The Federal Reserve released its bi-annual monetary policy report to Congress on Friday, which included an assessment of the economy that was both hopeful and cautious as vaccines fueled the prospect of economic recovery but risk obscured the horizon.
“While unprecedented fiscal and monetary stimulus and a relaxation of tough social distancing restrictions supported a rapid recovery in the US labor market last summer, the pace of growth has slowed and employment remains well below pre-pandemic levels,” the central bank said in the report.
The Fed used the letter that preceded Fed Chairman Jerome H. Powell’s testimony before a Senate committee Tuesday and a House committee on Wednesday to underscore the uneven economic cost of the pandemic. The report contained a special box dedicated to these differences.
“Job loss last spring was disproportionate among low-wage workers, less educated workers, and racial and ethnic minorities as in previous recessions, but also among women in contrast to previous recessions,” the Fed noted.
The burden on childcare from school closings is a major factor stifling women’s participation in the labor force, according to the central bank. Among mothers between the ages of 25 and 54 with children between 6 and 17 years of age, the proportion of those who stated that they were unemployed due to care responsibilities rose by 2.5 percentage points in the three months to January 2021 compared to a year earlier, said the Fed, based on personnel calculations from government data. This increase for mothers exceeded a 0.5 percentage point increase for fathers.
The report also pointed to possible financial risks. It was found that banks and other financial institutions have held up well so far, but that they “may suffer additional losses due to increasing defaults in the coming years”.
“Longstanding weaknesses in money market funds and mutual funds are not taken into account,” said the Fed.
The President of the Federal Reserve Bank of Boston expects a winning streak for the digital currency Bitcoin to come to an end at some point.
“Personally, I was surprised that Bitcoin continues to flourish,” said Eric Rosengren, head of the regional central bank, in an interview with the New York Times on Friday.
The digital currency trades at more than $ 50,000 per coin and rose to a market value of more than $ 1 trillion on Friday. That surge was supported as large companies like Tesla and financial firms like the Bank of New York Mellon began to use Bitcoin.
But Mr Rosengren said he couldn’t see a long-lasting use case for Bitcoin in a world where central banks would likely offer their own alternatives at some point.
“I would suspect later that a number of central banks will have digital currencies,” he said. “If any digital currency other than the underground economy is available, it’s not clear why people would use Bitcoin.”
“I would expect Bitcoin prices to come under pressure over time,” he continued.
Mr. Rosengren noted that China and Sweden have thought about digital currencies well and that the Boston Fed is also looking into the possibility for the United States. The Fed – and especially its chairman Jerome H. Powell – knew that, given the important role of the US dollar in the global economy, it would be very cautious about entering the digital currency area.
Some smaller central banks were more experimental. The Bahamian central bank introduced the sand dollar, a digital currency of the central bank, last year.
The executives of Facebook, Google and Twitter will again face skeptical lawmakers next month when a congressional committee asks them about the way disinformation is spreading on their platforms.
The House Energy and Commerce Committee announced Thursday that it would hold a hearing on March 25 with Mark Zuckerberg from Facebook, Sundar Pichai from Google and Jack Dorsey from Twitter.
The committee has been looking into the future of Section 230 of the Communications Decency Act, a 1996 law that protects the platforms from complaints about much of the content posted by their users. The January 6 attack on the Capitol, which included participants with ties to QAnon and other conspiracy theories that have spread widely online, re-raised concerns that the law allows platforms to easily handle extremist content.
“For too long, Big Tech has not recognized the role they have played in promoting and disseminating blatantly false information to the online audience,” a group of the committee’s top Democrats said in a statement. “Industry self-regulation has failed.”
Andy Stone, a spokesperson for Facebook, said the company “believes it is time to update the rules of the internet and this consultation should be another important step in the process.”
The House of Representatives Judiciary Committee announced its own tech industry hearings on Thursday. It said it would hold multiple hearings on how to update antitrust laws to address the power of tech giants. The committee interviewed executives before finalizing a lengthy investigation into companies last year.
The judicial committee’s first hearing will take place on Wednesday.
Renault, the French automaker, reported a loss of € 8 billion, or $ 9.7 billion, in 2020 as the pandemic wiped sales. However, the company said it would be profitable later this year.
Most of the annual loss resulted from Renault’s stake in its problematic partner Nissan. The losses at the Japanese carmaker cost 5 billion euros, Renault said. In addition, Renault’s car sales fell by 20 percent to just under three million vehicles over the course of the year.
“After a first half of the year hit by Covid-19, the group improved its performance significantly in the second half,” Renault CEO Luca de Meo said in a statement without giving a number. He said 2021 would “be difficult given the unknowns of the health crisis and supply shortages of electronic components.”
In 2021, the semiconductor shortage, a problem for almost all automakers, could cut production by as much as 100,000 vehicles, Renault said.
Mr de Meo, who was named Renault Managing Director in July, announced a return to profitability plan last month that includes cuts in production capacity, fewer models being sold and greater sharing of parts between vehicles to simplify manufacturing.
Oil and natural gas futures fell after jumping earlier in the week. Both were hit by the violent winter storms that left millions of people in Texas without electricity this week.
West Texas Intermediate, the US benchmark crude, fell 2.5 percent to around $ 59 a barrel on Friday. It had risen 6 percent from Friday to Wednesday as the weather hampered oil production.
Natural gas futures, which have risen as a result of the storms, have been moving up and down for the past few days. They fell 0.4 percent on Friday after falling 3 percent earlier in the day. They are still higher than last week.
The word that the Biden government offered to resume talks to re-establish an agreement to cap Iran’s nuclear program was seen as a drag on oil prices. The lifting of sanctions against Iran could allow it to sell more oil in the world market. Brent crude, the international benchmark, fell 2 percent on Friday to $ 62.68 a barrel.
The S&P 500 fell 0.2 percent, bringing its total weekly losses to 0.7 percent. The benchmark index fell every day this week after posting a series of gains last week. (There weren’t four consecutive winning days, as mentioned here.)
Uber’s shares fell 1 percent after the UK Supreme Court ruled that the company’s drivers must be classified as workers entitled to a minimum wage and vacation time. The case had been watched closely because of its impact on the gig economy.
The European markets were broadly higher: the Stoxx Europe 600 gained 0.5 percent and the UK FTSE 100 gained 0.1 percent. Asian markets closed mixed, with the Nikkei in Japan falling 0.7 percent while the Shanghai Composite in China rose 0.6 percent.
Markit’s purchasing managers’ index data for February showed various trends across Europe. The French composite production index hit a three-month low, reflecting the restrictions on business activity imposed by the recent lockdown. The German composite index rose thanks to an export-related upswing in the manufacturing sector.
In the UK, retail sales were down 8.2 percent in January compared to the previous month. Government data revealed this, a downturn exacerbated by a lockdown beginning in the new year. The drop, however, was less than expected and also not as bad as the 22 percent drop in April when the UK was locked down earlier. The National Statistics Bureau said some of the improvement was likely due to companies learning to adapt to bans, with more online and click-and-collect sales.
In California, forest fires and heat waves in recent years have forced utility companies to turn off electricity for millions of homes and businesses. Now Texas is learning that deadly winter storms and intense cold can do the same thing.
Bill Magness, president and chief executive officer of the state’s Electric Reliability Council, said Thursday that Texas was “seconds and minutes” away from a catastrophic blackout this week as rotating outages were used to control the flow of electricity.
The two largest states in the country have taken very different approaches to managing their energy needs – Texas has been aggressively deregulated and allowed the free market to flourish, while California introduced environmental regulations. However, the two countries are faced with the same ominous reality: they may be completely unprepared for the increasing frequency and severity of natural disasters caused by climate change.
Power outages in Texas and California have shown that the kind of extremely cold and hot weather climatologists said will make power plants more common as greenhouse gases build up in the atmosphere, can be polluted and taken out of service.
The problems in Texas and California underscore the challenge the Biden administration must face in modernizing its electricity system to be fully powered by wind turbines, solar panels, batteries and other zero-emission technologies – a goal that President Biden has set himself of the 2020 campaign.
The federal government and energy companies may need to spend trillions of dollars to harden power grids against the threat of climate change and move away from the fossil fuels that are responsible for warming the planet. These are not new ideas. Scientists have long warned that American power grids operated regionally are coming under increasing pressure and needing major improvements.
“We really need to change our paradigm, especially the utilities, because they’re more and more prone to disaster,” said Najmedin Meshkati, an engineering professor at the University of Southern California, of power outages in Texas and California. “You always have to literally think about the worst-case scenario because the worst-case scenario will happen.”
The executives of Robinhood, Reddit, Citadel and Melvin Capital Management were among the witnesses at a hearing on the GameStop trading frenzy held by the House Financial Services Committee on Thursday.
Robinhood’s general manager Vlad Tenev was the target for both Democrats and Republicans, answering more than half of the legislature’s questions. “I love your company because, if properly managed, it offers investment opportunities to people who are currently excluded from the market for one reason or another,” said Anthony Gonzalez Republican of Ohio. He added, “At the same time, I believe that a security flaw in your business model has clearly been exposed.”
Rep. Sean Casten, an Illinois Democrat, completed his harsh interrogation of Mr. Tenev, in which he shared the story of a 20-year-old college student who killed himself last summer and believed he had lost more than $ 700,000 by choosing the Robinhood Hotline and tapping them all while playing a short message and ending the call. New York Democrat Representative Alexandria Ocasio-Cortez said Robinhood’s decisions “harmed customers” and accused them of passing hidden costs on to their customers.
Keith Gill – known on YouTube as Roaring Kitty – said his interest in the company was based on his belief that the market underestimated the value of the brick and mortar retailer. His testimony included winking references – such as dangling his often-worn red headband from a picture of a kitten that was visible over his shoulder and saying, “I’m not a cat” – of internet meme culture.
Several tough questions were directed to Kenneth C. Griffin, head of the citadel. Members of Congress asked skeptical questions about Citadel’s practice of paying to trade customers with online brokers like Robinhood. Mr. Griffin tried to explain the intricacies of the deal but was often cut off. “Our people are fed up with saving you all if you screw up and gamble with the pension fund. And that’s what’s happening any moment, ”Michigan Democrat Representative Rashida Tlaib told him.
Senator Joe Manchin III, Democrat of West Virginia, announced Friday that he would stand up against Neera Tanden, President Biden’s nominee for administration and budgetary office, in an attempt to jeopardize her prospects in an evenly divided Senate.
The fate of the nomination is now in the hands of a party that Ms. Tanden has often criticized. She would need the support of at least one Republican senator to get sustained, and Vice President Kamala Harris would break a tie.
Given Ms. Tanden’s litany of critical public statements and tweets against members of both parties prior to her appointment, it is unclear whether such support exists – or whether other Democrats will also oppose it.
In a statement released Friday, Mr. Manchin cited comments from Ms. Tanden addressed personally to Senators Mitch McConnell of Kentucky, who are now the minority leader. Bernie Sanders, the independent Vermont now responsible for the Senate Budgets Committee; and other colleagues.
“I believe their openly partisan statements will have a toxic and detrimental impact on the vital working relationship between members of Congress and the next director of the Bureau of Administration and Budget,” said Manchin. “For this reason I cannot support your nomination. As I said earlier, we must take meaningful steps to end the political division and dysfunction that is permeating our policies. “
Ms. Tanden was grilled hard by both Republicans and Democrats during her two confirmation hearings earlier this month.
Republicans spent the first hour of their first hearing before a Senate Homeland Security Committee asking Ms. Tanden to explain her previous Twitter posts and why she deleted more than 1,000 tweets shortly after the November election.
Ohio Republican Senator Rob Portman read aloud posts calling Mr. McConnell “Moscow Mitch” and saying that “vampires have more hearts than Ted Cruz,” a Republican senator from Texas.
Your second hearing was no less fiery. Mr. Sanders confronted her with her story of targeting personal attacks on social media, including himself.
Ms. Tanden and Mr. Sanders have been fighting since the 2016 elections. In 2019, Mr. Sanders accused her of “defaming my employees and supporters and belittling progressive ideas”.
Ms. Tanden apologized to the legislature at both hearings and regretted many of her earlier statements.
“I deeply regret and apologize for my language, some of my previous languages,” said Ms. Tanden. “I realize that this role is a bipartisan one, and I realize that I have to win the trust of the senators across the board.”