Month: June 2022

Recession Is ‘Not Inevitable,’ Biden Says in AP Interview

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President Joe Biden told The Associated Press on Thursday that the American people are “really, really down” after a tumultuous two years with the coronavirus pandemic, volatility in the economy and now surging gasoline prices that are slamming family budgets.

He said a recession is not inevitable and bristled at claims by Republican lawmakers that last year’s COVID-19 aid plan was fully to blame for inflation reaching a 40-year high, calling that argument bizarre.

As for the overall American mindset, Biden said, “People are really, really down.”

“They’re really down,” he said. “The need for mental health in America, it has skyrocketed, because people have seen everything upset. Everything they’ve counted on upset. But most of it’s the consequence of what’s happened, what happened as a consequence of the COVID crisis.”

Speaking to the AP in a 30-minute Oval Office interview, Biden addressed the warnings by economists that the United States could be headed for a recession.

“First of all, it’s not inevitable,” he said. “Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.”

As for the causes of inflation, Biden flashed some defensiveness on that count.

“If it’s my fault, why is it the case in every other major industrial country in the world that inflation is higher? You ask yourself that? I’m not being a wise guy,” he said.

The president said he saw reason for optimism with the 3.6% unemployment rate and America’s relative strength in the world.

“Be confident, because I am confident we’re better positioned than any country in the world to own the second quarter of the 21st century,” Biden said. “That’s not hyperbole, that’s a fact.”

Biden’s bleak assessment of the national psyche comes as voters have soured on his job performance and the direction of the country. Only 39% of U.S. adults approve of Biden’s performance as president, according to a May poll from The Associated Press-NORC Center for Public Research, dipping from negative ratings a month earlier.

The president outlined some of the hard choices he has faced, saying the U.S. needed to stand up to Russian President Vladimir Putin for invading Ukraine in February even though tough sanctions imposed as a result of that war have helped caused gas prices to surge, creating a political risk for Biden in an election year. He called on oil companies to think of the world’s short-term needs and increase production.

Asked why he ordered the financial penalties against Moscow that have helped disrupt food and energy markets globally, Biden said he made his calculation as commander in chief rather than as a politician thinking about the election.

“I’m the president of the United States,” he said. “It’s what’s best in the country. No kidding. No kidding. So what happens? What happens if the strongest power in NATO, the organizational structure we put together, walked away from Russian aggression?”

Biden talked about the possibility of chaos in Europe if an unimpeded Russia kept moving deeper into the continent, China was emboldened to take over Taiwan and North Korea grew even more aggressive with its nuclear weapon ambitions.

Biden renewed his contention that major oil companies have benefited from higher prices without increasing production as much as they should. He said the companies needed to think of the world in the short term, not just their investors.
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 ESA Maps History of Milky Way Galaxy, Predicts Its Future

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Data from a European space observatory tells the history of our galaxy and may even predict its future. Plus, the full moon was as close to Earth as it will be this year, and a look back at a true space pioneer. VOA’s Arash  Arabasadi  brings us The Week in Space.
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Amid Inflation Worries, Fed Delivers a Higher-Than-Expected Rate Hike

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Amid a major stock market downturn, sharply rising inflation, and plummeting consumer confidence, the Federal Reserve Board interest rate-setting body decided Wednesday to raise interest rates by three-quarters of 1% in the hope of taming runaway prices.

The decision by the Federal Open Market Committee (FOMC) to increase the target for the federal funds rate to between 1.5% and 1.75% marked the largest single-day increase since 1994. The move illustrates the grave concern among policymakers about inflation, which rose at an annual rate of 8.6% last month, a 40-year high.

In remarks delivered at a press conference after the FOMC meeting, Federal Reserve Board Chair Jerome Powell indicated that more rate hikes are on the horizon, with another a half- or three-quarter-point increase likely in July, and other increases in three further meetings before the end of the year.

“My colleagues and I are acutely aware that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing and transportation,” Powell said, adding that the Fed is “strongly committed to returning inflation to our 2% objective.”

Trying to cool demand

Inflation drives up the cost of most items people buy on a regular basis, from gasoline to food to clothing. It can also drive up prices on big-ticket items, such as cars, appliances and furniture.

The strategy behind the Fed’s interest rate increases is to cool demand, which can help lower prices.

As interest rates increase, consumers become less likely to borrow money to make large purchases like cars and homes. In recent weeks, for example, the interest rate for a 30-year home mortgage loan in the U.S., which was under 5% in March, has spiked to above 6.7%. It also affects decisions by business owners to make new investments.

The central bank’s task is to cool demand enough to bring inflation back down to its target rate of 2% per year without pushing too far and causing a recession, which could lead to job losses and more economic pain.

‘Behind the curve’

Until last week, the assumption had been that the central bank would raise rates by half a point in this meeting, with other half-point increases in the pipeline later in the year. However, last week’s consumer price index report from the Bureau of Labor Statistics showed that rather than flattening out as expected, inflation had risen, from an 8.3% annualized pace to 8.6%.

The surprise report increased pressure on the central bank, which has been criticized for waiting too long to address rising prices, to take more dramatic action.

“The Fed is behind the curve on inflation and it knows it,” Greg McBride, senior vice president and chief financial analyst for Bankrate.com, told VOA. “Given the ugly inflation report from last week,” he said, a half-point increase would have felt insufficient.

The Fed tries hard not to surprise the financial markets and prefers to signal its rate changes well in advance through “forward guidance” that lets market participants know what to expect.

In his remarks Wednesday, Powell stressed that the circumstances under which the Fed took its decisions on rates was very uncommon, with the Labor Department’s surprising inflation data coming just days before the FOMC was set to meet.

Strong economy

During his remarks, Powell several times stressed that while inflation is high and consumer sentiment is low, the underlying U.S. economy is still strong, with demand for goods and services remaining high.

“We’re not seeing a broad slowdown,” he said. “We see job growth slowing, but it’s still at quite robust levels. We see the economy slowing a bit, but still, healthy growth levels.”

The Fed chair pushed back against concerns that higher interest rates could damage the economy, pointing out that while rates are rising, they are doing so from a historically low starting point — the Fed held rates at near zero through much of the pandemic and of the last decade.

“There’s a lot going on,” Powell said. “There are a lot of flows back and forth, but ultimately, it does appear that the U.S. economy is in a strong position, and well-positioned to deal with higher interest rates.”

Unemployment increase expected

As part of the post-FOMC meeting presentation, the Fed released its Summary of Economic Projections, which contains the committee members’ expectations about a number of economic indicators over the coming years, one of which is the unemployment level.

Employment levels in the U.S. have been one of the major success stories of the pandemic recovery. After spiking to a post-World War II high of 14.7% in April 2020, the jobless rate in the U.S. began to plummet and hit 3.6% in May, just one-tenth of a percent above the level in the months before the pandemic.

Looking forward, though, the members of the FOMC expect that the U.S. unemployment rate will begin rising as interest rates rise, perhaps to above 4% by 2024, with inflation rates down to 2%.

“A 4.1% unemployment rate, with inflation well on its way to 2%, I think that would be a successful outcome,” Powell said.

“We don’t seek to put people out of work,” he added. “Of course, we never think too many people are working and fewer people need to have jobs. But we also think that you really cannot have the kind of labor market we want without price stability.”

Recession worries remain

In their efforts to tame inflation, Powell and his colleagues at the Fed have been aiming for what economists characterize as a “soft landing.” That is, a cooling of demand that slows price rises but does not reverse economic growth and push the country into a recession.

Asked about the likelihood of a soft landing on Tuesday, Powell said, “That is our objective, and I do think it’s possible.”

However, he said that events such as supply shocks caused by Russia’s invasion of Ukraine and pandemic-related lockdowns in major Chinese manufacturing hubs make predictions difficult.

“Events of the last few months have raised the degree of difficulty and created great challenges,” he said, adding, “There’s a much bigger chance now that it will depend on factors that we don’t control.”

Despite the Fed chair’s assessment that it remains possible to avoid a recession, others said they were not convinced that getting back to 2% inflation by 2024 is possible any other way.

“It’s hard to see how we get to that level without a recession,” Bankrate’s McBride told VOA.
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Reports: Chinese Authorities Using COVID-Tracking App to Thwart Protesters

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During the early months of the pandemic, the Chinese government developed a color-coded smartphone app to track the movement of people in its effort to control the spread of COVID-19 and implement its zero-COVID policy.

This week, however, media reports surfaced that authorities in Zhengzhou, the capital of Henan province, were now using the required codes to restrict the movement of people upset because local banks had frozen their deposits.

Hundreds of depositors who had lost access to their funds had planned to travel to Zhengzhou on Monday, only to find their health codes had suddenly turned red. This meant they couldn’t travel, and the protests fizzled. The red code seemed to target only depositors, according to CNN.

VOA Mandarin asked China’s Foreign Ministry for comment on the government’s alleged new use for the app but received no comment.

The state-run Global Times ran an editorial on Tuesday saying, “The health code is a technical means designed to make the public compromise some personal information rights to comply with the needs of society’s public health security. It can only be used for epidemic prevention purposes. It is the responsibility of the relevant authorities to protect the privacy of citizens to the greatest extent during the epidemic prevention process.”

Hu Xijin, the former editor-in-chief of Global Times, posted on his Weibo microblog that the “red code issue is very disturbing,” and that any non-COVID-related use would be a “clear violation” of virus prevention measures.

Ever since China began promoting the portable and personalized health codes in response to the coronavirus outbreak, some people have speculated that the technology could be used as a political tool to restrict mobility. The app tracks a user’s travel, contact history and biometric data, such as temperature, through a smartphone.

Alex Gladstein, chief strategy officer at the New York-based Human Rights Foundation, said on Twitter, “I would have actually thought this happened more routinely in the past two years but apparently this is a watershed moment for using health tools to crack down on dissent.”

Another comment came from James Palmer, a former Beijing resident who is now deputy editor at Foreign Policy, who tweeted, “This is significant because — afaik (as far as I know) — it’s the first clear story we have of the health code system being used for non-Covid political control.”

The app uses a QR code to track a user’s movements in order to monitor exposure to known cases of the virus, according to a blog post at Center for Strategic and International Studies, a Washington think tank. Authorities throughout China required residents to provide their names and ID numbers and register for facial recognition to obtain the QR code linked to their identity.

If the QR code glows green, the user has had no contact with an infected person and can move around. An amber code means the user is required to quarantine at home for seven to 14 days, Those with red codes are to be treated and quarantined either at home or in a centralized location, according to CSIS.

It has become routine for Chinese to show the code in order to gain entry to housing compounds, theaters and restaurants, and public transportation.

According to reports by Reuters and other media, the depositors who had planned to protest in Zhengzhou said their most recent COVID-19 test results were negative, and that officials refused to explain why their health codes turned red.

Rina Chandran, a journalist at Thomson Reuters Foundation in India, tweeted, “This is what can happen when the govt controls your data: #China Covid app overnight restricts residents who need the health code to enter buildings and shops, use public transport, or leave the city.”

The Henan Provincial Health Commission told The Paper, a state-run news website, that it was “investigating and verifying” the complaints from depositors who received red codes.

Anouk Eigenraam, China correspondent at Het Financieele Dagblad/Algemeen Dagblad, tweeted, “This red health codes is exactly the reason why China will keep this 0 covid alive a long time. It’s to useful as a tool for control. I’ve been saying this for a year and many people kept saying ‘but the economy’, well as we saw they’re very willing to take a hit.”

 
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US Federal Reserve Imposes Large Interest Rate Hike

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The U.S. Federal Reserve announced Wednesday it would raise interest rates by the largest amount in nearly 30 years in an effort to cool inflation without tipping the economy into a recession. 

The central bank said it would raise its key interest rate by three-quarters of a percentage point, the largest amount since November 1994, and signaled more hikes to come. 

The rate increase comes as inflation, which measures the price of common goods such as food and fuel, rose by 8.6% over the 12 months ending in May — the highest rate in 40 years — driven by high post-pandemic demand for homes, cars, travel and other goods and services, global supply chain problems, strict COVID-19 lockdowns in China, and Russia’s invasion of Ukraine. 

In a statement announcing the rate hike, the Federal Open Market Committee, the Federal Reserve’s policy-setting board, said it remains “strongly committed to returning inflation to its 2% objective.” 

The three-quarter-point rate increase exceeds the one-half-point rate increase that Federal Reserve Chairman Jerome Powell had previously suggested would be imposed.  

He told reporters Wednesday that the latest information showed higher inflation than expected. 

“We thought strong action was warranted at this meeting,” he said, “and we delivered that.”

Shortly after the Fed’s announcement, Powell said if inflation shows no sign of abating, the central bank would likely impose either a half- or three-quarter-point increase at its next meeting in July.   

Some information for this report came from The Associated Press, Reuters and Agence France-Presse.  

 
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US Issues New Warnings on ‘Forever Chemicals’ in Drinking Water

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The U.S. Environmental Protection Agency on Wednesday released new warnings about synthetic pollutants in drinking water known as “forever chemicals,” saying the toxins can still be harmful even at levels so low they are not detectable. 

The family of toxic chemicals known as per- and polyfluoroalkyl substances, or PFAS, have been used for decades in household products such as nonstick cookware, stain- and water-resistant textiles and in firefighting foam and industrial products. 

Scientists have linked some PFAS to cancers, liver damage, low birth weight and other health problems. But the chemicals, which do not break down easily, are not yet regulated. 

The agency is set to issue proposed rules in coming months to regulate PFAS. Until the regulations come into effect, the advisories are meant to provide information to states, tribes and water systems to address PFAS contamination. 

The EPA also said it would roll out the first $1 billion to tackle PFAS in drinking water, from a total of $5 billion in funding in last year’s infrastructure law. The funds would provide states technical assistance, water quality testing and installation of centralized treatment systems. 

The updated drinking water health advisories for perfluorooctanoic acid (PFOA) and perfluorooctane sulfonic acid (PFOS) replace those the EPA issued in 2016. The advisory levels, based on new science that considers lifetime exposure, indicate that some health problems may still occur with concentrations of PFOA or PFOS in water that are near zero and below EPA’s ability to detect. 

“Today’s actions highlight EPA’s commitment to use the best available science to tackle PFAS pollution, protect public health, and provide critical information quickly and transparently,” said Radhika Fox, the EPA’s assistant administrator for water. 

The agency encourages entities that find PFAS in drinking water to inform residents and undertake monitoring and take actions to reduce exposure. Individuals concerned with PFAS found in their drinking water should consider installing a home filter, it said. 

The American Chemistry Council industry group, whose members include 3M and DuPont, said the EPA rushed the notices by not waiting for a review by the agency’s Science Advisory Board. The group said it was concerned that the process for developing the advisories was “fundamentally flawed.”
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FDA Advisers Move COVID-19 Shots Closer for Kids Under 5

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COVID-19 shots for U.S. infants, toddlers and preschoolers moved a step closer Wednesday. 

The Food and Drug Administration’s outside vaccine advisers gave a thumbs-up to Moderna’s two shots for the littlest kids. The panel is set to vote later Wednesday on whether to also recommend Pfizer’s three-shot series for those youngsters. 

The outside experts voted unanimously that the benefits of Moderna’s shots outweigh any risks for children under 5 — that’s roughly 18 million youngsters. 

They are the last remaining group in the U.S. to get vaccinated, and many parents have been anxious to protect their little children. If all the regulatory steps are cleared, shots should be available next week. 

“This is a long-awaited vaccine,” said panel member Dr. Jay Portnoy of Children’s Hospital in Kansas City, Missouri. “There are so many parents who are absolutely desperate to get this vaccine, and I think we owe it to them to give them a choice to have the vaccine if they want to.” 

Dr. Peter Marks, FDA’s vaccine chief, opened the meeting with data showing a “quite troubling surge” in young children’s hospitalizations during the omicron wave, and noted that 442 children under 4 have died during the pandemic. That’s far fewer than adult deaths but should not be dismissed in considering the need for vaccinating the youngest kids, he said. 

“Each child that’s lost essentially fractures a family,” Marks said. 

FDA reviewers said both brands appear to be safe and effective for children as young as 6 months old in analyses posted ahead of the all-day meeting. Side effects, including fever and fatigue, were generally minor in both, and less common than seen in adults. 

The two vaccines use the same technology, but there are differences. In a call with reporters earlier this week, vaccine experts noted that the shots haven’t been tested against each other, so there’s no way to tell parents if one is superior. 

“That is a really important point,”‘ said Dr. Jesse Goodman of Georgetown University, a former FDA vaccine chief. “You can’t compare the vaccines directly.” 

If the FDA agrees with its advisers and authorizes the shots, there’s one more step. The Centers for Disease Control and Prevention will decide on a formal recommendation after its own advisers meet Saturday. If the CDC signs off, shots could be available as soon as Monday or Tuesday at doctor’s offices, hospitals and pharmacies. 

Pfizer’s vaccine is for children 6 months through 4 years. Moderna’s vaccine is for 6 months through 5 years. 

Moderna’s shots are one-quarter the dose of the company’s adult shots. Two doses appeared strong enough to prevent severe illness but only about 40% to 50% effective at preventing milder infections. Moderna has added a booster to its study and expects to eventually offer one. 

Pfizer’s shots are just one-tenth its adult dose. Pfizer and partner BioNTech found that two shots didn’t provide enough protection in testing, so a third was added during the omicron wave. 

Pfizer’s submitted data found no safety concerns and suggested that three shots were 80% effective in preventing symptomatic coronavirus infections. But that was based on just 10 COVID-19 cases. The calculation could change as more cases occur in the company’s ongoing studies. 

The same FDA panel on Tuesday backed Moderna’s half-sized shots for ages 6 to 11 and full-sized doses for teens. If authorized by the FDA, it would be the second option for those age groups. Currently, the Pfizer vaccine is their only choice. 

The nation’s vaccination campaign started in December 2020 with the rollout of adult vaccines from Pfizer and Moderna, with health care workers and nursing home residents first in line. Teens and school-age children were added last year. 

Moderna said in April that it is also seeking regulatory approval outside the U.S. for its little kid shots. According to the World Health Organization, 12 other countries already vaccinate kids under 5, with other brands. 

In the U.S., it remains uncertain how many parents want their youngest children vaccinated. While COVID-19 is generally less dangerous for young children than older kids and adults, there have been serious cases and some deaths. Many parents trying to keep unvaccinated tots safe have put off family trips or enrolling children in day care or preschool. 

Still, by some estimates, three-quarters of all children have already been infected. Only about 29% of children ages 5 to 11 have been vaccinated since Pfizer’s shots opened to them last November — a rate far lower than public health authorities consider ideal. 

Dr. Nimmi Rajagopal, a family medicine physician at Cook County Health in Chicago, said she’s been preparing parents for months. 

“We have some that are hesitant, and some that are just raring to go,” she said. 

 
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Cartier and Amazon Target Knock-offs in US Lawsuits

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Amazon and Cartier joined forces Wednesday in U.S. court to accuse a social media influencer of working with Chinese firms to sell knock-offs of the luxury brand’s jewelry on the e-commerce giant’s site. 

The online personality used sites like Instagram to pitch Cartier jewelry such as “Love bracelets” to followers and then provided links that led to counterfeit versions on Amazon, one of two lawsuits alleged. 

The influencer appeared to be a woman in Handan, China, and the merchants involved in the “counterfeiting scheme” were traced to other Chinese cities, according to court documents. 

“By using social media to promote counterfeit products, bad actors undermine trust and mislead customers,” Amazon associate general counsel Kebharu Smith said in a statement. 

“We don’t just want to chase them away from Amazon — we want to stop them for good,” Smith added. 

The Seattle-based e-commerce giant has booted vendors targeted in the suit from its platform and teamed with Cartier to urge a federal court to make them pay damages and legal costs for hawking knock-off jewelry there from June 2020 through June 2021. 

The “sophisticated campaign” sought to avoid detection by having the social media influencer pitch jewelry as being Cartier, but the vendors made no mention of the luxury brand at their shops at Amazon, the lawsuit said. 

Buyers, however, were sent jewelry bearing Cartier trademarks, the companies alleged in court documents. 

A second lawsuit accuses an Amazon store operating under the name “YFXF” last year of selling counterfeit Cartier goods, disguising jewelry as unbranded at the website but sending buyers knock-offs bearing the company’s trademark. 

Those involved in the scheme “advertised their counterfeit products on third-party social media websites by using ‘hidden links’ to direct their followers to the counterfeit Cartier products, while disguising the products as non-branded in the listings in the Amazon Store,” the lawsuit said. 

The companies said that Instagram direct messages and shared links were used to instruct social media followers about how to buy knock-offs at Amazon. 

 
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Ukrainian Orphan Finds New Home and Hope in America

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Phil and Kristie Graves are a U.S.couple from Maryland and parents of three biological children and an adopted girl with special needs from Armenia. Recently, they decided to adopt a six-year-old girl with special needs from Ukraine. But that was before the Russian invasion. Anush Avetisyan has the story.
Videographer: Dmytri Shakhov  
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Biden Tells Oil Refiners: Produce More Gas, Fewer Profits 

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President Joe Biden on Wednesday called on U.S. oil refiners to produce more gasoline and diesel, saying their profits have tripled during a time of war between Russia and Ukraine as Americans struggle with record high prices at the pump.

“The crunch that families are facing deserves immediate action,” Biden wrote in a letter to seven oil refiners. “Your companies need to work with my Administration to bring forward concrete, near-term solutions that address the crisis.”

Gas prices nationwide are averaging roughly $5 a gallon, an economic burden for many Americans and a political threat for the president’s fellow Democrats going into the midterm elections. Broader inflation began to rise last year as the U.S. economy recovered from the coronavirus pandemic, but it accelerated in recent months as energy and food prices climbed after Russia invaded Ukraine in February and disrupted global commodity markets.

The government reported on Friday that consumer prices had jumped 8.6% from a year ago, the worst increase in more than 40 years.

The letter notes that gas prices were averaging $4.25 a gallon when oil was last near the current price of $120 a barrel in March. That 75-cent difference in average gas prices in a matter of just a few months reflects both a shortage of refinery capacity and profits that “are currently at their highest levels ever recorded,” the letter states.

As Biden sees it, refineries are capitalizing on the uncertainties caused by “a time of war.” His message that corporate greed is contributing to higher prices has been controversial among many economists, yet the claim may have some resonance with voters.

Some liberal lawmakers have proposed cracking down on corporate profits amid the higher inflation. Sen. Bernie Sanders, a Vermont independent, in March proposed a 95% tax on profits in excess of companies’ pre-pandemic averages.

The president has harshly criticized what he views as profiteering amid a global crisis that could potentially push Europe and other parts of the world into a recession, saying after a speech Friday that ExxonMobil “made more money than God this year.” ExxonMobil responded by saying it has already informed the administration of its planned investments to increase oil production and refining capacity.

“There is no question that [Russian President] Vladimir Putin is principally responsible for the intense financial pain the American people and their families are bearing,” Biden’s letter says. “But amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain.”

The letter says the administration is ready to “use all reasonable and appropriate Federal Government tools and emergency authorities to increase refinery capacity and output in the near term, and to ensure that every region of this country is appropriately supplied.” It notes that Biden has already released oil from the U.S. strategic reserve and increased ethanol blending standards, though neither action put a lasting downward pressure on prices.

The president is sending the letter to Marathon Petroleum, Valero Energy, ExxonMobil, Phillips 66, Chevron, BP and Shell.

He also has directed Energy Secretary Jennifer Granholm to convene an emergency meeting and consult with the National Petroleum Council, a federal advisory group that is drawn from the energy sector.

Biden is asking each company to explain to Granholm any drop in refining capacity since 2020, when the pandemic began. He also wants the companies to provide “any concrete ideas that would address the immediate inventory, price, and refining capacity issues in the coming months — including transportation measures to get refined product to market.”

There may be limits on how much more capacity can be added. The U.S. Energy Information Administration on Friday released estimates that “refinery utilization will reach a monthly average level of 96% twice this summer, near the upper limits of what refiners can consistently maintain.”

The letter says that roughly 3 million barrels a day of refining capacity around the world have gone offline since the pandemic began. In the U.S., refining capacity fell by more than 800,000 barrels a day in 2020.
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Australian-Led Team Discovers Supermassive Black Hole

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A massive, fast-growing black hole, more luminous than previously discovered phenomena, has been discovered by an international team led by astronomers in Australia. Scientists say the black hole consumes the equivalent of one Earth every second and shines 7,000 times brighter than all the light from our own galaxy.

Researchers were looking for unusual stars when they came across a supermassive black hole. It consumes the equivalent of one Earth every second and has the mass of three billion suns.

The team led by the Australian National University believes it was obscured by the lights of the Milky Way.

The discovery was made using the SkyMapper telescope at Siding Spring Observatory near Coonabarabran in New South Wales.

To take a more detailed look, the team went to the South African Astronomical Observatory’s 1.9-meter telescope in Cape Town.

Christopher Onken from the Australian National University is the study’s lead researcher.

He says astronomers have been searching for these types of objects without success for more than 50 years.

“What we found is what appears to be the most luminous growing black hole in the last nine billion years of the history of the universe,” said Onken. “People have been looking for these kinds of objects for almost 60-years and this one escaped its notice probably because it was just a little bit too close to the plane of the Milky Way, where there is so many stars that often it is hard to follow up all of the objects that you might find. And, so, this one had been just outside the range that had been surveyed in the past.”

Black holes are parts of space where matter has collapsed in on itself.

Their light comes from a ring of gas, dust and stars that circles the black hole, known as an accretion disk.

Astronomers hope this rare find will offer tantalizing clues about the formation of galaxies. The ancient black hole is so “astonishingly bright” that it should be visible to well-equipped amateur stargazers.

The Australian-led research is continuing. The team also discovered another 80 growing black holes.
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Study: Facebook Fails to Catch East Africa Extremist Content

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A new study has found that Facebook has failed to catch Islamic State group and al-Shabab extremist content in posts aimed at East Africa as the region remains under threat from violent attacks and Kenya prepares to vote in a closely contested national election. 

An Associated Press series last year, drawing on leaked documents shared by a Facebook whistleblower, showed how the platform repeatedly failed to act on sensitive content including hate speech in many places around the world. 

The new and unrelated two-year study by the Institute for Strategic Dialogue found Facebook posts that openly supported IS or the Somalia-based al-Shabab — even ones carrying al-Shabab branding and calling for violence in languages including Swahili, Somali and Arabic — were allowed to be widely shared. 

The report expresses particular concern with narratives linked to the extremist groups that accuse Kenyan government officials and politicians of being enemies of Muslims, who make up a significant part of the East African nation’s population. The report notes that “xenophobia toward Somali communities in Kenya has long been rife.” 

The al-Qaida-linked al-Shabab has been described as the deadliest extremist group in Africa, and it has carried out high-profile attacks in recent years in Kenya far from its base in neighboring Somalia. The new study found no evidence of Facebook posts that planned specific attacks, but its authors and Kenyan experts warn that allowing even general calls to violence is a threat to the closely contested August presidential election. 

Already, concerns about hate speech around the vote, both online and off, are growing. 

“They chip away at that trust in democratic institutions,” report researcher Moustafa Ayad told the AP of the extremist posts. 

The Institute for Strategic Dialogue found 445 public profiles, some with duplicate accounts, sharing content linked to the two extremist groups and tagging more than 17,000 other accounts. Among the narratives shared were accusations that Kenya and the United States are enemies of Islam, and among the posted content was praise by al-Shabab’s official media arm for the killing of Kenyan soldiers. 

Even when Facebook took down pages, they would quickly be reconstituted under different names, Ayad said, describing serious lapses by both artificial intelligence and human moderators. 

“Why are they not acting on rampant content put up by al-Shabab?” he asked. “You’d think that after 20 years of dealing with al-Qaida, they’d have a good understanding of the language they use, the symbolism.” 

He said the authors have discussed their findings with Facebook and some of the accounts have been taken down. He said the authors also plan to share the findings with Kenya’s government. 

Ayad said both civil society and government bodies such as Kenya’s national counterterrorism center should be aware of the problem and encourage Facebook to do more. 

Asked for comment, Facebook requested a copy of the report before its publication, which was refused. 

The company then responded with an emailed statement. 

“We’ve already removed a number of these pages and profiles and will continue to investigate once we have access to the full findings,” Facebook wrote Tuesday, not giving any name, citing security concerns. “We don’t allow terrorist groups to use Facebook, and we remove content praising or supporting these organizations when we become aware of it. We have specialized teams — which include native Arabic, Somali and Swahili speakers — dedicated to this effort.” 

Concerns about Facebook’s monitoring of content are global, say critics. 

“As we have seen in India, the United States, the Philippines, Eastern Europe and elsewhere, the consequences of failing to moderate content posted by extremist groups and supporters can be deadly, and can push democracy past the brink,” the watchdog The Real Facebook Oversight Board said of the new report, adding that Kenya at the moment is a “microcosm of everything that’s wrong” with Facebook owner Meta. 

“The question is, who should ask Facebook to step up and do its work?” asked Leah Kimathi, a Kenyan consultant in governance, peace and security, who suggested that government bodies, civil society and consumers all can play a role. “Facebook is a business. The least they can do is ensure that something they’re selling to us is not going to kill us.”
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Dangerous Heat Wave Descends on Parts of Midwest and South 

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A dangerous heat wave hit much of the Midwest and South on Tuesday, with temperatures hitting triple digits in Chicago and combining with the humidity to make it feel even hotter there and in other sweltering cities. 

More than 100 million people were expected to be affected by midweek, and authorities warned residents to stay hydrated, remain indoors when possible, and be aware of the health risks of high temperatures. Strong storms brought heavy rain and damaging wind to many of the affected areas on Monday, and more than 400,000 customers remained without power as of Tuesday afternoon. 

Excessive heat warnings are in effect for much of Illinois and Indiana along with parts of Minnesota, Iowa, Michigan and Ohio from Tuesday through Wednesday night, according to the National Weather Service. 

Heat index values — which take into account the temperature and relative humidity and indicate how hot it feels outdoors — approached and topped 105 degrees Fahrenheit (40 degrees Celsius) in some locations, including Chicago, the weather service said. 

“Full sun today will make it feel even hotter,” the weather service wrote. “There will not be much relief for those without air conditioning today through Wednesday night.” 

Much of southeastern Michigan — from just south of Flint to the state lines with Ohio and Indiana — was put under an excessive heat watch Wednesday through Thursday morning as the warm front is forecast to move east. 

A heat advisory was also issued, stretching from as far north as Wisconsin down to the Florida Panhandle on the Gulf coast. 

Health risks of heat 

In Chicago, where a ferocious storm Monday night heralded temperatures that were expected to exceed 90 degrees on Tuesday and Wednesday, the May deaths of three women when temperatures climbed above 32 C (90 F) served as a reminder of the dangers of such heat — particularly for people who live alone or are dealing with certain health issues. 

Pat Clemmons, an 81-year-old resident of the apartment complex where the women died, said everything was working well Tuesday morning as the temperatures climbed. She said that she had lived in the building for about 20 years and that she had never experienced issues before “that one horrible Saturday” in May. 

“They have every kind of air conditioner, air blower, fan jets and everything else. … I’m fine right now,” Clemmons said. “The air’s on. You know they’re going to have everything working perfectly right now ’cause all the chaos that happened.” 

By mid-afternoon, the temperature at Chicago Midway National Airport reached 100 F (38 C) for the first time since July 2012, the area’s weather service office reported. 

Officials encouraged Chicagoans to check on their neighbors and loved ones and to quickly report any problems with cooling their homes. The city opened six large cooling centers and encouraged people to cool off in libraries, park district buildings and other public locations. 

“The next two days will require that we all look out for one another and provide extra attention and resources for our vulnerable neighbors,” said Alisa Rodriguez, managing deputy commissioner for Chicago’s Department of Family Services and Support. 

The Detroit suburb of Westland opened many of its public buildings as cooling stations Tuesday, including its city hall, fire and police stations, a library and a community center. Residents can get out of the heat, charge cellphones and get bottled water there, the city said. 

South sizzles 

With a noon temperature at 35 C (95 F) and the heat index pushing 43 C (110 F) on Tuesday in Birmingham, Alabama, Cindy Hanger sat outside the food truck where she works. Her face was red and her green T-shirt was soaked with sweat. 

“I am worn out and I’m hot, and I’m ready to go home and have a cold drink,” she said. 

Hanger works outside the small rig taking and filling orders while two relatives work inside cooking. That arrangement is just fine with her on such days. 

“You think it’s hot out here? Imagine in there,” she said. 

The heat was also stressing certain power grids. 

The Tennessee Valley Authority, which serves 10 million people in Tennessee and parts of six surrounding Southern states, said that on Monday, it experienced record power demand for a single day in June. It said it provided 31,311 megawatts of energy at an average temperature of 94 F (34 C) in its region, which broke the previous June high of 31,098 megawatts that was set on June 29, 2012. 

The power provider said similar demand could continue through the end of the week as more hot and humid weather was expected
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FDA Advisers Back Moderna’s COVID-19 Vaccine for Older Kids

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A government advisory panel Tuesday endorsed a second brand of COVID-19 vaccine for school-age children and teens.

The Food and Drug Administration’s outside experts voted unanimously that Moderna’s vaccine is safe and effective enough to give to kids ages 6 to 17. If the FDA agrees, it would become the second option for those children, joining Pfizer’s vaccine.

The same FDA expert panel will meet Wednesday to consider tot-sized shots from Moderna and Pfizer for the littlest kids, those under 5.

Moderna’s COVID-19 vaccine has long been available for adults in the U.S. and elsewhere, and more than three dozen countries offer it to older children. If the FDA authorizes Moderna’s vaccine for teens and younger children, the Centers for Disease Control and Prevention will next decide whether to formally recommend the shots.

The Massachusetts company is seeking clearance for two doses and plans to later offer a booster. Tuesday’s vote was only for two doses — full-strength for 12-17 and half-sized doses for those 6-11.

“The data do support that the benefits outweigh the risks for both of these doses, in both of these age groups,” said the CDC’s Dr. Melinda Wharton, a member of the panel.

“I believe that this will provide families an important option” and may be particularly important for families who live in areas where coronavirus spread is increasing, said another panel member, Dr. Ofer Levy of Boston Children’s Hospital.

The FDA held up Moderna’s teen vaccine for months while it investigated a rare side effect, heart inflammation. That’s mostly a risk for teen boys and young men, and also can occur with the Pfizer vaccine. Moderna got extra scrutiny because its shots are a far higher dose.

In their review, FDA scientists said there were no confirmed cases of heart inflammation in Moderna’s kid studies. But experts say the studies may have had too few participants for a rare side effect like that to appear.

“That clearly needs to be watched closely going forward as we expand the use of the vaccine,” said Dr. Mark Sawyer, a panel member from the University of California, San Diego’s medical school.

As for other side effects, FDA officials said nothing worrisome was reported — mainly sore arms, headache and fatigue.

The FDA analysis concluded that two doses of Moderna are effective in preventing symptomatic COVID-19 illness in teens and younger kids, with the levels of virus-fighting antibodies comparable to those developed in young adults.

Vaccine effectiveness was estimated at 93% for the teens, and 77% for the younger children, according to the FDA analysis. However, the research was done when earlier versions of the coronavirus were causing most U.S. infections, before more contagious versions emerged. It’s also based on a limited number of COVID-19 cases, making the estimates a bit rough.

A booster shot was added to the studies, and data is expected in about the next month, Moderna officials said. Booster shots are now recommended for children vaccinated with Pfizer’s shots, as well as for all adults.

How much demand there will be for even two Moderna shots isn’t clear. Teens became eligible a year ago for Pfizer’s vaccine, which uses the same technology, and only 60% have gotten two doses. Shots for younger kids started in November; about 29% have been fully vaccinated, according to the CDC.
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Polluted Air Cuts Global Life Expectancy by 2 Years

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Microscopic air pollution caused mostly by burning fossil fuels shortens lives worldwide by more than two years, researchers reported Tuesday.

Across South Asia, the average person would live five years longer if levels of fine particulate matter met World Health Organization standards, according to a report from the University of Chicago’s Energy Policy Institute.

In the Indian states of Uttar Pradesh and Bihar, home to 300 million, crippling lung and heart disease caused by so-called PM2.5 pollution reduces life expectancy by eight years, and in the capital city of New Delhi by a decade.

PM2.5 pollution – 2.5 microns across or less, roughly the diameter of a human hair – penetrates deep into the lungs and enters the bloodstream.

In 2013, the United Nations classified it as a cancer-causing agent.

The WHO says PM2.5 density in the air should not top 15 micrograms per cubic meter in any 24-hour period, or 5 mcg/m3 averaged across an entire year.

Faced with mounting evidence of damaging health impacts, the WHO tightened these standards last year, the first change since establishing air quality guidance in 2005.

“Clean air pays back in additional years of life for people across the world,” lead research Crista Hasenkopf and colleagues said in the Air Quality Life Index report.

“Permanently reducing global air pollution to meet the WHO’s guidelines would add 2.2 years onto average life expectancy.”

Major gains in China

Almost all populated regions in the world exceed WHO guidelines, but nowhere more so that in Asia: by 15-fold in Bangladesh, 10-fold in India, and nine-fold in Nepal and Pakistan.

Central and West Africa, along with much of Southeast Asia and parts of central America, also face pollution levels — and shortened lives — well above the global average.

Surprisingly, PM2.5 pollution in 2020, the most recent data available, was virtually unchanged from the year before despite a sharp slow-down in the global economy and a corresponding drop in CO2 emissions due to Covid lockdowns.

“In South Asia, pollution actually rose during the first year of the pandemic,” the authors noted.

One country that has seen major improvements is China.

PM2.5 pollution fell in the nation of 1.4 billion people by almost 40 percent between 2013 and 2020, adding two years to life expectancy.

But even with this progress, lives in China are on average cut short today by 2.6 years.

The worst-hit provinces include Henan and Hebei, in north-central China, and the coastal province of Shandong.

Compared to other causes of premature death, the impact of PM2.5 pollution is comparable to smoking tobacco, more than three times that of alcohol use, and six times that of HIV/AIDS, the report said.
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LogOn: Companies Are Building the ‘Metaverse’ but What Is It?

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Often touted as the next digital shift, the metaverse comprises three-dimensional online spaces where people can work, shop, play games, go to concerts and so on. Michelle Quinn on what the metaverse is — or might be.
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The S&P 500 is in a Bear Market; Here’s What That Means

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Wall Street is back in the claws of a bear market as worries about inflation and higher interest rates overwhelm investors. 

The Federal Reserve has signaled it will aggressively raise interest rates to try to control inflation, which is the highest in decades. Throw in the war in Ukraine and a slowdown in China’s economy, and investors have been forced to reconsider what they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers. Big swings have become commonplace and Monday was no exception. 

The last bear market happened just two years ago, but this is still a first for those investors who got their start trading on their phones during the pandemic. Thanks in large part to extraordinary actions by the Federal Reserve, stocks have for years seemed to go largely in only one direction: up. But the “buy the dip” rallying cry popular after every market slide has grown more fainter — a recent rebound in stock prices was wiped out by a furious bout of selling over the past four days. 

Here are some common questions asked about bear markets 

Why is it called a Bear Market?

A bear market is a term used by Wall Street when an index like the S&P 500, the Dow Jones Industrial Average, or even an individual stock, has fallen 20% or more from a recent high for a sustained period of time. 

Why use a bear to represent a market slump? Bears hibernate, so bears represent a market that’s retreating, said Sam Stovall, chief investment strategist at CFRA. In contrast, Wall Street’s nickname for a surging stock market is a bull market, because bulls charge, Stovall said. 

The S&P 500, Wall Street’s main barometer of health, slid 3.9% Monday to 3,749. That’s nearly 22% below the high set on Jan. 3. The Nasdaq is already in a bear market, down 32.7% from its peak of 16,057.44 on Nov. 19. The Dow Jones Industrial Average is more than 17% below its most-recent peak. 

The most recent bear market for the S&P 500 ran from February 19, 2020, through March 23, 2020. The index fell 34% in that one-month period. It’s the shortest bear market ever. 

What’s bothering investors?

Market enemy No. 1 is interest rates, which are rising quickly as a result of the high inflation battering the economy. Low rates act like steroids for stocks and other investments, and Wall Street is now going through withdrawal. 

The Federal Reserve has made an aggressive pivot away from propping up financial markets and the economy with record-low rates and is focused on fighting inflation. The central bank has already raised its key short-term interest rate from its record low near zero, which had encouraged investors to move their money into riskier assets such as stocks or cryptocurrencies to get better returns. 

Last month, the Fed signaled additional rate increases of double the usual amount are likely in upcoming months. Consumer prices are at the highest level in four decades and rose 8.6% in May compared with a year ago. 

The moves by design will slow the economy by making it more expensive to borrow. The risk is the Fed could cause a recession if it raises rates too high or too quickly. 

Russia’s war in Ukraine has also put upward pressure on inflation by pushing up commodities prices. And worries about China’s economy, the world’s second largest, have added to the gloom. 

So, we just need to avoid a recession?

Even if the Fed can pull off the delicate task of tamping down inflation without triggering a downturn, higher interest rates still put downward pressure on stocks. 

If customers are paying more to borrow money, they can’t buy as much stuff, so less revenue flows to a company’s bottom line. Stocks tend to track profits over time. Higher rates also make investors less willing to pay elevated prices for stocks, which are riskier than bonds, when bonds are suddenly paying more in interest thanks to the Fed. 

Critics said the overall stock market came into the year looking pricey versus history. Big technology stocks and other winners of the pandemic were seen as the most expensive, and those stocks have been the most punished as rates have risen. But the pain is spreading widely, with retailers signaling a shift in consumer behavior. 

Stocks have declined almost 35% on average when a bear market coincides with a recession, compared with a nearly 24% drop when the economy avoids a recession, according to Ryan Detrick, chief market strategist at LPL Financial. 

So I should sell everything now, right?

If you need the money now or want to lock in the losses, yes. Otherwise, many advisers suggest riding through the ups and downs while remembering the swings are the price of admission for the stronger returns that stocks have provided over the long term. 

While dumping stocks would stop the bleeding, it would also prevent potential gains. Many of the best days for Wall Street have occurred either during a bear market or just after the end of one. That includes two separate days in the middle of the 2007-2009 bear market where the S&P 500 surged roughly 11%, as well as leaps of better than 9% during and shortly after the roughly monthlong 2020 bear market. 

Advisers suggest putting money into stocks only if it won’t be needed for several years. The S&P 500 has come back from every one of its prior bear markets to eventually rise to another all-time high. 

The down decade for the stock market following the 2000 bursting of the dot-com bubble was a notoriously brutal stretch, but stocks have often been able to regain their highs within a few years. 

How long do bear markets last and how deep do they go?

On average, bear markets have taken 13 months to go from peak to trough and 27 months to get back to break even since World War II. The S&P 500 index has fallen an average of 33% during bear markets in that time. The biggest decline since 1945 occurred in the 2007-2009 bear market when the S&P 500 fell 57%. 

History shows that the faster an index enters into a bear market, the shallower they tend to be. Historically, stocks have taken 251 days (8.3 months) to fall into a bear market. When the S&P 500 has fallen 20% at a faster clip, the index has averaged a loss of 28%. 

The longest bear market lasted 61 months and ended in March 1942 and cut the index by 60%. 

How do we know when a bear market has ended?

Generally, investors look for a 20% gain from a low point as well as sustained gains over at least a six-month period. It took less than three weeks for stocks to rise 20% from their low in March 2020.
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In Rural India, Soaring Cooking Gas Prices Reverse Gains in Tackling Deadly Kitchen Smoke 

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After cooking for decades on earthen stoves lit with firewood, women in Sarmathla village in India’s northern Haryana state were excited when they received cooking gas stoves and connections about five years ago.

The gas cylinders which use liquified petroleum gas (LPG) meant that they would not have to collect firewood and breathe in the smoky fumes emitted from stoves called “chullahs.”

They are among millions of poor rural households given subsidized gas connections and cylinders under a government program launched in 2016 to help women move away from using highly polluting sources of cooking such as wood and animal dung to a cleaner cooking fuel.

But in most homes in Sarmathla, the cylinders now lie unused in a corner of the kitchen as many return to lighting their stoves with firewood.

“I am a poor person and everything has become so expensive. As daily wagers, we barely earn four dollars a day,” said Santosh Devi, a village resident. “Tell me, should I buy food for children or buy a gas cylinder?”

A series of price increases in the past year and a half has made cooking gas cylinders unaffordable for many poor households already struggling to cope with soaring food prices and incomes that declined due to the pandemic.

The approximately $13 price tag of a gas cylinder is almost double compared to six years ago when the project was launched. And although the government last month announced a $2.50 subsidy for those with subsidized gas connections, most village residents say they still cannot use it as their primary source of cooking.

Cooking gas prices in India have jumped massively as international crude prices have spiraled — India is heavily dependent on imported natural gas.

The soaring costs pose a challenge to the ambitious program that aimed to tackle the severe health challenges caused by indoor air pollution. Along with building toilets and homes for the rural poor, it was one of the flagship programs of Prime Minister Narendra Modi’s government meant to dramatically improve the lives of poor households in the countryside.

The government subsidies had given more than 80 million rural households access to a clean energy source for cooking until last year, according to government figures.

But Poonam Devi, a resident of Sarmathla, said she uses it  sparingly.

“I only cook vegetables on gas but I make everything else on a wood fire,” said Devi as she rolled out Indian bread for the family of seven. “Sometimes I use it when guests come.”

Experts worry that this will set back efforts to address the severe health problems caused by toxic kitchen fumes. While this village depends mostly on firewood, cow dung and agricultural waste are other traditional sources for cooking in India’s vast rural areas.

“The indoor air pollution caused by these solid fuels is equivalent to a person smoking a significant number of cigarettes continuously at the same time,” said Abhishek Jain, director of Powering Livelihoods at the Council on Energy, Environment and Water in New Delhi.

Calling it one of India’s biggest public health challenges, Jain said, “Broad estimates suggest that India loses half a million of its population every year prematurely because of indoor air pollution. That is the scale of the problem we are dealing with.”

The women in this village know the health consequences of the sooty flames only too well.

“I cough and I get congestion and breathing problems due the cooking. So I try to cook on gas when I can,” said Paramwati, a Sarmathla resident whose tiny kitchen traps the fumes.

It is not just poor households that have been affected — even better-off families in this village, who do not benefit from government subsidies, are struggling to cope with the high prices of cooking gas.

“I have to think many times before I can refill this cylinder. I can only do it when I manage to save $13 or I have to wait until my husband gets his salary,” said Manju Chhoker.

That feeling is widely echoed across the village. “It is a huge challenge to cope with inflation and the high prices of gas. When it is time to refill the gas cylinder, I get really worried,” said another resident, Satya Prakash Rajput.

According to studies, the number of households using clean energy as the primary fuel for cooking rose exponentially from about 30 percent to nearly 70 percent between 2011 and 2020. Those gains are now under threat, say experts, as affordability emerges as a huge barrier.

“At the very least this has stalled the progress, at worst this has reversed some of the progress,” says Jain. “So, unless prices would get more affordable through either subsidy support by the government or a decrease in international prices, households may not now shift to liquified petroleum gas for most of their cooking.”

That means women in Sarmathla village may have to continue to lug firewood and cope with the fumes in their kitchens to light their stoves.
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UK Reports 104 More Cases of Monkeypox, Mostly in Men

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British health officials have detected another 104 cases of monkeypox in England in what has become the biggest outbreak beyond Africa of the normally rare disease.

The U.K.’s Health Security Agency said Monday there were now 470 cases of monkeypox across the country, with the vast majority in gay or bisexual men. Scientists warn that anyone, regardless of sexual orientation, is susceptible to catching monkeypox if they are in close, physical contact with an infected person or their clothing or bed sheets.

According to U.K. data, 99% of the cases so far have been in men and most are in London.

In May, a leading adviser to the World Health Organization said the monkeypox outbreak in Europe and beyond was likely spread by sex at two recent raves in Spain and Belgium.

Last week, WHO said 1,285 cases of monkeypox had been reported from 28 countries where monkeypox was not known to be endemic. No deaths have been reported outside of Africa. After the U.K., the biggest numbers of cases have been reported in Spain, Germany and Canada.

WHO said many people in the outbreak have “atypical features” of the disease which could make it more difficult for doctors to diagnose. The U.N. health agency also said while close contact can spread monkeypox, “it is not clear what role sexual bodily fluids, including semen and vaginal fluids, play in the transmission.”

Meanwhile, countries in Africa have reported more than 1,500 suspected cases including 72 deaths from eight countries. Monkeypox is considered endemic in Central and West Africa.
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Fed Tries to Thread the Needle in Forecasting a ‘Softish’ Landing

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U.S. Federal Reserve officials, beset by ongoing high inflation and a weakening growth picture, will lay out on Wednesday how they think their increasingly difficult goal of cooling the economy without sending it into a tailspin may play out in the months ahead.

That thorny predicament will be on display as Fed policymakers are expected to deliver their second half-percentage-point interest rate hike in a row and issue their latest projections through 2024 and beyond for economic growth, unemployment and inflation. As critically, they will signal the speed and scale of rate rises policymakers believe are needed to quash inflation at a 40-year-high.

What is certain is their forecasts are likely to bear little resemblance to those issued in March, which showed inflation going down without a rise in unemployment or policy being particularly restrictive.

The meeting comes two weeks after Fed Chair Jerome Powell and U.S. President Joe Biden met amid rising anxiety at the White House that a plentiful jobs picture is being drowned out by soaring costs for everything from rent and food to gasoline and airline tickets. 

Powell has previously said the central bank, which in March lifted interest rates for the first time in three years, will keep raising them until price increases ease in a “clear and convincing” way. Policymakers already signaled they plan to match this week’s expected rate increase with another half-point hike at their next meeting in July, bringing borrowing costs up to between 1.75% and 2.0% – right where just three months ago they thought they would be at year-end.

A hotter-than-expected inflation reading last Friday has even thrown some doubt on those expectations with economists at Barclays calling for a three-quarter-point move either this week or in July and Fed funds futures contracts now reflect better-than-even odds of a 75-basis-point rate hike by July, with a one-in-four chance of that occurring next week.

“It’s going to be a tricky meeting messaging-wise,” said Julia Coronado, a former Fed economist and president of MacroPolicy Perspectives. “It’s not a rosy outlook. They don’t have any easy choices to make.”

New forecasts, new questions

U.S. consumer price growth accelerated in May to 1.0% as gasoline prices hit a record high and the cost of services rose further, while core prices climbed 0.6% after advancing by the same margin in April, the Labor Department reported on Friday, underscoring the need for the Fed to keep its foot on the brakes. In the 12 months through May, headline inflation rose to 8.6%.

The new set of policymaker projections is set to reflect a faster pace of hikes, slower growth, higher inflation and a higher unemployment rate. The key will be how much for each.

All policymakers are now agreed the Fed needs to get its policy rate up to neutral – the level that neither stimulates nor constrains economic growth – by the end of this year. That rate is seen roughly between 2.4% and 3%.

The median dot for the end of 2022 could easily rise enough to signal at least another half-point increase in September given Friday’s worse-than-expected inflation reading. How far the Fed will have to raise rates overall will also move up, with most economists seeing them topping out between 3% and 3.5%.

For the unemployment rate over the next two years, the key is whether policymakers raise it by just a notch or two or show a material rise in layoffs, which would be at odds with their contention that inflation can be tamed without excessive joblessness.

Fed Governor Christopher Waller recently said if the Fed could bring down inflation to near its 2% goal while keeping the unemployment rate, currently at 3.6%, from rising above 4.25%, it would be a “masterful” performance.

“I don’t think it will change a lot but if it does … that’s a sign they’re worried about the possibility of a serious slowdown or recession,” said Roberto Perli, also a former Fed economist and head of global policy at Piper Sandler.

How much pain the Fed’s willing to swallow

Some of the factors keeping inflation so elevated, in particular supply shocks outside the Fed’s control due to Russia’s invasion of Ukraine that have caused a jump in food and oil prices, show no sign of abating. Overall the central bank still faces tremendous uncertainty on the outlook from that and other supply-chain disruptions caused by the COVID-19 pandemic.

Nor are officials getting much help yet on the demand side with the healthy finances of U.S. banks, companies and households a possible obstacle to curbing inflation as they raise rates in an economy able so far to pay the price.

The longer the Fed struggles to stifle demand and the longer inflation persists, the more likely the rate of price increases becomes embedded and the Fed needs to ramp up its action, reducing the chances of Powell’s hope for what he calls a “softish” landing.

Newly sworn-in Fed governors Philip Jefferson and Lisa Cook, who take their place among the 18-strong policymaking body for the first time, are unlikely to diverge from their colleagues’ resolve to lower inflation.

“While Cook and Jefferson are expected to be dovish additions to the Fed, that won’t matter much while inflation is 8%, and we doubt they will push back on the Fed’s tightening plans any time soon,” said Andrew Hunter, senior U.S. economist at Capital Economics.

If the committee consensus does not align with Powell’s view of what is needed, he has shown by his recent inter-meeting guidance that he is prepared to lead from the front to make sure inflation is decisively dented.

David Wilcox, a former Fed research director now director of U.S. economic research at Bloomberg Economics and a senior fellow at the Peterson Institute for International Economics, expects Powell to maintain a razor-sharp focus on the inflation side of the Fed’s mandate like Paul Volcker, the towering Fed chief who tamed inflation in the 1980s. 

“Powell has every intention of going down in history, if necessary, as Paul Volcker version 2.0,” said Wilcox. 
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