CNN Business/Paul R. LaMonica
The Fed keeps rates near zero and acknowledges fragile recovery

The Federal Reserve, as widely expected, left its key short-term interest rate near zero following its latest policy meeting Wednesday. The Fed cut rates to that level in March and has maintained that they are likely to remain there for several years as the economy recovers from the Covid-19 pandemic.

The Fed has launched several lending programs and other stimulus efforts in addition to slashing interest rates this year to support the economy during the coronavirus crisis.

But Fed chair Jerome Powell has continued to stress that the Fed (as well as Congress and the White House) may need to do more to help struggling American consumers and businesses.

“Economic activity and employment have continued to recover but remain well below their levels at the beginning of the year,” the Fed said in its statement.

“The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” the Fed added.

During a press conference, Powell noted that the optimism about Covid-19 vaccines is encouraging, but he noted it will take more time until Americans feel fully confident that they will be able to “reengage” in normal activities that would help boost the economy.

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U.S. retail sales decline further as Covid, lack of additional fiscal stimulus weigh

U.S. retail sales fell more than expected in November, likely weighed down by raging new Covid-19 infections and decreasing household income, adding to growing signs of a slowdown in the economy’s recovery from the pandemic recession.

The second straight monthly decline in retail sales reported by the Commerce Department on Wednesday could nudge Congress to agree on another fiscal stimulus package. News of the weak start to the holiday shopping season came as Federal Reserve officials were wrapping up a two-day policy meeting.

The U.S. central bank is expected to keep interest rates near zero and deliver a playbook for what might prompt the Fed to pump more money into the economy.

Retail sales dropped 1.1% last month, with receipts declining almost across the board. Data for October was revised down to show sales slipping 0.1% instead of rising 0.3% as previously reported, adding a sting to the report. October’s dip was the first since April, when stringent measures to control the first wave of coronavirus cases crippled the economy.

The plunge in sales last month was led by motor vehicles, with receipts at auto dealerships tumbling 1.7% after being unchanged in October. Receipts at clothing stores plummeted 6.8%. Consumers also cut back on eating and drinking out. Sales at restaurants and bars dropped 4.0%.

Sales at electronics and appliance stores fell 3.5% and receipts at furniture stores declined 1.1%. There were also decreases in sales at sporting goods, hobby, musical instrument and book stores. But receipts at food and beverage stores rose as did those at building material stores.

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Gold Bulls Take Heart From the Fed’s Resolve as Dollar Softens

Gold held an advance after the Federal Reserve strengthened its commitment to supporting the recovery in the world’s largest economy, and U.S. lawmakers made progress in getting a fiscal stimulus deal over the line.

The precious metal is on course for a third weekly gain, with the Fed promising at its final policy meeting of 2020 to maintain its massive asset-purchase program until it sees “substantial further progress” in employment and inflation. Chair Jerome Powell said that the case for fiscal stimulus is “very, very strong.” Gold’s rise has been aided by a weaker dollar.

Bullion is set to cap 2020 with the biggest annual gain in a decade on the prospects of further stimulus and curbs in several parts of the world as the coronavirus continues to wreak havoc. The U.S reported another daily record of deaths on Wednesday, while Germany saw its biggest rise in fatalities since the pandemic began as Chancellor Angela Merkel hinted a hard lockdown will remain in force longer than planned. While vaccines have been developed, curbing some haven demand, challenges remain in immunizing populations.

“The confluence of an ever-supportive Fed and the greenback trading softer has been the wind beneath the wings for gold,” although the 50-day moving average is limiting further gains, said Jingyi Pan, a market strategist at IG Asia Pte. “Added U.S. fiscal support and the continued weak U.S. dollar bias would stay supportive for gold in a seasonally positive month for the precious metal.”

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CNBC/Noah Higgins-Dunn
New York Gov. Cuomo warns a January economic shutdown is possible as Covid cases soar to springtime records

New York’s non-essential businesses may be forced to close again in January if the state doesn’t clamp down on escalating coronavirus cases, which have soared in recent weeks to record levels not seen since the spring, Gov. Andrew Cuomo said Wednesday.

“Of course a shutdown in January is possible,” Cuomo said at a press conference in Albany. “But there’s a big but,” he said, spelling the word out one letter at a time “B-U-T.”

Whether the state imposes an economic lockdown again depends on what New Yorkers do over the remaining holidays and whether new Covid-19 infections decline or grow, he said.

New York is grappling with a surge of Covid-19 cases, averaging roughly 10,294 new infections every day over the last week, a more than 7% increase compared with a week ago, according to a CNBC analysis of data compiled by Johns Hopkins University data. That’s more new cases every day than the state saw in the spring when hospital systems in New York City and elsewhere were overwhelmed with patients.

Cuomo didn’t say what a second shutdown would look like. He imposed another ban on indoor dining in New York City on Monday, but said he wants to keep public schools open and he hasn’t yet decided on whether to shut down non-essential businesses.

“It is up to us. What will happen in three weeks? What will happen in four weeks? You tell me what you’re going to do over the next three weeks or four weeks, and I’ll tell you what’s going to happen,” he said.

At the current rate the virus is spreading, New Yorkers should be prepared for a second shutdown similar to the one that Cuomo issued in the spring where nonessential businesses and schools were shuttered and people were told to stay home to halt Covid-19′s spread, Mayor Bill de Blasio warned.

Small businesses, especially restaurants, have struggled to stay afloat during the pandemic as social distancing restrictions force them to limit capacity. Some businesses have been forced to shut down temporarily — and permanently, in some cases — because of these limitations and a lack of stimulus.

Without additional aid for small businesses, Congress is “in the process of dashing the dreams of tens of thousands,” Buffett said. “Congress should act.”

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