On The Money – Hot labor market remains strong thanks to Fed hikes

Layoffs remain low even as interest rates rise. We’ll also look at the removal of a major cannabis banking bill and where a senior Fed official sees rates moving.

But first, Nike is sprinting out of Russia and not looking back.

welcome to money, your nightly guide to everything related to your bills, bank account, and bottom line. For The Hill, we are Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.

Jobless claims fall slightly amid recession fears

New jobless claims fell slightly last week as the US labor market showed few signs of slowing despite rising interest rates.

In the week ending June 18, initial jobless claims totaled 229,000 after adjusting for seasonal factors, down 2,000 from the previous week, the Labor Department reported Thursday. .

The background: The labor market remained historically strong, even as the Federal Reserve raised interest rates at a rapid pace to help calm inflation. Higher interest rates generally slow job growth as companies facing higher borrowing costs and slower sales cut job openings and lay off employees.

“Stable weekly data suggests that the impact of Federal Reserve interest rate hikes has yet to materialize in any serious way, as monetary policies often take months to work their way through the economy,” he said. writes Tuan Nguyen, an economist at RSM, in an analysis on Thursday. .

Sylvan has more here.

LEADING THE DAY

Cannabis banking bill removed from China competition package

Congressional leaders have removed a key cannabis banking measure from their China competition bill, dealing a blow to marijuana advocates who have pushed for its inclusion.

Supporters will now aim to have the Cannabis Banks Bill, which has repeatedly passed the House with broad bipartisan support, included in another spending package.

  • The SAFE Banking Act, which would allow legally operating cannabis companies to access banking services, was included in the House Democrats’ COMPETES Act, but not in the Senate’s passed bipartisan U.S. Innovation and Competition Act. Last year.
  • The decision is unsurprising, as Republican leaders have argued the cannabis bill doesn’t match other measures in China’s competitiveness package, and prominent Democrats want to match the banking bill. to social justice measures, which cannot be done in China. the conference committee.
  • Proponents of the bill said Thursday lawmakers are putting cannabis workers at risk by not overhauling the current system, which forces most dispensaries to use cash, making them prime targets for drug abusers. flights.

Cannabis lobby groups have warned Democrats that they cannot afford to enter the midterm elections without passing marijuana reform.

“The support and political will is there to get the SAFE Banking Act across the finish line. We are encouraged by the conversations about the bill’s association with other helpful cannabis and justice reforms. Criminal Justice,” Steven Hawkins, president of the US Cannabis Council, said in a statement. “We look forward to working with our members and allies to help get the job done.”

Read more here from Karl Evers-Hillstrom of The Hill.

HIGHER AND HIGHER

Fed’s Bowman expects 75 basis point hike in July

Federal Reserve Governor Michelle Bowman said Thursday she expects the central bank to raise interest rates by 0.75 percentage points at its next monetary policy meeting in July.

In a speech to Massachusetts bankers on Thursday, Bowman said she believes the Fed will need to issue its second consecutive 75 basis point hike in July, with several 50 basis point hikes to follow. She said with “unacceptably high” inflation, the Fed needs to move quickly to move its base interest rate range higher than where markets expect inflation to stabilize.

“I expect an additional 75 basis point rate hike to be appropriate at our next meeting as well as increases of at least 50 basis points at subsequent meetings, as long as incoming data shows them. will support,” Bowman said.

“Depending on the evolution of the economy, further increases in the target range of the federal funds rate may be required going forward.”

  • Bowman’s projection comes a week after the Fed raised interest rates by
    75 basis points for the first time since 1994.
  • While Fed Chairman Jerome Powell and other top Fed officials signaled for weeks that the bank would only hike 50 basis points, the bank issued a bigger hike after a surprisingly high inflation report had alarmed the bank and financial markets the previous week.

Here’s more from Sylvan.

STUDENT LOANS

Department of Education agrees to cancel $6 billion in loans

After three years of litigation, the Department of Education has agreed to settle a lawsuit filed against it over billions of dollars in debt forgiveness for hundreds of thousands of borrowers.

The terms of Sweet v. Cardona states that the Department of Education will immediately approve Borrower Defense Claims for approximately 200,000 borrowers, canceling $6 billion in student loans for students who attended schools the Department determined were at fault.

  • The settlement is split into two groups: The first class consists of approximately 200,000 borrowers who took out federal student loans to attend certain schools — the list includes more than a dozen different for-profit institutions across the country – who will have their loans fully forgiven, receive refunds for past loan payments and have their credit repaired.
  • The second class consists of approximately 64,000 students who have taken out federal student loans but have not attended a school on the aforementioned list. These students will have their loan cancellation requests reviewed and get a decision based on how long their request is pending.

There’s more on that here from Shirin Ali of The Hill.

Good to know

The Food and Drug Administration (FDA) said Thursday it was banning the sale of Juul e-cigarettes, a blow to the company and a major step in a broader effort to prevent youth vaping.

The FDA said Juul should stop selling and marketing its products and anything already on the market should be removed.

Here’s what else we’ve got our eyes on:

  • The House Armed Services Committee voted to advance its version of the $840 billion annual defense policy bill, adding more for additional ships, planes, aid to Ukraine and to offset the ‘inflation.
  • Sportswear giant Nike has announced plans to permanently shut down its business ventures in Russia following the ongoing invasion of Ukraine.
  • Parts shortages resulting from the COVID-19 pandemic led Toyota to again make adjustments to the company’s production plans, reducing the number of units produced worldwide by 50,000 in July.
  • The House Appropriations Committee has advanced its $314.1 billion appropriations bill for military construction and veterans affairs for fiscal year 2023, sending it to the entire lower house for exam.

That’s all for today. Thanks for reading and check out The Hill’s Finances page for the latest news and coverage. Well see you tomorrow.

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