# Colorado man sentenced in Nevada power plant fire initially described as terror attack
By **KEN RITTER**
December 27, 2023. 9:44 PM EST

---

**LAS VEGAS (AP)** - A Colorado man was sentenced Wednesday to prison in Nevada following his arrest last January for setting his car afire at a remote facility in what authorities initially characterized as a terror attack on the electric system serving several Las Vegas Strip casinos.

Mohammed Reza Mesmarian, 35, was sentenced to two to 10 years following his plea in November to guilty but mentally ill on charges of felony arson and property destruction in the incident at a remote desert solar array about 25 miles (40 kilometers) northeast of downtown Las Vegas.

"This was not so much an act of terrorism as a person going through personal issues during COVID, the loss of a marriage and his business," Mesmarian's attorney, Jeffrey Nicholson, told The Associated Press after sentencing. Nicholson said he sought probation, but he called Clark County District Court Judge Ronald Israel's sentence "a good and fair decision."

Mesmarian received credit for nearly a year already served in custody and could be paroled in early 2024.

Mesmarian, a dentist, is from Aurora, Colorado, where state records showed he faced Dental Board discipline and his license to practice was restricted in July 2022. Records also showed that Mesmarian filed Chapter 7 bankruptcy in October 2022. Nicholson said Wednesday he didn't immediately know the status of his client's dental license.

Mesmarian initially faced charges including terrorism, arson, destruction of property and escape. He spent months in custody during court proceedings that eventually determined he was competent to stand trial.

Police reported that no one was injured in the Jan. 4 fire, which wasn't immediately detected. Mesmaian was found and arrested a day later at a campground at Lake Mead, the Colorado River reservoir behind Hoover Dam east of Las Vegas.

Investigators said they learned that Mesmarian had rammed his car through a fence, crashed it against a transformer, set it ablaze and sat in a chair watching flames for about 15 minutes before walking away.

The incident in Nevada came just days after two men were arrested and charged with vandalizing electrical substations in Washington state and a month after federal regulators ordered a review of security standards following shootings that damaged two electric substations in North Carolina.

The Las Vegas-area facility, known as the Mega Solar Array, is operated by Chicago-based Invenergy. It serves several MGM Resorts International properties including Bellagio, MGM Grand, Aria and Park MGM. The resort operator said it switched to the statewide electric grid, and there was no effect at the casino resorts. Officials said the power facility returned to service within days.


# Prominent Republican Georgia lawmaker Barry Fleming appointed to judgeship
December 27, 2023. 8:08 PM EST

---

**ATLANTA (AP)** - A prominent Georgia state lawmaker was appointed Wednesday to a judgeship, and a special election for his House seat will be needed in coming months.

Rep. Barry Fleming of Harlem will serve as a superior court judge in Columbia County, replacing Judge James Blanchard Jr., who retired, Gov. Brian Kemp said in a news release. Fleming will be sworn in on Jan. 10, said Kemp spokesperson Garrison Douglas.

Kemp chooses judges from lists of candidates prepared by the Judicial Nominating Commission, whose members are appointed by the governor.

Fleming lost a race for House speaker to Jon Burns in 2022. He's been most recognized in recent years for leading the committee that authored a new election law in 2021 which restricted voting by mail and gave the legislature greater control over how elections are run. But House Speaker David Ralston stripped Fleming of his chairmanship after Fleming unsuccessfully ran for whip later in 2021. He was seen as a more right-wing alternative to Burns and Ralston.

His law practice, which has represented municipalities and counties around the city of Augusta, became a target of protests after the 2021 election law was enacted.

Fleming had previously served as whip starting in 2004, when Republicans took control of the chamber for the first time in more than 100 years. Among his other achievements then were passing a law requiring voters to show photo identification. Fleming stepped down to run an unsuccessful congressional race in 2008, but won reelection to the state House in 2012 and has served since.

Kemp must call a special election within 10 days of Fleming stepping down. That election must occur no sooner than 30 days and no later than 60 days after Kemp issues the call. That means the election could be timed to coincide with Georgia's March 12 presidential primary.

Fleming's 125th House District includes parts of Columbia and McDuffie counties.

Kemp on Wednesday also named Alison Sosebee as a superior court judge for Fannin, Gilmer and Pickens counties in north Georgia's Appalachian Judicial Circuit. Sosebee has been the district attorney in that circuit since 2013. She will replace Judge John Worcester, who died in August.

The governor named Mark Hendrix, solicitor general in Liberty County, to a newly created judgeship in the coastal Atlantic Circuit. That circuit covers Bryan, Evans, Liberty, Long, McIntosh and Tattnall counties.


# North Korea's Kim vows to bolster war readiness to repel 'unprecedented' US-led confrontations
By **HYUNG-JIN KIM**
December 27, 2023. 7:58 PM EST

---

**SEOUL, South Korea (AP)** - North Korean leader Kim Jong Un called for bolstered war readiness to repel what he said were unprecedented U.S.-led confrontational moves in comments during a key political meeting tasked with setting state objectives for 2024, state media reported Thursday.

Kim's comments indicated once again that North Korea will likely continue weapons tests to modernize its nuclear arsenal for the time being. But observers say Kim likely hopes to eventually use his boosted arsenal as leverage in diplomacy with Washington, possibly after the U.S. presidential election in November next year.

During Wednesday's second-day session of the ruling party's plenary meeting, Kim set forth unspecified tasks for the military and the munitions industry to "further accelerate the war preparations" in the face of "(anti-North Korea) confrontation moves by the U.S. and its vassal forces unprecedented in history," the official Korean Central News Agency said.

It said Kim also clarified the party's stance on expanding North Korea's strategic cooperation with anti-imperialist countries amid the world's rapidly changing geopolitical situation. KCNA said Kim spoke about the direction of the North's dealings with South Korea as well but didn't elaborate.

The Workers' Party meeting is expected to last several days, and state media are expected to publicize details of its discussions after it ends, likely on Dec.31. Experts say North Korea is expected to come up with pledges and steps to strengthen its nuclear attack capability and expand cooperation with Russia and China, which are also locked in separate confrontations with the U.S.

Topics to be dealt with at the meeting could include North Korea's push to operate more spy satellites following its launch of its first military reconnaissance satellite on Nov. 21. After the November launch, North Korea said it will submit to the plenary meeting a plan to launch more satellites to improve its spaced-based surveillance capabilities on its rivals.

Since last year, North Korea has performed a barrage of missile tests in breach of U.N. bans, including last week's launch of the solid-fueled Hwasong-18 intercontinental ballistic missile - its most advanced weapon designed to attack the mainland U.S. The North has argued it has sovereign, legitimate rights to conduct such tests to deal with the expansion of U.S.-South Korean military exercises that it views as invasion rehearsals.

Kim has refused to return to diplomacy with the U.S. since his high-stakes diplomacy with then-President Donald Trump fell apart in 2019. A main sticking point in the collapsed Kim-Trump diplomacy was how much sanctions relief North Korea would be given in return for a partial surrender of its nuclear program.


# Comedian Tom Smothers, one-half of the Smothers Brothers, dies at 86
By **FRAZIER MOORE** and **ANDREW DALTON**
December 27, 2023. 6:34 PM EST

---

Tom Smothers, half of the Smothers Brothers and the co-host of one of the most socially conscious and groundbreaking television shows in the history of the medium, has died at 86.

The National Comedy Center, on behalf of his family, said in a statement Wednesday that Smothers died Tuesday at home in Santa Rosa, California, following a cancer battle.

"I'm just devastated," his brother and the duo's other half, Dick Smothers, told The Associated Press in an interview Wednesday. "Every breath I've taken, my brother's been around."

When "The Smothers Brothers Comedy Hour" debuted on CBS in the fall of 1967 it was an immediate hit, to the surprise of many who had assumed the network's expectations were so low it positioned their show opposite the top-rated "Bonanza."

But the Smothers Brothers would prove a turning point in television history, with its sharp eye for pop culture trends and young rock stars such as the Who and Buffalo Springfield, and its daring sketches - ridiculing the Establishment, railing against the Vietnam War and portraying members of the era's hippie counterculture as gentle, fun-loving spirits - found an immediate audience with young baby boomers.

"We were moderate. We were never out there," Dick Smothers said. "But we were the first people through that door. It just sort of crept in as the '60s crept in. We were part of that generation."

The show reached No. 16 in the ratings in its first season. It also drew the ire of network censors. After years of battling with the brothers over the show's creative content, the network abruptly canceled the program in 1970, accusing the siblings of failing to submit an episode in time for the censors to review.

Nearly 40 years later, when Smothers was awarded an honorary Emmy for his work on the show, he jokingly thanked the writers he said had gotten him fired. He also showed that the years had not dulled his outspokenness.

"It's hard for me to stay silent when I keep hearing that peace is only attainable through war," Smothers said at the 2008 Emmy Awards as his brother sat in the audience, beaming. He dedicated his award to those "who feel compelled to speak out and are not afraid to speak to power and won't shut up."

During the three years the show was on television, the brothers constantly battled with CBS censors and occasionally outraged viewers as well, particularly when Smothers joked that Easter "is when Jesus comes out of his tomb and if he sees his shadow, he goes back in and we get six more weeks of winter." At Christmas, when other hosts were sending best wishes to soldiers fighting overseas, Smothers offered his to draft dodgers who had moved to Canada.

In still another episode, the brothers returned blacklisted folk singer Pete Seeger to television for the first time in years. He performed his song "Waist Deep in the Big Muddy," widely viewed as ridiculing President Lyndon Johnson. When CBS refused to air the segment, the brothers brought Seeger back for another episode and he sang it again. This time, it made the air.

After the show was canceled, the brothers sued CBS for $31 million and were awarded $775,000. Their battles with the network were chronicled in the 2002 documentary "Smothered: The Censorship Struggles of the Smothers Brothers Comedy Hour."

"Tom Smothers was not only an extraordinary comedic talent, who, together with his brother Dick, became the most enduring comedy duo in history, entertaining the world for over six decades - but was a true champion for freedom of speech," National Comedy Center Executive Director Journey Gunderson said in a statement.

Thomas Bolyn Smothers III was born Feb. 2, 1937, on Governors Island, New York, where his father, an Army major, was stationed. His brother was born two years later. In 1940 their father was transferred to the Philippines, and his wife, two sons and their sister, Sherry, accompanied him.

When the Japanese bombed Pearl Harbor, the family was sent home and Maj. Smothers remained. He was captured by the Japanese during the war and died in captivity. The family eventually moved to the Los Angeles suburb of Redondo Beach, where Smothers helped his mother take care of his brother and sister while she worked.

"Tommy was the greatest older brother. He took care of me," Dick Smothers said. "His maturity was amazing. Sometimes you lose part of your childhood."

The brothers had seemed unlikely to make television history. They had spent several years on the nightclub and college circuits and doing TV guest appearances, honing an offbeat comedy routine that mixed folk music with a healthy dose of sibling rivalry.

They would come on stage, Tom with a guitar in hand and Dick toting an upright bass. They would quickly break into a traditional folk song - perhaps "John Henry" or "Pretoria." After playing several bars, Tom, positioned as the dumb one despite being older, would mess up, then quickly claim he had meant to do that. As Dick, the serious, short-tempered one, berated him for failing to acknowledge his error, he would scream in exasperation, "Mom always liked you best!"

"It was the childlike enthusiasm through ignorance, and me, the teacher, correcting him - sometimes I'd correct him even if I was wrong," Dick Smothers said. "I was the perfect straight man for my brother. I was the only straight man for my brother."

They continued that shtick on their show but also surrounded themselves with a talented cast of newcomers, both writers and performers.

Future actor-filmmaker Rob Reiner was among those on the crack writing crew the brothers assembled.

"Tommy was funny, smart, and a fighter," Reiner said on social media Wednesday. "He created a ground breaking show that celebrated all that was good about American Democracy."

Other writers included musician Mason Williams and comedian Steve Martin, who presented Smothers with the lifetime Emmy. Regular musical guests included John Hartford, Glen Campbell and Jennifer Warnes.

The brothers had begun their own act when Tom, then a student at San Jose State College, formed a music group called the Casual Quintet and encouraged his younger brother to learn the bass and join. The brothers continued on as a duo after the other musicians dropped out, but began interspersing comedy with their limited folk music repertoire.

"We never wrote anything, we just made it up, and tried to remember what we made up," Dick Smothers said. "I just responded to Tom, if he said something that wasn't in the bit, I wouldn't stick to the script, I would listen."

The brothers' big break came in 1959 when they appeared at San Francisco's Purple Onion, then a hot spot for new talent. Booked for two weeks, they stayed a record 36. They had a similar run at New York's Blue Angel. But to their disappointment, they couldn't get on "The Tonight Show," then hosted by Jack Paar.

"Paar kept telling our agent he didn't like folk singers - except for Burl Ives," Smothers told the AP in 1964. "But one night he had a cancellation, and we went on. Everything worked right that night."

Dick Smothers said Wednesday that "we weren't that good when we were on 'The Tonight Show.' We were just charmingly different."

The brothers went on to appear on the TV shows of Ed Sullivan, Jack Benny and Judy Garland, among others. Their comedy albums were big sellers and they toured the country, especially colleges.

Before their more vaunted show, the duo got a sitcom in 1965. "The Smothers Brothers Show" was about a businessman (Dick) haunted by his late brother (Tom), a fledgling guardian angel. It lasted just one season.

Shortly after CBS canceled the "Comedy Hour," ABC picked it up as a summer replacement, but the network didn't bring it back in the fall. NBC gave them a show in 1975 but it failed to find an audience and lasted only a season. The brothers went their separate ways for a time. Among other endeavors, Smothers got into the wine business, launching Remick Ridge Vineyards in Northern California's wine country.

"Originally the winery was called Smothers Brothers, but I changed the name to Remick Ridge because when people heard Smothers Brothers wine, they thought something like Milton Berle Fine Wine or Larry, Curly and Mo Vineyards," Smothers once said.

They eventually reunited to star in the musical comedy "I Love My Wife," a hit that ran on Broadway for two years. After that they went back on the road, playing casinos, performing arts centers and corporate gatherings around the country, remaining popular for decades.

"We just keep resurfacing," Smothers commented in 1997. "We're just not in everyone's face long enough to really get old."

After a successful 20th anniversary "Smothers Brothers Comedy Hour" in 1988, CBS buried the hatchet and brought them back.

The show was quickly canceled, though it stayed on the air long enough for Smothers to introduce the "Yo-Yo Man," a bit allowing him to demonstrate his considerable skills with a yo-yo while he and his brother kept up a steady patter of comedy. The bit remained in their act for years.

"It was like a great marriage, you go through some rough spots, but you still don't lose that focus," Dick Smothers said.

They retired in 2010, but returned for a series of shows in 2021 that would be their last before Tom Smothers' illness left him unable to continue.

"The audience exploded," Dick Smothers said of those shows. "It was like a clap of thunder. They were young again."

Smothers married three times and had three children. He is survived by his wife Marcy, children Bo and Riley Rose, and brother Dick, in addition to other relatives. He was predeceased by his son Tom and sister Sherry.


# Americans ramped up spending during the holidays despite some financial anxiety and higher costs
By **ANNE D'INNOCENZIO** and **HALELUYA HADERO**
December 26, 2023. 11:06 AM EST

---

**NEW YORK (AP)** - Holiday sales rose this year and spending remained resilient during the shopping season even with Americans wrestling with higher prices in some areas and other financial worries, according to the latest measure.

Holiday sales from the beginning of November through Christmas Eve climbed 3.1%, a slower pace than the 7.6% increase from a year earlier, according to Mastercard SpendingPulse, which tracks all kinds of payments including cash and debit cards.

This year's sales are more in line with what is typical during the holiday season, however, after a surge in spending last year during the same period.

"This holiday season, the consumer showed up, spending in a deliberate manner" said Michelle Meyer, Chief Economist, Mastercard Economics Institute. "The economic backdrop remains favorable with healthy job creation and easing inflation pressures, empowering consumers to seek the goods and experiences they value most."

The number of people seeking unemployment benefits has remained very low by historical standards and employers are still having a hard time finding enough workers.

Still, sales growth was a bit lower than the 3.7% increase Mastercard SpendingPulse had projected in September. The data released Tuesday excludes the automotive industry and is not adjusted for inflation.

Clothing sales rose 2.4%, though jewelry sales fell 2% and electronics dipped roughly 0.4%. Online sales jumped 6.3 % from a year ago and in-person spending rose a modest 2.2%.

Consumer spending accounts for nearly 70% of U.S. economic activity and economists carefully monitor how Americans spend, particularly during the holidays, to gauge how they're feeling financially.

There had been rising concern leading up to the holiday about the willingness of Americans to spend because of elevated prices for daily necessities at a time that savings have fallen and credit card delinquencies have ticked higher. In response, retailers pushed discounts on holiday merchandise earlier in October compared with a year ago. They also took a cautious approach on how much inventory to order after getting stung with overstuffed warehouses last year.

The latest report on the Federal Reserve's favored inflation gauge, issued Friday, shows prices are easing. But costs remain still higher at restaurants, car shops, or for things like rent. Americans, however, unexpectedly picked up their spending from October to November as the holiday season kicked off, underscoring their spending power in the face of higher costs.

A broader picture of how Americans spent their money arrives next month when the National Retail Federation, the nation's largest retail trade group, releases its combined two-month statistics based on November-December sales figures from the Commerce Department.

The trade group expects holiday expects U.S. holiday sales will rise 3% to 4%. That's lower than last year's 5.4% growth but again, more consistent with typical holiday spending, which rose 3.6% between 2010 and 2019 before the pandemic skewered numbers.

Industry analysts will dissect the fourth-quarter financial performance from major retailers when they release that data in February.

The big concern: whether shoppers will pull back sharply after they get their bills in January. Nikki Baird, vice president of Aptos, a retail technology firm, noted customers, already weighed down by still high inflation and high interest rates, might pull back more because of the resumption of student loan payments that kicked in Oct. 1.

"I am worried about January," she said. "I can see a bit of a last hurrah."


# A Christmas rush to get passports to leave Zimbabwe is fed by economic gloom and a price hike
By **FARAI MUTSAKA**
December 24, 2023. 3:03 AM EST

---

**HARARE, Zimbabwe (AP)** - Atop many Christmas wish lists in economically troubled Zimbabwe is a travel document, and people are flooding the passport office this holiday season ahead of a price hike planned in the New Year.

The desperation at the office in the capital city of Harare is palpable as some people fear the hike could push the cost of obtaining a passport out of reach and economic gloom feeds a surge in migration.

Nolan Mukona said he woke up at dawn to get in line at the passport office but when he arrived at 5 a.m. there were already more than 100 people waiting. Some people had slept outside the office overnight.

"The only thing that can make my Christmas a cheerful one is if I manage to get a passport," said the 49-year-old father of three. "I have been saving for it for the last three months and I have to make sure I get it before January."

At $120, passports were already pricey for many in a country where the majority struggle to put food on the table. The finance minister's budget proposals for 2024 said passport fees would rise to $200 in January, sparking an outcry. The hike was then reduced to $150.

Several million Zimbabweans are estimated to have left the southern African country over the past two decades when its economy began collapsing. The migration has taken renewed vigor in recent years as hopes of a better life following the 2017 ouster of longtime president Robert Mugabe fade. The late president was accused of running down the country.

Many people, including professionals such as schoolteachers, are taking short nursing courses and seeking passports to leave for the United Kingdom to take up health care work.

According to figures released by the U.K.'s immigration department in November, 21,130 Zimbabweans were issued visas to work in the health and care sector from September last year to September this year, up from 7,846 the previous year.

Only India and Nigeria, countries with significantly larger populations than Zimbabwe, have more people issued such work visas.

Many more Zimbabweans choose to settle in neighboring South Africa.

According to South Africa's statistics agency, just over 1 million Zimbabweans are living in that country, up from more than 600,000 during its last census in 2011, although some believe the figure could be much higher as many cross the porous border illegally.

The economic desperation has coupled with the expected increase in the price of travel documents to create an end-of-year rush.

The passport office has increased working hours to operate at night to cater to the growing numbers. Enterprising touts sell spots for $5 for those who want to skip the line.

"It's my gateway to a better life," said Mukona of the passport he hopes to get.

He plans to leave his work as an English teacher at a private college to migrate to the United Kingdom as a carer. Once there, he hopes to have his family follow, a move that may be endangered by recent proposals by U.K. Prime Minister Rishi Sunak to change migration visa rules to limit the ability of migrant workers to bring their families to the U.K.

Harare-based economist Prosper Chitambara said a lack of formal jobs and low prospects of economic recovery have turned the passport from a mere travel document into a life-changing document for many.

"The challenging economic situation is not showing signs of remission so this is an incentive for Zimbabweans to migrate," said Chitambara. "The passport is now more than just a travel document. Being in possession of a passport means changed economic fortunes because it's a major step towards leaving."

The economist predicted a tougher New Year for Zimbabweans, citing a raft of new or higher taxes proposed by the finance minister.

Zimbabwe's government says the migration comes at a huge cost to the country because of a brain drain, particularly in the health sector. It has pleaded to the World Health Organization to intervene and stop richer countries from recruiting Zimbabwean nurses, doctors and other health professionals.

Vice President Constantino Chiwenga earlier this year described the recruitment as "a crime against humanity" and proposed a law to stop health professionals from migrating.

Life has not always turned out rosy for those leaving.

The British press has reported the abuse of people settling in the United Kingdom as care workers, with some ending up living on the streets or barely earning enough to survive.

A report by Unseen, a U.K charity, in October said "the care sector is susceptible to worker exploitation and modern slavery. Many people providing their labor in the sector receive low pay and the work is considered low-skilled."

The group, which campaigns against modern slavery and exploitation, said Zimbabweans were among the top nationalities to be victimized in the care sector.

Despite such reports, many in Zimbabwe are not deterred.

"I will deal with those issues when I get there. Right now my priority is getting hold of a passport and leaving. Anything is better than being in Zimbabwe right now," said Mukona.


# Federal Reserve's favored inflation gauge tumbles in November as prices continue to ease
By **PAUL WISEMAN**
December 22, 2023. 11:19 AM EST

---

**WASHINGTON (AP)** - The Federal Reserve's preferred measure of prices fell last month, another sign that inflation is easing and that Americans should benefit from reduced interest rates and get relief from painful price shocks in 2024.

Friday's report from the Commerce Department showed that U.S. consumer prices slid 0.1% last month from October and rose 2.6% from November 2022. The month-over-month drop was the largest since April 2020 when the economy was reeling from the COVID-19 pandemic.

Excluding volatile food and energy prices, so-called core inflation last month rose 0.1% from October and 3.2% from a year earlier.

The numbers show somewhat more progress against inflation than economists had expected. Inflation is steadily moving down to the Fed's year-over-year target of 2% and appears to be clearing the way for Fed rate cuts in 2024. That, in turn, could translate into lower rates on everything from mortgages to credit cards.

Rates on loans for cars, homes and other larger purchases tend to track the direction of Fed monetary policy, so when benchmark interest rates are cut in the U.S., consumer costs typically fall and free up more money for households to spend elsewhere.

The rate on the benchmark 30-year fixed-rate mortgage is already dropping: This week it dipped to a six-month low 6.67%, down from 7.79% in October.

Americans have already seen some relief from high prices. Consider the ingredients of a BLT sandwich: Prices are down almost 1% over the past year for bacon, more than 10% for lettuce and 4% for tomatoes. Car rental prices have tumbled 11%, air fares 12%, furniture 3%.

After nearly two years of Fed rate hikes - 11 since March 2022 - inflation has come down from the four-decade highs it hit last year. The Labor Department's closely watched consumer price index was up 3.1% last month from November 2022, down from a 9.1% year-over-year increase in June 2022.

Encouraged by the progress, the Fed has decided not to raise rates at each of its last three meetings and has signaled that it expects to cut rates three times next year.

"A sustained easing in price pressures will support a shift in the (Fed's) policy stance next year, from holding rates steady to lowering them over time," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "The exact timing will depend on how the labor market, inflation and growth will evolve next year. Based on our forecasts, we expect the Fed to start cutting rates by the middle of next year."

Despite widespread predictions that higher rates would cause a recession, the U.S. economy and job market have remained strong. That has raised hopes the Fed can achieve a "soft landing" - bringing inflation to its 2% year-over-year target without sending the economy into recession.

The U.S. inflation gauge the Commerce Department issued Friday is called the personal consumption expenditures (PCE) price index. It showed year-over-year inflation peaking at 7.1% in June 2022.

The Fed prefers the PCE index over the Labor Department's CPI in part because it accounts for changes in how people shop when inflation jumps - when, for example, consumers shift away from pricey national brands in favor of cheaper store brands.

Friday's report also showed that consumer spending rose 0.2% last month after rising 0.1% in October. Personal income rose 0.4% last month, a tick up from 0.3% in October.


# Stock market today: Wall Street ticks closer to record highs to cap its 8th straight winning week
By **STAN CHOE**
December 22, 2023. 4:57 PM EST

---

**NEW YORK (AP)** - Wall Street capped its eighth straight winning week with a quiet finish Friday, following reports showing inflation on the way down and the economy potentially on the way up.

The S&P 500 rose 0.2% to sit less than 1% below its record set nearly two years ago. The Dow Jones Industrial Average slipped 18 points, or less than 0.1%, and the Nasdaq composite edged 0.2% higher.

Bristol Myers Squibb helped lift the market and rose 2% after it said it will buy Karuna Therapeutics in a cash deal valued at a total of $14 billion. That helped offset an 11.8% slump for Nike, which cut its revenue forecast for its fiscal year and dragged sharply on the Dow. The athletic giant cited weakness in China, the downsides of a stronger U.S. dollar for exporters and other challenges.

But Wall Street's focus was squarely on a suite of economic reports released Friday, which led to some swings in Treasury yields.

Falling yields have been a primary reason the stock market has charged roughly 15% higher since late October. Not only do they boost the economy by encouraging borrowing, they also relax the pressure on the financial system and goose prices for investments. They've been easing on hopes that inflation has cooled enough for the Federal Reserve to cut interest rates through 2024.

A report on Friday showed the measure of inflation the Federal Reserve prefers to use slowed by more than economists expected, down to 2.6% in November from 2.9% a month earlier. It echoed other inflation reports for November released earlier in the month.

"Inflation has fallen very quickly this year, especially in the last three to five months," said Niladri "Neel" Mukherjee, chief investment officer of TIAA's Wealth Management team. Over the next few months, "I think inflation will fade away in terms of top-of-mind items" as risks for financial markets.

Friday's data also showed spending by U.S. consumers unexpectedly rose during the month. While that's a good sign for growth for an economy driven mainly by consumer spending, it could also indicate underlying pressure remains on inflation.

"People are tightening their belts, but they're not suffocating their spending," said Brian Jacobsen, chief economist at Annex Wealth Management.

The Federal Reserve is walking a tightrope, trying to slow the economy enough through high interest rates to cool inflation, but not so much that it tips into a recession. A stronger-than-expected economy could complicate the balancing act.

Other reports on Friday showed orders for long-lasting manufactured goods strengthened more in November than expected, sales of new homes unexpectedly weakened and sentiment for U.S. consumers improved.

The yield on the 10-year Treasury was at 3.89%, roughly its same level from late Thursday. But it swerved a couple of times following the release of the reports. The 10-year yield is still down comfortably from October, when it was above 5% and putting painful downward pressure on the stock market.

Traders are largely betting the Federal Reserve will cut its main interest rate by at least 1.50 percentage points by the end of next year, according to data from CME Group. The federal funds rate is currently sitting within a range of 5.25% to 5.50% at its highest level in more than two decades.

The Federal Reserve released projections last week showing its typical policymaker expects to cut the federal funds rate several times next year, but likely by only half as much as what Wall Street is expecting.

Critics say Wall Street is too optimistic about how many rate cuts may come in 2024 and when they could begin. They warn the big run for stocks since late October on anticipation of such support may be overdone, or at the least pulling forward returns that would have happened in 2024.

With its eight straight weekly gains, the S&P 500 is in the midst of its longest winning streak since 2017.

Mukherjee of TIAA Wealth Management is relatively optimistic about the U.S. economy in coming years, particularly as artificial-intelligence technology helps reshape the world. But he sees the economy enduring at least a soft patch in the first half of 2024 as the effects of past rate hikes fully make their way through the system.

Plus, he sees the Federal Reserve more hesitant to cut rates than Wall Street expects.

"I think the market has run ahead of itself a little bit in pricing in six rate cuts," he said. "Inflation is coming down very quickly, but this is a Fed which has been scarred once when they took the view that inflation was transitory back in 2021, and they overstayed their welcome at zero interest rates for longer than anyone though they would. They want to make sure they're reasonably comfortable, quite comfortable with inflation somewhere in the vicinity of their target."

All told, the S&P 500 rose 7.88 points to 4,754.63. The Dow slipped 18.38 to 37,385.97, and the Nasdaq gained 29.11 to 14,992.97.

In stock markets abroad, indexes were mixed in Europe and Asia.

Hong Kong's Hang Seng dropped 1.7% after China released new regulations for online gaming. That sent stocks of Tencent, China's largest gaming company, and rival NetEase down sharply.


# Turkish central bank raises interest rate to 42.5% to combat high inflation
December 21, 2023. 7:42 AM EST

---

**ANKARA, Turkey (AP)** - Turkey's central bank hiked its key interest rate by 2.5 percentage points on Thursday as part of its efforts to combat high inflation that has left many households struggling to afford rent and essential items.

The bank's Monetary Policy Committee raised its benchmark rate to 42.5%, delivering its seventh interest rate hike in a row to tame inflation, which rose to 61.98% last month.

But the bank signaled that the rate hikes - which took borrowing costs from 8.5% to the current 42.5% - could soon end.

"The committee anticipates to complete the tightening cycle as soon as possible," it said. "The monetary tightness will be maintained as long as needed to ensure sustained price stability."

The series of rate hikes came after President Recep Tayyip Erdogan - a longtime proponent of an unorthodox policy of cutting rates to fight inflation - reversed course and appointed a new economic team following his reelection in May.

The team includes former Merrill Lynch banker Mehmet Simsek, who returned as finance minister, a post he held until 2018, and Hafize Gaye Erkan, a former U.S.-based bank executive, who took over as central bank governor in June.

Prior to that, Erdogan had fired central bank governors who resisted his rate-slashing policies, which economists said ran counter to traditional economic thinking, sent prices soaring and triggered a currency crisis.

In contrast, central banks around the world raised interest rates rapidly to target spikes in consumer prices tied to the rebound from the COVID-19 pandemic and then Russia's war in Ukraine.

"There is much still to be done in taming inflation but the bond market is optimistic that Turkey is on the right track," said Cagri Kutman, Turkish market specialist at KNG Securities. "Turkish bonds have been amongst the strongest performing out of major economies over the past month."

Bartosz Sawicki, market analyst at Conotoxia fintech, said that the central bank was likely to complete its rate hikes next month at 45%.

"Consequently, the (central bank) is set to halt the tightening before the local elections in March," he wrote in an email.


# American consumers are feeling much more confident as holiday shopping season peaks
By **MATT OTT**
December 20, 2023. 5:53 PM EST

---

American consumers are feeling more confident than they have since summer, good news for businesses with the all-important holiday shopping season peaking.

The Conference Board, a business research group, said Wednesday that its consumer confidence index rose for the second straight month, to 110.7 in December from 101 in November. That's much better than analysts' forecasts of 104.5 and the highest reading since July.

Americans' expectations of a recession in the next 12 months declined to the lowest level so far this year.

The index measures both Americans' assessment of current economic conditions and their outlook for the next six months.

Consumer spending accounts for about 70% of U.S. economic activity, so economists pay close attention to consumer behavior as they take measure of the broader economy.

The index measuring Americans short-term expectations for income, business and the job market shot up to 85.6 in December from 77.4 in October. It's the first time in four months that its been above 80. A reading below 80 for future expectations historically signals a recession within a year.

The survey's write-in responses indicated that rising prices are still consumers' top concern, while worries over interest rates and geopolitical conflicts declined.

Consumers' view of current conditions also jumped this month, to 148.5, from 136.5 in November.

The survey also showed modest increases in consumers' intent to purchase homes, autos, appliances and spend on vacations.

Americans unexpectedly picked up their spending at retailers from October to November as the unofficial holiday season kicked off, underscoring the power of shoppers despite elevated prices. Retail sales rose 0.3%, in November from October, when sales fell 0.2%, according to the Commerce Department.


# UK rate cut speculation swells as inflation falls by more than anticipated to 2-year low of 3.9%
By **PAN PYLAS**
December 20, 2023. 8:51 AM EST

---

**LONDON (AP)** - Inflation in the U.K. as measured by the consumer prices index eased back to its lowest level in more than two years, official figures showed Wednesday, in a development that stoked speculation that the Bank of England may start cutting interest rates sooner than expected.

The Office for National Statistics said that inflation dropped to 3.9% in the year to November, its lowest level since September 2021, from 4.6% the previous month. That decline was bigger than anticipated in financial markets.

The agency said the biggest driver for the fall was a decrease in fuel prices after an increase at the same time last year. The decreasing rate in food price inflation also contributed to the decline.

The sharp drop has fueled expectations that the Bank of England, which sets interest rates in order to hit a 2% target, may move to reduce borrowing rates possibly in the first half of 2024.

The pound dropped 0.6% to $1.2650, a sign that traders think the central bank may look to cut rates soon, which would reduce relative returns for holders of the currency.

"The Bank has been loath to put a timetable on rate cuts in 2024, but this clearly raises the prospect of the Bank being in a position to ease policy in the first half of the year, rather than later," said Neil Wilson, chief markets analyst at Finalto. "At least it will prompt the market to buy into this idea."

That's a marked change from last week when the Bank of England left its main interest rate at a 15-year high of 5.25%, where it has stood since August following the end of nearly two years of hikes. Bank Gov. Andrew Bailey said that interest rate policy would likely have to remain "restrictive for an extended period of time."

The Bank of England has managed to get inflation down from a four-decade high of more than 11%, but still has a way to go to get to its target of 2%.

Higher interest rates targeted a surge in inflation, first stoked by supply chain issues during the coronavirus pandemic and then Russia's full-scale invasion of Ukraine, which pushed up food and energy costs.

While the interest rate increases have helped in the battle against inflation, the squeeze on consumer spending, primarily through higher mortgage rates, has weighed on the growth of the British economy. There are growing worries that rates will stay high for too long, unnecessarily damaging the economy.

However soon the Bank of England decides to cut rates, it's very likely that relatively high borrowing rates and low economic growth will be the backdrop for next year's general election. That's also a concern for the governing Conservative Party, which opinion polls say is way behind the main opposition Labour Party.


# From AI and inflation to Elon Musk and Taylor Swift, the business stories that dominated 2023
By **PAUL WISEMAN** and **KEN SWEET**
December 20, 2023. 5:57 PM EST

---

The tide turned against inflation.

Artificial intelligence went mainstream - for good or ill.

Labor unions capitalized on their growing might to win more generous pay and benefits.

Elon Musk renamed and rebranded the social media platform Twitter, removed guardrails against phony or obscene posts and ranted profanely when advertisers fled in droves.

The American housing market, straining under the weight of heavy mortgage rates, took a wallop.

And Taylor Swift's concert tour scaled such stratospheric heights that she invigorated some regional economies and drew a mention in Federal Reserve proceedings.

A look back at 10 top business stories in 2023:

## RAGING AGAINST INFLATION
The Fed and most other major central banks spent most of the year deploying their interest-rate weapons against the worst bout of inflation in four decades. The trouble had erupted in 2021 and 2022 as the global economy roared out of the pandemic recession, triggering supply shortages and igniting prices.

By the end of 2023, though, the Fed, the European Central Bank and the Bank of England had taken a breather. Their aggressive rate hikes had brought inflation way down from the peaks of 2022, when Russia's invasion of Ukraine sent energy and grain prices rocketing and intensified price spikes.

In the United States, the Fed's policymakers delighted Wall Street investors by signaling in December that 2024 would likely be a year of rate cuts - three to be exact, in their expectations - and not rate hikes. The Bank of England and ECB sounded a more cautious note, suggesting that inflation, though trending down, remained above their target.

"Should we lower our guard?" Christine Lagarde, the ECB president, told reporters. "We ask ourselves that question. No, we should absolutely not lower our guard."

The Council on Foreign Relations, which tracks interest rates in 54 countries, found that central banks turned aggressive toward inflation in the spring of 2022. Policies remain tight, the council found, but the overall anti-inflation stance has eased.

## AI GOES MAINSTREAM
Artificial intelligence thrust itself into public consciousness this year. But the technology, while dazzling for its ability to retrieve information or produce readable prose, has yet to match people's science fiction fantasies of human-like machines.

Catalyzing a year of AI fanfare was ChatGPT. The chatbot gave the world a glimpse of advances in computer science, even if not everyone learned quite how it works or how to make the best use of it.

Worries escalated as this new cohort of generative AI tools threatened the livelihoods of people who write, draw, strum or code for a living. AI's ability to produce original content helped fuel strikes by Hollywood writers and actors and legal challenges from bestselling authors.

By year's end, the AI crises had shifted to ChatGPT's own maker, OpenAI, which was nearly destroyed by corporate turmoil over its CEO, and to a meeting room in Belgium, where European Union leaders emerged after days of talks with a deal for the world's first major AI legal safeguards.

## WORKERS SCORE GAINS
The long-battered American labor movement flexed its muscle in 2023, taking advantage of widespread worker shortages to demand - and receive - significantly better pay and benefits. From Hollywood writers and actors to autoworkers to hotel workers, 510,000 laborers staged 393 strikes in the first 11 months of 2023, according to Cornell University's Labor Action Tracker.

Under its pugnacious new president, Shawn Fain, the United Auto Workers struck the Big Three automakers - Ford, General Motors and Stellantis, the parent of Chrysler, Jeep and Ram - and won pay raises, improved benefits and numerous other concessions.

Hollywood writers and actors, as a result of their walkouts, secured higher pay and protection from the unrestricted use of artificial intelligence, among other concessions.

The unions' gains marked a resurgence for their workers after years following the Great Recession of 2007-2009 when union power further dwindled, wage gains languished and employers seemed to have their pick of job candidates. An explosive economic rebound from the COVID-19 recession of 2020 and a wave of retirements left companies scrambling to find workers and provided labor unions with renewed leverage

Still, even now, unions remain a shadow of what they once were: As of last year, roughly 10% of U.S. employees belonged to labor unions, way down from 20% in 1983. And back in the 1970s, the United States experienced an average of 500 strikes a year, involving 2 million workers, said Johnnie Kallas, a labor expert at Cornell.

## MUSK'S X-RATED TRANSFORMATION
A little more than a year ago, Elon Musk walked into Twitter's San Francisco headquarters, fired its CEO and other top executives and began transforming the social media platform into what's now known as X.

Since then, the company has been bombarded by allegations of misinformation, endured significant advertising losses and suffered declines in usage.

Disney, Comcast and other high-profile advertisers stopped spending on X after the liberal advocacy group Media Matters issued a report showing that their ads were appearing alongside material praising Nazis. (X has sued the group, claiming it "manufactured" the report to "drive advertisers from the platform and destroy X Corp.")

The problems culminated when Musk went on an expletive-ridden rant in an on-stage interview about companies that had halted spending on X. Musk asserted that advertisers that pulled out were engaging in "blackmail" and, using a profanity, essentially told them to get lost.

"Don't advertise," X's billionaire owner said.

## HOUSING'S MISERABLE YEAR
Remarkably, the U.S. economy and job market largely avoided pain in 2023 from the Fed's relentless campaign against inflation - 11 interest-rate hikes since March 2022.

Not so the housing market.

As the Fed jacked up borrowing rates, the average 30-year fixed-rate mortgage rate shot up from 4.16% in March 2022 to 7.79% in October 2023. Home sales crumbled. For the first 10 months of 2023, sales of previously occupied homes sank 20%.

Yet at the same time and despite the sales slump, home prices kept rising. The combination of high mortgage rates and rising prices made homeownership - or the prospect of trading up to another house - unaffordable for many.

Contributing to the squeeze was a severe shortage of homes for sale. That, too, was a consequence of higher rates. Homeowners who were sitting on super-low mortgage rates didn't want to sell their houses only to have to buy another and take on a new mortgage at a much higher rate. Mortgage giant Freddie Mac says 60% of outstanding mortgages still have rates below 4%; 90% are below 6%.

## CRYPTO CHAOS (CONTINUED)
If 2022 was the year that the cryptocurrency industry collapsed, 2023 was the year of the spillover from that fall.

The year's headlines from crypto were dominated by convictions and legal settlements as Washington regulators adopted a much more aggressive stance toward the industry.

A jury convicted Sam Bankman-Fried, the founder and former CEO of the crypto exchange FTX, of wire fraud and six other charges. Weeks later, the founder of Binance, Chengpeng Zhao, agreed to plead guilty to money laundering charges as part of a settlement between U.S. authorities and the exchange. Among the other crypto heavyweights that met legal trouble were Coinbase, Gemini and Genesis.

Yet speculation that crypto may gain more legitimacy among investors helped more than double the price of bitcoin. After years of delays, regulators are eventually expected to approve a bitcoin exchange-traded fund. Whether that would prove sufficient to sustain bitcoin's rally over the long run remains to be seen.

## BANKING JITTERS
Historically, high interest rates benefit banks; they can charge more for their loans. But in 2023, higher rates ended up poisoning a handful of them.

The industry endured a banking crisis on a scale not seen since 2008. Three midsized banks - Silicon Valley Bank, Signature Bank and First Republic Bank - collapsed.

For years, banks had loaded up their balance sheets with high-quality mortgages and Treasurys. In an era of ultra-low rates, those mortgages and bonds paid out puny interest.

Enter the specter of inflation and the Fed's aggressive rate hikes. As rates jumped, the banks' bonds tumbled in value because investors could now buy new bonds with much juicier yields. With pressure on the banks mounting, some anxious depositors withdrew their money. After one such bank run, Silicon Valley collapsed. Days later, Signature Bank failed. First Republic was seized and sold to JPMorgan Chase.

Investors remain concerned about midsized institutions with similar business models. Trillions of dollars in commercial real estate loans that remain on these banks' books could become problematic in 2024.

## GLOBAL MARKETS RALLY
From Austria to New Zealand, stock markets rallied through 2023. As inflation eased, stocks climbed despite sluggish global economic growth.

A tumble in crude oil prices helped slow inflation. A barrel of Brent crude, the international standard, dropped 14% through mid-December on expectations that the world has more than enough oil to meet demand.

An index that spans nearly 3,000 stocks from 47 countries returned 18% in U.S. dollar terms as of Dec. 11. Healthy gains for Apple, Nvidia and other U.S. Big Tech stocks powered much of the gains. So did the 45% return for the Danish pharmaceutical company Novo Nordisk, which sells the Wegovy drug to treat obesity and the 33% return for the Dutch semiconductor company ASML.

The bond market endured more turbulence. Bond prices tumbled for much of the year, and their yields rose, over uncertainty about how far central banks would go in raising rates to curb inflation.

The yield on the 10-year U.S. Treasury briefly topped 5% in October to reach its highest level since 2007. Yields have since eased on the expectation that the Fed is done raising rates.

## WORLD ECONOMY'S RESILIENCE
Over the past three years, the global economy has absorbed one hit after another. A devastating pandemic. The disruption of energy and grain markets stemming from Russia's invasion of Ukraine. A resurgence of inflation. Punishing interest rates.

And yet economic output kept growing in 2023, if only modestly. Optimism grew about a "soft landing" - a scenario in which high rates tame inflation without causing a recession. The head of the International Monetary Fund praised the global economy for its "remarkable resilience."

The United States has led the way. Defying predictions that high rates would trigger a U.S. recession, the world's largest economy has continued to grow. And employers, fueled by solid consumer spending, have kept hiring at healthy rates.

Still, the accumulated shocks are restraining growth. The IMF expects the global economy to expand just 2.9% in 2024 from an expected 3% this year. A major concern is a weakened China, the world's No. 2 economy. Its growth is hobbled by the collapse of an overbuilt real estate market, sagging consumer confidence and high rates of youth unemployment.

## THE U.S. ECONOMY (TAYLOR'S VERSION)
Taylor Swift dominated popular culture, with her record-shattering $1 billion concert tour, her anointment as Time magazine's Person of the Year and her high-profile romance with Travis Kelce, the Kansas City Chiefs football star.

The Swift phenomenon went further yet. It extended into the realm of the national economy. Her name came up at a July news conference by Fed Chair Jerome Powell, when Powell was asked whether Swift's blockbuster ticket sales revealed anything about the state of the economy. Though Powell avoided a direct reply, Swift's name came up that same month in a Fed review of regional economies: Her tour was credited with boosting hotel bookings in Philadelphia.

Economist Sarah Wolfe of Morgan Stanley has calculated that Swifties spent an average of $1,500 on airfares, hotel rooms and concert tickets to her shows (though it's perhaps worth noting that Beyonce fans spent even more - an average $1,800).


# Houthi attacks on commercial ships have upended global trade in vital Red Sea corridor
By **COURTNEY BONNELL**
December 18, 2023. 2:34 PM EST

---

**LONDON (AP)** - The attacks on commercial vessels in the Red Sea by Yemen's Houthi rebels have scared off some of the world's top shipping companies and oil giants, effectively rerouting global trade away from a crucial artery for consumer goods and energy supplies that is expected to trigger delays and rising prices.

BP said Monday that it has "decided to temporarily pause all transits through the Red Sea," including shipments of oil, liquid natural gas and other energy supplies. Describing it as a "precautionary pause," the London-based oil and gas corporation said the decision faces ongoing review but crew safety was the priority.

Both oil and European natural gas prices rose partly over market nerves about attacks by the Iranian-backed Houthis, who confirmed two new attacks Monday. It is the latest targeting of container ships and oil tankers passing through a narrow waterway that separates Yemen from East Africa and leads north to the Red Sea and Suez Canal, through which an estimated 10% of the world's trade passes.

Besides critical energy supplies reaching Europe and beyond on tankers, food products like palm oil and grain and most of the world's manufactured products move by container ships - many of them heading through the Suez Canal.

"This is a problem for Europe. It's a problem for Asia," said John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, which represents 80% of the world's commercial fleet.

He noted that 40% of Asia-Europe trade normally goes through the waterway: "It has the potential to be a huge economic impact."

Almost all goods that stores needed for Christmas will have already been delivered, but online orders could be delayed, analysts say, because four of the world's five largest container shipping companies have paused or rerouted movements through the Red Sea in the last several days.

MSC, Maersk, CMA CGM Group and Hapag-Lloyd are leaders in alliances that move the bulk all consumer goods between Asia and Europe, so "virtually all services will have to make this rerouting," said Simon Heaney, senior manager of container research for Drewry, a maritime research consultancy.

Ships will have to go around the Cape of Good Hope at the bottom of Africa instead, adding what some analysts have said could be a week to 10 days or even longer to voyages.

Depending on what companies decide to do, they will have to add more ships to make up the extra time or burn more fuel for the longer journey and if they decide to go faster to meet their itineraries - both of which would release more climate-changing carbon dioxide, Heaney said.

"The impact will be longer transit times, more fuel spent, more ships required, potential disruption and delays - at least in the first arrivals in Europe," he said, noting that ships could arrive to ports from their longer journeys "in clumps."

That brings up the cost of shipping, but "I don't think it's going to go to the heights that it reached during the pandemic," Heaney said.

Supply chain disruptions increased as people stuck at home during the COVID-19 pandemic ramped up orders for all sorts of products, driving up consumer prices around the world.

Stawpert of the shipping chamber said he would expect to see some price increases for consumers in the short term but that it depends how long the security threat lasts.

The Houthis have targeted Israeli-linked vessels during Israel's war with Hamas but escalated their attacks in recent days, hitting or just missing ships without clear ties.

Brig. Gen. Yahya Saree, the Houthi military spokesman, said Monday that they launched what he described as "naval aircraft" at the Cayman Islands-flagged Swan Atlantic, a chemical and oil products carrier, and Panama-flagged MSC CLARA cargo ship. He didn't offer further details.

Denmark-based operator Uni-Tankers said the Swan Atlantic, which was carrying vegetable oils to France's Reunion Island off Madagascar in the Indian Ocean, was hit by an unknown object that ignited a small fire. Crew members put it out and all were reported to be safe, the company said. It received military aid and continued on its journey.

U.S. Defense Secretary Lloyd Austin said at a news conference during a visit to Israel that he was convening a meeting of his counterparts in the Middle East and beyond on Tuesday to address the Houthi risk to shipping.

"These attacks are reckless, dangerous, and they violate international law," Austin said. "We're taking action to build an international coalition to address this threat."

U.S., French, U.K. and other coalition warships already patrol the area, keeping the waterway open. Stawpert said deployments by navies have increased and that should boost confidence in the shipping industry and ease the threat to some degree.

"We would also hope for a surge in forces, given how important this is to the world economy and people around the world," he said.

Disruptions expected from the Red Sea could have far-reaching effects because they would happen at the same time ships are being restricted through the Panama Canal, a major trade route between Asia and the United States.

Some companies had planned to reroute to the Red Sea - which is a crucial thoroughfare for Asia-Europe shipments - to avoid delays at the Panama Canal caused by a lack of rainfall, analysts say.

Now, some may be scared away from that alternative by the threat of Houthi attacks. That means those taking extra precautions to avoid risks and delays from both global trade arteries will have to take the longer journey around Africa.

"It's unprecedented that the two have coincided," the analyst Heaney said, adding that neither the Suez nor Panama canals are closed, "it's just that they're becoming less viable for the short term."

The cancellations also will mean problems for cash-strapped Egypt, he said, with millions in fees that shipping companies pay to clear the Suez Canal representing a big source of income for a country whose economy is struggling with high inflation and a weakening currency.


# Stock market today: Asian shares are mixed. Japan's central bank keeps its monetary policy unchanged
By **ELAINE KURTENBACH**
December 19, 2023. 12:25 AM EST

---

**BANGKOK (AP)** - Asian shares were mixed Tuesday after a seven-week winning streak on Wall Street cooled.

U.S. futures were flat and oil prices edged higher.

Tokyo's Nikkei 225 index gained 0.9% to 33,063.00 after the Bank of Japan kept its ultra-lax monetary policy unchanged, as expected. The dollar rose against the yen, climbing to 143.38 yen from 142.79.

The S&P/ASX 200 in Sydney added 0.8% to 7,486.90, while South Korea's Kospi was nearly unchanged, at 2,566.30.

Hong Kong's Hang Seng index declined 0.6% to 16,527.75 and the Shanghai Composite index fell less than 1 point to 2,930.18.

Bangkok's SET also was little changed, while Taiwan's Taiex fell 0.7%.

On Monday, the S&P 500 rose 0.5% to 4,740.56 and the Nasdaq composite picked up 0.6% to 14,904.81. The Dow Jones Industrial Average finished essentially flat after most of a 0.2% gain faded by late afternoon, closing at 37,306.02.

Retailers and big technology companies were among the big gainers. Amazon.com rose 2.7% and Etsy climbed 4.7% for the biggest gain among S&P 500 stocks.

Chipmaker Nvidia rose 2.4%, while Meta added 2.9% and Netflix closed 3% higher.

Energy companies also rallied as the price of crude oil jumped more than $1 amid growing concerns about attacks from Iranian-backed Houthis on shipping in the Red Sea. Oil and natural gas giant BP has joined the growing list of companies that have halted shipments in the major trade route.

Valero Energy rose 2.6% and Marathon Petroleum added 2.3%.

U.S. Steel soared 26.1% after agreeing to be acquired by Japan's Nippon Steel. The Pittsburgh steel maker played a key role in the nation's industrialization. The all-cash deal is valued at about $14.1 billion, or $14.9 billion with debt. That's nearly double what was offered just four months ago by rival Cleveland Cliffs.

Investors had several other corporate buyout updates to review. Photoshop maker Adobe rose 2.5% following an announcement that it is terminating its planned $20 billion buyout of Figma. Door maker Masonite International fell 16% after saying it will by PGT Innovations in a deal worth about $13 billion.

Treasury yields mostly rose. The yield on the 10-year Treasury rose to 3.95% from 3.92% late Friday.

The broader market surged last week and added to solid December gains after the Federal Reserve signaled that inflation may have cooled enough for the central bank to shift to cutting interest rates in 2024. The Dow closed out last week with a record, while the S&P 500 ended the week with its longest weekly winning streak in six years, while edging closer to its all-time high.

The benchmark S&P 500 is now up more than 23% this year, while the Nasdaq is up more than 42%.

Lower interest rates typically take pressure off of financial markets. The Fed's goal since 2022 has been to slow the economy and grind down prices for investments enough through high interest rates to get inflation under control. Economic growth has slowed, but has not dipped into recession, while inflation continues easing.

Wall Street is betting that those conditions mean the Fed is done raising interest rates and could start cutting them in early 2024. Investors will get their last big inflation update of the year on Friday when the government releases its report on personal consumption expenditures. It's the Fed's preferred measure of inflation and has been easing since the middle of 2022.

Analysts polled by FactSet expect the measure of inflation to soften to 2.8% in November from 3% in October.

Investors will also have a few big earnings reports to review this week, which could give them a better sense of how companies and consumers are faring amid high interest rates and lingering inflation. Package delivery service FedEx will report its latest financial results on Tuesday and Cheerios maker General Mills will report its results on Wednesday. Athletic footwear giant Nike will report its latest results on Thursday.

Early Tuesday, U.S. benchmark crude oil was down 1 cent at $72.81 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, was up 11 cents at $78.08 per barrel.

The euro rose to $1.0929 from $1.0925 late Monday.


# The Federal Reserve could do what was thought impossible: Defeat inflation without a steep recession
By **CHRISTOPHER RUGABER**
December 16, 2023. 7:29 AM EST

---

**WASHINGTON (AP)** - It was the most painful inflation Americans had experienced since 1981, when "The Dukes of Hazzard" and "The Jeffersons" were topping the TV charts. Yet the Federal Reserve now seems on the verge of defeating it - and without the surge in unemployment and the deep recession that many economists had predicted would accompany it.

Inflation has been falling more or less steadily since peaking in June of last year at 9.1%. And when the Fed's preferred inflation gauge for November is reported next week, it's likely to show that in the past six months, annual inflation actually dipped just below the Fed's target of 2%, economists at UBS estimate.

The cost of goods - such as used cars, furniture and appliances - has fallen for six straight months. Compared with a year ago, goods prices are unchanged, held down by improved global supply chains.

Housing and rental costs, a major driver of inflation, are growing more slowly. Wage growth has cooled, too, though it still tops inflation. Milder wage growth tends to ease pressure on restaurants, hotels and other employers to increase their prices to cover their labor costs.

"I think it's really good to see the progress that we're making," Chair Jerome Powell said at a news conference Wednesday after the Fed's latest policy meeting. "If you look at the ... six-month measures, you see very low numbers."

On Friday, the Congressional Budget Office, a nonpartisan agency, estimated that inflation will drop to 2.1% by the end of next year.

There will likely be bumps on the road toward getting inflation fully under control, officials have said. Powell insisted that "no one is declaring victory." And he reiterated that the central bank wants to see further evidence of falling inflation before it would feel confident that it is sustainably headed back to the 2% target.

Yet many economists, normally a cautious lot, are now willing to declare that inflation is nearly back under control after two-plus years in which it imposed hardships on millions of American households.

"It appears that inflation has returned to 2%," said Tim Duy, chief economist at SGH Macroeconomics. "The Fed looks like it has won that battle."

Prices spikes are also moderating overseas, with both the Bank of England and European Central Bank keeping their benchmark interest rates unchanged this week. Though inflation is still at 4.6% in the United Kingdom, it has fallen to 2.4% in the 20 countries that use the euro currency.

With inflation cooling, Powell said the 19 officials on the Fed's policy setting committee had discussed the prospects for rate cuts at this week's meeting. The officials also projected that the Fed will cut its key interest rate three times next year.

That stance marked a drastic shift from the rate-hiking campaign the Fed began in March 2022. Beginning then, the central bank raised its benchmark rate 11 times, from near zero to roughly 5.4%, its highest level in 22 years, to try to slow borrowing, spending and inflation. The result was much higher costs for mortgages, auto loans, business borrowing and other forms of credit.

Powell's suddenly more optimistic words, and the Fed's rate-cut projections, sent stock market indexes soaring this week. Wall Street traders now foresee a roughly 80% likelihood that the first rate cut will occur when the Fed meets in March, and they are forecasting a total of six cuts in 2024.

On Friday, John Williams, president of the Federal Reserve Bank of New York and a top lieutenant of Powell's, sought to pour some cold water on those expectations. Speaking on CNBC, Williams said it was "premature to be even thinking" about whether to cut rates in March. But he also mentioned that his forecast was for inflation to move down "sustainably" to 2%.

The week's events represented a departure from just two weeks ago, when Powell had said it was "premature" to say whether the Fed had raised its key rate high enough to fully conquer high inflation. On Wednesday, he suggested that the Fed was almost certainly done with rate increases.

Recent data appeared to have helped shift Powell's thinking. On Wednesday, a measure of wholesale prices came in lower than economists had expected. Some of those figures are used to compile the Fed's preferred inflation gauge, which, as a result, is expected to show much lower inflation numbers next week.

Powell said some Fed officials had even updated their economic projections on Wednesday, not long before they were issued, in light of the lower-than-expected wholesale price report.

"The speed at which inflation has fallen has been like an earthquake at the Fed," Duy wrote in a note to clients Wednesday.

And yet in the meantime, the economy keeps growing, defying widespread fears from a year ago that 2023 would bring a recession, a consequence of the much higher borrowing rates the Fed engineered. A report on retail sales Thursday showed that consumers grew their spending last month, likely encouraged by increased discounting that will also lower inflation. Such trends are supporting the growing belief that the economy will achieve an elusive "soft landing," in which inflation is defeated without an accompanying recession.

"We think the Fed cannot believe its luck: We are back to 'immaculate disinflation,' " Krishna Guha, an economic analyst at investment bank Evercore ISI, wrote in a client note.

Economists credit the Fed's rapid rate hikes for contributing to inflation's decline. In addition, a recovery in global supply chains and a jump in the number of Americans - and recent immigrants - searching for jobs have helped cool the pace of wage growth.

Jon Steinsson, an economics professor at the University of California, Berkeley, said that by aggressively raising their key interest rate in about 15 months - the fastest such pace in four decades - Fed officials kept Americans' inflation expectations largely in check. Expectations can become self-fulfilling: If people expect higher inflation, they often take actions, such as demanding higher wages, that can send prices higher still.

"They played a crucial role," Steinsson said.

Still, a continued decline in inflation isn't guaranteed. One wild card is rental prices. Real-time measures of new apartment leases show those costs rising much more slowly than they did a year ago. It takes time for that data to flow into the government's figures. In fact, excluding what the government calls "shelter" costs - rents, the cost of homeownership and hotel prices - inflation rose just 1.4% last month from a year earlier.

But Kathy Bostjancic, an economist at Nationwide, said she worries that a shortage of available homes could raise housing costs in the coming years, potentially keeping inflation elevated.

The Fed's rate hikes, Bostjancic said, could actually prolong the shortage. Today's higher mortgage rates may limit home construction while also discouraging current homeowners from selling. Both trends would keep a lid on the supply of homes and keep prices elevated.

Yet Fed officials appear confident in their forecasts that inflation is steadily slowing. In September, 14 of 19 Fed policymakers had said there were risks that inflation could rise faster than they expected. This month, only eight said so.

"Their projections have mostly gone down, and they think the probability that there will be some flare-up of inflation is lower," said Preston Mui, senior economist at Employ America, an advocacy group.


# Congressional Budget Office projects lower inflation and higher unemployment into 2025
By **FATIMA HUSSEIN**
December 15, 2023. 1:36 PM EST

---

**WASHINGTON (AP)** - The Congressional Budget Office said Friday it expects inflation to nearly hit the Federal Reserve's 2% target rate in 2024, as overall growth is expected to slow and unemployment is expected to rise into 2025, according to updated economic projections for the next two years.

The office's Current View of the Economy from 2023 to 2025 report estimates that the unemployment rate will hit 4.4% in the fourth quarter of 2024 and remain close to that level through 2025.

Currently, the unemployment rate is 3.7%, according to the latest Bureau of Labor Statistics data.

Meanwhile, gross domestic product, otherwise known as the overall health of the economy, is estimated to fall from 2.5% in 2023 to 1.5% in 2024 - then rebound to 2.2% in 2025, according to the CBO projections.

Compared with its February 2023 projections, CBO's Friday report predicts weaker growth, lower unemployment, and higher interest rates in 2024 and 2025.

But in a reminder that the U.S. economy has seldom behaved as anticipated through the pandemic and its aftermath, the employment forecast looks very different from the pace of hiring so far this year.

The jobless rate has now remained below 4% for nearly two years, the longest such streak since the late 1960s.

And on the inflation front, most economists expect growth to slow and inflation to continue to decline.

This week, the Federal Reserve kept its key interest rate unchanged for a third straight time, and its officials signaled that they are edging closer to cutting rates as early as next summer.

At a news conference, Federal Reserve Chair Jerome Powell said that officials are likely done raising rates because of how steadily inflation has cooled.

In keeping with the agency's mandate to provide objective, impartial analysis, the report makes no policy recommendations, CBO director Phillip Swagel said in the report.


# From New York to Tokyo, stock markets around the world have rallied in 2023
By **STAN CHOE**
December 14, 2023. 10:38 AM EST

---

**NEW YORK (AP)** - It's been a great year for stock markets around the world.

Wall Street's rally has been front and center, with the U.S. stock market the world's largest and its clear leader in performance in recent years. The S&P 500 is on track to return more than 20% for the third time in the last five years, and its gangbusters performance has brought it back within 2% of its record set at the start of 2022. The Dow Jones Industrial Average closed at a record high Wednesday.

Even in Japan, which has been home to some of the world's most disappointing stocks for decades, the market marched upward to touch its highest level since shortly after its bubble burst in 1989.

Across developed and emerging economies, stocks have powered ahead in 2023 as inflation has regressed, even with wars raging in hotspots around the world. Globally, inflation is likely to ease to 6.9% this year from 8.7% in 2022, according to the International Monetary Fund.

The expectation is for inflation to cool even further next year. That has investors feeling better about the path of interest rates, which have shot higher around much of the world to get inflation under control. Such hopes have been more than enough to offset a slowdown in global economic growth, down to an estimated 3% this year from 3.5% last year, according to the IMF.

This year's glaring exception for global stock markets has been China. The recovery for the world's second-largest economy has faltered, and worries are rising about cracks in its property market. Stocks in Hong Kong have taken a particularly hard hit.

This year's big gains for global markets may carry a downside, though: Some possible future returns may have been pulled forward, limiting the upside from here.

Europe's economy has been flirting with recession for a while, for example, and many economists expect it to remain under pressure in 2024 because of all the hikes to interest rates that have already been pushed through.

And while central banks around the world may be set to cut interest rates later in 2024, which would relieve pressure on the economy and financial system, rates are unlikely to return to the lows that followed the 2008 financial crisis, according to researchers at investment giant Vanguard. That new normal for rates could also hem in returns for stocks and make markets more volatile.

For the next decade, Vanguard says U.S. stocks could return an annualized 4.2% to 6.2%, well below their recent run. It's forecasting stronger potential returns from stocks abroad, both in the emerging and developed worlds.


# How Houthi attacks on ships in the Red Sea are affecting global trade
By **COURTNEY BONNELL**
December 21, 2023. 10:29 AM EST

---

**LONDON (AP)** - The attacks on commercial ships in the Red Sea by Yemen's Houthi rebels have rerouted a majority of global trade away from the crucial maritime artery for consumer goods and energy supplies, a shift expected to trigger delays and rising prices.

Oil, natural gas, grain and everything from toys to electronics typically travel through the waterway separating Africa and the Arabian Peninsula en route to the Suez Canal, where 12% of the world's trade passes.

Some of the world's largest container shipping companies and oil giant BP are sending vessels on longer journeys that bypass the Red Sea. In response to the growing impact to global trade, the U.S. and a host of other nations have created a new force to protect ships.

Here are things to know about the recent attacks and the impact on global shipping:

## WHY ARE HOUTHIS ATTACKING SHIPS?
The Houthis are Iranian-backed rebels who seized Yemen's capital, Sanaa, in 2014, launching a grinding war against a Saudi-led coalition seeking to restore the government.

The Houthis have sporadically targeted ships in the region, but the attacks have increased since the start of the Israel-Hamas war. They have used drones and anti-ship missiles to attack vessels and in one case used a helicopter to board and seize an Israeli-owned ship and its crew.

They have threatened to attack any vessel they believe is either going to or coming from Israel. That's now escalated to apparently any vessel, with container ships and oil tankers flagged to countries like Norway and Liberia being attacked or drawing missile fire.

The Houthis also have hailed vessels by radio to try to convince them to change course closer to the territory they control.

## WHY IS THE RED SEA IMPORTANT?
The Red Sea has the Suez Canal at its northern end and the narrow Bab el-Mandeb Strait at the southern end leading into the Gulf of Aden. It's a busy waterway with ships traversing the Suez Canal to bring goods between Asia and Europe and beyond.

In fact, 40% of Asia-Europe trade normally goes through the area, including a huge amount of energy supplies like oil and diesel fuel for import-dependent Europe, said John Stawpert, senior manager of environment and trade for the International Chamber of Shipping, which represents 80% of the world's commercial fleet.

So do food products like palm oil and grain and anything else brought over on container ships, which is most of the world's manufactured products.

In all, about 30% of global container traffic and more than 1 million barrels of crude oil per day typically head through the Suez Canal, according to global freight booking platform Freightos Group.

## HOW ARE HOUTHI ATTACKS AFFECTING TRADE?
Huge shipping container companies MSC, Maersk, CMA CGM Group and Hapag-Lloyd, among others, are avoiding the Red Sea and sending their ships around Africa and the Cape of Good Hope. That adds what analysts say could be a week to two weeks to voyages.

Shippers amounting to 62% of global capacity are opting for the longer route, according to Freightos. That's lead the number of vessels moving through the Red Sea to drop by more than 40% in a week, said Project44, a tech company whose platform helps companies track shipments.

London-based BP also that it has "decided to temporarily pause all transits through the Red Sea," including shipments of oil, liquid natural gas and other energy supplies.

Depending on what companies decide to do, they will have to add more ships to make up the extra time or burn more fuel for the longer journey and if they decide to go faster to meet their itineraries - both of which would release more climate-changing carbon dioxide, said Simon Heaney, senior manager of container research for Drewry, a maritime research consultancy.

"The impact will be longer transit times, more fuel spent, more ships required, potential disruption and delays - at least in the first arrivals in Europe," he said.

That brings up the cost of shipping, but "I don't think it's going to go to the heights that it reached during the pandemic," Heaney said.

Supply chain disruptions increased as people stuck at home during the COVID-19 pandemic ramped up orders for all sorts of products, driving up consumer prices worldwide.

Stawpert of the shipping chamber said he would expect to see some price increases for consumers in the short term but that it depends how long the security threat lasts.

Project44 foresees higher gasoline prices because if the conflict drags on, a "major disruption to oil is anticipated" and that would push up the cost of crude. Oil prices already have been rising.

The company also expects products could be missing from store shelves after the busy holiday shopping season, with new shipments taking longer to arrive.

However, "one saving grace may be the timing, as December and early January are typically slow, post-holiday season times for ocean freight," Judah Levine, head of research for Freightos, said in a blog post.

## HOW IS THE WORLD RESPONDING?
U.S. Defense Secretary Lloyd Austin announced a security initiative to protect ships in the Red Sea that includes United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain.

Some of those countries will conduct joint patrols while others provide intelligence support in the southern Red Sea and the nearby Gulf of Aden, Austin said. The goal is to provide ships and other assets to help protect trade in the area.

It builds on the existing presence of U.S. and other coalition warships that patrol to keep the waterway open. The Houthis have no formal naval warships to use to impose a cordon, relying on harassing fire and only one helicopter-borne assault so far.

Meanwhile, ships are still moving through the Red Sea, though insurance costs have doubled, which can add hundreds of thousands of dollars to a journey for the most expensive ships, said David Osler, insurance editor for Lloyd's List Intelligence, which provides analysis for the global maritime industry.

He expects those costs to keep rising.


# European Central Bank keeps its key interest rate at a record high. Now, when will it cut?
By **DAVID McHUGH**
December 14, 2023. 10:35 AM EST

---

**FRANKFURT, Germany (AP)** - The European Central Bank kept its key interest rate at a record high Thursday and said it will leave it there as long as needed to battle back inflation, signaling that cuts are not around the corner despite expectations it will act next year to support the shrinking economy.

It follows similar decisions this week by the U.S. Federal Reserve, Bank of England and Swiss National Bank to leave rates unchanged. The Fed went further by signaling it could make three interest rate cuts next year.

The ECB gave away little about its future moves after keeping its benchmark rate at 4%, reiterating that it will make decisions based on the latest information on how the economy is doing.

"Should we lower our guard? We ask ourselves that question. No, we should absolutely not lower our guard," bank President Christine Lagarde said at a news conference, speaking hoarsely and coughing at times because she said she was recovering from COVID-19 but was no longer contagious.

Policymakers "did not discuss rate cuts at all, no discussion, no debate on this issue," she said. Lagarde also stressed that future decisions will ensure that rates "will be set at sufficiently restrictive levels for as long as necessary."

Central banks worldwide drastically raised rates to contain inflation that broke out in the wake of the COVID-19 pandemic and Russia's invasion of Ukraine. They're now trying to balance keeping rates high for long enough to ensure inflation is contained against the risk that higher borrowing costs could throw their economies into recession.

Inflation has fallen more than expected in the 20 European Union countries that use the euro currency, to 2.4% in November from a peak of 10.6% in October 2022. That's not too far from the ECB's goal of 2% considered best for the economy.

That has led analysts to predict the ECB will cut rates next year, though the timing is not certain and forecasts range from March to September for the move.

While inflation is down following a record pace of rate hikes, economic growth has lagged because the cost of borrowing has surged for things like home purchases and business investment in new offices and factory equipment. The eurozone saw economic output shrink 0.1% in the July-to-September quarter.

Meanwhile, wages are still catching up to higher prices in shops, leaving European consumers less than euphoric even as European city centers deck themselves in Christmas lights.

In Paris, travel agent Amel Zemani says Christmas shopping will have to wait for the post-holiday sales.

"I can't go shopping this year, I can't afford Christmas gifts for the kids," she said. "What do they want? They want sneakers. I'm waiting for the sales to give them the gifts then. And they understand."

Steven Ekerovich, an American photographer living in the French capital, said that while "Paris was lagging easily 50% behind the rest of the major cosmopolitan cities in pricing, it's catching up fast. Rents, food, clothing. So, you have got to be careful now."

That lingering inflation being felt across the eurozone is what the ECB is trying to stamp out.

The bank's messaging Thursday showed that "there's still a long way to go before the ECB starts cutting rates," said Carsten Brzeski, chief eurozone economist at ING bank. "It should also be clear that the end of a hiking cycle does not imminently lead to a cutting cycle."

Brzeski said he sees the first rate cuts in June.

On the other hand, inflation was likely to be "quite a lot lower" than the ECB expects, so the first cut of a quarter-percentage point could come in April, with four more such cuts more to follow, said Andrew Kenningham, chief Europe economist at Capital Economics.

Higher interest rates combat inflation by increasing the cost of borrowing throughout the economy, from bank loans and lines of credit for businesses to mortgages and credit cards. That makes it more expensive to borrow to buy things or invest, lowering demand for goods and easing prices.


# Bank of England holds interest rates at a 15-year high despite worries about the economy
By **PAN PYLAS**
December 14, 2023. 10:14 AM EST

---

**LONDON (AP)** - The Bank of England kept borrowing rates unchanged Thursday despite mounting worries over the state of the British economy, and it showed little sign that it is contemplating cutting them anytime soon - unlike the U.S. Federal Reserve.

The central bank left its main interest rate at a 15-year high of 5.25%, where it has stood since August following the end of nearly two years of hikes.

Six of the nine members of the Monetary Policy Committee voted to keep rates on hold while three wanted a quarter-point hike - a clear signal to the markets that rate cuts are not on the agenda yet.

That was backed up by bank Gov. Andrew Bailey, who said in a statement that interest rate policy would likely have to remain "restrictive for an extended period of time."

The Bank of England has managed to get inflation down from a four-decade high of over 11% - but there's still a ways to go for it to get back to the bank's 2% target.

Inflation, as measured by the consumer price index, stood at 4.6% in the year to October, clearly still too high for comfort.

"We've come a long way this year .... but there is still some way to go," Bailey said.

The bank's decision to hold rates follows two years of hikes that targeted a surge in inflation, first stoked by supply chain issues during the coronavirus pandemic and then Russia's invasion of Ukraine, which pushed up food and energy costs.

While the interest rate increases have helped in the battle against inflation, the squeeze on consumer spending, primarily through higher mortgage rates, has weighed on growth in the British economy. There are growing worries that rates will stay high for too long, unnecessarily damaging the economy.

"With inflation trending downwards and the economy at risk of recession, the case for interest rate cuts is likely to grow over the coming months," said Suren Thiru, economics director at the Institute of Chartered Accountants in England and Wales.

The U.S. Fed already has signaled that it expects to make three interest rate cuts next year after it kept rates on hold Wednesday. The European Central Bank, which sets policy for the 20 European Union countries using the euro currency, also left rates unchanged but indicated, like the Bank of England, that it would stay the course for a while.

Those different stances were evident in the performance of the British pound as investors priced in the likelihood of more imminent cuts from the Fed, which would reduce relative returns for holders of the dollar. The pound was up by a full cent at $1.2750 and unchanged against the euro.

However soon the Bank of England decides to cut rates, it's very likely that high borrowing rates and low economic growth will be the backdrop for next year's general election. That's hardly ideal for the governing Conservative Party, which opinion polls say is way behind the main opposition Labour Party.


# Text of the policy statement the Federal Reserve released Wednesday
December 13, 2023. 2:21 PM EST

---

**WASHINGTON (AP)** - Below is the statement the Fed released Wednesday after its policy meeting ended:

Recent indicators suggest that growth of economic activity has slowed from its strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.

The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy.

In determining the extent of any additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller.


# Wholesale inflation in US slowed further last month, signaling that price pressures continue to ease
By **PAUL WISEMAN**
December 13, 2023. 9:02 AM EST

---

Wholesale inflation in the United States was unchanged in November, suggesting that price increases in the economy's pipeline are continuing to gradually ease.

The Labor Department reported Wednesday that its producer price index - which tracks inflation before it reaches consumers - was flat from October to November after having fallen 0.4% the month before. Measured year over year, producer prices rose just 0.9% from November 2022, the smallest such rise since June.

Excluding volatile food and energy costs, so-called core wholesale prices were unchanged from October and were up just 2% from a year ago - the mildest year-over-year increase since January 2021. Among goods, prices were unchanged from October to November, held down by a 4.1% drop in gasoline prices. Services prices were also flat.

Wednesday's report reinforced the belief that inflation pressures are cooling across the economy, including among wholesale producers. The figures , which reflect prices charged by manufacturers, farmers and wholesalers, can provide an early sign of how fast consumer inflation will rise in the coming months.

Year-over-year producer price inflation has slowed more or less steadily since peaking at 11.7% in March 2022. That is the month when the Federal Reserve began raising its benchmark interest rate to try to slow accelerating prices. Since then, the Fed has raised the rate 11 times, from near zero to about 5.4%, the highest level in 22 years.

The Fed is expected later Wednesday to announce, after its latest policy meeting, that it's leaving its benchmark rate unchanged for the third straight meeting. Most economists believe the Fed is done raising rates and expect the central bank to start reducing rates sometime next year.

On Tuesday, the Labor Department reported that consumer prices rose just 0.1% last month from October and 3.1% from a year earlier. But core prices, which the Fed sees as a better indicator of future inflation, were stickier, rising 0.3% from October and 4% from November 2022. Year-over-year consumer price inflation is down sharply from a four-decade high of 9.1% in June 2022 but is still above the Fed's 2% target.

"The data confirm the downtrend in inflation, although consumer prices are moving lower more gradually," said Rubeela Farooqi, chief U.S. economist at High Frequency Economics. "For the Fed, there is nothing in today's figures that changes our expectation that (its policymakers) will hold policy steady today, and rates are at a peak."

Despite widespread predictions that the Fed rate hikes would cause a recession, the U.S. economy and job market have remained surprisingly strong. That has raised hopes the Fed can pull off a so-called soft landing - raising rates enough to tame inflation without sending the economy into recession.