On The Money — Hot labor market stays strong through Fed hikes

·6 min read

Layoffs remain low even as interest rates go higher. We’ll also look at the scrapping of a major cannabis banking bill and where a top Fed official sees rates going.

But first, Nike is sprinting out of Russia and isn’t looking back.

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Subscribe here.

Jobless claims fall slightly amid recession fears

New applications for unemployment aid fell slightly last week as the U.S. job market showed few signs of a slowdown despite rising interest rates.

In the week ending June 18, initial claims for unemployment insurance totaled 229,000 after adjustments for seasonal factors, a decrease of 2,000 from the previous week, the Labor Department reported Thursday.

The background: The labor market has remained historically strong, even as the Federal Reserve has raised interest rates at a rapid pace to help cool inflation. Higher interest rates usually slow job growth as businesses facing higher borrowing costs and slower sales pull back job openings and lay off employees.

“The steady weekly data suggests that the impact of the Federal Reserve’s interest rate increases has yet to show up in earnest as monetary policies often take months to make their way through the economy,” wrote Tuan Nguyen, economist at RSM, in a Thursday analysis.

Sylvan has more here.


Cannabis banking bill removed from China competition package

Congressional leaders have removed a key cannabis banking measure from their China competition bill, dealing a blow to marijuana advocates who pushed for its inclusion.

Supporters will now aim to get the cannabis banking bill, which has passed the House several times with broad bipartisan support, included in another spending package.

  • The SAFE Banking Act, which would allow legally operating cannabis businesses to access banking services, was included in House Democrats’ COMPETES Act but not the Senate’s bipartisan U.S. Innovation and Competition Act passed last year. 

  • The decision isn’t surprising, as Republican leaders argued that the cannabis bill didn’t fit with other measures in the China competitiveness package, and prominent Democrats want to pair the banking bill with social justice measures, something that can’t be done in the conference committee. 

  • The bill’s supporters said Thursday that lawmakers are endangering cannabis workers by failing to overhaul the current system, which forces most dispensaries to use cash, making them top targets for robberies.

Cannabis lobbying groups have warned Democrats that they cannot afford to enter the midterms without having passed any marijuana reforms.

“The support and political will is there to get the SAFE Banking Act across the finish line. We are encouraged by conversations about pairing the bill with other helpful cannabis and criminal justice reforms,” Steven Hawkins, president of the U.S. Cannabis Council, said in a statement. “We look forward to working with our members and allies to help get the job done.”

Read more here from The Hill’s Karl Evers-Hillstrom.


Fed’s Bowman expects 75 basis point hike in July

Federal Reserve Governor Michelle Bowman said Thursday she expects the central bank to raise interest rates by another 0.75 percentage points at its next monetary policy meeting in July.

In a speech to Massachusetts bankers Thursday, Bowman said she believes the Fed will need to issue its second consecutive 75 basis point hike in July with several 50 basis point hikes to follow. She said with inflation “unacceptably high,” the Fed must move quickly to move its baseline interest rate range higher than where markets expect inflation to settle.

“I expect that an additional rate increase of 75 basis points will be appropriate at our next meeting as well as increases of at least 50 basis points in the next few subsequent meetings, as long as the incoming data support them,” Bowman said.

“Depending on how the economy evolves, further increases in the target range for the federal funds rate may be needed after that.”

  • Bowman’s projection comes a week after the Fed hiked interest rates by
    75 basis points for the first time since 1994.  

  • While Fed Chair Jerome Powell and other top Fed officials signaled for weeks the bank would only hike by 50 basis points, the bank issued a larger hike after an unexpectedly high inflation report alarmed the bank and financial markets in the prior week.

Here’s more from Sylvan.


Education Department agrees to cancel $6B in loans

After three years of litigation, the Education Department agreed to settle a lawsuit brought against it regarding billions of dollars in debt forgiveness for hundreds of thousands of borrowers.

The terms of the settlement for Sweet v. Cardona state that the Education Department will immediately approve borrower defense claims for approximately 200,000 borrowers, effectively canceling $6 billion in student loans for students that attended schools that the Department determined engaged in misconduct.

  • The settlement is divided into two groups: The first class consists of about 200,000 borrowers who took out federal student loans to attend certain schools — the list includes over a dozen different for-profit institutions around the country — who will have their loans fully canceled, receive refunds for prior loan payments and have their credit repaired.  

  • The second class consists of about 64,000 students that took out federal student loans but did not attend a school on the aforementioned list. These students will have their loan cancellation applications considered and get a decision based on how long their application has been pending.

There’s more on this here from The Hill’s Shirin Ali.

Good to Know

The Food and Drug Administration (FDA) said Thursday that it is banning the sale of Juul e-cigarettes, a major blow to the company and a major step in a broader effort to prevent youth vaping.

The FDA said Juul must stop selling and marketing its products, and everything that’s already on the market must be removed.

Here’s what else we have our eye on:

  • The House Armed Services Committee voted to advance its $840 billion version of the annual defense policy bill, adding in more for extra ships, aircraft, Ukraine aid and to offset inflation.

  • Sportswear giant Nike has announced plans to permanently shut down its business ventures in Russia over the ongoing invasion of Ukraine.

  • Part shortages resulting from the COVID-19 pandemic have led Toyota to again make adjustments to the company’s production plans, reducing the number of globally produced units by 50,000 this July.

  • The House Appropriations Committee advanced its $314.1 billion military construction and veterans’ affairs appropriations bill for fiscal year 2023, sending it to the full lower chamber for consideration.

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 tomorrow.


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