Business

Fed leader, concerned about jobs downturn, tees up interest rate cuts

Published

2 years ago

August 23, 2024

Fed leader, concerned about jobs downturn, tees up interest rate cuts

After a near-textbook campaign to rein in inflation by raising interest rates, the head of the Federal Reserve, Jerome H. Powell, all but promised Friday to start lowering rates next month — with fingers crossed that it’s not too late to avoid a recession.

From the beginning of the inflationary surge triggered more than three years ago by the economic disruptions of the pandemic, it was clear that raising interest rates could tame price hikes. It was also clear that, if rates stayed too high too long, they could choke the economy into recession.

And few states are showing stronger signs of a possible downturn than California, which has felt the impact of high interest rates more severely than others. Not only has its unemployment rate been among the highest in the land while its job creation rate lagged, but pillar industries such as entertainment and tech have also gone through major disruption and many residents and businesses have left the state.

“Overall, the economy continues to grow at a solid pace,” Powell said in a widely anticipated speech at the annual summer symposium of central bankers in Jackson Hole, Wyo. “But the inflation and labor market data show an evolving situation. The upside risks to inflation have diminished. And the downside risks to employment have increased.

“The time has come for policy to adjust,” he said, giving the strongest signal yet of an imminent rate cut.

Investors cheered the news. Major stock indexes rose almost immediately after he began speaking.

Powell did not tip his hand on the size of the coming rate cut, but most analysts widely expect a small quarter-point move next month and a succession of similar reductions over the next year.

But Powell’s emphasis on doing “everything we can to support a strong labor market” gave some economists reason to think that the Fed could make a half-point move next month. Powell said that the pace of policy actions would “depend on incoming data, the evolving outlook, and the balance of risks.”

Whatever the initial size may be, it should fairly quickly nudge down interest rates on credit cards, auto loans and other consumer financing, but the broader economic effects of Fed policy are likely to take hold only gradually.

And with the political climate at a boil and the U.S. unemployment rising significantly since the start of the year, the Fed may find itself behind the curve in reversing course after what has been, up to now, a successful run of lowering inflation while preventing the economy from falling into a recession — the so-called soft landing.

“They’ve got to get going,” said Mark Zandi, chief economist at Moody’s Analytics, who for months has been calling on the Fed to start lowering rates.

Barring major economic changes or extreme volatility in markets, most economists see two to three quarter-point cuts this year and several more over the course of 2025, eventually bringing the Fed’s benchmark rate from the current two-decade high of 5.3% down to around 3%.

Financial markets have already priced in a September quarter-point cut, with stocks having mostly recovered from a big jolt a couple of weeks ago when investors feared the economy was turning down quickly and that it was already too late for the Fed.

Interest rates for a conventional 30-year mortgage were down to a hair below 6.5% this week, from more than 7% as recently as May. Lower rates should also help with auto purchases. Zandi said car sales have slowed as consumers have been waiting for better rates. The average interest rate on a five-year new auto loan was 8.2% in the second quarter, the highest since the Fed’s record keeping began in 2006.

The overriding question with the economy is jobs, both for workers and for political leaders facing a national election in November. And jobs are one of the two basic elements of the Fed’s responsibility. The other is price stability.

Powell acknowledged on Friday that the Fed initially misjudged the inflation spike in spring 2021, thinking that the pandemic-related surge in prices would be “transitory” and one that the Fed could look past.

Most analysts criticized Fed officials for waiting too long to raise rates, but Powell noted that they were hardly alone. “The good ship Transitory was a crowded one,” he said, adding in impromptu remarks, “I think I see some former shipmates out there today,” prompting a moment of laughter from the audience during his 15-minute speech.

It wasn’t until March 2022 when the Fed began raising rates. And, until recently, Powell and his colleagues focused squarely on consumer price inflation, which peaked in June 2022 at 9.1% and has since dropped to just under 3%. With inflation now trending toward the Fed’s 2% target, the central bank’s attention has turned to employment, which has become more worrisome in recent weeks.

First-time unemployment claims have moved up while the number of job openings has shrunk. The nation’s unemployment rate, 4.3% in July, is up from 3.7% in January, and new reports this week indicate that job growth from March 2023 to March 2024 was considerably smaller than previously estimated, though still healthy.

“The cooling in labor market conditions is unmistakable,” Powell said, adding, “We do not seek or welcome further cooling in labor market conditions.”

California’s unemployment rate has held steady in the last three months at 5.2%, but that’s still the second-highest in the country after Nevada. (California earlier in the year had the highest jobless figure.) More recently the pace of job growth in California has picked up, but the July report from the state’s Employment Development Department shows workers in California on average are putting in fewer hours of work.

That may not be a bad thing if more workers are opting for a better work-life balance, something that has become more important since the pandemic, said Erica Groshen, an economist and former commissioner of the U.S. Bureau of Labor Statistics. And, longer term, it could mean companies are more productive if they’re producing as much or more with less labor input.

But the decline in work hours, she said, could signal weakening demand and pending layoffs if business conditions persist or worsen.

The latest data from the state EDD show average weekly hours of work for all private-sector employees was down to 33.4 hours in July, from 34.5 a year ago. That may not seem like much, but it means a significant corresponding drop in average weekly earnings, which turned negative in July compared with a year earlier. Workers in information, education and health services, professional and business services, and the leisure sector, posted fewer hours of work.

“The softening job market tends to go with reduced hours,” said Sung Won Sohn, professor of economics and finance at Loyola Marymount University. “Typically, firms start cutting back hours before shedding jobs.”

That is likely even more true now because over the past several years many employers have had trouble finding new workers when they needed them.

Tom Trujillo, president of a family-owned business that operates eight Wienerschnitzel restaurants in the Southland, has held on to his staff of about 140. But like many other fast-food franchisees, Trujillo said he has cut back on overtime and some part-time employees’ hours as a result of the $20 minimum wage that took effect in April for his industry.

In response , he said he’s raised prices and that some of his stores are opening a little later and some dining rooms closing an hour or two earlier.

“I have a reserve credit line, with a zero balance,” Trujillo said. “The lower interest rates would be nice if I have to draw on that.”

But what he said he needs most today are more customers and for them to come more often.

Whether lower interest rates could help drive greater sales at Trujillo’s and other businesses remains to be seen.

Business

A new delivery bot is coming to L.A., built stronger to survive in these streets

Published

4 hours ago

February 28, 2026

Press Room

A new delivery bot is coming to L.A., built stronger to survive in these streets

The rolling robots that deliver groceries and hot meals across Los Angeles are getting an upgrade.

Coco Robotics, a UCLA-born startup that’s deployed more than 1,000 bots across the country, unveiled its next-generation machines on Thursday.

The new robots are bigger, tougher and better equipped for autonomy than their predecessors. The company will use them to expand into new markets and increase its presence in Los Angeles, where it makes deliveries through a partnership with DoorDash.

Dubbed Coco 2, the next-gen bots have upgraded cameras and front-facing lidar, a laser-based sensor used in self-driving cars. They will use hardware built by Nvidia, the Santa Clara-based artificial intelligence chip giant.

Coco co-founder and chief executive Zach Rash said Coco 2 will be able to make deliveries even in conditions unsafe for human drivers. The robot is fully submersible in case of flooding and is compatible with special snow tires.

Zach Rash, co-founder and CEO of Coco, opens the top of the new Coco 2 (Next-Gen) at the Coco Robotics headquarters in Venice.

(Kayla Bartkowski/Los Angeles Times)

Early this month, a cute Coco was recorded struggling through flooded roads in L.A.

“She’s doing her best!” said the person recording the video. “She is doing her best, you guys.”

Instagram followers cheered the bot on, with one posting, “Go coco, go,” and others calling for someone to help the robot.

“We want it to have a lot more reliability in the most extreme conditions where it’s either unsafe or uncomfortable for human drivers to be on the road,” Rash said. “Those are the exact times where everyone wants to order.”

The company will ramp up mass production of Coco 2 this summer, Rash said, aiming to produce 1,000 bots each month.

The design is sleek and simple, with a pink-and-white ombré paint job, the company’s name printed in lowercase, and a keypad for loading and unloading the cargo area. The robots have four wheels and a bigger internal compartment for carrying food and goods .

Many of the bots will be used for expansion into new markets across Europe and Asia, but they will also hit the streets in Los Angeles and operate alongside the older Coco bots.

Coco has about 300 bots in Los Angeles already, serving customers from Santa Monica and Venice to Westwood, Mid-City, West Hollywood, Hollywood, Echo Park, Silver Lake, downtown, Koreatown and the USC area.

The new Coco 2 (Next-Gen) drives along the sidewalk at the Coco Robotics headquarters in Venice.

The company is in discussion with officials in Culver City, Long Beach and Pasadena about bringing autonomous delivery to those communities.

There’s also been demand for the bots in Studio City, Burbank and the San Fernando Valley, according to Rash.

“A lot of the markets that we go into have been telling us they can’t hire enough people to do the deliveries and to continue to grow at the pace that customers want,” Rash said. “There’s quite a lot of area in Los Angeles that we can still cover.”

The bots already operate in Chicago, Miami and Helsinki, Finland. Last month, they arrived in Jersey City, N.J.

Late last year, Coco announced a partnership with DashMart, DoorDash’s delivery-only online store. The partnership allows Coco bots to deliver fresh groceries, electronics and household essentials as well as hot prepared meals.

With the release of Coco 2, the company is eyeing faster deliveries using bike lanes and road shoulders as opposed to just sidewalks, in cities where it’s safe to do so. Coco 2 can adapt more quickly to new environments and physical obstacles, the company said.

Coco 2 is designed to operate autonomously, but there will still be human oversight in case the robot runs into trouble, Rash said. Damaged sidewalks or unexpected construction can stop a bot in its tracks.

The need for human supervision has created a new field of jobs for Angelenos.

Though there have been reports of pedestrians bullying the robots by knocking them over or blocking their path, Rash said the community response has been overall positive. The bots are meant to inspire affection.

“One of the design principles on the color and the name and a lot of the branding was to feel warm and friendly to people,” Rash said.

Coco plans to add thousands of bots to its fleet this year. The delivery service got its start as a dorm room project in 2020, when Rash was a student at UCLA. He co-founded the company with fellow student Brad Squicciarini.

The Santa Monica-based company has completed more than 500,000 zero-emission deliveries and its bots have collectively traveled around 1 million miles.

Coco chooses neighborhoods to deploy its bots based on density, prioritizing areas with restaurants clustered together and short delivery distances as well as places where parking is difficult.

The robots can relieve congestion by taking cars and motorbikes off the roads. Rash said there is so much demand for delivery services that the company’s bots are not taking jobs from human drivers.

Instead, Coco can fill gaps in the delivery market while saving merchants money and improving the safety of city streets.

“This vehicle is inherently a lot safer for communities than a car,” Rash said. “We believe our vehicles can operate the highest quality of service and we can do it at the lowest price point.”

Business

Trump orders federal agencies to stop using Anthropic’s AI after clash with Pentagon

Published

16 hours ago

February 27, 2026

Press Room

Trump orders federal agencies to stop using Anthropic’s AI after clash with Pentagon

President Trump on Friday directed federal agencies to stop using technology from San Francisco artificial intelligence company Anthropic, escalating a high-profile clash between the AI startup and the Pentagon over safety.

In a Friday post on the social media site Truth Social, Trump described the company as “radical left” and “woke.”

“We don’t need it, we don’t want it, and will not do business with them again!” Trump said.

The president’s harsh words mark a major escalation in the ongoing battle between some in the Trump administration and several technology companies over the use of artificial intelligence in defense tech.

Anthropic has been sparring with the Pentagon, which had threatened to end its $200-million contract with the company on Friday if it didn’t loosen restrictions on its AI model so it could be used for more military purposes. Anthropic had been asking for more guarantees that its tech wouldn’t be used for surveillance of Americans or autonomous weapons.

The tussle could hobble Anthropic’s business with the government. The Trump administration said the company was added to a sweeping national security blacklist, ordering federal agencies to immediately discontinue use of its products and barring any government contractors from maintaining ties with it.

Defense Secretary Pete Hegseth, who met with Anthropic’s Chief Executive Dario Amodei this week, criticized the tech company after Trump’s Truth Social post.

“Anthropic delivered a master class in arrogance and betrayal as well as a textbook case of how not to do business with the United States Government or the Pentagon,” he wrote Friday on social media site X.

Anthropic didn’t immediately respond to a request for comment.

Anthropic announced a two-year agreement with the Department of Defense in July to “prototype frontier AI capabilities that advance U.S. national security.”

The company has an AI chatbot called Claude, but it also built a custom AI system for U.S. national security customers.

On Thursday, Amodei signaled the company wouldn’t cave to the Department of Defense’s demands to loosen safety restrictions on its AI models.

The government has emphasized in negotiations that it wants to use Anthropic’s technology only for legal purposes, and the safeguards Anthropic wants are already covered by the law.

Still, Amodei was worried about Washington’s commitment.

“We have never raised objections to particular military operations nor attempted to limit use of our technology in an ad hoc manner,” he said in a blog post. “However, in a narrow set of cases, we believe AI can undermine, rather than defend, democratic values.”

Tech workers have backed Anthropic’s stance.

Unions and worker groups representing 700,000 employees at Amazon, Google and Microsoft said this week in a joint statement that they’re urging their employers to reject these demands as well if they have additional contracts with the Pentagon.

“Our employers are already complicit in providing their technologies to power mass atrocities and war crimes; capitulating to the Pentagon’s intimidation will only further implicate our labor in violence and repression,” the statement said.

Anthropic’s standoff with the U.S. government could benefit its competitors, such as Elon Musk’s xAI or OpenAI.

Sam Altman, chief executive of OpenAI, the company behind ChatGPT and one of Anthropic’s biggest competitors, told CNBC in an interview that he trusts Anthropic.

“I think they really do care about safety, and I’ve been happy that they’ve been supporting our war fighters,” he said. “I’m not sure where this is going to go.”

Anthropic has distinguished itself from its rivals by touting its concern about AI safety.

The company, valued at roughly $380 billion, is legally required to balance making money with advancing the company’s public benefit of “responsible development and maintenance of advanced AI for the long-term benefit of humanity.”

Developers, businesses, government agencies and other organizations use Anthropic’s tools. Its chatbot can generate code, write text and perform other tasks. Anthropic also offers an AI assistant for consumers and makes money from paid subscriptions as well as contracts. Unlike OpenAI, which is testing ads in ChatGPT, Anthropic has pledged not to show ads in its chatbot Claude.

The company has roughly 2,000 employees and has revenue equivalent to about $14 billion a year.

Business

Video: The Web of Companies Owned by Elon Musk

Published

1 day ago

February 27, 2026

Press Room

Video: The Web of Companies Owned by Elon Musk

new video loaded: The Web of Companies Owned by Elon Musk

In mapping out Elon Musk’s wealth, our investigation found that Mr. Musk is behind more than 90 companies in Texas. Kirsten Grind, a New York Times Investigations reporter, explains what her team found.

By Kirsten Grind, Melanie Bencosme, James Surdam and Sean Havey

February 27, 2026