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Today’s Big Deal: The U.S. economy is dealing with roadblocks stemming from Russia’s invasion and inflation. We’ll also look at Manchin’s decision to oppose Biden’s Fed pick and the Kremlin’s increasingly desperate financial moves.
But first, watch an anti-war protestor interrupt one of Russia’s most popular newscasts.
For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom. Reach us at slane@digital-stage.thehill.com or @SylvanLane, afolley@digital-stage.thehill.com or @ArisFolley and kevers@digital-stage.thehill.com or @KarlMEvers.
Let’s get to it.
Russian war, inflation pinch US economy
The U.S. economy faces mounting threats from abroad as the war in Ukraine and a COVID-19 surge in China threaten to stoke inflation and slow growth.
While most economists say the U.S. is still on track for stellar job gains and sturdy economic growth this year, the risks of a slowdown have spiked over the past two weeks.
- The war in Ukraine and the weeks of rising threats from Russia have already driven crude oil prices — and the gasoline prices linked to them — to staggering heights.
- Energy and food prices, which had risen steadily throughout 2021, are on track to rise even higher as Russia’s invasion threatens the global supply of oil, natural gas and wheat.
- Soaring COVID-19 cases across China could now add fuel to the inflationary fire as factories, neighborhoods and entire cities shut down under the country’s strict coronavirus containment policies.
“If you have more disruptions to Chinese factories and imports, more supply chain bottlenecks, more shortages, higher prices, this adds to the inflationary pressures,” said Mark Zandi, chief economist at Moody’s Analytics, in a Monday interview.
“It’s just one more reason to be nervous about the economy’s prospects,” he said.
Sylvan explains here.
Read more: Russia’s ties to the global economy are rapidly unwinding as crushing sanctions and the Kremlin’s response upend decades of post-Soviet reforms.
The Kremlin announced strict banking and export limits meant to prop up its currency’s plunging value this week at the expense of foreigners. Moscow has also pledged to seize the assets of any business leaving Russia and allow its companies to steal Western patents. Experts say the fallout could last long after the war in Ukraine ends and tarnish Russia’s standing for decades, even if sanctions are eased.
Here’s more from Sylvan and Karl.
MAKING IT OFFICIAL
Manchin to oppose Biden Fed pick over climate stances
Sen. Joe Manchin (D-W.Va.) said Monday that he will not vote to confirm President Biden’s pick for a powerful position on the Federal Reserve Board over her criticism of the fossil fuel industry.
In a Monday statement, Manchin said he opposes Biden’s nomination of Sarah Bloom Raskin to serve as the Fed’s vice chair of supervision because of his “concerns about the critical importance of financing an all-of-the-above energy policy to meet our nation’s critical energy needs.”
- Raskin, a former Fed governor and Treasury Department deputy secretary, urged financial regulators and banks to pay closer attention to climate-related financial risks for years before Biden chose her to be the Fed’s regulatory chief.
- She had also warned against making investments in fossil fuel projects and companies, noting the environmental risks and financial volatility within the sector, and opposed the Fed giving emergency loans to fossil fuel companies during the height of the coronavirus pandemic.
Without Manchin’s vote, Raskin would need the unlikely support of at least one Republican senator to be confirmed by the upper chamber. Democrats narrowly control the Senate with 50 members plus the tie-breaking vote of Vice President Harris. Manchin’s opposition will also bolster a Senate GOP blockade of Raskin’s nomination on the Senate Banking Committee, which has snarled her and four other Fed nominations.
Sylvan has the latest here.
GET READY TO RUBLE
Russia threatens to pay foreign debts in rubles following sanctions
Russia is threatening to pay foreign debts in rubles after a number of Moscow’s top banks were sanctioned in response to the country’s invasion of Ukraine.
The Russian government is scheduled to pay $117 million on Wednesday for a pair of its dollar-denominated bonds, according to Reuters.
- The Russian foreign ministry has reportedly accepted a temporary course of action that gives banks the ability to pay back debts, but it is now warning that whether or not those payments withstand depends on the sanctions.
- A number of Moscow’s top banks have been sanctioned as a result of Russia’s invasion of Ukraine. Last month, the Treasury Department banned financial dealings with the Bank of Russia and the Russian foreign investment fund, and the White House announced that the U.S. and its allies would oust certain Russian banks from the SWIFT international banking system.
If the payments cannot go through, the finance ministry reportedly said it would repay Eurobonds in rubles, which has plummeted to record lows since Russia’s invasion.
Read more here from The Hill’s Mychael Schnell.
PRICE LYFT
Lyft to charge temporary surcharge fee amid rising gas prices
Popular ride-share app Lyft confirmed Monday that it will charge riders a fuel surcharge fee amid rising gas prices across the country.
The company told The Hill in an email that it has been “closely monitoring rising gas prices and their impact on our driver community.”
- “Driver earnings overall remain elevated compared to last year, but given the rapid rise in gas prices we’ll be asking riders to pay a temporary fuel surcharge, all of which will go to drivers,” a spokesperson said. No details were shared on how much riders would be charged. The spokesperson added that the company will share more information soon.
- This follows a similar move by Lyft rival Uber, which announced on Friday that it will charge riders a fuel fee to mitigate the impact of rising gas prices.
Uber customers will pay a surcharge of either $0.45 or $0.55 for Uber rides and a surcharge of either $0.35 or $0.45 for Uber Eats orders starting Wednesday. The full amount will go straight to drivers.
The Hill’s Sarakshi Rai has more on this here.
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Good to Know
Nonwhite voters are more likely than white voters to say that inflation has caused a major financial strain in their lives.
A Wall Street Journal poll found that 35 percent of Black, Hispanic, Asian American and other voters who said they were something other than white said inflation would have a significant strain on their life. Among white voters, 28 percent said the same.
Here’s what else we have our eye on:
- The Committee on House Administration has postponed its hearing on proposals to ban congressional stock trading after its chair, Rep. Zoe Lofgren (D-Calif.), tested positive for COVID-19.
- India is reportedly considering a Russian offer to buy crude oil and other commodities at discount prices a week after the U.S. banned all Russian energy imports.
- After more than two years of holding special hours for shoppers over age 60 and other high-risk groups during the COVID-19 pandemic, Costco says it is ending the policy.
- The Equal Employment Opportunity Commission (EEOC) on Monday issued guidance for workers, clarifying that discriminating against employees or job applicants with family caregiving responsibilities may violate federal law.
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 Tuesday.