Campaign News

The Federal Reserve announced on Wednesday that it will keep its benchmark interest rate at current levels in response to lackluster job creation in recent months and other discouraging economic data.

The decision will shield American consumers from higher borrowing costs, but it also reflects the fragility and unpredictability of the current economic recovery, some seven years after the Great Recession officially ended.

The central bank’s Federal Open Market Committee is keeping the influential target federal funds rate — the Fed-set interest rate banks charge one another for overnight lending — at a range of 0.25 to 0.5 percent. Since the rate is a benchmark for lending throughout the economy, leaving it unchanged will likely prevent higher interest rates on mortgages, car loans and other household debts.

The Fed has a dual mandate to craft monetary policy that both maximizes employment and keeps inflation in check. The FOMC lowers the federal funds rate to accelerate job growth by reducing borrowing costs. It raises the rate to limit price inflation by slowing the pace of job growth.

The FOMC’s decision not to do the latter in June was widely expected. Fed officials signaled earlier this month that disappointing job creation had undermined the case for a rate hike. The economy created just 38,000 jobs in May, and new data show that the preceding two months produced fewer jobs than previously believed, according to the Bureau of Labor Statistics.

The central bank is also responding to tepid inflation. The price of consumer goods, excluding food and energy, rose 1.6 percent in the 12 months ending in April, according to the price index favored by the Fed — well below the Fed’s 2-percent target. And a University of Michigan survey revealed on Friday that U.S. households’ expectations of long-term inflation are lower than they have been at any point since the survey began collecting data in 1979.

In a press conference following the announcement, Federal Reserve Chairwoman Janet Yellen acknowledged the role that those developments played in the central bank’s decision, noting that “recent economic indicators have been mixed.”

Yellen also said that the prospect of a “Brexit,” or British exit from the European Union, was “one of the factors” that led the central bank to hold off on an interest rate hike. The United Kingdom will vote on the country’s membership in the EU on June 23.

If the U.K. chooses to leave the EU, which functions as a single market, it could ultimately have adverse effects on the U.S. economic outlook, Yellen suggested. A higher percentage of British voters supported Brexit than opposed it in a poll released on Monday.

The Fed last raised the federal funds rate by one-quarter of a percentage point in December, the first increase since the financial crisis. The rate had been at or near zero — 0 to 0.25 percent — since December 2008.

With the December interest rate increase, the Fed seemed to express confidence that the economic recovery had entered a new phase, indicating it was time to pivot to the work of preventing inflation. Yellen predicted that the move would be the first in a series of small interest rate hikes that would gradually raise rates to levels that are more historically normal.

Since then, however, disappointing economic data have repeatedly delayed the pace of those increases. Slower global demand reduced the availability of credit, and wage growth remained sluggish, prompting the Fed not to raise the federal funds rate in March.

Fed officials suggested in May that economic conditions would finally permit them to raise the rate again in June. But the May job creation data, released on June 3, rapidly dashed those plans.

The central bank’s next opportunity to announce a rate hike will be July 27, after a meeting of the FOMC.

Wednesday’s announcement will come as welcome news to many progressive economists and activists who have long argued that the job market has much more room to grow before inflation becomes a serious problem.

While the official unemployment rate is 4.7 percent, much of its recent decline is due to people dropping out of the workforce altogether. The labor force participation rate, which measures the percentage of people actively seeking work in addition to those who are working, is significantly lower than it was in 2000.

In fact, when you exclude workers 55 or older who may have retired voluntarily, labor force participation is lower now than it was at its worst point during the past two business cycles, according to an analysis by the Economic Policy Institute.

A job market where people continue to give up on finding work is part of the reason wage growth has failed to meet expectations, since employers still have little reason to compete for workers, progressive economists argue. Average hourly pay rose 2.5 percent in the 12-month period ending in May, not enough for a significant boost in most Americans’ paychecks.

The Fed Up campaign, a coalition of progressive groups that advocates for Fed policy that is favorable to workers and communities of color, cites figures like those when pleading with the Fed to hold off on raising rates. Fed Up has called on the Fed not to raise the benchmark interest rate until “the economic recovery reaches all communities,” said Jordan Haedtler, Fed Up campaign manager.

Progressives were overjoyed when presumptive Democratic presidential nominee Hillary Clinton expressed her sympathy with these concerns last month. The campaign said in a statement that as president, Clinton would appoint Fed officials who take seriously the central bank’s mandate to maximize employment, in addition to its duty to tamp down inflation.

Clinton stands to benefit politically from Wednesday’s announcement, since voters typically judge the candidate of the incumbent party for the economy’s performance. A rate increase would have squeezed economic demand, risking even slower job growth in the months ahead of the general election.

Donald Trump, the presumptive Republican presidential nominee, has expressed a wide variety of views about the Fed. He most recently suggested that he supports low interest rates, but that he plans to replace Yellen as Fed chair.

Yellen said Wednesday that the central bank will act based on economic data in the coming months, even if its actions are perceived as affecting the general election in November. “We are very focused on assessing the economic outlook and making changes that are appropriate without taking politics into account,” she said.

This piece has been updated with Yellen’s comments.

By Daniel Marans

Source

The Morning Call - April 6, 2013 - Whitehall Township resident Belkys Luvon doesn't expect all of America's undocumented immigrants to be granted U.S. citizenship overnight. That's not what she and other advocates of comprehensive reform of the country's immigration laws are lobbying for — or even what they'd want.

But Luvon, who said she came to the United States legally from the Dominican Republic 29 years ago, feels it only fair that undocumented immigrants be offered legal means of gaining citizenship.

Basically, what proponents call "a path to citizenship" should be for those who have lived here, abided by the law, worked hard, raised families and otherwise contributed to the well-being of countless communities, Luvon said.

She and other Lehigh Valley residents, as well as organizers from other areas, staged a public rally for immigration reform Saturday at Allentown's Cedar Creek Park. Only a few dozen people were on hand in the early going — the event got off to a late start — but support for the cause regionally, as well as nationally, is strong, according to Tony Perlstein of the Center for Popular Democracy inWashington, D.C., which supports reform.

In addition to the event in Allentown, "speak outs" for reform were scheduled in Norristown and other parts of Pennsylvania, and across the country, Perlstein said.

Luzon — who operates a consulting business helping immigrants attain citizenship, as well as with preparing income tax returns and starting businesses of their own — said she wants more people, regardless of status, to have the kind of opportunity granted to her.

"I consider myself lucky, thank God," she said, having followed her mother to America. "I believe it is fair, after living here and working hard" — and staying out of trouble with the law, she stressed — for people to have a path to citizenship as envisioned by PresidentBarack Obama, Luzon said.

Luzon objects to the term "illegal immigrants."

"No human being is illegal," she said.

Reform supporter Erika Sutherland, a Muhlenberg Collegeprofessor, said she hopes for a comprehensive package of reforms that streamlines existing programs for attaining citizenship and gives people a way to get on the path toward citizenship.

Among the goals, she said, is "an equitable comprehensive citizenship" for the estimated 11 million undocumented immigrants, the vast majority of whom are "people contributing to our community and [who] want nothing more than the ability to stay and work."

"We are a nation of immigrants," Sutherland concluded. "We can do better."

With a group of Republican and Democratic senators working on comprehensive reform, the Center for Popular Democracy expects tens of thousands of supporters at a demonstration Wednesday in Washington in favor of reform, Perlstein said.

 Source

Sen. Jeff Flake (R-Ariz.) boarded a plane leaving Washington, D.C. on Thursday, less than a week after voting for a tax bill that could result in devastating cuts to disability programs.

Ady Barkan, a 33-year-old father living with amyotrophic lateral sclerosis (ALS), boarded the same flight after spending several days protesting the very legislation Flake helped ram through the Senate.

Read the full article here.

A group of Minnesota lawmakers will focus on closing racial disparities in the state.

Sen. Jeff Hayden and Sen. Bobby Joe Champion will co-chair the new Subcommittee on Equity (which is part of the larger Finance Committee), according to a news release.

There are 15 lawmakers on the new subcommittee (nine DFLers, six Republicans) – you can see a full roster here. The subcommittee’s schedule will be posted here, though right now there are no meetings listed for the next two months.

The Senate DFL Caucus appointed the members, who will look to “address the complex and multifaceted challenges of racial and economic disparities,” according to a message from Senate Majority Leader Tom Bakk’s office.

Racial disparities in Minnesota

There are serious problems when it comes to racial disparities in the state.

Unemployment among the black community in Minnesota continued to rise last year despite the decreasing unemployment rates for Hispanic and white people, according to the Department of Employment and Economic Development.

State numbers released last fall showed the average income of Minnesota’s African-Americans is falling and is now less than half of what white residents are making, with more than one-third of black households living in poverty.

Minnesota has the third-highest unemployment gap between white and black people in the country – with the jobless rate among blacks almost 3.7 times higher than among whites, according to a study released last year by the Center for Popular Democracy.

Financial site WalletHub ranked Minnesota as the worst state in the U.S. when it comes to racial integration, saying it has some of the highest racial gaps when it comes to median annual income, homeownership, the poverty rate and more.

All this (and more) led lawmakers to consider addressing racial inequity in a possible special session – but during talks, Gov. Mark Dayton noted there was “significant disagreement” between lawmakers on how to address the problem. And then the special session didn’t happen anyway. So if something gets done, it could be in the current Legislative session.

Gov. Mark Dayton’s proposed budget includes $100 million to address racial disparities in the state, by expanding workforce programs, helping college completion and increasing home ownership among minorities, the Pioneer Press reported.

By Shaymus McLaughlin

Source