The daily business briefing: March 9, 2023

Federal Reserve Chair Jerome Powell told House lawmakers Wednesday in his second day of congressional testimony that the size of the central bank's next interest rate hike to fight inflation would depend on the latest economic data. Powell said Fed leaders were keeping an open mind heading into their next meeting this month. On Tuesday, he told a Senate committee that it might be necessary for the Fed to raise rates higher and longer than previously anticipated, given recent data showing that a string of aggressive increases to borrowing costs hadn't slowed the economy as much as hoped. "I stress that no decision has been made on this," Powell told the House Financial Services Committee. 

President Biden on Thursday will release an annual budget proposal White House officials say would save hundreds of billions of dollars by lowering drug prices and cutting unnecessary spending, while hiking some taxes on businesses and rich investors. It includes a 25 percent minimum tax on billionaires, and "nearly double the capital gains tax rate for investment to 39.6 percent from 20 percent," Bloomberg reported. Administration officials said the plan would reduce federal budget deficits by nearly $3 trillion over a decade. But the spending blueprint has "no chance of driving tax or spending decisions in Congress this year," according to The New York Times, because it clashes with priorities of Republicans, who now control the House and are pushing to slash social spending.

The number of job openings in the United States fell to 10.8 million in January, down 410,000 from December but still exceeding the number of eligible workers by far, according to data released Wednesday by the Labor Department. There are now 1.9 job openings for every person available to fill them, according to the Job Openings and Labor Turnover Survey, or JOLTS. Federal Reserve officials carefully monitor the JOLTS report as they make decisions on monetary policy, like raising interest rates. The "extremely tight" labor market is one of the indicators showing that the economy remains stronger than expected despite high inflation and rising interest rates. 

Oil prices dropped for a third consecutive day on Thursday as fears of a global economic downturn mounted. International benchmark Brent crude fell 0.4 percent to $82.32 per barrel, while U.S. benchmark West Texas Intermediate fell 11 cents to $76.55. Both fell more than 4 percent in the last two days. Analysts said concerns that rising interest rates could trigger a U.S. recession intensified after Federal Reserve Chair Jerome Powell's comments to lawmakers this week, overshadowing hopes that an economic rebound in China and an unexpected drop in U.S. inventories could boost demand, according to Reuters. "Fears of recession are conspicuously rising," said Tamas Varga of oil broker PVM.

U.S. stock futures fell slightly early Thursday as investors remained concerned about Federal Reserve Chairman Jerome Powell's congressional testimony warning of possible bigger interest-rate hikes if economic data remains strong. Futures tied to the Dow Jones Industrial Average were flat at 6:45 a.m. ET, but S&P 500 and Nasdaq futures were down 0.2 percent and 0.5 percent, respectively. The Dow fell 0.2 percent on Wednesday while the S&P 500 and the Nasdaq rose 0.1 percent and 0.4 percent, respectively, after plunging a day earlier. "The market is finally coming to the realization that elevated interest rates are here to stay and the idea of a Fed pivot anytime soon is wishful thinking," Main Street Research's chief investment officer James Demmert said Thursday.