Watch as Powell and Yellen Testify on Economic Recovery: Live Updates
Watch as Powell and Yellen Testify on Economic Recovery: Live Updates
Federal Reserve Chair Jerome H. Powell told lawmakers that the economy is healing from the pandemic downturn and continued to play down inflation concerns at a hearing before House lawmakers on Tuesday.
Mr. Powell, in response to a question about whether the $1.9 trillion spending package to combat the virus, combined with President Biden’s plan to spend as much as $3 trillion on an infrastructure bill, could cause prices to shoot higher, said any spike would likely be temporary.
“We do expect that inflation will move up over the course of this year,” Mr. Powell said, saying that some of that would be mechanical as low readings from March and April 2020 drop out of the data, and part of it might be driven by a bounce-back in demand.
“Our best view is that the effect on inflation will be neither particularly large nor persistent,” he said.
Mr. Powell is testifying along with Janet L. Yellen, the Treasury secretary, before the House Financial Services committee on the economic recovery from the pandemic.
The testimony is the first time Ms. Yellen and Mr. Powell have appeared side by side in their current roles. President Donald J. Trump chose to replace Ms. Yellen with Mr. Powell at the Fed, but the two economic officials spent several years working together at the Fed and have a good rapport.
Mr. Powell told lawmakers on Tuesday that the economy was healing and that although many workers and businesses continued to suffer, the aggressive response from the central bank, Congress and the White House helped to avoid the most devastating economic scenarios.
“While the economic fallout has been real and widespread, the worst was avoided by swift and vigorous action,” Mr. Powell said at House Financial Services committee.
Ms. Yellen is expected to face questions on executing Mr. Biden’s $1.9 trillion economic relief legislation, as well as the existing programs that were created during the Trump administration that the Treasury is still required to oversee.
The Treasury Department has been racing to distribute $1,400 checks to millions of Americans, posing a test for Ms. Yellen’s team, which is not yet fully in place.
Ms. Yellen pushed hard for a robust fiscal relief package and has suggested that the next bill needs to be focused on addressing longer-term structural issues facing the economy that have led to vast income inequality.
In her opening statement, Ms. Yellen described the rescue legislation as precisely what the economy needed.
“With the passage of the rescue plan, I am confident that people will reach the other side of this pandemic with the foundations of their lives intact,” Ms. Yellen said. “And I believe they will be met there by a growing economy. In fact, I think we may see a return to full employment next year.”
Mr. Powell pointed out that the economy has recently improved and that the labor market has begun adding back jobs after a winter lull. But he will note that those metrics may not capture the full extent of the damage to workers.
“However, the sectors of the economy most adversely affected by the resurgence of the virus, and by greater social distancing, remain weak, and the unemployment rate — still elevated at 6.2 percent — underestimates the shortfall,” Mr. Powell said.
The Fed chair added that the central bank, which has rates at near-zero and is buying bonds to keep credit flowing and to bolster the economy, “will not lose sight of the millions of Americans who are still hurting.”
Mr. Powell told lawmakers that the Fed’s many market-facing programs in 2020, which supported credit to corporations, midsize businesses and municipalities, helped to “keep organizations from shuttering and put employers in both a better position to keep workers on and to hire them back as the recovery continues.”
And he underlined that the programs, in most cases, have either shut down or will soon end. Mr. Powell consistently has said that the lending efforts, supported by the Treasury, were emergency tools that the Fed would stop using once conditions were stable.
Cineworld, the parent company of the U.S. movie theater chain Regal Cinemas, announced on Tuesday that it would reopen its cinemas in the United States in April and in Britain in May as those countries ease lockdown restrictions.
“We have long-awaited this moment,” said Mooky Greidinger, the chief executive of Cineworld, which is based in London. “With capacity restrictions expanding to 50 percent or more across most U.S. states, we will be able to operate profitably in our biggest markets.”
Regal Cinemas is the second largest theater chain in the United States, after AMC Theaters. The announcement by Cineworld comes six months after the movie theater chains were forced to shut down across the United States and Britain last October in an effort to curb the spread of the coronavirus. The decision affected a total of 45,000 employees in both countries and forced studios to postpone film releases.
Cineworld also announced a multiyear agreement with Warner Bros. starting in 2022 that will allow the theater chain to show the studios’ films for 45 days in the United States and 31 days in Britain. The deal shortens the typical window that theaters have to show movies before they are released to on-demand streaming services.
The reopening plans in the United States will coincide with the release of two movies from Warner Bros. Pictures, “Godzilla vs. Kong” on April 2 and “Mortal Kombat” on April 16.
“We are very happy for the agreement with Warner Bros.,” Mr. Greidinger said. “This agreement shows the studio’s commitment to the theatrical business.”
Last week, AMC Theaters announced the reopening of nearly all of its U.S. theaters.
The moves come at a time of concern that looser restrictions will lead to rise in coronavirus cases. On Monday, the director of the Centers for Disease Control and Prevention warned that relaxed pandemic restrictions could lead to another spike. “If we don’t take the right actions now,” said Dr. Rochelle Walensky, “we will have another avoidable surge.”
In September, Cineworld reported a pretax loss of $1.6 billion for the first half of 2020. In 2019, 90 percent of the company’s revenue was generated in the United States and Britain.
Mayor Francis Suarez of Miami is selling his city as the world’s cryptocurrency capital. “We want to be on the next wave of innovation,” he told the DealBook newsletter.
To make that happen, Mr. Suarez said he was “refashioning” the city’s “fun in the sun” image. Thanks in part to the mayor’s marketing efforts, tech and finance titans have flocked to Miami during the pandemic.
Last month, Mr. Suarez, a Republican, suggested Miami pay municipal workers and accept tax payments in Bitcoin, as well as invest city funds in the cryptocurrency. Local officials have agreed to study the proposals.
The notion has made Mr. Suarez popular in the crypto community, advancing his rebranding campaign. His efforts have also won him campaign donations from tech investors, attracted money to cultivate Miami’s growing tech sector and may soon pay a big county bill.
The cryptocurrency exchange FTX is seeking naming rights for the city’s N.B.A. arena, known as AmericanAirlines Arena. Miami-Dade County took over branding deals in 2018 and is supposed to pay the team $2 million per year, sponsor or no (American Airlines’ contract ended in 2019). The FTX agreement is nearly final, pending a vote by county commissioners on Friday. “It’s awesome that we’ve attracted a huge cryptocurrency exchange,” Mr. Suarez said, noting that FTX’s bid “complements the brand” that Miami is establishing.
It would be the N.B.A.’s first crypto sponsorship of an arena, but it would also tie a county revenue stream to a relatively young exchange and chief executive. FTX was founded in 2019 and is run by Samuel Bankman-Fried, a 28-year-old billionaire who was one of the biggest donors to President Biden’s campaign.
The pandemic has prompted people to relocate to Florida from Silicon Valley and New York as Bitcoin gained legitimacy and value. The mayor sees the trends as interrelated, and he is seizing the moment.
“People come here and start realizing that there’s way more tech talent than they thought,” he said. All that’s missing, he added, is a regulatory overhaul: Lawmakers are modeling Florida’s approach on Wyoming’s crypto policies.
But the success of the mayor’s effort won’t be apparent until it’s clear that people are making their moves permanent and maintaining their enthusiasm for crypto if — or when — there is another market downturn.
Stocks were uneven on Tuesday amid new concerns about the global economic recovery from the pandemic.
Europe has been reporting a rise in new virus cases and increasing lockdown restrictions. Fresh confusion about the AstraZeneca vaccine were raised on Tuesday morning as U.S. health authorities questioned whether some of the U.S. trial data submitted by the drugmaker was outdated.
Investors were awaiting testimony from Treasury Secretary Janet Yellen and the Federal Reserve chair, Jerome H. Powell, about the recovery of the U.S. economy. They will be questioned by the House Financial Services Committee later Tuesday. According to prepared remarks, Mr. Powell is expected to tell lawmakers that “while the economic fallout has been real and widespread, the worst was avoided by swift and vigorous action.”
In the Markets
Wall Street was up slightly midday after wavering between losses and gains. The S&P 500 was up 0.2 percent coming off a 0.7 percent rise on Monday. The yield on the 10-year Treasury note dropped slightly to 1.66 percent.
European indexes were trading lower, with the Stoxx Europe 600 down about 0.1 percent.
Energy prices fell. West Texas Intermediate, the U.S. crude benchmark, was down about 4 percent to below $60 a barrel. Brent, the international benchmark, fell by more than 3.5 percent, to about $62.30 a barrel. Natural gas also fell.
GameStop’s chief customer officer, Frank Hamlin, will leave the company at the end of the month, according to a regulatory filling on Tuesday. The video game retailer, which was at the center of a retail trading frenzy earlier this year that sent its share price soaring, will release its quarterly earnings later on Tuesday. Last month, GameStop also said its chief financial officer, Jim Bell, would leave. The company is under pressure from an activist shareholder to complete a digital transformation. It will report earnings Tuesday afternoon.
Microsoft shares were up about 2 percent after reports late Monday that the company was in talks to acquire Discord, a social media company popular with gamers.
Baidu, the Chinese search company that some people once called the Google of China, raised $3.1 billion in a share listing in Hong Kong on Tuesday, the latest homecoming of a Chinese company against a toughening regulatory backdrop in the United States.
Investors showed a muted appetite for the company, which already has a listing in New York and has been eclipsed by other Chinese technology firms in recent years. In the United States, Google has used its search power to become a dominant internet company, but Baidu has not grown as quickly as Alibaba, the Chinese e-commerce company, or Tencent, a conglomerate with holdings in video games and social media.
Its stock finished its first day trading on the Hong Kong exchange flat at 252 Hong Kong dollars, or about $32, a share.
The broader Hang Seng exchange fell 1.3 percent amid rising tensions between the United States and China. The United States said on Monday it would join the European Union, Canada and Britain in sanctioning Chinese officials over human rights abuses against China’s mostly Muslim Uyghur community.
Baidu follows other New York-listed Chinese companies like Alibaba, NetEase and JD.com in offering their shares to Chinese retail investors through a listing in the Chinese territory of Hong Kong. More companies have done “homecoming listings” in recent years as Chinese officials have tried to lure back companies that chose to list overseas.
Secondary listings by Chinese companies have also become more popular as American regulators have pledged to delist Chinese companies from their exchanges if they do not adhere to local accounting rules. Baidu is among a group of Chinese companies that has denied access to inspections by the Public Company Accounting Oversight Board, an auditing watchdog created by the U.S. government.
An executive order by former President Donald J. Trump preventing Americans from investing in companies deemed to have ties to the Chinese military has also led to an exodus of Chinese companies. The New York Stock Exchange delisted China Mobile, China Telecom and China Unicom earlier this year.
The Hong Kong market has shown less interest for secondary listings than it has for newer technology companies like Kuaishou, a short-video app, that nearly tripled in value on its debut last month and valued the company at $160 billion.
Baidu is valued at $92 billion on the Nasdaq stock market.
The Senate confirmed Martin J. Walsh, the mayor of Boston and a former leader of the city’s powerful building trades council, as labor secretary on Monday. The vote was 68 to 29.
The confirmation filled the last leadership role for the 15 executive departments in President Biden’s cabinet. Of nine other cabinet-level leadership roles, seven have been filled.
In a statement after the vote, Mr. Walsh said that he was grateful for the Senate’s bipartisan support and that he shared Mr. Biden’s and Vice President Kamala Harris’s “commitment to building an economy that works for all.”
“I have been a fighter for the rights of working people throughout my career, and I remain committed to ensuring that everyone — especially those in our most marginalized communities — receives and benefits from full access to economic opportunity and fair treatment in the workplace,” Mr. Walsh said in the statement. “I believe we must meet this historic moment, and as the nation’s secretary of labor, I pledge to help our economy build back better.”
Mr. Walsh’s nomination had won widespread praise from union officials, who were enthusiastic about having one of their own oversee the department, a historical rarity. Many union officials regard his close relationship with the president as an advantage for labor groups.
“Because he enjoys mutual trust and respect with President Biden, he will be positioned to put labor’s concerns front and center on the national agenda,” Lee Saunders, president of the American Federation of State, County and Municipal Employees, said in an email.
One of Mr. Walsh’s top priorities as labor secretary will be re-energizing the Occupational Safety and Health Administration, which critics have accused of failing to protect workers during the pandemic. The safety agency recently put out new guidance to employers on protecting workers from Covid-19 and is considering a new rule to mandate safety measures that the Trump administration rejected.
The department has already moved to set aside a number of rules issued by the Trump administration that weakened worker protections. One of those rules would probably have deemed most gig workers to be independent contractors rather than employees, making them ineligible for the federal minimum wage and overtime pay.
Under Mr. Walsh, the department will be charged with crafting replacements for some of these rules. It will most likely move to expand other protections, such as raising the threshold — currently set at about $35,500 — below which most salaried workers are automatically eligible for time-and-a-half overtime pay.
As mayor, he offered support to undocumented immigrants whom federal officials were seeking to detain, pressed contractors to set aside at least 40 percent of their work on public construction projects for racial minorities, and created gender-neutral bathrooms in City Hall.
“If you know Marty Walsh, you know that he has transcended race and class lines and fights for all with a real focus on the vulnerable,” said Randi Weingarten, the president of the American Federation of Teachers.
Mr. Walsh plans to resign as mayor on Monday evening, according to an aide.
Federal officials are looking into a series of recent accidents involving Teslas that either were using Autopilot or might have been using it.
Autopilot is a computerized system that uses radar and cameras to detect lane markings, other vehicles and objects in the road. It can steer, brake and accelerate automatically with little input from the driver. Tesla has said it should be used only on divided highways, but videos on social media show drivers using Autopilot on various kinds of roads.
The National Highway Traffic Safety Administration confirmed last week that it was investigating 23 such crashes, Neal E. Boudette reports for The New York Times.
In one accident this month, a Tesla Model Y rear-ended a police car that had stopped on a highway near Lansing, Mich. The driver, who was not seriously injured, had been using Autopilot, the police said.
In February in Detroit, under circumstances similar to the 2016 Florida accident, a Tesla drove beneath a tractor-trailer that was crossing the road, tearing the roof off the car. The driver and a passenger were seriously injured. Officials have not said whether the driver had turned on Autopilot.
NHTSA is also looking into a Feb. 27 crash near Houston in which a Tesla ran into a stopped police vehicle on a highway. It is not clear if the driver was using Autopilot. The car did not appear to slow before the impact, the police said.
“The Ellen DeGeneres Show” has lost more than a million viewers, according to the research firm Nielsen, averaging 1.5 million viewers over the last six months, down from 2.6 million in the same period last year. This year’s season opener in September, in which Ms. DeGeneres apologized in the wake of reports of workplace misconduct at her show, had the highest ratings for an “Ellen” premiere in four years. But since then, the show has seen a 43 percent decline in viewers. Even with the complications affecting all talk shows during the pandemic, the show has suffered a steeper decline than its rivals. “Dr. Phil” is down 22 percent, and “The Kelly Clarkson” show has lost 26 percent of its viewers.
Some investors have started distancing themselves from Dispo, a fast-growing photo-sharing app, after its co-founder, the YouTube creator David Dobrik, became embroiled in controversy. In an investigation by Insider that published last week, Mr. Dobrik was accused of playing a role in a sexual assault scandal involving a former member of his “Vlog Squad.” He later told The Information that he would leave Dispo and step down from its board. And some of Dispo’s investors, including Spark Capital, Seven Seven Six and Unshackled Ventures, have also started backing away.
President Biden on Monday nominated Lina Khan to the Federal Trade Commission, installing a vocal critic of Big Tech into a key oversight role of the industry. If her nomination is approved by the Senate, Ms. Khan, 32, would fill one of two empty seats earmarked for Democrats at the F.T.C. Ms. Khan became recognized for her ideas on antitrust with a Yale Law Journal paper in 2017 called “Amazon’s Antitrust Paradox” that accused Amazon of abusing its monopoly power.