US ECONOMY & POLITICS

U.S. Jobless Claims Edged Up to 373,000 Last Week – Wall Street Journal, 7/8/2021

• Jobless claims held nearly steady last week, interrupting a downward trend and showing the labor market’s recovery remains uneven, at a time when many states are discouraging workers from tapping jobless assistance.
• Initial unemployment claims, a proxy for layoffs, rose by 2,000 last week to a seasonally adjusted 373,000, the Labor Department said Thursday. The previous week’s figure was revised up to 371,000.
• The four-week moving average, which smooths out volatility in the weekly figures, was 394,500, the lowest reading since March 2020.
• The number of continuing unemployment payments made through regular state programs also fell to the lowest level since March 2020, for the week ended June 26, the Labor Department said.
• Unemployment assistance payments made through pandemic programs fell by nearly a half million for the week ended June 19 as some states ended their participation last month.

Fed Officials Saw Progress Toward Taper Move, Minutes Show – Bloomberg, 7/8/2021

• Federal Reserve officials were not ready to communicate a timeline for scaling back asset purchases due to high uncertainty on the economic outlook, a record of their June gathering showed, though they did want to nail down a plan in case they have to move sooner.
• “The committee’s standard of ‘substantial further progress’ was generally seen as not having yet been met, though participants expected progress to continue,” according to minutes from the June 15-16 Federal Open Market Committee meeting published Wednesday.
• The June meeting marked a turn in the central bank’s comfort with inflation risks amid heightened price pressures as the economy reopens from the pandemic.
• But above all, the minutes show the committee had a lot of questions about how soon labor shortages and supply bottlenecks contributing to inflation would resolve.
• Several participants emphasized “that uncertainty around the economic outlook was elevated and that it was too early to draw firm conclusions about the paths of the labor market and inflation,” the minutes noted.

Borrowing Is Back as Sign-Ups for Auto Loans, Credit Cards Hit Records – Wall Street Journal, 7/8/2021

• Consumer demand for auto loans and leases, general-purpose credit cards and personal loans was up 39% in April compared with the same period last year, according to credit-reporting firm Equifax.
• It was also up 11% compared with April 2019, according to Equifax, which measured how often lenders checked consumers’ credit reports to make loan decisions.
• Equifax said lenders extended a record number of auto loans and leases in March, the latest month for which data are available.
• They also bumped up credit-card originations, issuing more general-purpose credit cards than any other March on record. Equifax’s data goes back to 2010.
• Separately, lenders mailed 127 million personal-loan solicitations to people’s homes in May, up from 60 million a year prior, according to Mintel Comperemedia, which tracks the offers.

Biden Pitches Child-Care, Education Plan as Democrats Debate Size – Wall Street Journal, 7/8/2021

• President Biden sought to rally public support for a multitrillion-dollar education and child-care plan at the core of his domestic-policy agenda, as Democrats in Congress wrestle with disagreements over the size and scope of the package.
• The president is simultaneously pressing Congress to pass a $1 trillion bipartisan infrastructure bill and the education and child-care plan, which Democrats hope to approve without Republican support through a process tied to the budget known as reconciliation.
• Both measures face challenges. The White House needs at least 10 Republican votes in the Senate to pass the infrastructure package, which was negotiated by a group of centrist senators.
• And Democrats must stick together if they want to move the education and child-care plan without the backing of Republicans. Democrats can lose no more than four Democratic votes in the House and none in the Senate on legislation opposed by all Republicans.
• Sen. Joe Manchin (D., W.Va.), who has said that the legislation should be fully paid for, has said he could support a package of around $2 trillion.
• Senate Budget Committee Chairman Bernie Sanders (I., Vt.) has floated spending as much as $6 trillion, with half of it paid for by tax increases.

Biden to Target Railroads, Ocean Shipping in Executive Order – Wall Street Journal, 7/8/2021

• The Biden administration will push regulators to confront consolidation and perceived anticompetitive pricing in the ocean shipping and railroad industries as part of a broad effort to blunt the power of big business to dominate industries, according to a person familiar with the situation.
• As part of a sweeping executive order expected this week, the administration will ask the Federal Maritime Commission and the Surface Transportation Board to combat what it calls a pattern of consolidation and aggressive pricing that has made it onerously expensive for American companies to transport goods to market.
• The administration says the relatively small number of major players in the ocean shipping trade and in the U.S. freight rail business has enabled companies to charge unreasonable fees.
• In the case of the seven Class 1 freight railroads, consolidation has given railroads monopoly power over sections of the country where theirs are the only freight tracks, the person said.

EUROPE & WORLD

ECB Aims for Slightly Higher Inflation, Stops Short of Fed’s Major Shift – Wall Street Journal, 7/8/2021

• European Central Bank officials forged an agreement on a new policy framework, aiming for slightly higher inflation in a region that is struggling to emerge from the Covid-19 recession, but stopping short of the major policy shift unveiled in 2020 by the Federal Reserve.
• The ECB’s policy changes, its first in nearly two decades, represent a compromise between conservative policy makers in northern countries like Germany, who tend to worry about high inflation, and those in Southern European nations such as Italy who are more concerned about weak economic growth.
• The bank said it would aim to keep eurozone inflation at 2% over the medium term, instead of the current target of just below 2%, and would allow room to overshoot its target when needed.
• It also said it would move to incorporate house prices into its calculation of the inflation rate, and would support efforts to combat climate change via its bond-purchase programs and collateral framework.

China Car Sales Fall With Chips in Short Supply – Wall Street Journal, 7/8/2021

• China’s car sales snapped an 11-month streak of year-over-year growth as demand bolstered by a strong economic recovery collided with a global semiconductor shortage.
• Sales of passenger cars in June were down 5.1% from a year earlier to 1.58 million vehicles, the China Passenger Car Association said Thursday.
• April-June sales were up 2.3% from the same period last year, when the market began to recover from a nationwide pandemic lockdown.
• Japanese car makers were among the hardest-hit by the chip shortage last month. Nissan’s China sales were down 16% in June from a month earlier, while Honda’s were off 17%. Honda cited component shortages.
• The car association said it expects supply constraints to ease in the second half of the year.

Deliveroo hikes forecasts as food delivery demand stays strong – Reuters, 7/8/2021

• Britain’s Deliveroo reported an 88% jump in quarterly food orders and raised its annual order value forecasts on Thursday, as people remained hooked on having meals and groceries delivered to their home.
• The food-delivery firm, which connects customers with over 115,000 restaurants and grocers in the UK and 11 other countries, predicted gross transaction value (GTV) would grow 50%-60% in 2021, compared with an earlier forecast of 30%-40%.
• Still, Deliveroo said investments in “growth opportunities” this year and its expectation that average order values would at some point revert towards pre-Covid levels, led it to estimate profit margins were likely to come in at the lower end of a 7.5% to 8% range it had given earlier.

Volkswagen, BMW Fined $1 Billion by Europe Over Diesel-Tech Collusion – Wall Street Journal, 7/8/2021

• The European Commission on Thursday slapped fines totaling $1 billion on BMW and Volkswagen, as well as VW’s Porsche and Audi units, after finding that the German auto makers had colluded to impede competition in diesel emissions systems.
• The investigation dates back to 2019 when, in the wake of the Volkswagen diesel emissions-cheating scandal, the Commission alleged that German car makers had held technical meetings between 2009 and 2014 that violated European Union antitrust rules because the companies agreed not to compete to develop the best emissions systems for diesel-powered cars.
• Instead, they agreed to fulfill the minimum requirements of EU regulation.
• BMW said in a statement that it agreed to settle the investigation after the EU dropped additional antitrust charges.
• The company said the talks with other car makers were aimed at creating a customer-friendly emissions system, and said BMW never engaged in any unlawful manipulation of emissions-control systems.

BOJ seen cutting this year’s growth forecast as COVID-19 curbs hurt outlook – sources – Reuters, 7/8/2021

• The Bank of Japan is expected to slash this fiscal year’s economic growth forecast in fresh quarterly projections due out next week, sources say, as prospects of another state of emergency for Tokyo threaten to dent consumption.
• But the central bank is likely to maintain its view the world’s third-largest economy is headed for a moderate recovery as robust exports and output offset some of the weakness in consumer demand, said four sources familiar with its thinking.
• The expected downgrade highlights Japan’s struggle to contain the COVID-19 pandemic, as slow vaccine rollouts and a resurgence in infections force authorities to declare a state of emergency for Tokyo just 16 days before the Olympic Games begin.

World food prices fall in June for first time in a year – FAO – Reuters, 7/8/2021

• World food prices fell in June for the first time in 12 months, pushed lower by declines in vegetable oils, cereals and dairy products, the United Nations food agency said on Thursday.
• The Rome-based FAO also said in a statement that worldwide cereal harvests would come in at nearly 2.817 billion tonnes in 2021, slightly down on its previous estimate, but still on course to hit an annual record.
• The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 124.6 points last month versus a revised 127.8 in May.
• FAO’s vegetable oil price index plunged 9.8% in June, partly on the back of a fall in palm oil prices, which were hit by expectations of output gains in leading producers and a lack of fresh import demand.

Factmonster – TODAY in HISTORY

• The first public reading of the Declaration of Independence was given in Philadelphia, Pa. (1776)
• The Wall Street Journal began publication. (1889)
• The Recording Industry Association of America (RIAA) awarded the first official gold album. It was for the Oklahoma soundtrack. (1958)