News of the Day

Federal Reserve Bank Faces Challenges to Credibility

The Federal Reserve is attempting to tamp down two significant challenges to its credibility as both its handling of inflation and internal ethics face growing scrutiny. 

The central bank is quickly moving to address a scandal involving stock trades made by its top officials. And price increases are running higher and longer than many Fed officials expected, boosting pressure on the bank to slam the brakes on the recovery from the COVID-19 pandemic and back down from a new, more tolerant approach to inflation. 

The Fed last year launched a strategy that allows inflation to rise above the bank’s 2 percent annual target to make up for almost a decade of low price increases and stagnant wages. The new framework was meant to allow wages and employment to rise until inflation was on track to average out near the Fed’s ideal level before the bank hiked interest rates.

Even so, the persistence of high inflation and uncertainty over how long it will last is boosting pressure on the Fed to change course and deviate from its new framework. 

Prices grew by 4.3 percent in the year leading into August, according to the personal consumption expenditures index, the Fed’s preferred gauge of inflation. The consumer price index for September also showed steady increases in food, energy and housing prices, prompting interest rates on bonds to rise as Wall Street braces for higher inflation.

The Fed is almost certain to announce next month its plans to reduce its monthly purchases of Treasury and mortgage bonds, initiated in March 2020 to keep markets flowing, with the economy well into its recovery. Powell reiterated Friday that the Fed does not plan to raise interest rates until the labor market is on track to fully recover from the pandemic.

Announcing a sooner start to interest rate hikes could appease inflation hawks and soothe some concern about rising prices. But experts say it would raise serious doubts about the Fed’s willingness to follow its own rules as it also scrambles to contain the fallout of a trading scandal involving at least two former top officials. 

All Wisconsin Phone Calls will Require Dialing the Area Code

Starting Sunday people in Wisconsin will have to dial local numbers using 10 digits — the area code and the seven-digit phone number.

Currently, people in Wisconsin can place a call to a number in the same area code without dialing the area code. The change will affect both landlines and cellphones and all of Wisconsin’s six area codes, as well as more than two dozen other states that have not already switched to 10-digit dialing.

The change is because the Federal Communications Commission is establishing 988 as the new nationwide phone number for suicide prevention and mental health help.

CDC Expands Eligibility for COVID-19 Vaccine Booster Shots

On Thursday, CDC Director Rochelle Walensky, endorsed the CDC Advisory Committee on Immunization Practices (ACIP) recommendation for a booster shot of COVID-19 vaccines in certain populations.

For individuals who received a Pfizer-BioNTech or Moderna COVID-19 vaccine, the following groups are eligible for a booster shot at 6 months or more after their initial series:

For the nearly 15 million people who got the Johnson & Johnson COVID-19 vaccine, booster shots are also recommended for those who are 18 and older and who were vaccinated two or more months ago.

There are now booster recommendations for all three available COVID-19 vaccines in the United States. Eligible individuals may choose which vaccine they receive as a booster dose. Some people may have a preference for the vaccine type that they originally received and others, may prefer to get a different booster. The CDC recommendations now allow for this type of mix and match dosing for booster shots.


Legislative Leaders Introduce New Congressional and Legislative District Maps

Yesterday, Senate Majority Leader Devin LeMahieu (R-Oostburg) and Assembly Speaker Robin Vos (R-Rochester) introduced the new maps for Congressional, Assembly and Senate districts. (Senate Bill 621/Senate Bill 622) as part of the redistricting process in Wisconsin.

Every ten years, the U.S. Census Bureau publishes updated information reflecting changes in the population since the previous census. This information is used by states to redraw local, legislative, and congressional districts so that each district has approximately the same number of  people.

The Wisconsin State Legislature, according to their constitutional and statutory duty, has undertaken this task with requests for additional input from numerous public advocacy groups, including the ‘People’s Maps Commission’, and Wisconsinites from across the state. The new district maps are the next step towards crafting final districts which meet every criteria required by state law, the U.S. Supreme Court, Wisconsin Supreme Court, and the Constitutions of the United States of America and the State of Wisconsin.

With the introduction of the maps as legislation, Wisconsinites will now have the opportunity to thoroughly review and give comment on congressional districts, state senate districts, and state assembly districts as part of the public hearing process. That additional input will continue the open, transparent process as bills move through the Legislature.

The Legislature made it very clear through Senate Joint Resolution 63 that the criteria used to create maps are consistent with the traditional and legal frameworks that guide redistricting. The transparent efforts to engage the public and enshrine our intent through an official action of the Legislature is designed to give everyone in Wisconsin confidence in the process and additional opportunity for unprecedented public input.

State of Wisconsin Ends Fiscal Year 2021 with $2.58 Billion Positive Balance

Wisconsin concluded Fiscal Year 2021, which ended on June 30, 2021, with a positive balance of $2.58 billion.  In addition, the state increased its Budget Stabilization Fund (“Rainy Day” Fund) to a record-high $1.73 billion according to the new Annual Fiscal Report released by the Wisconsin Department of Administration (DOA) today.

“A healthy rainy-day fund will help us face tomorrow’s challenges head-on,” said DOA Secretary Joel Brennan. “By prudently managing our way through this crisis, we’ve built the largest Budget Stabilization Fund in state history, making sure we’re ready for future challenges, and securing a strong pandemic recovery for our hard-hit communities, businesses and industries.”

Noteworthy items from the Fiscal Year 2021 Annual Fiscal Report include:

  • The state’s undesignated general fund balance at the end of Fiscal Year 2021 was $2.58 billion, more than double the prior year’s balance of $1.17 billion in Fiscal Year 2020.
  • Wisconsin transferred excess revenues of $967.4 million to its Budget Stabilization Fund, more than doubling the prior year balance. The current Budget Stabilization Fund balance now totals roughly $1.73 billion, the largest in the state’s history and more than five times larger than the balance at the end of Fiscal Year 2018.
  • State general fund tax collections in Fiscal Year 2021 increased by 11.6% over the prior year and exceeded the most recent estimates by nearly $319 million.

The full Fiscal Year 2021 Annual Fiscal Report is available here: 

Biden Administration Scales Back IRS Bank-Monitoring Plan

The Biden administration on Tuesday endorsed a scaled-back version of a proposal that could force banks to turn over customers’ account information to the Internal Revenue Service under growing criticism from banking groups and Republicans.

Under a new plan that Senate Democrats are expected to unveil, banks, credit unions and other financial institutions would be required to report annually on accounts with deposits and withdrawals worth more than $10,000, rather than the $600 threshold that President Biden initially proposed.

Banks are already required to report any transaction that exceeds $10,000 to the Financial Crimes Enforcement Network – part of anti-money laundering requirements.

In a September letter addressed to House Speaker Nancy Pelosi, D-Calif., and Minority Leader Kevin McCarthy, R-Calif., more than 40 banks urged lawmakers to vote against such a proposal, warning it could create a “tremendous liability” for all involved by requiring the collection of financial information for the majority of Americans “without proper explanation of how the IRS will store, protect and use this enormous trove of personal financial information.”

We Energies and WPS Customers Will See Higher Heating Bills

Two of the state’s largest utilities are warning of higher heating bills this winter as natural gas prices have more than doubled since earlier this year. Natural gas has been relatively cheap for years, but prices have surged due to lower supplies and rising demand worldwide.

The price to buy natural gas has spiked from $2.62 per million British thermal unit earlier this year to between $5 and $6 since late September, according to the Energy Information Administration.

In the agency’s winter fuels outlook, the EIA expects nearly half the nation’s households that use natural gas will spend between 22 and 50 percent more on average, depending on whether the winter is colder or warmer than normal. Homes that use propane for heating could see costs rise between 29 and 94 percent depending on the severity of winter weather.

The state’s largest electric and natural gas utility, We Energies, warns the cost to heat homes could go up by $25 per month for residential customers based on a typical winter. Wisconsin Public Service customers could pay $40 more per month.

OSHA Sends Employer Vaccine Rule to White House for Final Review

The Occupational Safety and Health Administration has submitted the text of a new vaccine rule for large employers to the Office of Management and Budget, bringing the emergency standard announced by President Joe Biden last month one step closer to taking effect.

“The Occupational Safety and Health Administration has been working expeditiously to develop an emergency temporary standard that covers employers with 100 or more employees to ensure their workers are fully vaccinated or undergo weekly testing to protect employees from the spread of coronavirus in the workplace,” a Labor Department spokesman said Tuesday.

“On Tuesday, October 12, as part of the regulatory review process, the agency submitted the initial text of the emergency temporary standard to the Office of Management and Budget.”

Once OMB concludes its review of the regulation, the emergency temporary standard will be published in the Federal Register, when it will go into effect.

President Biden Seeks to Spearhead New Effort to Ease Supply-Chain Delays

President Joe Biden will turn his focus to supply-chain transportation bottlenecks on Wednesday, as the congested Port of Los Angeles will announce a 24 hours a day, seven days a week effort to confront the squeeze on goods.

A meeting at the White House will convene corporate executives, labor leaders as well as port officials, and Biden plans to highlight their efforts to ease distribution backlogs and respond to product demands that have grown during the coronavirus pandemic, two administration officials said on the condition of anonymity to preview the day’s events.

The 24/7 shift by the Port of Los Angeles follows a move last month by the nearby Port of Long Beach to a similar schedule. FedEx Corp., United Parcel Service Inc. and Walmart Inc. are also pledging to move to 24/7 operations, the official added, while Target. Corp., Samsung Electronics Co. and Home Depot Inc. are taking steps to start addressing the backlog in distribution.

The White House said that among those six companies, a total of 3,500 additional containers a week would be moving at night through the end of the year.

“Large companies are announcing they will use expanded hours to move more cargo off the docks, so ships can come to shore faster,” the White House said. “Unlike leading ports around the world, U.S. ports have failed to realize the full possibility offered by operation on nights and weekends.”

Despite Wisconsin’s Strong Economic Recovery, Participation in Government Programs Remains High

While Wisconsin’s unemployment situation has rebounded since April 2020, participation in government safety net programs remains elevated, according to a new Badger Institute brief authored by Dr. Angela Rachidi, senior fellow in poverty studies at the American Enterprise Institute and Badger Institute Visiting Fellow.

In her brief, titled “Employment and the Safety Net During the Pandemic,” Rachidi found that as of September 2021, receipt of unemployment insurance, federal food assistance and cash for low-income parents in Wisconsin remains higher than pre-pandemic levels. Although the economy has improved dramatically and the labor market is tight, food and cash aid caseloads continue to rise. Additional findings in the brief include:
· By the first week of September, the number of continuing unemployment insurance claims in Wisconsin was 41,000, still almost double the number of claims during the same week in 2019.
· Payments to SNAP households in Wisconsin have skyrocketed, increasing 167% from June 2019 to June 2021, while participation increased almost 30%. This is more per SNAP household on average in constant dollars than at any time in the past 20 years.
· The number of people receiving TANF started increasing in March 2020, consistent with a higher unemployment rate, but has continued to increase even as the employment situation in Wisconsin has improved.
· The labor force participation rate in Wisconsin was 66.5% in August 2021, slightly below the rate in August 2019 of 67.2%.
Higher government benefits increase the likelihood that people will reduce work hours or leave employment altogether, according to Rachidi. For Wisconsin’s economy to regain its footing fully, people must be available and willing to work.