Regional Fed Bank Presidents Stress Fight Against Inflation; U.S. to Report December Job Market Data By James Christie
Good day. The Federal Reserve's short-term benchmark rate should rise to a level this year that it slows the U.S. economy as the central bank tries to cool inflation, St. Louis Fed President James Bullard said Thursday. Meanwhile, Atlanta Fed President Raphael Bostic said that, "I appreciate recent reports that include signs of moderating price pressures, but there is still much work to do," and Kansas City Fed President Esther George said she raised her forecast for the fed-funds rate to above 5%. Their comments follow an essay by Minneapolis Fed President Neel Kashkari published online Wednesday in which he said he expects the Fed to pause rate rises after reaching a peak rate of 5.4%. Today, the U.S. Labor Department releases December's jobs report. Economists surveyed by The Wall Street Journal estimate the economy added 200,000 jobs last month, compared with an increase of 263,000 in November.
Now on to today's news and analysis.
Top News Fed Official Sees Progress on Inflation, Says More Rate Rises Needed
The Federal Reserve's short-term benchmark rate isn't yet at a level high enough to sufficiently slow the U.S. economy to combat high inflation, but it should get there this year , a central bank official said Thursday.
"We are getting closer," said St. Louis Fed President James Bullard during a talk to business leaders in St. Louis. "What we're looking at is a combination of factors that are making it more likely that 2023 will be a disinflationary year."
Fed Still Has Much Work to Do in Inflation Fight, Bostic Says
Inflation is the biggest headwind to the U.S. economy, and Federal Reserve officials remain determined to push it down to their 2% target, Federal Reserve Bank of Atlanta President Raphael Bostic said.
Fed's George Sees Rates Above 5% for Some Time
Federal Reserve Bank of Kansas City President Esther George on Thursday said she has raised her forecast for the fed-funds rate to above 5% and expects it to stay there for some time as the Fed continues its fight against inflation. In an interview with CNBC, Ms. George, who is set to retire by the end of the month, said she wasn't forecasting a recession, but warned the Fed's efforts to bring down demand don't leave a lot of room for error. (MarketWatch)
U.S. Economy Jobs Report to Show Labor Market's Strength as 2022 Closed
Today's jobs report will offer an insight into the state of the U.S. labor market as 2023 gets under way. Hiring was resilient in 2022 despite a slowing economy and the Federal Reserve's aggressive pace of interest rate increases aimed at bringing down inflation. However, recent data and a wave of tech and finance industry layoffs suggest the labor market may be starting to lose momentum and gains could reverse in the year ahead. The report is set to be released at 8:30 a.m. ET.
Unemployment Claims Fell During Holiday Week
Initial jobless claims, a proxy for layoffs, fell by 19,000 to a seasonally adjusted 204,000 last week, the Labor Department said Thursday, signaling continued historic tightness in the labor market.
Regulator Proposes Banning Noncompete Clauses for Workers
The FTC issued a plan to ban noncompete clauses to let workers take jobs with rival companies or start competing businesses, raising the prospect of legal opposition from companies that say the practice has a legitimate purpose.
U.S. Trade Deficit Narrowed Sharply as Global Demand Cooled
The U.S. trade deficit shrank in November at the steepest monthly rate in nearly 14 years, adding to signs of a global economic slowdown through the holiday season amid high inflation and climbing interest rates.
Key Developments Around the World Bank of Mexico Minutes Show Support for Slower Rate Increases
Mexican central bankers discussed taking a softer stance on raising rates as price pressures showed signs of easing, with one calling for an end to the tightening cycle at their next meeting, minutes of their Dec. 15 policy gathering show.
Finance Ministry Nominates Omar Mejía to Bank of Mexico Board
The Mexican Finance Ministry on Thursday nominated economist Omar Mejía Castelazo as the deputy governor of the Bank of Mexico, replacing Gerardo Esquivel, whose term ended Dec. 31.
Warmer Weather Helps Ease Europe's War-Driven Inflation Surge
Lower energy costs as Europe enjoys a mild start to winter have helped slow the eurozone's annual rate of inflation to single digits, but consumer prices are still rising too quickly for policy makers at the European Central Bank.
Sliding Natural-Gas Prices Deal Surprise Reprieve to Europe
Inflation Threatens a French Institution: Baguettes
President Emmanuel Macron pledged to bakers and pastry chefs the French government would deliver more aid as they face rising costs for ingredients and energy that have led some bakers to say they can't afford to run their ovens.
Chinese Firm Signs $540 Million Oil-and-Gas Deal in Afghanistan
In the biggest deal struck since the Taliban's takeover in 2021, Xinjiang Central Asia Petroleum and Gas Co. Ltd. said it would develop an oil-and-gas field in the Amu Darya basin in northern Afghanistan.
Financial Regulation Roundup Crypto Lender Genesis Considers Bankruptcy, Lays Off 30% of Staff
Massive crypto lender Genesis Global Trading Inc. laid off 30% of its staff and is considering filing for bankruptcy, according to people familiar with the matter, the latest sign of financial turmoil at the crypto lender.
Celsius Co-Founder Sued by New York Attorney General
New York Attorney General Letitia James filed a civil lawsuit Thursday against Alex Mashinsky , alleging the co-founder of bankrupt crypto lender Celsius Network LLC defrauded investors out of billions of dollars of digital currency.
Good News on Taxes Came Too Late for Many SPACs
A rare bit of good news came too late for battered SPACs that were liquidating at a record pace last month: The Treasury Department and IRS said SPAC liquidations wouldn't be taxed under a new federal buyback levy .
Forward Guidance Friday (all times ET)
8:30 a.m.: U.S. December jobs report
10 a.m.: ISM report on business services PMI for December
11:15 a.m.: Atlanta Fed's Bostic speaks on panel at American Economic Association meeting in New Orleans; Fed's Cook speaks on panel on inflation at American Economic Association meeting in New Orleans
12:15 p.m.: Richmond Fed's Barkin speaks at economic forecast forum in Durham, N.C.
3:30 p.m.: Atlanta Fed's Bostic speaks on panel at American Economic Association meeting in New Orleans
Monday
5 a.m.: EU unemployment rate for November
10 a.m.: The Conference Board Employment Trends Index for December
12:30 p.m.: Atlanta Fed's Bostics speaks on economic and monetary policy to Atlanta Rotary; San Francisco Fed's Daly discusses economic outlook in virtual WSJ Live Q&A event
3 p.m.: U.S. consumer credit for November
Research Small Businesses in U.S. Still Look to Add Jobs
The number of U.S. small-business owners planning to add positions remains elevated, the National Federation of Independent Business says. At the same time, compensation rose in December as owners sought to attract and retain workers, NFIB says. According to NFIB, 55% of owners reported hiring or trying to hire in December and 41%, seasonally adjusted, of all owners reported job openings they couldn't fill last month. NFIB Chief Economist Bill Dunkelberg says small-business owners "remain frustrated with the current labor situation," adding that "the trend in planned hiring eased slightly as labor quality and labor cost are two top issues for owners."
-Stephen Nakrosis
Commentary Greener, More Secure Supply Chains Won't Come Cheap
"Green protectionism" and an accelerated effort by multinationals to diversify away from China promise substantial long-term benefits, but will probably entail significant costs for companies and consumers, Nathaniel Taplin writes.
What If Inflation Suddenly Dropped and No One Noticed?
It defies credulity to think that interest-rate hikes that started only in March could have cut inflation appreciably by July, Alan S. Blinder writes, adding that there is an argument that monetary policy works faster now than it used to-but not that fast.
Mr. Blinder, a professor of economics and public affairs at Princeton, served as vice chairman of the Federal Reserve, 1994-96. He is the author, most recently, of "A Monetary and Fiscal History of the United States, 1961-2021" (Princeton University Press).
Basis Points U.S. private-sector employment rose by 235,000 in December, payroll processor ADP said, a sign many companies are still hiring and the labor market remains strong. Economists polled by The Wall Street Journal had forecast a gain of 153,000 private sector jobs. (Dow Jones Newswires) A slowdown in U.S. heavy-duty truck orders deepened at the end of 2022, according to research group FTR, which reports net orders for new Class 8 rigs in North America reached 28,300 units in December, down 21% from November and nearly half the number of trucks ordered in September. (DJN) Canada posted a goods-trade deficit of 41 million Canadian dollars in November, the equivalent of about $30.4 million, Statistics Canada said Thursday. October's surplus was revised down sharply to C$130 million from C$1.21 billion reported last month. Exports dropped 2.3% to C$64.37 billion in December, while imports fell 2.1% to C$64.41 billion, the data agency said. (DJN) Brazil's industrial production was slightly lower in November compared with October after output of durable consumer goods declined. Production fell a seasonally adjusted 0.1% in November and rose 0.9% from a year earlier, the Brazilian Institute of Geography and Statistics, or IBGE, said Thursday. In October, production rose 0.3% in the month and climbed 1.7% from a year earlier. (DJN) Economic sentiment in the eurozone improved in December for a second consecutive month, helped by rising consumer and
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01-06-23 0715ET
