CPD IN THE NEWS

The Federal Reserve offered a slightly more upbeat assessment of the economy but provided little insight into when it will raise its benchmark interest rate for the first time in nearly a decade.

Fed officials voted unanimously to keep the target rate at zero for now, after wrapping up their regular two-day policy-setting meeting in Washington on Wednesday afternoon. In a carefully worded statement, the central bank noted that the economy has expanded “moderately.” It pointed to solid job gains and lower unemployment as signs that the labor market has improved, adding that underemployment has also diminished.

Perhaps most important, the Fed characterized the risks to its outlook for the economy as “nearly balanced” — the same description it used after its previous meeting. Some analysts believe that the Fed will move once the risks are weighted more evenly.

U.S. stock markets spiked after the release of the Fed statement but quickly settled back down. Both the blue-chip Dow Jones Industrial Average and the broader Standard & Poor's 500 average were up about half a percentage point in mid-afternoon trading.

Fed Chair Janet Yellen has said several times that she expects the central bank will raise its benchmark federal funds rate before the end of the year, a move that would herald the end of the central bank’s unconventional — and controversial — efforts to resuscitate the American economy.

Many investors and economists believe the moment will come during the Fed’s meeting in September, which would be followed by a news conference allowing Yellen to explain the central bank’s decision more fully. But a vocal minority think the Fed will wait to move in December, the next meeting with a scheduled news conference. A few economists — including two officials within the central bank — believe the Fed should hold off until 2016 to be sure the recovery is solid.

Fed officials have debated how strong of a signal to send as the moment of liftoff nears. But the central bank has repeatedly emphasized that its decision will depend on the evolution of economic data — and so investors should look to the numbers for the green light for action.

A key figure will be the government’s estimate of second quarter economic growth slated for release Thursday. Falling oil prices, a strong dollar and a sharp slowdown in the growth of consumer spending helped drive an unexpected contraction in the economy over the winter. Fed officials are hoping that second quarter GDP growth will prove the dip was merely temporary.

A stronger reading would also align with the pickup in hiring over the past two months. Unemployment is nearing its lowest sustainable level, making some officials antsy for the Fed to start tapping the brakes on the economy.

But others have argued that exceptionally low inflation means the Fed has plenty of time to act. Price growth remains well below the central bank’s 2 percent target, and officials have said they want to be “reasonably confident” it is moving up before tightening policy. In June, the central bank had stated that energy prices “appear to have stabilized.” But on Wednesday, it cited further declines in energy prices, along with the falling price of imports, as reasons inflation has remained low.

The Fed slashed its target interest rate to zero when the country was in the grips of the financial crisis in 2008, and it has stayed there ever since. In addition, it pumped trillions of dollars into the economy in an effort to lower longer-term rates and spur borrowing among consumers and investment among businesses. Unwinding those policies will likely take years.

Meanwhile, the Fed is facing renewed scrutiny in Congress. The House Financial Services committee on Wednesday passed a bill that would require the central bank to explain when it deviates from certain monetary policy models, disclose more information on salaries and allow for audits of the Fed's decision-making process. Another bill sponsored by Texas Republican Rep. Kevin Brady would create a commission to examine the Fed, which recently celebrated its centennial.

“The Fed is trying to do too much,” Brady said in an interview. “It can be the right tool, but not for everything and everybody.”

The central bank is also facing pressure from the other end of the political spectrum. A coalition of community activists and labor groups is urging the Fed to leave its target rate unchanged amid elevated unemployment rates among minorities.

“Until we reach genuine full employment, there is no reason for the Fed to contemplate putting people out of work and slowing down our economy via interest rate hikes,” the Fed Up campaign said in a statement.

Source: The Washington Post

Looking ahead, MMT advocates hope to grow their movement through grassroots organizing. One example they pointed to was Fed Up, a national campaign launched in 2015, whereby low-income workers and union members pressured the Federal Reserve to not hike interest rates, a rare instance of popular pressure being applied to monetary policy. Fed Up made the case that there was no inflation pressure forcing them to raise rates and that doing so would suppress their already low wages.

Read the full article here.

Oh, what a difference a year can make.

Last July, Federal Reserve chairwoman Janet Yellen endured criticism for House testimony in which she seemed to imply that there was little the Fed could do to address the disproportionately high African-American unemployment rate.

Not so on Tuesday. In her semi-annual testimony to the Senate Banking Committee, Yellen emphasized that the failure of the economic recovery to reach communities of color influences the Fed’s decision-making, and made a strong commitment to improving diversity at the central bank.

“Jobless rates have declined for all major demographic groups, including for African Americans and Hispanics,” Yellen said, according to her prepared remarks. “Despite these declines, however, it is troubling that unemployment rates for these minority groups remain higher than for the nation overall, and that the annual income of the median African-American household is still well below the median income of other U.S. households.”

Yellen’s policy argument has not fundamentally changed. It is the Fed’s job to maximize employment in the economy as the whole, she says, and it lacks the tools to target particular communities. And the Fed chief has clarified since last summer that she takes seriously how the Fed’s adjustment of interest rates can have an especially big impact on African Americans and Latinos, who have higher jobless rates.

But Yellen’s remarks and actions on Tuesday represent the Fed’s greatest demonstration yet that it is putting the concerns of communities of color front and center on its agenda.

The Fed Up campaign, a coalition of progressive groups that has led the push to make the Federal Reserve more responsive to workers in general, and communities of color in particular, was pleased with the focus of Yellen’s testimony.

“Each time since Yellen spoke last July, when she got pushback over what she said, she has gotten a little bit better,” said Jordan Haedtler, Fed Up’s campaign manager. “Now she is proactively showing that the Fed is assessing this data and does take this data into account.”

Diversity is an extremely important goal and I will do everything I can to further advance it.

This week’s hearings, held every six months in both chambers of Congress — the House will hold its hearing on Wednesday — are an opportunity for the Fed chair to update lawmakers about the overall state of the economy. As part of the briefing, the Fed releases an accompanying monetary policy report summarizing its economic assessment and research.

For the first time, the Fed chose to devote a section of its report to whether the “gains of the economic expansion [have] been widely shared.” That section focused on how the recovery affected different races and ethnicities differently.

The results are discouraging. Despite years of job growth, the rates of full-time work for African Americans and Latinos are a few percentage points lower than they were before the recession, while the rates among white and Asian-American workers have more or less reached pre-recession levels. And the median income of black households, which took the biggest hit of any group during the recession, has also been slower to recover, reaching only 88 percent of what it was in 2007, compared with about 94 percent for the other three groups.

Responding to a question about the new section from Sen. Sherrod Brown (D-Ohio), Yellen insisted that weighing the disparate impact of economic growth on a range of different groups is a key part of the Fed’s mission.

“There are very significant differences in success in the labor market across demographic groups,” she said. “It is important for us to be aware of those differences and to focus on them as we think about monetary policy and the broader work that the Federal Reserve does in the area of community development and trying to make sure that financial services are widely available to those that need it, including low- and moderate-income [households].”

Yellen also recognized the importance of diversity — of race, gender, professional background and ideology — within the Fed’s ranks in ensuring the bank remains sensitive to a broad array of Americans’ economic experiences.

She touted her creation of a task force in the Fed to improve its gender and ethnic diversity, but acknowledged there is more to be done.

“Diversity is an extremely important goal and I will do everything I can to further advance it,” Yellen said.

Progressive groups and their allies in Congress trying to make the Fed more accountable to the public have focused on increasing diversity and reducing Wall Street’s influence at the central bank. Eleven senators, including Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.), and 116 House members sent a letter to Yellen on May 12 urging her to prioritize the diversity of Fed officials, especially at the 12 regional Fed banks, which are privately owned. (Hillary Clinton expressed similar sentiments in a statement later that day.)

The makeup of the regional Fed bank boards is important because they are dominated by the big banks and have free reign to appoint their presidents. The regional Fed bank presidents hold five seats on the Federal Open Market Committee, the central bank panel that adjusts the benchmark interest rate. Currently, regional Fed presidents make up half of the FOMC’s influential votes.

As a result, the Fed officials with the power to raise interest rates and effectively increase unemployment are selected by people who are disproportionately white, male and from the finance and business sectors.

In the interests of changing that, the Fed Up campaign on Monday released a slate of 39 candidates for the regional Federal Reserve bank boards of directors. The candidates not only reflect racial and gender diversity, but also come exclusively from academic institutions, community groups and labor organizations.

“On racial and gender diversity there has been modest progress, though it has not taken place at the rate we would like to see,” Haedtler said. Haedtler added that there is even greater room for improvement when it comes to the diversity of professional backgrounds of board members and other top Fed officials, an area where he said there has been “regression” under Yellen’s watch.

By Daniel Marans

Source

The Express-Times - March 11. 2015, by Precious Petty - Pennsylvanians on Wednesday rallied in cites across the commonwealth and urged state legislators to put people first.

A dozen Lehigh Valley residents gathered outside Sen. Pat Browne's West Hamilton Street office in Allentown. They chanted "Listen up, Pat Browne" and displayed signs printed with the message "We rise," sometimes drawing shouts or honks of support from passersby.

Keystone Progress organizer Nicole Matos led demonstrators as they called for an education funding boost, a higher minimum wage, equal pay for women and increased Medicaid spending. Similar rallies occurred all morning and afternoon in Jim Thorpe, Pittsburgh, York and five other Pennsylvania cities, she said.

Matos, of Stroudsburg, said too many of the state's elected officials are making decisions that advance corporate interests while exacerbating inequality, hurting low-income and minority families, damaging the environment and weakening the nation's democracy.

National Day of Action rally on March 11, 2015 A National Day of Action rally was held March 11, 2015, outside Sen. Pat Browne’s office in Allentown.

Allentown School Board member CeCe Gerlach said more than 1,300 students have dropped out of city schools over the last three years and inadequate education funding is contributing to the problem.

"They've dropped out, partly, because our class sizes have increased. They've dropped out because we don't have enough textbooks all the time. They've dropped out because the teachers aren't able to pay each student the amount of individual attention that they require," said Gerlach, who was among the demonstrators.

"They've dropped out because many of them need jobs because their families, who are working at minimum wage, can't afford to pay their rent."

She said Browne has gone to bat for Allentown schools before and she's hopeful he'll step to the plate again this budget season.

"He's come through for the Allentown School District in the past," Gerlach said. "I'm hopeful he'll come through for the Allentown School District now."

Keystone Progress in a news release said the organization staged rallies outside the offices of legislators whose recent actions undercut public education. Browne, along with other Republican Senate leaders, sent school superintendents a letter advising them not to count on getting the education funding that's part of Gov. Tom Wolf's budget proposal.

A staffer at Browne's office declined comment about the rally, which was timed to fall on the National Day of Action.

Keystone Progress joined with National People's Action, Center for Popular Democracy and USAction to mark the day and send the message that it's time for legislators to put people and the planet first, the release says. People in 23 states participated in rallies and other events.

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