Former US Treasury secretary Lawrence Summers said evidence is starting to emerge that Federal Reserve actions are having an impact on the US economy, with some indications of a turn in labour demand and increased stockpiles of unsold items.
“We’re seeing a little bit of indications that some firms are no longer reporting the kind of huge labour shortages that they were before,” Mr Summers said. “We’re seeing some indications of inventory buildups.”
Mr Summers’ comments echoed those of some observers picking up on shifts not yet immediately apparent in broad economic indicators. The May US employment report on Friday showed a stronger-than-expected gain in payrolls, with more Americans joining the labour force and unemployment remaining close to 50-year lows.
Rick Rieder, chief investment officer of global fixed income at BlackRock, earlier on Friday cited a “long list” of companies freezing hiring plans across technology, health care and other sectors, and signs of companies having improved availability of labour. Mr Rieder also warned payrolls could contract within three or four months.
Mr Summers said he saw “a lot of strength” in the jobs report as well as “some beginnings of the evidence of monetary policy working.” The overall picture remains one of a “very stretched economy”, he said.
The former Treasury chief noted again that history shows that when inflation exceeds 4 per cent and unemployment drops below 4 per cent a recession occurs within two years. “My best guess would be that’s what we’ll see this time round,” he said.
“I don’t think we have the tools to bring this down smoothly,” after excess demand was created with fiscal stimulus in 2021, Mr Summers said.
Fed vice chairwoman Lael Brainard this week reiterated the expectation that the US central bank will raise interest rates by half a percentage point in June and July. She also said the case for a pause in hikes in September was “very hard”.
While Fed policymakers are unable to directly affect supply shocks, that shouldn’t stop them from shrinking demand to pull down inflation, Mr Summers said.
“If the capacity of the economy to produce has been reduced, we’ve got to reduce the level of demand,” he said, also highlighting that wage inflation is the basis for much of the current surge in consumer prices.
The biog
Hobbies: Writing and running
Favourite sport: beach volleyball
Favourite holiday destinations: Turkey and Puerto Rico
UAE currency: the story behind the money in your pockets
Top 10 most polluted cities
- Bhiwadi, India
- Ghaziabad, India
- Hotan, China
- Delhi, India
- Jaunpur, India
- Faisalabad, Pakistan
- Noida, India
- Bahawalpur, Pakistan
- Peshawar, Pakistan
- Bagpat, India
Why seagrass matters
- Carbon sink: Seagrass sequesters carbon up to 35X faster than tropical rainforests
- Marine nursery: Crucial habitat for juvenile fish, crustations, and invertebrates
- Biodiversity: Support species like sea turtles, dugongs, and seabirds
- Coastal protection: Reduce erosion and improve water quality
Packages which the US Secret Service said contained possible explosive devices were sent to:
- Former first lady Hillary Clinton
- Former US president Barack Obama
- Philanthropist and businessman George Soros
- Former CIA director John Brennan at CNN's New York bureau
- Former Attorney General Eric Holder (delivered to former DNC chair Debbie Wasserman Schultz)
- California Congresswoman Maxine Waters (two devices)
UAE v Gibraltar
What: International friendly
When: 7pm kick off
Where: Rugby Park, Dubai Sports City
Admission: Free
Online: The match will be broadcast live on Dubai Exiles’ Facebook page
UAE squad: Lucas Waddington (Dubai Exiles), Gio Fourie (Exiles), Craig Nutt (Abu Dhabi Harlequins), Phil Brady (Harlequins), Daniel Perry (Dubai Hurricanes), Esekaia Dranibota (Harlequins), Matt Mills (Exiles), Jaen Botes (Exiles), Kristian Stinson (Exiles), Murray Reason (Abu Dhabi Saracens), Dave Knight (Hurricanes), Ross Samson (Jebel Ali Dragons), DuRandt Gerber (Exiles), Saki Naisau (Dragons), Andrew Powell (Hurricanes), Emosi Vacanau (Harlequins), Niko Volavola (Dragons), Matt Richards (Dragons), Luke Stevenson (Harlequins), Josh Ives (Dubai Sports City Eagles), Sean Stevens (Saracens), Thinus Steyn (Exiles)
Sweet%20Tooth
%3Cp%3E%3Cstrong%3ECreator%3A%20%3C%2Fstrong%3EJim%20Mickle%3Cbr%3E%3Cstrong%3EStarring%3A%20%3C%2Fstrong%3EChristian%20Convery%2C%20Nonso%20Anozie%2C%20Adeel%20Akhtar%2C%20Stefania%20LaVie%20Owen%3Cbr%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E2.5%2F5%3C%2Fp%3E%0A
MATCH INFO
Sheffield United 0 Wolves 2 (Jimenez 3', Saiss 6)
Man of the Match Romain Saiss (Wolves)
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
The specs
Engine: 5.2-litre V10
Power: 640hp at 8,000rpm
Torque: 565Nm at 6,500rpm
Transmission: 7-speed dual-clutch auto
Price: From Dh1 million
On sale: Q3 or Q4 2022
