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      Janet Yellen tells Congress US faces ‘unacceptable levels of inflation’

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      Janet Yellen tells Congress US faces ‘unacceptable levels of inflation’Treasury secretary admits she regrets describing inflation as ‘transitory’ and says it is ‘top economic problem at this point’ Janet Yellen told Congress that the US is facing “unacceptable levels of inflation” on Tuesday as the treasury secretary defended herself from criticism of her previous comments that rising prices were “transitory”.Although the hearing with the Senate finance committee was centered on Joe Biden’s budget for 2023, Yellen was forced to answer questions on inflation, including some on how she once said that inflation would be “transitory”, or temporary.In response to a question about how she had initially framed inflation, Yellen said: “When I said that inflation would be transitory, what I was not anticipating was a scenario in which we would end up contending with multiple variants of Covid that would be scrambling our economy and global supply chains.“I was not envisioning impacts on food and energy prices we’ve seen from Russia’s invasion of Ukraine.”Yellen said she and the Federal Reserve chair, Jerome Powell, “could have used a better term than transitory”.She said: “There’s no question that we have huge inflation pressures, that inflation is really our top economic problem at this point and that it’s critical that we address it. I do expect inflation to remain high, although I very much hope that it will be coming down now.”Last week, Yellen drew headlines for making similar comments to CNN, during an interview in which she had been “wrong then about the path inflation would take”.At the hearing on Tuesday, Yellen said: “We currently face macroeconomic challenges, including unacceptable levels of inflation, as well as the headwinds associated with the disruptions caused by the pandemic’s effect on supply chain and the effects of supply-side disturbances to oil and food market.”‘We’re still struggling’: low unemployment can’t hide impact of low wages and rising inflationRead moreThe Biden administration has been delicately walking the inflation tightrope over the last few months as they try to push an aggressive response while also emphasizing other indicators that prove the economy is still improving, particularly in the jobs market.Biden celebrated the figures shown in May’s jobs report, released last Friday, which showed that 390,000 new jobs were created that month.“Because of the enormous progress we’ve made on the economy, Americans can tackle inflation from a position of strength,” Biden said in remarks following the release of the jobs report.Republicans in Tuesday’s hearing repeatedly pointed to the passing of the $1.9bn American Rescue Plan, which was passed in March last year and delivered further coronavirus aid, as a key driver of inflation.In response, Yellen noted that Biden “inherited an economy with very high unemployment”.“We had to address the possibility that this could be the downturn that could match the Great Recession,” she said. “In the policy, there were various risks taken into account. Of course, inflation was one of them. But the overwhelming risk was that America would be marred by a deep and long recession.”Yellen pointed to the expansion of child tax credit, which gave extra assistance to families, in the stimulus package that “resulted in a dramatic reduction in childhood poverty and financial insecurity for American families and contributed little to nothing to inflation”.She also said the US is “not the only country that’s experiencing inflation – you can see that in virtually every developed country around the world”.TopicsInflationJanet YellenEconomicsUS politicsBiden administrationnewsReuse this content More

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      in World Politics

      Saudi Crown Prince Mohammed bin Salman’s Heady Days

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      The Fair Observer website uses digital cookies so it can collect statistics on how many visitors come to the site, what content is viewed and for how long, and the general location of the computer network of the visitor. These statistics are collected and processed using the Google Analytics service. Fair Observer uses these aggregate statistics from website visits to help improve the content of the website and to provide regular reports to our current and future donors and funding organizations. The type of digital cookie information collected during your visit and any derived data cannot be used or combined with other information to personally identify you. Fair Observer does not use personal data collected from its website for advertising purposes or to market to you.As a convenience to you, Fair Observer provides buttons that link to popular social media sites, called social sharing buttons, to help you share Fair Observer content and your comments and opinions about it on these social media sites. These social sharing buttons are provided by and are part of these social media sites. They may collect and use personal data as described in their respective policies. Fair Observer does not receive personal data from your use of these social sharing buttons. It is not necessary that you use these buttons to read Fair Observer content or to share on social media. More

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      in US Politics

      US sues casino mogul Steve Wynn to compel him to register as an agent of China

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      US sues casino mogul Steve Wynn to compel him to register as an agent of ChinaJustice department says Wynn lobbied the Trump administration for China to protect his business interests in Macau The US Department of Justice on Tuesday sued Steve Wynn, the billionaire former casino mogul and senior Republican fund raiser, to compel him to register under the Foreign Agents Registration Act as an agent of China.The department said Wynn, 80, had contacted then-US president Donald Trump and members of his Republican administration in 2017 to convey China’s request to cancel the visa of or otherwise remove a Chinese businessperson who had sought political asylum in the United States.In a statement the Department of Justice said it was seeking to compel Wynn to register under the Foreign Agents Registration Act (Fara) as the agent of the People’s Republic of China (PRC) and a senior official of the PRC’s Ministry of Public Security (MPS).“The filing of this suit – the first affirmative civil lawsuit under Fara in more than three decades – demonstrates the department’s commitment to ensuring transparency in our democratic system,” said assistant attorney general Matthew Olsen of the justice department’s national security division. “Where a foreign government uses an American as its agent to influence policy decisions in the United States, Fara gives the American people a right to know.”‘Sinkhole of corruption’: Trump Organization sells Washington hotelRead moreAccording to the complaint, in June and August 2017 Wynn contacted Trump and members of his administration to “convey the PRC’s request to cancel the visa or otherwise remove from the United States a Chinese businessperson who left China in 2014, was later charged with corruption by the PRC and sought political asylum in the United States”.The Wall Street Journal reported earlier that the person was Chinese businessman Guo Wengui, who has been accused by the Chinese authorities of a range of criminal offenses including bribery and sexual assault, charges he has denied. Guo has said he is the subject of a witch hunt after accusing senior PRC figures of having corrupt ties with China’s business leaders.The complaint alleges that Wynn engaged in these efforts at the request of Sun Lijun, then-vice minister of the MPS. “Wynn conveyed the request directly to the then-president over dinner and by phone, and he had multiple discussions with the then-president and senior officials at the White House and National Security Council about organizing a meeting with Sun and other PRC government officials,” according to the justice department.Wynn’s company owned and operated casinos in Macau, a special administrative region in the PRC and the department alleges that “Wynn acted at the request of the PRC out of a desire to protect his business interests in Macau”.Wynn’s lawyers denied the charges.“Steve Wynn has never acted as an agent of the Chinese government and had no obligation to register under the Foreign Agents Registration Act. We respectfully disagree with the Department of Justice’s legal interpretation of Fara and look forward to proving our case in court,” said a statement from his attorneys, Reid Weingarten and Brian Heberlig.In 2018, Wynn resigned as finance chair of the Republican National Committee, a day after it was reported that he faced multiple of allegations of sexual misconduct.Days later he resigned from his luxury casino and hotel company, Wynn Resorts. He denied the allegations of sexual harassment and assault.In 2020, Elliott Broidy, a venture capitalist and former deputy finance chairman of the Republican National Congress, pleaded guilty of acting as an unregistered foreign agent, accepting millions of dollars to lobby the Trump administration for Malaysian and Chinese interests. Broidy admitted to working with Chinese officials attempting to return Guo to his home country.The complaint alleges Wynn was drawn into the lobbying effort by Broidy. Broidy was later pardoned by Trump.Agencies contributed reporting.TopicsChinaGamblingDonald TrumpTrump administrationUS politicsnewsReuse this content More

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      in UK Politics

      ‘Think and reflect’ before seeking pay rise, says £575,000-a-year Bank of England chief

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      Workers should “think and reflect” before asking for pay rises, £575,000-a-year Bank of England chief Andrew Bailey told MPs on Monday.The governor said high earners in particular should consider the impact of inflation before seeking salary top-ups as prices rises.It comes as the Office for National Statistics (ONS) is later this week expected to confirm inflation has passed eight per cent, while the Bank of England itself has warned it could is likely to peak at 10.25 per cent by the end of the year.Mr Bailey told MPs on the Treasury select committee: “I spoke in an interview about this. I do think people, particularly people who are on higher earnings, should think and reflect on asking for high wage increases. More

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      in UK Politics

      Government deepens probe into Chinese purchase of graphene maker Perpetuus Group

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      Business secretary Kwasi Kwarteng has ordered the next stage of a review into a proposed Chinese takeover of a group of UK tech firms, citing national security concerns.The step would allow the secretary of state to block the proposed sale if it is found to threaten British interests. Last September, the proposed sale of Perpetuus Group to a group led by Chinese company Shanghai Kington Technologies was blocked by Mr Kwarteng. Perpetuus Group is a collection of UK companies, some of which have developed new intellectual property involving modern engineering super material graphene. These technologies have “strategic applications”, according to a statement issued by the Department for Business, Energy and Industrial Strategy on Wednesday.Mr Kwarteng said of the next steps in the probe: “The UK remains firmly open for business, however we have been clear that foreign investment must not threaten our national security.“I have considered the evidence presented to me and asked the Competition and Markets Authority to undertake an in-depth investigation so we can fully consider the implications of this transaction,” the business secretary added.The probe uses powers under the 2002 Enterprise Act because the government intervened before its newer legislation, the National Security and Investment Act, came into force this year.Perpetuus’ website outlines a range of applications for its nanomaterials, which are constructed from tiny particles which can help to shrink the scale of electronic circuitry or improve its performance.Graphene, one of these materials, is a key branch of Perpetuus’ specialisms in sensitive technologies. It is used to create coatings and components which are much stronger or more aerodynamic than those using other comparable materials. Its applications are manifold in innovative engineering from vehicles, to aircraft.The transaction is considered to be much more sensitive than the proposed takeover of semiconductor maker Newport Wafer Fab, according to senior government sources. This is because Perpetuus’ technologies involve more sensitive and novel intellectual property.The £63m sale of Newport Wafer Fab last year to Nexperia, a Dutch company owned by China’s Wingtech, is also under review. This was confirmed by a statement from business minister Lord Callanan, on 7 April, but it came after a prolonged debate among senior government figures over the deal.There are deep cabinet divides over the role of Chinese investment in the UK and the threats it may pose to national security. Foreign secretary Liz Truss and Mr Kwarteng are understood to be keen to reduce dependence on China within sensitive supply chains.Other figures, including prime minister Boris Johnson and chancellor Rishi Sunak, have expressed concerns that national security fears must not override the need to remain an attractive investment destination for the world’s second-largest economy.Perpetuus and Newport Wafer Fab, the former whose activities include creating conductive coatings for electronics and the latter which makes silicon wafers, are both case studies which will inform the government’s semiconductor strategy. This is expected to be published this month by the Department for Culture, Media, and Sport, according to Whitehall sources.The review into the potential sale of Perpetuus is expected to last 24 weeks, but this could be extended if officials consider more time is needed for their investigations. More

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      in US Politics

      US inflation rate slows but remains close to 40-year high

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      US inflation rate slows but remains close to 40-year highConsumer price index reveals costs rising by a monthly rate of 0.3% in April, down from 1.2% in March, the first fall since August 2021 Price rises slowed in the US in April but the annual inflation rate remained close to a 40-year high, leaving many Americans struggling to afford necessities including food, shelter and fuel.The latest consumer price index (CPI) figures – which measure a broad range of goods and services – showed prices rising by a monthly rate of 0.3% in April, down from 1.2% in March, the first fall since August 2021.But it is still too early to say whether inflation has peaked. At 8.3% the annual rate of inflation in April was down from 8.5% in March but remains at a level unseen since the 1980s. Over the year the CPI’s food index increased 9.4%, the largest 12-month increase since April 1981. The so-called core-price index – which excludes the volatile categories of food and energy – increased 0.6% on the month, up from March’s 0.3% gain.The figures come as the Federal Reserve is moving to sharply increase interest rates in an attempt to bring prices back under control. The pace of rate rises, and fears that they may trigger a recession, have spooked investors and sent stock markets reeling.Soaring demand and a lack of supply thanks to the pandemic have led to price rises across a broad swath of goods and services. Air fares are up 40% over the last three months. A booming house market has made housing unaffordable for many Americans, especially people of color, and 49% of people recently told Pew Research that affordable housing is a large problem in their community.Randall Kroszner, an economics professor at the University of Chicago and former Fed governor, said the sharp rise in core inflation would worry the Fed. “That is where you look for evidence that inflation is becoming entrenched,” he said.Kroszner said global issues including the war in Ukraine and China’s Covid woes had combined with rising rates to deliver a “one-two punch” to the US economy. He believes the chances of the US entering a recession have risen and that the housing and jobs markets may be the next to suffer.“I’m generally an optimist but this is challenging,” he said.The rising cost of living has become a leading political issue as the US prepares for November’s midterm elections. Rising prices have battered Joe Biden’s approval ratings. This week an Investors Business Daily/TIPP poll found that Biden’s approval had fallen to 39%, approaching his previous record low of 38% set in February, and confidence in the US economy was close to an eight-year low.On Tuesday, Biden said his administration was doing all it could to tackle inflation. “I want every American to know that I’m taking inflation very seriously,” he said in remarks from the White House. “It’s my top domestic priority.The Biden administration has made attempts to bring down prices. In March the White House announced plans to release up to 1m barrels of oil a day from the strategic reserve, in an attempt to dampen high gasoline prices exacerbated by the war in Ukraine. But gas prices remain elevated at a national average of $4.37 a gallon compared with $2.96 a year ago, according to AAA.Republicans have blamed Biden’s stimulus programs for rising prices, a claim he disputes. ​​ The president said his policies had “helped not hurt” the nation’s economic outlook.MIT economics professor Kristin Forbes said the US recovery had shown the US economy lacked skilled workers in industries where demand for jobs was high, pushing up wages – a problem that also afflicted the UK in the wake of the pandemic.The former Bank of England policymaker told a committee of MPs in the UK parliament that she expected inflation in the US to fall, especially once increases in borrowing costs feed through into more expensive mortgages and loans.However, she said the UK faced an acute inflationary spiral that would continue into the autumn because Britain was the only country affected by all six drivers of global inflation. Inflation is running at 7% in the UK, but is forecast by the Bankto exceed 10% later this year. She highlighted the impact on the UK of higher energy prices, a falling exchange rate, trade restrictions that pushed up goods prices, a decade of modest inflation going into the pandemic, expectations among businesses and consumers of much higher inflation in a year’s time and a tight labour market, forcing wages higher.“The UK is the only country to tick every box with inflation pressures coming from all six areas,” she said.TopicsUS economyInflationEconomicsUS politicsBiden administrationnewsReuse this content More

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      in UK Politics

      Oil firms collect £22bn in profits as fuel and energy bills soar

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      Oil, gas and electricity companies have raked in billions of pounds in extra profits this year as families struggle with massive rises in fuel prices and gas bills.Shell, BP, Exxon Mobil and Chevron have all seen profits rise, boosted by high oil prices in the wake of Russia’s invasion of Ukraine. Between them, the four companies reported $27.3bn (£22bn) in profits during the first three months of this year.Energy suppliers have also enjoyed bumper earnings, with British Gas owner Centrica updating the stock market on Tuesday to say it expected profits to be at the top end of previous guidance.It came on the same day that the chairman of Tesco – Britain’s largest fuel retailer – said there was an “overwhelming need” for a windfall tax on energy companies after seeing the supermarket’s customers “extremely stretched”.Tesco sold £6.6bn of petrol and diesel in its latest financial year – a 48 per cent increase on 2020/21.Forecourt prices have surged to record highs this year while the price cap on domestic energy billed jumped 54 per cent last month.New estimates from consultants Cornwall Insight predict that the cap will rise again from £1,971 to £2,395 for the average household, putting extra pressure on consumers. Prices are expected to remain elevated until at least the end of 2024.The latest profit figures will lend further weight to calls for a windfall tax on energy companies. Labour has pushed for a tax on North Sea oil and gas revenues which it claims would raise around £1.2bn to help households with bills.Tesco chairman John Allan told BBC Radio 4’s Today programme ahead of the Queen’s Speech that he thinks oil and gas companies are “expecting” a windfall tax and doubts “they would actually be much fazed by it”. The speech laying out Boris Johnson’s legislative agenda for the year has been criticised for not including adequate measures to tackle the cost of living crisis.The UK’s “Big Six” energy suppliers have yet to report results for the first quarter of this year but British Gas is not alone in forecasting stellar financial performance. Rival supplier and energy network operator SSE recently upgraded its profit outlook to £1bn for the year to 31 March, a rise of 10 per cent on last year’s performance.E.On is set to deliver its results on Wednesday with analysts forecasting earnings from the group’s core business to jump from £1.6bn in 2021 to £2.1bn in 2022.BP boss Bernard Looney likened the oil giants’ business to a “cash machine” last year, as sales bounced back after being hammered by the pandemic. Underlying profit rose to $6.2bn (£5.3bn) in the first three months of this year, more than double the $2.6bn (£2.1bn) BP made in the same period last year.It was the firm’s best quarterly result in a decade and helped Mr Looney to a big pay rise as he collected an annual package of £4.5m, up from £1.7m a year earlier.Exxon Mobil, the ultimate owner of Esso, reported profits of $5.5bn (£4.4bn) during the first quarter of this year, up from $2.7bn (£2.1bn) in the same period during 2021.Revenue for the Texas-based oil major came in at $90.5bn (£73bn) during the latest period, up from $59.1bn (£48bn) a year ago when sales were impacted by Covid restrictions. Esso has more petrol stations than any other operator in the UK, with 1,227.Shell has also benefited from rising oil prices. Its adjusted earnings – which exclude one-off costs – rose to $9.1bn (£7.3bn) in the first quarter from $3.2bn (£2.5bn) in the same period last year.Chevron, which owns the Texaco brand, reported its profits had quadrupled to $6.5bn (£5.2bn), the company’s best performance in 10 years.Oil companies argue that their profits have always been cyclical – rising when the price of crude is high and falling when it is low. All major oil companies saw sales plunge during the early part of the pandemic. Several firms, including Exxon, Shell and BP, have written off billions of dollars as they hurry to exit investments in Russia.However, as financial pressures on consumers mount, political pressure to tax this year’s bumper revenues is growing. BP and Shell have both committed to making backing future projects in the UK, undermining arguments that a windfall tax would deter investment.Ed Miliband, Labour’s shadow climate change and net zero secretary, said government plans to tackle spiralling fuel bills, including a “buy now pay later” scheme of rebates, were “wholly inadequate to meet the scale of needs. And they refuse to implement a windfall tax on the oil and gas producers making record profits, that could fund real support for families.” More

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      in US Politics

      White House announces internet program for low-income Americans

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      White House announces internet program for low-income AmericansWith new commitment from 20 internet providers, about 48m households will be eligible for $30 monthly plans The Biden administration announced on Monday that 20 internet companies have agreed to provide discounted service to people with low incomes, a program that could effectively make tens of millions of households eligible for free service through an already existing federal subsidy.The $1tn infrastructure package passed by Congress last year included $14.2bn in funding for the Affordable Connectivity Program, which provides $30 monthly subsidies ($75 in tribal areas) on internet service for millions of lower-income households.Jill Biden makes unannounced visit to Ukraine and meets first ladyRead moreWith the new commitment from the internet providers, about 48m households will be eligible for $30 monthly plans for 100 megabits per second, or higher speed, service – making internet service fully paid for with the government subsidy if they sign up with one of the providers participating in the program.Biden, during his White House run and the push for the infrastructure bill, made expanding high-speed internet access in rural and low-income areas a priority. He has repeatedly spoken out about low-income families have struggled to find reliable wifi, so their children could take part in remote schooling and complete homework assignments early in the coronavirus pandemic.“If we didn’t know it before, we know now: high-speed internet is essential,” the Democratic president said during a White House event last month honoring the National Teacher of the Year.The 20 internet companies that have agreed to lower their rates for eligible consumers provide service in areas where 80% of the US population, including 50% of the rural population, live, according to the White House. Participating companies that offer service on tribal lands are providing $75 rates in those areas, the equivalent of the federal government subsidy in those areas.Biden and Vice-President Kamala Harris on Monday were set to meet with telecom executives, members of Congress and others to spotlight the effort to improve access to high-speed internet for low-income households.The providers are Allo Communications, AltaFiber (and Hawaiian Telecom), Altice USA (Optimum and Suddenlink), Astound, AT&T, Breezeline, Comcast, Comporium, Frontier, IdeaTek, Cox Communications, Jackson Energy Authority, MediaCom, MLGC, Spectrum (Charter Communications), Starry, Verizon (Fios only), Vermont Telephone Co, Vexus Fiber and Wow! Internet, Cable and TV.American households are eligible for subsidies through the Affordable Connectivity Program if their income is at or below 200% of the federal poverty level, or if a member of their family participates in one of several programs, including the Supplemental Nutrition Assistance Program (Snap), Federal Public Housing Assistance (FPHA) and Veterans Pension and Survivors Benefit.TopicsUS newsBroadbandInternetBiden administrationIncome inequalityTelecommunications industryUS politicsnewsReuse this content More