New York (CNN) — Harvard President Claudine Gay announced Tuesday she is stepping down amid a firestorm of controversy at the university.

“It is with a heavy heart but a deep love for Harvard that I write to share that I will be stepping down as president,” Gay wrote in a letter to the Harvard community. “After consultation with members of the Corporation, it has become clear that it is in the best interests of Harvard for me to resign so that our community can navigate this moment of extraordinary challenge with a focus on the institution rather than any individual.”

Gay did not say when she plans to formally step down but she described the decision as “difficult beyond words.”

“Amidst all of this, it has been distressing to have doubt cast on my commitments to confronting hate and to upholding scholarly rigor — two bedrock values that are fundamental to who I am — and frightening to be subjected to personal attacks and threats fueled by racial animus,” Gay wrote.

She is resigning just six months into her presidency. The first Black president in Harvard’s nearly 400-year history and the second woman, Gay acknowledged how short her tenure was.

“When my brief presidency is remembered, I hope it will be seen as a moment of reawakening to the importance of striving to find our common humanity — and of not allowing rancor and vituperation to undermine the vital process of education,” Gay said.

She was undone in part by her responses at a congressional hearing last month, as well as an ongoing plagiarism scandal.

At the House hearing, Gay was criticized for a lack of direct answer about policies and procedures to combat bullying and harassment of Jewish students.

Alan M. Garber, who currently serves as provost and chief academic officer at Harvard, will step in as interim president until the school finds a new leader, the Harvard Corporation announced in a letter on Tuesday.

The Corporation said the search for a new president would “begin in due course,” but did not specify an exact timeline.

Gay said in her letter she would return to a faculty position “and to the scholarship and teaching that are the lifeblood of what we do.”

A spokesperson did not immediately respond to requests for comment.

This is a breaking story. Check back for updates.

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New York (CNN) — Many feared 2023 would be the year of recession. It turned out to be the year of remarkable resilience.

The US economy appears to be enjoying the soft landing many argued was nearly impossible.

Inflation has cooled dramatically, unemployment remains low and the Federal Reserve could deliver rate cuts as soon as March.

“The big story of 2023 is we stuck the landing,” Justin Wolfers, professor at the University of Michigan, told CNN.

Wolfers noted the economy didn’t just bounce back from the fastest recession ever, but it overcame the war in Ukraine, oil price shocks, political dysfunction and countless other issues.

“It’s the little engine that could,” Wolfers said of the economy. “Given how bad the shocks were, this could have been so much worse.”

The US economy still faces real risks and challenges, from the Israel-Hamas war to the least affordable housing market in a generation. And yet there are tangible reasons to be optimistic about the economy in 2024, forces that are easier to see than they were a year ago.

‘Remarkable’ inflation cool-down

Many on Wall Street and in Washington expected inflation would cool after hitting four-decade highs in June 2022.

But few anticipated just how fast it would happen. Consumer prices increased by 3.1% year-over-year in November, down sharply from 9.1% in June 2022.

The speed of the inflation cool-down is “remarkable,” economist Ian Shepherdson recently wrote in a report.

Mark Zandi, chief economist at Moody’s Analytics, told CNN he expects inflation will be back near the Federal Reserve’s 2% target by the end of 2024.

After spiking above $5 a gallon in 2022, gas prices eased significantly in 2023. GasBuddy projects the yearly average for US gas prices will fall again in 2024, allowing consumers to spend $32 billion less on fuel than they did in 2023.

Declaring victory over inflation

Inflation has cooled so much the Fed has halted the monster-sized rate hikes that threatened to derail the economy and freaked out investors.

Fed officials are now even penciling in rate cuts for 2024, an outcome which would represent declaring victory in the war on inflation.

Zandi said he suspects the Fed will cut rates four times in 2024, likely beginning in May. Goldman Sachs is betting the Fed could start delivering rate cuts in March.

Rate cuts would bring relief to Main Street, lowering the cost to get a mortgage, get a car loan and carry a credit card balance. Mortgage rates have already plunged from nearly 8% in October to 6.6% at the end of the year.

Blockbuster year for stocks

Cooling inflation, fading recession fears and looming rate cuts fired up Wall Street.

US stocks ended the year with a bang as the S&P 500 rallied nine weeks to end the year – the longest win streak since 2004. The Nasdaq spiked 43%, narrowly missing its best year in two decades.

It’s true the stock market is not the economy. At times, what’s good for Wall Street is not good for Main Street, and vice versa.

But in this case, the stock market rally largely reflected optimism about the economy, inflation and confidence in a soft landing, which is good news, for Wall Street and Main Street.

‘Extraordinarily low’ layoffs

Despite the Fed’s rate hikes, the unemployment rate is sitting at just 3.7%, near a half-century low.

Initial jobless claims, a proxy for layoffs, remain historically low at just 218,000, a sign many employers are reluctant to let go of the workers they have.

“Claims are extraordinarily low,” Zandi said. “For alarm bells to go off, claims would have to be closer to 300,000. We are a long, long way away from that.”

If this trend lasts, it should support consumer spending — the main driver of the US economy.

“As long as layoffs remain relatively low, the economy should be fine,” said Zandi. “We are in this kind of virtuous economic cycle.”

Paychecks over prices

For much of the economic recovery from Covid-19, prices have increased faster than paychecks, which means real wages, adjusted for inflation, shrank.

However, the trend has started to shift recently, with paychecks catching up to inflation.

Both Zandi and Wolfers expressed optimism real wage growth will gather momentum in 2024.

“As time goes on here and inflation remains low, incomes will catch up and pass inflation,” Zandi said. “People will start feeling better about things.”

‘A million things’ could go wrong

Of course, the past few years have shown reminded everyone how unexpected developments like the Covid-19 pandemic or Russia’s invasion of Ukraine can wreck the most optimistic forecasts.

It’s possible other black swan events emerge, darkening the economic picture for 2024.

“There are a million things that could go wrong, as we know,” said Wolfers. “Recessions do happen.”

Zandi said his list of worries is topped by the risk of further stress in the financial system like the bank failures in early 2023.

Another concern keeping Zandi awake: the 2024 presidential election.

The race for the White House will surely be influenced by the economy. (It’s the top issue for voters). But the opposite could also be true.

Zandi predicted a very close contest and warned a contested election may trigger uncertainty or even social unrest.

“If that’s the case, that could be very damaging to the stock market and the broader economy,” he said.

Still, Wolfers is hoping for a dose of normalcy after a wild few years for the US economy.

“Every economist’s secret dream is we hope the economy is boring. I want a 2024 in which you never want to call me because most of your viewers have jobs, feel comfortable about their income and nothing bad has happened,” he said. “That hasn’t been the story, because of the pandemic, but it might be the story for the next year.”

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New York (CNN) — A growing number of cash-strapped Americans are cracking their nest eggs for emergency funds.

The number of 401(k) plan participants taking hardship distributions increased by 13% between the second and third quarters, according to an analysis by Bank of America of its clients’ employee benefit programs.

That figure now stands at 18,040, the highest level in at least the past five quarters since Bank of America started tracking this data.

The growing reliance on 401(k) plans as a source of urgent cash is further evidence of consumer financial stress heading into the 2024 election year.

Despite high GDP and low unemployment, some Americans are clearly facing a cash crunch and struggling to pay the bills.

Lisa Margeson, managing director of Bank of America’s retirement research and insights group, said the rising number of 401(k) hardship distributions could be caused by high inflation and the rising cost of living.

As Covid-era savings shrink, more and more consumers are turning to a costly way to borrow: Credit cards. Despite record-high rates, credit card balances have swelled by $148 billion over the past year to $1.08 trillion, according to a report from the New York Federal Reserve released Wednesday.

The same report also found that the share of households newly delinquent on credit cards is at the highest level in a dozen years.

Others are leaning on their retirement accounts for cash.

Bank of America said the number of 401(k) participants taking hardship distributions increased by 27% from the first quarter of this year. The average withdrawal amount was steady at $5,070.

Bank of America’s client employee benefit programs are comprised of more than 4 million plan participants.

The bank found that 0.59% of 401(k) participants took a hardship distribution last quarter, up from 0.52% in the second quarter and 0.49% the year before.

According to the IRS, for a distribution from a 401(k) plan to be considered a hardship, it must be made because of an “immediate and heavy financial need, and limited to the amount necessary to satisfy that financial need.” The 401(k) participant gets taxed on this cash withdrawal (it is subject to income tax,) and the money is not paid back to the account.

Financial experts typically urge people to avoid tapping their 401(k) plans for emergency cash, if they can. That’s because funds pulled from retirement accounts will miss out on years, if not decades, of expected growth in the market.

“It’s important that employees try to minimize withdrawals from their 401(k)…whenever possible,” Bank of America’s Margeson said. “When left to grow and invest, these savings can provide employees with a solid nest egg — setting them up for a bright financial future.”

The good news is that despite the high cost of living, many Americans are still socking away money in their retirement accounts.

Bank of America found 401(k) contribution rates were steady during the third quarter at 6.5%.

Even better, Bank of America found that more than one in five (21.3%) of Gen Z and 10.4% of Millennials are ramping up their contribution rates. Just under 3% of those age groups are cutting back on their retirement savings.

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New York (CNN) — Danielle Foskie is among a growing number of Americans who have stumbled into a credit card doom loop.

Foskie, a registered dental hygienist who lives outside of Cleveland, Ohio, couldn’t pay the bills when Covid-19 interrupted business at the dentist office where she works. She turrned to credit cards to get by, eventually racking up $60,000 in credit card debt.

“The stress was very intense. I’ve never found myself in such a situation,” Foskie told CNN.

She’s not alone.

In 2022, about one in 10 (9.9%) general purpose credit card accounts in the United States were in “persistent debt” — a difficult-to-escape situation where borrowers are charged more in interest and fees than they pay down in principal, according to a new Consumer Financial Protection Bureau report shared first with CNN.

That’s up from 8.4% in 2021, a trend that the CFPB blames on shrinking paychecks (after adjusting for inflation) and rising borrowing costs.

“People get into this situation they can’t get out of. The fees and interest keep people trapped there,” a CFPB official told CNN.

Americans were hit with $105 billion in credit card interest last year alone, according to the CFPB’s biennial consumer credit card report. That includes $30.5 billion in the fourth quarter, the highest since at least 2015.

Roughly one in three cardholders with the lowest credit scores — subprime and deep subprime — were in persistent debt last year, according to the CFPB. That’s up from around 25% in 2021 and approaching pre-Covid levels.

CFPB officials expect the number of Americans stuck in this doom loop will go even higher in 2023.

“The industry uses rewards to get you in. You think you’re going to pay everything off every month, but sometimes things don’t go as planned,” the CFPB official said. “If you start carrying a balance, you have to pay a hefty price.”

Warning sign: Credit card late fees surge

Credit cards are among the most expensive ways to borrow — especially these days.

The Federal Reserve’s war on inflation, marked by aggressive interest rate hikes, has lifted credit card rates to record highs, according to Bankrate.com.

Yet Americans have continued to rely on credit cards as they grapple with a high cost of living. US credit card balances surpassed $1 trillion during the second quarter of this year for the first time ever, according to the New York Fed.

The CFPB said interest charges have grown since mid-2021 as Americans spent more on credit cards, balances grew and borrowing costs climbed.

The CFPB report contained some warning signs suggesting that some consumers are facing financial pressure even as unemployment remains historically low.

For instance, for the first time, quarterly late fees topped $4 billion during the fourth quarter of last year, according to the report.

Annual late fees jumped by 28% in 2022 to $14.5 billion, returning to pre-Covid levels, the CFPB said.

Americans with lower credit scores were hit the hardest by late fees.

Even though consumers with deep subprime credit scores hold just 6% of card accounts, they generated 28% of all late fees last year, the CFPB said. (By contrast, consumers with the highest credit scores generated just 6% of late fee volume).

Earlier this year, the CFPB unveiled a proposed rule that would cap credit card late fees at $8, down sharply from the 2022 average of $32.

Making just the minimum payment

A significant number of Americans are only making the minimum payment on their credit card debt, a situation that can drastically increase the overall cost of borrowing and how long it takes to pay it all back.

About 13% of general purpose credit card accounts and 17% of private label accounts paid only the minimum payment due each month in 2022, according to the CFPB report.

Nearly one in three (31%) of subprime private label accounts make just the minimum payment. (There are no comparisons to previous years as this is the first time the CFPB tracked this metric).

Renee Barrett, a 48-year-old mother of twins from the Bronx, found herself making just the minimum payments when she decided to make a career change during the pandemic.

“When I got fed up with the work I was doing and resigned, I had no savings to fall back on,” Barrett said.

Eventually, Barrett accumulated $10,000 in credit card debt on top of $40,000 of student debt.

Barrett urged others to “never, ever” turn to credit cards to get by unless they know with “absolutely certainty” it can be repaid.

As signs of consumer stress emerge, the credit card industry continues to perform well financially.

Credit card issuer profitability took a hit in 2020 during Covid but rebounded sharply in 2021 and last year remained at or above 2019 levels, the CFPB found. The report also warned of an “apparent lack of competition” on credit card rates.

“Credit remains widely available and card issuers are profiting handsomely,” CFPB Director Rohit Chopra told CNN in a statement. “It’s critical that we inject more competition in this market so that Americans can switch their card balances to lower rates.”

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New York (CNN) — Leading business groups are praising President Joe Biden and House Speaker Kevin McCarthy for forging a bipartisan agreement to raise the debt ceiling, and they are calling for Congress to pass the legislation before the government suffers a devastating default.

“With the US at risk of defaulting in less than 10 days, there is no time to spare. We urge members of Congress to give the legislation their strong support,” Josh Bolten, the CEO of the Business Roundtable and former chief of staff to President George W. Bush, said in a statement on Sunday.

Bolten applauded the agreement for not only raising the debt ceiling through January 1, 2025, but for making a “down payment” on permitting reform and taking steps towards putting America on a “more sustainable fiscal trajectory.”

Suzanne Clark, president and CEO of the US Chamber of Commerce, said in a separate statement that by reaching a compromise, Biden and congressional leaders have “shown they can come together on a bipartisan basis and act in the best interests of our country.”

“Members of Congress must finish the job and send the bill to the President’s desk to be signed into law without delay. The gravity of this moment cannot be overstated,” said Clark, who added the Chamber will consider this a “key vote” for lawmakers.

The National Association of Manufacturers, the largest manufacturing trade group in the nation, congratulated Biden, McCarthy and their lawmakers for reaching an agreement.

“Defaulting on our debt would create economic chaos, harming manufacturing workers and their families and jeopardizing our leadership in the world,” NAM CEO Jay Timmons, who previously worked as a senior aid to Republican officials, said in a statement. “Congress should act quickly to pass this agreement and to demonstrate to Americans and to the world the continued strength of our institutions and our democracy.”

Big bank CEOs are also pressing lawmakers to green light the debt limit deal.

The Financial Services Forum, a trade group whose members include Citigroup CEO Jane Fraser, JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon, issued a statement Tuesday praising the efforts of Biden and McCarthy and urging Congress to adopt the agreement.

“Responsible and timely action will preserve the full faith and credit of the United States and our nation’s important position of global economic leadership,” Financial Services Forum CEO Kevin Fromer said in the statement.

Biden and McCarthy reached an agreement Saturday, but the deal isn’t done yet. Party leaders in Washington are working furiously Monday to convince holdouts to back the compromise legislation that would avert default. Still, prospects for passage of the bill are rising as many centrist Democrats said they would back the bill, and Republicans said they believed that they would be able to carry the support of the majority of their House conference.

The House vote is expected to take place Wednesday.

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(CNN) — Senator Elizabeth Warren is cranking up the pressure on the Federal Reserve following the collapse of Silicon Valley Bank.

In a new letter shared exclusively with CNN, Warren, Sen. Bernie Sanders and ten other senators are calling for the Fed to crack down on large regional banks with assets between $100 billion and $250 billion.

Both Silicon Valley Bank and Signature Bank fit into that asset threshold when they failed earlier this month. The bipartisan 2018 rollback of Dodd-Frank freed large regional banks in that range of assets from the toughest oversight.

“The fall of both SVB and Signature, the near-crash of First Republic, and the struggles of other regional banks shed new light on the systemic important of banks with assets totaling between $100 billion and $250 billion,” the lawmakers wrote in a letter sent Wednesday to Michael Barr, the vice chair for supervision at the Fed.

The dozen lawmakers note that the same 2018 rollback of Dodd-Frank gives the Fed latitude in applying tougher regulation on banks in this category — including stronger capital, liquidity, stress testing and resolution plans.

Notably, the letter was signed by Senator Angus King, the Maine independent who voted in favor of the 2018 rollback. It was also signed by Sanders and Democratic Senators Jack Reed, Tammy Duckworth, Richard Blumenthal, Mazie Hirono, Ed Markey, Sheldon Whitehouse, Tina Smith, Chris Van Hollen and Brian Schatz.

“Irresponsible and excessive risk taking by SVB and Signature executives should serve as a clear reminder that banks cannot be left to supervise themselves,” Warren and the other Senate Democrats wrote. “The Fed has a responsibility to ensure financial stability, and in order to fulfill that responsibility, it must ensure that all banks with potential systemic significance are subject to rigorous safety and soundness rules.”

The lawmakers argue that the federal intervention in the wake of the SVB and Signature failures underscore the systemic risk posed by troubles in banks of this size.

Treasury Secretary Janet Yellen said Tuesday that US officials took “decisive and forceful actions” to calm the banking crisis after the bank failures.

What will the Fed do?

Days after the bank failures, the Federal Reserve launched a review of the regulation and oversight of Silicon Valley Bank. That review is being led by Barr, who President Joe Biden nominated to be the Fed’s top regulator of Wall Street.

Fed Chairman Jerome Powell, a frequent target of Warren’s criticism, called for a “thorough, transparent and swift review” by the Fed.

The Fed is rethinking some of its own rules related to midsize banks, including potentially ramping up capital and liquidity requirements and stepping up annual “stress tests,” the Wall Street Journal previously reported.

“We strongly support this approach,” Warren and her colleagues wrote in the letter. “In order to restore sufficient safety practices to the banking system and restore consumers’ confidence in the soundness of their banks, the Fed must immediately exercise its authority to apply enhanced prudential standards and supervision to banks with $100-$250 billion in assets.”

Warren has long been a regulation hawk, pushing for tough rules to prevent a repeat of the 2008 crisis and sharply criticizing those who have relaxed rules on banks.

‘Serious mistake’

However, the role of the 2018 rollback of Dodd-Frank in the failure of Silicon Valley Bank is hotly debated

Mark Zandi, chief economist at Moody’s Analytics, recently told CNN’s Kate Bolduan he doesn’t know if the easing of stress test requirements “would have forestalled” the bank failures, adding these stress tests “couldn’t have hurt.”

Sheila Bair, a Republican and the former chair of the FDIC during the 2008 crisis, told CNN’s Poppy Harlow she doesn’t think there is “some broad problem because of deregulation with regional banks.”

Patricia McCoy, a former federal regulator, told CNN on Tuesday that the events of the past ten days have shown the 2018 rollback of Dodd-Frank for banks in the $100 billion to $250 billion asset range was a “serious mistake.”

“Fast forward five years, and two of those banks — Silicon Valley and Signature Bank — failed due to lack of liquidity and possible undercapitalization,” McCoy, now a professor at Boston College Law School, said in an email. “Their failures destabilized the financial system in the process and caused federal banking regulators to take measures (such as insuring all the deposits at the two failed banks) that will tempt banks to bet on even bigger risks in the future.”

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 (CNN) — First Republic Bank, facing a crisis of confidence from investors and customers, is set to receive a $30 billion lifeline from a group of America’s largest banks.

“This show of support by a group of large banks is most welcome, and demonstrates the resilience of the banking system,” the Treasury Department said in a statement Thursday.

The major banks include JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Truist.

The $30 billion infusion will give the struggling San Francisco lender much-needed cash to meet customer withdrawals and buttress confidence in the US banking system during a tumultuous moment for lenders.

A First Republic spokesman declined to comment.

In a statement, the banks said their action “reflects their confidence in First Republic and in banks of all sizes,” adding that “regional, midsize and small banks are critical to the health and functioning of our financial system.”

Markets volatile over liquidity woes

First Republic’s shares, which were halted several times for volatility Thursday, ended the day up more than 10%.

The bank’s problems underscored continued worries about the banking system in the aftermath of the collapse of Silicon Valley Bank and Signature Bank.

Both Fitch Ratings and S&P Global Ratings downgraded First Republic Bank’s credit rating on Wednesday over concerns that depositors could pull their cash.

Many regional banks, including First Republic, have large amounts of uninsured deposits above the $250,000 FDIC limit. Although not close to SVB’s massive percentage of uninsured deposits (94% of its total), First Republic has a sizable 68% of total deposits that are uninsured, according to S&P Global.

That led many customers to exit the bank and put their money elsewhere, creating a problem for First Republic: It has to borrow money or sell assets to pay customers their deposits in cash.

To make money, banks use a portion of customers’ deposits to give out loans to other customers. But First Republic has an unusually large 111% liability-to-deposit ratio, S&P Global says. That means the bank has lent out more money than it has in deposits from customers, making it a particularly risky bet for investors.

Yellen organizes a quiet meeting

Treasury Secretary Janet Yellen on Thursday met privately in Washington with JPMorgan CEO Jamie Dimon before 11 banks agreed to deposit $30 billion in First Republic Bank to stabilize the teetering lender, according to two people familiar with the matter.

The meeting served as a culmination of what had been a series of conversations over the last two days between Yellen and other US officials and leaders from some of the country’s largest banks as they sought a private sector lifeline for the battered California bank.

Yellen had driven the effort from the government side, while Dimon led the effort to organize the bank executives that would eventually get behind the dramatic infusion of deposits.

Yellen first conceived of the idea of the largest US banks coming together to direct deposits toward First Republic, according to a separate source familiar with the matter. The move was seen as critical to stabilizing the bank’s deposit base — but also a critical signal to financial markets about both the bank and the US financial system.

The Federal Reserve created a loan system designed to prevent regional banks from failing after SVB collapsed. The facility will allow banks to give the Fed their Treasury bonds as collateral for one-year loans. In return, the Fed will give banks the value that the banks paid for the Treasuries, which have plunged in the past year as the Fed has hiked interest rates.

That extraordinary federal intervention appears to have been insufficient to keep investors satisfied.

First Republic on Sunday announced a deal with JPMorgan to gain fast access to cash if needed, and the bank then said it had $70 billion in unused assets that it could quickly use to pay customers’ withdrawals if needed.

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(CNN) — The federal government isn’t going to take away your gas stove, a top consumer regulator told CNN on Wednesday.

Richard Trumka Jr, a US Consumer Product Safety commissioner, set off a firestorm this week by suggesting the agency could ban gas stoves because they have been linked to childhood asthma.

Trumka confirmed to CNN that “everything’s on the table” when it comes to gas stoves, but stressed that any ban would apply only to new gas stoves, not existing ones.

“We are not looking to go into anyone’s homes and take away items that are already there. We don’t do that,” Trumka said. “If and when we get to regulation on the topic, it’s always forward looking. You know, it applies to new products. Consumers always have the choice of what to keep in their homes and we want to make sure they do that with full information.”

There are increasing health concerns about indoor pollution linked to gas stoves.

Trumka pointed to a December 2022 study in the International Journal of Environmental Research and Public Health that found indoor gas stove usage is associated with an increased risk of current asthma among children. That study found almost 13% of current childhood asthma in the United States is attributable to gas stove use.

For now, Trumka said, CSPC has not “coalesced” around a solution and is still gathering information and preparing to ask for public input.

“We try to look at ways to make things safe. That is goal one. And if we can do that, that’s fantastic. But every option, if we fall short of that, is on the table,” Trumka said.

The CSPC commissioner also pointed out that consumers who wish to switch from a gas stove to an electric one are eligible to a rebate of up to $840 through the Inflation Reduction Act.

Trumka did not retract his comments to Bloomberg News earlier this week where he said that “products that can’t be made safe can be banned.”

Manchin slams as ‘recipe for disaster’

Those remarks set off controversy among more conservative lawmakers.

“This is a recipe for disaster. The federal government has no business telling American families how to cook their dinner,” Democratic Sen. Joe Manchin of West Virginia said on Twitter on Tuesday. “I can tell you the last thing that would ever leave my house is the gas stove that we cook on.”

Trumka responded directly on Wednesday, telling CNN: “I have no intention of coming for Senator Manchin’s… any of his items.”

GOP Rep. Ronny Jackson of Texas went even further than Manchin.

“I’ll NEVER give up my gas stove,” Jackson tweeted on Tuesday. “If the maniacs in the White House come for my stove, they can pry it from my cold dead hands. COME AND TAKE IT!!”

Trumka, who President Joe Biden nominated in 2021 to serve on the CPSC, responded in the interview.

“First, let’s not blame anybody in the White House. If there’s a maniac, um, sorry,” he said, emphasizing that Americans have the freedom to make their own choice and CPSC regulates manufacturers, not consumers.

Biden does not favor gas stove ban

The White House weighed in on Wednesday, with a spokesperson telling CNN: “The President does not support banning gas stoves — and the Consumer Product Safety Commission, which is independent, is not banning gas stoves.”

Alexander Hoehn-Saric, the agency’s chairman, also issued a statement on Wednesday noting that research indicates emissions from gas stoves “can be hazardous” and the CPSC is looking for ways to “reduce related indoor air quality hazards.”

“But to be clear,” Hoehn-Saric said, “I am not looking to ban gas stoves and the CPSC has no proceeding to do so.”

Instead, he said the agency is researching gas stove emissions and exploring ways to address potential health risks, including by asking the public this spring to provide information.

What can consumers do now?

The American Gas Association, an industry trade group, put out a statement on Tuesday saying that “attempts to generate consumer fears with baseless allegations to justify the banning of natural gas is a misguided agenda” that would “saddle vulnerable populations with significant costs.”

Trumka responded by saying the AGA has a “vested interest in keeping things the same and we are trying to educate the public right now.”

Consumers who are concerned about gas stoves in their home can take precautions. Trumka urged those with gas stoves to ensure the exhaust hood is vented to outside the home, not being routed back into the home.

“We’ve been hearing that so many people’s exhaust tubes don’t adequately ventilate,” he said.

If the exhaust is not vented outside the home, Trumka said gas stove users should open a window or turn on a fan to clear the air.

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(CNN) — Many on Wall Street cheered last fall when the midterm elections ushered in a return of divided government in Washington.

The old mantra is that gridlock is good because it means neither political party can mess things up.

But the historic dysfunction playing out in Congress this week is a reminder that you should be careful what you wish for. While gridlock might be good for markets and the economy, complete paralysis is bad because, every so often, government needs to get stuff done.

House Republicans’ inability to pick a speaker on the first ballot (or second or third) for the first time in a century raises an ominous question: If lawmakers can’t pick a speaker, how can they tackle truly thorny issues like raising the debt ceiling or responding to a potential recession?

“We’re watching a slow-moving trainwreck collide with a dumpster fire,” Isaac Boltansky, director of policy research at BTIG, told CNN in a phone interview. “This is a clear indication we will have dysfunction for the entirety of this Congress, which heightens the risk around must-act deadlines such as the debt ceiling.”

One New York Stock Exchange trader, a self-described conservative, told CNN on Tuesday the situation in the House is “disturbing” because it suggests lawmakers will struggle to get even more important things done.

“This is a joke. The party can’t get its [stuff] together. It’s a disgrace,” said the trader, who requested anonymity to discuss the situation candidly.

Even if Republicans eventually coalesce around Rep. Kevin McCarthy or a consensus candidate for speaker, the past few days have made plain to investors, economists and the public just how ungovernable the GOP majority in the House appears to be.

“This is not gridlock so much as a rudderless ship without a captain,” Chris Krueger of Cowen Washington Research Group wrote in a note titled, “Burning down the House: Speaker vote opening act for 2 years of tail risk.”

Krueger said the 4,000-page spending bill passed by Congress last month removed “a lot of the sharp objects” that could harm the economy.

Buckle up for debt ceiling brinksmanship

But lawmakers did not agree to tackle the debt ceiling, the borrowing limit that must be raised to avoid a calamitous US debt default.

It’s not hard to imagine the ungovernable GOP majority clashing with Democrats and the White House this summer and fall over the debt ceiling — with the entire world economy hanging in the balance.

Even before the House speaker stalemate, Goldman Sachs warned late last year that 2023 could bring the scariest debt ceiling fight since that infamous 2011 episode that cost America its perfect AAA credit score.

In the past, brinksmanship over the debt ceiling eventually gave way to a compromise, though often not until significant pressure was applied by business leaders, financial markets — or both.

It’s not clear how a debate over the debt ceiling will play out this time though, given the narrowly divided Congress and skepticism from Republicans about corporate America.

“Our concern is that an increasingly populist GOP is less tied to big business influence, while a narrow majority amplifies their influence,” Benjamin Salisbury, director of research at Height Capital Markets, wrote in a note to clients on Wednesday.

‘All about the Fed’

Of course, the “House of Cards”-style drama playing out in Congress is not the most pressing issue facing the economy and investors right now.

The biggest questions concern whether the US economy is about to stumble into a recession (or a “slowcession,” if you ask Moody’s) and how long the Federal Reserve will keep up its fight against inflation.

Later this week, on Friday, investors will be laser-focused not on McCarthy’s fate but on the monthly jobs report and what it says about efforts to cool down the labor market.

Andrew Frankel, co-president of Stuart Frankel, dismissed the House speaker race as a “big, fat nothing-burger” for the market and said it was “just noise.”

“It’s all about the Fed,” Frankel said.

How would Congress respond to a recession?

And yet the stalemate in the House underscores how hard it will be for lawmakers to aggressively respond to a potential recession or another crisis in the next two years.

Although there are reasons to be cautiously optimistic about a soft landing, former Fed Chair Alan Greenspan warns a recession is still the most likely outcome.

Greenspan, senior economic adviser at Advisors Capital Management, said in a discussion posted online that inflation will not cool enough to avoid “at least a mild recession” induced by the Fed.

“We may have a brief period of calm on the inflation front, but I think it will be too little too late,” Greenspan said.

If there is a recession, the chaos in Washington suggests the economy may not be able to count on a timely rescue from Congress this time around.

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 (CNN) — In the spring of 2008, as gas prices were barreling towards record highs, presidential candidates John McCain and Hillary Clinton threw their weight behind a gas tax holiday.

Future president Barack Obama, by contrast, dismissed the idea as a political “gimmick” designed purely to win votes. “The easiest thing in the world for a politician to do is tell you exactly what you want to hear,” Obama said in April 2008.

Flash forward 14 years. Obama’s former vice president is now pushing for a gas tax holiday to ease the strain of record-high gas prices. President Joe Biden wants a three-month pause on the 18.3-cent-per-gallon federal tax.

If it gets through Congress, a gas tax holiday would deliver swift — albeit modest — relief to consumers by lowering retail gasoline prices by as much as 18 cents a gallon.

A gas tax holiday would be politically popular. It would also allow the White House to show that Biden is taking tangible action to address one of the biggest headaches facing families.

Americans are grappling with a 41% spike in gas prices since Russia’s invasion of Ukraine in late February. Record-high gas prices have contributed to the worst inflation in 40 years, forcing the Federal Reserve to raise interest rates so aggressively that markets are in turmoil and recession risks are rising.

Yet suspending the gas tax would involve trade-offs that serve to validate why Obama and others have bashed such a move as a gimmick — and why it may not get through Congress.

It won’t solve the underlying problem

First, a gas tax holiday would do nothing to fix the supply shock driving up prices, not just for gasoline but diesel and jet fuel, too.

Secondly, it would push demand in the wrong direction. At a minimum, artificially lowering prices would support buying gasoline, underlining the adage that the best cure for high prices is high prices.

“The risk is that at a time when the supply-and-demand balance that sets prices is already extremely out of balance, it would enable more Americans to hit the road,” said Patrick DeHaan, director of petroleum analysis at GasBuddy.

Suspending the gas tax also would effectively encourage the use of gasoline — running counter to the Biden administration’s ambitious climate goals that call for moving away from fossil fuels.

“Barack Obama was right. A gas tax holiday was a bad idea in 2008 and it’s a bad idea today,” Senator Bernie Sanders wrote on Twitter in March.

Like other progressives, Sanders instead threw his weight behind a windfall profit tax on the oil-and-gas industry, a potentially-popular move that carries its own set of risks.

Adding to inflation?

Mark Zandi, chief economist at Moody’s Analytics, told CNN in a phone interview that a gas tax holiday would not be helpful and could even be inflationary, forcing the Fed to raise rates more aggressively.

“I’m not a fan. You want people to drive less and use less gas. This works against that objective,” he said. “It’s not well-targeted.”

Zandi also expressed concern that energy companies may not pass along the entire savings from a gas tax holiday.

The Moody’s economist served as an economic adviser to McCain during the 2008 race when the Arizona Republican endorsed a gas tax holiday.

“I probably lost that battle,” Zandi said.

Another problem with a gas tax holiday today: Revenue raised from this levy helps finance the Highway Trust Fund, which is already short on funding. The federal gas tax hasn’t been increased since 1993, when gas was selling for just over $1 a gallon.

Unless those funds are replaced from other sources, suspending the gas tax would sap resources for building and repairing highways at a time when the price tag on those projects is going up due to soaring costs for construction materials and labor.

Energy Secretary Jennifer Granholm acknowledged this issue over the weekend, telling Dana Bash on CNN’s “State of the Union” that one challenge of suspending the gas tax is that it “funds the roads.”

Gary Cohn, a longtime Democrat who served as a top economic official in the Trump White House, told CNN Tuesday he’s concerned about how a gas tax holiday would diminish funding for infrastructure — a key policy focus of the Biden administration.

“The unintended consequences of getting rid of the tax are enormous,” said Cohn, who is now vice chairman at IBM. “The gas tax idea, although it looks like it solves the problem today, it actually creates, I think, more problems down the road.”

‘Self-defeating’

Marc Goldwein, senior policy director at the Committee for a Responsible Budget, said a gas tax holiday would be a “mistake,” in part because pushing up demand would lift prices.

“It would be partially self-defeating, not that meaningful for prices at the pump and costly for the federal government,” Goldwein said.

Economist Larry Summers, a former adviser to Obama and Treasury Secretary under President Bill Clinton, similarly told NBC’s “Meet the Press” last weekend that a gas tax holiday is “kind of a gimmick.”

And yet Biden officials say the president is seriously weighing it as an option.

Treasury Secretary Janet Yellen said last weekend a gas tax holiday is “certainly worth considering.”

If Biden and Congress do go this route, they will face a problem down the road when the tax holiday expires. “It’s going to be very unpopular when prices snap back up by 18 cents a gallon,” GasBuddy’s DeHaan said.

And that raises the specter of a temporary gas tax suspension morphing into a permanent holiday.

The post A gas tax holiday sounds fantastic. But there’s a reason Obama bashed it as a ‘gimmick’ appeared first on The Atlanta Voice.