Chairman Powell says Fed is not close to cutting rates
Prices continued to rise at an uncomfortably fast pace in February. Hold off on any rate cuts by the Federal Reserve.
The Commerce Department reported that monthly profits rose 0.3% in February. Personal Consumption Expenditures (PCE) Price Index. Converting this into an annualized rate of increase is 4.1%, far exceeding the Fed’s 2% target.
A few months ago, many Democratic-leaning experts and economists pointed out that the three-month annualized rate of PCE prices showed that inflation had been overcome and the Fed could safely begin lowering rates. For example, back in September, new york times columnist paul krugman Tweet: “Still not in recession, but core PCE has fallen to 2.2% on a 3-month basis. A win for Team Long Transitory.”
It hasn’t aged very well. The annualized headline PCE inflation rate for the most recent three months was 3.4%. The three-month core inflation rate remains at 3.5%. In other words, Inflation no longer tends to return quickly to the Fed’s target However, the inflation rate is stuck between 3% and 4%.
Core PCE up to 3.5% on a 3-month basis. https://t.co/XCnaYTI9Js
— Jason Furman (@jasonfurman) March 29, 2024
Federal Reserve Chairman Jerome Powell He said that February’s PCE statistics were “mostly in line with expectations.” This was an odd way of saying it, since Chairman Powell appeared to have divulged the Fed’s forecast in a press conference last week. In other words, market expectations were partly shaped by Mr. Powell’s telling in advance where he thought PCE was headed.
Mr. Powell also February inflation data does not provide further reassurance to the Fed Inflation is continuing to decline to 2%.
Kai RyssdalAmerican Public Radio host market On the show, Powell was asked directly whether February’s numbers were considered “good” enough to warrant a rate cut. Mr. Powell refused to say yes. In fact, he said, inflation statistics were good last year but bad in January. February’s data was better than the previous month, but not as good as last year.
Federal Reserve Chairman Jerome Powell attends the “FRB Listens” event in Washington, DC on March 22, 2024. (Al Drago/Bloomberg via Getty Images)
“While it’s down in February, it’s not as low as most of the positive indicators we had in the second half of last year, but it’s definitely more in line with what we would expect,” Powell said. “What we have said is that we do not believe it is appropriate to begin lowering rates until the Federal Open Market Committee is confident that inflation has fallen sustainably to 2%.” And what does it take to gain that confidence? It’s simply a good indicator regarding inflation. It’s the same one we got last year. ”
That last phrase is important. Measures of inflation this year have not coincided with the Fed’s interest rate cuts. It was last year. The Fed has no intention of cutting interest rates unless inflation falls below 0.2% per month and close to 0.1%.
The long and expensive road to rebuilding the Baltimore Bridge
The job of rebuilding what has been destroyed francis scott key bridge The Baltimore operation will take much longer and cost more than many originally thought.
The Associated Press reported Friday that experts say rebuilding the bridge could take “18 months to several years.” it is, $400 million price tag “Or more than double that.”
If anything, those are conservative estimates. The original bridge took him five years to build from groundbreaking to ribbon cutting. But planning for the bridge began several years earlier. In the 1970s it cost $141 million. Equivalent to $735 million today.
Construction of the Francis Scott Key Bridge over the Port of Baltimore, circa May 1973. (Photo: Jim Pickerell/Environmental Protection Agency via the US National Archives and Records Administration)
But simply adjusting 1970s construction costs for inflation doesn’t capture how much more expensive major infrastructure projects are today than they were 50 years ago. Brookings Institution 2019 study Of the cost of interstate highway construction, each state spent approximately 3x to build 1 mile of highway In the 1980s as well as in the early 1960s. Research stops there, as large-scale infrastructure construction has largely stopped since then.
Bloomberg reported last year:
Since the 1980s, no new freeways have been built or seriously proposed in most cities in the Northeast. In the booming West, construction lasted a little longer, but even in freeway mecca Los Angeles, no new urban freeways have been built since Interstate 105 was completed in his 1993 year. do not have. Most dam construction has also been cancelled. The Colorado River became a powerful symbol of the environmental movement, and he was one of the last large-scale federal water projects of its kind.A little bit New urban highway project still underway – and In the process of demolishing black and brown homes — The scale of construction is just a fraction of what was happening from the 1960s to the ’80s. Today, discussions often refer to some of the most harmful infrastructure built during the postwar period of economic growth, from dams along the Snake and Colorado rivers to urban freeways like Interstate 81 in Syracuse. The focus is on removal.
A big factor in the increase in construction costs is what the authors of the Brookings study call “citizen voice.” Starting in the 1960s, ambitious projects by planning czars like Robert Moses began. Increasingly constrained by changes in laws and regulations It aims to protect worker safety, the environment, community needs, endangered species, and a variety of other interests. New laws impose additional costs, and federal court rulings make it easier for citizens to contest projects or demand concessions, causing prices to go up and projects to take longer to complete. became.
The original Key Bridge was built because costs had already begun to rise significantly, and by all appearances, costs continue to rise.concerns about Environmental impact of construction It’s as high as ever. The water area where the key bridge was Important populations of marine life It is an important resting place for migratory birds, and protecting it would increase the cost of building the bridge.
Fed estimates $2 billion price tag
Federal officials told Maryland lawmakers: Replacing and cleaning the bridge will cost at least $2 billion., According to Bloomberg. Even this is likely to be an underestimate, especially if interest costs for bridge financing are included.
conservative estimate Benjamin Shafer, a professor of civil and systems engineering at Johns Hopkins University, told USA Today that cleaning up the disaster site and rebuilding the bridge could take 10 years.
A lot of things can happen in 10 years. Five more parliamentary elections and three presidential elections are scheduled to be held.The economy will almost certainly go into and come out of at least one recession. From now until 2034. Changes in the U.S. fiscal situation and the government’s political stance could significantly slow recovery or, less likely, accelerate it.Therefore, it is no wonder that the bridge has not yet been rebuilt 15 years From now on, and if the final price is near 5 billion dollars.
