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Is a recession looming?

The financial press is full of speculation over the prospects for a recession in late 2022 or 2023. While it’s not easy to predict turning points in the business cycle, two factors have at least some predictive power. First, certain economic fundamentals, such as an overheating economy, can make a recession more likely. Second, asset prices in financial markets often provide useful signals before the data show up in slower-moving macroeconomic indicators. Let’s start with the fundamentals.

It is often said that if the Federal Reserve could predict a recession then it could prevent the recession. Strictly speaking, this is only true of recessions that occur when the economy is relatively stable, rather than in an “overheating” economy in need of a contractionary monetary policy to slow inflation. When the economy is not overheated, the Fed could prevent an anticipated recession with enough monetary stimulus (rate cuts and/or quantitative easing) to keep spending growing at a moderate rate.

Today, however, we’re experiencing the latter. The economy is severely overheated. While some of the inflation problem is due to supply constraints, aggregate demand has also been growing at an excessive rate and pushing prices too high, too fast. Nominal GDP is up more than 10 percent over the past 12 months, a rate of growth in spending that is not consistent with the Fed’s 2 percent inflation target. The Fed needs to slow that growth to no higher than 4 percent to get inflation under control.

Here’s where it gets even more complicated. During normal times (such as the late 2010s), a 4 percent nominal GDP growth rate would be consistent with a healthy job market. These are not normal times. The Fed’s overly expansionary monetary policy in late 2021, which included huge infusions of extra money into the economy, has pushed wage inflation up over 6 percent. Nominal GDP growth ultimately determines the revenue available to firms to pay wages, and today, 4 percent nominal GDP growth might not provide enough revenue to maintain current employment levels at a time when wages are rising fast.

If the Fed’s contractionary monetary policy does succeed in reducing nominal GDP growth to roughly 4 percent, one of two things might happen. The best outcome would be for wage growth to slow sharply from current levels, which would allow firms to avoid large layoffs. But if wages continue growing at 6 percent while nominal GDP growth slows sharply, higher unemployment is almost inevitable.

In the past, the Fed has not succeeded in achieving a so-called “soft landing.” Any time the unemployment rate has risen by at least one percentage point, it has always gone on to rise much further — at least two points above the low during the previous boom. America has not had any borderline recessions since the government began collecting unemployment data in the 1940s. Either we’ve clearly had a recession, or clearly avoided one.

Today, market indicators are presenting a mixed picture of the risk of recession, with the market consensus viewing one as increasingly likely but not certain. For instance, while stock prices are down sharply, if there actually were a recession, they would probably fall even further. And while interest rate futures markets show rates declining slightly during 2023, if there were a recession, interest rates would probably fall much more sharply — perhaps to zero.

These facts are certainly no reason for complacency. The patterns we see in the markets, including soaring oil prices, falling stock prices and a flattening yield curve, often occur right before an economic contraction.

The yield curve is particularly interesting. Today, two-year Treasury bond yields are still a bit lower than 10-year T-bond yields. But the Fed’s policy of raising rates is likely to “invert” the yield curve soon — that is, to cause short-term interest rates to rise above longer-term rates. Contrary to popular belief, this is not a foolproof recession indicator, but recessions have often occurred within a year of a yield curve inversion.

One reason to be humble is that economists do not have a good track record in predicting recessions. Indeed, during the 1990, 2001 and 2008 recessions, the consensus forecast did not predict a recession until several months after it was underway. There is even a possibility that we are already in recession today, as the first quarter of 2022 showed negative growth in output. I suspect that first-quarter GDP data will later be revised upward, however, as job growth has been extremely strong.

The inflation data going forward may end up being worse than many pundits expect, while the unemployment rate will do somewhat better than in previous recessions, despite slow growth in real output. In other words, while the jury is still out on a recession, we may face a few years of stagflation.

Scott Sumner is the Ralph G. Hawtrey Chair of Monetary Policy with the Mercatus Center at George Mason University and a professor emeritus at Bentley University.

Source: TEST FEED1

Nation’s first openly gay AG could be Massachusetts’s first out lesbian governor

Maura Healey never dreamed of working in government. In fact, she never imagined she’d go into politics at all. After graduating from Harvard University in 1992, where she co-captained the women’s basketball team, the Hampton Falls, New Hampshire native played professionally overseas for two years – no small feat for a 5-foot-4 point guard.

Healey, a Democrat now at the tail end of her second term as Massachusetts’ attorney general, admits her career trajectory has been a bit unorthodox.

“Mine was sort of an unlikely path,” she told Changing America in an interview.

Healey, who in January announced her bid for governor, is remarkable for a lot of reasons, among them being she’s the first female attorney general in the nation to identify as openly gay. Should she win her race in November, Healey will make history again as the state’s first elected female governor and the first out lesbian governor in America.

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“I’m honored if I can be an example for others, and I take that seriously,” Healey said. “All I want is for people to have opportunity, and if my election can help open doors for other LGBTQ young people, then I’m happy about that.”

Recalling her run for state attorney general in 2014, Healey said her sexual orientation wasn’t really a talking point, likely because Massachusetts already had LGBTQ+ nondiscrimination policies in place. At the time, Massachusetts had been issuing marriage licenses to same-sex couples for more than a decade, long before the Supreme Court legalized same-sex marriage in all 50 states.

“My identity really wasn’t discussed,” Healey said, “it really wasn’t of interest.”

But that changed when she got elected.

“I came to see that it mattered for a lot of people,” she said. “After I was elected, people would come up to me and say ‘now, I think more is possible for my child.’ It was those comments that really drove home for me what having someone like me in this position could mean for people.”

“I believe that representation matters,” Healey added. “We’re only going to have the laws and policies and regulations that work for our community if those laws and policies reflect the diversity of our community.”

Since then, Healey has been joined by another openly gay colleague – Michigan Attorney General Dana Nessel. (Andrew Bruck, from New Jersey, briefly served as acting attorney general between July and February).

“That’s important too,” Healey said. “You don’t want to just be the first. What’s important is that you’re not the last.”

If there is anything the last six months have demonstrated, it is that representation really does matter. Hundreds of bills in mostly conservative-led states have been introduced – in some cases signed into law – that target the fundamental rights of LGBTQ+ people.

“Here we are in 2022, and we’re having to re-fight some of the fights that we fought – and won – years ago,” Healey said.

Healey is uniquely qualified to make that observation. In 2012, while leading the Civil Rights Division of the Massachusetts Attorney General’s office, she headed the nation’s first successful challenge to the Defense of Marriage Act (DOMA), which defined marriage for federal purposes as a union between one man and one woman.

A year later, the Supreme Court ruled that a section of the law preventing the government from recognizing same-sex marriages was unconstitutional. Exactly two years after that, the court ruled that every state must recognize same-sex marriages.

“When I brought our DOMA lawsuit, I remember it was a case many people didn’t think we could win,” Healey said. “Some people, including constitutional scholars, called me and told me I was wrong to bring that case, that I was going to mess up precedent and destroy the likelihood of equality for the LGBTQ community.”

“But we needed to do it,” she said. Almost a decade later, Healey and others are steeling themselves for the possibility of defending marriage equality yet again.

The Supreme Court last week overturned Roe v. Wade, the landmark 1973 ruling that established the constitutional right to an abortion. Writing for the majority, Justice Samuel Alito emphasized that the ruling would not affect other decisions on same-sex marriage, sex between gay couples or the right to contraception.

In a concurring opinion, however, Justice Clarence Thomas wrote that the court’s “substantive due process precedents” set in cases like Obergefell v. Hodges – in which the court ruled that same-sex marriage is protected under the Due Process and Equal Protection Clauses of the Fourteenth Amendment – should be revisited.

“Now that the Court overturned a 50-year precedent, there’s no telling where they will stop when it comes to infringing on our civil rights – on contraceptive access, on marriage equality, and more,” she wrote to Changing America in an email following the court’s decision in Dobbs v. Jackson Women’s Health Organization.

Even without Roe, access to abortion (and marriage equality, which has not yet been challenged officially), is still legal in Massachusetts. Healey intends to keep it that way.

Source: TEST FEED1

Jan. 6 panel member: Messages Cheney showed at hearing constitute witness tampering

Rep. Pete Aguilar (D-Calif.), a member of the House select committee investigating the Jan. 6, 2021, Capitol attack, said Tuesday that the messages shown by Rep. Liz Cheney (R-Wyo.) at the end of the hearing on Tuesday constitute witness tampering.

Aguilar was responding to a question asked by CNN’s John Berman on “New Day” about the significance of the messages.

According to the California Democrat, the possibility of witness tampering is something that should be looked at by both the committee and “potentially” by the Department of Justice.

Aguilar added that the committee takes the safety and security of those individuals who have testified “incredibly seriously.”

He reiterated Cheney’s comments and added that “like the Vice Chair said, we asked witnesses routinely whether they have had outreach from other members of the former administration.”

Cheney on Tuesday displayed messages sent to an unidentified witness that said: “A person let me know you have your deposition tomorrow. He wants me to let you know that he’s thinking about you. He knows you’re loyal, and you’re going to do the right thing when you go in for your deposition.”

Aguilar also told Berman that “it wasn’t lost on anyone that former President Trump has behavior like we heard yesterday”, referencing witness Cassidy Hutchinson’s testimony that Trump has an explosive temper.

Aguilar refused to comment on the the investigative steps taken by the Jan. 6 committee but added that he believes “that those statements speak for themselves.”

He also noted that the committee is aware of the messages and that it is “dangerous behavior.”

Aguilar refused to elaborate on whether there are other messages to Jan. 6 witnesses in addition to the ones that were shared by the committee on Tuesday.

Rep. Jamie Raskin (D-Md.) on Tuesday didn’t answer questions from reporters when asked if the committee has any more evidence of witness tampering.

He added that the evidence of witness tampering that the committee has released are the two instances that the vice chair cited anonymously, “for obvious reasons.”

“It’s a crime to tamper with witnesses, it’s a form of obstructing justice. The committee won’t tolerate it, and we haven’t had the chance to fully investigate it or fully discuss it, but it’s something on our agenda,” he said.

Source: TEST FEED1

Democratic governors urge Congress to avert 'disastrous' ObamaCare premium hike

A group of Democratic governors is calling on Congress to avert what they call “disastrous” ObamaCare premium increases for next year, as lawmakers search for a solution in their economic package.  

The letter from 14 Democratic governors to congressional leaders calls for extending enhanced Affordable Care Act subsidies enacted last year as part of President Biden’s American Rescue Plan (ARP), but which are currently set to expire at the end of this year.  

“We urge you to take action immediately to make the ARP expanded subsidies permanent to prevent a disastrous erosion of health insurance coverage,” write the state leaders, including Illinois Gov. JB Pritzker, California Gov. Gavin Newsom, Michigan Gov. Gretchen Whitmer and New Jersey Gov. Phil Murphy.  

In the letter, first reported by Punchbowl News, they also linked the issue to struggles with inflation. “At a time when governments at all levels are struggling to find ways to reduce costs for the American people, we cannot allow the looming specter of rising health costs to cause more uncertainty and stress for American families,” they wrote.  

Democrats in Congress have also been calling for extending the enhanced subsidies, but their fate largely depends on Sen. Joe Manchin (D-W.Va.), the key vote on Biden’s party-line economic package.  

Manchin has not given a clear answer on whether he supports extending the enhanced subsidies. In one interview with Insider this month, he suggested he could support an extension if the financial assistance was further “means-tested,” meaning help was reduced for people with higher incomes.  

“We should be helping the people who really need it the most and are really having the hardest time,” he said.  

The premium increase also poses a political risk for Democrats, already facing a tough midterm landscape, as notices of the premium increases would go out ahead of the elections.  

If the enhanced subsidies expire, it would return the Affordable Care Act to its pre-2021 levels of financial assistance. But the premium increases would be substantial: with an average increase of about 53 percent affecting roughly 13 million people, according to the Kaiser Family Foundation.  

Source: TEST FEED1

NATO invites Finland, Sweden to join alliance

NATO officially invited Sweden and Finland to join its military alliance on Wednesday, a day after Turkey dropped its reservations over having the Nordic countries join the defense bloc.

“It demonstrates that President Putin has not succeeded in closing NATO’s door,” NATO Secretary General Jens Stoltenberg said during the NATO summit in Madrid. “He is getting the opposite of what he wants. He wants less NATO; President Putin is getting more NATO by Finland and Sweden joining our Alliance.”

“We’re sending an unmistakable message, in my view — and I think yours as well — that NATO is strong, united, and the steps we’re taking during this summit are going to further augment our collective strength,” President Biden concurred. 

The invitation was immediately slammed by Russia, with one Kremlin official saying it was “a purely destabilizing factor,” according to CNBC.

The development comes against the backdrop of Russia’s invasion in Ukraine, which has shifted Sweden’s and Finland’s attitudes about joining the military alliance. The two Nordic countries submitted their applications to join NATO last month. 

Though many of NATO’s members expressed support for both countries to join the military alliance, Turkey raised objections, accusing Finland and Sweden of not being aggressive enough against a group that Turkey and other nations have designated as a terrorist group, the Kurdistan Workers’ Party (PKK.) 

But Turkey withdrew its qualms on Tuesday after the countries signed a trilateral memorandum vowing to support one another against national security threats and to enhance counterterrorism cooperation. 

Turkish President Recep Tayyip Erdoğan and President Biden are anticipated to meet one-on-one sometime on Wednesday during the NATO summit in Madrid. 

“In any accession to the Alliance, it is of vital importance that the legitimate security concerns of all Allies are properly addressed. We welcome the conclusion of the trilateral memorandum between Türkiye, Finland, and Sweden to that effect,” read the declaration issued by NATO members during the summit. 

“The accession of Finland and Sweden will make them safer, NATO stronger, and the Euro-Atlantic area more secure.  The security of Finland and Sweden is of direct importance to the Alliance, including during the accession process.”

Source: TEST FEED1

Kinzinger hits back at Boebert’s church and state remarks: ‘We must oppose the Christian Taliban’

Rep. Adam Kinzinger (R-Ill.) on Wednesday criticized comments that Rep. Lauren Boebert (R-Colo.) made on Sunday in which she called for ending the separation of church and state in the United States.

Boebert said in a speech at the Cornerstone Christian Center in Basalt, Colo., that she is “tired” of the principle and falsely claimed that the Founding Fathers did not intend to keep religion separate from government. 

Kinzinger condemned Boebert’s comments and compared them to the views of the Taliban, the militant Islamic fundamentalist group that rules Afghanistan. 

“There is no difference between this and the Taliban. We must oppose the Christian Taliban. I say this as a Christian,” he tweeted. 

Boebert argued that the separation of church and state “junk” is not in the Constitution and was only in a letter that “means nothing like they say it does.” 

She appeared to be referencing a letter that then-President Thomas Jefferson wrote in 1802 to the Danbury Baptist Church Association in Connecticut. In the letter, Jefferson wrote that the American people had built “a wall of separation between Church and State.” 

The constitutional interpretation of separation of church and state comes from the establishment clause of the First Amendment, which states that “Congress shall make no law respecting an establishment of religion.” 

The Supreme Court applied this provision also to the states through the 14th Amendment’s due process clause, which prohibits states from passing laws that restrict people’s “life, liberty, or property, without due process of law.” 

But the court has more recently signaled a willingness to allow religion in public spaces, striking down a law in Maine earlier this month that prevented religious schools from receiving tuition aid from public funds. It also ruled in favor of a high school football coach who was placed on leave for violating the school’s policy against staff encouraging students to engage in prayer. 

Boebert argued that the government has been able to direct the church but instead the church should direct the government. 

After winning the election to the House in 2020 and gaining a reputation as a far-right conservative with hardline views, Boebert won the Republican nomination for reelection to her seat on Tuesday.

Source: TEST FEED1

Nissan recalling over 300,000 Pathfinders due to risk of 'hood opening while driving'

(NEXSTAR) – Nissan is recalling hundreds of thousands of Pathfinder SUVs after identifying an “issue involving the hood opening while driving,” the automaker says.

The recall affects approximately 322,671 Pathfinder vehicles from 2013, 2014, 2015 and 2016 model years. Nissan estimated that roughly 0.44% of the vehicles contain the defect.

Nissan alerted the National Highway Traffic Safety Administration of the issue on June 13, announcing intentions to begin a voluntary recall. The automaker warned of an increased risk of crash should the hood open while Pathfinder drivers are operating the vehicles.

“The bell crank assembly lever, which actuates the secondary lock lever, may become stuck thereby preventing the secondary lock from properly engaging the secondary hood catch,” Nissan said. “If the driver inadvertently releases the primary hood latch or the hood is not closed properly, and if the bell crank lever is stuck in the open position, the hood may open without warning while the vehicle is in motion.  In such cases, it could obstruct the driver’s forward view and may increase the risk of crash.”

Beginning next month, Nissan plans to recall notifications containing instructions for customers to “check the condition of the bell crank” of their vehicles, as well as options for servicing the cars.

A remedy for the issue is under development, according to the automaker.

Consumers can find more information concerning the recall via the NHTSA or at NissanUSA.com. Drivers with concerns may also reach out via the NHTSA’s Vehicle Safety Hotline by dialing 1-888-327-4236.

Source: TEST FEED1

Former Jan. 6 committee counsel running for Senate in Missouri as independent

A former counsel for the House committee investigating the Jan. 6, 2021, Capitol riot is running for an open Senate seat in Missouri as an independent. 

John Wood, a former federal prosecutor who served as counsel to Vice Chairwoman Liz Cheney (R-Wyo.) on the House Jan. 6 Select Committee, announced in a release on Wednesday that he is running for Senate to give voters a “common sense, conservative” candidate and an alternative to the future nominees of the two major parties. 

“Missouri is at a crossroads, and my candidacy offers a common sense alternative to the crazy extremes both parties are offering in this race,” Wood said. 

His announcement follows urging from some activists and a former senator from Missouri last week for Wood to join the race. Wood left his role as a top investigator on the Jan. 6 committee at the end of last week following a series of public hearings the committee held. 

Polls for the Republican nomination for the seat show former Missouri Gov. Eric Greitens with a small lead over his competitors, according to the RealClearPolitics polling average. 

Greitens has faced a number of controveries, including releasing an ad earlier this month showing him with a firearm and saying he is going “RINO hunting,” an acronym for Republican in name only. Facebook removed the ad from the platform after Greitens posted it for violating its “policies prohibiting violence and incitement.” 

Wood said Greitens’ ad was “glorifying” evidence against his political enemies and is evidence that the primaries in the election have become a “race to the bottom.” 

Former Sen. Jack Danforth (R-Mo.) told The Hill this month that Wood would be a “terrific senator” and he would use his super PAC to support Wood’s candidacy, giving him resources that most independent candidates do not have access to. 

Danforth said the person sent to the Senate from Missouri should be someone who works across the political aisle and wants to “restore civility” to politics. He added that Wood has a “good heart” and plenty of experience. 

Wood has served as U.S. attorney for the Western District of Missouri and held multiple positions under former President George W. Bush. In Bush’s administration, he worked as deputy associate attorney general at the Justice Department and top legal positions in the Office of Management and Budget and Department of Homeland Security. 

Wood and the eventual Republican and Democratic nominees will be running for an open seat vacated by retiring Sen. Roy Blunt (R). The Republican and Democratic primaries are scheduled for Aug. 2. 

The release announcing Wood’s candidacy states that research suggests the Senate race may be prime for an independent candidate like Wood. 

A memo from a political action committee called Missouri Stands United, which took a poll on the race, states that most voters in the election are undecided or likely to support “the lesser of two evils” of the nominees. The memo states that a “substantial” pool of voters from both parties would consider an independent candidate looking to change the “status quo” of the two-party system. 

Danforth, who served as a senator for almost 20 years, said in his interview with The Hill earlier this month that the results of a poll conducted by a polling firm he enlisted also showed that an independent candidate could perform well in the state.

Source: TEST FEED1

Warren calls on HHS to provide access to voter registration services through health insurance applications

Sen. Elizabeth Warren (D-Mass.) is calling on the Biden administration to provide access to voter registration services through HealthCare.gov, where Americans can apply for health insurance through the Department of Health and Human Services (HHS).

Warren urged HHS Secretary Xavier Becerra to make changes to HealthCare.gov that could lead to millions of Americans registering to vote, especially those living below the federal poverty level, according to a letter first obtained by The Hill.

She pointed to President Biden’s executive order on promoting access to voting that came out in March 2021 and a recent update from the administration that all agencies, including HHS, said they were making progress on enhancing access to voter registration.

“But HHS can do more to fulfill its commitments under the President’s Voting EO. In particular, it should expeditiously implement changes to HealthCare.gov to facilitate access to voter registration services for millions of Americans,” she said in the letter.

Nearly 8.4 million people actively applied for health insurance through HealthCare.gov and about 73 percent of consumers enrolled in a marketplace plan live at or below 150 percent of the federal poverty level, according to Centers for Medicare & Medicaid Services data Warren cited.

“Despite record voter turnout during the 2020 election, low-income voters still voted at lower rates than higher earners, and difficulty with voter registration is the most significant barrier to voting for low-income Americans and communities of color. HHS interacts with these communities every year through HealthCare.gov and can and should offer its users the opportunity to register to vote,” the senator said.

She asked Becerra to send a detailed report of HHS’ progress on implementing voter registration access through HealthCare.gov by July 12.

“Too many Americans still face substantial barriers when registering to vote,” Warren said in a statement to The Hill. “That’s why it’s important for the Department to follow through on its commitments to make it easier for HealthCare.gov users to access voter registration and election information in the same place they access their health insurance.”

Biden’s March 2021 executive order a on promoting access to voting directed an all-of-government effort to promote information about the voting process and to further the ability of all eligible Americans to vote.

Source: TEST FEED1