Tag Archives: Economy

The Federal Reserve is prodding Americans to buy more on credit

FILE PHOTO: A sign advertises homes for sale in a new housing development in Dickinson, North Dakota January 21, 2016. REUTERS/Andrew Cullen

By Jason Lange

WASHINGTON (Reuters) – The Federal Reserve’s decisive statement this week that interest rates are unlikely to rise this year sends a signal to U.S. households: keep buying stuff.

The Fed tries to guide the U.S. economy by controlling the interest rate banks charge one another for overnight loans. Moving this rate up lifts other rates in the economy, making it costlier for people to use their credit cards or to buy homes and cars. Higher rates also make companies rethink investments.

A solid majority of Fed policymakers on Wednesday said higher rates are unlikely this year, leading investors to bet the economy might slowing enough for the Fed to actually cut rates.

The following are some possible consequences for American households:

EASY CREDIT

The Fed’s signal on its interest rate outlook led key market rates to fall, including the yield on 10-year Treasury bonds. That is a sign that rates are also falling for loans used to buy houses and cars. Interest rates for credit cards may also drift lower. Mortgage rates have been falling since November when Fed policymakers made clear they would be patient about rate decisions.

SAVING DISCOURAGED

Lower rates also encourage spending by taking the shine off some common ways to save money. Low yields reduce the return on money in savings accounts as well as in funds made up of safe-haven government bonds. This poses a problem for retirees who depend more on their income from savings and who take a hit from lower rates on Treasury bonds. The Fed has argued that retirees benefit from actions taken to support the broader economy.

RETIREMENT BOOST

Rising stock prices comprise the flip side of lower bond yields. That boosts the value of private retirement accounts, such as 401(k)s, particularly those of young people whose accounts tend to be weighted toward stocks.

The benchmark S&P 500 stock index surged after the Fed’s decision, reflecting the view that cheaper borrowing costs would help company profits. It is possible that stock market gains could boost consumer spending because people sometimes loosen their purse strings after a rise in perceived wealth.

BUOYANT LABOR MARKET

The U.S. jobless rate is near its lowest level in 50 years although lately there have been signs of softening in the labor market. Hiring slowed sharply in February and the number of new jobless claims every week has also been ticking higher. The Fed’s action aims to keep the labor market solid. That could help encourage more people to rekindle job searches they had given up when the economy was still weak following the 2007-09 financial crisis.

 

(Reporting by Jason Lange, editing by G Crosse)

U.S. trade representative hopes U.S., China in final weeks of talks

FILE PHOTO - U.S. trade representative Robert Lighthizer, a member of the U.S. trade delegation to China, arrives at a hotel in Beijing, China February 12, 2019. REUTERS/Jason Lee

(Reuters) – U.S. Trade Representative Robert Lighthizer said on Tuesday he hopes the United States and China are in the final weeks of talks to secure a deal that will ease a trade war between the world’s two largest economies.

“Our hope is we are in the final weeks of having an agreement,” Lighthizer said at a Senate Finance Committee hearing, though he cautioned that issues remained.

“If those issues are not resolved in favor of the United States, we won’t have a deal.”

(Reporting by David Lawder and Humeyra Pamuk; Writing by Chris Prentice; Paul Simao)

U.S. inflation forecasts decline, supporting rate-hike holiday

A customer shops for Thanksgiving ham at a grocery store in Los Angeles, California U.S. November 21, 2017. REUTERS/Lucy Nicholson

NEW YORK (Reuters) – U.S. consumers expect prices to rise more slowly, according to the Federal Reserve Bank of New York, a decline in inflation expectations in February that likely reinforces policymakers’ reluctance to hike rates.

The survey of consumer expectations, published on Monday, is one of the Fed’s price gauges as it weighs the need for rate rises. It showed one- and three-year ahead inflation expectations were down 0.2 percentage points to 2.8 percent last month, with sharp declines in expected medical care expenses. Both the one- and three-year gauges had been roughly unchanged since April 2018.

Stable and low inflation is one of the main reasons that the U.S. central bank, having raised interest rates four times last year, is now taking a wait-and-see approach to any more tightening in 2019.

The Fed is also conducting a broad policy review that may result in the central bank welcoming inflation that is slightly and temporarily over its target. Some policymakers and analysts think the Fed now has far more ability to respond to upward spikes in prices rather than persistently low readings. That is because interest rate cuts lose their potency as those borrowing costs approach zero.

Fed officials last raised their target policy rate in December to 2.25 to 2.50 percent but signaled after that point that they would be “patient” before deciding future moves.

The New York Fed’s survey found that consumers expected tame inflation despite also forecasting their own wages would rise. Average one-year earnings growth expectations increased to 2.5 percent last month, from 2.4 percent the month before. Consumers also forecast a lower likelihood that unemployment will rise. Economists are debating whether rising wages and low unemployment figures still translate into higher inflation as orthodox economic theory assumes.

Consumers were also slightly more optimistic about the direction of U.S. stock prices and their ability to access credit to finance purchases.

The Internet-based survey taps a rotating panel of 1,300 households.

(Reporting by Trevor Hunnicutt; Editing by Chizu Nomiyama)

Credit reporting agencies face pressure from skeptical U.S. Congress

FILE PHOTO: The logo and trading information for Credit reporting company Equifax Inc. are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 26, 2017. REUTERS/Lucas Jackson

By Pete Schroeder

WASHINGTON (Reuters) – The nation’s major credit reporting agencies faced renewed scrutiny from Congress on Tuesday, as lawmakers consider legislation overhauling the industry.

Top executives from the three major credit reporting agencies – Equifax Inc, Experian Plc and TransUnion had to defend their business models before skeptical lawmakers who appeared eager to order changes to the sector following Equifax’s massive data breach, disclosed in 2017.

“Our nation’s consumer credit reporting system is broken,” said Representative Maxine Waters, chairwoman of the House Financial Services Committee. “I’m troubled to the point where I do think that we need to start thinking about how we reimagine it and rebuild it from the ground … We will be introducing legislation.”

Waters has a draft bill that would limit the reach of such credit reports, shorten the time adverse information remains on consumers’ records, and make it easier for consumers to dispute errors on their reports.

Several Democrats made clear they were dissatisfied with the current state of the country’s credit reporting, arguing consumers lack control over their own data.

The panel’s top Republican, Representative Patrick McHenry, agreed the industry was in need of a makeover. However, he emphasized a desire to see more companies compete with the three largest agencies.

“What I see here is an oligopoly,” he told executives. “I don’t see that vibrant competition which is needed for these agencies to actually help consumers.”

The massive data breach disclosed by Equifax in 2017, where a cyber attack exposed the personal data of roughly 148 million people, has driven calls from Washington for changes to the industry.

Legislation beefing up protections around consumer data is seen by analysts and lobbyists to be a rare area of common ground in the current Congress, where Democrats control the House and Republicans control the Senate.

Waters’ Senate counterpart, Banking Chairman Mike Crapo, has said legislation addressing the collection and protection of personal data is one of his top priorities this year. He is currently soliciting input on how consumers could retain more control over their personal information.

For their part, credit reporting agency executives told lawmakers they were working to address consumer concerns and bolster their cybersecurity to guard against future breaches.

“Consumers trust and expect that their credit reports contain the most accurate and complete data possible, and lenders rely on that information to help millions of consumers obtain the right loans at the right time,” said Equifax CEO Mark Begor in prepared testimony.

(Reporting by Pete Schroeder; Editing by Lisa Shumaker)

U.S. states sue Trump administration in showdown over border wall funds

A view shows a new section of the border fence in El Paso, Texas, U.S., as seen from Ciudad Juarez, Mexico February 15, 2019. REUTERS/Jose Luis Gonzalez

By Jeff Mason and Sarah N. Lynch

WASHINGTON (Reuters) – A coalition of 16 U.S. states led by California sued President Donald Trump and top members of his administration on Monday to block his decision to declare a national emergency to obtain funds for building a wall along the U.S.-Mexico border.

The lawsuit filed in U.S. District Court for the Northern District of California came after Trump invoked emergency powers on Friday to help build the wall that was his signature 2016 campaign promise.

Trump’s order would allow him to spend on the wall money that Congress appropriated for other purposes. Congress declined to fulfill his request for $5.7 billion to help build the wall this year..

“Today, on Presidents Day, we take President Trump to court to block his misuse of presidential power,” California Attorney General Xavier Becerra said in a statement.

“We’re suing President Trump to stop him from unilaterally robbing taxpayer funds lawfully set aside by Congress for the people of our states. For most of us, the office of the presidency is not a place for theater,” added Becerra, a Democrat.

The White House declined to comment on the filing.

In a budget deal passed by Congress to avert a second government shutdown, nearly $1.4 billion was allocated toward border fencing. Trump’s emergency order would give him an additional $6.7 billion beyond what lawmakers authorized.

Three Texas landowners and an environmental group filed the first lawsuit against Trump’s move on Friday, saying it violated the Constitution and would infringe on their property rights.

The legal challenges could slow Trump’s efforts to build the wall, which he says is needed to curb illegal immigration and drug trafficking. The lawsuits could end up at the conservative-leaning U.S. Supreme Court.

Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New Mexico, New York, Oregon, Virginia, and Michigan joined California in the lawsuit.

The states said Trump’s order would cause them to lose millions of dollars in federal funding for national guard units dealing with counter-drug activities and redirection of funds from authorized military construction projects would damage their economies.

In television interviews on Sunday and Monday, Becerra said the lawsuit would use Trump’s own words against him as evidence that there was no national emergency to declare.

Trump said on Friday he did not need to make the emergency declaration but wanted to speed the process of building the wall. That comment could undercut the government’s legal argument.

“By the president’s own admission, an emergency declaration is not necessary,” the states said in the lawsuit. “The federal government’s own data prove there is no national emergency at the southern border that warrants construction of a wall.”

(Reporting by Jeff Mason and Sarah N. Lynch; Editing by Clarence Fernandez)

Wary of shutdown, Trump inches toward support for funding deal

U.S. President Donald Trump listens next to Commerce Secretary Wilbur Ross during a Cabinet meeting at the White House in Washington, U.S., February 12, 2019. REUTERS/Carlos Barria

By Richard Cowan and Steve Holland

WASHINGTON (Reuters) – U.S. President Donald Trump on Wednesday edged toward backing a deal in Congress on government funding that would not meet his demand for $5.7 billion for a wall on the Mexican border but would avert a partial government shutdown.

Trump, widely blamed for a five-week shutdown that ended in January, said he did not want to see federal agencies close again because of fighting over funds for the wall, one of his signature campaign promises in the 2016 election.

The Republican president did not commit himself to backing the government funding agreement struck between Democratic and Republican lawmakers this week. But two sources and a Republican senator close to the White House said he would likely sign off on it.

“I don’t want to see a shutdown. A shutdown would be a terrible thing. I think a point was made with the last shutdown,” Trump told reporters. “People realized how bad the border is, how unsafe the border is, and I think a lot of good points were made.”

Trump said he would hold off on a decision until he sees actual legislation about the issue. Republican Senator Lindsey Graham said Trump was “inclined to take the deal and move on.”

Graham told reporters that Trump would then look elsewhere to find more money to build a wall along the U.S. southern border and was “very inclined” to declare a national emergency to secure the funds.

With a Friday night deadline looming before a shutdown, there is little time for the White House and the political parties in Congress to agree on funding.

Funding is due to expire for the Department of Homeland Security, the Justice Department and several other federal agencies.

LESS MONEY

The congressional agreement reached on Monday falls far short of giving Trump all the money he wants to help build the wall. Instead, congressional sources say, it includes $1.37 billion for new barriers – about the same as last year – along 55 miles (90 km) of the border.

Details of the legislation were still being written, but the full bill could be made public as early as Wednesday evening, according to lawmakers and congressional aides.

The accord must be passed by the House of Representatives, dominated by Democrats, and the Republican-controlled Senate, then signed by Trump by midnight on Friday to prevent a shutdown.

The measure’s fate in the House was far from certain given the risk that some conservatives and liberals will oppose the compromise for different reasons.

Like Trump, congressional Republicans have little appetite for a repeat of the 35-day partial shutdown in December and January – the longest in U.S. history – which closed about a quarter of federal agencies and left some 800,000 federal workers without pay.

“It’s time to get this done,” Senate Majority Leader Mitch McConnell said on the Senate floor on Wednesday, in reference to voting on the compromise.

Democrats in the House are aiming to schedule a vote on Thursday evening, Majority Leader Steny Hoyer, a Democrat, told reporters. If passed, it would then go to the Senate.

OTHER OPTIONS

A White House spokeswoman, Mercedes Schlapp, told CNN that lawyers were reviewing the administration’s options should Congress not provide Trump’s demanded money for the wall.

The Washington Post, citing a White House official, said Trump was likely to explore using his executive power to reallocate other federal funds for barrier projects along the southern border. CNN, citing the White House, also said Trump was weighing the use of an executive order, among other options.

Trump previously threatened to declare a “national emergency” if Congress did not provide money specifically for the wall – a move that would almost certainly draw opposition in Congress and in the courts.

“We think the president would be on very weak legal ground to proceed,” said Hoyer, the No. 2 Democrat in the House.

Speaking to sheriffs and police chiefs of major cities, Trump said later on Wednesday that he was determined to “fully and completely” secure the U.S. border, including providing more law enforcement, closing legal loopholes and finishing the border wall.

Trump has come in for criticism from the right for wavering on support for the wall, which the administration says will cut illegal immigration and drug smuggling.

“Trump talks a good game on the border wall, but it’s increasingly clear he’s afraid to fight for it,” right-wing commentator Ann Coulter tweeted on Tuesday.

Trump abandoned a planned compromise on funding for the wall in December after similar criticism.

(Reporting by Richard Cowan and Susan Cornwell; Additional reporting by Roberta Rampton, Amanda Becker, Susan Heavey and Lisa Lambert; Writing by Alistair Bell; Editing by Jonathan Oatis and Peter Cooney)

U.S. job openings hit record high; workers more scarce

Corporate recruiters (R) gesture and shake hands as they talk with job seekers at a Hire Our Heroes job fair targeting unemployed military veterans and sponsored by the Cable Show, a cable television industry trade show in Washington, June 11, 2013. REUTERS/Jonathan Ernst/File Photo

By Lucia Mutikani

WASHINGTON (Reuters) – U.S. job openings surged to a record high in December, led by vacancies in the construction and accommodation and food services sectors, strengthening analysts’ views that the economy was running out of workers.

While the release of the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, on Tuesday underscored labor market strength, there are worries the shortage of workers could hurt an economic expansion that has lasted 9-1/2 years and is the second longest on record.

“The labor market continues to heat up,” said Chris Rupkey, chief economist at MUFG in New York. “But growth cannot continue for much longer if there is no one out there to work in the factories and shops and malls across America.”

Job openings, a measure of labor demand, increased by 169,000 to a seasonally adjusted 7.3 million in December, the highest reading since the series started in 2000. That lifted the job openings rate to 4.7 percent from 4.6 percent in November.

Construction vacancies increased by 88,000 jobs in December. There were an additional 84,000 jobs in the accommodation and food services sector. Job openings in the healthcare and social assistance sector rose by 79,000 in December.

Federal government vacancies, however, fell by 32,000 jobs and job openings in real estate, rental and leasing dropped 31,000 in December.

Hiring continued to lag job openings in December, rising to 5.9 million from 5.8 million in November. That further widened the gap between vacancies and hiring, which emerged in 2015, reflecting tightening labor market conditions. There were 1.2 job openings for every unemployed person in December.

ROBUST LABOR MARKET

Anecdotal evidence has been growing of companies experiencing difficulties finding workers. A survey of small businesses published on Tuesday found that almost a quarter of owners reported that difficulties finding qualified workers as their “single most important business problem” in January.

According to the survey from the National Federation of Independent Business, 35 percent of small business owners reported job openings they could not fill in January.

The labor market has enjoyed a record 100 straight months of job gains, with nonfarm payrolls increasing by 304,000 jobs in January, the most since February 2018. But as workers become more scarce, job growth is expected to slow to around 150,000 per month this year.

Economists believe the dearth of workers will drive up wage growth, even though the number of workers voluntarily quitting their jobs has remained steady.

“The diminishing availability of workers is expected to lead to more upward pressure on wages, bring more workers into the labor force and induce more companies to find ways to produce and service their customers with automated processes,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The JOLTS report showed the number of workers voluntarily quitting their jobs was little changed at 3.5 million in December, keeping the quits rate at 2.3 percent for a third straight month. The quits rate is viewed by policymakers and economists as a measure of job market confidence.

There were increases in the number of workers quitting their jobs in professional and business services and in the health care and social assistance sectors. But these were offset by declines in several industries and the government.

“With a labor market this tight, you may expect the quits rate to be going up or at a higher level already,” said Nick Bunker, an economist at Indeed Hiring Lab. “The big question is whether this a temporary lull, or if the quits rate has hit its high point.”

Layoffs fell in December, pushing the layoffs rate down to 1.1 percent from 1.2 percent in November.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

U.S. weekly jobless claims retreat from one-and-a-half-year high

Job seekers and recruiters gather at TechFair in Los Angeles, California, U.S. March 8, 2018. REUTERS/Monica Almeida

By Lucia Mutikani

WASHINGTON (Reuters) – The number of Americans filing applications for unemployment benefits dropped from near a 1-1/2-year high last week, but the decline was less than expected, suggesting some moderation in the pace of job growth.

Still, the Labor Department’s report on Thursday continued to point to strong job market conditions, which should underpin the economy amid rising headwinds, including a fading fiscal stimulus boost and a trade war between Washington and Beijing, as well as slowing growth in China and Europe.

The Federal Reserve last week kept interest rates steady but said it would be patient in lifting borrowing costs further this year in a nod to growing uncertainty over the economy’s outlook. The U.S. central bank removed language from its December policy statement that risks to the outlook were “roughly balanced.”

“Labor market conditions remain quite positive, good news for workers, for the consumer sector and the economy more broadly,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan.

Initial claims for state unemployment benefits tumbled 19,000 to a seasonally adjusted 234,000 for the week ended Feb. 2, the Labor Department said on Thursday. The drop partially unwound the prior week’s jump, which lifted claims to 253,000, the highest reading since September 2017.

Claims that week were boosted by layoffs in the service industry in California, most likely striking teachers in Los Angeles.

A 35-day partial shutdown of the federal government as well as difficulties adjusting the data around moving holidays like Martin Luther King Jr. day, which occurred later this year than in recent years, also probably contributed to the spike in filings.

The longest shutdown in history likely forced workers employed by government contractors to file claims for unemployment benefits.

The shutdown ended on Jan. 25 after President Donald Trump and Congress agreed to temporary government funding, without money for his U.S.-Mexico border wall.

Economists polled by Reuters had forecast claims falling to 221,000 in the latest week.

U.S. stocks were trading lower on renewed fears of a global slowdown after the European Union cut its economic growth forecasts and White House adviser Larry Kudlow warned there was still a sizable distance to go on U.S.-China trade talks. The dollar was little changed against a basket of currencies, while U.S. Treasury prices rose.

MOMENTUM SLOWING

The Labor Department said no states were estimated last week. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 4,500 to 224,750 last week. Claims by federal government workers, which are filed separately and with a one-week lag fell 8,070 to 6,669 in the week ended Jan. 26.

“Claims remain important to watch in the weeks ahead,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in White Plains, New York. “The data are suggesting at least some slowing in employment growth.”

The government reported last Friday that non-farm payrolls increased by 304,000 jobs in January, the largest gain since February 2018. Thursday’s claims report showed the number of people receiving benefits after an initial week of aid fell 42,000 to 1.74 million for the week ended Jan. 26.

These so-called continuing claims had raced to a nine-month high in the prior week. The four-week moving average of continuing claims rose 4,250 to 1.74 million.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)

Venezuela captures rogue officers after uprising at military outpost

Demonstrators stand close to the remains of a burning car used as barricade during a protest near to a National Guard outpost in Caracas, Venezuela January 21, 2019. REUTERS/Carlos Garcia Rawlins

By Mayela Armas and Brian Ellsworth

CARACAS (Reuters) – Venezuela has captured a group of military officers who stole weapons and kidnapped four officials on Monday, the government said, hours after a social media video showed a sergeant demanding the removal of President Nicolas Maduro.

An unspecified number of officers early on Monday attacked a National Guard outpost in the Caracas neighborhood of Cotiza, a kilometer (0.6 mile) from the presidential Miraflores palace, where they met “firm resistance,” the government said in a statement. Witnesses reported hearing gunshots at about 3 a.m. (0700 GMT) in the area.

An armored vehicle is seen outside an outpost of the Venezuelan National Guards during a protest in Caracas, Venezuela January 21, 2019. REUTERS/Carlos Garcia Rawlins

An armored vehicle is seen outside an outpost of the Venezuelan National Guards during a protest in Caracas, Venezuela January 21, 2019. REUTERS/Carlos Garcia Rawlins

Protesters later burned trash and a car outside the outpost, where the officers were arrested, in a sign of growing tensions following Maduro’s inauguration to a second term that governments around the world have called illegitimate.

Though the incident signals discontent within the armed forces, it appeared to involve only low-ranking officers with little capacity to force change in the hyperinflationary economy as many people suffer from shortages of food and medicine.

“The armed forces categorically reject this type of action, which is most certainly motivated by the dark interests of the extreme right,” the government said in a statement read out on state television.

Maduro was inaugurated on Jan. 10 under an avalanche of criticism that his leadership was illegitimate following a 2018 election widely viewed as fraudulent, with countries around the world disavowing his government.

Opposition leaders and exiled dissidents have called on the armed forces to turn against Maduro, which the president has denounced as efforts to encourage a coup against him.

The opposition-controlled congress’s head, Juan Guaido, said the uprising was a sign of the armed forces’ depressed state of mind. Congress was committed to offering guarantees to officers who helped with “the constitution’s reconstitution,” he said, though he did not want the military to fall into internal conflict.

“We want it to stand as one man on the side of the people, the constitution, and against the usurpation,” he said on Twitter.

In the videos that circulated on Twitter, a group of armed soldiers stood in darkness apparently at the Cotiza outpost while their leader addressed the camera and called for Venezuelans to support their revolt.

“You all asked that we take to the streets to defend the constitution. Here we are. Here we have the troops. It’s today when the people come out to support us,” said the man in the video, who identified himself as Luis Bandres.

The government said the men took two vehicles from a police station in the Macarao district in the west of Caracas before driving to a barracks in the eastern Petare slum, where they stole an arms cache and kidnapped four officials.

After they attacked the Cotiza outpost in the early hours of the morning, security forces surrounded them. In response, several dozen residents barricaded streets and set fire to rubbish as they chanted “Don’t hand yourself in,” according to Reuters witnesses. Troops fired tear gas to disperse them.

“These soldiers are right to rise up. We need a political change, because we don’t have any water or electricity,” said Angel Rivas, a 49-year-old laborer at the protest.

The United States and many Latin American nations say Maduro has become a dictator whose failed state-led policies have plunged Venezuela into its worst ever economic crisis, with inflation approaching 2 million percent.

Maduro says a U.S.-directed “economic war” is trying to force him from power.

(Additional reporting by Vivian Sequera and Corina Pons; Writing by Brian Ellsworth and Angus Berwick; Editing by Marguerita Choy)

Shutdown bites economy as Democrats reject Trump invitation to talk

FILE PHOTO: U.S. President Donald Trump walks before speaking to the media as he returns from Camp David to the White House in Washington, U.S., January 6, 2019. REUTERS/Joshua Roberts/File Photo

By Steve Holland and Ginger Gibson

WASHINGTON (Reuters) – The U.S. economy is taking a larger-than-expected hit from the partial government shutdown, White House estimates showed on Tuesday, as congressional Democrats rejected President Donald Trump’s invitation to discuss the issue.

The shutdown dragged into its 25th day on Tuesday with neither Trump nor Democratic congressional leaders showing signs of bending on the topic that triggered it – funding for the wall Trump promised to build along the border with Mexico.

Trump invited a bipartisan group of members of Congress for lunch at 12:30 p.m. EST (1730 GMT) to discuss the standoff but the White House said Democrats turned down the invitation. Nine Republicans were expected to attend.

Trump is insisting Congress shell out $5.7 billion as about 800,000 federal workers go unpaid during the partial shutdown.

“It’s time for the Democrats to come to the table and make a deal,” said White House spokeswoman Sarah Sanders.

House Democratic leaders said they did not tell members to boycott Trump’s lunch but had pressed those invited to consider whether the talks would be productive or produce a photo-op for the president.

“We are unified,” House Majority Leader Steny Hoyer told reporters on Tuesday morning.

The Trump administration had initially estimated the shutdown would cost the economy 0.1 percentage point in growth every two weeks that employees were without pay.

But on Tuesday, there was an updated figure: 0.13 percentage point every week because of the impact of work left undone by 380,000 furloughed employees as well as work left aside by federal contractors, a White House official said.

SHUTDOWN IMPACT

The partial shutdown is the longest in U.S. history and its effects have begun to reverberate across the country.

Longer lines have formed at some airports as more security screeners fail to show up for work while food and drug inspections have been curtailed and farmers, stung by recent trade spats, have been unable to receive federal aid.

Speaking on CNBC, Delta Air Lines Inc Chief Executive Officer Ed Bastian said the partial shutdown will cost the airline $25 million in lost revenue in January because fewer government contractors are traveling.

Trump ran for office in 2016 on a promise to build a wall to stop illegal immigration and drug trafficking. He had toyed with the prospect of declaring a national emergency to circumvent Congress to secure the funding, but this week has backed off from that idea, which would attract a court challenge.

Democrats, who took over the U.S. House of Representatives this month, have rejected the border wall but back other border security measures.

They have also insisted that Trump and Republicans reopen government before negotiations occur.

“We can keep on the pressure on negotiations over (border) security but it is long past time that we reopen the government, and make sure it is not federal employees, their families and businesses that are being held hostage,” said Democrat Representative Katherine Clark.

House Democrats have passed a number of bills to fund the roughly one-quarter of federal operations that have been closed, but Senate Majority Leader Mitch McConnell, a Republican, has said the chamber will not consider legislation that Trump will not sign into law.

McConnell, who has mainly stayed out of the public fray on the shutdown, on Tuesday accused Democrats of “acrobatic contortions” to avoid negotiating on the shutdown.

(Reporting by Steve Holland, Susan Cornwell, Ginger Gibson, Makini Brice, Susan Heavey; Writing by Roberta Rampton; Editing by Steve Orlofsky and Bill Trott)