Crypto News: Economics Daily: The case to pause

I'm Chris Anstey, a senior editor for economic policy in Boston, and today we're looking at the upcoming US jobs report and the June Fed decision. Send us feedback and tips to ecodaily@blooomberg.net or tweet to @economics. And if you aren't yet signed up to receive this newsletter, you can do so here.

The House passed debt-limit legislation forged by President Joe Biden and Speaker Kevin McCarthy.
The US economy showed signs of cooling in recent weeks as hiring and inflation eased slightly, according to the Federal Reserve.
Underlying inflation in the euro zone dipped by more than expected.

All Fed officials are not created equal. The chair, of course, stands supreme in setting the central bank's agenda and frame of debate. But the gradation doesn't stop there.

Fed watchers sometimes refer to the "troika" of the chair, vice chair and president of the Federal Reserve Bank of New York — who serves as vice chief of the Federal Open Market Committee that sets interest rates — as the core group of policymakers.

Governor Philip Jefferson isn't quite a troika member, but with his nomination as vice chair, financial markets suggest traders are already viewing him that way. On Wednesday, Jefferson signaled the central bank is inclined to keep rates steady at its next meeting in June. And Treasuries rallied on his remarks.

"Skipping a rate hike at a coming meeting would allow the Committee to see more data before making decisions about the extent of additional policy firming," Jefferson said. He also advised that a pause doesn't necessarily mean the Fed's done.

His comments aligned with the suggestion of a June pause that Chair Jerome Powell gave in early May, but was in conflict with some Fed officials, including Cleveland Fed President Loretta Mester, who opposed taking a rate hike off the table.

Economists including Rubeela Farooqi at High Frequency Economics flagged that the upcoming reports on May employment and the consumer price index could still sway the panel when it gathers June 13-14. But as Steve Matthews reports here, Jefferson has helped take out some of the sting from any hot jobs number on Friday.

And it would take a trend reversal for the May data to come in softer than economists' forecasts. The long-predicted cracking of the US jobs market remains just a prediction at this point.

As usual, the median estimates shows a slowdown in hiring, rise in unemployment and a dip in wage gains. We'll see. The number of unfilled jobs in the US unexpectedly jumped, to over 10 million — more than every economist had expected in Bloomberg's survey.

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China's factory surveys this week highlighted an uncertain outlook.
Emmanuel Macron's transformation of France is starting to show cracks.
The US birth rate declined slightly last year after picking up in 2021.
A lopsided trade relationship with India is forcing Russia to accumulate up to $1 billion each month in rupee assets that remain stranded.
The BRICS group is ramping up its bid for greater global influence.

About the only thing that's certain about the impact of artificial intelligence is that it's captured massive attention, from corporate executives to investors to economists and, yes, journalists.

But while the ultimate impact on economic growth, wages and worker-replacement rates is impossible to nail down, Dario Perkins at TS Lombard observes that this technological innovation is coming at an excellent time to promote its widespread take up.

"Most companies did not invest in the 2010s because low interest rates and cheap labor meant they did not need to; so, it is not surprising that productivity stagnated," he wrote in a recent note to clients. "But a world of labor shortages and persistent supply tensions will be more conducive to faster technological diffusion."

The ultimate magnitude of the likely acceleration of technological innovation is "questionable," but "there is clear evidence that AI can deliver significant productivity improvements," Perkins said. His take: "This is a big deal for a global economy that has been stuck in a long secular productivity funk."

Speaking of AI...