Powell secures 2nd term
The chairman is mired in a high-stakes effort to curb inflation
The Senate on Thursday confirmed Jerome Powell for a second four-year term as Federal Reserve chair, giving bipartisan backing to Powell's high-stakes efforts to curb the highest inflation in four decades.
The 80-19 vote reflected broad support in Congress for the Fed's drive to combat surging prices through a series of sharp interest rate hikes that could extend well into next year. The Fed's goal is to slow borrowing and spending enough to ease the inflation pressures.
Since February, when his first term expired, Powell had been leading the central bank in a temporary capacity.
He faces a difficult and risky task in trying to quell inflation without weakening the economy so much as to cause a recession. The job market remains robust and has strengthened to a point that Powell has said is “unsustainably hot” and contributing to an overheating economy.
Spiking prices across the economy have caused pain for millions of Americans whose wages aren't keeping up with the cost of such necessities as food, gas and rent. And the prospect of steadily higher interest rates has unsettled the financial markets, with stock prices having tumbled for weeks.
Powell's support Thursday in the Senate was roughly in line with what he received four years ago, after he was first nominated as Chair by President Donald Trump. At that time, the Senate voted 84-13 to confirm him.
To some degree, Powell's support in Congress reflects the blame that most Republicans assign to President Joe Biden's $1.9 trillion COVID-19 relief package — rather than to the Fed's ultra-low rates — for causing high inflation. Many economists, including those who have served in previous Democratic administrations, agree that Biden's legislation played a role in accelerating prices.
Powell's confirmation comes as many economists have sharply criticized the Fed for waiting too long to respond to worsening inflation, making its task harder and riskier.
Prices first spiked a year ago, after Americans ramped up their spending once vaccines were administered and COVID-19 restrictions began to decline. The surge in demand caught many businesses unprepared and short on supplies, causing prices for goods like cars, furniture and appliances to soar — if consumers could even find them. High inflation has since spread to most of the rest of the economy, including rents and such other services as hotel rooms, restaurant meals and medical care.
Rivian recalls trucks for faulty air bag triggers
The Irvine-based startup Rivian Automotive has issued its first recall, alerting the government that several hundred 2022 R1T trucks could have a miscalibrated air bag trigger in the front passenger seat.
In a letter to the National Highway Traffic Safety Administration, the electric vehicle maker said the system that controls the air bag “may not deactivate … when a child or child seat occupies the front passenger seat.”
If an air bag did deploy, Rivian stated, “a child in the front seat may be at a greater risk of injury.”
A Rivian spokesperson on Thursday said infants and children should not be placed in the front passenger seat of affected Rivian vehicles until a front passenger seat replacement is complete. The supplier, the spokesperson noted, has assumed the cost of seat replacement.
The company was not aware of any injuries related to the issue.
Rivian said its service centers will replace the front passenger seat, free of charge. The company said 502 trucks were among the recall.
Letters to owners will be mailed within 60 days, Rivian said. R1T owners also can call Rivian customer service at 1-734855-4345. The Rivian recall ID number is FSAM-651.
Truck owners also can contact the NHTSA Vehicle Safety Hotline at 1-888-327-4236 (TTY 1-800424-9153), or go to nhtsa.gov.
Potentially bad brakes lead to Mercedes recall
Mercedes-Benz is telling the owners of more than 292,000 vehicles in the U.S. to stop driving them due to a problem that could cause the brakes to fail.
The German automaker is recalling the vehicles and says it will offer free towing so the owners can get them to a dealership for service. The recall covers certain ML, GL and R-Class vehicles from the 2006 through 2012 model years.
Mercedes says in documents posted Thursday by the National
Highway Traffic Safety Administration that moisture can get into a brake booster housing and cause corrosion. That can cause a vacuum leak, which would decrease brake performance.
In rare cases, hard braking could cause mechanical damage to the booster, and it may not be possible to stop the vehicles with the brake pedal, Mercedes said in a statement Thursday. A foot-activated parking brake would still work.
The company says it has no reports of crashes or injuries.
Dealers will replace parts as needed. Owners will be notified by letter starting May 27.
If repairs can't be done immediately, dealers will help find loaner cars for the owners, the company says in the statement.
Mercedes says owners can call 888-548-8514 with questions.
Stocks mixed in another day of erratic trading
Another messy day of trading on Wall Street ended with an uneven finish for the major stock indexes Thursday, after the market reversed most of an early slide in the final hour of trading.
The S&P 500 closed only 0.1% lower after having been down 1.9% earlier in the day. The Dow Jones Industrial Average fell
0.3%, while the Nasdaq rose 0.1%.
The S&P 500 fell 5.10 points to 3,930.08. The Dow dropped 103.81 points to 31,730.30. The Nasdaq rose 6.73 points to 11,370.96. The indexes are all on pace for sharp weekly declines, extending the market's slump so far this year. The benchmark S&P 500 is now down 17.5% this year, while the Nasdaq is down 27.3%. The Russell 2000 rose 21.24 points, or 1.2%, to 1,739.38.
The yield on the 10-year Treasury fell to 2.87% from 2.92%.
The Labor Department on Thursday reported that wholesale prices soared 11% in April from a year earlier. Health care companies and retailers were among the market's gainers Thursday. Pfizer rose 2.8% and Home Depot gained 2.4%.