Senate probe reveals Boeing’s ‘troubling and recurring’ safety failings
(NEW YORK) — The Senate Permanent Subcommittee on Investigations published a memo Wednesday including new details about Boeing safety failings relating to the Alaska Airlines door plug incident in January.
The memo — released ahead of Federal Aviation Administration Administrator Michael Whitaker’s planned testimony before the subcommittee on Wednesday — suggested Boeing had failed to ensure adequate standards in multiple areas.
Boeing personnel, the memo said, “continue to feel pressure to prioritize speed of production over quality.”
The Jan. 5 Alaska Airlines incident saw a door plug on flight 1282 blow out minutes after takeoff from Portland, Oregon, leaving a large hole in the side of the Boeing 737 Max 9 plane. The plane safely made an emergency landing and no one was seriously injured.
The memo noted the results of a May 2024 employee survey that found only 47% of workers answered favorably to the statement, “Schedule pressures do not cause my team to lower our standards.”
Training also remains a problem, the memo said.
“Boeing is failing to ensure many of their employees have the appropriate education, training, skills or experience to effectively perform their assigned tasks,” it read.
The subcommittee said Boeing failed to ensure that nonconforming parts are appropriately documented, stored and dispositioned so that they are not installed on aircraft.
Quality inspection procedures — and FAA review of those procedures — also raised questions as to the qualifications and independence of inspectors, the memo said.
“Boeing personnel are allowed to inspect the quality of their own work,” it read.
“These troubling and recurring safety deficiencies raise questions about the FAA’s ability to oversee the quality and safety of Boeing aircraft through effective and lasting enforcement,” the memo said.
Wednesday’s memo and Whitaker’s testimony are part of a wider inquiry that began on March 19, investigating Boeing’s safety and culture practices following whistleblower allegations.
(WASHINGTON) — The Federal Reserve maintained its benchmark interest rate on Wednesday, keeping borrowing costs at their highest level in more than two decades despite a prolonged cooldown of inflation. An interest rate cut is widely expected in the coming months.
The Fed issued its latest interest rate decision after a months-long stretch of data has established the key conditions for a rate cut: falling inflation and slowing job gains.
Still, economists expected the Fed to leave interest rates unchanged on Wednesday. The move offered the central bank time to ensure current trends hold ahead of its next meeting in September.
“Inflation has eased over the past year but remains somewhat elevated,” the Federal Open Market Committee, the policymaking body at the Fed, said in a statement. “The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”
The chances of an interest rate cut in September stand at more than 85%, according to the CME FedWatch Tool, a measure of market sentiment. The same tool showed the odds of a rate cut on Wednesday at a meager 5%.
The economy appears to be hurtling toward interest rate cuts later this year. Such an outcome would deliver long-sought loan relief for households and businesses saddled with expensive debt.
Price increases have slowed significantly from a peak of more than 9%, though inflation remains a percentage point higher than the Fed’s target rate of 2%. An outright drop in prices in June compared to the month prior marked a major sign of progress in slowing inflation.
The labor market has continued to grow but its breakneck pace has cooled. The unemployment rate has ticked up this year from 3.7% to 4.1%.
The Fed is guided by a dual mandate to keep inflation under control and the labor market strong. The monthslong stretch of good news for inflation alongside bad news for unemployment has prompted the Fed to give additional consideration to its goal of keeping Americans on the job, Fed Chair Jerome Powell said last month.
“For a long time, since inflation arrived, it’s been right to mainly focus on inflation. But now that inflation has come down and the labor market has indeed cooled off, we’re going to be looking at both mandates. They’re in much better balance,” Powell said at a meeting of The Economic Club of Washington, D.C.
“That means that if we were to see an unexpected weakening in the labor market, then that might also be a reason for reaction by us,” Powell added.
However, robust economic data released last week may complicate the path toward a rate cut.
The U.S. economy grew much faster than expected over three months ending in June, accelerating from the previous quarter and defying concerns about a possible slowdown, according to data from the U.S. Bureau of Economic Analysis.
If the Fed cuts interest rates as the economy is heating up, the central bank risks rekindling rapid price increases.
After the economic data came out last Thursday, the odds of a September interest rate cut fell to about 80%. The dip in sentiment proved temporary, however. The odds have risen seven percentage points since then.
(WASHINGTON) — Vice President Kamala Harris has unveiled a comprehensive agenda focused on cooling inflation, but many economists consider the fight against price increases to be nearly finished.
Inflation stands below 3% for the first time since 2021, U.S. government data earlier this month showed. The Federal Reserve is widely expected to cut interest rates at a meeting in September, suggesting that the central bank could retreat from its yearslong battle to slow prices.
Still, consumer prices have climbed more than 20% over the last three years, demoralizing shoppers and straining household budgets. Inflation continues to top lists of voter concerns.
Economists who spoke with ABC News described current price levels as an unfortunate reality that would be nearly impossible to undo, since an outright lowering of prices typically accompanies economic hardship that would require medicine more painful than the ailment.
However, some economists said Harris’ proposals could reduce prices for some essential goods, like food, while slowing inflation for items such as housing that are still seeing rapid price increases. Other economists said the measures amount to a solution for a problem that no longer exists, saying the tardy legislative fixes could stunt economic activity.
“We can’t unwind prices back to a certain place,” Catherine Pakaluk, a professor of economics at the Busch School of Business at Catholic University, told ABC News.
Since overall prices depend on a worldwide tug of war between supply and demand, general cost reductions would demand a significant economic shock to send that balance askew, Pakaluk added.
“All prices are linked together,” Pakaluk said. “We all have a sense, ‘If only we could reset prices back to where they were three years ago.’ But there’s no mechanism for that.”
In response to ABC News’ request for comment, the Harris campaign pointed to a speech that she delivered on Friday.
“When I am elected president, I will make it a top priority to bring down costs and increase economic security for all Americans. As president, I will take on the high costs that matter most to most Americans, like the cost of food,” Harris said.
“We all know that prices went up during the pandemic when the supply chains shut down and failed, but our supply chains have now improved and prices are still too high,” Harris added.
While acknowledging the difficulty of achieving overall price decreases, some economists noted a potential for price reductions in certain industries, especially the food and grocery sector targeted by Harris’ proposals.
Harris points to the market power of large corporations in the grocery industry as a key cause of rapid price increases for food, saying companies use their outsized role to raise prices without fear of a competitor offering a comparable product at a more affordable price. Consumers, the Harris campaign says, are left with nowhere to turn.
“Extreme consolidation in the food industry has led to higher prices that account for a large part of higher grocery bills,” the campaign said in a statement on Friday.
Dan Scheitrum, a professor of agribusiness at California Polytechnic State University, San Luis Obispo, said Harris’ plan to crack down on potential anti-competitive practices within the food sector could end up lowering prices for some household staples.
“If price fixing is taking place and it gets addressed, I expect that could undo some of the price increases,” Scheitrum said.
While general inflation has moderated, price increases for housing remain highly elevated. Housing prices climbed 5.1% over the year ending in July, soaring at a pace more than twice as fast as the overall inflation rate.
The Harris campaign proposed restoring affordability through a combination of boosting home supply and easing the price pressures for some homebuyers.
Economists who spoke with ABC News largely applauded Harris’ efforts to boost the housing supply but offered mixed opinions about a potential $25,000 subsidy for first-time homebuyers.
“We as economists commonly disagree, but the question of housing supply is something we kind of all agree about,” Pakaluk said
On the other hand, a $25,000 subsidy for some homebuyers could allow them to increase their bids and send prices higher, Pakaluk added. “It might have the opposite effect on price than they want,” Pakaluk said.
Peter Morici, a professor emeritus at the University of Maryland’s School of Business, warned against the economic consequences of any attempt to cool prices when they’re well on their way to normal levels.
“The price increases that we’ve seen are very difficult to reverse,” Morici told ABC News. “It can’t be solved, except with draconian measures.”
Other economists indicated that a wide-ranging effort to address inflation could play an important preventative role, safeguarding the economy against a price spike in the event of an emergency, such as another pandemic.
“Even if you’re back to being on budget rather than on edge, you’re still scared. You’ve had a really terrible experience from no fault of your own,” Isabella Weber, an economics professor at the University of Massachusetts Amherst who studies price controls, told ABC News.
“We have to prepare for the next shock,” Weber added.
(Bloomington, Minn.) — Minnesota Gov. Tim Walz, the Democratic vice presidential nominee, has enacted economic policies in the state on key issues like job creation and taxes.
The track record, stretching back to 2018, indicates how he may approach such issues if granted the nation’s second-highest office.
His positions could also help shape perceptions of the Harris-Walz ticket on the economy, which ranks as one of the most important issues among voters.
Here’s what to know about where Walz stands on key economic issues:
Jobs
During his tenure, Walz has sought to boost employment in Minnesota.
In 2020, he enacted the $1.9 billion Local Jobs and Projects Plan, which invested in construction and renovation projects as a means of restoring employment after the onset of the COVID-19 pandemic.
Still, the state has lagged behind the nation as a whole in the number of jobs created since the outbreak of the pandemic. Total nonfarm payrolls in Minnesota have grown by just 0.5% since 2020, which lags far behind a rate of 5.8% nationwide over that period, according to a Reuters analysis of data released by the Bureau of Labor statistics.
Walz has signed into law a series of measures viewed as pro-worker. Last year, Minnesota established paid sick and medical leave, banned non-compete agreements and expanded protections for Amazon warehouse workers. In May, Minnesota enacted a measure providing a raise for Uber and Lyft drivers while averting a threat made by those companies to stop doing business in the state.
The AFL-CIO, the nation’s largest labor organization, praised the selection of Walz as vice presidential nominee. “We know that Gov. Walz will be a strong partner in the Harris White House, fighting every day to improve the lives of workers in communities across America,” AFL-CIO President Liz Schuler said in a statement on Tuesday.
Taxes
Last year, Walz enacted tax reform legislation that included a child tax credit worth up to $1,750 for each child 17 years old and younger in households earning up to about $96,000 a year
In addition, Walz expanded tax exemptions for social security payments as well as income resulting from student loan forgiveness.
To help offset these tax cuts, Walz enacted tax increases for some wealthy individuals and corporations. The state imposed a 1% surtax on capital gains, dividends, and other investment income that exceeds $1 million in a year. He also raised taxes for corporations that bring in a portion of their revenue abroad.
Minnesota is expected to end 2025 with a $3.7 billion budget surplus, according to a projection issued in February by the Minnesota Department of Management and Budget, a state agency.
“Minnesota stands apart from the pack with a moderately progressive tax system that asks slightly more of the rich than of low- and middle-income families,” the Institute on Taxation and Economic Policy, a non-partisan think tank, said on Tuesday.
Tax Foundation, a non-partisan advocacy group focused on tax reform, on Tuesday pointed to Walz’s record of supporting some tax increases.
“Gov. Walz’s tax policy record is notable because of how much it contrasts with broader national trends,” the organization said. “In recent years, most governors have championed tax cuts. Walz, rare among his peers, chose tax increases.”
Economic growth and inflation
In recent years, economic growth in Minnesota has trailed the rate of growth in the U.S. overall.
In 2023, inflation-adjusted gross domestic product in Minnesota grew 1.2%, less than half of the 2.5% expansion nationwide, U.S. Bureau of Economic Analysis data showed. The previous year, Minnesota’s inflation-adjusted GDP grew nearly one percentage point slower than the rate nationwide, according to BEA data.
Inflation in a key metropolitan area of Minnesota, meanwhile, is lower than the nationwide average.
As of May, prices in the Minneapolis-St. Paul-Bloomington area rose 2.6% over the previous year, U.S. Bureau of Labor Statistics data showed. Consumer prices increased 3.3% nationwide over that period, BLS found.