Business

On The Money — Hot labor market stays strong through Fed hikes

Layoffs remain low even as interest rates go higher. We’ll also look at the scrapping of a major cannabis banking bill and where a top Fed official sees rates going. 

But first, Nike is sprinting out of Russia and isn’t looking back. 

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan LaneAris Folley and Karl Evers-Hillstrom. Subscribe here.

Jobless claims fall slightly amid recession fears

New applications for unemployment aid fell slightly last week as the U.S. job market showed few signs of a slowdown despite rising interest rates. 

In the week ending June 18, initial claims for unemployment insurance totaled 229,000 after adjustments for seasonal factors, a decrease of 2,000 from the previous week, the Labor Department reported Thursday. 

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

“The steady weekly data suggests that the impact of the Federal Reserve’s interest rate increases has yet to show up in earnest as monetary policies often take months to make their way through the economy,” wrote Tuan Nguyen, economist at RSM, in a Thursday analysis. 

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 pushed for its inclusion. 

Supporters will now aim to get the cannabis banking bill, which has passed the House several times with broad bipartisan support, included in another spending package. 

Cannabis lobbying groups have warned Democrats that they cannot afford to enter the midterms without having passed any marijuana reforms. 

“The support and political will is there to get the SAFE Banking Act across the finish line. We are encouraged by conversations about pairing the bill with other helpful cannabis and criminal justice reforms,” Steven Hawkins, president of the U.S. 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 The Hill’s Karl Evers-Hillstrom.

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 another 0.75 percentage points at its next monetary policy meeting in July. 

In a speech to Massachusetts bankers 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 inflation “unacceptably high,” the Fed must move quickly to move its baseline interest rate range higher than where markets expect inflation to settle. 

“I expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis points in the next few subsequent meetings, as long as the incoming data support them,” Bowman said. 

“Depending on how the economy evolves, further increases in the target range for the federal funds rate may be needed after that.” 

Here’s more from Sylvan.

STUDENT LOANS

Education Department agrees to cancel $6B in loans 

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

The terms of the settlement for Sweet v. Cardona state that the Education Department will immediately approve borrower defense claims for approximately 200,000 borrowers, effectively canceling $6 billion in student loans for students that attended schools that the Department determined engaged in misconduct.  

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

Good to Know

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

The FDA said Juul must stop selling and marketing its products, and everything that’s already on the market must be removed.  

Here’s what else we have our eye on: 

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you tomorrow. 

VIEW FULL VERSION HERE

Business