Federal Reserve Chairman Jerome Powell told congressional lawmakers Wednesday that the central bank is determined to bringing down inflation and has the ability to make that happen.
“At the Fed, we understand the hardship high inflation is causing. We are strongly committed to bringing inflation back down, and we are moving expeditiously to do so,” the Fed chief said in remarks for the Senate Banking Committee. “We have both the tools we need and the resolve it will take to restore price stability on behalf of American families and businesses.”
Along with expressing resolve on inflation, Powell said economic conditions are generally favorable, with a strong labor market and persistently high demand.
However, he acknowledged that inflation is running too hot and needs to come down.
“Over coming months, we will be looking for compelling evidence that inflation is moving down, consistent with inflation returning to 2%,” Powell said. “We anticipate that ongoing rate increases will be appropriate; the pace of those changes will continue to depend on the incoming data and the evolving outlook for the economy.”
He noted that the war in Ukraine and Covid-linked shutdowns in China are adding to inflation pressures, and added that the problem is not unique to the U.S. but is affecting many global economies.
Powell’s remarks are part of a congressionally mandated semiannual report on monetary policy – more commonly known in markets as the Humphrey Hawkins report and testimony, for the act which mandated them.
This is an especially delicate moment for Fed policy.
Over its past three meetings, the central bank has raised rates a cumulative 150 basis points – 1.5 percentage points – in an effort to tackle inflation that is running at its fastest annual pace in more than 40 years.
The 75 basis point increase at last week’s Federal Open Market Committee meeting marked the biggest single hike since 1994.
Powell has stressed that he thinks tighter monetary policy will be an effective tool against inflation, and has said he thinks the economy is well positioned to handle higher rates.
However, cracks have been showing in the economy this year that indicate the higher rates are coming as the economy already is slowing.
Gross domestic product declined at a 1.5% annualized pace in the first quarter and is on pace to be flat in the second quarter, according to the Atlanta Fed. Housing sales have been plunging and there even have been some signs that the jobs market is slowly decelerating at a time when inflation-adjusted wages have fallen 3% over the past year.
Despite the economic wobbles, Powell and his fellow policymakers have indicated the rate hikes will continue. Projections released at the meeting last week point to the Fed’s benchmark short-term borrowing rate rising to 3.4% by the end of this year, from its current targeted range of 1.5%-17.5%.
This is breaking news. Please check back here for updates.
Original Post: cnbc.com
Ukraine’s Zelenskyy Tells Davos Supplies of Western Tanks Must Outpace Another Russian Offensive
Ukrainian President Volodymyr Zelenskyy on Wednesday said the supplies of Western tanks must outpace another Russian attack, reviving Kyiv’s push for the delivery of heavily armored vehicles amid fears the Kremlin could soon launch a new mobilization drive.
“Mobilization of the world must outpace a next military mobilization of our joint enemy,” Zelenskyy said via videoconference at the World Economic Forum in Davos, Switzerland.
“The supplying of Ukraine with air defense systems must outpace Russia’s next missile attacks. The supplies of Western tanks must outpace another invasion of Russian tanks.”
“The restoration of security and peace in Ukraine must outpace Russia’s attacks on security and peace in other countries. A tribunal for military crimes must prevent new ones,” Zelenskyy said.
His comments come amid speculation that Russian President Vladimir Putin may be poised to announce another mobilization round.
Analysts at the Institute for the Study of War, a U.S.-based think tank, said Tuesday that Putin may announce “a second mobilization wave in the coming days, possibly as soon as January 18.”
Zelenskyy and senior Ukrainian officials have repeatedly urged Western allies to provide heavy military vehicles and weapons in order to help defeat Russia’s nearly year-long onslaught.
Poland, France and the U.K. have recently pledged to send tanks to the Ukrainian military, while Finland says it could also donate a small number of German-made Leopard 2 tanks to help Kyiv protect itself.
Germany’s government said last week, however, that it has no plans to provide Ukraine with the Leopard 2 tanks.
‘Another horrible day for Ukraine’
Earlier on Wednesday, the three main figures of Ukraine’s Interior Ministry died in a helicopter crash in a suburb of the capital Kyiv.
The helicopter fell near a kindergarten and a residential building in Brovary with the cause of the crash being investigated.
Ukraine’s Interior Minister Denys Monastyrskyi, First Deputy Minister Yevhenii Yenin and the Interior Ministry’s State Secretary Yurii Lubkovych were among those killed in the crash.
Ukrainian authorities said at least 14 people died in the crash. Initially, reports indicated 18 people had died in the crash, although this has since been revised.
Zelenskyy described the incident as a “tragedy” and led delegates at Davos in a minute’s silence “to honor the memory of every person Ukraine has lost.”
Separately, Ukrainian first lady Olena Zelenska said at a news conference that it was “another horrible day for Ukraine.”
— CNBC’s Holly Ellyatt contributed to this report.
Original Post: cnbc.com
Holiday Sales Fall Short of Expectations, Set Stage for Tougher 2023 for Retailers
Holiday sales fell short of industry expectations, as shoppers felt pinched by inflation and rising interest rates, according to data from the National Retail Federation.
Sales during November and December grew 5.3% year over year to $936.3 billion, below the major trade group’s prediction for growth of between 6% and 8% over the year prior. In early November, NRF had projected spending of between $942.6 billion and $960.4 billion.
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The sales forecast excludes spending at automobile dealers, gasoline stations and restaurants.
The gains include the impact of inflation, too, which drives up total sales. The consumer price index, which measures the cost of a broad mix of goods and services, was up 6.5% in December compared with a year ago, according to the Labor Department.
For retailers, the shopping season’s results reflect the challenges ahead. As Americans continue to pay higher prices for groceries, housing and more month after month, they are racking up credit card balances, spending down savings and having fewer dollars for discretionary spending.
This is breaking news. Please check back for updates.
Microsoft, Amazon and Other Tech Companies Have Laid Off More Than 60,000 Employees in the Last Year
The job cuts in tech land are piling up, as companies that led the 10-year bull market adapt to a new reality.
Microsoft said Wednesday that it’s letting go of 10,000 employees, which will reduce the company’s headcount by less than 5%. Amazonfresh round of job cuts Wednesday that are expected to eliminate more than 18,000 employees and become the largest workforce reduction in the e-retailer’s 28-year history.
The layoffs come in a period of slowing growth, higher interest rates to battle inflation, and fears of a possible recession next year.
Here are some of the major cuts in the tech industry so far. All numbers are approximations based on filings, public statements, and media reports:
Microsoft: 10,000 jobs cut
“I’m confident that Microsoft will emerge from this stronger and more competitive,” CEO Satya Nadella announced the move in a memo to employees that was posted on Microsoft’s website Wednesday. The move will reduce Microsoft’s headcount by less than 5%, and some employees will find out this week if they’re losing their jobs, he wrote.
Amazon: 18,000 jobs cut
Earlier this month, Amazonsaid the company was planning to lay off more than 18,000 employees, primarily in its human resources and stores divisions. It came after Amazon said in November it was looking to cut staff, including in its devices and recruiting organizations. CNBC reported at the time that the company was looking to lay off about 10,000 employees.
Amazon went on a hiring spree during the Covid-19 pandemic. The company’s global workforce swelled to more than 1.6 million by the end of 2021, up from 798,000 in the fourth quarter of 2019.
Alphabet (Verily): 230 jobs cut
Google parent company Alphabet15% of employees from its health sciences division Verily. Google itself has not undertaken any significant layoffs as of Jan. 18, but employees are increasingly growing worried that the axe may soon fall.
Crypto.com: 500 jobs cut
Crypto.com announced plans to lay off 20% of its workforce Jan. 13. The company had 2,450 employees, according to PitchBook data, suggesting around 490 employees were laid off.
“All impacted personnel have already been notified,” Marszalek said in a post.
Coinbase: 2,000 jobs cut
The exchange plans to cut 950 jobs, according to a blog post. Coinbase, which had roughly 4,700 employees as of the end of September, had already slashed 18% of its workforce in June saying it needed to manage costs after growing “too quickly” during the bull market.
“With perfect hindsight, looking back, we should have done more,” CEO Brian Armstrong told CNBC in a phone interview at the time. “The best you can do is react quickly once information becomes available, and that’s what we’re doing in this case.”
Salesforce: 7,000 jobs cut
In a letter to employees, co-CEO Marc Benioff said customers have been more “measured” in their purchasing decisions given the challenging macroeconomic environment, which led Salesforce to make the “very difficult decision” to lay off workers.
Salesforce will record charges of $1.0 billion to $1.4 billion related to the headcount reductions, and $450 million to $650 million related to the office space reductions, the company said.
Meta: 11,000 jobs cut
The tech giant’s cuts come after it expanded headcount by about 60% during the pandemic. The business has been hurt by competition from rivals such as TikTok, a broad slowdown in online ad spending and challenges from Apple’s iOS changes.
Twitter: 3,700 jobs cut
Shortly after closing his $44 billion purchase of Twitter in late October, new owner Elon Musk cut around 3,700 Twitter employees, according to internal communications viewed by CNBC. That’s about half the staff. Since then, significantly more employees have quit after Musk changed some company policies around working from home and wrote that he expected all employees to commit to a “hardcore” work environment.
Lyft: 700 jobs cut
Lyft announced in November that it cut 13% of its staff, or about 700 jobs. In a letter to employees, CEO Logan Green and President John Zimmer pointed to “a probable recession sometime in the next year” and rising rideshare insurance costs.
For laid-off workers, the ride-hailing company promised 10 weeks of pay, healthcare coverage through the end of April, accelerated equity vesting for the Nov. 20 vesting date and recruiting assistance. Workers who had been there for more than four years will get an extra four weeks of pay, they added.
Stripe: 1,100 jobs cut
Online payments giant Stripe announced plans to lay off roughly 14% of its staff, which amounts to about 1,100 employees, in November.
CEO Patrick Collison wrote in a memo to staff that the cuts were necessary amid rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets and sparser startup funding. Taken together, these factors signal “that 2022 represents the beginning of a different economic climate,” he said.
Stripe was valued at $95 billion last year, and reportedly lowered its internal valuation to $74 billion in July.
Shopify: 1,000 jobs cut
In July, Shopify announced it laid off 1,000 workers, which equals 10% of its global employees.
In a memo to staff, CEO Tobi Lutke acknowledged he had misjudged how long the pandemic-driven e-commerce boom would last, and said the company is being hit by a broader pullback in online spending. The company’s stock price is down 78% in 2022.
Netflix: 450 jobs cut
In a statement to employees the company said, “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth.”
Snap: 1,000 jobs cut
In late August, Snap announced it laid off 20% of its workforce, which equates to over 1,000 employees.
Robinhood: 1,100 jobs cut
Retail brokerage firm Robinhood cut 23% of its staff in August, after slashing 9% of its workforce in April. Based on public filings and reports, that amounts to more than 1,100 employees.
Tesla: 6,000 jobs cut
In June, TeslaElon Musk wrote in an email to all employees that the company is cutting 10% of salaried workers. The Wall Street Journal estimated the cuts would come to about 6,000 employees, based on public filings.
“Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas,” Musk wrote. “Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.”
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