Business Highlights: Powell on economy, jobless aid claims

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Powell: Higher rates unlikely to cause deep US recession

WASHINGTON (AP) — The last time the Federal Reserve faced inflation as high as it is now, in the early 1980s, it jacked up interest rates to double-digit levels — and in the process caused a deep recession and sharply higher unemployment. On Thursday, Chair Jerome Powell suggested that this time, the Fed won’t have to go nearly as far. “We think we can avoid the very high social costs that Paul Volcker and the Fed had to bring into play to get inflation back down,” Powell said in an interview at the Cato Institute, referring to the Fed chair in the early 1980s who sent short-term borrowing rates to roughly 19% to throttle punishingly high inflation.

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Stocks recover from a stumble on Wall Street and end higher

NEW YORK (AP) — The stock market recovered from a midday stumble and ended higher, staying on track for its first weekly gain in four weeks. The S&P 500 rose 0.7% Thursday. The Nasdaq composite and the Dow Jones Industrial average also ended higher after bumpy rides of their own. Interest rate policies were in focus as the European Central Bank made its largest-ever rate increase, in line with moves from the U.S. Federal Reserve and other central banks to fight inflation. Meanwhile Fed Chair Jerome Powell reaffirmed the Fed’s commitment to keep rates high “until the job is done” in getting inflation under control.

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Yellen pushes Biden economic plans in battleground Michigan

WASHINGTON (AP) — Treasury Secretary Janet Yellen has pressed the case for Democratic economic policies during a visit to Ford’s Rouge electric vehicle assembly plant in election-year battleground Michigan. After a production-line tour, Yellen promoted recent legislative successes for the Biden administration. Yellen says she’s more optimistic about the course of the economy than she’s been “for quite a while” and says she knows “we are headed in the right direction.” Yellen’s visit to Detroit was part of a monthlong tour as well as a larger White House campaign to highlight new laws intended to aid the economy, boost computer chip manufacturing, lower prescription drug prices, expand clean energy and revamp the country’s infrastructure.

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Fewer Americans apply for jobless aid last week

WASHINGTON (AP) — The number of Americans filing for unemployment benefits last week fell to its lowest level since May despite repeated attempts by the Federal Reserve to cool the economy and bring inflation under control. Applications for jobless aid for the week ending Sept. 3 fell by 6,000 to 222,000, the Labor Department reported Thursday. First-time applications generally reflect layoffs. The four-week average for claims, which smooths out some of the weekly ups and downs, declined by 7,500 to 233,000. Hiring in the U.S. in 2022 has been remarkably strong even as the country faces rising interest rates and weak economic growth.

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Long-term mortgage rates now at highest point since 2008

WASHINGTON (AP) — Average long-term U.S. mortgage rates jumped again this week to their highest level in almost 14 years, certain to keep even more potential buyers out of a housing market that’s cooled considerably since the Federal Reserve began jacking up its benchmark borrowing rate. Mortgage buyer Freddie Mac reported Thursday that the 30-year rate jumped to 5.89%, the highest it’s been since November of 2008, just after the housing market collapse set off the Great Recession. The average rate on 15-year, fixed-rate mortgages, popular among those looking to refinance their homes, climbed above 5% for the first time since 2009.

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UK to cap energy prices, end fracking ban to ease crisis

LONDON (AP) — British Prime Minister Liz Truss says her Conservative government will cap domestic energy prices for homes and businesses to ease the cost-of-living crisis. She also says she will approve more North Sea oil drilling and lift a ban on fracking to increase the United Kingdom’s domestic energy supply. Truss told lawmakers Thursday that the two-year “energy price guarantee” means average household bills will be no more than 2,500 pounds a year for heating and electricity. Bills had been due to rise to 3,500 pounds pounds a year beginning in October, triple the costs of a year ago. Critics say that means taxpayers will have to foot the bill, instead of energy companies that are seeing windfall profits.

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As housing market cools, homebuyers regain leverage

LOS ANGELES (AP) — Homebuyers are regaining leverage at the negotiating table as the housing market slows, new data from Redfin shows. On average, U.S. homes purchased during a four-week period in August sold for less than the asking price. That hasn’t happened since at least March 2021, according to the real estate brokerage. Years of soaring home prices and sharply higher mortgage rates remain hurdles for many would-be homebuyers, but with more homes selling for less than their asking price, the housing market is at least becoming less skewed in favor of sellers.

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Cheaper electric vehicles coming despite high battery costs

WARREN, Mich. (AP) — Auto companies are rolling out more affordable electric vehicles that should widen their appeal to a larger group of buyers. That’s despite rising battery costs. The latest EV came Thursday from General Motors, a Chevrolet Equinox small SUV. It has a starting price around $30,000 and a range-per-charge of 250 miles, or 400 kilometers. You can get range of 300 miles, or 500 kilometers, if you pay more. GM won’t release the exact price of the Equinox EV until closer to the date it goes on sale, about this time next year. But the SUV is at the low end of Edmunds.com’s list of prices for electric vehicles sold in the U.S. The average cost of an EV is now around $65,000.

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European Central Bank makes largest-ever interest rate hike

FRANKFURT, Germany (AP) — The European Central Bank has made its largest-ever interest rate increase to combat record inflation that is squeezing consumers and pushing the 19 countries that use the euro currency toward recession. The bank’s 25-member governing council raised its key benchmarks by an unprecedented three-quarters of a percentage point Thursday. The ECB joined the U.S. Federal Reserve and other central banks in the global stampede of rapid rate hikes. Russia’s war in Ukraine has fueled inflation in Europe, with Russia sharply reducing supplies of cheap natural gas used to heat homes, generate electricity and run factories. That has driven up gas prices by 10 times or more.

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The S&P 500 added 26.31 points, or 0.7%, to 4,006.18. The Dow Jones Industrial Average gained 193.24 points, or 0.6%, to 31,774.52. The Nasdaq tacked on 70.23 points, or 0.6%, to 11,862.13. The Russell 2000 index of smaller companies rose 14.90 points, or 0.8%, to 1,846.91.