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The Fed’s path to a ‘Goldilocks’ economy just got a little more complicated

A higher-than-expected payrolls number and wage reading add to the delicate tightrope walk the Fed has to execute.

The numbers would indicate that 3.75 percentage points worth of rate increases have so far had little impact on labor market conditions.

Fed Chairman Jerome Powell earlier this week outlined concerns he has about inflation and the jobs market in particular.

“The inflation outlook, while very uncertain at best, has a path forward that is consistent with a Goldilocks scenario,” Moody’s economist Mark Zandi said

As far as jobs reports go, November’s wasn’t exactly what the Federal Reserve was looking for.

A higher-than-expected payrolls number and a hot wage reading that was twice what Wall Street had forecast only add to the delicate tightrope walk the Fed has to navigate.

In normal times, a strong jobs market and surging worker paychecks would be considered high-class problems. But as the central bank seeks to stem persistent and troublesome inflation, this is too much of a good thing.

“The Fed can ill afford to take its foot off the gas at this point for fear that inflation expectations will rebound higher,” wrote Jefferies chief financial economist Aneta Markowska in a post-nonfarm payrolls analysis in line with most of Wall Street Friday. “Wage growth remains consistent with inflation near 4%, and it shows how much more work the Fed still needs to do.”

well ahead of the 200,000 Dow Jones estimate. Wages rose 0.6% on the month, double the estimate, while 12-month average hourly earnings accelerated 5.1%, above the 4.6% forecast.

The numbers would indicate that 3.75 percentage points worth of rate increases have so far had little impact on labor market conditions.

“We really aren’t seeing the impact of the Fed’s policy on the labor market yet, and that’s concerning if the Fed is viewing job growth as a key indicator for their efforts,” said Elizabeth Crofoot, senior economist at Lightcast, a labor market analytics firm.

Much of the Street analysis after the report was viewed through the prism of comments Fed Chairma  made Wednesday. The central bank chief outlined a set of criteria he was watching for clues about when inflation will come down.

Among them were supply chain issues, housing growth, and labor cost, particularly wages. He also went about setting caveats on a few issues, such as his focus on services inflation minus housing, which he thinks will pull back on its own next year.

“The labor market, which is especially important for inflation in core services ex housing, shows only tentative signs of rebalancing, and wage growth remains well above levels that would be consistent with 2 percent inflation over time,” Powell said. “Despite some promising developments, we have a long way to go in restoring price stability.”

he said he expected the Fed could cut the size of its rate hikes — the part that markets seemed to hear as grounds for a post-Powell rally. He added that the Fed likely would have to take rates up higher than previously thought and leave them there for an extended period, which was the part the market seemed to ignore.

“The November employment report … is precisely what Chair Powell told us earlier this week he was most worried about,” said Joseph LaVorgna, chief U.S. economist at SMBC Nikko Securities. “Wages are rising more than productivity, as labor supply continues to shrink. To restore labor demand and supply, monetary policy must become more restrictive and remain there for an extended period.”

 

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Erdogan unveils Turkey’s first astronaut on election trail

Turkey’s first astronaut will travel to the International Space Station by the end of the year, President Recep Tayyip Erdogan said Saturday after an illness forced him to cancel several days of appearances.

Air force pilot Alper Gezeravci, 43, was selected to be the first Turkish citizen in space. His backup is Tuva Cihangir Atasever, 30, an aviation systems engineer at Turkish defense contractor Roketsan.

Erdogan made the announcement at the Teknofest aviation and space fair in Istanbul, the president’s first public appearance since falling ill during a TV interview on Tuesday. He appeared alongside Azerbaijan’s president, Ilham Aliyev, and Libya’s interim prime minister, Abdul Hamid Dbeibeh.

“Our friend, who will go on Turkey’s first manned space mission, will stay on the International Space Station for 14 days,” Erdogan said. “Our astronaut will perform 13 different experiments prepared by our country’s esteemed universities and research institutions during this mission.”

Erdogan described Gezeravci as a “heroic Turkish pilot who has achieved significant success in our Air Force Command.”

The Turkish Space Agency website describes Gezeravci as a 21-year air force veteran and F-16 pilot who attended the U.S. Air Force Institute of Technology.

Wearing a red flight jacket, Erdogan appeared in robust health as he addressed crowds at the festival. Turkey’s presidential and parliamentary elections are scheduled for May 14, and opinion polls show Erdogan in potentially his toughest race since he came to power two decades ago.

Turkey is dealing with a prolonged economic downturn, and the government received criticism after a February earthquake killed more than 50,000 in the country. Experts blamed the high death toll in part on shoddy construction and law enforcement of building codes.

While campaigning for reelection, Erdogan has unveiled a number of prestigious projects, such as Turkey’s first nuclear power plant and the delivery of natural gas from Black Sea reserves.

 

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Israelis rally for 17th week against judicial overhaul plans

Tens of thousands of Israelis protested judicial overhaul proposals Saturday in the 17th weekly rally against Prime Minister Benjamin Netanyahu’s governing coalition.

The demonstrations have been ongoing since the beginning of the year, and organizers plan to continue, despite Netanyahu delaying the changes last month. The leaders of the mass protests want the proposals scrapped altogether.

“We are just getting started,” read a banner that demonstrators held at the main protest in Tel Aviv, Israel’s economic hub. Smaller demonstrations were reported in several parts of the country.

Spanish Prime Minister and Socialist leader Pedro Sanchez voiced support to the Israeli antigovernment protesters in a video message aired on a large screen in Tel Aviv.

We as Socialist International have always fought for freedom, equality, justice, and democracy. Yet, as many of you know, these are values that we cannot take for granted,” Sanchez said.

Protesters argue the proposed changes threaten Israel’s democratic values, hurting a system of checks and balances and concentrating authority in the hands of Netanyahu and his extremist allies.

They also say that the prime minister has a conflict of interest in trying to reshape the nation’s legal system at a time when he is on trial.

Such changes would result in weakening the Supreme Court, giving parliament, which is controlled by Netanyahu’s allies, authority to overturn its rulings and limiting its ability to review laws.

The protest gained support from the military’s elite reserve force, businesses, and large sectors of the Israeli community. But on Thursday, tens of thousands of right-wing Israelis who support the legal

 

 

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Florida

‘Total nightmare:’ As Florida insurance companies go insolvent, homeowners pay the price

Seminole county couple has three-year open claim because of insolvent insurer.

What happens when your property insurer goes out of business?

It is happening quite a bit in Florida and is leading to all policyholders paying more.

The Florida Insurance Guaranty is adding a 1% assessment to policyholders starting in October to cover claims for insolvent companies.

A Seminole County couple has lived without a fully functioning kitchen for three years because their insurer went out of business.

Sandra Braga Alfonso said what started as a leak under her sink has turned into a three-year nightmare.

She said there was already a fight with her insurer to pay out the claim, but then the company went under and it got worse.

Alfonso has a fridge and an oven but is missing lower cabinets, a stove, her normal sink, and a dishwasher.

“It has been a total nightmare,” Alfonso said.

It started in December of 2019 with a leak under her sink, she said.

She eventually discovered water in all her lower cabinets and in the sheetrock behind the cabinets, she said.

“The insurance company gave us approval to rip everything out that was damaged and now they don’t want to pay to put it back in,” Alfonso said.

The insurance company cut a check for $4,800, she said.

Of that $4,300 went to water mitigation to prevent mold. That left about $500, not nearly enough to replace her kitchen, she said.

“We’ve tried to settle, go to mediation, everything,” she said.

Finally, Alfonso and her husband filed a lawsuit against her insurer, but after two years of hearings and motions and waiting for a court date, her insurer went out of business.

She was with Capitol Insurance, but according to the Florida Department of Financial Services, Capitol was merged into Southern Fidelity, which is now one of 14 companies in liquidation.

“I’m over it. I just want my kitchen. I just want to be able to live again. I love to cook, and I can’t,” Alfonso said.

In the last year, Florida lawmakers have had three special legislative sessions to deal with Florida’s property insurance crises.

News 6 asked Alfonso if she thinks anything is being done in Tallahassee to help consumers with their insurance issues.

“No, it’s all for the insurance company,” she said.

One of the biggest moves made in Tallahassee over the last year is the legislature doing away with what is referred to as “one-way attorney’s fees.”

That means if you sued your insurer over a claim and won, the insurance company had to pay your attorney’s fees. Without it, Alfonso said she would never have been able to sue her insurer even though in her case, it didn’t do any good.

No. My husband’s retired. He’s on disability and he’s retired we’re on a fixed income,” Alfonso said.

Alfonso has now turned to the Florida Insurance Guaranty Association, which handles the claims of insolvent property and casualty insurance companies.

They are still negotiating the amount it will take to fix her kitchen — more than three years later.

“I owned my first home when I was 20-something years old,” Alfonso said. “I’ve been paying my insurance premiums since I’m like 25, never filed a claim and look where I am now,” Alfonso said.

 

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