The Iran war has scrambled the Federal Reserve's outlook on inflation and unemployment and will likely further delay interest rate cuts this year, putting off any relief for consumers struggling with high borrowing costs for home and car purchases. The spike in oil and gas prices presents already-divided Fed officials with a worst-case scenario as they conclude a key meeting Wednesday. Costlier gas will raise inflation in the short run, which typically causes the central bank to raise borrowing costs — or at least leave them unchanged. Yet if the spike is high enough or lasts long enough, it could hammer the economy and push up unemployment, which the Fed would typically respond to by cutting its key rate.
By CHARLOTTE KRAMON, ALEX VEIGA and MARY CLARE JALONICK Associated Press
In a rare bipartisan effort for a deeply divided Congress, the Senate has passed a broad bill to make U.S. housing more accessible and affordable. The bill passed on Thursday would reduce regulations, regulate corporate investors and expand how housing dollars can be used to build affordable homes and rentals. It now heads back to the House, which passed a separate version earlier this year. It is unclear whether President Donald Trump would sign it after declaring last weekend that he won't sign any new measures unless Congress passes legislation that would require voters to show proof of citizenship.
Worries about the war with Iran sent oil prices back to $100 per barrel and stocks sinking worldwide. The S&P 500 fell 1.5% Thursday and returned to big swings following a couple days of relative calm. The Dow Jones Industrial Average dropped 1.6%, and the Nasdaq composite sank 1.8%. The center of action was again the oil market, where the price of a barrel of Brent crude got as high as $101.59. Treasury yields climbed in the bond market on worries about higher inflation and fewer cuts to interest rates by the Federal Reserve.
By PAUL WISEMAN and ANNE D'INNOCENZIO AP Business Writers
American employers unexpectedly cut 92,000 jobs last month, a sign that the labor market remains under strain. The unemployment rate blipped up to 4.4%. The Labor Department reported Friday that hiring deteriorated from January, when companies, nonprofits and government agencies added a healthy 126,000 jobs. Economists had expected 60,000 new jobs in February. Revisions also cut 69,000 jobs from December and January payrolls. The surprisingly weak employment picture in February adds to the economic uncertainty over the war with Iran, which has caused oil prices to surge and saddled business and consumers with unforeseen costs.
Oil prices jumped Tuesday for the second straight day and gas prices moved higher in the United States, underscoring the threat of rising inflation posed by the Iran war. Coming after nearly five years of elevated costs, even a modest pickup in prices could further sour many Americans on the economy and heighten the affordability concerns that have become a top political issue. A key issue, economists say, is how long the conflict lasts and whether key shipping routes, such a the Strait of Hormuz, at the mouth of the Persian Gulf, are closed. About one-fifth of the world's oil and natural gas is shipped through the Strait.
By CHRISTOPHER RUGABER and PAUL WISEMAN Associated Press Writers
President Donald Trump sought in his first State of the Union address to sell Americans on the idea of a booming economy, falling prices, and soaring jobs, yet he faces a skeptical public with a much gloomier view. Barely 12 hours before his speech, in fact, The Conference Board, a business research group, released its latest consumer confidence report. It showed that overall confidence in the economy remains historically low, and is barely above the level it plunged to in the depths of the COVID recession. Other polling has yielded similar results: Only 39% of Americans approve of Trump's economic leadership, according to the latest Associated Press-NORC Center for Public Affairs Research survey.
