The Federal Reserve Leaves Key Interest Rate Unchanged Amid Slower Job Growth
The Federal Reserve Leaves Key Interest Rate Unchanged Amid Slower Job Growth
The Federal Reserve announced on Wednesday that it will keep its benchmark interest rate at current levels in response...
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
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“Shamelessness Is All The Rage”
Trump’s own lawyer compares him to a mob boss, McConnell helps open the door for Trump to fire Mueller, Beto O’Rourke...
Trump’s own lawyer compares him to a mob boss, McConnell helps open the door for Trump to fire Mueller, Beto O’Rourke closes in on Ted Cruz, and Mike Pompeo meets Kim Jong Un. Then activist Ady Barkan joins Jon and Dan to talk about the special election in Arizona and his new project, beaherofund.com.
Listen to the conversation here.
Queens activist Ana Maria Archila takes center stage in elevator showdown with Flake
Queens activist Ana Maria Archila takes center stage in elevator showdown with Flake
Message delivered, message received — Queens-style. Outerborough activist Ana Maria Archila, after angrily confronting...
Message delivered, message received — Queens-style.
Outerborough activist Ana Maria Archila, after angrily confronting Sen. Jeff Flake in a Capitol Hill elevator over his support of Supreme Court nominee Brett Kavanaugh, said the accounts of America’s abused women were no longer falling on deaf ears after the Arizona Republican delayed a vote on the judge’s candidacy for a week.
Read the full article and watch the video here.
Black Lives Matter Coalition Makes Demands as Campaign Heats Up
Black Lives Matter Coalition Makes Demands as Campaign Heats Up
More than 60 organizations associated with the Black Lives Matter movement have released a series of demands on Monday...
More than 60 organizations associated with the Black Lives Matter movement have released a series of demands on Monday, including for reparations.
The list of six platform demands is aimed at furthering their goals as the presidential campaign heads into the homestretch.
The release of the six demands comes a few days before the second anniversary of the shooting of Michael Brown in Ferguson, Mo., which set off months of protests and led to a national conversation about police killings of blacks.
As part of the effort, the groups are demanding, among other things, reparations for what they say are past and continuing harms to African-Americans, an end to the death penalty, legislation to acknowledge the effects of slavery, as well as investments in education initiatives, mental health services and jobs programs.
“We wanted to intervene in this current political moment where there is all this amazing and inspiring work that is resisting state violence and corporate power,” said M. Adams, co-executive director of Freedom Inc., a nonprofit group based in Madison, Wis., which focuses on violence within and against low-income communities of color.
The list comes right after the Republicans and Democrats held their respective national conventions, and as the general election fight is heating up, with the two nominees, Donald J. Trump and Hillary Clinton, now crisscrossing the nation campaigning. But the coalition will not be endorsing any presidential candidate.
Marbre Stahly-Butts, who is part of the leadership team of the Movement for Black Lives Policy Table, which worked on the demands, said: “On both sides of aisle, the candidates have really failed to address the demands and the concerns of our people. So this was less about this specific political moment and this election, and more about how do we actually start to plant and cultivate the seeds of transformation of this country that go beyond individual candidates.”
The groups worked on creating the demands for a year before making their demands known on Monday. They now plan to start local campaigns aimed at pushing for changes in law enforcement and community programs in cities across the country.
“We seek radical transformation, not reactionary reform,” Michaela Brown, communications director of Baltimore Bloc, another participating group, said in a statement. “As the 2016 election continues, this platform provides us with a way to intervene with an agenda that resists state and corporate power, an opportunity to implement policies that truly value the safety and humanity of black lives, and an overall means to hold elected leaders accountable.”
By YAMICHE ALCINDOR
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Amid Heightened Tension, Advocates Push Cuomo to Veto Police Discipline Bill
A day after a Staten Island grand jury declined to indict NYPD officer Daniel Pantaleo in the chokehold death of Eric...
A day after a Staten Island grand jury declined to indict NYPD officer Daniel Pantaleo in the chokehold death of Eric Garner, Gov. Andrew Cuomo and Assembly Speaker Sheldon Silver, two of most powerful men in the state, said they are interested in passing major criminal justice reforms during next year's legislative session.
There is no need to wait that long to take significant action, says a coalition of groups operating under the banner "This Stops Today" (after words spoken by Eric Garner shortly before his death), that includes Communities United For Police Reform, Center for Popular Democracy, Make the Road NY and the NYCLU, among others. The coalition and other advocates are calling on Cuomo to veto a bill passed in both houses of the Legislature that would allow the rules for police disciplinary action to be decided in collective bargaining with unions rather than by elected officials.
The bill, S7801/A9853, and Cuomo's veto of it, is a major platform item for those involved in action across New York City in response to the grand jury decision. For a second straight night on Thursday, protesters flooded streets, chanting, shutting down major roadways and staging 'die-ins.' The bill passed overwhelmingly in the Senate and Assembly. The only votes against in the Senate came from Sens. Liz Krueger and James Seward.
On Thursday, Gov. Cuomo told Susan Arbetter on The Capitol Pressroom that he wants to look at reforming police training and the grand jury system, and at instituting body cameras for police across the state. "I think long term this is something we have to look at this session," Cuomo said. "I think we need a comprehensive look."
Speaker Silver issued a statement saying he is committed to "working with Governor Cuomo, my colleagues in the Legislature, Mayor de Blasio and with law enforcement to improve the manner in which we police our streets and to restore the people's faith in our legal system."
Neither Cuomo nor Silver discussed the police conduct bill. The governor's office did not return a request for comment for this story.
New York City Council members including Brad Lander and Jumaane Williams have also called on Cuomo to veto the bill. "If signed into law, this bill would severely undermine the City's ability to hold police officers accountable for their actions," said the two in an August statement.
"The Council Member and many of his progressive colleagues are on record calling on the Governor to veto the bill. The need for strong civilian oversight of police discipline is more important now than ever," a representative from Lander's office told Gotham Gazette on Thursday.
The legislation has been pushed through the Legislature with the support of law enforcement unions only to be vetoed by Govs. David Paterson, Eliot Spitzer, George Pataki, and Mario Cuomo.
The Brooklyn NAACP is asking constituents to call and write to Cuomo to urge his veto. "This bill would strip local public officials of disciplinary authority over the police officers they employ, which would have a detrimental impact on the accountability of local police departments, and thus safety and public confidence in the police," reads the form letter offered by the group.
Cuomo did not veto any legislation before Election Day this year, but has used some controversial vetoes since.
The state's Court of Appeals ruled once in 2006 and once in 2012 that police discipline should be left in the hands of public officials and not determined during collective bargaining with unions.
"Police officers – who put themselves in harm's way for the sake of public safety – have the right to fair treatment and due process," reads the August statement from Lander and Williams, who co-authored the controversial NYPD-related Community Safety Act which passed in 2013 over a veto by then-Mayor Michael Bloomberg. "At the same time the authority to investigate police misconduct, and pursue discipline when appropriate, must be held by government officials who are accountable to the public. As we saw just last week in the police union press conference blaming Eric Garner for his own death, the unions' inclination is to protect their members at all costs."
Source: Gotham Gazette
Part-Time Workers Struggle With Full-Time Juggling Act
NPR - March 6, 2015, by Yuki Noguchi - The cold weather did not hamper hiring last month. Employers...
NPR - March 6, 2015, by Yuki Noguchi - The cold weather did not hamper hiring last month. Employers added nearly 300,000 jobs to payrolls, and the unemployment rate fell to 5.5 percent.
Despite another strong report, there is little evidence that all the hiring is putting upward pressures on wages.
And there are more than 6.5 million people working part time who would like to have more hours.
Randa Jama pushes airline passengers on wheelchairs to their gates at the Minneapolis-St. Paul International Airport. This had been a full-time job when she took it last fall, but then a couple of months later, that changed.
"They told me that you're working only Saturday and Sunday from now," she says.
That cut her hours to 12 a week. Sometimes, her supervisors ask her at the last minute to stay late or do an extra shift. Since she cut back on babysitters, she can't accommodate.
"I let them go because they can't just wait for me to get full time. Now that I want to work full time, no I can't because obviously I changed everything," Jama says.
Higher wages are just one issue workers like Jama care about. They say getting enough hours — and a predictable schedule — are equally important in order to enable them to find additional work or deal with the other obligations in their lives.
"Nowadays you have to say you have open availability and that you're free to work whenever," says Aditi Sen, a researcher for the Center for Popular Democracy, a worker advocacy group.
But pledging open availability limits a worker's ability to plan or get other work.
So far, the law has little to say when it comes to scheduling.
Some states, including Minnesota, Connecticut, Maryland and Massachusetts, are considering legislation that would require several weeks advance notice of schedule changes and institute minimum time off between shifts.
Shannon Henderson says she needs more control over her constantly shifting work schedule. The single mom of two says she asks for more than the 33 hours a week she typically gets working at the Wal-Mart in Sacramento, Calif. But that's also stressful.
"In order to get hours, you have to have open availability," she says. "For instance, last week I worked all late shifts, which was 2 to 11. And then this week I had all early shifts, which was 6:30 to 2."
Wal-Mart last month promised to raise its base wage and give workers more control over their schedules.
Henderson worries the store won't give her more control without cutting back on her hours. She looks for more steady work when she can.
"I do look. But the thing is, with the scheduling being all over the place, it makes it hard for me to actually set time to go look," she says.
Neil Trautwein, vice president of health care policy at the National Retail Federation, says, "Unquestionably those are some difficult hours."
Trautwein says retailers are balancing the consumer demand for 24/7 service, with employees' scheduling concerns. Wal-Mart, he says, is responding to workers' demands.
"That's the way the market self-adjusts and self-regulates," he says.
Jason Diaz, a server at a restaurant in New Haven, Conn., says in order to work 40 hours a week, he's constantly looking for extra gigs.
"Finding the place is the first problem," he says. "And then finding out how to manage that, and travel cost expenses and still being to my next job on time is pretty difficult."
He spends his remaining time trying to find a full-time job and taking care of his son.
"Just in the last two weeks, I got an email from my boss saying, 'Hey, you have to work on Tuesday, so figure out what you're going to do with your son,' " he says.
So Diaz canceled his son's drum lesson and found babysitting, only to discover his boss had made a mistake and he didn't have to work, after all.
Source
Why Aren’t Presidential Candidates Talking About the Federal Reserve?
Why Aren’t Presidential Candidates Talking About the Federal Reserve?
In an election fueled by populist anger and dominated by talk of economic insecurity, why aren’t any of the...
In an election fueled by populist anger and dominated by talk of economic insecurity, why aren’t any of the presidential candidates talking about the Federal Reserve?
After nearly a decade of high unemployment, severe racial and gender disparities and wage stagnation, voters are heading to the ballot box in pursuit of a fairer economy with less rampant inequality. In California and New York, low-wage workers are celebrating historic agreements to raise the minimum wage to $15 per hour. And the economy and jobs consistently rank among the top concerns expressed by voters of all political stripes.
One government institution reigns supreme in its ability to influence wages, jobs and overall economic growth, yet leading candidates for president have barely discussed it at all. The Federal Reserve is the most important economic policymaking institution in the country, and it is critical that voters hear how candidates plan to reform and interact with the Fed.
The Fed too often epitomizes the problems with our economy and democracy over which voters are voicing frustration: Commercial banks literally own much of the Fed and are using it to enrich themselves at the expense of the American working and middle class. When Wall Street recklessness crashed the economy in 2008, American families paid the price.
At the time, JP Morgan Chase CEO Jamie Dimon sat on the board of the New York Federal Reserve Bank, which stepped in during the crisis to save Dimon’s firm and so many other banks on the verge of collapse. Although the Fed’s actions helped Wall Street recover, that recovery never translated to Main Street, where jobs and wage growth stagnated.
Commercial banks should not govern the very institution that oversees them. It’s a scandal that continues to threaten the Fed’s credibility. An analysis conducted earlier this year by my parent organization, The Center for Popular Democracy, showed that employees of financial firms continue to hold key posts at regional Federal Reserve banks and that leadership throughout the Federal Reserve System remains overwhelmingly white and male and draws disproportionately from the corporate and financial world.
When the Fed voted in December to raise interest rates for the first time in nearly a decade, the decision was largely driven by regional Bank presidents — the very policymakers who are chosen by corporate and financial interests. In 2015, the Fed filled three vacant regional president position, and all three were filled with individuals with strong ties to Goldman Sachs; next year, 4 of the 5 regional presidents voting on monetary policy will be former Goldman Sachs insiders. Can we trust these blue-chip bankers to address working Americans’ concerns?
Yet despite the enormous power it wields and the glaring problems it continues to exemplify, the Fed has received little attention this election cycle. As noted by Reuters last week, two of the remaining candidates for president, Hillary Clinton and John Kasich, have been mute on what they would do about the central bank. Donald Trump’s sporadic statements about the Fed have been characteristically short on details, prompting former Minneapolis Federal Reserve Bank President Narayana Kocherlakota to call for Clinton, Trump and all presidential candidates to clarify exactly how they plan to oversee the Fed’s management of the economy. Ted Cruz has piped up about the Fed on a few occasions, although his vocal endorsement of “sound money” and other policies that contributed to the Great Depression warrant clarification.
The most detailed Fed reform proposal from a presidential candidate to date was a December New York Times op-ed in which Bernie Sanders wrote that “an institution that was created to serve all Americans has been hijacked by the very bankers it regulates,” and urged vital reforms to the Fed’s governance structure.
On Monday, Dartmouth economist Andy Levin, a 20-year Fed staffer and former senior adviser to Fed Chair Janet Yellen and her predecessor Ben Bernanke, unveiled a bold proposal to reform the Federal Reserve and make it a truly transparent, publicly accountable institution that responds to the needs of working families.
The New York primary provides a perfect opportunity for the remaining presidential candidates to tell us what they think about the Federal Reserve. Candidates in both parties should specify whether they support Levin’s proposals, and if not, articulate their preferred approach for our federal government’s most opaque but essential institution.
As Trump, Cruz and Kasich gear up for a potentially decisive primary, they would do well to respond to the many calls for clarity on the Fed. And on Thursday night, Sanders and Clinton will have the chance to clarify their stances on the Fed when they debate in Brooklyn, just a few miles away from Wall Street and the global financial epicenter that is the New York Federal Reserve Bank.
As New York voters get ready to decide which of the remaining candidates would make the best president, they will be asking themselves which candidate will better handle the economy. The candidates’ positions on the Fed must be part of the equation.
Jordan Haedtler is campaign manager of the Fed Up campaign, which calls on the Federal Reserve to adopt policies that build a strong economy for the American public. Fed Up is an initiative of the Center for Popular Democracy, a nonprofit group that advocates for a pro-worker, pro-immigrant, racial and economic justice agenda.
By Jordan Haedtler
Source
These Cities Aren’t Waiting for the Supreme Court to Decide Whether or Not to Gut Unions
These Cities Aren’t Waiting for the Supreme Court to Decide Whether or Not to Gut Unions
In the face of the Janus case, local elected officials across the country are renewing our efforts to help workers...
In the face of the Janus case, local elected officials across the country are renewing our efforts to help workers organize—in traditional ways, and in new ones. Brad Lander is a New York City Council Member from Brooklyn and the chairman of the board of Local Progress, a national association of progressive municipal elected officials. Helen Gym is a Councilmember At Large from Philadelphia and Vice-Chair of Local Progress, a national network of progressive elected officials.
Read the full article here.
How Twitter vaulted 'Abolish ICE' into the mainstream
Ana Maria Archilla the co-executive director of Center for Popular Democracy, said that at first progressives "were...
Ana Maria Archilla the co-executive director of Center for Popular Democracy, said that at first progressives "were worried about the political implications."
But "when Randy could say it in rural Wisconsin, in Paul Ryan, territory,” she continued, activists felt they had made a breakthrough.
Read the full article here.
How Bad Are Waste and Fraud at Charter Schools? This Bad.
NEA Today - May 14, 2014, by Tim Walker - Lax oversight and limited accountability has led to a shocking misuse of...
NEA Today - May 14, 2014, by Tim Walker - Lax oversight and limited accountability has led to a shocking misuse of taxpayer funds by charter schools nationwide, according to a new report from the Center for Popular Democracy and Integrity in Education.
“We expected to find a fair amount of fraud when we began this project, but we did not expect to find over $100 million in taxpayer dollars lost,” said Kyle Serrette, the Director of Education Justice at the Center for Popular Democracy. “That’s just in 15 states. And that figure fails to capture the real harm to children. Clearly, we should hit the pause button on charter expansion until there is a better oversight system in place to protect our children and our communities.”
The report, “Charter School Vulnerabilities to Waste, Fraud, and Abuse,” examined representative charter school data from 15 states and found instances of charter operators using charter funds for personal use; school revenues being used to illegally support charter operator businesses; mismanagement that put children in potential danger; charter executives illegally inflating enrollment to boost revenues; and charter operators mismanaging their schools.
While many of the instances of fraud and abuse noted in the report resulted from charter school administrators pilfering funds and misrepresenting their successes—a comparatively small number when compared to the national total of charter schools—it should be pointed out that limited oversight has helped foster an atmosphere where these kinds of problems are more commonplace. And much of this hands-off practice stems from the way charter schools have evolved over the ensuing years since their initial conception.
“To understand why there are so many problems in the charter industry, one must understand the original purpose of charter schools,” the report says. “Lawmakers created charter schools to allow educators to explore new methods and models of teaching. To allow this to happen, they exempted the schools from the vast majority of regulations governing the traditional public school system.”
So even as the number of charter schools increases, along with the funding that they receive, accountability measures have been slow to keep pace.
“Despite rapid growth in the charter school industry, no agency, federal or state, has been given the resources to properly oversee it,” the report noted in its introduction. “Given this inadequate oversight, we worry that the fraud and mismanagement that has been uncovered thus far might be just the tip of the iceberg.”
So what are some of the common-sense laws and oversight methods that the report suggests? For starters, establishing an office dedicated to managing and overseeing charters on the state level will help maintain performance standards and temper instances of fraud and abuse. Greater transparency on the part of charters, including independent audits available to the public and easy access to the charter agreements and other pertinent documents, will create a sustainably open atmosphere. And expanding many of the requirements for public schools to charter schools, including non-discrimination and transparency requirements, will narrow the divide in terms of oversight.
“Our school system exists to serve students and enrich communities,” says Sabrina Stevens, Executive Director of Integrity in Education. “We need to have rules in place that can systematically weed out incompetent or unscrupulous charter operators before they pose a risk to students and taxpayers.”
If so-called reformers are so determined to tout charter schools as a panacea for traditional public schools, then at the very least they can be held to the same standards of accountability, oversight, and scrutiny that public schools must take for granted.
“School funding is too scarce as it is; we can hardly afford to waste the resources we do have on people who would prioritize exotic vacations over school supplies or food for children,” Stevens adds. “We also can’t continue to rely on the media or isolated whistleblowers to identify these problems.”
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