Federal Reserve set to make interest rate decision days after election of Trump
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(WASHINGTON) — The Federal Reserve on Thursday will announce its latest decision on the direction of interest rates, setting the path for borrowing costs just two days after the victory of President-Elect Donald Trump.
The Fed cut its benchmark interest rate a half of a percentage point in September, dialing back its yearslong fight against inflation and delivering relief for borrowers saddled with high costs.
The Federal Open Market Committee (FOMC), a policymaking body at the Fed, has forecast further interest rate cuts.
By the end of 2024, interest rates will fall another half of a percentage point from their current level of between 4.75% and 5%, according to FOMC projections. Interest rates will drop another percentage point over the course of 2025, the projections further indicated.
The central bank is widely expected to cut interest rates by another quarter of a percentage point when it meets on Thursday, according to the CME FedWatch Tool, a measure of market sentiment.
In recent months, the U.S. has inched closer to a “soft landing,” in which inflation returns to normal and the economy averts a recession.
Government data released last week showed robust economic growth over a recent three-month period, alongside a continued cooldown of inflation.
U.S. hiring slowed in October, but fallout from hurricanes and labor strikes likely caused an undercount of the nation’s workers, U.S. Bureau of Labor Statistics data on Friday showed.
Since 2021, the Fed has sought to rein in inflation with elevated interest rates. Even after the Federal Reserve cut its benchmark interest in September, it still stands at a historically high level.
Inflation has cooled dramatically from a peak of about 9% in 2022, hovering right near the Federal Reserve’s target rate of 2%.
The trajectory of inflation could shift in the coming months. Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants are widely expected to raise consumer prices, experts previously told ABC News.
To be sure, the Fed says it bases its decisions on economic conditions and operates as an independent government body.
When asked previously about the 2024 election at a press conference in Washington, D.C., in December, Powell said, “We don’t think about politics.”
The election of Trump appears to have delivered a boost for the stock market. The U.S. stock market soared at the open of trading on Wednesday, just hours after Trump declared victory.
The Dow Jones Industrial Average climbed more than 1,300 points, amounting to a nearly 3% rise in the index. The S&P 500 and the tech-heavy Nasdaq each jumped more than 2%.
Shares of Tesla, the electric vehicle company headed by Trump ally Elon Musk, spiked about 14.5% in early trading on Wednesday.
(BERLIN) — Workers for the largest online retailer in the world are planning to go on strike during one of the busiest shopping weekends of the holiday season.
Amazon employees are preparing to protest in 20 countries, including in major cities in the United States, Germany, the United Kingdom, Japan and Brazil, starting on Black Friday over “labor abuses, environmental degradation and threats to democracy,” according to UNI Global Union and Progressive International, a Switzerland-based global labor union.
Dubbed the “Make Amazon Pay days of resistance,” the strike is scheduled to last from Black Friday through Cyber Monday, the union announced in a press release. Demonstrators are calling for increased wages and for employees to be permitted to unionize.
The strike could lead to delays in holiday deliveries for customers, economy experts told ABC News.
Unions and allied groups around the world are planning to participate, according to UNI Global Union.
Thousands of workers in the German cities of Graben, Dortmund Werne, Bad Hersfeld, Leipzig, Koblenz and Rheinberg will also protest, in addition to hundreds in New Delhi, who are demonstrating to demand fair treatment following the mistreatment of workers during a heat wave in July, the union said.
The Association for the Taxation of Financial Transactions and Citizen’s Action will hold protests in multiple cities across France, and garment workers will also take to the streets in Bangladesh, the union said.
This year marks the fifth annual Make Amazon Pay demonstration, which aims to “hold Amazon accountable around the world” by targeting a busy holiday shopping weekend. In 2023, Amazon represented 18% of the worldwide Black Friday sales, with more than $170 billion in total holiday sales, according to an earnings report released earlier this year.
“Amazon’s relentless pursuit of profit comes at a cost to workers, the environment and democracy,” said Christy Hoffman, general secretary of UNI Global Union. “[Jeff] Bezos’ company has spent untold millions to stop workers from organizing, but the strikes and protests happening around the world show that workers’ desire for justice — for union representation — can’t be stopped. We stand united in demanding that Amazon treat its workers fairly, respect fundamental rights, and stop undermining the systems meant to protect us all.”
Amazon defended its treatment of workers in a statement to ABC News on Thursday.
“This group is being intentionally misleading and continues to promote a false narrative,” Amazon spokesperson Eileen Hards said. “The fact is at Amazon we provide great pay, great benefits, and great opportunities — all from day one. We’ve created more than 1.5 million jobs around the world, and counting, and we provide a modern, safe, and engaging workplace whether you work in an office or at one of our operations buildings.”
The company announced earlier this year a $2.2 billion investment to increase pay for fulfillment and transportation employees in the U.S. As a result, the average base wage for these employees is now more than $22 per hour and the average total compensation more than $29 per hour when the value of their elected benefits is factored in, according to the company.
Comprehensive benefits for these employees that begin on the first day of employment include health, vision and dental insurance; a 401(k) with 50% company match; up to 20 weeks paid leave, which includes 14 weeks of pregnancy-related disability leave and six weeks of parental leave; and Amazon’s Career Choice program, which prepays college tuition, according to Amazon.
An earlier statement to ABC News from Amazon stated: “While we’re always listening and looking at ways to improve, we remain proud of the competitive pay, comprehensive benefits and engaging, safe work experiences we provide our teams.”
Amazon workers have been outspoken in recent years about workers’ rights, especially as the 2020 COVID-19 pandemic increased the number of online orders. E-commerce sales in the U.S. increased by $244.2 billion — or 43% — in 2020, the first year of the pandemic, rising from $571.2 billion in 2019 to $815.4 billion in 2020, according to the Census Bureau’s Annual Retail Trade Survey.
In 2022, a worker-led independent group led the first-ever U.S. union at the company, unionizing a 6,000-employee Amazon warehouse in Staten Island, New York.
While subsequent attempts at facilities in Alabama and New York have failed, efforts have continued.
In June 2023, nearly 2,000 Amazon workers organized a walkout after a mandate to return to the office was issued. In Kentucky, Amazon employees who spoke to ABC News alleged that the company was leading a union-busting campaign to discourage employees from organizing.
Amazon told ABC News last year that the disciplinary action taken by the company at an Amazon facility in Kentucky came in response to infractions of company policy.
“Amazon squeezes everything that it can get, but it changes its behavior depending on its jurisdiction,” James Schneider, communications director for Progressive International, told ABC News this week. “Let’s say, in Sweden, it engages much better at how it operates with trade unions. But in the U.S., it engages in union busting.”
A 2022 report by the United Nations’ International Labour Organization found that post-pandemic inflation and the rising cost of living have been decreasing the value of minimum wage globally.
The rise of inflation has paved the way for collective action, experts say. (Starbucks was also part of the 2022 union resurgence.)
“Amazon is everywhere, but so are we. By uniting our movements across borders, we can not only force Amazon to change its ways but lay the foundations of a world that prioritizes human dignity, not Jeff Bezos’ bank balance,” said Varsha Gandikota-Nellutla, Progressive International’s co-general coordinator.
(NEW YORK) — A surging stock market, low unemployment and robust growth — by just about every measure, the economy stood poised to deliver victory for Vice President Kamala Harris.
The exception, of course, was inflation, and it appears to have overshadowed other indicators. More than two-thirds of voters say the economy is in bad shape, according to the preliminary results of an ABC News exit poll.
Inflation likely shaped negative voter perceptions of the economy and helped fuel anger toward the party in power, just as it has done across the globe since the pandemic unleashed a wave of rapid price increases, experts told ABC News.
The political potency of inflation stems from the visceral, recurring sense of unease caused by high prices, experts added. That feeling leaves voters insecure about their future and desperate for a leader who can change the nation’s course.
“Inflation has a specific and special power in elections,” Chris Jackson, senior vice president of public affairs for Ipsos in the U.S., told ABC News. “It’s something people see in their face every day — every time they go to the grocery store or fill up their car.”
He added, “Inflation is present in people’s lives. It’s something they’re unhappy with and it’s something they rightly or wrongly blame on whoever is in charge.”
The pandemic set off an acute bout of inflation that impacted nearly every country across the world, when global supply chain blockages caused an imbalance between the availability of goods and the demand for them. In other words, too much money chased too few products.
Prices began to rise rapidly in the U.S. in 2021, catapulting the inflation rate to a peak of about 9% the following year. Inflation soared even higher in many other countries, including the likes of Brazil and England, where leaders faced an angry electorate.
In Brazil, where President Jair Bolsonaro cut taxes on fuel and electricity in an effort to slash prices over the months preceding an election that concluded in October 2022, the nation nevertheless replaced him with a leftwing challenger.
Earlier that year, in England, Prime Minister Liz Truss responded to the highest inflation in four decades with an economic policy centered on tax cuts and energy price controls. Her tenure in office lasted just 44 days before market reaction and political disarray led to her stepping down.
The post-pandemic pattern has exemplified a high rate of leadership change amid inflation crises around the world over the last half century, according to a study by Eurasia Group, a political risk consultancy firm. Examining 57 inflation shocks since 1970, the firm found government turnover in 58% of cases.
Further, when there was an election during or within two years of an inflation shock, it led to a change in government in roughly three out of every four instances, according to Eurasia Group.
“We’re seeing this trend on jet fuel after the pandemic,” said Robert Kahn, the managing director of global macro-geoeconomics at the New York-based Eurasia Group. “The pandemic inflation shock contributes to a sense of instability and a loss of confidence among people in their governments.”
Carola Binder, an economics professor at the University of Texas at Austin who studies the history of inflation in the U.S., characterized recent anti-incumbent sentiment in a slightly different way: “When people are experiencing inflation and suffering from it, they want to have someone or something to blame.”
Inflation has cooled dramatically over the past two years, now hovering near the Federal Reserve’s target rate of 2%. Even so, that progress hasn’t reversed a leap in prices that dates back to the pandemic. Since President Joe Biden took office in 2021, consumer prices have skyrocketed more than 20%.
The potential role of inflation in the U.S. election owes to a typical lag between when inflation comes down and when consumers acclimate to new price levels, since a lower inflation rate does not mean prices have come down but rather that they have begun to increase at a slower pace, experts told ABC News.
“When inflation comes back down, the prices of many critical items remain high, especially for people who are stretched and living paycheck to paycheck,” Kahn said.
Consumers will likely acclimate to current price levels over the coming months, but voters will remain sensitive to inflation, experts said.
President-elect Donald Trump’s proposals of heightened tariffs and the mass deportation of undocumented immigrants risk rekindling rapid price increases, some experts said.
When asked about whether inflation could reemerge as an important issue ahead of the next midterm elections in 2026, Jackson said: “If Republicans shoot themselves in the foot, absolutely.”
(NEW YORK) — A newly filed lawsuit has accused Subway of “unfair and deceptive trade practices” and selling its steak-and-cheese sandwiches based on “false and misleading advertisements,” that the lawsuit claims show customers getting at least three times more meat than is actually in the product.
The class-action complaint against Subway was filed on Monday in the United States District Court for the Eastern District of New York by plaintiff Anna Tollison, accusing Subway of using “photographs in its advertisements that make it appear that the Steak & Cheese sandwich contains at least 200% more meat than the actual sandwiches that customers receive,” according to the lawsuit.
“Subway’s advertisements for the Product are unfair and financially damaging to consumers as they are receiving a product that is materially lower in value than what is being represented,” the lawsuit says. “Subway actions are especially concerning now that inflation, food, and meat prices are very high and many consumers, especially lower income consumers, are struggling financially.”
The lawsuit also says that Subway’s promise of a portion that is larger is “causing consumers to come to, or order from, Subway restaurants and make purchases that they would not have otherwise made.”
The lawsuit says it stems from Tollison’s visit to a Subway in Jamaica, New York, on Aug. 23 when she picked up a steak-and-cheese sandwich after ordering it through Subway’s mobile app for $6.99 plus tax.
“After she picked up and began eating her sandwich, [Tollison] realized that there was barely any steak in the sandwich and that the photographs that she relied on were grossly misleading,” the lawsuit says.
The lawsuit is seeking unspecified damages for New Yorkers who bought the sandwiches in the last three years from Oct. 28, 2021 and alleges “egregious” violations of the state’s consumer protection laws.
This is not the first time Subway has dealt with lawsuits critical of their business. In 2021, Ireland’s Supreme Court issued a ruling declaring that for the purposes of tax law, the bread served in Subway’s hot sandwiches does not actually meet the legal definition of “bread” because of its sugar content and is rather a “confectionary or fancy baked good.”
In that case, Justice Donal O’Donnell in the Ireland Supreme Court said that the definition of “bread” was originally established to make a distinction between the starch in other baked goods, like cookies or cake or brownies, that are sugary and therefore not healthy enough to be considered essential foods.
“Subway’s bread is, of course, bread,” Subway said in a statement given to ABC News. “We have been baking fresh bread in our stores for more than three decades and our guests return each day for sandwiches made on bread that smells as good as it tastes.”
Subway also previously defended themselves against a lawsuit for more than four years claiming that their “footlong” sandwiches were too short. That case was dismissed in 2017.
