It’s hump day and rate cut day, so I tapped senior business correspondent Christine Romans to share her reporting from the briefing with Chairman Jermone Powell. Her takeaway? There seems to be no magic bullets for some of the economic issues affecting everyday people. But the Fed has to do something, so here we are.
Though if you are visiting the U.S. from overseas, and you have some questionable social media posts, you may want to reconsider your travel plans. On Here’s The Scoop, I spoke with Julia Ainsley, who is reporting on a new social media policy that may affect many travelers coming to the States.
Today’s newsletter was produced with senior editor Michelle Garcia. Let’s get into it.
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FIRST THINGS FIRST
As expected, the Federal Reserve cut interest rates this afternoon by a quarter point, to help stabilize the softer labor market without stoking inflation.
The members of the Fed are trying to thread quite a needle.
“There is no risk-free path for policy as we navigate this tension between our employment and inflation goals,” Fed Chair Jerome Powell said in a news conference. “Our obligation is to make sure that a one time increase in the price level does not become an ongoing inflation problem.”
Is the math adding up?: The economic data that these decisions are usually based on is a little fuzzy this time around, thanks to the six-week government shutdown earlier this fall. The federal offices that chart key information, like the unemployment rate or the consumer price index, remained closed for the entirety of October. So today’s voting members of the Fed had to rely on alternative sources of data, which have indicated a slowing job market.
JPMorgan Chase executive Marianne Lake told NBC News yesterday, “The data looks good, consumers look resilient, small businesses are resilient, but there’s less capacity to weather an incremental stress.”
This is the third time the Fed has cut rates this year, and the decision was not unanimous, which is pretty unusual for this generally unified board. Two members wanted no cuts while Stephen Miran, on temporary leave from the White House, voted for a half-point cut.
Why it matters: One of the Fed’s jobs is to steer us away from a terrible job market. One of the ways its board members do this is by adjusting interest rates up and down, making it cheaper or more expensive to borrow cash.
Speaking of which, a rate cut is also likely to push down interest rates on loans for major purchases, like a car or a mortgage on a house. So if you happen to have enough money for a down payment on a house, this might be your time to strike.
But Christine Romans, who was at the Fed news conference, asked Powell about whether this will help people looking to buy a house. Powell said he doesn’t expect immediate relief for homebuyers, since there are so many factors at play when it comes to the housing market.
“The housing market faces some really significant challenges,” Powell told her. “I don’t know that a .25 basis point decline is going to make much of a difference for people. Housing supply is low.”
(In fact, the nation’s housing market is so tough that the average age of the first-time homebuyer is 40, an all-time high. I like the idea of 40 being the new 30, but maybe not in this respect).
There’s also the worries about inflation. While the president said last night in Pennsylvania that inflation is no longer a problem, the rate is at 2.8%, meaning things are still a little more expensive than they were a year ago — and above the Fed’s 2% target.
The Personal Consumption Expenditures Price Index — another very cool, and obviously hip data set that the Fed uses as an inflation indicator — shows people’s spending has been relatively flat for the last few months. Even with the cut, the Fed is signaling caution around the persistence of inflation, which is why experts say it may not cut interest rates again anytime soon.
Powell said today that the board is banking on inflation dropping down to 2.3% next year. He told Christine too that, with his term ending in May, he is focused on handing a strong economy and stable inflation over to his successor.
INSIDE SCOOP
The U.S. may require foreign tourists to share five years’ worth of social media history with the federal government before entering the country. The U.S. Customs and Border Protection issued a 60-day notice in the Federal Register yesterday, requesting public comment on this plan, so it’s not final, and it could change. CBP said this potential change is in line with an executive order issued in January to collect information about foreign visitors applying through the U.S. Visa Waiver program.
As part of this program, which applies to people from countries including the U.S., Japan, Australia and France, travelers would be asked to share email addresses from the last decade, telephone numbers, names and information of family members, and social media information. For more on this plan, I turned to senior Homeland Security correspondent Julia Ainsley.
BTW
🛢️ Attorney General Pam Bondi confirmed that the U.S. seized an oil tanker off the coast of Venezuela as the country continues to escalate military presence in South America.
🌍 During a rally in Pennsylvania on affordability, President Trump described Somalia as “filthy, dirty, disgusting, ridden with crime,” and asked why more people from Norway, Sweden and Denmark don’t migrate to the U.S. instead.
📚 Sophie Kinsella, the author of the bestselling “Shopaholic” novels died at age 55, just 18 months after revealing she had an aggressive form of brain cancer.
🗳️ Eileen Higgins will be Miami’s first Democratic mayor in nearly three decades, boosting the national party before the midterm election cycle kicks off.
💸 The Department of Education will end a major student loan repayment program launched by President Joe Biden.
👩🏼⚖️ An Army gynecologist has been criminally charged following an investigation into allegations that he secretly videotaped patients during exams, the Army Office of Special Trial Counsel said yesterday.
⚽ Egypt and Iran are not pleased about being paired up for an LGBTQ Pride-themed match during a World Cup match scheduled in Seattle.
✒️ In 2023, the State Department adopted Calibri, a typeface easier to read for some people with disabilities. State Secretary Marco Rubio ordered the return to the “more formal” Times New Roman, rejecting “immoral, radical, wasteful” diversity, equity, inclusion and accessibility initiatives.
👠 Former “Real Housewives of Salt Lake City” star Jen Shah was released from federal prison today, more than four years early from her 6.5-year sentence. She leaves behind prison mates Ghislaine Maxwell and Elizabeth Holmes.
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