Friday Five | December 16, 2022

A recap of this week’s top-five news items and resources from the intersection of business and government.

1. Fed raises key rate by half-point and signals more to come

The Federal Reserve reinforced its inflation fight Wednesday by raising its key interest rate for the seventh time this year and signaling more hikes to come. But it announced a smaller hike than it had in its past four meetings at a time when inflation is showing signs of easing.

The Fed made clear, in a statement and a news conference by Chair Jerome Powell, that it thinks sharply higher rates are still needed to fully tame the worst inflation bout to strike the economy in four decades.

The latest rate hike was announced one day after an encouraging report showed that inflation in the United States slowed in November for a fifth straight month. The year-over-year increase of 7.1%, though still high, was sharply below a recent peak of 9.1% in June.

“The inflation data in October and November show a welcome reduction,” Powell said at his news conference. “But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.”

Read the full story here.

President Biden on Tuesday said he thinks prices will return to normal at the end of 2023 while touting the November slowdown in inflation as welcome news ahead of the holidays.

“I hope by the end of next year, we’re much closer,” he said on when to expect prices to go back to normal. “But I can’t make that prediction. I just, I’m convinced they’re not going to go up, convinced they’re going to continue to go down.”

Read the full story here.

2. Moore taps three young political veterans for key administration roles

Gov.-elect Wes Moore and Lt. Gov.-elect Aruna Miller are turning to a trio of young but seasoned veterans of state government and politics to help them run their administration.

The Moore-Miller transition team announced Wednesday evening that Matthew Verghese will be the incoming administration’s new director of the Federal Office in Washington, D.C.; Emmanuel “Manny” Welsh will be the administration’s liaison to the Board of Public Works; and Pokuaa “PK” Owusu-Acheaw will become Miller’s chief of staff. All grew up in Maryland and have worked for state politicians and political institutions in various capacities.

“This group of leaders will serve Maryland with distinction and I’m elated to have them join our team to create a Maryland where no one is left behind,” Moore said in a statement.

Read the full story here.

3. Maryland Department of Commerce 2022 Annual Report

In their newly released Annual Report titled “Stronger for the Future,” the Maryland Department of Commerce details wins for 2022 and the state of business in Maryland. The report highlights big wins this year as well as industries that are innovating for the future.

“With the worst days of the COVID-19 pandemic finally behind us, Commerce focused this year on attracting many new businesses to the state, retaining existing businesses, and helping to bring new jobs,” said Secretary Mike Gill.

Read the report here and watch the short video they released recapping the state’s 2022 successes:

4. Amid budget surplus, Hogan recommends his last spending plan

Maryland Gov. Larry Hogan highlighted preliminary budget recommendations Thursday for the incoming administration of Gov.-elect Wes Moore at a time when the state has a big budget surplus.

Largely due to enormous federal aid during the pandemic, Maryland has an estimated $2.5 billion budget surplus heading toward the next fiscal year. The state also is set to have an unusually large amount in its Rainy Day Fund: roughly $3 billion, or about 12% of the state’s general fund.

Hogan, who prioritized fiscal responsibility throughout his tenure, urged the incoming administration and lawmakers to maintain a sizable surplus. The term-limited Republican also urged lawmakers in the General Assembly, which is controlled by Democrats, to leave the big pot of reserves in the Rainy Day Fund intact, even as the legislature is acquiring new budget powers in the upcoming legislative session.

“With continued inflation and economic uncertainty at the national level, we believe this is critically important, and it would be a mistake for the legislature to use its newly expanded budgetary power to return to the old habits of raiding the Rainy Day Fund or recklessly spending down the surplus,” Hogan said at a news conference.

Read the full story here.

5. Retail sales drop at start of key holiday shopping season

Americans cut back sharply on retail spending last month as the holiday shopping season began with high prices and rising interest rates. Retail sales fell 0.6% from October to November after a sharp 1.3% rise the previous month, the government said Thursday. Sales fell at furniture, electronics, and home and garden stores.

Americans’ spending has been resilient ever since inflation first spiked almost 18 months ago, but the capacity of Americans to continue spending in a period of high inflation may be beginning to ebb.

“The weakness in sales … suggests that higher borrowing costs, slower employment growth and an unusually low saving rate are now catching up with consumers,” said Andrew Hunter, senior U.S. economist at Capital Economics.

Read the full story here.

Secure your seat ➡️ Jan. 26

Meet the State
9:30 a.m. – 6:30 p.m.
Annapolis, MD

Meet the State, presented by Amazon, is the premier, early-session gathering of legislative and state government leaders with the business community.

Register now to be part of these critical conversations and for your opportunity to inform legislators how businesses are driving the economy, advancing economic success and creating Maryland jobs.


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