The Fed’s tone has changed, reflecting an optimistic outlook. What does this tell us about the economy?
- Meanwhile, another mass shooting in California has affected the AAPI community
- And, new plans to prevent fraud on organic food labels
Guests: Axios’ Courtenay Brown and The Washington Post’s Laura Reilly.
Credits: Axios Today is produced by Niala Budhu, Alexandra Botti, Lydia McMullen-Laird, Fonda Mwangi and Alex Sugiura. Music composed by Evan Viola. You can contact us [email protected]. Questions, comments and story ideas can be sent to Niala via text or voicemail at 202-918-4893.
NIALA: Good morning! Welcome to Axios today!
It’s Tuesday, January 24th.
I am Niala Budhu.
Today we’re looking at: new plans to prevent fraud on organic food labels. Meanwhile, the death toll in the Monterey Park shooting continues to rise. But first: cautious optimism at the Fed is the big thing today.
A new tone for the Fed
NIALA: We talked a lot on the podcast about the Fed’s fight with inflation last year as the central bank fought with interest rates. But the Fed’s tone has recently shifted to an optimistic outlook. What does this tell us about the economy? Here’s Courtenay Brown, Axios’ economics reporter, to translate that Fedspeak for us. Hi Courtenay
COURTENAY: Hi, Niala.
NIALA: All right, Courtenay. First the 10,000 foot view. What’s going on with the economy right now, specifically with inflation?
COURTENAY: The data that’s been coming in lately, the economic data has looked good for the most part. We got the consumer price index, which is an indicator of price growth in a basket of consumer goods. Prices for the month of December fell overall and appear to have slowed in the 12 months to December. It has slowed for several months in a row, and that’s really good news for the Fed’s fight against inflation. In addition, we have had significant job growth. You see a lot of tech layoffs in the headlines, and you know, it’s very painful for people who are losing their jobs. But in most cases, businesses are still really hungry for workers. And the unemployment rate is very low.
NIALA: So how can you tell if the Fed is sounding optimistic these days?
COURTENAY: I think to understand how the Fed’s tone has changed, I think you have to go back to last summer, when a number of economic reporters and leading economic policymakers gathered in Jackson Hole for a very serious message from the Federal Reserve. Chairman Jerome Powell. Returning to price stability, or in other words, overcoming inflation, requires economic hardship. This is the message of the chairman of the Fed. I think the scenario that Chairman Powell had in mind, um, the increase in unemployment, hasn’t happened yet. Now, they’re optimistic, but there’s data to back up what they’re saying. So inflation has been down for months, the US labor market is looking pretty, very strong. The economy and the aggregate are slowing down, but it’s still good. There is no evidence to support the so-called spiral of wages. Here’s a scary scenario that played out a few decades ago when inflation was a big problem in this country. Wages are slowing down, which of course sounds bad for working Americans, but what the Fed is really worried about is that wages are rising faster, faster, and faster. And it will be very difficult to cover inflation. But that’s not the scenario happening right now, which is very good news.
NIALA: Does this mean the Fed may raise interest rates again next week?
COURTENAY: Oh, sure. The Fed’s fight against inflation is not over. You know, what happened in 2022 was the Fed raised rates very quickly, really aggressively, to contain inflation. I know it’s only January, but the story for 2023 looks like the Fed will slow the pace of interest rate hikes and eventually they will see how the economy develops and hold interest rates at that level. what will happen to inflation and what we expect when the Fed meets in the coming days for its policy.
NIALA: Courtenay Brown is a co-author of Axios Macro. Thanks Courtney.
COURTENAY: Thank you Niala.
Another mass shooting happened in California
NIALA: At least seven people were killed yesterday in a mass shooting at two locations in San Mateo County, California. The 67-year-old suspect is in custody. According to local authorities, the dead were Chinese agricultural workers.
This comes less than two days after the Monterey Park shooting in California, which also involved the AAPI community. Another person was killed yesterday, bringing the death toll to 11.
At a briefing yesterday, Monterey Park Police Chief Scott Wiese said the cause of death of the shooter, who died of a self-inflicted gunshot wound, has not yet been determined.
SCOTT WISE: That’s a big part of why. The problem is, because we’ll never know. And we have to leave it behind.
NIALA: Just a moment: USDA goes into organic fraud.
New plans to prevent fraud on organic food labels
NIALA: Welcome to Axios today. I am Niala Budhu.
Organic food sales have more than doubled from a decade ago. In 2021, the sales volume will be 57.5 billion dollars. This is according to the Organic Trade Association. But now, falsely labeled organic products are hitting grocery store shelves, and the USDA is cracking down.
Washington Post reporter Laura Reilly wrote about it. Hi Laura. Welcome to Axios today.
LAURA REILEY: Thank you so much for having me.
NIALA: Laura, the DOJ recently filed charges related to a multi-million dollar organic scheme, so what is organic fraud?
LAURA: It’s common in commercial grains. Soybeans and corn are obviously huge crops that travel around the world, traveling from Asia and the Middle East to the US and back again. So these products, if you claim more organic status than regular, you can charge 50% more, twice as much. So there is a lot of incentive to falsify such products.
NIALA: Is this also a problem in grocery stores?
LAURA: Yes. You may have noticed that if you go to a grocery store like Whole Foods that really specializes in organic produce, the speaker on the shelf will often say Product of Mexico. So we have a lot of organic produce that’s grown elsewhere and imported into the US, and that allows the growers to bend the organic rules a little bit, as long as they don’t bend or break the organic rules. Whether it’s fertilizer use or pest and weed control, soil quality or no GMOs, despite all of these things that should be a form of organic practices, you often see people cutting corners as a way to increase their income. flow.
NIALA: So what are the USDA’s new organic guidelines? What is the official definition?
LAURA: What happened last week is that these new guidelines mean that many businesses in this supply chain will have to be certified organic. For brokers, traders, all middlemen to have transparency connecting what they get from the grocery store or the table at the restaurant to that grower. Brokers and traders must be certified. All imports will be certified, and inspections and reporting requirements will be strengthened for organic growers. It remains to be seen whether this will actually be effective in curbing this type of fraud.
NIALA: How do you think these new guidelines will change the food business?
LAURA: Of course, some producers fear USDA penalties. But it all depends on whether or not there are enough inspectors at the border or at the point of production, and they actually do, where did you get those soybeans? Where did you get this corn? Some attorneys I’ve talked to say this has been problematic for decades and they’re not sure it’s really going to reduce some of the problems.
I mean, for example, most of the organic milk in the United States comes from huge dairies in California, they’re organic, they don’t use growth hormones and antibiotics and things like that. But they are organic in name only, not in spirit. Because most of these animals do not have access to pasture, they lack some of the basic husbandry practices required for this organic designation.
NIALA: So what advice do you have for consumers who are interested in buying and taking care of organic food?
LAURA: I would say, and it’s hard because it means you have to eat really seasonally, I would look to local sources, if you can reduce the distance that food has to travel, you might know. the whole supply chain, understanding, being able to trace its origin. Also, for a food product at the grocery store, say a bag of pea protein, you’re better off with chips or something similar, the shorter the ingredient list, the more likely it is all organic ingredients. Be honest and accurate. Once you get into products with 20, 30, 50 ingredients, it’s statistically unlikely that they’ll all be certified organic.
NIALA: Laura Reilly reports on the food business for The Washington Post. Thank you.
LAURA: Thank you.
NIALA: That’s it for us today. You can send me feedback and story ideas at 202-918-4893.
I am Niala Budhu. Thanks for listening, stay safe and I’ll see you back here tomorrow morning.