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Today’s Big Deal: The surge of the omicron variant didn’t stop Americans from spending — or prices from rising. We’ll also look at the latest sanctions on Russia, lobbying firms cutting ties with major Russian banks, and troubling news about homeownership in America.
For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@digital-release.thehill.com or @SylvanLane, afolley@digital-release.thehill.com or @ArisFolley and kevers@digital-release.thehill.com or @KarlMEvers.
Let’s get to it.
Inflation gauge rose 6.1% annually in January
Prices for consumer goods rose 0.6 percent in January and 6.1 percent in the preceding 12 months, according to data released Friday by the Commerce Department.
The personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred gauge of inflation, showed prices steaming ahead in January as consumer spending spiked and incomes stayed flat. The PCE index without food and energy prices rose 0.5 percent in January and 5.2 percent on the year.
“Consumers were in a spending mood in January despite Omicron and the highest inflation in four decades. Omicron led US consumers to pare back their spending on high-contact services, but this was largely offset by more purchases of durable goods, especially autos,” wrote Lydia Boussour of Oxford Economics in a Friday analysis.
- Consumer spending bounced back sharply from a December plunge even as inflation held firm. Personal consumption expenditures grew 2.1 percent last month after falling 0.8 percent in December, and by 1.5 percent when adjusted for inflation.
- Personal incomes, however, rose just 0.1 percent without adjusting for rising prices.
The takeaway: The steady march of inflation and a likely jump in energy prices driven by the Russian invasion of Ukraine will keep the Federal Reserve on track to raise interest rates next month. While some Fed officials have opened the door to a 0.5 percentage point rate increase — twice the size of a typical hike — others have urged caution, particularly as markets process the implications of new sanctions on Russia.
Sylvan has more here.
LEADING THE DAY
White House to sanction Putin for invasion of Ukraine
The Biden administration will sanction Russian President Vladimir Putin and other top officials in Moscow in response to the Russian invasion of Ukraine, White House press secretary Jen Psaki confirmed Friday.
The move follows an announcement from the European Union earlier in the day that it would sanction Putin and Russian Foreign Minister Sergey Lavrov directly for the country’s attack on neighboring Ukraine.
- Prior to the announcement, President Biden spoke with European Commission President Ursula von der Leyen, Psaki said. Biden a day earlier didn’t rule out sanctioning Putin directly, but would not say whether he would pursue such a step.
- Sanctioning a world leader directly is a rare step that comes days after Putin authorized military attacks on Ukraine. Russian military forces have moved closer to the capital of Kyiv, and U.S. officials have warned Russia may attempt to decapitate the Ukrainian government and replace it with pro-Russian leaders.
- The Biden administration has rolled out phased sanctions in recent days in response to the attacks on Ukraine. Biden announced Tuesday sanctions on multiple Russian financial institutions and Russian oligarchs.
The Biden administration has rolled out phased sanctions in recent days in response to the attacks on Ukraine. Biden announced Tuesday sanctions on multiple Russian financial institutions and Russian oligarchs.
The president on Thursday hit two of Russia’s biggest banks with sanctions, said the U.S. would limit exports of certain goods to Russia, and froze the assets of additional Russian oligarchs.
Check out more here from The Hill’s Brett Samuels.
BYE BYE BANKS
DC lobbying firms cut ties with Russian banks VTB, Sberbank
Influential U.S. lobbying firms have severed ties with VTB Bank and Sberbank after President Biden announced sanctions on the Russian state-owned financial institutions.
Powerhouse firm Venable LLP ended its lobbying contract with Sberbank Friday, according to a new filing. Sidley Austin LLP, another top Washington law and lobbying firm, said Friday that it ended its years-long representation of VTB Bank.
- These moves come after the Biden administration imposed sanctions on five Russian banks that prevent them from accessing the U.S. financial system.
- Sberbank holds more than one-third of Russian assets — the bank says that one in every two Russian companies has a Sberbank account — while VTB Bank has nearly one-fifth of the nation’s assets.
The Russian banks had been lobbying lawmakers and U.S. officials to avoid slapping them with harsh sanctions, which will cut off their access to the U.S. dollar and prompt financial institutions around the world to stop doing business with them.
Karl has more details here.
HOMEOWNERSHIP GAP
Homeownership rate among Black Americans lower than a decade ago: analysis
The homeownership rate for Black Americans in 2020 was lower than it was a decade before, even as the nation’s overall homeownership rate saw a record annual increase, a new report has found.
A report released by the National Association of Realtors (NAR) earlier this week found the U.S. homeownership rate rose by 1.3 percent from 2019 to 2020, reaching 65.5 percent overall – a jump the group called “the largest annual increase on record.” But the new report also shines a somber light on the racial disparities behind those figures.
- The report shows that the homeownership rate for Black Americans hit 43.4 percent that year, compared to 44.2 a decade before. By contrast, the homeownership rate for white Americans and Asian Americans jumped in the same period, rising to 72.1 percent and 61.7 percent, respectively.
- In the current housing market, the report notes that roughly half of homes on sale “are affordable to households with at least $100,000 income.” According to the report, almost half of Asian households in the country earn more that amount annually, compared to 35 percent of white households, a quarter of Hispanic households and a fifth of Black households.
Aris has more here.
COMING SOON
Stay ahead of the news cycle with The Hill’s new Evening Report, featuring the day’s top stories and a look ahead to tomorrow.
Good to Know
The Centers for Disease Control and Prevention significantly eased its mask recommendations, including for schools, as part of long-awaited updated guidance for dealing with COVID-19.
Under the new guidelines, more than 70 percent of the U.S. population is in an area with “low” or “medium” COVID-19 community level, meaning masks are not recommended for the general public.
Here’s what else have our eye on:
- Delta Air Lines suspended its ticket-buying partnership with Russian airline Aeroflot on Friday following Russia’s violent invasion of Ukraine.
- Sen. Mark Warner (D-Va.) asked major social media platforms to ramp up efforts to curb Russian information operations after the country launched its invasion of Ukraine.
- Labor union leaders cheered President Biden for nominating Judge Ketanji Brown Jackson to the U.S. Supreme Court, hailing her as a pro-worker jurist.
- Sen. Mark Kelly (D-Ariz.) called on President Biden to release oil from the national stockpile and support legislation to suspend the federal gas tax to lower prices.
- The U.S. government will ease restrictions for private companies and others looking to do business in Afghanistan in an effort to provide a much-needed infusion of funds into its crippled economy.
That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and coverage. We’ll see you Monday.
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