Business

Fed Chair Jerome Powell Shows Little Urgency to Lower Rates

Published

1 year ago

February 11, 2025

Fed Chair Jerome Powell Shows Little Urgency to Lower Rates

Jerome H. Powell, chair of the Federal Reserve, signaled little urgency to lower interest rates with the economy sturdy and inflation still too high in a hearing with lawmakers on Tuesday.

Mr. Powell, who testified before the Senate Banking Committee, confronts an economic and political landscape that is far different from what it was when he last appeared before Congress in July. The Fed has paused its rate-cutting plans with inflation still above its target, and questions are swirling about how it will navigate the economic and institutional ramifications of tariffs and other policies that President Trump has put at the center of his presidency.

“We do not need to be in a hurry to adjust our policy stance,” Mr. Powell told lawmakers.

The semiannual hearings, which will continue on Wednesday before the House Financial Services Committee, follow the Fed’s move into a new phase in its yearslong effort to tame price pressures. After lowering rates by a full percentage point last year, the Fed is in a holding pattern as it assesses how quickly to release its grip on the economy and ease borrowing costs.

Mr. Powell emphasized that conditions across the labor market “remain solid and appear to have stabilized.” That has given the central bank latitude to be patient about its next steps, especially since progress toward its 2 percent inflation goal has recently been bumpy.

“If the economy remains strong, and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer,” Mr. Powell said. “If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly.”

The incoming inflation data has been slightly more reassuring, with price gains finally moderating in key sectors like housing. But sweeping proposals put forward by Mr. Trump that would affect immigration, tariffs and taxes have made the Fed’s job much more difficult.

The Fed, during Mr. Trump’s first trade war, did not respond to what it generally perceived as a one-off jump in prices stemming from tariffs. Instead, central bankers focused on souring business sentiment and a pullback in global demand, prompting it to lower rates in 2019 to shore up the economy.

The Fed could follow that same playbook this time. But much will depend on whether consumer and business expectations of future inflation remain in check. Because the backdrop is so different from 2018 — when inflation was too low — the fear is that Americans emerging from the worst shock to prices in decades will be more sensitive to additional increases.

Mr. Powell said the Fed’s job was not to comment on tariff policy, but to “try to react to it in a thoughtful, sensible way.” He later added that it would be “unwise to speculate” about the economic impact but said the Fed would be focused on the “net effect” of what Mr. Trump planned to pursue with regard to deportations, fiscal spending and taxes as well.

Already there are signs that people are bracing for higher inflation. Expectations about what will happen in the year ahead have risen sharply, according to a preliminary survey published by the University of Michigan on Friday.

Short-term metrics like that tend to bounce around a bit, so Fed officials focus on longer-term expectations. A new measure released by the Federal Reserve Bank of New York on Monday showed year-ahead inflation expectations steadying in January, while those over a five-year horizon rose slightly.

Mr. Powell expressed no concern on Tuesday about Americans’ expectations about future inflation and said that “policy is well positioned to deal with the risks and uncertainties that we face.”

The rules and regulations that govern Wall Street are also in focus for lawmakers, given the numerous changes since Mr. Powell last testified. The central bank has paused any “major rulemakings” after its top Wall Street cop, Michael Barr, decided a month ago to step down as vice chair for supervision. He said he was relinquishing that role, but not his Fed governorship, to avoid a lengthy legal battle with Mr. Trump that he feared could damage the Fed.

Mr. Barr had faced intense resistance from Wall Street and some of his own colleagues for seeking to impose stricter rules on big banks. He was eventually forced to scrap his initial proposal and issue a new one with significantly less onerous requirements. Mr. Powell said on Tuesday that the level of capital at the largest banks was “about right,” but acknowledged that having a global standard for regulations, known as “Basel III endgame,” was “good” for both U.S. banks and the economy.

Mr. Powell faced a number of questions from Republican senators about “debanking,” which refers to the closing of customer accounts for politically motivated reasons. The Fed chair said that he was “troubled by the quantity of these reports” and that it was “fair to take a fresh look” at the practice.

Mr. Powell confirmed that the Fed had removed language in a manual for its regional reserve banks regarding master accounts, which give financial companies access to the Fed’s payment systems. It had previously said reserve banks should “consider the conduct of the institution and its leadership” and the prospects of “undue reputational risks” before proceeding. One focal point was whether the institution engaged in “controversial commentary or activities.”

The Fed’s chair also came under fire for changes set to be made on the yearly stress tests it runs on the country’s largest banks to gauge their ability to withstand big economic and financial market shocks. Banking lobbyist groups sued the institution over the issue in December.

In a letter sent to Mr. Powell ahead of the hearings, Senator Elizabeth Warren of Massachusetts joined Representative Maxine Waters of California in calling on the Fed to resist making those changes or risk allowing banks to “game the stress tests” in a way that could ultimately undermine the stability of the financial system.

“The changes sought by big banks — like previous rollbacks of banking rules — will come back to haunt families, small businesses and the economy, increasing the likelihood of another Wall Street-driven economic collapse,” said the letter, which was seen by The New York Times.

Ms. Warren, the ranking Democrat on the Banking Committee, and Ms. Waters, who serves in a parallel role on the Financial Services Committee, also made the case that the banks’ legal arguments “do not have merit” and suggested that they would not hold up if the Fed would “vigorously defend its clear legality in court.”

The confrontation comes amid apprehension about how the Fed is handling directives from the White House. The central bank operates independently of the executive branch and prizes above all its ability to make decisions on interest rates without interference.

“We are concerned that, instead of fighting against the banks in courts and elsewhere, the Fed is now — in the wake of President Trump’s election — seeking new avenues for premature surrender,” Ms. Warren and Ms. Waters said in their letter to Mr. Powell.

The issue of policy independence reared up during Mr. Trump’s first term as he consistently attacked Mr. Powell for resisting his demands to lower interest rates speedily enough. He has been more circumspect so far in his second term, even saying the Fed’s decision to pause rate cuts in January “was the right thing to do.”

Asked about what he would do if Mr. Trump tried to remove a member of the Fed’s policymaking Board of Governors, Mr. Powell said, “It’s pretty clearly not allowed under the law.”

On issues apart from its policy independence, the Fed has shown a clear willingness to align with the White House when it deems it is appropriate and lawful. Most recently, the Fed voluntarily complied with Mr. Trump’s executive order to halt hiring. The Fed has also scaled back on its diversity, equity and inclusion programs as well as public initiatives related to climate change — areas the Trump administration has railed against.

Still, Mr. Trump’s imprint on the Fed so far pales next to what other agencies have experienced. The Consumer Financial Protection Bureau, the federal government’s financial industry watchdog, was effectively shut down over the weekend, with its acting director, Russell Vought, ordering employees to cease working.

Mr. Vought, who leads the Office of Management and Budget, also cut off the consumer bureau’s funding, which originates from requests to the Fed. The central bank last transferred $245 million in January to cover a portion of the agency’s 2025 budget of around $800 million.

Mr. Powell was pressed repeatedly by Democrats on Tuesday about the potential impact on consumers if the bureau ceases operations. He conceded that the Fed had limited jurisdiction and agreed that there would be a gap in terms of enforcement.

Mr. Powell was also asked about the Treasury Department’s payments system, which channels about 90 percent of the payments for the government and has been a source of concern after Elon Musk’s team recently gained access to it. Mr. Powell confirmed that the Fed’s sole role is to execute the payments directed by Treasury and that the central bank’s capacity to carry out those duties was “safe.”

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Business

California farmers were already struggling. Then came the Iran war

Published

23 minutes ago

March 29, 2026

Press Room

California farmers were already struggling. Then came the Iran war

Shortly after the Iran war started four weeks ago, farming executive Bikram Hundal was beside himself.

The vice president of operations at Sequoia Nut Co. had shipped 15 containers of almonds, walnuts and pistachios from the Port of Long Beach, and he wasn’t exactly sure where they were on the high seas.

Their destination was Dubai’s Port of Jebel Ali, a major trading hub, but the jets, missiles and rockets crisscrossing Middle Eastern skies had diverted one ship to the Netherlands and another to Algeria.

Finally, the remainder of the 300 tons of California nuts worth $1.7 million was offloaded at the Port of Fujairah, also in the United Arab Emirates but on the Gulf of Oman, a bit farther from the fighting.

Now, shipping costs to the region have tripled to $7,500 per container, and Hundal is uncertain when the Tulare County company will get its money.

“They will be slow in paying for those goods, and they told us whatever goods were sold already to them [that] have not shipped, please do not ship those,” he said. “That will impact our cash flow. We have to pay the growers for them.”

Since the start of the war, the average price of a gallon of diesel in California has hit $7.26. Fertilizer prices have risen too.

As the war unfolds in Iran, farmers like Hundal are being whiplashed by forces beyond their control, including the cutting off of key export markets and a sharp rise in the cost of doing business.

The war has driven up the price of diesel that fuels trucks and farm and ranch equipment, as well as fertilizers critical for increasing crop yields — leading to fears that if the conflict goes on much longer it could push up prices at the market.

The average price of a gallon of diesel in California has hit $7.26, up more than $2 compared with a month ago. Diesel that powers tractors and other non-road vehicles and engines is typically almost $1 cheaper as it is exempt from certain taxes.

Tara Gallegos, a spokesperson for Gov. Gavin Newsom, blamed the farm economy difficulties on President Trump’s “recklessness” in starting the war.

“California farmers are getting hit twice with higher fertilizer costs and higher fuel costs. Every American will wind up paying for that at the grocery store because these commodities are priced globally,” she said.

Trump has made conflicting statements about the rise in fuel prices, contending that it is a “small price to pay” to pursue his war aims of knocking out Iran, but also saying he wants to wrap up hostilities quickly.

Even before the war, California’s farmers were struggling due to the disruption caused last year by Trump’s tariffs, which hit farmers hard as trading partners responded with their own duties.

California is the largest agricultural state in the nation as measured by the value of its crops, which topped $60 billion for the first time in 2024 — and it was hit with corresponding big losses last year.

The value of the top 13 state agricultural products exported to China — including almonds, pistachios and dairy — fell in aggregate by 64%, or $1 billion, in 2025, according to a recent UC Davis estimate.

Faith Parum, an economist at the American Farm Bureau Federation, said the rise in fertilizer and diesel prices follows last year’s tariff-related trade disruption and several years of natural disasters, including droughts and freezes.

“How do we make sure that we keep farmers in business? Because it is a matter of national security and food security,” she said.

Parum noted that farmers who plant crops such as corn, soy, rice and cotton have experienced nationwide losses of $90 billion since 2023.

Already there are reports that some fertilizers are up by a third or more in price. The rise is taking place in California and across the U.S. even though the country produces the majority of its nitrogen-based fertilizers, which are critical to improving crop yields.

The fertilizers are typically applied by U.S. farmers either as liquid nitrogen, liquid ammonia or as pellets of urea, which is the most common nitrogen-based fertilizer in the world, said Veronica Nigh, chief economist at the Fertilizer Institute.

While the vast majority of liquid nitrogen and ammonia is domestically produced, the U.S. imports about half of its urea, making it susceptible to the Middle East supply shock.

All nitrogen fertilizers are derived from ammonia, which is made using natural gas — with half of all exportable urea supplies coming from the oil-and-gas rich Mideast, where it has to pass through the disputed Strait of Hormuz, she said.

Prices are up worldwide, with fertilizer plants closing in Bangladesh, raising the specter of an urea shortage. That could lead to food shortages first in less wealthy countries, while U.S. consumers might see higher food prices unless the war winds down quickly, Nigh said.

Food prices rose sharply after Russia invaded Ukraine in 2022, but that was largely due to the countries being major grain exporters.

“This is different than anything we’ve experienced before, in that it is not occurring in a single market, and that it is something that is a critical input to growers around the world,” she said.

The war is hitting Midwest farmers just as they enter the planting season for crops such as wheat, corn and soybean, and need to apply vast quantities of fertilizer.

California grows those crops too, but the big money is in nuts, produce and other “specialty” crops, leading to a constant demand for fertilizer. “You have price and purchase exposure throughout the year,” Nigh said.

Sal Parra Jr., who helps run his family’s 1,500-acre farm in Fresno County and is operations director at the more than 10,000-acre Bowles Farming Co. in adjacent Merced County, is the kind of farmer Nigh is talking about.

The two farms plant a large variety of crops, including nuts, corn, wheat, cotton, alfalfa and fruits and vegetables — all needing a variety of fertilizers and other nutrients.

The rise in costs are bad enough, but now there are fears that a key liquid fertilizer, UAN-32 — which contains three forms of nitrogen, including liquid urea — could be in short supply.

“We actually have taken the initiative at Bowles to fill as much storage as we have available with fertilizer to try to lessen the blow,” he said, noting his family farm doesn’t have the capacity to store much fertilizer.

There are techniques to stretch supplies by more efficiently applying fertilizer, Parra noted, such as by administering soil treatments, though they are costly.

A driver hauls almonds from the fields in a tractor trailer

In addition to rising fuel costs, farmers in the Central Valley say they are stockpiling fertilizer and looking for otherways to fertilize their crops.

“I think that a year like this, where you see fertilizer prices moving the way they’re moving, it may justify using other methodologies,” he said. “I’m going to get very creative with with our fertilizer programs.”

At the same time, he said, the farms are having to absorb higher costs for diesel, which runs pumps, tractors and big rigs carrying crops to market.

Much of what the farms sell is on contract with prices already set, which means those costs will have to be absorbed for now, said Parra, who worries many state crops could see lower sales as prices eventually rise in markets.

“A lot of what we grow are beautiful watermelons, or carrots or tomatoes, and depending on what the price is, people may or may not buy it,” he said.

The economic shocks caused nationwide by extreme weather events, the disruption of export markets and now the war have prompted the industry, including California growers, to seek federal assistance.

A driver hauls almonds in a tractor trailer

Trump’s massive tax-cut-and-spending bill last year increased payments to farmers. In December, Trump approved $12 billion in emergency assistance, including $1 billion for the kind of produce, nuts and other specialty crops grown in California.

And just last week, the administration issued an emergency fuel waiver to allow continuing nationwide sales of E15 — a gasoline blended with 15% ethanol, nearly all of which is produced from corn grown by U.S. farmers.

“That is very helpful,” Parum said.

Typically, sales of the gas are restricted during the summer due to the volatility of ethanol and its contribution to smog, but the Farm Bureau maintains that new studies show the blend is non-polluting.

Other relief being sought includes dropping long-standing duties on countries that export fertilizer products to the U.S., such as Morocco, a supplier of phosphates.

The war also is disrupting key markets for growers like Sequoia.

While the Middle East isn’t as large an export market for California farmers and ranchers as Canada, the European Union or Mexico; the United Arab Emirates ranks in the top 10 as the nuts, strawberries and other products exported there are distributed across the region.

two men look at computers in company offices

Along with almonds and pistachios, walnuts are a staple of the Mideastern diet — and those grown by California farmers are considered the “gold standard,” said Robert Verloop, chief executive of the California Walnut Board and Commission.

The war struck right it the middle of the holiest month on the Islamic calendar, Ramadan, which began Feb. 17 and ended March 19, when consumption is higher.

About 70,000 tons of walnuts were on their way or about to be shipped to the region in the period leading up to and including Ramadan. That accounts for roughly 10% of California’s production, expected to hit $1 billion this year.

Some ships were temporarily diverted to ports in China, India and Europe until new customers are located. Many shipments are now being canceled before being loaded on ships, creating a backlog, Verloop said.

an employee at Sequoia Nut Company and Custom Almonds LLC loads almonds into bulk bags

The war also has closed Mideastern markets as residents fearful of rocket attacks stay home. That has been a factor in reducing consumption, forcing some nuts to be sold elsewhere at discounted prices, he said.

Also, an expected wave of orders that typically follows Ramadan has not materialized, hurting California farmers who might not be able to make up the losses, he said.

“Life is not the same, and it’s not business as usual,” Verloop said. “There an expression in the industry. If you don’t eat it in February, you don’t need twice as much in March.”

Business

Living comfortably costs the most in these Californian cities

Published

12 hours ago

March 29, 2026

Press Room

Living comfortably costs the most in these Californian cities

In California’s spendy cities, living comfortably costs more than almost anywhere else.

From the Bay Area to Orange County, living well requires incomes north of $150,000 in the pricier places, according to a recent study. A family with two kids needs more than $400,000 per year in some spots.

The study, conducted by financial technology company SmartAsset, analyzed 100 of the largest cities in the country.

San José ranked as the second-most expensive city, where a single adult must make nearly $160,000 and a family of four needs over $400,000 to live comfortably, the study found. Orange County cities — Irvine, Anaheim and Santa Ana — followed closely behind.

New York City topped the list, with a salary for comfortable living at about $900 higher than in San José.

Los Angeles ranked 16th on the list, where a single adult must make $120,307 to live comfortably. A family of four should bring in just over $280,000 annually.

San Diego and Chula Vista tied for seventh place, with a $136,781 salary for a single adult. San Francisco came in ninth, followed by Fremont and Oakland, which tied for 10th.

Santa Clarita, Long Beach, Riverside and Sacramento also made the top 20 list.

The study measured comfortable living using the 50/30/20 rule, in which half of a household’s post-tax income should go to needs, 30% to wants and 20% to savings.

The company used the MIT living wage calculator to determine cost of living by region for single adults and families of four.

A family of four faces the toughest living costs in the Bay Area, taking up four of the top five cities with the highest salaries needed to live comfortably.

San Francisco topped that list, with income for two parents projected at $407,597. Projected income in San José was slightly lower at $402,771, followed by Fremont and Oakland.

The study’s findings are in line with existing research that paints a grim picture of the statewide housing crisis, said Carolina Reid, an associate professor of city and regional planning at UC Berkeley.

“California is one of the more expensive places to live, and that definitely is true when we’re talking about families who are juggling multiple competing demands on their incomes,” Reid said.

Housing costs, groceries and gas prices — all considered necessities in the study — have skyrocketed nationwide, while wages have largely remained stagnant.

California housing costs are about double the national average. The state has struggled to keep up with demand, largely due to the lingering impacts of decades-long missteps in housing policies, said Paavo Monkkonen, a professor in urban planning at UCLA.

“It’s a problem that we created very slowly over a long period of time,” Monkkonen said.

The expected salary needed to live comfortably was significantly higher than the median household income for some California cities.

The difference is especially stark in Santa Ana, where the median salary is $95,118 — over $56,000 less than the projected salary needed to live comfortably in the city for a single adult.

Los Angeles had a $38,000 gap between the city’s median household income of $82,263 and the projected salary.

Cost of living is often hard to measure given the variability in how households choose to spend their money, Reid said. Housing is also the primary driver for living costs, which Monkkonen said is difficult to measure given the market’s unpredictability.

“People are living here somehow, right?” he said. “If you just look at the incomes and rents separately, you don’t really get a picture of how people are doing it…they’re spending a lot of their incomes on rents, but they’re also doubling up.”

Business

How the landmark verdict against Meta and YouTube could hit their businesses

Published

1 day ago

March 28, 2026

Press Room

How the landmark verdict against Meta and YouTube could hit their businesses

A Los Angeles jury dealt a blow to social media giants Meta and YouTube this week when it found that the platforms were negligent for designing addictive features that harmed the mental health of a California woman.

Both companies plan to appeal, but the ruling has ignited uncertainty around the tech companies’ future and sparked questions about the potential fallout.

The seven-week trial kicked off in February, featuring testimony from Meta and YouTube executives.

Kaley G.M., a 20-year-old Chico, Calif., woman, sued the platforms in 2023, alleging that using social media at a young age led to her mental health problems such as body dysmorphia and depression. She also sued TikTok and Santa Monica-based Snap and those companies settled ahead of the trial.

Lawyers representing the woman argued that the platforms hook in young users with features such as infinite scrolling, autoplaying videos and beauty filters.

People use social media to keep up with their friends and family, but teens can also feel inadequate, sad or anxious when they compare themselves to a curated version of other people’s lives online. They’re also spending a lot of time watching a seemingly endless amount of short videos.

A jury determined that Meta was 70% responsible for Kaley’s harms and YouTube was 30% responsible. They awarded her a total of $6 million. The ruling came shortly after a New Mexico jury found Meta liable for $375 million in damages after the state Atty. Gen. Raúl Torrez alleged the platform’s features enabled predators and pedophiles to exploit children.

“These verdicts mark an unsurprising breaking point. Negative sentiment toward social media has been building for years, and now it’s finally boiled over,” said Mike Proulx, a director at Forrester, a market research company.

How have the companies reacted to the verdict?

Meta and Google, which owns YouTube, said they disagreed with the ruling and plan to appeal.

“This case misunderstands YouTube, which is a responsibly built streaming platform, not a social media site,” said Jose Castañeda, a Google spokesman, in a statement.

Meta spokesman Andy Stone posted the company’s statement on social media site X.

“Teen mental health is profoundly complex and cannot be linked to a single app. We will continue to defend ourselves vigorously as every case is different, and we remain confident in our record of protecting teens online,” the statement said.

Tech companies have been responding to mental health concerns, rolling out new parental controls so parents can keep track of their children’s screen time and moderating harmful content. Instagram and YouTube have versions of their apps meant for young people.

Some child advocacy groups and lawmakers, though, say these changes aren’t enough.

The ruling could affect how much money YouTube’s parent company, Alphabet, and Meta earn as they spend more on legal battles. While they make billions of dollars from advertising, investors are wary about higher expenses. The companies are already spending billions of dollars on artificial intelligence and developing new hardware such as smartglasses.

On Thursday, Meta’s stock fell more than 7% to $549 per share. Alphabet saw its share price drop more than 2% to roughly $280.

In 2025, Meta’s annual revenue grew 22% from the previous year to $200.97 billion.

Last year, YouTube’s annual revenue surpassed more than $60 billion. Both Google and Meta have been laying off workers as they spend more on AI.

The ongoing backlash hasn’t stopped tech companies from growing their users.

A majority of U.S. teens use YouTube, TikTok, Instagram and Snapchat, according to a 2025 Pew Research Center survey. More than 3.5 billion people use one of Meta’s products, which include Instagram and Facebook.

Social media has continued to change over the years as companies double down on short videos and AI chatbots.

Mental health concerns have only heightened as AI chatbots that respond to questions and generate content become more popular. Families have sued OpenAI, Character.AI and Google after their loved ones who used chatbots killed themselves.

Some analysts remain skeptical that Meta and YouTube would make drastic changes to their products because they’ve weathered crises before.

“Neither Meta nor YouTube is going to do anything different until a court orders them to, or there’s a significant drop in user or advertiser use,” said Max Willens, Principal Analyst at eMarketer.

Other analysts said legal risks could also affect how tech companies develop new AI-powered products and features.

“It’s likely that tech firms will now face increased scrutiny over the design of their platforms, which should drive more thoughtful inclusion of features that foster healthier interactions and safeguard mental health,” said Andrew Frank, an analyst with Gartner for Marketing Leaders.

At the very least, the verdicts serve as a “dire warning about how we handle the next wave of technology,” Proulx said.

“If we’re still struggling to put effective guardrails around social media after nearly two decades, we’re far from prepared for the growing harms of AI, which is moving faster, scaling wider, and embedding itself far deeper into people’s lives,” he said.

Times staff writer Sonja Sharp contributed to this report.