Congress returned to work this week, joining President Biden, central bankers and corporate leaders worldwide in uncertainty about how to fix what ails the U.S. and European economies. The pandemic hangover and upheaval created by Russia’s war with Ukraine are adding to already ample risks.
U.S. economic growth is slowing this quarter, but consumers are not reining in their spending. Why would they? The job market and wages are strong. Gasoline, groceries, meat and housing prices, however, are sky high, leading the Federal Reserve to loudly signal it will launch a series of interest rate hikes beginning in earnest next week in an attempt to chill inflation while striving to avoid overkill, which would be recession (MarketWatch).
“We’re going into some challenging times and there is a lot of sentiment out there that we could even be heading towards some sort of recession,” Frank Sorrentino, chairman and CEO of ConnectOne Bank, told Fox Business.“Nobody knows for sure. … The concept of cheap, easy money with no credit issues will change.”
Democrats say they want to try to lower gasoline pump prices (The Hill), but they aren’t sure what proposals can pass or would work, including the idea of a federal gas tax holiday, which has its share of detractors. “We are definitely going to act to try to address the geopolitical issues that relate to gas prices being where they are [and] act in terms of some of the supply chain challenges,” said Rep. Hakeem Jeffries (D-N.Y.), who is seen as the odds on favorite to be the top House dem in a new Congress.
The Hill’s Sylvan Lane and The New York Times report that U.S. housing prices are so gargantuan that families eager to buy are shut out by cash-wielding investors (who put what they buy up for rent). They face a scarcity of affordable homes on the market and never-ending sticker shock. Why does this trend matter? Because for Americans, homeownership historically has been a route to wealth creation and for many, a middle-class lifestyle.
The Kremlin’s move on Wednesday to bar Poland and Bulgaria from plentiful, cheap natural gas sold by Russia may be a manageable problem for now in those two countries, but analysts say Moscow’s warning is meant for Germany as Russia tries to divide the West. The United States says it will work with allies to surge liquified natural gas to expand European supply.
German Chancellor Olaf Scholz today said Russia clings to the idea of a “forced peace” in Ukraine, which he argued will not work (Reuters).
“It is in the interest of both the EU and Russia to work out a solution,” Goldman Sachs analysts told clients Tuesday, warning that a larger suspension of natural gas in Europe could lead to a “significant economic toll” (The New York Times).
Russia is gambling, too, report The Hill’s Morgan Chalfant, Laura Kelly and Zack Budryk. The Kremlin wants to pressure European countries to pay for Russian energy imports in rubles to work around international sanctions.
© Associated Press / Rogelio V. Solis | Mississippi subdivision.
Related Articles
■ The Associated Press:The United Nations says it is mobilizing an experienced team to coordinate the evacuation of civilians from Mariupol’s steel plant in Ukraine. U.N. Secretary-General António Guterres and Russian President Vladimir Putin agreed “in principle” on Tuesday to the evacuation.
■ The Associated Press: Germany has been the top buyer of Russian energy since Russia’s war began in February, according to an independent report released on Thursday.
■ The New York Times: Russia is making slower advances on the ground in eastern Ukraine.
Virtual Event Invite
Join TODAY, “Sustainability Imperative” at 2 p.m. ET to gain insights from Energy Secretary Jennifer Granholm, actress and activist Sigourney Weaver, White House Council on Environmental Quality…
Read More: The Hill’s Morning Report — Biden, Congress mull mounting economic woes