Fed cuts interest rate half a point | The Excerpt

On Thursday’s episode of The Excerpt podcast: USA TODAY Economics and Jobs Reporter Paul Davidson breaks down what the Fed rate cut means for the economy. Lebanon is on edge after a wave of handheld device detonations. USA TODAY White House Correspondent Joey Garrison puts the Teamsters decision not to endorse Kamala Harris or Donald Trump in context. The FBI reveals details of a Trump campaign hack, as Iran ramps up a 2024 election meddling campaign. Flu deaths in children reach troubling highs amid drops in vaccinations, according to the CDC.

Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.

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Taylor Wilson:

Good morning. I'm Taylor Wilson, and today is Thursday, September 19th, 2024. This is The Excerpt. Today the Fed has lowered its key interest rate. What's that mean for the economy? Plus the latest from Lebanon after more handheld device attacks, and the Teamsters won't endorse Harris or Trump. What could that mean for the election?

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The Federal Reserve lowered its key interest rate by a half percentage point yesterday, moving ahead with its first rate cut in four years. I spoke with USA TODAY economics and jobs reporter Paul Davidson to help put the move in context. Paul, thanks for hopping on The Excerpt today.

Paul Davidson:

No problem, Taylor. Thank you.

Taylor Wilson:

So Paul, what did the Federal Reserve decide on its key interest rate yesterday?

Paul Davidson:

Yeah, the Federal Reserve decided to cut its key interest rate by a relatively large half a percentage point. It had a choice between a half percentage point and a quarter point basically, and it decided to go big. It went with the larger cut, the first rate cut in four years. Its key rate affects rates throughout the economy, such as mortgage rates, credit card rates, auto loan rates, corporate bond rates. So it was a pretty significant, even historic, decision. It had hiked rates very rapidly while inflation was rising very sharply during and after COVID, and inflation finally has come down, and the Fed decided to pivot and start cutting rates to boost the economy in the job market.

Taylor Wilson:

Yeah, so, Paul, was this a surprising move, and what really led to this decision?

Paul Davidson:

It depends on who you ask. It was kind of a coin toss coming into the meeting. Markets, futures markets, which try to predict where the Fed's going to go, had started predicting a bigger half-point cut. But meanwhile, a lot of economic research firms were still figuring quarter-point cut because the Fed's been so cautious and been so patient at the lower rates too soon. They wanted to make sure inflation was under control, so they'd been pretty conservative. I wouldn't say it was surprising because markets really were looking for the larger cut to get started as the Fed turns more to trying to boost the economy rather than ease inflation. But I think it did probably surprise a lot of people that think of the Fed as being a little more cautious the last couple of years because of high inflation.

Taylor Wilson:

Paul, forward-looking here. What did the Fed's forecast in terms of cuts for the rest of this year and also beyond into '25?

Paul Davidson:

So even though the Fed started with a bang half point cut, which probably should make markets happy, it's not really going for half point cuts from now on. It's going to settle into more of a moderate measured pace. So the next couple meetings, November and December, it looks like the Fed is going to cut rates by a quarter point, and then it's looking for a full percentage point next year, which is fairly measured. It's sort of one quarter point cut every other meeting or four quarter point cuts for the year. It's looking for continued cuts as inflation continues to come down toward the Fed's goal and the Fed is trying to keep the job market healthy and the economy healthy, and then another couple of cuts ratcheting down to a couple of cuts in 2026. So basically, it's a fast start and then a more measured pace because the Fed thinks the job market is still in pretty good shape and the economy's in pretty good shape, but it wants to prevent it from spiraling down and it wants to keep it where it is today.

Taylor Wilson:

What does all this mean really more broadly, Paul, when we're talking about inflation, the job market, and the economy as a whole right now?

Paul Davidson:

Well, the Fed hopes that what it's doing and what it did was kind of thread the needle. What it's trying to achieve, and sort of you might say Fed speak, is a soft landing, and a soft landing means you're boosting your interest rates to lower inflation. But you're doing it in a way, in a sort of very nuanced, delicate way, so that you don't cause recession. You do it moderately, but then you pull back when necessary and you start lowering rates. It's a sort of difficult feat to pull off. A lot of times in the past when the Fed has increased rates to bring down inflation, it has caused a recession because it's hard to achieve that balance. But the Fed seems to be on the path to succeeding, and so it looks like rates are still high, and that should help continue to bring down inflation.

At the same time, the Fed is taking action as the job market wobbles a little bit. It's taking action to sort of juice the economy, juice the stock market, and hopefully that keeps the job market from worsening anymore and keeps the economy in good shape too. The big picture is the Fed's hoping that it achieves that ideal. It's not guaranteed. The fact that the Fed is lowering rates now could pick up inflation or keep inflation a little higher, and if they don't go fast enough in lowering rates, the job market could worsen a bit, unemployment could rise, but the Fed believes in hopes. It's kind of threading that needle.

Taylor Wilson:

Paul, it's an election fall where weeks away from election night. So I have to throw you this question. Have we heard from the political world at all in the wake of this Fed move?

Paul Davidson:

As you might expect, Democrats have been urging the Fed to cut rates for quite a while now. Democrats like Elizabeth Warren and other Democrats believe rates have been too high for too long that inflation has been coming down, and they've been nudging and urging the Fed to cut rates sooner, which would help the economy naturally and help the Biden administration because that's the incumbent president and help Vice President Harris and her campaign. Republicans think the Fed should not be cutting rates so much that here you have an election coming up and you have the Fed cutting rates again, which may help the incumbent. So as might be well-predicted, Republicans think the Fed is sort of aiding existing administration. On the other hand, Fed Chair Powell and other Fed officials have been adamant that they don't consider politics at all and they never do. That they're strictly looking to help the economy and help Americans and help consumers and do the right thing and that it was just time to cut interest rates. Inflation is finally getting close to the Fed's goal, and the job market is starting to weaken a little bit.

Taylor Wilson:

Paul, great breakdown for us here. Paul Davidson covers economics and jobs for USA TODAY. Thank you, Paul.

Paul Davidson:

Thanks very much, Taylor. Happy to do it.

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Taylor Wilson:

Handheld radios used by Hezbollah detonated yesterday across Lebanon's south. The country's health ministry said 20 people were killed and more than 450 injured in Beirut's suburbs and elsewhere, while the death toll from Tuesday pager explosions rose to 12. Lebanon's government and Hezbollah, an Iran-backed group that uses the nation as a base for its militants, both blamed Israel for the attacks on wireless electronic devices. Many people lost eyes and fingers in the blasts. Others suffered serious stomach wounds. Israel has not commented on the mass attack on Hezbollah communications, but multiple reports have said it was carried out by its spy agency, Mossad.

The operations came alongside Israel's 11-month-old war in Gaza and fears of an escalation on its Lebanese border, along with the risk of a full-blown regional war. Israel and Hezbollah have long been enemies and fought a major war in 2006, but cross-border fighting between the two sides has been stoked by Israel's war in Gaza, and tens of thousands of Israelis have been forced to evacuate Northern Israel amid waves of near-deadly Hezbollah missiles since Hamas attacked Israel on October 7th. Meanwhile, Israel's defense minister says that the country is opening a new phase in its war with Hamas in Gaza.

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The International Brotherhood of Teamsters Union said yesterday it will not endorse either Vice President Kamala Harris or former President Donald Trump in the presidential election. I spoke with USA TODAY White House correspondent Joey Garrison to learn more.

Hey there, Joey.

Joey Garrison:

Hey, how's it going?

Taylor Wilson:

Good, Joey. Thanks for hopping on. So let's just start here. What decision did the Teamsters make, and what led up to this decision?

Joey Garrison:

For months, Teamsters has withheld endorsing in the presidential election, and then on Wednesday, we finally got their answer, and they're not endorsing anyone at all in the '24 presidential election. They opted not to endorse back when Joe Biden was the presumptive democratic nominee, and they maintained that neutral stance for weeks here. They finally met with Kamala Harris, the Democratic nominee, on Monday for the first time, but they came away with that, still not willing to endorse her. This is a union that typically endorses Democrats like most unions do, but that's not entirely the case. Have endorsed Republicans in the past. Most recently, George Bush senior back in 1988 endorsed Reagan, endorsed Nixon, but not endorsing a Democrat who has campaigned partially on her backing of unions as a big deal in this election.

You'll remember Sean O'Brien, the Teamsters president, made hay back in July when he spoke at the Republican National Convention in Milwaukee. He became the first Teamsters president to speak at a R.N.C in 121-year history of the union, and that upset a lot of Democrats who were saying, "Hey, we cited legislative with you on all sorts of issues over the years that are pro union, but you're going to speak at the Republican convention." But I think that was a signal that, "Hey, we might not be going down the traditional road here in terms of backing the Democratic nominee."

Taylor Wilson:

Yeah, so in terms of what this now functionally might mean for the election, Joey, does this hurt Harris more than Trump?

Joey Garrison:

It definitely hurts Harris. He is, just like Biden has, flexed kind of her union credentials here. She's been backed by 9 out of the 10 largest labor unions, including UAW, the main teachers unions, AFL-CIO. This is the one outlier, particularly in Pennsylvania and Wisconsin and Michigan. Some of the states that still have a fairly large union membership, though much smaller than it used to be decades ago, that can play into the election. Now, interestingly, shortly before Teamsters announced their decision not to endorse, they released polling data that showed their rank-and-file members support Trump at a wider clip than they do Harris. It was by a fairly substantial margin, 58% for Trump and 31% for Harris. So that's a pretty wide gap. Although traditionally, these unions have endorsed the Democratic presidential candidates, that's a big base for Trump that he is trying to get these blue collars, white working class voters, many who have differences of opinion on who they support from their union leadership. In this case, Teamsters looked and surveyed their members, saw that more of them endorsed Trump, and they ultimately did not back Harris.

Taylor Wilson:

So Joey, how are the two campaigns responding here? How are they framing this decision from the Teamsters?

Joey Garrison:

Well, the Harris campaign is actually highlighting a lot of local Teamsters unions that have nonetheless endorsed Harris, kind of breaking ranks with the National Union on that end. Really, every 20 or 30 minutes since this announcement, I've gotten new press releases from the Harris campaign where they have cited another one. So they're arguing, "Look, I mean, we might not have gotten this endorsement, but make no mistake about it, Kamala Harris is the pro-Union, the neighbor-friendly candidate of these two." Conversely, the Trump campaign is citing those polls that I just said, saying, "Hey, even though the executive board of Teamsters isn't making a formal decision, the vast majority of rank-and-file working men and women..." This is their statement, "... want Donald Trump back in the White House."

So they're again making that play right to the rank-and-file members, and this is a union that represents truck drivers, freight workers, a wide assortment of blue collar jobs out there. So that's an important voting block that both candidates are going after, particularly in those three states. I think a lot of these people have already made up their minds one way or another. I wouldn't expect a major polling shift as a result of this, but in terms of campaign infrastructure, assistance, and those sorts of things, having the Teamsters' endorsement would've been a nice boost, particularly for the Harris campaign.

Taylor Wilson:

Right. Interesting stuff here. Joey Garrison is a White House correspondent with USA TODAY. Thank you, Joey.

Joey Garrison:

Hey, thanks for having me on.

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Taylor Wilson:

Iranian hackers send people associated with President Joe Biden's campaign unsolicited information that was stolen from former President Donald Trump's campaign, but it was ignored. That's according to the FBI and other federal agencies yesterday. The announcement is the latest in a series of warnings by federal cybersecurity officials about Iran's efforts to meddle in the upcoming election, including taking specific steps to release information about Trump's campaign. That has also included a hack-and-leak spearphishing effort targeting Trump's campaign in retaliation for the former president's actions taken while he was in office, including killing Islamic Revolutionary Guard Corps general Qasem Soleimani.

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The nation recorded one of its worst totals for child deaths from the flu this past season, coinciding with troubling drops in US vaccination rates, federal health officials warned. Nearly 200 children died from influenza-related complications in the '23-'24, season according to the CDC. The season's death toll of 199 matches the 2019-2020 flu season, officials said. The highest death toll recorded was 288 children who died from the flu in 2009-2010 at the height of the H1N1 swine flu pandemic. Most of the 199 total children who died from the virus were eligible for a vaccine but did not receive one. Studies have shown that annual flu vaccines, while not foolproof against infection, are effective against serious illness.

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It's been nearly a decade since the Sexual Assault Kit Initiative has been put into place. It's a relatively new grant program that takes aim at the decades-old problem of unprocessed sexual assault kits. Nearly $350 million in grant money went to 90 local and state agencies across the U.S., but for many rape survivors, the program's promise of justice fell short. Many kits still were not tested, and for the ones that had been, few convictions ever arrived. USA TODAY investigative reporter Tricia Nadolny spoke with my co-host Dana Taylor about the year and a half she spent looking into what really happened with America's rape kit backlog. You could find the episode right here on this feed today after 4:00 PM, Eastern time.

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Thanks for listening to The Excerpt. You can get the podcast wherever you get your pods, and if you're on a smart speaker, just ask for The Excerpt. I'm Taylor Wilson, and I'll be back tomorrow with more of The Excerpt from USA TODAY.