It's hump day and rate cut day, so I called the senior business correspondent Christina Romans share your report from the briefing with Chairman Jermon Powell. Her takeaway? There seems to be no magic bullet to solve some of the economic problems affecting ordinary people. But the Fed has to do something, and here we are.
However, if you are visiting the US from abroad and have questionable social media posts, you may want to reconsider your travel plans. On Here's the scoopI spoke to Julia Ainslie, which is reporting a new policy on social media that could impact many travelers coming to the States.
Today's newsletter was prepared by Senior Editor Michelle Garcia. Let's get to it.
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First of all
As expected, The Federal Reserve cut interest rates this afternoon by a quarter point to help stabilize a weaker labor market without stoking inflation.
Fed members are trying to get into trouble.
“There is no risk-free path for policy as we navigate the tension between our employment and inflation goals,” Fed Chairman Jerome Powell said at a news conference. “Our responsibility is to ensure that a one-time increase in the price level does not become a permanent inflationary problem.”
Does the math add up?: The economic data on which these decisions are usually based is a bit blurry this time due to the six-week government shutdown earlier this fall. Federal agencies that compile key information, such as the unemployment rate or the consumer price index, remained closed throughout October. Thus, Fed voting members today had to rely on alternative data sources that indicated labor market slowdown.
JPMorgan Chase CEO Marianne Lake told NBC News yesterday“The data looks good, consumers look resilient, small businesses are resilient, but they are less able to withstand increased stress.”
This is the third time the Fed has cut rates this year, and the decision was not unanimous, which is quite unusual for this otherwise unified board of directors. Two members did not want any cuts, and Stephen Mearan, on temporary leave from the White House, voted for a half-point cut.
Why is this important: One of the Fed's jobs is to steer us away from a terrible job market. One way board members do this is by adjusting interest rates up and down, making it cheaper or more expensive to borrow money.
Speaking of which, rate cuts will also likely lead to lower interest rates on loans for large purchases, such as a car or a home mortgage. So if you have enough money for a down payment on a home, it might be time to take the plunge.
But Christina Romans, who attended the Fed news conference, asked Powell if this would help people looking to buy a home. Powell said he doesn't expect immediate relief for homebuyers because there are so many factors at play in the housing market.
“The housing market is facing some really serious challenges,” Powell told her. “I'm not sure a 0.25 basis point cut will make much difference to people. Housing supply is low.”
(In fact, the country's housing market is so difficult that The average age of first-time homebuyers is 40, a record high.. I like the idea that 40 is the new 30, but maybe not in this regard).
There are also concerns about inflation. Although the president said last night in Pennsylvania that inflation is no longer an issue, the rate is at 2.8%, meaning it's still slightly more expensive than a year ago – and above the Fed's 2% target.
The Personal Consumption Expenditures Price Index—another very cool and apparently trendy data set that the Fed uses as an inflation indicator—shows that people's spending has been relatively flat over the past few months. Even with the cuts, the Fed is signaling caution about persistent inflation, so experts say it may not cut interest rates again anytime soon.
Powell said today that the board expects inflation to fall to 2.3% next year. He also told Christina that as his term expires in May, he is focused on passing on a strong economy and stable inflation to his successor.
INNER SCOOP
The US may require foreign tourists share five years of social media history with the federal government before entering the country. Yesterday, US Customs and Border Protection published a 60-day notice in the Federal Register seeking public comment on the plan, so it is not final and subject to change. CBP said this potential change is consistent with an executive order issued in January to collect information on foreign visitors applying under the U.S. Visa Waiver Program.
The program, which covers people in countries including the US, Japan, Australia and France, will ask travelers to share email addresses from the past decade, phone numbers, names and details of family members, and social media information. To learn more about this plan, I reached out to Department of Homeland Security senior correspondent Julia Ainslie.
BY THE WAY
🛢️ Attorney General Pam Bondi confirmed that US seizes oil tanker off Venezuela as the country continues to build up its military presence in South America.
🌍 During a rally in Pennsylvania for affordability, President Trump spoke about Somalia as “dirty, filthy, disgusting, crime-filled” and asked why more people from Norway, Sweden and Denmark don't migrate to the US instead.
📚 Sophie Kinsellabestselling author of Shopaholic has died aged 55, just 18 months after discovering she had an aggressive form of brain cancer.
🗳️Eileen Higgins will be Miami's first Democratic mayor for nearly three decades, supporting the national party before the midterm election cycle began.
💸 Department of Education will complete a large student loan repayment program launched by President Joe Biden.
👩🏼⚖️ An Army gynecologist faces criminal charges Following an investigation into allegations that he secretly videotaped patients during examinations, the Army Office of Special Counsel said yesterday.
⚽ Egypt and Iran are unhappy about being paired up for an LGBTQ Pride-themed match during a World Championship match scheduled for Seattle.
✒️ In 2023, the State Department adopted Calibri, a font that is easier to read for people with disabilities. Secretary of State Marco Rubio ordered a return to the “more formal” Times New Romanrejecting “immoral, radical, wasteful” diversity, equity, inclusion and accessibility initiatives.
👠 Former star of The Real Housewives of Salt Lake City Jen Shah released from federal prison today, more than four years early from her 6.5-year sentence. She leaves behind her fellow inmates Ghislaine Maxwell and Elizabeth Holmes.
Thanks for reading, and if you're a subscriber, I'll see you tomorrow.
