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THE BIG DEAL—Powell says pickup in job gains likely this fall: Federal Reserve Chairman Jerome Powell told lawmakers Tuesday that the U.S. remains on track for a strong rebound from the coronavirus recession despite several speed bumps that have weighed on the recovery.
Testifying before a special House COVID-19 subcommittee, Powell expressed confidence that rising inflation and lackluster job growth would both turn around as the global economy smoothed out the kinks of reopening.
“I think we’ll see strong job creation in the fall. I really do,” Powell said. For now, he said, “there seems to be some kind of a speed limit,” pointing to more than 9 million job openings and even more Americans who are unemployed.
“It may just be that it’s hard to match up with a new job and people feel like they can wait a little bit longer and really shop carefully,” Powell added. I’ve got more here.
The dynamics:
- His appearance before the subcommittee comes as the Fed is coming under growing pressure from inflation hawks to raise interest rates and halt monthly bond purchases with prices rising sharply from pandemic lows.
- At the same time, the U.S. has gained an average of 540,000 jobs over the past three months — half the rate Powell and many other economists had expected.
Powell acknowledged that the pace of job gains had plenty of room to rise with millions of Americans out of the labor force. But Republican lawmakers remained unconvinced, insisting that President Biden’s extension of jobless benefits and other support measures included in the $1.9 trillion COVID-19 relief bill from March have disincentivized work and overheated the economy.
“These Biden administration inflation policies have put you in a tough spot,” House Minority Whip Steve Scalise (R-La.) told Powell.
LEADING THE DAY
Schumer, Pelosi meeting with White House on infrastructure: Senate Majority Leader Charles Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) will meet with White House officials on Wednesday to talk about the path forward on infrastructure.
- Schumer told Senate Democrats during their closed-door caucus lunch on Tuesday that he and Pelosi will meet with the officials to discuss both a budget resolution that could pave the way for moving a bill through the Senate with just Democratic votes and bipartisan talks, a Senate Democratic source told The Hill.
- The meeting comes as Democratic leadership is trying to balance the bipartisan talks with a growing push from many within the caucus to cut the cord and move forward on their own with a larger package that could be passed under budgetary rules and avoid a filibuster.
The Hill’s Jordain Carney brings us up to speed here.
The background: The White House is ramping up its outreach as the bipartisan talks reach a make-or-break moment.
- White House officials met with a bipartisan group behind the $1.2 trillion, eight-year infrastructure bill on Tuesday at the Capitol.
- Biden also spoke with centrist Sens. Kyrsten Sinema (D-Ariz.) and Joe Manchin (D-W.Va.) on Monday.
Housing prices rose 23.6 percent annually in May, setting new record: Housing prices rose more than 20 percent in the 12 months leading into May, according to data released Tuesday by the National Association of Realtors (NAR), setting a new annual record.
- The median sale price for existing homes in May rose 23.6 percent from a year ago, marking a new peak as the COVID-19 pandemic drove a massive increase in housing prices and sales.
- While existing home sales dropped 0.9 percent between April and May, sales are up 44.6 percent from May 2020.
- The inventory of available homes for sale also rose 7 percent last month but is down a staggering 20.6 percent from May 2020.
“Home sales fell moderately in May and are now approaching pre-pandemic activity,” said Lawrence Yun, NAR chief economist, in a Tuesday statement. “Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market.” I explain here.
ON TAP TOMORROW:
- The House Financial Services Committee holds a markup of pending legislation at 10 a.m.
- Housing and Urban Development Secretary Marcia Fudge testifies before the House Budget Committee on the department’s fiscal 2022 budget request at 10 a.m.
- A House Health, Education, Labor and Pensions subcommittee holds a hearing on expanding access to the retirement savings system at 10:15 a.m.
- Treasury Secretary Janet Yellen testifies before a Senate Appropriations subcommittee on the department’s fiscal 2022 budget request at 2 p.m.
GOOD TO KNOW
- The IRS on Tuesday rolled out two new web tools related to the child tax credit expansion established by President Biden’s coronavirus relief law, as the agency prepares to start monthly advance payments of the credit next month.
- U.S. companies would likely pay less in income taxes than their foreign competitors if President Biden’s corporate tax increases were enacted, according to a Reuters analysis published Tuesday.
- Roughly half of U.S. workers are reconsidering their current jobs and are willing to learn new skills to work in a different industry, according to a poll from Prudential Financial released Tuesday.
ODDS AND ENDS
- Abigail Disney, heiress to the Walt Disney Company, argued Tuesday that the U.S. economy is in an “upside-down structure” in which some people are constantly working “to make ends meet,” while wealthy individuals are “sitting on their rear ends” while “not paying taxes.”
- The House Judiciary antitrust subcommittee is coming under pressure to hit the brakes on a legislative package targeting tech giants.