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Oil-Shipping Costs Soar as Ukraine War Reshapes Global Trade

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Gas Prices Are Expected to Fall Even Further

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The average cost of fuel in the U.S. has fallen more than 30% from a record, with seven states below $3 a gallon.

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Larry Summers Says Fed Will Need to Boost Rates More Than Markets Expect

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(Bloomberg) — Former Treasury Secretary Lawrence Summers warned that the Federal Reserve will probably need to raise interest rates more than markets are currently expecting, thanks to stubbornly high inflationary pressures.

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“We have a long way to go to get inflation down” to the Fed’s target, Summers told Bloomberg Television’s “Wall Street Week” with David Westin. As for Fed policymakers, “I suspect they’re going to need more increases in interest rates than the market is now judging or than they’re now saying.”

Interest-rate futures suggest traders expect the Fed to raise rates to about 5% by May 2023, compared with the current target range of 3.75% to 4%. Economists expect a 50-basis point increase at the Dec. 13-14 policy meeting, when Fed officials are also scheduled to release fresh projections for the key rate.

“Six is certainly a scenario we can write,” Summers said with regard to the peak percentage rate for the Fed’s benchmark. “And that tells me that five is not a good best-guess.”

Summers was speaking hours after the latest US monthly jobs report showed an unexpected jump in average hourly earnings gains. He said those figures showcased continuing strong price pressures in the economy.

“For my money, the best single measure of core underlying inflation is to look at wages,” said Summers, a Harvard University professor and paid contributor to Bloomberg Television. “My sense is that inflation is going to be a little more sustained than what people are looking for.”

Read More: Job Market Is Too Tight for Fed Comfort as Labor Pool Shrinks

Average hourly earnings rose 0.6% in November in a broad-based gain that was the biggest since January, and were up 5.1% from a year earlier. Wages for production and nonsupervisory workers climbed 0.7% from the prior month, the most in almost a year.

While a number of US indicators have suggested limited impact so far from the Fed’s tightening campaign, Summers cautioned that change tends to occur suddenly.

“There are all these mechanisms that kick in,” he said. “At a certain point, consumers run out of their savings and then you have a Wile E. Coyote kind of moment,” he said in reference to the cartoon character that falls off a cliff.

In the housing market, there tends to be a sudden rush of sellers putting their properties on the market when prices start to drop, he said. And “at a certain point, you see credit drying up,” forcing repayment problems, he added.

“Once you get into a negative situation, there’s an avalanche aspect — and I think we have a real risk that that’s going to happen at some point” for the US economy, Summers said. “I don’t know when it’s going to come,” he said of a downturn. “But when it kicks in, I suspect it’ll be fairly forceful.”

Inflation Target

The former Treasury chief also warned that “this is going to be a relatively high-interest-rate recession, not like the low-interest-rate recessions we’ve seen in the past.”

Summers reiterated that he didn’t think the Fed ought to change its inflation target to, say, 3%, from the current 2% — in part because of potential credibility issues after having allowed inflation to surge so high the past two years.

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Prince William meets President Biden, awards climate prizes By Reuters

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© Reuters. Britain’s Prince William, Prince of Wales arrives at the John F. Kennedy Presidential Library, in Boston, Massachusetts, U.S., December 2, 2022. Charles Krupa/Pool via REUTERS

By Jeff Mason and Brian Snyder

BOSTON (Reuters) -Prince William greeted U.S. President Joe Biden at Boston’s waterfront on Friday, the final day of a visit by British royals trying to focus attention on tackling environmental issues.

William and his wife, Kate, attempted to keep the spotlight on climate and other causes they champion on their first overseas trip since taking on the titles of Prince and Princess of Wales after the death of Queen Elizabeth in September.

In the middle of their U.S. visit, however, Netflix Inc (NASDAQ:) released a trailer for an upcoming documentary series about William’s younger brother, Harry, and his American wife, Meghan, reviving talk about rifts in the royal family. Buckingham Palace also was dealing with a new racism controversy.

On Friday afternoon, William smiled as he met Biden outdoors in cold weather along Boston’s waterfront. The two men took a brief stroll before a private meeting at the John F. Kennedy Presidential Library and Museum.

The pair were expected to discuss “shared climate goals” and “prioritization of mental health issues,” White House spokeswoman Karine Jean-Pierre told reporters before the meeting.

Later on Friday, William and Kate honored winners of the Earthshot Prize, an award William established to recognize people working on solutions to problems caused by climate change.

“By supporting and scaling them, we can change our future,” William said on stage at the black-tie ceremony, which was attended by English soccer star David Beckham, James Bond actor Rami Malek and other celebrities.

Kate and William last visited the United States in 2014, when they were guests of then-President Barack Obama at the White House.

Their current trip came just days before Harry and Meghan looked set to steal the limelight at an awards ceremony in New York.

For many in the British media, Harry and Meghan have become the royal villains, turning their back on duty while using their royal status to forge out lucrative careers and earn millions, including from Netflix.

In contrast, William and Kate are usually portrayed in the British media as dutiful and earnest, reflecting the style of the late queen.

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