The Fed Won’t Say the ‘R’ Word

We’re really, really, really not in a recession.Credit…Manuel Balce Ceneta/Associated Press

Powell keeps it sunny

The Federal Reserve is continuing its aggressive campaign to cool inflation, even as the economy begins to slow. The U.S. central bank raised interest rates yesterday — this time by three-quarters of a percentage point — for the fourth time this year. Investors cheered the move, with the S&P 500 rising nearly 3 percent by the end of the day. Futures markets suggest stocks will open slightly lower today. The Fed’s benchmark short-term interest rate is now as high as 2.5 percent, up from near-zero in March.

But the big question on many minds is whether the economy will slow too much. During a news conference yesterday, the Fed chair, Jerome Powell, was asked in every way possible whether he thought the economy was in, or headed toward, a recession. And every time, he answered: No, not at all.

The Fed is more optimistic about a soft landing than Wall Street. Powell said a recession wasn’t in his outlook, even though much of Wall Street sees one coming either by the end of this year or early next, reports The Times’s Jeanna Smialek. Instead, Powell said the labor market indicated that the economy, while slowing, remained strong. He added that the Fed planned to continue raising rates until the end of 2023.

In part, the Fed can remain optimistic because the data about the economy is mixed. Consumer confidence is plunging, while corporate profits continue to increase, and the unemployment rate remains low. Peter Coy, our colleague from Times Opinion who writes a newsletter about business and economics, noted that G.D.P. and gross domestic income — another measure of economic activity — should track relatively closely but have recently diverged. The gap between the two measures is at its widest since 1947.

The Fed, though, is probably not a reliable recession messenger. The central bank has said it can bring down inflation without sending the economy backward. Many question that. “A big part of leadership is to project confidence,” Michael Arone, a strategist at State Street Global Advisors, told DealBook. “I have always taken Fed-speak with a bit of salt, but when it comes to a recession, as I told my team this morning, a ton of salt.”

We’ll have a better view of the recession question this morning when the Bureau of Economic Analysis releases its first estimate of the economy’s second-quarter performance. Follow The Times’s live coverage of reactions to the G.D.P. numbers.


Spirit Airlines and JetBlue agree to merge. Their deal was announced a day after Spirit and Frontier terminated their proposed agreement after monthslong talks. JetBlue will pay $33.50 in cash for Spirit shares, which closed at $24.30 yesterday. But antitrust regulators could derail the merger or demand stiff concessions.

Senator Joe Manchin, in a reversal, agrees to action on a climate and tax plan. The West Virginia Democrat said he would support including hundreds of billions of dollars for climate and energy programs and tax increases in a package to subsidize health care and lower drug costs, less than two weeks after upending hopes for such a deal. It’s not clear what changed his mind.

The Senate passes the CHIPS Act to bolster American chip-making. The bill would provide $280 billion to expand U.S. manufacturing and technological abilities, including $52 billion in subsidies and additional tax credits for companies that manufacture silicon chips domestically.

Read More About Apple

  • The End of a Partnership: Three years after Apple promised to continue working with Jony Ive, its former design leader, the two parties appear to be through. Here is what the change could mean for Apple.
  • Union Effort: Apple employees at a Baltimore-area store voted to unionize, making it the first of the company’s 270-plus stores in the United States to do so.
  • Upgrading: At its annual developer conference in June, Apple unveiled a range of new software features that expand the iPhone’s utility and add more opportunities for personalization.

A Berkshire Hathaway-owned lending unit will pay $20 million to settle a redlining suit. State and federal prosecutors accused Trident Mortgage of discouraging people in nonwhite neighborhoods of Philadelphia from applying for home loans. The Justice Department called the settlement the second largest in its history.

Stellantis, maker of the Jeep, Peugeot and Fiat brands, reports a record profit. The automaker said this morning that its profits rose by a third, to 8 million euros, buoyed by higher North American margins. Automakers including Ford and General Motors have also benefited from high prices for new vehicles, but inflation has pushed up the cost of materials and parts.

Exclusive: Using the F.T.C. to go after gunmakers

A new bill being introduced in Congress today seeks to use the powers of the Federal Trade Commission to limit the spread of guns. The bill would allow the F.T.C. to investigate gunmakers for deceptive advertising practices. That is something the agency is charged with doing for other industries, but has been forbidden from doing with gun manufacturers, which have long enjoyed extra protections from Washington.

It is the latest front in the fight in Washington over gun control after the mass shooting in Uvalde. The bill is being sponsored by Representative Tom Malinowski, Democrat of New Jersey, and Representative Robin Kelly, Democrat of Illinois and vice chair of the congressional Gun Violence Prevention Task Force. It calls for the F.T.C. to file a report to Congress in a year’s time identifying ads that are designed to appeal to those under 18, feature semiautomatic assault weapons or imply or encourage an illegal use of guns.

Gun control advocates have been calling for the F.T.C. to investigate gunmakers for years,without success. The bill, which has a fair chance of passing in the House but is likely to face challenges in the Senate, could influence the F.T.C. to bring cases against gunmakers even if it does not become law. “This bill finally subjects the gun industry and its advertising practices to the oversight and scrutiny we apply to other industries, holds companies accountable for marketing to kids, and makes clear that there are consequences for deceptively hawking weapons of war to impressionable consumers,” Mr. Malinowski said in a statement.

Meta faces a new reality on acquisitions

The F.T.C. yesterday sued Meta, the social media giant once known as Facebook, to block it from buying Within, a virtual reality start-up. It’s the first antitrust lawsuit against a tech behemoth since Lina Khan took charge of the commission. It’s also the first to test one of the tenets of Khan’s new brand of antitrust enforcement, namely that the tech giants should be stopped not just from further consolidating their markets, but also from muscling into new ones.

The suit puts Khan on a collision course with Mark Zuckerberg, Meta’s C.E.O. Zuckerberg has staked the future of the company on the growth of virtual and augmented reality, a transition that is looking more urgent as its ad sales slump. This suit could crimp his metaverse ambitions, write The Times’s David McCabe and Mike Isaac.

Meta said the case was “based on ideology and speculation.” It’s also a risk for Khan. Regulators have traditionally focused on policing deals that combine two large companies already locked in competition. And courts have been hesitant to block mergers solely based on the idea that if no deal were done, the two companies would become competitors. But the F.T.C. claims in its suit that Facebook should be forced to win over customers on its own, rather than leverage its profit and dominant position in social networking in order to buy out competition in a new market.

For Khan, just bringing the case could be seen as a win. Suing Facebook begins to lay the groundwork for the reframing of competition law that she is pushing for. “It’s a riskier case, but one they think is worth bringing because if they succeed it will help bring the frontier of enforcement outward,” said William Kovacic, a former F.T.C. chairman.

“We are building up a tsunami of grain, producing more than we can export. We will still be sitting on crops that won’t get out.”

— Georg von Nolcken, chief executive of Continental Farmers Group in Ukraine. The country’s farmers are skeptical that a deal with Russia to resume grain exports will hold. Twenty million tons of grain are trapped in Ukraine, exacerbating a global hunger crisis.

Crypto scammers infiltrate app stores

Apple and Google are not crypto companies. But their app stores are gateways to crypto, and they are under fresh scrutiny after the authorities raised alarms about a rash of scams that have cost investors more than $40 million. Sherrod Brown, chairman of the Senate Banking Committee, sent letters yesterday to Sundar Pichai of Google and Tim Cook of Apple that were shared exclusively with DealBook, asking the chief executives to explain how their companies screened for scammers.

Cyber criminals create apps with the names and logos of legitimate businesses to lure investors, the F.B.I. warned in an advisory last week, citing such apps on Google Play and the Apple App Store. Brown believes the corporations should play an active part in policing these scams, writing that it’s “imperative that app stores have the proper safeguards in place.” The C.E.O.s have until Aug. 10 to explain their approval processes, security measures, reporting options for users and engagement with law enforcement.

The scrutiny for Apple and Google comes amid a crypto industry reckoning. The digital asset crash has bankrupted companies, cost retail investors dearly and has lawmakers scrambling to draft legislation. A blockchain executive visiting Washington told DealBook that the crash had everyone she talks to on Capitol Hill worried and more focused on action than ever before. Brown, a critic of crypto even before the downturn, is holding a hearing on scams and risks in crypto today.



  • Twitter is seeking a commitment that its trial with Elon Musk will be completed in five days. (Reuters)

  • Deals in European consumer goods and retail have slowed amid rising inflation. (Reuters)


  • Three Republican Senate hopefuls who slam Big Tech have deep ties to it. (NYT)

  • The U.S. offered to swap a Russian arms dealer for the basketball player Brittney Griner and another imprisoned American, Paul Whelan. (NYT)

Best of the rest

  • The Alibaba founder Jack Ma reportedly plans to give up control of the fintech giant Ant Group as it deals with heavy pressure from Chinese regulators. (WSJ)

  • Apple hired a top car-development manager from Lamborghini. (Fortune)

  • Sequoia will open its first U.S. office outside Silicon Valley, in New York City. (The Information)

  • The back story of McDonald’s decision to sell its 853 restaurants in Russia. (Fortune)

  • “Rockstar Games Cleaned Up Its Frat-Boy Culture — and Grand Theft Auto, Too” (Bloomberg)

  • Beyoncé’s new album, “Renaissance,” leaked 36 hours before it was scheduled to be released. (Variety)

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