Overnight Finance

On The Money — Biden's big plans for the Fed

Biden's big plans for the Fed


Happy Friday and welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. Subscribe here: thehill.com/newsletter-signup.

Today's Big Deal: How President Biden can still reshape the Fed after renominating Jerome Powell. We'll also look at a sharp drop in jobless claims and a new nominee for White House budget chief.

But first, a very Happy Thanksgiving from The Hill family to yours. We're taking the rest of the week off and will be back in your inbox Monday evening.

For The Hill, I'm Sylvan Lane. Write me at slane@thehill.com or @SylvanLane. You can reach my colleagues on the Finance team Naomi Jagoda at njagoda@thehill.com or @NJagoda and Aris Folley at afolley@thehill.com or @ArisFolley.

Let's get to it.

Biden eyes new path for Fed 

President Biden emphasized continuity and bipartisanship when making his picks for the top two positions at the Federal Reserve this week. But his next slate of nominees could establish an enduring left-leaning majority at the central bank.

  • Biden on Monday announced he would renominate Fed Chairman Jerome Powell, a Republican well-liked in both parties, and appoint Lael Brainard - the only Democrat on the bank's Board of Governors - as vice chair.
  • But Biden still has three seats on the seven-person Fed board to fill and the vacant vice chairmanship of supervision, which sets the Fed's regulatory agenda, and he says that his new picks won't be quite like the last. 

The president said his next nominees will "bring new perspectives and new voices," along with "long overdue" diversity to the Fed board. 

"With three open seats and the vice chair for supervision, there is still a lot of leeway for Biden to make a meaningful and distinct imprint on the trajectory of the Federal Reserve," said Kathryn Judge, a banking law professor at Columbia University.

"The continuity Biden tried to signal is really a commitment to support the monetary policy and the focus on unemployment that Powell has spearheaded during his leadership, but there's a lot of other issues that could be addressed by the Federal Reserve in coming years."

I'll tell you what that means here.


Jobless claims plunge to 199K, lowest level since 1969

New weekly claims for jobless aid plunged to the lowest level in more than 50 years last week, according to data released Wednesday by the Labor Department.

  • In the week ending Nov. 20, there were 199,000 initial applications for unemployment insurance, according to the seasonally adjusted figures, a decline of 71,000 from the previous week. 
  • Claims fell to the lowest level since November 1969 and are now well below the pre-pandemic trough of 225,000 applications received the week of March 14, 2020. 

The steep drop in unemployment applications comes after several strong months of job growth and rising consumer spending heading into the holiday shopping season. While high inflation has stressed many household budgets, U.S. job growth, economic production, stock values and corporate profits have all steamed ahead.

The caveat: The steep drop was likely due to the Labor Department expecting far more seasonal layoffs than the country experienced last month, one of several ways the pandemic has skewed economic data. But even if claims rebound toward normal levels next week, it will mark a strong improvement.


Biden taps Shalanda Young to lead White House budget office

President Biden on Wednesday announced his plans to nominate Shalanda Young as director of the Office of Management and Budget (OMB) after the longtime Capitol Hill aide spent months serving as acting director.

If confirmed, Young would be the first Black woman to run the agency. She has served as acting director since Neera Tanden's nomination for OMB director was withdrawn in March.

Biden also announced his intent to nominate Nani Coloretti as deputy director of the OMB. Coloretti would become one of the highest ranking Asian American or Pacific Islanders in the administration if confirmed.

  • The OMB has been without Senate-confirmed leadership for the entirety of the Biden administration thus far after Tanden withdrew her nomination in the face of bipartisan opposition.
  • The agency is responsible for overseeing the formulation and implementation of the federal government's budget. Biden referred to it in Wednesday's video as the "nerve center" of the government.

Brett Samuels has more here.


Incomes, consumer spending rose in October even as inflation spiked

Consumer spending rose in October despite a surge of inflation as higher personal incomes helped buffet rising prices, according to data released Wednesday by the Commerce Department.

  • Personal consumption expenditures rose 1.3 percent last month, powered by a 1 percent increase in spending on goods and a 0.7 percent rise in spending on services. 
  • Consumer spending on goods has run far ahead of services due to a combination of supply chain snarls, coronavirus-related restrictions and changes in consumption habits driven by the pandemic.
  • The PCE index rose 0.6 percent in October after three straight months of 0.4 percent increases in consumer prices. The index also rose 5 percent during the year leading into October - a 0.6 percentage point increase in the annual inflation rate from September.

I break it down here.

Good to Know


Federal Reserve officials debated this month whether the bank should be prepared to taper asset purchases and raise interest rates quicker than they once expected as inflation spiked, according to minutes released Wednesday.

Here's what else we have our eye on:

  • A majority of registered voters blame President Biden and Congress for the global supply chain and delivery issues affecting Americans, according to a new poll.
  • JPMorgan Chase CEO Jamie Dimon on Wednesday apologized after he made what he called "a joke" saying the bank would outlast the Chinese Communist Party.


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 next week.