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The Week in Business: The Fed remains on track

    When the Federal Reserve raised interest rates by another three-quarters of a point on Wednesday, the fourth consecutive rise of that magnitude, the central bank sent mixed messages about its share price. The policy statement accompanying the tariff decision emphasized that officials would soon slow down the increases. But Fed chairman Jerome H. Powell seemed to communicate the opposite, saying at a news conference that it was “premature to think about pausing” the Fed’s aggressive campaign to tame inflation. Investors liked one of these messages more than the other: The policy note pushed stocks on Wall Street briefly; Mr. Powell’s comments knocked them over. Fed officials have expressed concern that they are doing too little to fight inflation, but they are also well aware of the risks of doing too much. On Wednesday, Mr. Powell that the window for a so-called soft landing that would prevent the economy from falling into recession had been “shrinked”.

    Employers added 261,000 jobs in October, further proof of the sustainability of the labor market in light of the Fed’s efforts to cool the economy. Job growth remains unusually strong but is moderating – the market “going from white-hot to red-hot,” as one economist put it. The unemployment rate, while still low, rose to 3.7 percent. Fed officials may be looking for more definitive signs of slowing down, but the latest jobs report gives President Biden a message of hope ahead of the midterm elections as it lends credence to the claim that the country is not yet in recession. But Republicans could use the same data to hold their own tone to voters that the economy has weakened under Mr. Biden.

    Before Elon Musk took over Twitter, there were rumors that he had plans to make mass layoffs. The leadership had tried to allay concerns about impending budget cuts by telling staff there was no confirmation of Mr Musk’s intentions. But now many of those executives are gone, and last week the billionaire began clearing the site’s 7,500 staff. Workers received the news in an email Friday morning, and while it didn’t provide details on how many jobs would be cut, previous internal reports indicated that about half of Twitter workers were likely to lose their jobs. Under the agreement Mr. Musk made with the social media service, he is obligated to maintain the employee’s compensation and benefits before taking ownership, so among other things, Mr. Musk may have to pay fired Twitter employees monthly salary. As for the rest of the employees, Friday’s email said Mr. Musk “looks forward to communicating with everyone his vision for the company soon.”

    According to conventional wisdom, the first midterm elections of a president’s term are a referendum on him and his party. In these elections, that means a referendum on the stewardship of the economy by the Democrats in particular. With inflation now at its 40-year high, President Biden has proclaimed resilient job growth and sought to highlight the bright spots in more troubling economic data. Gas prices — which have an inordinate effect on people’s confidence toward the country — have also fallen in recent weeks, which could give Democrats a boost. But US voters must weigh many factors in the polls this week, including the Supreme Court decision on abortion, the Jan. 6 hearings, a volatile stock market and rising mortgage rates. At the same time, pre-election misinformation is swirling about voting machines and ballot boxes to influence how and whether people vote.