Tag: Federal Reserve

Companies are Slashing Away at Debt as Surging Inflation Casts Shadow over Interest Rate Cuts

South Carolina Sun Staff
Business meeting

Many companies are looking to cut down on their debts as recent high inflation reports have made borrowing more expensive as the prospect of interest rate cuts by central banks diminishes, The Wall Street Journal reported Wednesday.

Even companies with already high credit outlooks are deleveraging to boost their rating with top agencies and reduce debt costs that have increased along with interest rates, while firms with lower ratings are needing to cut debt to maintain profitable operations, according to the WSJ. Investors have had to adjust their view about when interest rates might decline in recent weeks as persistently high levels of inflation have made it less likely that central banks around the world, including in the U.S., will cut interest rates, reducing the cost of holding debt.

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Commentary: Inflation Will Stick Around as Long as The Big Spenders Do

South Carolina Sun Staff
President Joe Biden signing a bill

August came early to the nation’s capital with last week’s round of March inflation data. The late summer weather in Washington, D.C., is notoriously hot and sticky, two accurate descriptors of the latest price increases facing families and businesses alike. Inflation is stubbornly high, and the Biden administration’s spendthrift public policies are to blame.

In the past 12 months, consumer prices rose 3.5 percent, the second month of accelerating annual inflation. In March alone, prices rose 0.4 percent. That may not sound like much, but it’s actually terrible. If that monthly inflation rate holds steady, prices will double in less than 16 years.

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Investors Scramble to Adjust Their Portfolios After Inflation Surge

South Carolina Sun Staff
New York Stock Exchange trading floor

Many investors are diversifying their portfolios from standard stocks and bonds as March’s inflation surge casts doubt on economy-boosting rate cuts from the Federal Reserve happening this year, according to Reuters.

The consumer price index increased to 3.5 percent year-over-year in March, up from 3.2 percent in February and far from the Fed’s 2 percent target. Markets prior to March’s inflation report anticipated a few rate cuts this year, leading investors to buy up stock in anticipation that markets would rise when cuts materialize, but the increasing possibility that the Fed will not cut rates this year has led investors to switch up their market strategy, according to Reuters.

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Retailer Joann Fabrics Files for Bankruptcy as Americans Cut Back on Creature Comforts

South Carolina Sun Staff
Joann Fabrics store

Major fabric and craft retailer Joann announced Monday that it was filing for bankruptcy as consumers pull back on spending due to harsh economic conditions.

The retailer recently reached an agreement with a majority of its financial stakeholders as well as other financing parties, giving the company around $132 million in new financing while also reducing the debt on the company’s balance sheet by around $505 million, according to an announcement from Joann. Retail sales across the U.S. economy have continued to slump in recent months, growing just 0.6 percent month-to-month in February, not including inflation, and declining 1.1 percent in January as consumers pull back on non-essentials as prices rise.

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Commentary: Unemployment Up Another 760,000 Since December 2022 as Unemployment Rate Jumps to 3.9 Percent

South Carolina Sun Staff

Don’t look now, but U.S. labor markets appear to be churning in the wrong direction, as the unemployment rate jumped to 3.9 percent in February, and the unemployment level hit a new high for this cycle at almost 6.5 million, up 760,000 from its low this cycle of 5.7 million in Dec. 2022, according to the latest data from the Bureau of Labor Statistics.

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Fed Continues Rate Pause with Cuts on the Horizon

South Carolina Sun Staff

The Federal Reserve announced on Wednesday that it would not change its benchmark federal funds rate, but does project rate cuts later this year.

The Fed’s decision not to raise rates keeps the target range between 5.25% and 5.50%, the highest level since 2001, marking the fourth meeting in a row where the Fed chose to not adjust the rate, according to an announcement from the Federal Reserve following a meeting by the Federal Open Market Committee (FOMC). Investor projections for upcoming FOMC meetings are increasingly predicting a rate cut, with the market calculating around 58% odds that the rate will be reduced in March as of Jan. 31, according to CME Group.

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Corporate Media in Crisis as Outlets Grapple with Biden’s Economy

South Carolina Sun Staff
Joe Biden

Numerous legacy media outlets are struggling with challenges posed by President Joe Biden’s economy and resorting to drastic measures, Axios reported on Friday.

Close to a dozen of these outlets are firing workers, dealing with employee strikes or looking to sell, according to Axios. The Federal Reserve’s imposition of high interest rates to bring down inflation is hindering their ability to accumulate more debt, complicating their efforts to extend the timeline for resolving their financial difficulties.

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Biggest Bank in U.S. Records Most Profitable Year Ever Despite Sector Crisis

South Carolina Sun Staff

Top U.S. bank JP Morgan Chase on Friday reported $49.6 billion in profits for 2023, a record for the bank, despite a sector crisis that shut down multiple smaller institutions.

Profits for the year were up for the bank despite net income bringing in only $9.3 billion in the fourth quarter, falling 15%, while the company brought in $39.9 billion in net revenue, up 12% for the quarter, according to JP Morgan’s fourth quarter earnings report. JP Morgan’s record profits come after a year of crisis for the sector, starting with a bank run in March at Silicon Valley Bank (SVB), which then spread to First Republic Bank and Signature Bank, prompting the Federal Deposit Insurance Corporation (FDIC) to step in and seize the banks, ultimately selling First Republic’s assets to JP Morgan.

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Federal Reserve Employees Went Through DEI Training as Inflation Rose

South Carolina Sun Staff

New documents reveal that, as the nation suffered from the strain of historically high inflation, employees at the Federal Reserve spent more time going through diversity, equity, and inclusion (DEI) training than addressing the financial crisis.

According to the Washington Free Beacon, the newly-obtained documents reveal that there were four DEI training sessions held in the spring and summer of 2021. These lessons featured such teachings as “correct pronoun usage is a civil right” and acknowledging “White privilege,” as well as demanding the use of “inclusive language” such as “Latinx,” a word that is meant to erase the historically gendered language used in Hispanic languages.

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