Labor Market Rebounds, but Recovery Is Uneven, Fed Says: Live Updates
Labor Market Rebounds, but Recovery Is Uneven, Fed Says: Live Updates
The Federal Reserve released its twice-annual monetary policy report to Congress on Friday, offering an assessment of the economy that was at once hopeful and cautious as vaccines stoke the prospects of an economic recovery, but risks crowd the horizon.
“While unprecedented fiscal and monetary stimulus and a relaxation of rigorous social-distancing restrictions supported a rapid rebound in the U.S. labor market last summer, the pace of gains has slowed and employment remains well below pre-pandemic levels,” the central bank said in the report.
The Fed used the missive, which comes ahead of testimony by the Fed chair, Jerome H. Powell, before a Senate committee on Tuesday and a House committee on Wednesday, to underline the uneven economic costs of the pandemic. The report included a special box dedicated to those disparities.
“Job losses last spring were disproportionately severe among lower 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.
Childcare burdens resulting from school closures are an important factor holding back women’s participation in the labor force, the central bank said. Among mothers between the ages of 25 to 54 with children between the ages of 6 and 17, the share who said they were out of the labor force because of caregiving responsibilities was up 2.5 percentage points in the three months ending January 2021 compared with the same period a year earlier, the Fed said, based on staff calculations of government data. That increase for mothers exceeded a 0.5 percentage point increase for fathers.
The report also pointed to possible financial risks down the road. It noted that banks and other financial institutions have held up well so far, but that they “may experience additional losses as a result of rising defaults in the coming years.”
Plus, “longstanding vulnerabilities at money market mutual funds and open-end investment funds remain unaddressed,” the Fed said.
The chief executives of Facebook, Google and Twitter will face skeptical lawmakers again next month when a congressional committee questions them about the ways disinformation spreads across their platforms.
The House Energy and Commerce Committee said Thursday that it would hold a hearing on March 25 with Mark Zuckerberg of Facebook, Sundar Pichai of Google and Jack Dorsey of Twitter.
The committee has been examining the future of Section 230 of the Communications Decency Act, a 1996 law that shields the platforms from lawsuits over much of the content posted by their users. The attack on the Capitol on Jan. 6, which included participants with ties to QAnon and other conspiracy theories that have spread widely online, has renewed concerns that the law allows the platforms to take a hands-off approach to extremist content.
“For far too long, Big Tech has failed to acknowledge the role they’ve played in fomenting and elevating blatantly false information to its online audiences,” a group of the committee’s top Democrats said in a statement. “Industry self-regulation has failed.”
Andy Stone, a spokesman for Facebook, said the company “believes it’s time to update the rules of the internet, and this hearing should be another important step in the process.”
The House Judiciary Committee announced its own set of hearings on the tech industry on Thursday. It said it would hold multiple hearings on how to update antitrust laws to address the power of the tech giants. The committee questioned chief executives before concluding a lengthy investigation into the companies last year.
The Judiciary Committee’s first hearing will take place on Wednesday.
Renault, the French carmaker, reported a loss of 8 billion euros, or $9.7 billion, in 2020 as the pandemic gutted sales, but the company said that was profitable in the later part of the year.
Most of the annual loss stemmed from Renault’s stake in its troubled partner, Nissan. Losses at the Japanese carmaker drained €5 billion from the bottom line, Renault said. In addition, Renault car sales plunged 20 percent for the year, to just short of three million vehicles.
“After a first half impacted by Covid-19, the group has significantly turned around its performance in the second half,” Luca de Meo, Renault’s chief executive, said in a statement, without giving a figure. He said that 2021 was “set to be difficult given the unknowns regarding the health crisis as well as electronic components supply shortages.”
In 2021, shortages of semiconductors, a problem for almost all carmakers, could cut production by as much as 100,000 vehicles, Renault said.
Mr. de Meo, who became Renault’s chief executive in July, last month announced a plan to return to profitability that includes cuts in production capacity, sales of fewer models and increased parts sharing among vehicles to simplify manufacturing.
Oil and natural gas futures fell after jumping earlier in the week. Both were affected by the fierce winter storms that caused millions of people to go without power across Texas this week.
West Texas Intermediate, the U.S. benchmark crude, dropped 2.5 percent on Friday, to about $59 a barrel. It had jumped 6 percent from Friday to Wednesday, as oil production was hindered by the weather.
Natural gas futures, which rose as a result of the storms, have moved up and down in recent days. On Friday, they ended down 0.4 percent after dropping as much as 3 percent earlier in the day. They still remain elevated from last week.
Word that the Biden administration was offering to restart talks to restore an accord limiting Iran’s nuclear program was seen as weighing on oil prices. Lifting sanctions against Iran could allow it sell more oil on the global market. Brent crude, the international benchmark, was down 2 percent on Friday, to $62.68 a barrel.
The S&P 500 fell 0.2 percent, bringing its total losses for the week to 0.7 percent. The benchmark index fell every day this week after a string of gains last week. (There were not four consecutive days of gains, as was earlier stated here.)
Shares of Uber dropped 1 percent after Britain’s 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 closely watched because of its ramifications for the gig economy.
European markets were broadly higher, with the Stoxx Europe 600 up 0.5 percent and FTSE 100 in Britain gaining 0.1 percent. Asian markets closed mixed, with the Nikkei in Japan down 0.7 percent while the Shanghai composite in China rose 0.6 percent.
Purchasing managers’ index data for February, from Markit, showed a variety of trends across Europe. The France composite output index hit a three-month low, reflecting the restrictions on business activity imposed by the latest lockdown. The Germany composite index rose, helped by an export-led manufacturing upturn.
In Britain, retail sales fell 8.2 percent in January compared with the preceding month, government data said, a downturn that was sharpened by a lockdown that started in the new year. But the decline was less than expected, and also not as bad as the 22 percent drop seen in April, when Britain went into an earlier lockdown. The Office of National Statistics said some of the improvement probably came from businesses learning to adapt to lockdowns, with more online and click-and-collect sales.
In California, wildfires and heat waves in recent years forced utilities to shut off power to millions of homes and businesses. Now, Texas is learning that deadly winter storms and intense cold can do the same.
Bill Magness, the president and chief executive of the Electric Reliability Council of Texas, the state’s grid operator, said on Thursday that Texas was “seconds and minutes” from a catastrophic blackout this week as rotating outages were used to control the flow of electricity.
The country’s two largest states have taken very different approaches to managing their energy needs — Texas deregulated aggressively, letting the free market flourish, while California embraced environmental regulations. Yet the two states are confronting the same ominous reality: They may be woefully unprepared for the increasing frequency and severity of natural disasters caused by climate change.
Blackouts in Texas and California have revealed that power plants can be strained and knocked offline by the kind of extreme cold and hot weather that climate scientists have said will become more common as greenhouse gases build up in the atmosphere.
The problems in Texas and California highlight the challenge the Biden administration will face in modernizing the electricity system to run entirely on wind turbines, solar panels, batteries and other zero-emission technologies by 2035 — a goal that President Biden set during the 2020 campaign.
The federal government and energy businesses may have to spend trillions of dollars to harden electricity grids against the threat posed by climate change and to move away from the fossil fuels responsible for the warming of the planet in the first place. These are not new ideas. Scholars have long warned that American electricity grids, which are run regionally, will come under increasing strain and needed major upgrades.
“We really need to change our paradigm, particularly utilities, because they are becoming much more vulnerable to disaster,” Najmedin Meshkati, an engineering professor at the University of Southern California, said about blackouts in Texas and California. “They need to always think about literally the worst-case scenario because the worst-case scenario is going to happen.”
The chief 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.
Vlad Tenev, the chief executive of Robinhood, was the target for both Democrats and Republicans, fielding more than half of the lawmakers’ questions. “I love your company because it does, when correctly managed, provide investment opportunities for individuals who are currently frozen out of the markets for one reason or another,” said Representative Anthony Gonzalez, Republican of Ohio. He added: “At the same time, though, I believe a vulnerability was clearly exposed in your business model.”
Representative Sean Casten, an Illinois Democrat, capped his sharp questioning of Mr. Tenev, in which he relayed the story of a 20-year-old college student who killed himself last summer believing that he’d lost more than $700,000, by dialing the Robinhood help line and letting everyone listen in as a short message was played and the call was terminated. Representative Alexandria Ocasio-Cortez, Democrat of New York, said Robinhood’s decisions had “harmed customers,” and accused it of passing on hidden costs to its customers.
Keith Gill — known on YouTube as Roaring Kitty — testified that his interest in the company was based on his belief that the market was underestimating the brick-and-mortar retailer’s value. His testimony included winking references — such as dangling what appeared to be his oft-worn red headband off a picture of a kitten visible over his shoulder and the statement “I am not a cat” — to internet meme culture.
Several harsh questions were directed at Kenneth C. Griffin, the chief of Citadel. Members of Congress asked skeptical questions about Citadel’s practice of paying to trade against customers at online brokers like Robinhood. Mr. Griffin tried to explain the intricacies of the business but was often cut off. “Our folks are tired of bailing you all out when you screw up and gamble with the retirement fund. And that’s exactly what happens every single moment,” Representative Rashida Tlaib, Democrat of Michigan, said to him.