1 big thing: Crypto makes its case

Members of Congress listen via video conference as Sam Bankman-Fried, chief executive officer of FTX Cryptocurrency Derivatives Exchange, speaks during a hearing

2. Charted: One housing mania indicator

3. What's happening

4. New prediction: Remote pay cuts vanish

5. The year at-home traders took over Reddit

6. What they're saying

🐪 Today's newsletter is 712 words, a 2½-minute read.

🔔 The dashboard: The S&P 500 closed up 0.3%.

Biggest S&P gainer? Norwegian Cruise Line (+8%). Other cruise lines and airlines also popped.

Biggest decliner? Kroger (-5%). It's coming off a near-record high.

National

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Catch up on the day's biggest business stories and look ahead to important trends. Led by Hope King and Nathan Bomey.

Axios Closer

1 big thing: The next payment lapse

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2. Charted: How America grades the economy

3. What’s happening 

4. Dollar Tree under pressure to uproot its board

A shopper walks through the aisles of a Dollar Tree store in Alhambra, California

5. The hot, new CEO jargon

6. What they’re saying 

Today's newsletter is 701 words, a 3-minute read

🔔 The dashboard: The S&P 500 fell 0.9%.

Biggest S&P gainer? Moderna (+6%), erasing Friday's decline.

Biggest decliner? Nvidia (-7%), its 4th straight day in the red. 

1 big thing: 🔥 The hot pandemic labor market

2. Charted: Unprecedented port volume

4. Scoop: Legendary crypto investor makes a move

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5. Blackstone's unexpected celebrity cameo

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Today's newsletter is 633 words, a 2-minute read.

🔔 The dashboard: The S&P 500 rose over 1%. Fed rally!

Biggest S&P gainer? Drugmaker Eli Lilly (+10%), after it released rosy sales and profit forecasts.

Biggest decliner? Nucor (-9%), after the steelmaker warned about declining volumes at its mills. 

Editor's note: Item 1 was corrected to show that there are over 2 million fewer workers in the job market compared to pre-pandemic times (not 4 million).

1 big thing: Boat boom won't let up

2. Mapped: America's job shortfalls

4. Why your next gift could be crypto

Illustration of a crypto coin with a bow. 

5. Spider-Man to the (box office) rescue

😎 Today's Closer — the last edition of the year! — is 631 words, a 2-minute read. Keep reading for some news about this newsletter.

Biggest S&P gainer? Medical records company Cerner (+13%) amid reports it could be acquired by Oracle. 

Biggest decliner? Furniture part maker Leggett & Platt (-8%). ¯\_(ツ)_/¯

Happy holidays! Keep up with me on Twitter — @Courtenay_Brown.

1 big thing: America's inflation burst

2. Charted: Price spike breakdown

4. "Zoom firing" CEO will take time off

5. Spoiler alert: Why Peloton is on the defensive

😎 Today's newsletter is 650 words, a 2½-minute read.

🔔 The dashboard: The S&P 500 closed up 0.9%.

Biggest S&P gainer? Oracle (+16%) after a better-than-expected earnings report.

Biggest decliner? Moderna (-5%). Early data from its seasonal flu shot trial showed it raised antibodies as much as a rival vaccine already on the market.

The recent stock market mayhem won't change the Federal Reserve's plan for a series of aggressive interest rate hikes meant to curb soaring inflation, Fed chair Jerome Powell said on Tuesday.

Why it matters: The nation's most influential economic policymaker says the Fed won't back down from an historic campaign to squash prices rising at the fastest pace in 40 years. 

What he's saying: "What we need to see is inflation coming down in a clear and convincing way. We’re going to keep pushing until we see that,” Powell said, speaking at a Wall Street Journal event.

"If that involves moving past broadly understood levels of [the neutral interest rate], we won’t hesitate to do that."

Catch up quick: The Fed earlier this month enacted the steepest interest rate hike in over two decades. Powell reaffirmed on Tuesday that the central bank is on pace for similar 50 basis point moves in coming months, "if the economy performs about as we expect."

The bottom line: "It's been good to see financial markets reacting [to] the way we're speaking about the economy," Powell said.

"Financial conditions overall have tightened significantly. That's what we need."

Market sell-off won't stop Fed's interest rate hike campaign

"Financial conditions have tightened significantly. That's what we need."

Fed chairman Jerome Powell speaks onstage at a conference

Federal Reserve Board Chair Jerome Powell. (Photo: Samuel Corum/Getty Images)

Federal Reserve

Stock market

The <a class="gtmContentClick" data-vars-link-text="recent stock market mayhem" data-vars-click-url="https://www.axios.com/2022/04/22/market-madness-as-the-fed-hints-it-means-business" data-vars-content-id="242570ed-b0d2-4269-b55a-fdbd808c072c" data-vars-headline="Market sell-off won&#x27;t stop Fed&#x27;s interest rate hike campaign" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/04/22/market-madness-as-the-fed-hints-it-means-business" target="_self">recent stock market mayhem</a> won&#x27;t change the Federal Reserve&#x27;s plan for a series of aggressive interest rate hikes meant to curb soaring inflation, Fed chair Jerome Powell said on Tuesday.Why it matters: The nation&#x27;s most influential economic policymaker says the Fed won&#x27;t back down from an historic campaign to squash prices rising at the fastest pace in 40 years.

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Axios Markets

Some are warning that the Federal Reserve's effort to slow inflation could potentially return the U.S. economy to the unusual condition it found itself in during the 1970s and early 1980s: Stagflation. 

The big picture: Despite high inflation, the U.S. economy is humming along — with unemployment at 3.6% in April —near the low levels that last prevailed in the late 1960s. 

Stagflation describes a highly unusual economic state of affairs when the economy is weak or stagnating — with high or rising unemployment — yet inflation is also elevated.

This is the opposite of what usually happens. 

High inflation tends to break out when economic growth is really roaring. 

Periods of weak economic growth, and rising joblessness, are typically accompanied by slow price increases, or even falling prices.

While the annual pace of price increases have surged to 40-year highs in recent months, unemployment is incredibly low.  This is an inflationary environment, not stagflation.  

When's the last time we had stagflation? 

The best-known stagflationary episodes hit the U.S. in the 1970s and early 1980s, when a series of oil shocks — especially the 1973 embargo that Arab members of OPEC placed on the United States in response for military support of Israel — sent fuel costs and inflation surging, as unemployment simultaneously shot higher. 

The combination of energy shocks and stagflationary conditions lasted on and off  into the early years of the Reagan administration. As late as 1982, unemployment was hovering around 10% and prices were rising as much as 6% annually. 

A number of economic policy bigwigs — former Federal Reserve chairman Ben Bernanke, current Fed chair Jerome Powell and Treasury secretary Janet Yellen (who also led the Fed) — have recently either implicitly or explicitly suggested that as the Fed tries to bring down inflation, unemployment will likely rise. 

That will likely mean we'll have an economy that is sort of stagflationary, at least for some period of time. In other words, growth will be weakening, but inflation will still be high.

Treasury Secretary Janet Yellen on Wednesday: "The economic outlook globally is challenging, and uncertain, and higher food and energy prices are having stagflationary effects, namely, depressing output and spending and raising inflation all around the world."

Bernanke in a New York Times article published this week: ''Even under the benign scenario, we should have a slowing economy ... And inflation's still too high but coming down. So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high,'' he predicted. ''So you could call that stagflation."

Powell told the Wall Street Journal this week: "I would say there could be some pain involved in restoring price stability."

What can Biden do about stagflation if it actually occurs?

Not much that wouldn't be politically unpalatable. 

Biden could propose a sharp reduction in federal deficit spending. That could help reduce inflation, but it would likely hurt growth and raise unemployment. 

He could attempt the kind of wage and price controls that President Nixon imposed in 1971, though that seems extremely unlikely and not particularly effective. 

He could basically let the Fed deal with it. That's essentially the path Jimmy Carter took in the late 1970s. The soaring Fed rate hikes and the deep recession that followed contributed mightily to his annihilation in the 1980 presidential election.  

The bottom line: Like we said above, we don't yet have stagflation. It's possible that the Fed is able to thread the needle so perfectly that inflation comes down easily and unemployment raises ever so slightly and nobody notices. 

But stagflation is a possibility, and an unappealing one for practically everyone. 

What stagflation means and what Biden could do about it

High inflation tends to break out when economic growth is really roaring.

Illustration of a dollar sign covered in cracks with pieces of tape over the cracks.

Stagflation

Jobs

Some are warning that the Federal Reserve&#x27;s effort to slow inflation could potentially return the U.S. economy to the unusual condition it found itself in during the 1970s and early 1980s: <a class="gtmContentClick" data-vars-link-text="Stagflation" data-vars-click-url="https://www.axios.com/2022/02/25/ukraine-could-turn-boomflation-into-stagflation" data-vars-content-id="9124fd96-b71d-4b7d-8ad3-9a5f0e228cd1" data-vars-headline="What stagflation means and what Biden could do about it" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/02/25/ukraine-could-turn-boomflation-into-stagflation" target="_self">Stagflation</a>. The big picture: Despite high inflation, the U.S. economy is humming along — with <a class="gtmContentClick" data-vars-link-text="unemployment at 3.6% in April" data-vars-click-url="https://www.axios.com/2022/05/06/jobs-report-april" data-vars-content-id="9124fd96-b71d-4b7d-8ad3-9a5f0e228cd1" data-vars-headline="What stagflation means and what Biden could do about it" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/05/06/jobs-report-april" target="_self">unemployment at 3.6% in April</a> —near the low levels that last prevailed in the late 1960s.

Axios Sneak Peek

President Biden will nominate Sarah Bloom Raskin as the Federal Reserve's top Wall Street cop, a Biden administration official said, one of three nominees being unveiled for the critical open seats on the central bank's board of governors.

Why it matters: It's Biden's biggest mark yet on the influential economic body that's center stage as the country grapples with inflation rising at the fastest pace in decades and a recovering labor market.

Biden also tapped Lisa Cook, an economist who teaches at Michigan State University and previously served on the Council of Economic Advisers during the Obama administration, and Davidson College's Philip Jefferson, a former Fed economist.

If confirmed, Cook would be the first Black woman to serve on the Fed's seven-member board, while Jefferson would be the fourth Black man. 

Between the lines: Raskin, Biden's pick for the Fed's vice chair of supervision, is likely to appease Democrats who want someone in the role who's tougher on financial regulation and vocal on issues like climate change.

Raskin, a Duke University law professor who served as a Fed governor from 2010 to 2014 before joining the Treasury Department during the Obama administration, has been outspoken about regulators calling out the risks climate change poses to the financial system.

If confirmed, Raskin could influence how banks and other financial institutions weigh and disclose their climate risks. Republican Senators signaled this week they will be skeptical of her climate views and may oppose her nomination entirely.

The bottom line: Biden's picks for the Fed board come at a crucial time for the central bank that's moving to tame inflation that's been more persistent than initially thought.

With the new additions may come more focus on issues the Fed has recently started to be more outspoken about, Fed watchers say — including climate change and a more inclusive definition of full employment that factors in indicators like the Black unemployment rate.

What's next: Fed Chair Jerome Powell, tapped for a second term by Biden in November, and Lael Brainard, Biden's pick for vice-chair, both faced confirmation hearings this week and are on track for Senate votes.

Biden names Sarah Bloom Raskin as Fed's top banking regulator

It's Biden's biggest mark yet on the economic body grappling with soaring inflation.

Sarah Bloom Raskin, governor of the U.S. Federal Reserve, speaks during an open meeting of the Board of Governors of the Federal Reserve in Washington

Sarah Bloom Raskin during a Fed meeting in 2013. Photo: Andrew Harrer/Bloomberg via Getty Images

Joe Biden

President Biden will nominate Sarah Bloom Raskin as the Federal Reserve&#x27;s top Wall Street cop, a Biden administration official said, one of three nominees being unveiled for the critical open seats on the central bank&#x27;s board of governors.Why it matters: It&#x27;s Biden&#x27;s biggest mark yet on the influential economic body that&#x27;s center stage as the country grapples with inflation rising at the fastest pace in decades and a recovering labor market.

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

Consumers continued to spend in April, with retail sales jumping 0.9% from the prior month, according to government data released on Tuesday.

Why it matters: Shoppers aren't pulling back on spending even as prices soar at the fastest pace in 40 years. This is a good sign for the American economy amid fears of a coming recession as inflation rages.

Retail sales rose 8.2% from a year ago, a period when inflation jumped by 8.3%.

Stripping out spending on gasoline, retail sales were even stronger, rising 1.3% from the prior month.

Details: Consumers upped spending at restaurants and bars, and spent more on clothing, furniture and cars.

Spending on gas fell 2.7% compared to March, when gas prices rose as Russia invaded Ukraine.

The bottom line: Economists are keeping a close eye on consumer spending for signs of how they are grappling with soaring prices. So far, activity remains robust.

What to watch: Walmart, the nation's biggest retailer, says it sees some signs that cash-strapped consumers are adjusting their behavior because of higher prices.

CFO Brett Biggs told CNBC on Tuesday that the company is seeing more sales of half-gallons of milk and its private brand of lunch meat. The company expects inflation to continue to crimp its business this year.

Editor's note: This story has been updated with additional details from the report.

Retail sales jump as prices soar at fastest pace in 40 years

Retail sales rose 0.9% last month — a good sign for the economy.

People shopping in the meat aisle in a grocery store 

People shop at a grocery store this month in New York City. Photo: Spencer Platt/Getty Images

Consumers

Retail

Consumers continued to spend in April, with <a class="gtmContentClick" data-vars-link-text="retail sales" data-vars-click-url="https://www.axios.com/2022/03/31/inflation-adjusted-spending-falls-in-february" data-vars-content-id="be760d4c-1560-4e3b-b746-4b03f6a94851" data-vars-headline="Retail sales jump as prices soar at fastest pace in 40 years" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/03/31/inflation-adjusted-spending-falls-in-february" target="_self">retail sales</a> jumping 0.9% from the prior month, according to <a class="gtmContentClick" data-vars-link-text="government data" data-vars-click-url="https://www.census.gov/retail/marts/www/marts_current.pdf" data-vars-content-id="be760d4c-1560-4e3b-b746-4b03f6a94851" data-vars-headline="Retail sales jump as prices soar at fastest pace in 40 years" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.census.gov/retail/marts/www/marts_current.pdf" target="_blank">government data</a> released on Tuesday.Why it matters: Shoppers aren&#x27;t pulling back on spending even as prices soar at the <a class="gtmContentClick" data-vars-link-text="fastest pace in 40 years" data-vars-click-url="https://www.axios.com/2022/05/11/inflation-remained-high-april" data-vars-content-id="be760d4c-1560-4e3b-b746-4b03f6a94851" data-vars-headline="Retail sales jump as prices soar at fastest pace in 40 years" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/05/11/inflation-remained-high-april" target="_self">fastest pace in 40 years</a>. This is a good sign for the American economy amid fears of a coming recession as inflation rages.

America's job recovery hit another hiccup last month.

Good news: Nearly everybody who wants a job is getting one. 

Bad news: The number of people who want a job isn't rising very fast.

Why it matters: A shortage of workers is holding back job creation and America's recovery from the pandemic.

Employers added just 199,000 jobs — half as many as economists penciled in. The survey is based on mid-December, before Omicron infections soared.

But the unemployment rate dropped to 3.9%, a fresh pandemic-era low.

What they're saying: "Both sides of today’s report agree the labor market is recovering. The disagreement is just over how fast it is happening," Indeed economist Nick Bunker said in a note.

Between the lines: The monthly jobs report is actually two reports in one, based on separate surveys. Lately they’ve diverged, with employers reporting slowing job creation but households saying more people are finding work.

There may be less of a contradiction than it seems. Employers want to create new jobs, and are hiring the formerly unemployed, driving down the jobless rate. 

But that isn't coaxing more people to work. The share of adults in the labor force was unchanged in December and remains 1.5 percentage points below pre-pandemic levels.

The bottom line: Employers can't hire people who aren't looking for work, and that's holding back job growth.

Editor's note: This piece was updated with further details from the report.

Jobs need workers

The data was collected before the worst of the Omicron variant spread.

Jobs report

America&#x27;s job recovery hit another hiccup last month.<ul><li>Good news: Nearly everybody who wants a job is getting one. </li><li>Bad news: The number of people who want a job isn&#x27;t rising very fast.</li></ul>Why it matters: A shortage of workers is holding back job creation and America&#x27;s recovery from the pandemic.

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Stories

What stagflation means and what Biden could do about it

Market sell-off won't stop Fed's interest rate hike campaign

Retail sales jump as prices soar at fastest pace in 40 years

Biden names Sarah Bloom Raskin as Fed's top banking regulator

Jobs need workers

Newsletter editions

Axios Closer: Super year for superyachts

Axios Closer: Next milestone to watch

Axios Closer: Stimmy cliff

Axios Closer: Inflation burst

Axios Closer: Crypto makes its case