US ECONOMY & POLITICS

Jobless claims stay extremely low at 204,000. No sign of rising U.S. unemployment. – Market Watch, 9/28/2023

• The number of Americans who applied for unemployment benefits rose slightly last week to 204,000, but layoffs remained extremely low and there was no sign of rising unemployment.
• New jobless claims edged up from a revised 202,000 in the prior week, the government said.
• Economists had forecast new claims in the week ended Sept. 23 to total 214,000.
• New jobless claims fell in 33 of the 53 states and territories that report these figures to the federal government.
• Claims rose in 20 states.
• The number of raw or actual claims — that is, before seasonal adjustments — fell to a nearly one-year low of 174,590.
• The number of people collecting unemployment benefits in the U.S., meanwhile, rose by 12,000 to 1.67 million.

Fed’s Goolsbee Says Traditional Economic View May Cause Overshoot – Bloomberg, 9/28/2023

• Federal Reserve Bank of Chicago President Austan Goolsbee said policymakers shouldn’t place too much weight on the traditional economic idea that steep job losses are needed to quell inflation, which he said could lead officials to raise interest rates too high.
• This traditionalist view, Goolsbee said, “misses key features of our recent inflationary experience and that, in today’s environment, believing too strongly in the inevitability of a large trade-off between inflation and unemployment comes with the serious risk of a near-term policy error.”
• In speech titled “The 2023 Economy: Not Your Grandpa’s Monetary Policy Moment,” Goolsbee argued that historic economic relationships, like that between unemployment and inflation — with prices typically rising when jobs were plentiful — may not be the best guideposts today given how different the post-Covid inflationary period has been.
• Goolsbee said policymakers should instead focus on how different components of core inflation are decelerating — with cooling still needed especially in housing inflation — as well as monitor productivity growth, not obsess too much on near-term real wages and keep an eye on inflation expectations.
• “The unwinding of supply shocks, the composition of demand returning to more stable patterns, and Fed credibility are central to why I think it might be possible today to reduce inflation while avoiding a deep recession,” he said.
• “I haven’t decided what I’m going to do at the next one but at this kind of progress I feel comfortable with what I’ve said before: We’re moving to a period where the question is not how much more is the rate going to go up – it becomes how long are we going to keep it here,” Goolsbee said in a question-and-answer session following the speech.
• He cited higher oil prices, a slowdown in the Chinese economy, the autoworkers’ strike and a potential government shutdown as shocks that could impact the economy.

US Consumer Spending Rose at Weakest Pace in a Year Last Quarter – Bloomberg, 9/28/2023

• US consumer spending advanced at half the pace as previously reported in the second quarter, largely due to weaker services outlays, according to government figures published Thursday.
• Personal consumption, the main driver of the US economy, rose an annualized 0.8% in the April-to-June period, according to the third estimate of gross domestic product from the US Bureau of Economic Analysis.
• That compared with 1.7% in the previous estimate, and marked the weakest advance in over a year.
• Overall GDP rose at an unrevised 2.1% rate during the period.

• Stronger business fixed investment helped offset the slowdown in consumer spending, advancing at a 7.4% pace versus the previously reported 6.1% estimate.
• Net exports and inventories were also revised higher, no longer acting as a drag on growth.
• A gauge of the income generated and costs incurred from producing goods and services — gross domestic income — advanced 0.7% in the second quarter after a sizable upward revision to the first-quarter figures, the BEA figures showed.
• Averaging GDI and GDP, the economy grew 1.4% in each quarter.
• In the second-quarter figures, the PCE price index excluding food and energy — a gauge Fed officials watch closely — rose at an unrevised 3.7% pace in the second quarter.

US Pending Home Sales Index Slides to Lowest Level Since 2020 – Bloomberg, 9/28/2023

• A gauge of pending US previously owned home sales fell in August to the lowest level since April 2020, evidence of a resale market throttled by higher mortgage rates.
• The National Association of Realtors’ index of contract signings tumbled 7.1% to 71.8 from July, the group reported Thursday.
• The decline was larger than all estimates in a Bloomberg survey of economists.
• Compared with a year earlier, pending home sales were down nearly 19% on an unadjusted basis.
• All regions saw declines in August.
• Contract signings in the South fell to the lowest level since 2010, while the West posted the weakest reading in data back to 2001.

UAW Threatens More Strikes as GM, Stellantis Try to Keep Repair Parts Flowing – Wall Street Journal, 9/28/2023

• The United Auto Workers union pledged to widen its strike on Friday barring significant progress in talks with Detroit carmakers, as the companies take steps to keep critical parts flowing to their dealerships.
• Parallel talks between the UAW and General Motors, Ford Motor and Chrysler-parent Stellantis continued, a union official said Wednesday, nearly two weeks into a limited strike at all three automakers.
• The UAW official said the union would identify new strike targets at 10 a.m. Friday, with walkouts to begin at noon, unless bargainers make headway in negotiations for new four-year contracts.
• GM and Stellantis have devised plans for white-collar workers to staff the parts hubs so they could continue shipping components used for customer maintenance and repairs at dealerships.
• Ahead of the strike, Stellantis additionally leased a nonunion warehouse and banked 30 days of inventory for 2,500 different types of parts, according to a document seen by The Wall Street Journal.
• It is unclear whether Stellantis, which owns Jeep, Ram and other brands, is using the warehouse or has deployed salaried staff to help move parts, now that the facilities are on strike.

GOP Presidential Candidates Fail to Outshine Trump at Second Debate – Wall Street Journal, 9/28/2023

• The second GOP presidential debate was full of arguments, one-liners and strained attempts for attention, but none of the candidates made a case strong enough to challenge Donald Trump as the front-runner.
• Seven hopefuls appeared desperate to make an impact before the GOP electorate further solidifies behind Trump, who has opened up a huge lead for the nomination.
• Yet beyond a handful of criticisms about the former president skipping the event and his foreign policy, the field largely trained its fire on each other.
• As the debate concluded, moderators asked them to vote a candidate “off the island.”
• All the candidates but former New Jersey Gov. Chris Christie, who named Trump, refused to play along, a sign of how a large field might continue.
• Nikki Haley squabbled with multiple opponents, particularly businessman Vivek Ramaswamy and South Carolina Sen. Tim Scott, and Florida Gov. Ron DeSantis hammered away at his talking points.
• The candidates tried to have it both ways when asked about the United Auto Workers strike.
• At the last debate, Trump’s rivals only barely went after him. This time, they were quick to attack him for skipping the event.

U.S. Races to Fortify Power Grid Against Extreme Weather – Wall Street Journal, 9/28/2023

• A gusher of cash is starting to pour out of Washington to carry out the Biden administration’s plan to strengthen the U.S. power grid and make it more resilient to outages and extreme weather.
• The Energy Department on Thursday is set to announce a new round of grants to tribes, territories and 11 states including Arizona, Florida and West Virginia as part of a $2.3 billion program designed to advance a key piece of the White House’s clean-energy drive.
• It is a fraction of the amount the government plans to spend on the grid in coming years.
• The administration sees strengthening the grid as crucial to getting Americans to adopt greener alternatives such as electric vehicles that rely on the network, especially as harsher weather conditions from global warming make utilities more vulnerable.
• Increasing capacity also would help transmit the growing amount of wind and solar energy the government is encouraging as part of a shift away from coal and natural gas.
• “We need to deploy transmission lines at twice the current pace than we’ve experienced in the last couple years,” he said at an Energy Department conference in Washington, D.C.

Kari Lake to Announce Senate Run, Setting Up High-Stakes Arizona Race – Wall Street Journal, 9/28/2023

• Kari Lake will announce a run for Kyrsten Sinema’s Senate seat next month, setting the stage for what is expected to be one of 2024’s most competitive and unpredictable races.
• Lake, the former local TV news anchor turned conservative darling who is still contesting the results of her 2022 loss for governor, told The Wall Street Journal she will launch her next campaign at an Oct. 10 rally.
• The race looks likely to be a three-way matchup between the Republican Lake, Democratic Rep. Ruben Gallego and Sinema, who now identifies as an independent.
• The winner of the seat could determine which party controls the U.S. Senate.
• “We need to get a senator in there who is going to fight back and put America first,” Lake said in an interview.
• Arizona is a top battleground in next year’s presidential and Senate elections, and combined campaign spending in the state will be in the hundreds of millions of dollars.
• Voters here have narrowly elected Democrats for president, governor and Senate over the past several cycles, after moderate Republicans and independents moved away from former President Donald Trump and his GOP allies, including Lake.

Fed Watchdog Faults Central Bank Officials on Oversight of SVB – Bloomberg, 9/28/2023

• The Federal Reserve’s bank supervision officials failed to step up their oversight and scrutiny of risks at Silicon Valley Bank before its collapse in March, the US central bank’s internal watchdog said in a new report.
• The regional bank examination approach “for SVB did not evolve with SVB’s growth and increased complexity,” the Fed inspector general said in a report released Thursday.
• The Board of Governors in Washington and the San Francisco Fed examiners did not effectively transition SVB to the large bank examination process, the IG said in the review of the bank’s failure.
• “Examiners should have closely scrutinized the risks from rising interest rates on SVB’s investment securities portfolio,” the IG said.
• The Fed inspector general also criticized SVB management, which “failed to appreciate the significance of the multiple layers of risks or recognize the vulnerabilities inherent in the bank’s condition.”
• Barr called the failure “a textbook case of mismanagement” and blamed Fed supervisors for lacking “forceful enough action.”
• He also pointed to his predecessor, Randal Quarles, saying a “shift in culture” changed how “supervision was executed.”

Speaker McCarthy criticizes Senate measure, says House will get bill done to avoid shutdown – CNBC, 9/28/2023

• House Speaker Kevin McCarthy, R-Calif., on Thursday criticized a short-term Senate government funding bill — stoking more fears that a shutdown could take place — saying the measure would not bolster border security.
• “I look at the current Senate bill that does nothing to deal with the border security. Don’t take my word for it.
• The governor of Massachusetts declared a state of emergency,” he told CNBC’s “Squawk Box,” while also noting New York City’s increased spending on shelter for migrants.
• “This is something that Democrats and Republicans want to have done,” he said.
• “I’ve got members who have held us up since the summer not to be able to bring our appropriation bills up. Otherwise, we probably have them all done,” he said.
• “I’ve got members who will not vote to have a stopgap measure to continue to fund government. I got members who say they’ll never vote for it.”

EUROPE & WORLD

Evergrande’s Billionaire Chairman Hui Is Under Police Surveillance – Bloomberg, 9/28/2023

• Hui Ka Yan, the billionaire chairman of beleaguered property developer China Evergrande Group, is suspected of crimes, according to a statement from the firm.
• Authorities have notified the company that Hui has been subject to “mandatory measures,” according to a statement to the Hong Kong stock exchange Thursday.
• The company’s shares will remain halted until further notice, it said.
• The move is the latest sign that the saga at the world’s most indebted developer has entered a new phase involving the criminal justice system, after authorities earlier this month detained some staff at its wealth management unit and two former executives were also reportedly held.
• The announcement follows a Bloomberg News report, citing people familiar with the matter, that Hui was taken away by Chinese police earlier this month and put under so-called residential surveillance, a type of police action that falls short of formal detention or arrest and doesn’t mean Hui will be charged with a crime.

Saudi Arabia Targets 70 Million International Visitors a Year – Bloomberg, 9/28/2023

• Saudi Arabia has set itself the target of attracting 70 million international tourists a year by 2030, as it looks to accelerate an $800 billion plan to become a travel hotspot and one of the world’s most visited countries.
• The kingdom has raised its goal from the previous one of 50 million visitors, Tourism Minister Ahmed Al Khateeb said in an interview.
• This year’s figure will end up being between 25 and 30 million, he said.
• It’s “a very reasonable target” for the end of the decade given the sheer investment underway to create more resorts and a new airline to bring people to the country, he said.
• Al Khateeb said the government had also revised up its 2030 goal for total annual tourist trips — a figure that includes local travelers — to 150 million from 100 million.
• Saudi Arabia hosted an event marking United Nations’ World Tourism Day on Wednesday.
• It included the presence of the Israel’s Tourism Minister Haim Katz in what was the highest-level official visit by an Israeli official to the kingdom yet.
• The move was a further sign of warming ties between the countries, which are negotiating a deal with the US that would see them establish formal diplomatic ties.

Factmonster – TODAY in HISTORY

• William the Conqueror invaded England. – 1066
• Portuguese explorer Juan Rodríguez Cabrillo arrived at present-day San Diego. – 1542
• The closing campaign of the American Revolution at Yorktown Heights, Va. began. – 1781
• Eight Chicago White Sox players were indicted for fixing the 1919 World Series in the “Black Sox scandal.” – 1920
• Two U.S. Army planes landed in Seattle after completing the first round-the-world-flight in 175 days. – 1924
• A German-Soviet agreement divided Poland between Nazi Germany and the USSR. – 1939
• Walter Washington became the first mayor of the District of Columbia. – 1967
• Japan and Communist China agreed to re-establish diplomatic relations. – 1972