BRUSSELS — The victory in Italian elections of the far-right and Euroskeptic leader Giorgia Meloni, who once wanted to ditch the euro currency, sent a tremor on Monday through a European establishment worried about a new right-wing shift in Europe.
European Union leaders are now watching her coalition’s comfortable victory in Italy, one of its founding members, with caution and some trepidation, despite reassurances from Ms. Meloni, who would be the first far-right nationalist to govern Italy since Mussolini, that she has moderated her views.
But it is hard for them to escape a degree of dread. Even given the bloc’s successes in recent years to agree on a groundbreaking pandemic recovery fund and to confront Russia’s aggression in Ukraine, the appeal of nationalists and populists remains strong — and is spreading, a potential threat to European ideals and cohesion.
said in a Twitter message: “In these difficult times, we need more than ever friends who share a common vision and approach to Europe’s challenges.”
Europe’s concerns are less about policy toward Ukraine. Ms. Meloni has said she supports NATO and Ukraine and has no great warmth for President Vladimir V. Putin of Russia, as her junior coalition partners, Matteo Salvini and Silvio Berlusconi, have evinced.
Still, Mr. Berlusconi said last week that Mr. Putin “was pushed by the Russian population, by his party, by his ministers to invent this special operation.” The plan, he said, was for Russian troops to enter “in a week to replace Zelensky’s government with a government of decent people.”
Italian popular opinion is traditionally sympathetic toward Moscow, with about a third of seats in the new Parliament going to parties with an ambiguous stance on Russia, sanctions, and military aid to Ukraine. As the war proceeds, with all its domestic economic costs, Ms. Meloni may take a less firm view than Mr. Draghi has.
Mr. Kupchan expects “the balance of power in Europe will tilt more toward diplomacy and a bit less toward continuing the fight.” That is a view more popular with the populist right than with parties in the mainstream, but it has prominent adherents in Germany and France, too.
“These elections are another sign that all is not well with mainstream parties,” said Mark Leonard, director of the European Council on Foreign Relations, and spell a complicated period for the European Union.
Even the victory a year ago of Olaf Scholz in Germany, a man of the center left, was ensured by the collapse of the center-right Christian Democrats, who had their worst showing in their history, while in April, France’s long-dominant center-right Republicans fell to under 5 percent of the vote.
“People in Brussels are extremely anxious about Meloni becoming an E.U. prime minister,” Mr. Leonard said. “They’ve seen how disruptive Orban can be from a small country with no systemic role in the E.U. Meloni says she won’t immediately upend the consensus on Ukraine, but she could be a force for a much more virulent form of Euroskepticism in council meetings.”
One or two troublemakers can do a lot of a damage to E.U. decision-making, he said, “but if it’s five or six,” it becomes very hard to obtain coherence or consensus.
When the leftist, populist Five Star Movement led Italy from 2018 to early 2021, before Mr. Draghi, it created major fights inside Brussels on immigration and asylum issues. Ms. Meloni is expected to concentrate on topics like immigration, identity issues (she despises what she calls “woke ideology”), and future E.U. rules covering debt and fiscal discipline, to replace the outdated growth and stability pact.
But analysts think she will pick her fights carefully, given Italy’s debt mountain — over 150 percent of gross domestic product — and the large sums that Brussels has promised Rome as part of the Covid recovery fund. For this year, the amount is 19 billion euros, or about $18.4 billion, nearly 1 percent of Italy’s G.D.P., said Mujtaba Rahman, Europe director for the Eurasia Group, with a total over the next few years of some 10.5 percent of G.D.P.
“Draghi has already implemented tough reforms to satisfy Brussels, so there is no reason for her to come in and mess it up and agitate the market,” Mr. Rahman said. But for the future, there are worries that she will push for an expansionist budget, looser fiscal rules and thereby make the more frugal countries of northern Europe less willing to compromise.
For Mr. Rahman, the bigger risk for Europe is the loss of influence Italy exercised under Mr. Draghi. He and President Emmanuel Macron of France, “were beginning to create an alternative axis to compete with the vacuum of leadership now in Germany, and all that will be lost,” Mr. Rahman said. Italy will go from a country that leads to one that Europe watches anxiously, he said.
There was a sign of that anxiety just before the election, when Ursula von der Leyen, the president of the European Commission, warned that Brussels had “the tools” to deal with Italy if things went in a “difficult direction.” It was seen as a hint that the European Commission could cut funds to Italy if it were deemed to be violating the bloc’s democratic standards.
Mr. Salvini, seeing an opportunity, immediately responded: “What is this, a threat? This is shameful arrogance,” and asked Ms. von der Leyen to “respect the free, democratic and sovereign vote of the Italian people” and resist “institutional bullying.”
Instead, Mr. Stefanini, the former diplomat, urged Brussels to be patient and to engage with Ms. Meloni. “The new government should be judged on facts, on what it does when in power,” he said. “The real risk is that by exaggerated overreactions the E.U. makes legitimate concerns self-fulfilling prophecies.
“If she’s made to feel rejected, she’ll be pushed into a corner — where she’ll find Orban and other soulmates waiting for her, and she’ll team up with them,” he continued. “But if she’s greeted as a legitimate leader, democratically elected, it will be possible for the E.U. to do business with her.”
Luuk van Middelaar, a historian of the bloc, also urges caution. European leaders know two things about Italian prime ministers, he said. First, “they are not very powerful at home, and two, they tend not to last very long” — since World War II, an average of about 18 months.
“So they will wait and see and not be blown away,” Mr. van Middelaar said. If she lasts longer, however, she could energize other far-right Euroskeptics in other big countries like France, he said, “and that would make a real difference.”
When Ja’Kobi Moore decided to apply this year to a private high school in her hometown of New Orleans, she learned that she needed at least one letter of recommendation from a teacher. She had never asked for one, so she sought help.
“Teacher letter of recommendation,” she typed into TikTok’s search bar.
Ms. Moore, 15, scrolled TikTok’s app until she found two videos: one explaining how to ask teachers for a recommendation letter and the other showing a template for one. Both had been made by teachers and were easier to understand than a Google search result or YouTube video, said Ms. Moore, who is planning to talk to her teachers this month.
dance videos and pop music. But for Generation Z, the video app is increasingly a search engine, too.
TikTok’s powerful algorithm — which personalizes the videos shown to them based on their interactions with content — to find information uncannily catered to their tastes. That tailoring is coupled with a sense that real people on the app are synthesizing and delivering information, rather than faceless websites.
On TikTok, “you see how the person actually felt about where they ate,” said Nailah Roberts, 25, who uses the app to look for restaurants in Los Angeles, where she lives. A long-winded written review of a restaurant can’t capture its ambience, food and drinks like a bite-size clip can, she said.
TikTok’s rise as a discovery tool is part of a broader transformation in digital search. While Google remains the world’s dominant search engine, people are turning to Amazon to search for products, Instagram to stay updated on trends and Snapchat’s Snap Maps to find local businesses. As the digital world continues growing, the universe of ways to find information in it is expanding.
said at a technology conference in July.
Google has incorporated images and videos into its search engine in recent years. Since 2019, some of its search results have featured TikTok videos. In 2020, Google released YouTube Shorts, which shares vertical videos less than a minute long, and started including its content in search results.
TikTok, which is owned by the Chinese internet company ByteDance, declined to comment on its search function and products that may be in testing. It said it was “always thinking about new ways to add value to the community and enrich the TikTok experience.”
Doing a search on TikTok is often more interactive than typing in a query on Google. Instead of just slogging through walls of text, Gen Z-ers crowdsource recommendations from TikTok videos to pinpoint what they are looking for, watching video after video to cull the content. Then they verify the veracity of a suggestion based on comments posted in response to the videos.
This mode of searching is rooted in how young people are using TikTok not only to look for products and businesses, but also to ask questions about how to do things and find explanations for what things mean. With videos often less than 60 seconds long, TikTok returns what feels like more relevant answers, many said.
Alexandria Kinsey, 24, a communications and social media coordinator in Arlington, Va., uses TikTok for many search queries: recipes to cook, films to watch and nearby happy hours to try. She also turns to it for less typical questions, like looking up interviews with the actor Andrew Garfield and weird conspiracy theories.
elections, the war in Ukraine and abortion.
TikTok’s algorithm tends to keep people on the app, making it harder for them to turn to additional sources to fact-check searches, Ms. Tripodi added.
“You aren’t really clicking to anything that would lead you out of the app,” she said. “That makes it even more challenging to double-check the information you’re getting is correct.”
TikTok has leaned into becoming a venue for finding information. The app is testing a feature that identifies keywords in comments and links to search results for them. In Southeast Asia, it is also testing a feed with local content, so people can find businesses and events near them.
Building out search and location features is likely to further entrench TikTok — already the world’s most downloaded app for those ages 18 to 24, according to Sensor Tower — among young users.
TikTok “is becoming a one-stop shop for content in a way that it wasn’t in its earlier days,” said Lee Rainie, who directs internet and technology research at the Pew Research Center.
That’s certainly true for Jayla Johnson, 22. The Newtown, Pa., resident estimated that she watches 10 hours of TikTok videos a day and said she had begun using the app as a search engine because it was more convenient than Google and Instagram.
“They know what I want to see,” she said. “It’s less work for me to actually go out of my way to search.”
Ms. Johnson, a digital marketer, added that she particularly appreciated TikTok when she and her parents were searching for places to visit and things to do. Her parents often wade through pages of Google search results, she said, while she needs to scroll through only a few short videos.
“God bless,” she said she thinks. “You could have gotten that in seconds.”
More than six months after one of the largest infant formula manufacturing plants in the United States issued a recall and was then shut down because of contamination concerns, a newborn staple remains in short supply.
In parts of the country, parents and their families are scrambling to locate precious containers of formula for their babies and many large retailers remain out of stock of popular brands. Some companies like Walmart and Target are limiting the number of containers that can be purchased at one time.
While the situation has improved since mid-July, the out-of-stock figures for powder formula on store shelves in late August remained at 23 percent, still above the 10 percent it was before the recall and shutdown, according to the Chicago-based market research firm IRI.
infections in four babies — two of them fatal — who had consumed formula manufactured at the plant. On Feb. 17, two days after the shutdown, Abbott recalled batches of three powdered formulas over complaints of serious bacterial contamination. (Abbott has said that there is no “conclusive evidence” to link the company’s formulas to the illnesses.) That disruption made it clear just how dependent Americans were on a few formula manufacturers, and the Biden administration found itself scrambling to figure out how to make more product available.
ending around Nov. 14, the F.D.A. said it would release guidance this month on how the new companies can continue to sell in the United States past this fall.
“Parents in the U.S. have been looking for a better product than what they were being offered,” said Will McMahon, one of the members of the family who owns the British baby formula Kendamil. The company has spent the last three years working through the formal process, including clinical trials, necessary to get its organic infant formula approved by the F.D.A.
Kendamil was one of the earliest formulas to get its application approved by the F.D.A. in the wake of the Sturgis plant shutdown, and the company has begun sending two million cans of formula to the United States.
dropped in early August after it said the F.D.A. had notified it that it was “deferring further consideration” of its application to import formula into the United States.
resume manufacturing of Similac formulas at its plant in Sturgis.
The company also said that it increased production at other U.S.-based manufacturing plants and one in Ireland, and that it would supply the United States with more than eight million pounds of formula in August, an increase from the year before. But it noted it would take six weeks for the Similac product from the Sturgis plant to start to hit store shelves.
But some industry experts say it will take time for Abbott to gain back the market share it once had. “To be frank, there is a lot of consumer mistrust around Similac right now,” said Mr. Dittmeier of the W.I.C. program.
That could be a boon for Reckitt Benckiser, which has been running its formula manufacturing plants at full tilt all summer, hoping to hold on to the market share it has gained at Abbott’s expense. Its market share has climbed to nearly 60 percent from 35 percent before the recall, said Robert Cleveland, who oversees the Mead Johnson nutrition business at Reckitt.
“We remain committed to making as much formula as we can,” Mr. Cleveland said. “We continue to maximize our domestic manufacturing, running overtime and going 24/7.” He added that the company had received approval to bring in formula from its plants in Singapore and specialty formula from its facilities in Mexico.
Still, in late August, when Lori Sharp, a first-time mother in Port Hueneme, Calif., realized she was down to one container of Reckitt’s Enfamil Sensitive infant formula for her 3-month-old daughter, the formula was out of stock on Walmart.com.
Panicking, she scoured more websites and widened her geographic search. She eventually discovered a container of formula at a Target 40 minutes away in Moorpark, Calif. “I went into the store and they actually had four more, but their shelves were so bare,” Ms. Sharp said. “I bought all of them.”
In Georgia, some of the most acute shortages are in rural areas. Jennifer Kelly, who is the family services manager at the early Head Start program in Swainsboro, which is between Macon and Savannah, said trying to find formula earlier this summer had become a “daily chore.”
The 14 babies she watches drink seven different kinds of formula. She and her staff were often driving to Walmart, Walgreens or a local grocery chain or scouring Amazon for some of the more obscure brands.
“It’s not like it was a few months ago when the shelves were bare,” Ms. Kelly said. “I am hoping we are on the other side of this dilemma.”
When the formula shortage was at a crisis point in May, Ms. Robinson of Bucks County, Pa., created a Facebook group that connected parents around the country. The group, called Formula Hunters, does not exchange money to keep out profiteers who have been hoarding formula and seeking to resell it at a markup.
The group operates on the notion that a parent who buys a hard-to-find formula brand and sends it to another parent in the group will eventually be repaid when others do the same for them.
Formula Hunters now has 1,500 members, who are still actively helping each other locate formula. “This has been going on for so many months,” Ms. Robinson said. “The frustration has been high.”
Prime Minister Prayuth Chan-ocha’s removal is likely to only be temporary going by past trends. But letting him stay poses some risks.
Thailand’s Constitutional Court suspended the prime minister from his duties on Wednesday while it decides whether the man who led a military coup in 2014 has violated the country’s term limits, potentially opening a new chapter of turmoil in the nation’s troubled politics.
Prime Minister Prayuth Chan-ocha’s removal is likely to only be temporary since the court has generally ruled in the government’s favor in a slew of political cases.
Any decision to allow the general to stay on risks invigorating a protest movement that has long sought to oust him and reopening deep fissures in Thailand, which has been rocked by repeated bursts of political chaos since a coup toppled then-Prime Minister Thaksin Shinawatra in 2006.
Since then, Thaksin, a telecoms billionaire whose populist appeal threatened the traditional power structure, has remained at the center of the country’s politics, as his supporters and opponents fought for power both at the ballot box and in the streets, sometimes violently. The 2014 takeover ousted his sister from power.
Deputy Prime Minister Prawit Wongsuwan, a close political ally of Prayuth and part of the same military clique that staged the coup, will take over as acting prime minister, a spokesman for the prime minister’s office said Wednesday. Anucha Burapachaisri added that Prayuth would respect the court’s decision and called on others to do the same.
But those who want Prayuth gone don’t want Prawit in power either.
“No Prayuth. No Prawit. No military coup government,” a leading protest group said in a statement after the court decision Wednesday.
The group known as Ratsadon, or The People, issued a new call for protests, but only a small number came in response.
Prayuth’s detractors contend he has violated a law that limits prime ministers to eight years in power — a threshold they say he hit Tuesday since he officially became prime minister on Aug. 24, 2014.
But his supporters contend his term should be counted from when the current constitution, which contains the term-limit provision, came into effect in 2017. Another interpretation would start the clock in 2019, following the election.
The case — in which the court is deciding whether a coup-leader has stayed in power too long — highlighted Thailand’s particular political culture: Often the soldiers who overthrow elected leaders then try to legitimize their rule and defuse opposition by holding elections and abiding by constitutional restrictions.
For instance, while Prayuth initially came to power in a coup, he won the job legally after a general election in 2019.
By a vote of 5 to 4 on Wednesday, the court agreed to suspend the prime minister from his duties while it considers a petition from opposition lawmakers. The court’s announcement said Prayuth must submit his defense within 15 days of receiving a copy of the complaint, but it did not say when it would rule.
He will remain in his other post of defense minister, according to Anucha, the spokesman.
Polls show Prayuth’s popularity is at a low ebb, with voters blaming him for mishandling the economy and botching Thailand’s response to the COVID-19 pandemic.
In 2020, tens of thousands of people took to the streets to demand that Prayuth and his Cabinet resign, while also calling for the constitution to be amended and the monarchy to be reformed.
Several confrontations between the student-driven protest movement and authorities became violent. A legal crackdown on activists further embittered critics.
Small protests appealing again to Prayuth to step down and the Constitutional Court to force him to if he didn’t have been held daily since Sunday, but drawn only small crowds.
“I am very pleased. Gen. Prayuth has stayed for a long time and had no vision to develop the country at all,” Wuttichai Tayati, a 28-year-old who works in marketing, said while protesting in Bangkok on Wednesday. “At least taking him out for now might make Thailand move forward a bit.”
Even if Prayuth does go, replacing him with Prawit will not resolve the standoff.
In addition to his close association with the military clique that seized power, Prawit, 77, was tainted by allegations he had illegally amassed a collection of luxury watches he couldn’t possibly afford on a government salary, though a court accepted his explanation they were gifts and cleared him of wrongdoing.
Whether Prawit would or could take the prime minister’s post if the court rules against Prayuth is not clear. He has publicly acknowledged his health is not good and is better known as a behind-the-scenes political organizer.
Also, some legal scholars think the eventual replacement would have to come from the small pool of candidates that the country’s political parties nominated for the job after the 2019 general election. That list did not include Prawit, though it appears possible he could be nominated in case of a deadlock.
If he is not forced out of office, Prayuth must call a new election by March next year, though he has the option of calling one before that.
The eight-year term limit was meant to target Thaksin, whose political machine remains powerful. The 2014 coup ousted the government of Thaksin’s sister, Yingluck Shinawatra.
Thailand’s traditional conservative ruling class, including the military, felt that Thaksin’s popularity posed a threat to the country’s monarchy as well as their own influence. The courts have been stalwart defenders of the established order and ruled consistently against Thaksin and other challengers.
A help wanted sign at a store along Queen Street West in Toronto Ontario, Canada June 10, 2022. REUTERS/Carlos Osorio
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OTTAWA, Aug 5 (Reuters) – Canada’s economy unexpectedly lost jobs for the second month in a row in July after a year-long boom, but analysts predicted that this would not stop the Bank of Canada from hiking interest rates to fight inflation.
Statistics Canada on Friday reported 30,600 positions were shed while the unemployment rate stayed at a record low 4.9%.
The data marked the second consecutive month of relatively moderate losses. Between May 2021 and May 2022, the economy added 1.06 million jobs as the recovery from COVID-19 took hold.
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Analysts polled by Reuters had expected an increase of 20,000 positions and for the jobless rate to edge up to 5.0%.
The central bank last month surprised markets by raising its main interest rate by 100 basis points in a bid to tackle inflation, and said more hikes would be needed. read more
Derek Holt, vice president of capital markets economics at Scotiabank, said the July figures were disappointing but predicted Canada’s central bank would keep raising rates.
“I think they know full well that fighting inflation is going to break a few things, and one of them will be slowing job market momentum,” he said.
The average hourly wages of permanent employees – a figure the Bank of Canada watches closely – rose by 5.4% from July 2021, down from June’s 5.6% year-on-year increase but sharply higher than the 2.4% registered at the start of the year.
“That’s going to concern the Bank of Canada much more than the job count as evidence of tight markets amid difficulty getting workers,” said Holt.
Statscan said there was no indication of increased job churn despite the tight labor market.
The United States, by far Canada’s largest trading partner, on Friday reported unexpectedly strong jobs numbers. This helped push the Canadian dollar 0.6% lower to 1.2945 to the greenback, or 77.25 U.S. cents.
The Canadian central bank’s next scheduled rate announcement is on Sept. 7, with the August jobs data due on Sept 9.
Money markets have fully priced in a 50 basis point hike and see about a two-thirds chance of a 75 basis point move.
“We’re still dealing with the lowest unemployment rate in at least 50 years, and wages that are running strong,” said Doug Porter, chief economist at BMO Capital Markets.
“I don’t believe things are nearly weak enough to call a halt to rate hikes. We had penciled in a 50 basis point rate hike in September and I would say we’re comfortable with that call,” he said by phone.
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Additional reporting by Ismail Shakil in Ottawa and Fergal Smith in Toronto;
Editing by Jan Harvey, Paul Simao and John Stonestreet
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Covers Canadian political, economic and general news as well as breaking news across North America, previously based in London and Moscow and a winner of Reuters’ Treasury scoop of the year.
KYIV — The rave had been planned for weeks, with the space secured and the D.J.s, the drinks, the invites and the security all lined up.
But after a recent missile strike far from the front lines killed more than 25 people, including children, in central Ukraine, an attack that deeply unsettled all Ukraine, the rave organizers met to make a hard, last-minute decision. Should they postpone the party?
They decided: No way.
“That’s exactly what the Russians want,” said Dmytro Vasylkov, one of the organizers.
a city that already enjoyed a reputation for being cool, it gets easier to find a party. A hip-hop event the other night became a sea of bobbing heads. The party was held outdoors. For a spell, it started raining. But that didn’t matter. The party was on. On the dance floor, bodies were bumping.
Pink Freud, a bar, the war keeps coming up. Small talk between a young woman and Mr. Chehorka, the bartender, who also works as a psychotherapist, led to a conversation about hobbies that led to a discussion about books that led, inexorably, to the Russians.
Mr. Chehorka told the young woman that he was selling his large collection of Russian language books because he never wanted to read Russian again.
“This is my own war,” he explained.
He added that he felt the city’s whole psyche had changed. “Kyiv’s different now,” he said. “People are more polite, more friendly. They’re not drinking as hard.”
A yearning for close connection, for something meaningful amid a seismic, terrifying event that won’t end, is what brought two dozen people to a recent“cuddle” party.
Cuddle parties started before the war, but the people who came two Sundays ago — a mix of men and women from their early 20s to mid-60s — said they really needed them now.
The cuddlers gathered in a large, tent-like structure near the river, and as new age music played, they lied on floor cushions in a big warm heap. Some stroked their neighbor’s hair. Others clutched each other tightly, eyes closed, like it was the last embrace they’d ever share with anyone. After about 15 to 20 minutes, the heap stirred awake.
The cuddlers opened their eyes, untangled themselves, stood up and smoothed out their pants. The whole idea is to seek bodily comfort from curling up with a stranger. They found new cuddling partners and new positions.
The instructor was clear that none of this was supposed to be sexual or romantic. But still, it looked like a G-rated orgy.
This cuddling is another dimension of Kyiv’s party scene at the moment: Many social gatherings are specifically engineered to provide solace.
Maksym Yasnyi, a graphic designer, just held a 24-hour yoga party, which he said was “really cool” but it wasn’t like going out before the war.
“Before the war, Kyiv nightlife was sparkling with different colors,” he said. “You could spend the whole night going from party to party. If I allow myself to think about this, I’ll make myself really upset.”
Now, when it hits 10, Kyiv radiates a nervous energy. People drinking on the street, or out by the river, check their watches. They cap the clear plastic bottles of cider they were swigging, get up and walk quickly.
Cars move faster. More run yellow lights. The clock is ticking.
Uber prices triple, if you can find one.
Some young people, seeing the impossibility of hailing a ride, say bye to their friends and duck their heads and start running home, desperate to beat curfew.
At the stroke of 11, Kyiv stops. Nothing moves. The sidewalks lie empty.
All that energy that was building, building, building, suddenly plunges into a stunning, citywide hush.
Federal Reserve officials are set to make a second abnormally large interest rate increase this week as they race to cool down an overheating economy. The question for many economists and investors is just how far the central bank will go in its quest to tame inflation.
Central banks around the world have spent recent weeks speeding up their interest rate increases, an approach they’ve referred to as “front-loading.” That group includes the Fed, which raised interest rates by a quarter-point in March, a half-point in May and three-quarters of a point in June, its biggest move since 1994. Policymakers have signaled that another three-quarter-point move is likely on Wednesday.
The quick moves are meant to show that officials are determined to wrestle inflation lower, hoping to convince businesses and families that today’s rapid inflation won’t last. And, by raising interest rates quickly, officials are aiming to swiftly return policy to a setting at which it is no longer adding to economic growth, because goosing the economy makes little sense at a moment when jobs are plentiful and prices are climbing quickly.
released in June suggested that officials would raise rates to 3.4 percent by the end of the year, up from around 1.6 percent now. Many economists have interpreted that to mean that the Fed will raise rates by three-quarters of a point this month, half of a point in September, a quarter-point in November and a quarter-point in December. In other words, it hints that a slowdown is coming.
But policy expectations have regularly been upended this year as data surprises officials and inflation proves stubbornly hot. Just this month, investors were speculating that the Fed might make a full percentage-point increase this week, only to simmer down after central bankers and fresh data signaled that a smaller move was more likely.
That changeability is a key reason that the Fed is likely to emphasize that it is closely watching economic data as it determines policy. Its next meeting is nearly two months away, in September, so central bankers will most likely want to keep their options open so that they can react to the evolving economic situation.
inflation has been running at the fastest pace in more than 40 years, it is likely to slow when July data is released because gasoline prices have come down notably this month.
And, although inflation expectations had shown signs of jumping higher, one key measure eased in early data out this month. Keeping inflation expectations in check is paramount because consumers and companies might change their behavior if they expect quick inflation to last. Workers could ask for higher pay to cover rising costs, companies might continually lift prices to cover climbing wage bills and the problem of rising prices would be perpetuated.
A variety of other metrics of the economy’s strength, from jobless claims to manufacturing measures, point to a slowing business environment. If that cooling continues, it should keep the Fed on track to slow down, said Subadra Rajappa, the head of U.S. rates strategy at Société Générale. While Fed officials want the economy to moderate, they are trying to avoid tipping it into an outright recession.
“When you start to see cracks appear in the unemployment measures, they’re going to have to take a much more cautious approach,” Ms. Rajappa said.
Markets have been quivering in recent days, concerned that central banks around the world will push their war on inflation too far and tank economies in the process. Investors are increasingly betting that the Fed might lower interest rates next year, presumably because they expect the central bank to set off a downturn.
“It is very likely that central banks will hike so quickly that they will overdo it and put their economies into a recession,” said Gennadiy Goldberg, a rates strategist at TD Securities. “That’s what markets are afraid of.”
American employers added 372,000 jobs in June, and wages continue to climb strongly. Consumer spending has eased somewhat, but less than expected. While the housing market is slowing, rents continue to pick up in many markets.
Plus, the outlook for inflation is dicey. While gas prices may be slowing for now, risks of a resurgence lie ahead, because, for example, the administration’s efforts to impose a global price cap on Russian oil exports could fall through. Rising rents mean that housing costs could help to keep inflation elevated.
While Mr. Powell made clear at his June news conference that three-quarter-point rate increases were out of the ordinary and that he did “not expect” them to be common, Fed officials have also been clear that they would like to see a string of slowing inflation readings before feeling more confident that price increases are coming under control.
“We at the Fed have to be very deliberate and intentional about continuing on this path of raising our interest rate until we get and see convincing evidence that inflation has turned a corner,” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in a Bloomberg interview this month.
The central bank will get a fresh reading on the Personal Consumption Expenditures index — its preferred inflation gauge — on Friday. That data will be for June, and it is expected to show continued rapid inflation both on a headline basis and after volatile food and fuel prices are stripped out. The Employment Cost Index, a wage and benefits measure that the Fed watches closely, will also be released that day and is expected to show compensation climbing quickly.
Given the recent decline in prices at the gas pump, at least two months of slower inflation readings by September are possible — but not guaranteed.
“They cannot prematurely hint that they think victory over inflation is coming,” Mr. Shepherdson of Pantheon wrote.
The recent string of high-profile mass shootings in the U.S. is prompting some faith leaders to ramp up security.
The Rev. Steven Marsh never thought he would see the day his church in Laguna Woods, California — a town of 16,500 populated largely by retirees — would be spending $20,000 a month for security.
Then a gunman opened fire on May 15 during a luncheon at Geneva Presbyterian Church, where Marsh is senior pastor, killing one and injuring five other members of a Taiwanese congregation that met there. Officials said the man, who was motivated by political hatred against Taiwan, chained the church’s doors shut and hid firebombs inside before shooting at the gathering of elderly church members.
Houses of worship are meant to be places of shelter, reflection and peace, where strangers are welcome. But the recent string of high-profile mass shootings in the U.S. is a reminder violence can happen anywhere, prompting some faith leaders to ramp up security.
At Geneva Presbyterian, armed security guards now stand watch every weekday and during Sunday services. The church also is adding more security cameras, developing an active shooter plan and applying for Department of Homeland Security funding.
“We’re not trying to militarize the church,” Marsh said. “We prayed about it and made a decision to have armed security as an act of faith.”
Without the new security measures, Marsh predicted that a mass exodus by the congregation and the schools on the church’s campus would have followed the shooting.
Creating a space that is both safe and welcoming is possible, said Rabbi Charlie Cytron-Walker, the former spiritual leader of Congregation Beth Israel in Colleyville, Texas.
In January, he and three others were taken hostage by a pistol-wielding man during a Shabbat service. Cytron-Walker threw a chair at the gunman — a courageous act that helped them safely escape — after a nearly 11-hour standoff. He credits the several rounds of active shooter training he has taken.
“When you are unable to run away or find a hiding place, you need to find a way to act and to fight back,” Cytron-Walker said. “When we were most afraid he was going to kill us, I saw a moment I had been looking for all day long.”
Cytron-Walker now leads Temple Emanuel in Winston-Salem, North Carolina. As he works on a security plan with his new congregation, he is being mindful of how a welcoming synagogue can enhance safety “because someone who wants to do harm can see that they are not going to be able to walk in anonymous.”
Historically, sanctuaries have been vulnerable to violent attacks — from bombings at Black churches during the Civil Rights era to more recent shootings in the U.S. at mosques and Sikh gurdwaras. In the U.S., FBI hate crime statistics show that incidents in churches, synagogues, temples and mosques increased 34.8% between 2014 and 2018.
“All faiths are under attack in America by radicals and extremists,” said Alon Stivi, a security consultant for synagogues, Jewish community centers and day schools. Some congregants are reticent to show up.
“They’re asking a lot more questions: ‘Should I come to the weekly services or just come for the holidays? And if I come, should I bring my kids?'”
Religious leaders who once preferred to leave security in the hands of the divine are taking precautions that seemed unthinkable years prior, Stivi said. More congregants are carrying concealed handguns to services, too, he said.
From $25 million in 2016 to $180 million last year, the federal government has steadily increased the amount of funding it sets aside to help the faith community with security costs, Stivi said. But not all faith leaders are aware they can apply for it, he said.
Past attacks on houses of worship and other public spaces have prompted faith leaders to evaluate — sometimes for the first time — if there is more that can be done to keep their flocks safe.
Today an armed police officer watches over Sunday services at Mt. Zion African Methodist Episcopal Church in Charleston, South Carolina, said the Rev. Kylon Middleton, who leads the congregation. When an officer is unable to be on campus for church events, members carrying concealed weapons keep watch.
“It is sad, but we are in such times where we must have armed security to protect our people,” he said.
The church is two blocks away from Emmanuel African Methodist Episcopal Church. In 2015, a self-proclaimed white supremacist opened fire during Bible study and killed nine worshippers, including the senior pastor. Middleton said the late pastor was like a brother to him.
In the wake of the massacre, security discussions at Mt. Zion factor worship style into the equation, including the need for some to always keep their eyes open, especially when most have theirs closed in prayer, Middleton said.
“No one ever thought mass shootings would happen in churches, which are sacred sanctuaries where you can escape the world and seek spiritual refuge,” he said. “When that space has been violated, it creates a restlessness of spirit.”
After the 2018 massacre at the Tree of Life synagogue in Pittsburgh, Rabbi Jon Leener met with local New York police to discuss safety for Base BKLYN, his home-based ministry that has welcomed thousands.
For years, he and his wife, Faith, would unlock their front door right before Shabbat dinners, believing in a Judaism where no door is shut or locked. That changed after Tree of Life — the deadliest antisemitic attack in U.S. history. Leener also installed a security camera and a buzz-in system for visitors. He hired an armed guard after this year’s hostage situation in Texas.
“It’s terribly unfortunate that we live in an age when we need to compromise our value of openness for the threat of violence, but that is just the reality at the moment,” Leener said.
It is a balancing act for many. Marsh said the shooting in his church happened because members of the Taiwanese congregation were welcoming to the shooter — a person they didn’t know.
“The church needs to be welcoming to all people, and we cannot lose that,” he said.
“Are there ways an active shooter could get on our campus again? Yes. But we have to be willing to have this happen again. Otherwise, we would all have to go through metal detectors. It would no longer be a church.”
WASHINGTON/MUMBAI, May 17 (Reuters) – Nofe Isah, a 25-year old based in Nigeria, has been investing in crypto since January. Last week, she lost all of her $5,000 in savings as cryptocurrency luna went into free fall.
Isah, a recently unemployed administrative officer, vowed she would never invest in crypto again.
“I can’t believe I fell for crypto,” she told Reuters by phone. “I’m just trying not to get myself depressed. Crypto has taken my money, fine. It shouldn’t take my head.”
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The crypto market, known for its wild price swings, slumped last week as investors yanked money from riskier assets amid worries over soaring inflation and rising interest rates.
Bitcoin, the world’s largest cryptocurrency, fell as low as $25,401 on Thursday, its lowest since Dec. 2020. It hit a record high of $69,000 in November.
Small tokens were hit too, with ether, the second-largest token, dropping more than 15% to its lowest since June. Luna – a digital coin widely hyped on social media and backed by institutional crypto investors – shed nearly all of its value.
Small traders such as Isah have flocked to cryptocurrencies in the hope of quick returns, despite warnings from regulators that the emerging assets can be high risk.
Platforms such as Robinhood, which has 23 million customers across a variety of assets, have helped spur retail investing, including in crypto. Around a quarter of Robinhood’s transaction-based revenues came from cryptocurrencies in the first quarter of this year, Robinhood said in its latest earnings statement.
Overall user numbers at crypto platforms have ballooned. Binance, the world’s biggest crypto exchange, had some 118 million clients last month, up from 43.4 million in the first quarter of last year.
But after last week’s turmoil, online forums were awash with tales of woe, as retail investors expressed anguish about their losses.
“I’m 49, big mortgage, 3 kids etc. My retirement party is on ice for the foreseeable future!”, a user with the handle Boring-Fun-3646 said on Reddit.
Another user with the handle AdventurousAdagio830 posted on Reddit: “It doesn’t seem real that I lost $180,000.”
Emblematic of crypto risks was the collapse last week of terraUSD, a stablecoin designed to keep a constant value via a complex algorithm that involved luna.
When the coins came under heavy selling pressure, the system broke down. TerraUSD – designed to keep a value of $1 – traded around 9 cents on Tuesday while luna plunged to near-zero, based on CoinGecko data. read more
Tejan Shrivastava, a 31-year old graphic designer from Mumbai, who has been investing in cryptocurrencies for the last year, had his $250 investment wiped out by luna’s collapse.
“It was stuck in a death spiral. All the money was gone in 15 minutes,” he told Reuters.
“I don’t even know if I’ll invest in crypto in the future. I have a crypto portfolio, but I am planning to liquidate it once it reaches break even.”
Luna’s fall wiped out most of its market value which had been above $40 billion as recently as early April, CoinGecko data shows.
Retail investors’ online frustration even spilled over into the real world.
Seoul police last week said they were seeking a suspect after an unidentified individual rang the doorbell of the apartment of Do Kwon, the founder of terraUSD, and ran away.
Police would investigate whether the suspect had invested in cryptocurrencies, a Seoul police officer told Reuters.
Through its 13-year life, the crypto sector has been peppered by vertiginous climbs and sudden free falls. In November, for instance, bitcoin slumped by a fifth in just under two weeks after touching a record $69,000. Six months earlier, it had tumbled by almost 40% in just nine days.
Yet crypto’s latest crash – which pushed the sector’s combined value to $1.2 trillion, less than half of where it was last November – led to the crushing of luna, which on May 1 was the eighth-largest cryptocurrency by market capitalisation.
Cryptocurrencies are subject to patchy regulation across the world, with traders of bitcoin and the panapoly of smaller tokens typically unprotected against price slumps.
But it is difficult to gauge the scale of retail investors’ pain from the crypto plunge and the repercussions on future appetite given the opaque nature of the market.
In Britain more than 4% of adults – some 2.3 million people – own cryptocurrencies, data published last year by the UK financial watchdog showed.
Britain’s watchdog said understanding of crypto was falling compared with a year earlier, “suggesting that some crypto users may not fully understand what they are buying”.
Still, some small investors are keeping the faith.
Eloisa Marchesoni, based near Tulum in Mexico and investing with a crypto syndicate, said she would not give up.
“I am looking to buy the dip – we are all waiting for bitcoin to go down to $22,000, which is not something too probable but not something that’s ‘not probable at all’.”
Marchesoni is also hedging her crypto bets with physical assets — “cars because you can lease them, watches, real estate”.
Bitcoin was hovering around $30,000 on Tuesday, having lost more than 20% so far this month.
Regulators remain on alert. The British government said last month it will regulate stablecoins. read more
The U.S. Securities and Exchange Commission is toughening its stance. Gary Gensler, SEC chair, said this week investors in cryptocurrencies needed more protections. read more
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Additional reporting by Alun John in Hong Kong and Soo-hyang Choi in Seoul; Writing by Carolyn Cohn, Elizabeth Howcroft and Tom Wilson in London. Editing by Jane Merriman
Our Standards: The Thomson Reuters Trust Principles.
Inflation came in strong and wage growth remained elevated at the end of 2021, setting the stage for a challenging economic year in which the Federal Reserve and White House will try to maintain momentum in the job market while wrestling price gains under control.
The Personal Consumption Expenditures index, the Fed’s preferred inflation gauge, came in at 5.8 percent in December, up from 5.7 percent the prior month. That beat out the prior month to become the fastest pace since 1982.
climbed 4 percent in the year through the fourth quarter, with its wages and salaries measure picking up by 4.5 percent.
That marked the fastest pace of increase for both the overall compensation and the wages and salaries measure since the data series started two decades ago.
taken steps aimed at relieving pressure on choked supply chains, the job of slowing down demand to bring prices under control rests primarily with the Fed.
produced by the Federal Reserve Bank of New York that incorporates backlogs, delivery times and inventories.
Inflation sped up starting last year as people bought more goods, aided by repeated government relief checks and other federal benefits. The world’s factories and shipping lines have struggled to keep up with demand, resulting in rising prices for cars, lumber and clothing. While spending has moderated somewhat recently — it fell in December as Omicron spread, as goods consumption declined — it is unclear whether that is a blip caused by the pandemic or a lasting pullback.
Fed officials have been watching for signs that inflation, which they have projected will ease to less than 3 percent by the end of the year, might instead linger.
“We are attentive to the risks that persistent real wage growth in excess of productivity could put upward pressure on inflation,” Jerome H. Powell, the Fed’s chair, said during a news conference on Wednesday. Friday’s data could offer officials some slight reprieve.
Mr. Powell had in December specifically cited the previously Employment Cost Index reading — which came in high during the third quarter — as one reason that the Fed had decided to shift from stoking growth to preparing to fight back if inflation becomes long-lasting.
The fact that the measure did not pick up as sharply as expected in the final quarter of the year could give investors some confidence that the central bank’s policy-setting group, the Federal Open Market Committee, will not further speed up its plans to withdraw economic help.
University of Michigan survey has shown sentiment faltering as prices have risen, and the Conference Board’s index ticked down in January.
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What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
“You have very high inflation, so people are seeing an erosion of their purchasing power,” said Dana M. Peterson, chief economist at The Conference Board, noting that the resurgent virus is also to blame. “People will have higher confidence once we’re beyond Omicron.”
For now, it is a moment of pronounced economic uncertainty.
Ashley Fahr, the owner of the culinary company and event space La Cuisine in Venice, Calif., said rising grocery costs began to bite at a difficult moment — just before Omicron began to surge, causing people to pull back from activities like the cooking classes and catering events she offers.
She noticed in December that her food bill had gone up by about 15 percent, chipping away at her margins, and passed about 5 percent of that on to customers while absorbing the rest of the increase.
“I didn’t want to quote a number people would balk at,” she said.
Ms. Fahr said she pays her workers — most of whom are independent contractors — competitive wages and that it’s hard to keep up with rising prices and still turn a profit. She is watching to see what other local caterers and cooking classes do with their pricing — and whether they begin to pass on the full increase to customers.
“If everyone else does it, I’ll do it too,” Ms. Fahr said.
That sort of logic is what economic officials worry about. If businesses and consumers begin to expect prices to steadily rise, they may begin to accept instead of resisting them — and when inflation gets baked into expectations, it might spiral upward year after year, economists worry.
“What we’re trying to do is get inflation, keep inflation expectations well anchored at 2 percent,” Mr. Powell, the Fed chair, said at his news conference this week. “That’s always the ultimate goal.”