President Biden is confident in the U.S. economy’s ability to avoid a recession despite a rough week. We’ll also look at another stock market slide, rising mortgage rates and pushback to the White House from the oil industry.
But first, a hush money probe in the WWE.
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. Someone forward you this newsletter? Subscribe here.
Biden says recession ‘not inevitable’
President Biden on Thursday said that a recession is not inevitable in the wake of the Federal Reserve’s decision to raise interest rates at the quickest pace in nearly 30 years.
“First of all, it’s not inevitable,” Biden told The Associated Press in an exclusive interview. “Secondly, we’re in a stronger position than any nation in the world to overcome this inflation.”
- The stock market closed with steep losses Thursday following the Fed’s announcement that it would hike its baseline interest rate range by 0.75 percentage points after an alarming May surge in inflation.
“Be confident, because I am confident we’re better positioned than any country in the world to own the second quarter of the 21st century,” Biden told the AP. “That’s not hyperbole, that’s a fact.”
The Hill’s Alex Gangitano has more here.
Read more: 56 percent in new poll believe US is in recession
Dow falls below 30k as Fed hikes, housing slowdown spook market
Stocks closed with steep losses Thursday after the Federal Reserve boosted interest rates at the quickest pace since 1994.
- The Dow Jones Industrial Average lost 741 points by the closing bell Thursday, falling 2.4 percent and below 30,000 points for the first time since 2020.
- The S&P 500 index closed with a loss of 3.3 percent and the Nasdaq Composite plunged to a loss of 4.1 percent.
Thursday’s selloff comes after the Fed announced it would hike its baseline interest rate range by 0.75 percentage points, the largest rate hike since 1994, after a surprising May surge in inflation alarmed central bank officials.
Investors also appeared alarmed by new data released Thursday showing a sharp increase in mortgage interest rates and steep decline in new home construction.
Sylvan explains here.
RATES KEEP CLIMBING
Mortgage rates hit 5.78 percent in record spike
Interest payments for the U.S. benchmark 30-year fixed rate mortgage saw the largest one-week upward movement in 35 years, hitting 5.78 percent as of Thursday.
The rate jumped more than half a percentage point in the last week and is nearly double what it was a year ago, according to government-backed mortgage lender Freddie Mac.
- That means a monthly mortgage payment on a roughly median-valued $400,000 home, after a 20 percent down payment, would be $1,874, up more than $500 from last year.
- The spike is expected to cool down the tight housing market temporarily as buyers stay away from sky-high rates.
The Hill’s Tobias Burns has more here.
OIL AND TROUBLE
Exxon Mobil, Chevron push back on Biden blaming industry for oil prices
ExxonMobil and Chevron released statements this week saying the Biden administration could be doing more to address oil prices as the president has gone after the companies for making large profits while gas prices spike.
On Tuesday, President Biden slammed oil executives in a letter saying they had unacceptably high profit margins while regular Americans are suffering and calling on the industry to work with the administration to address increased prices from the Russian invasion of Ukraine.
- Both companies highlighted in statements measures they have taken during this time where Americans are seeing the highest gas prices in years.
- Chevron said it will be increasing Permian Basin production by more than 15 percent this year. ExxonMobil says it has increased refining capacity to process U.S. light crude by around 250,000 barrels a day. After the pandemic, ExxonMobil also stressed it borrowed $30 billion to prepare for the post-pandemic increase in oil demand.
The Hill’s Lexi Lonas has more here.
Good to Know
President Biden on Thursday signed into law a bipartisan bill that aims to reign in the container shipping industry in a bid to ease supply chain challenges at ports and lower costs of goods.
Biden signed the legislation days after it cleared the House in an overwhelmingly bipartisan vote, telling an audience at the White House that the measure would help ease inflation.
Here’s what else we have our eye on:
- Monthly car payments hit a new record high in May, averaging $712, according to a new report from Cox Automotive & Moody’s Analytics.
- Total U.S. home equity reached a record high of $27.8 trillion, according to the Federal Reserve.
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.