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The Fed Bets on a ‘Soft Landing,’ but Recession Risk Looms

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The Fed Bets on a ‘Soft Landing,’ but Recession Risk Looms

Jerome H. Powell, the Federal Reserve chair, emphasised this week that the central financial institution he leads might reach its quest to tame speedy inflation with out inflicting unemployment to rise or setting off a recession. However he additionally acknowledged that such a benign final result just isn’t sure.

“The historic file supplies some grounds for optimism,” Mr. Powell stated.

That “some” is price noting: Whereas there could also be hope, there’s additionally motive to fret, given the Fed’s monitor file when it’s in inflation-fighting mode.

The Fed has at occasions managed to boost rates of interest to chill down demand and weaken inflation with out meaningfully harming the financial system — Mr. Powell highlighted examples in 1965, 1984 and 1994. However these situations got here amid a lot decrease inflation, and with out the continuing shocks of a world pandemic and a struggle in Ukraine.

The half Fed officers keep away from saying out loud is that the central financial institution’s instruments work by slowing down the financial system, and weakening progress at all times comes with a threat of overdoing it. And whereas the Fed ushered in its first price enhance this month, some economists — and a minimum of one Fed official — assume the central financial institution was too sluggish to begin taking its foot off the gasoline. Some warn that the delay will increase the possibility it may need to overcorrect in consequence.

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The Fed has touched off recessions with previous price will increase: It occurred within the early Nineteen Eighties, when Paul Volcker raised charges in a marketing campaign to convey down very speedy inflation and despatched unemployment rocketing painfully greater within the course of.

“There isn’t a assure that there might be a recession, however you might have excessive inflation, and in case you’re severe about bringing it down shortly, you need to hike loads,” stated Roberto Perli, the top of world coverage at Piper Sandler, an funding financial institution, and a former Fed economist. “The financial system doesn’t like that. I feel the chance is substantial.”

It’s no shock that it may be troublesome to chill down inflation whereas sustaining an financial enlargement. Increased borrowing prices trickle by way of the financial system by slowing the housing market, discouraging massive purchases and prompting firms to chop enlargement plans and rent fewer employees. That broad pullback weakens the labor market and slows wage progress, serving to inflation to reasonable. However the chain response performs out regularly, and its outcomes can solely be seen with a delay, so it’s simple to put on the brakes too arduous.

“Nobody expects that bringing a couple of mushy touchdown might be simple within the present context — little or no is simple within the present context,” Mr. Powell acknowledged throughout his remarks this week, including, “My colleagues and I’ll do our absolute best to achieve this difficult job.”

Six of the eight Fed-rate-increase cycles because the early Nineteen Eighties have resulted in recession, although a few of these had been attributable to exterior shocks — just like the pandemic — and a few by asset bubble implosions, together with the 2007 housing disaster and the collapse in web shares within the early 2000s.

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Fed officers are hoping that at present’s robust financial system will assist them keep away from a tough touchdown. They level to the truth that labor markets are booming and client demand is stable, so lifting charges and tempering voracious shopping for may assist provide to catch up and chill the financial system with out giving it freezer burn. Mr. Powell has argued that with so many open jobs per unemployed employee, the Fed may be capable to decelerate the labor market a bit with out truly pushing the unemployment price up.

Loretta J. Mester, the president of the Federal Reserve Financial institution of Cleveland, stated the Fed was not at a degree the place it needed to determine between preventing inflation or pummeling progress.

“Given the place the financial system is now, and the place the dangers are, to my thoughts the key financial problem is inflation,” Ms. Mester advised reporters on a name Wednesday. “I don’t see it as being a trade-off at this level.”

James Bullard, the president of the Federal Reserve Financial institution of St. Louis, stated in an interview that he thought the truth that the central financial institution had credibility as an inflation fighter — and was elevating charges to defend that credibility — might permit it to regulate coverage in a approach that allowed demand to reasonable with out inflicting main financial disruptions.

Within the Nineteen Eighties, when Paul Volcker was the Fed chair, the central financial institution needed to persuade the world that it was ready to wrestle inflation beneath management after greater than a decade of speedy worth positive aspects.

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“Do no matter it takes, I suppose that’s the mantra of the day; I do assume inflation is our No. 1 concern,” Mr. Bullard stated. “I don’t assume, nonetheless, that it’s a Volcker-like state of affairs.”

Close to-term client and market inflation expectations have shot greater over the previous yr as inflation has hit a 40-year excessive and continued to speed up, however longer-term worth progress expectations have solely nudged barely greater.

If shoppers and companies anticipated speedy worth will increase yr after yr, that might be a troubling signal. Such expectations might develop into self-fulfilling if firms felt comfy elevating costs and shoppers accepted these greater prices however requested for greater paychecks to cowl their rising bills.

However after a yr of speedy inflation, it’s no assure that longer-term inflation expectations will keep in verify. Holding them beneath management is a giant a part of why the Fed is getting shifting now whilst a struggle in Ukraine stokes uncertainty. The central financial institution raised charges by 1 / 4 level this month and projected a collection of rate of interest will increase to return.

Whereas officers would normally look previous a brief pop in oil costs, just like the one the battle has spurred, issues about expectations imply they don’t have that luxurious this time round.

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“The chance is rising that an prolonged interval of excessive inflation might push longer-term expectations uncomfortably greater,” Mr. Powell stated this week.

Mr. Powell signaled that the Fed might increase rates of interest by half a proportion level in Could and imminently start to shrink its stability sheet of bond holdings, insurance policies that might take away assist from the U.S. financial system way more quickly than within the final financial enlargement.

Some officers, together with Mr. Bullard, have urged shifting shortly, arguing that financial coverage continues to be at an emergency setting and that’s out of line with a really robust financial system.

However buyers assume the Fed might want to reverse course after a collection of speedy price will increase. Market pricing suggests — and a few researchers assume — that the Fed will increase charges notably this yr and early subsequent, solely to reverse a few of these strikes because the financial system slows markedly.

“Our base case has the Fed reversing shortly sufficient to keep away from a full-blown recession,” Krishna Guha, the top of world coverage at Evercore ISI, wrote in a current evaluation. “However the chance of pulling this off just isn’t significantly excessive.”

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So why would the Fed put the financial system in danger? Neil Shearing, the group chief economist at Capital Economics, wrote that the central financial institution was following the “sew in time saves 9” method to financial coverage.

Elevating rates of interest now to scale back inflation provides the central financial institution a shot at stabilizing the financial system with out having to enact an much more painful coverage down the street. If the Fed dallies, and better inflation turns into a extra lasting function of the financial system, it is going to be even more durable to stamp out.

“Delaying price hikes attributable to fears in regards to the financial spillovers from the struggle in Ukraine would threat inflation changing into extra entrenched,” Mr. Shearing wrote in a notice to purchasers. “Which means extra coverage tightening is in the end wanted to squeeze it out of the system, and making a recession in some unspecified time in the future sooner or later much more seemingly.”

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Blinken pressured to freeze Afghanistan aid after revelation nearly $300M could have gone to Taliban

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Blinken pressured to freeze Afghanistan aid after revelation nearly 0M could have gone to Taliban

FIRST ON FOX: Secretary of State Antony Blinken is being called on to freeze aid to Afghanistan following revelations that the assistance could be going to the Taliban. 

A recent report from the Special Inspector General for Afghanistan Reconstruction (SIGAR), a government entity conducting oversight of U.S. aid to the country, determined that two of five bureaus within the Department of State (DOS) couldn’t prove their compliance with counterterrorism vetting.

“Collectively, State could not demonstrate their compliance with its partner vetting requirements on awards that disbursed at least $293 million in Afghanistan,” the report stated. 

Sen. Mike Braun called for a freeze on Afghan aid after it was revealed Taliban could be receiving money. (Getty Images)

Sen. Mike Braun, R-Ind., said the reported oversight was “deeply alarming” in a letter to Blinken and urged him to stop Afghanistan aid until the issue is addressed. 

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The failure of the DOS to fully comply with counterterrorism vetting standards “has strengthened and enriched the Taliban and its terrorist affiliates,” he said. “Further, when funds that are intended for humanitarian and development purposes end up supporting groups that perpetuate violence and instability, U.S. national security interests in the region are significantly undermined.”

“It is imperative that State take immediate remedial and comprehensive action to rectify these issues to prevent similar occurrences in the future,” wrote Braun. 

‘NEVER HEARD OF HIM’: HARRIS VP PICK WALZ HAS LITTLE NOTORIETY AMONG TRUMP-VANCE VOTERS IN PA

Taliban soldier rides in U.S. military vehicle left behind during Afghanistan withdraw

Taliban holds a military parade with equipment captured from U.S. army in Kandahar, Afghanistan on November 8, 2021.  (Photo by Murteza Khaliqi/Anadolu Agency via Getty Images)

Further, SIGAR found that $10.9 million in U.S. taxpayer money was paid to the Taliban-controlled government by 38 of the U.S.’s 65 implementing partners. However, the report said the amount was “likely only a fraction of the total amount of U.S. assistance funds provided to the Taliban in taxes, fees, duties, and utilities because UN agencies receiving U.S. funds did not collect data or provide relevant information about their subawardees’ payments.”

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In his letter, Braun questioned Blinken over what measures were “being taken against those individuals responsible for the failure to comply with vetting requirements and documentation retention” and asked for a description of what improvements would be made to its “documentation and record-keeping practices to avoid lapses.” 

TRUMP-ENDORSED MIKE ROGERS WINS REPUBLICAN SENATE PRIMARY IN MICHIGAN

Biden Blinken

Sen. Mike Braun, R-Ind., said the oversight was ‘deeply alarming’ in a letter to Blinken, pictured  right, and urged him to stop Afghanistan aid until the issue is addressed.  (Photo by Andrew Harnik/Getty Images)

The U.S. has been the largest international contributor of support to Afghans after their government collapsed, allowing the Taliban to take power following the disastrous withdrawal of American troops in August 2021 under President Biden. 

According to SIGAR, more than $2.8 billion has been provided by the U.S. in both humanitarian and development aid to the country since the withdrawal.

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DOS did not provide comment to Fox News Digital in time for publication. 

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Opinion: Republicans' 'Tampon Tim' joke about Walz is already backfiring

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Opinion: Republicans' 'Tampon Tim' joke about Walz is already backfiring

Before Tuesday, vice presidential contender Tim Walz was hardly a household name. Now that the Minnesota governor has been the subject of round-the-clock news interviews and viral videos, he has also picked up a new nickname. Enter “Tampon Tim,” conservatives’ response to the 2024 state law Walz signed that requires public schools to provide menstrual products in student bathrooms.

It hardly feels like much of a “gotcha” moniker, though. Periods have been a mainstream public policy priority for the better part of the last decade. And California has been at the forefront. Since 2017, the Legislature has passed a series of laws — including ones that eliminate the state sales tax on menstrual products; mandate the provision of menstrual products in all public school restrooms for students in grades 6-12, as well as at California state universities; and require county jails and state prisons to provide free access to tampons and pads to people who are incarcerated.

California has also proposed legislation to improve public health disclosure requirements around the ingredients in menstrual products — an especially timely effort in light of recent headlines: A study last month out of UC Berkeley shows that toxic chemicals including lead and arsenic were found in several name-brand tampons.

While California is a leader, it is hardly an outlier. It is one of 30 states that have scrapped the “tampon tax” in the past eight years; the latest to join the roster is Texas, with a signature from Republican Gov. Greg Abbott on a bill that garnered notable bipartisan support. Across the country, 28 states also mandate the provision of menstrual products in public schools; another 25 states require the same in their jails and prisons.

In an era of often intractable political polarization, menstrual policy has proven something of a unicorn. Hardly the butt of jokes, “menstrual equity” is a bipartisan agenda on which the two major parties have found common ground — and agree that ameliorating the economic burden and easing the stigma of menstruation is plain common sense.

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So why the Tampon Tim uproar? Mostly it is about the language of the Minnesota law, which states that pads and tampons must be available to “all menstruating students” and “in restrooms regularly used by students in grades 4 to 12,” rather than qualifying that only “female restrooms” stock the products. Though an amendment to alter the wording failed, it did not set off a culture war, nor did it stymie support for the bill. One Republican lawmaker, Dean Urdahl, remarked, “Just talking with my wife and family members, they felt like it was an important issue I should support.”

Making menstruation into an internet meme seems destined to backfire now too. To begin with, who but silly preteens does that? As Walz would say, it is just plain weird.

Second, recent elections and polling show that reproductive health and rights are wildly popular to voters. As a presidential candidate, Kamala Harris is a strong, steady voice — including on an array of adjacent issues like menstrual literacy and the need for data protection regarding period tracking apps. (I joined a White House discussion with her on those topics after the Supreme Court decision that reversed Roe vs. Wade.)

Republicans know their positions on reproductive rights are out of step with popular opinion — so much so that they barely whispered it at their national convention last month. They have more substantive damage control to do for their own vice presidential candidate. JD Vance’s controversial commentary about “childless cat ladies” and assisted fertility might just be bested by his own congressional voting record — which includes … wait for it … enabling menstrual cycle surveillance by state law enforcement agencies. And lest we forget Trump’s own crude remarks on the matter: On Aug. 8, 2015, he accused newscaster Megyn Kelly of having “blood coming out of her wherever.”

Gone are the days when periods were a punchline. In 2024, they may well prove to be the most powerful political rallying cry. Former presidential candidate Hillary Clinton posted this week that it was “nice of the Trump camp to help publicize Gov. Tim Walz’s compassionate and common-sense policy.”

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She added, “Let’s do this everywhere.” Hear, hear.

Jennifer Weiss-Wolf, executive director of the Birnbaum Women’s Leadership Center at New York University School of Law, is the author of “Periods Gone Public: Taking a Stand for Menstrual Equity” and the forthcoming “Period. Full Stop. The Politics of Menopause.”

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With 30 days until voting starts, 'election season' kicks off sooner than you think

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With 30 days until voting starts, 'election season' kicks off sooner than you think

There are 90 days until Election Day on Tuesday, Nov. 5.

But if Americans vote like they did in the last two election cycles, most of them will have already cast a ballot before the big day.

Early voting starts as early as Sept. 6 for eligible voters, with seven battleground states sending out ballots to at least some voters the same month.

It makes the next few months less a countdown to Election Day, and more the beginning of “election season.”

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Former President Trump and Vice President Kamala Harris (Getty Images)

States have long allowed at least some Americans to vote early, like members of the military or people with illnesses. 

In some states, almost every voter casts a ballot by mail.

Many states expanded eligibility in 2020, when the COVID-19 pandemic made it riskier to vote in-person.

That year, the Fox News Voter Analysis found that 71% of voters cast their ballots before Election Day, with 30% voting early in-person and 41% voting by mail.

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Early voting remained popular in the midterms, with 57% of voters casting a ballot before Election Day.

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Voters casting their ballots.

A voter fills out a ballot in Lake Orion, Michigan. (Nic Antaya/Bloomberg via Getty Images)

Elections officials stress that voting early is safe and secure. Recounts, investigations and lawsuits filed after the 2020 election did not reveal evidence of widespread fraud or corruption. 

The difference between “early in-person” and “mail” or “absentee” voting.

There are a few ways to vote before Election Day.

The first is early in-person voting, where a voter casts a regular ballot in-person at a voting center before Election Day.

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The second is voting by mail, where the process and eligibility varies by state.

Eight states vote mostly by mail, including California, Colorado, Nevada and Utah. Registered voters receive ballots and send them back.

Most states allow any registered voter to request a mail ballot and send it back. This is also called mail voting, or sometimes absentee voting. Depending on the state, voters can return their ballot by mail, at a drop box, and/or at an office or facility that accepts mail ballots.

In 14 states, voters must have an excuse to vote by mail, ranging from illness, age, work hours or if a voter is out of their home county on lection day.

States process and tabulate ballots at different times. Some states don’t begin counting ballots until election night, which delays the release of results.

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Voting begins on Sept. 6 in North Carolina, with seven more battleground states starting that month

This list of early voting dates is for guidance only. For comprehensive and up-to-date information on voter eligibility, processes, and deadlines, go to Vote.gov and your state’s elections website.

The first voters to be sent absentee ballots will be in North Carolina, which begins mailing out ballots for eligible voters on Sept. 6.

Seven more battleground states open up early voting the same month, including Pennsylvania, Georgia, Wisconsin, Michigan and Nevada.

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Michigan citizens voting early.

Early voters cast their ballots in Ferndale, Michigan. (Nic Antaya/Bloomberg via Getty Images)

September deadlines

In-person early voting in bold.

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Sept. 6

  • North Carolina – Absentee ballots sent to voters

Sept. 16

  • Pennsylvania – Mail-in ballots sent to voters

Sept. 17

  • Georgia – Absentee ballots sent to military & overseas

Sept. 19

  • Wisconsin – Absentee ballots sent

Sept. 20

  • Arkansas, Montana, Nebraska, North Dakota, Ohio, Utah, Wyoming – Absentee ballots sent to military & overseas
  • Minnesota, South Dakota – In-person absentee voting begins
  • Virginia – In-person early voting begins
  • Indiana, Kentucky, West Virginia – Absentee ballots sent

Sept. 21

  • Alabama, Alaska, Colorado, Connecticut, Florida, Kansas, Massachusetts, Maryland, Michigan, New Hampshire, New York, Oregon, South Carolina, Washington – Absentee ballots sent to military & overseas
  • Indiana, New Mexico – Absentee ballots sent
  • Maryland, New Jersey – Mail-in ballots sent

Sept. 23

  • Mississippi – In-person absentee voting begins & absentee ballots sent
  • Oregon, Vermont – Absentee ballots sent

Sept. 26

  • Illinois – In-person early voting begins 
  • Michigan – Absentee ballots sent
  • Florida, Nevada – Mail-in ballots sent
  • North Dakota – Absentee & mail-in ballots sent

Sept. 30

  • Nebraska – Mail-in ballots sent

October deadlines

Oct. 4

  • Connecticut – Absentee ballots sent

Oct. 6

  • Michigan – In-person early voting begins 
  • Maine – In-person absentee voting begins & mail ballots sent
  • California – In-person absentee voting begins & mail ballots sent
  • Montana – In-person absentee voting begins
  • Nebraska – In-person early voting begins 
  • Georgia – Absentee ballots sent
  • Massachusetts – Mail-in ballots sent

Oct. 8

  • California – Ballot drop-offs open
  • New Mexico, Ohio – In-person absentee voting begins
  • Indiana – In-person early voting begins
  • Wyoming – In-person absentee voting begins & absentee ballots sent

Oct. 9

  • Arizona – In-person early voting begins & mail ballots sent

Oct. 11

  • Colorado – Mail-in ballots sent
  • Arkansas, Alaska – Absentee ballots sent

Oct. 15

  • Georgia – In-person early voting begins
  • Utah – Mail-in ballots sent

Oct. 16

  • Rhode Island, Kansas, Tennessee – In-person early voting begins
  • Iowa – In-person absentee voting begins
  • Oregon, Nevada – Mail-in ballots sent

Oct. 17

  • North Carolina – In-person early voting begins 

Oct. 18

  • Washington, Louisiana – In-person early voting begins
  • Hawaii – Mail-in ballots sent

Oct. 19

  • Nevada, Massachusetts – In-person early voting begins 
  • Alaska, Arkansas, Connecticut, Idaho, North Dakota, South Carolina, Texas – In-person early voting begins 
  • Colorado – Ballot drop-offs open

Oct. 22

  • Hawaii, Utah – In-person early voting begins 
  • Missouri, Wisconsin – In-person absentee voting begins

Oct. 23

  • West Virginia – In-person early voting begins

Oct. 24

  • Maryland – In-person early voting begins

Oct. 25

  • Delaware – In-person early voting begins

Oct. 26

  • Michigan, Florida, New Jersey, New York – In-person early voting begins 

Oct. 30

  • Oklahoma – In-person early voting begins 

Oct. 31

  • Kentucky – In-person absentee voting begins

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