A major recession is coming, Deutsche Bank warns | CNN Business

New York CNN Business —

Deutsche Bank raised eyebrows earlier this month by becoming the first major bank to forecast a US recession, albeit a “mild” one.

Now, it’s warning of a deeper downturn caused by the Federal Reserve’s quest to knock down stubbornly high inflation.

“We will get a major recession,” Deutsche Bank economists wrote in a report to clients on Tuesday.

The problem, according to the bank, is that while inflation may be peaking, it will take a “long time” before it gets back down to the Fed’s goal of 2%. That suggests the central bank will raise interest rates so aggressively that it hurts the economy.

“We regard it…as highly likely that the Fed will have to step on the brakes even more firmly, and a deep recession will be needed to bring inflation to heel,” Deutsche Bank economists wrote in its report with the ominous title, “Why the coming recession will be worse than expected.”

Behind the curve

Consumer prices spiked by 8.5% in March, the fastest pace in 40 years. The jobs market remains on fire, with Moody’s Analytics projecting that the unemployment rate will soon fall to the lowest level since the early 1950s.

To make its case, Deutsche Bank created an index that tracks the distance between inflation and unemployment over the past 60 years and the Fed’s stated goals for those metrics. That research, according to the bank, finds that the Fed today is “much further behind the curve” than it has been since the early 1980s, a period when extremely high inflation forced the central bank to raise interest rates to record highs, crushing the economy.

History shows the Fed has “never been able to correct” even smaller overshoots of inflation and employment “without pushing the economy into a significant recession,” Deutsche Bank said.

Given that the job market has “over-tightened” by as much as two percentage points of unemployment, the bank said, “Something stronger than a mild recession will be needed to do the job.”

The good news is that Deutsche Bank sees the economy rebounding by mid-2024 as the Fed reverses course in its inflation fight.

Goldman Sachs: Recession is not inevitable

Of course, no one knows precisely how this will play out. Although Deutsche Bank is pessimistic – it’s the most bearish among major banks on Wall Street – others contend this gloom-and-doom is overdone.

Goldman Sachs concedes it will be “very challenging” to bring down high inflation and wage growth, but stresses that a recession is “not inevitable.”

“We do not need a recession but probably do need growth to slow to a somewhat below-potential pace, a path that raises recession risk,” Goldman Sachs economists wrote in a report Friday evening.

UBS is similarly hopeful that the economic expansion will continue despite the Fed’s shift to inflation-fighting mode.

“Inflation should ease from current levels, and we do not expect a recession from rising interest rates,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a report on Monday.

War and Covid lockdowns pressure inflation

Deutsche Bank said the most important factor behind its more negative view is the likelihood that inflation will remain “persistently elevated for longer than generally anticipated.”

The bank said several developments will contribute to higher-than-feared inflation, including: the reversal of globalization, climate change, further supply-chain disruptions caused by the war in Ukraine and Covid lockdowns in China and coming increases to inflation expectations that will support actual inflation.

“The scourge of inflation has returned and is here to stay,” Deutsche Bank said.

If inflation does stay elevated, the Fed will be forced to consider more dramatic interest rate hikes. The Fed raised interest rates by a quarter-percentage point in March and Chairman Jerome Powell conceded last week that a half-point hike is “on the table” at next week’s meeting.

“It is sorely tempting to take a go-slow approach hoping that the US economy can be landed softly on a sustainable path. This will not happen,” Deutsche Bank said. “Our view is that the only way to minimize the economic, financial and societal damage of prolonged inflation is to err on the side of doing too much.”

The Fed is ready to move faster on interest rates | CNN Business

New York CNN Business —

The Federal Reserve is ready to raise interest rates at a faster pace to get a handle on America’s pervasive inflation problem, according to minutes from the central bank’s March meeting released Wednesday.

The minutes said “many participants” at the Fed’s meeting in March noted they would have preferred a 50 basis point increase to the federal funds rate in light of high inflation.

Instead the Fed raised the benchmark rate by 25 basis points to a range of 0.25%-0.5% last month, its first interest rate increase since 2018. Only St Louis Fed President James Bullard was in favor of a 50 basis point increase at the March meeting.

The rate hike came after the Fed announced the wind-down of its pandemic stimulus late last year.

Between a strong US labor market, which has seen the unemployment rate fall to a new pandemic-era low of 3.6%, and inflation climbing to a 40-year high, the Fed needs to “move expeditiously,” Fed Chairman Jerome Powell said during a conference last month.

The central bankers are also cautious about any further price increases due to Russia’s invasion of Ukraine. “By leading to higher energy and food prices, weighing on consumer sentiment, and contributing to tighter financial conditions, the invasion also negatively affected the growth outlook,” the minutes said.

Following the more moderate rate increase in March, expectations for a steeper hike at the May meeting have risen. According to the CME’s FedWatch Tool, market expectations for a 50 basis point increase are above 75%. Expectations inched higher still after the minutes were released Wednesday.

Other central bank officials have also said they would be open to raising interest rates faster since the initial increase last month, including Philadelphia Fed President Patrick Harker.

The Fed said it is also getting ready to shrink down its massive balance sheet, which got bloated during the pandemic stimulus program. The Fed could reduce its Treasury and mortgage-backed security holdings by as much as $95 billion per month starting in May, a faster pace than in previous tightening cycles.

Wall Street was displeased to hear the Fed’s increasingly worried tone about inflation. Investors sold off stocks, with the Dow (INDU) falling 200 points, or 0.6%. The broader S&P 500 (SPX) fell 1% and the Nasdaq Composite (COMP) tumbled 2.1%.

Bond rates continued to surge with the expectation that rates would rise quickly. The 10-year Treasury yield rose to 2.62%, hitting a three-year high.

Former Fed President Bill Dudley said in a Bloomberg op-ed Wednesday morning that a down market is a necessary byproduct of lowering inflation. “One thing is certain: To be effective, [the Fed] will have to inflict more losses on stock and bond investors than it has so far,” Dudley said.

–CNN Business’ Dave Goldman and Nicole Goodkind contributed to this report.

5 signs the world is headed for a recession | CNN Business

New York CNN Business —

Around the world, markets are flashing warning signs that the global economy is teetering on a cliff’s edge.

The question of a recession is no longer if, but when.

Over the past week, the pulse of those flashing red lights quickened as markets grappled with the reality — once speculative, now certain — that the Federal Reserve will press on with its most aggressive monetary tightening campaign in decades to wring inflation from the US economy. Even if that means triggering a recession. And even if it comes at the expense of consumers and businesses far beyond US borders.

There’s now a 98% chance of a global recession, according to research firm Ned Davis, which brings some sobering historical credibility to the table. The firm’s recession probability reading has only been this high twice before — in 2008 and 2020.

Consumer spending accounts for roughly two-thirds of US gross domestic product. That growth engine is beginning to sputter. Richard B. Levine/Levine Roberts/ZUMA Press

When economists warn of a downturn, they’re typically basing their assessment on a variety of indicators.

Let’s unpack five key trends:

The mighty US dollar

The US dollar plays an outsized role in the global economy and international finance. And right now, it is stronger than it’s been in two decades.

The simplest explanation comes back to the Fed.

When the US central bank raises interest rates, as it has been doing since March, it makes the dollar more appealing to investors around the world.

In any economic climate, the dollar is seen as a safe place to park your money. In a tumultuous climate — a global pandemic, say, or a war in Eastern Europe — investors have even more incentive to purchase dollars, usually in the form of US government bonds.

The Bank of England intervened in the bond market this week restore confidence in UK assets. Chris Ratcliffe/Bloomberg/Getty Images

While a strong dollar is a nice perk for Americans traveling abroad, it creates headaches for just about everyone else.

The value of the UK pound, the euro, China’s yuan and Japan’s yen, among many others, has tumbled. That makes it more expensive for those nations to import essential items like food and fuel.

In response, central banks that are already fighting pandemic-induced inflation wind up raising rates higher and faster to shore up the value of their own currencies.

The dollar’s strength also creates destabilizing effects for Wall Street, as many of the S&P 500 companies do business around the world. By one estimate from Morgan Stanley, each 1% rise in the dollar index has a negative 0.5% impact on S&P 500 earnings.

America’s economic engine stalls

The No. 1 driver of the world’s largest economy is shopping. And America’s shoppers are tired.

After more than a year of rising prices on just about everything, with wages not keeping up, consumers have pulled back.

“The hardship caused by inflation means that consumers are dipping into their savings,” EY Parthenon Chief Economist Gregory Daco said in a note Friday. The personal saving rate in August remained unchanged at only 3.5%, Daco said — near its lowest rate since 2008, and well below its pre-Covid level of around 9%.

Once again, the reason behind the pullback has a lot to do with the Fed.

The Federal Reserve, led by Chairman Jerome Powell, is aggressively raising rates to combat inflation — even if it risks triggering a recession. Kevin Lamarque/Reuters

Interest rates have risen at a historic pace, pushing mortgage rates to their highest level in more than a decade and making it harder for businesses to grow. Eventually, the Fed’s rate hikes should broadly bring costs down. But in the meantime, consumers are getting a one-two punch of high borrowing rates and high prices, especially when it comes to necessities like food and housing.

Americans opened their wallets during the 2020 lockdowns, which powered the economy out of its brief-but-severe pandemic recession. Since then, government aid has evaporated and inflation has taken root, pushing prices up at their fastest rate in 40 years and sapping consumers’ spending power.

Corporate America tightens its belt

Business has been booming across industries for the bulk of the pandemic era, even with historically high inflation eating into profits. That is thanks (once again) to the tenacity of American shoppers, as businesses were largely able to pass on their higher costs to consumers to cushion profit margins.

But the earnings bonanza may not last.

In mid-September, one company whose fortunes serve as a kind of economic bellwether gave investors a shock.

FedEx, which operates in more than 200 countries, unexpectedly revised its outlook, warning that demand was softening, and earnings were likely to plunge more than 40%.

In an interview, its CEO was asked whether he believes the slowdown was a sign of a looming global recession.

“I think so,” he responded. “These numbers, they don’t portend very well.”

FedEx, with its global footprint, is an economic bellwether. Its revised outlook has renewed recession fears on Wall Street. Justin Tallis/AFP/Getty Images

FedEx isn’t alone. On Tuesday, Apple’s stock fell after Bloomberg reported the company was scrapping plans to increase iPhone 14 production after demand came in below expectations.

And just ahead of the holiday season, when employers would normally ramp up hiring, the mood is now more cautious.

“We’ve not seen the normal September uptick in companies posting for temporary help,” said Julia Pollak, chief economist at ZipRecruiter. “Companies are hanging back and waiting to see what conditions hold.”

Welcome to bear territory

Wall Street has been hit with whiplash, and stocks are now on track for their worst year since 2008 — in case anyone needs yet another scary historical comparison.

But last year was a very different story. Equity markets thrived in 2021, with the S&P 500 soaring 27%, thanks to a torrent of cash pumped in by the Federal Reserve, which unleashed a double-barreled monetary-easing policy in the spring of 2020 to keep financial markets from crumbling.

The party lasted until early 2022. But as inflation set in, the Fed began to take away the proverbial punch bowl, raising interest rates and unwinding its bond-buying mechanism that had propped up the market.

The hangover has been brutal. The S&P 500, the broadest measure of Wall Street — and the index responsible for the bulk of Americans’ 401(k)s — is down nearly 24% for the year. And it’s not alone. All three major US indexes are in bear markets — down at least 20% from their most recent highs.

In an unfortunate twist, bond markets, typically a safe haven for investors when stocks and other assets decline, are also in a tailspin.

All three major US indexes are in a bear market, down at least 20% from their most recent highs. Michael M. Santiago/Getty Images

Once again, blame the Fed.

Inflation, along with the steep rise in interest rates by the central bank, has pushed bond prices down, which causes bond yields (aka the return an investor gets for their loan to the government) to go up.

On Wednesday, the yield on the 10-year US Treasury briefly surpassed 4%, hitting its highest level in 14 years. That surge was followed by a steep drop in response to the Bank of England’s intervention in its own spiraling bond market — amounting to tectonic moves in a corner of the financial world that is designed to be steady, if not downright boring.

European bond yields are also spiking as central banks follow the Fed’s lead in raising rates to shore up their own currencies.

Bottom line: There are few safe places for investors to put their money right now, and that’s unlikely to change until global inflation gets under control and central banks loosen their grips.

War, soaring prices and radical policies collide

Nowhere is the collision of economic, financial, and political calamities more painfully visible than in the United Kingdom.

Like the rest of the world, the UK has struggled with surging prices that are largely attributable to the colossal shock of Covid-19, followed by the trade disruptions created by Russia’s invasion of Ukraine. As the West cut off imports of Russian natural gas, energy prices have soared and supplies have dwindled.

Those events were bad enough on their own.

But then, just over a week ago, the freshly installed government of Prime Minister Liz Truss announced a sweeping tax-cut plan that economists from both ends of the political spectrum have decried as unorthodox at best, diabolical at worst.

In short, the Truss administration said it would slash taxes for all Britons to encourage spending and investment and, in theory, soften the blow of a recession. But the tax cuts aren’t funded, which means the government must take on debt to finance them.

That decision set off a panic in financial markets and put Downing Street in a standoff with its independent central bank, the Bank of England. Investors around the world sold off UK bonds in droves, plunging the pound to its lowest level against the dollar in nearly 230 years. As in, since 1792, when Congress made the US dollar legal tender.

The BOE staged an emergency intervention to buy up UK bonds on Wednesday and restore order in financial markets. It stemmed the bleeding, for now. But the ripple effects of the Trussonomics turmoil is spreading far beyond the offices of bond traders.

Britons, who are already in a cost-of-living crisis, with inflation at 10% — the highest of any G7 economy — are now panicking over higher borrowing costs that could force millions of homeowners’ monthly mortgage payments to go up by hundreds or even thousands of pounds.

The upshot

While the consensus is that a global recession is likely sometime in 2023, it’s impossible to predict how severe it will be or how long it will last. Not every recession is as painful as the 2007-09 Great Recession, but every recession is, of course, painful.

Some economies, particularly the United States, with its strong labor market and resilient consumers, will be able to withstand the blow better than others.

“We are in uncharted waters in the months ahead,” wrote economists at the World Economic Forum in a report this week.

“The immediate outlook for the global economy and for much of the world’s population is dark,” they continued, adding that the challenges “will test the resilience of economies and societies and exact a punishing human toll.”

But there are some silver linings, they said. Crises force transformations that can ultimately improve standards of living and make economies stronger.

“Businesses have to change. This has been the story since the pandemic started,” said Rima Bhatia, an economic adviser for Gulf International Bank. “Businesses no longer can continue on the path that they were at. That’s the opportunity and that’s the silver lining.”

— CNN Business’ Julia Horowitz, Anna Cooban, Mark Thompson, Matt Egan and Chris Isidore contributed reporting.

Recession fears are mounting. Here's how to protect your money ...

When it comes to fraying nerves, this spring is really outperforming.

A push by the Federal Reserve to raise interest rates and combat high inflation. Supply chain shortages. An ongoing global health crisis. And of course, the geopolitical earthquake caused by Russia’s invasion of Ukraine, which is also threatening to create a world food crisis.

With Russia’s internationally condemned invasion of Ukraine, one thing is certain: No one knows exactly how things will play out.

Lock in a new job now

With ultra-low unemployment and plenty of openings, it’s a job seeker’s market right now. But if there’s a recession, that could change quickly. So make hay while you can.

“If you are not working, or are looking for a better position, now would be a good time to take advantage of the very strong job market and lock in a position,” said Florida-based certified financial planner Mari Adam.

To help in your search, here are some resume dos and don’ts to keep in mind.

Cash in on the housing boom

If you’ve been on the fence about selling your home, now might be the time to make the leap.

The housing market has been on a tear, with year-over-year home prices up nearly 15% in April and rents nearly 17% higher.

Meanwhile, mortgage rates are up more than 2 percentage points from a year ago, which makes buying a home much more expensive and that may dampen demand. “I would suggest that anyone planning to put their house on the market do so right away,” said Adam.

Cover your near-term cash needs

It’s always a good idea, but especially when confronted with big events beyond your control, to make sure you have liquid assets for your most urgent needs.

That means enough money set aside in cash, money market funds or short-term fixed income instruments to cover near-term tax payments, unexpected emergencies and any big, upcoming expenses (e.g., a down payment or tuition).

This is also advisable if you are near or in retirement, in which case you may want to have enough liquidity to cover a year or more of the living expenses that you would ordinarily pay for with withdrawals from your portfolio, Williams said. This should be the amount you would need to supplement your fixed income payments, such as Social Security or a private pension.

In addition, Williams suggests having two to four years in lower volatility investments like a short-term bond fund.

That will help you ride out any market downturn should one occur and give your investments time to recover.

Don’t trade on the headlines

Rapid-fire news reports about higher energy and food prices or talk of a potential world war or nuclear attack are unnerving. But making financial decisions based on an emotional response to current events is often a losing proposition.

But making financial decisions based on an emotional response to current events is often a losing proposition.

“Making a radical change in the midst of all this uncertainty is usually a decision that [you’ll] regret,” said Don Bennyhoff, chief investment officer for Liberty Wealth Advisors and a former investment strategist at Vanguard.

Look back at periods of crisis over the last century and you’ll see that stocks typically came back faster than anyone might have expected in the moment, and did well on average over time.

For example, since the financial crisis hit in 2008, the S&P 500 has returned 11% a year on average through 2021, according to data analyzed by First Trust Advisors. The worst year in that period was 2008, when stocks fell 38%. But in most of the years that followed, the index posted a gain. And four of its annual gains ranged between 23% and 30%.

If you go back as far as 1926, that annual average return on the S&P has been 10.5%.

“Staying the course may be hard on your nerves, but it can be healthiest for your portfolio,” Williams said.

That’s not to discount the seriousness of nuclear threats or the chance that this period could diverge from historical patterns. But were things to truly escalate globally, he noted, “we’d have more to be concerned about than our investment portfolios.”

Review your risk tolerance

It’s easy to say you have a high tolerance for risk when the S&P 500 keeps setting record highs. But you have to be able to stomach the volatility that inevitably comes with investing over time.

So review your holdings to make sure they still align with your risk tolerance for a potentially rockier road ahead. And while you’re at it, figure out what it means to you to “lose” money.

“There are many definitions of risk and loss,” Bennyhoff said.

For instance, if you’re keeping money in a savings account or CD, any interest rate you’re earning is likely being outpaced by inflation. So while you preserve your principal, you lose buying power over time.

Then again, if it’s more important to preserve principal over a year or two than risk losing any of it – which could happen when you invest in stocks – that inflation-based loss may be worth it to you because you’re getting what Bennyhoff calls a “sleep-easy return.”

That said, for longer-term goals, figure out how much you feel comfortable putting at some risk to get a greater return and prevent inflation from eating away at your savings and gains.

“Over time you’re better off and safer as a person if you can grow your wealth,” Adam said.

Rebalance your portfolio

Given record stock returns in the past few years, now may be a good time to rebalance your portfolio if you haven’t done so in a while.

For instance, Adam said, you may be overweight in growth stocks. To help stabilize your returns going forward, she suggested maybe reallocating some money into slower-growing, dividend-paying value stocks through a mutual fund.

And check to see that you have at least some exposure to bonds. While inflation has resulted in the worst quarterly return in high-quality bonds in 40 years, don’t count them out.

“Should a recession result from the Fed’s aggressive interest rate hikes to quell inflation, bonds are likely to do well. Recessions tend to be far kinder to high quality bonds than they are to stocks,” Bennyhoff said.

Make new investments slowly

If you have a large lump sum – maybe you just sold your business or house, or you got an inheritance or big bonus – you may wonder what to do with it now.

Given all the global uncertainty, Adam recommends investing it in smaller chunks periodically – e.g., every month for a given period of time – rather than all at once.

“Space out your investing over time since this week’s news will be different than next week’s news,” she said.

Do your best. Then ‘let go’

Whatever the news today, building financial security over time requires a cool, steady hand.

“Don’t let your feelings about the economy or the markets sabotage your long-term growth. Stay invested, stay disciplined. History shows that what people – or even experts – think about the market is usually wrong. The best way to meet your long-term goals is just stay invested and stick to your allocation,” Adam said.

Doing so will help minimize any damage a rough market in 2022 may cause.

“If you’ve built an appropriately diversified portfolio that matches your time horizon and risk tolerance, it’s likely the recent market drop will be a mere blip in your long-term investing plan,” Williams said.

Keep in mind: It’s impossible to make perfect choices since no one has perfect information.

“Collect your facts. Try to make the best decision based on those facts plus your individual goals and risk tolerance.” Adam said. Then, she added, “Let go.”

(If you want to help Ukrainians who have had to flee or who stayed behind to fight, here’s a growing list of organizations to which you can make a donation.)

Gas prices may inch down — but that's not all good news | CNN ...

New York CNN Business —

Editor’s Note: This story is part of CNN Business’ Nightcap newsletter. To get it in your inbox, sign up for free, here.

There’s good news and bad news on the gas prices front. Good news: Some price relief could be on the way. The bad news: It’s because traders are betting on a recession.

In simple terms, there are two ways to bring down prices: Increase supply or reduce demand. The former is costly and complicated. The latter happens when consumers start pulling back because prices have risen too much and individual budgets are strained. That’s what appears to have happened this spring, as Americans watched gas prices soar above $5 a gallon and overall inflation top four-decade highs.

Although that might spell relief at the fuel pump, it may also signal a different kind of economic pain on the horizon.

“This morning’s market action has recession worries written all over it,” wrote Peter Boockvar, the chief investment officer at Bleakley Advisory Group. He put the odds of a recession this year at 99% because “nothing is 100%.”

Prices of oil spiked to $122.11 on June 8, their highest since March and about a dollar off its highest level since 2008.

In just two weeks since that spike, oil prices have fallen 16%. Why? It’s inflation, yet again, and the Federal Reserve’s campaign to fight it.

Recession fears

Consumer sentiment plunged to a record low, as consumers grew increasingly frustrated with high prices, according to a closely watched survey released June 10.

On the same day, the government’s primary inflation gauge, the consumer price index, saw its biggest jump in 40 years, with prices surging 8.6% for the 12 months ending in May. That was higher than the April reading — not the direction anyone was hoping for.

That mix of bad news more or less guaranteed that the Federal Reserve would have to raise interest rates more aggressively than it had previously signaled — a reality that shook investors and sent equity markets tumbling.

When central banks raise interest rates, it slows down economic activity, reducing demand for energy, which brings gas prices down (albeit slowly).

Over the weekend, US drivers got a very slight break on prices as the AAA average for a gallon of unleaded gas fell just below the $5 mark after hitting a high of $5.02 a gallon last week. That price has declined by a fraction of a penny each day since then.

On Wednesday, oil prices continued to fall even after the Biden administration said it would urge lawmakers to suspend the 18.4-cents-a-gallon federal gas tax in an effort to take the heat off prices – an action you’d expect would be bullish for demand.

Brent crude, the international benchmark, fell 4% to near $109 a barrel on Wednesday. West Texas Intermediate crude, the US standard, sank 4.5% to $104 a barrel.

Gas prices have fallen much more slowly than they went up, reaffirming the adage that prices go up like a rocket and come down like a feather. For the two months ahead of last week’s record, the AAA average price reading rose 58 times in 60 days, adding 94 cents to the national average price. That’s a steady climb of nearly 2 cents a day, compared with less than a penny a day that the price has fallen since Tuesday.

— CNN Business’ Chris Isidore contributed to this article.

Enjoying Nightcap? Sign up and you’ll get all of this, plus some other funny stuff we liked on the internet, in your inbox every night. (OK, most nights — we believe in a four-day week around here.)

What to expect from this week's Fed meeting | CNN Business

New York CNN —

The Federal Reserve is expected to raise interest rates by half a point at the conclusion of its two-day policy meeting on Wednesday, an indication that the central bank is pulling back on its aggressive stance as signs begin to emerge that inflation may be easing.

Although that increase would be smaller than the three-quarter-point hikes announced at the past four Fed meetings, it’s nothing to scoff at.

It’s still double the Fed’s customary quarter-point hike, and a sizable increase that will likely cause economic pain for millions of American businesses and households by pushing up the cost of borrowing for homes, cars and other loans.

The Fed’s anticipated action would increase the rate that banks charge each other for overnight borrowing to a range of between 4.25% and 4.5%, the highest since 2007.

Federal Reserve Chairman Jerome Powell confirmed last month that smaller rate hikes could be expected, saying: “The time for moderating the pace of rate increases may come as soon as the December meeting.”

But while inflation is unlikely to slow dramatically any time soon, partly due to continued pressure on wages amid a shortage of workers, Wall Street appears to believe the Fed will eventually be forced to pivot away from, or even reverse its regimen of rate hikes. Traders are largely pricing in rate cuts in the second half of 2023.

The Fed will conclude its rate hike regimen by the second quarter of next year, predicted JPMorgan analysts in a recent note. “With inflation continuing to fade and fiscal policy likely on hold, the Fed is likely to end its tightening cycle early in the new year and inflation could begin to ease before the end of 2023,” they wrote. The analysts expect two quarter-point hikes in the first half of 2023.

But the average period between peak interest rates and the first reductions by the Fed is 11 months, which could mean that even if the central bank stops actively hiking rates, they could remain elevated into 2024.

Investors will closely read the Fed’s economic outlook, the Summary of Economic Projections, which is also due out Wednesday. And they will watch Powell’s press conferences for clues about what’s to come — though they may end up sorely disappointed.

”We expect Fed Chair Powell will insist on the need to hold policy at a restrictive level for some time to bring inflation down toward the 2% target,” wrote Gregory Daco, chief economist at EY-Parthenon, in a note to clients Monday. “This will serve to push back against current market pricing … Powell will stress that history cautions strongly against prematurely loosening policy.”

What about the famous soft landing?

The Fed has increased its benchmark lending rate six times this year in an attempt to discourage borrowing, cool the economy and bring down historically high inflation that peaked at 9.1% over the summer.

Even if interest rate hikes do ease off, they will remain high, and economists are largely expecting that the US economy will endure a recession next year. Powell said in November that there is still a chance the economy avoids recession but the odds are slim, noting: “To the extent we need to keep rates higher longer, that’s going to narrow the path to a soft landing.”

In an interview that aired on CBS on Sunday, Treasury Secretary Janet Yellen — Powell’s predecessor at the Fed — said there is “a risk of a recession. But it certainly isn’t, in my view, something that is necessary to bring inflation down.”

And the economy has so far withstood the Fed’s aggressive rate hikes. The job market is healthy, wages are growing, Americans are spending and GDP is strong. Business is also good: Companies are largely beating revenue expectations and reporting positive earnings results.

A global problem

The Fed isn’t acting alone, it’s just one of nine central banks expected to make a rate announcement this week. Landing softly on the ever-narrowing path between high inflation and recession is a global concern as central banks across the world contend with similar economic problems.

The European Central Bank, the Bank of England and the Swiss National Bank are expected to follow the United States with half-point moves of their own on Thursday. Norway, Mexico, Taiwan, Colombia and the Philippines will also likely increase their borrowing costs this week.

The Federal Reserve announces its rate hike decision Wednesday at 2 p.m., followed by a press conference with Chair Powell at 2:30 p.m.

Gas tax holiday: There's a reason Obama once bashed this idea as ...

New York CNN Business —

In the spring of 2008, as gas prices were barreling towards record highs, presidential candidates John McCain and Hillary Clinton threw their weight behind a gas tax holiday.

Future president Barack Obama, by contrast, dismissed the idea as a political “gimmick” designed purely to win votes. “The easiest thing in the world for a politician to do is tell you exactly what you want to hear,” Obama said in April 2008.

Flash forward 14 years. Obama’s former vice president is now pushing for a gas tax holiday to ease the strain of record-high gas prices. President Joe Biden wants a three-month pause on the 18.3-cent-per-gallon federal tax.

If it gets through Congress, a gas tax holiday would deliver swift — albeit modest — relief to consumers by lowering retail gasoline prices by as much as 18 cents a gallon.

A gas tax holiday would be politically popular. It would also allow the White House to show that Biden is taking tangible action to address one of the biggest headaches facing families.

Americans are grappling with a 41% spike in gas prices since Russia’s invasion of Ukraine in late February. Record-high gas prices have contributed to the worst inflation in 40 years, forcing the Federal Reserve to raise interest rates so aggressively that markets are in turmoil and recession risks are rising.

Yet suspending the gas tax would involve trade-offs that serve to validate why Obama and others have bashed such a move as a gimmick — and why it may not get through Congress.

It won’t solve the underlying problem

First, a gas tax holiday would do nothing to fix the supply shock driving up prices, not just for gasoline but diesel and jet fuel, too.

Secondly, it would push demand in the wrong direction. At a minimum, artificially lowering prices would support buying gasoline, underlining the adage that the best cure for high prices is high prices.

“The risk is that at a time when the supply-and-demand balance that sets prices is already extremely out of balance, it would enable more Americans to hit the road,” said Patrick DeHaan, director of petroleum analysis at GasBuddy.

Suspending the gas tax also would effectively encourage the use of gasoline — running counter to the Biden administration’s ambitious climate goals that call for moving away from fossil fuels.

“Barack Obama was right. A gas tax holiday was a bad idea in 2008 and it’s a bad idea today,” Senator Bernie Sanders wrote on Twitter in March.

Like other progressives, Sanders instead threw his weight behind a windfall profit tax on the oil-and-gas industry, a potentially-popular move that carries its own set of risks.

Adding to inflation?

Mark Zandi, chief economist at Moody’s Analytics, told CNN in a phone interview that a gas tax holiday would not be helpful and could even be inflationary, forcing the Fed to raise rates more aggressively.

“I’m not a fan. You want people to drive less and use less gas. This works against that objective,” he said. “It’s not well-targeted.”

Zandi also expressed concern that energy companies may not pass along the entire savings from a gas tax holiday.

The Moody’s economist served as an economic adviser to McCain during the 2008 race when the Arizona Republican endorsed a gas tax holiday.

“I probably lost that battle,” Zandi said.

Another problem with a gas tax holiday today: Revenue raised from this levy helps finance the Highway Trust Fund, which is already short on funding. The federal gas tax hasn’t been increased since 1993, when gas was selling for just over $1 a gallon.

Unless those funds are replaced from other sources, suspending the gas tax would sap resources for building and repairing highways at a time when the price tag on those projects is going up due to soaring costs for construction materials and labor.

Energy Secretary Jennifer Granholm acknowledged this issue over the weekend, telling Dana Bash on CNN’s “State of the Union” that one challenge of suspending the gas tax is that it “funds the roads.”

Gary Cohn, a longtime Democrat who served as a top economic official in the Trump White House, told CNN Tuesday he’s concerned about how a gas tax holiday would diminish funding for infrastructure — a key policy focus of the Biden administration.

“The unintended consequences of getting rid of the tax are enormous,” said Cohn, who is now vice chairman at IBM. “The gas tax idea, although it looks like it solves the problem today, it actually creates, I think, more problems down the road.”

‘Self-defeating’

Marc Goldwein, senior policy director at the Committee for a Responsible Budget, said a gas tax holiday would be a “mistake,” in part because pushing up demand would lift prices.

“It would be partially self-defeating, not that meaningful for prices at the pump and costly for the federal government,” Goldwein said.

Economist Larry Summers, a former adviser to Obama and Treasury Secretary under President Bill Clinton, similarly told NBC’s “Meet the Press” last weekend that a gas tax holiday is “kind of a gimmick.”

And yet Biden officials say the president is seriously weighing it as an option.

Treasury Secretary Janet Yellen said last weekend a gas tax holiday is “certainly worth considering.”

If Biden and Congress do go this route, they will face a problem down the road when the tax holiday expires. “It’s going to be very unpopular when prices snap back up by 18 cents a gallon,” GasBuddy’s DeHaan said.

And that raises the specter of a temporary gas tax suspension morphing into a permanent holiday.

Premarket stocks: The bond market is crumbling | CNN Business

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

New York CNN Business —

The global bond market is having a historically awful year.

The yield on the 10-year US Treasury bond, a proxy for borrowing costs, briefly moved above 4% on Wednesday for the first time in 12 years. That’s a bad omen for Wall Street and Main Street.

What’s happening: This hasn’t been a pretty year for US stocks. All three major indexes are in a bear market, down more than 20% from recent highs, and analysts predict more pain ahead. When things are this bad, investors seek safety in Treasury bonds, which have low returns but are also considered low-risk (As loans to the US government, Treasury notes are seen as a safe bet since there is little risk they won’t be paid back).

But in 2022’s topsy-turvy economy, even that safe haven has become somewhat treacherous.

Bond returns, or yields, rise as their prices fall. Under normal market conditions, a rising yield should mean that there’s less demand for bonds because investors would rather put their money into higher-risk (and higher-reward) stocks.

Instead markets are plummeting, and investors are flocking out of risky stocks, but yields are going up. What gives?

Blame the Fed. Persistent inflation has led the Federal Reserve to fight back by aggressively hiking interest rates, and as a result the yields on US Treasury bonds have soared.

Economic turmoil in the United Kingdom and European Union has also caused the value of both the British pound and the euro to fall dramatically when compared to the US dollar. Dollar strength typically coincides with higher bond rates as well.

So while we’d normally see a rising 10-year yield as a signal that US investors have a rosy economic outlook, that isn’t the case this time. Gloomy investors are predicting more interest rate hikes and a higher chance of recession.

What it means: Portfolios are aching. Vanguard’s $514.5 billion Total Bond Market Index, the largest US bond fund, is down more than 15% so far this year. That puts it on track for its worst year since it was created in 1986. The iShares 20+ Year Treasury bond fund (TLT) (TLT) is down nearly 30% for the year.

Stock investors are also nervously eyeing Treasuries. High yields make it more expensive for companies to borrow money, and that extra cost could lower earnings expectations. Companies with significant debt levels may not be able to afford higher financing costs at all.

Main Street doesn’t get a break, either. An elevated 10-year Treasury return means more expensive loans on cars, credit cards and even student debt. It also means higher mortgage rates: The spike has already helped push the average rate for a 30-year mortgage above 6% for the first time since 2008.

Going deeper: Still, investors are more nervous about the immediate future than the longer term. That’s spurred an inverted yield curve – when interest rates on short-term bonds move higher than those on long-term bonds. The inverted yield curve is a particularly ominous warning sign that has correctly predicted almost every recession over the past 60 years.

The curve first inverted in April, and then again this summer. The two-year treasury yield has soared in the last week, and now hovers above 4.3%, deepening that gap.

On Monday, a team at BNP Paribas predicted that the inverted gap between the two-year and 10-year Treasury yields could grow to its largest level since the early 1980s. Those years were marked by sticky inflation, interest rates near 20% and a very deep recession.

What’s next: The bond market may face fresh volatility on Friday with the release of the Federal Reserve’s favored inflation measure, the Personal Consumption Expenditure Price Index for August. If the report comes in above expectations, expect bond yields to move even higher.

The Bank of England steps in to save pensions

The Bank of England held an emergency intervention to maintain economic stability in the UK on Wednesday. The central bank said it would buy long-dated UK government bonds “on whatever scale is necessary” to prevent a market crash.

Investors around the globe have been dumping the British pound and UK bonds since the government on Friday unveiled a huge package of tax cuts, spending and increased borrowing aimed at getting the economy moving and protecting households and businesses from sky-high energy bills this winter, reports my colleague Mark Thompson.

Markets fear the plan will drive up already persistent inflation, forcing the Bank of England to push interest rates as high as 6% next spring, from 2.25% at present. Mortgage markets have been in turmoil all week as lenders have struggled to price their loans. Hundreds of products have been withdrawn.

“This repricing [of UK assets] has become more significant in the past day — and it is particularly affecting long-dated UK government debt,” the central bank said in its statement.

“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability. This would lead to an unwarranted tightening of financing conditions and a reduction of the flow of credit to the real economy.”

Many final salary, or defined-benefit, pension funds were particularly exposed to the dramatic sell-off in longer dated UK government bonds.

“They would have been wiped out,” said Kerrin Rosenberg, UK chief executive of Cardano Investment.

The central bank said it would buy long-dated UK government bonds until October 14.

The silver-lining case for bonds

Steep drops in bond prices may be signaling doom and gloom for the economy, but some analysts say short-term bonds are still looking more attractive than equities right now.

“Record low yields have kept fixed income in the shadow of equities for decades,” said analysts at BNY Mellon Wealth Management in a research note. “But the aggressive shift in Fed policy is beginning to change this.”

Central banks around the globe have responded to elevated inflation by hiking interest rates– and bond yields have increased alongside them. The two-year US Treasury bond is currently yielding nearly 4%. That’s still a relatively low return, but better than the S&P 500’s dividend yield of around 1.7%.

“For the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities…you now get paid for owning them,” wrote Barry Ritholtz of Ritholtz Wealth Management on Wednesday.

Consider the alternative: the S&P is down more than 20% year to date.

Up next

The US Bureau of Economic Analysis releases its third estimate for Q2 GDP and US weekly jobless claims.

US economy will soon start losing 175,000 jobs a month, Bank of ...

New York CNN Business —

The Federal Reserve’s fight to squash inflation will cause the US economy to start losing tens of thousands of jobs a month beginning early next year, Bank of America warns.

Although the jobs market remained surprisingly strong in September, the Fed is working hard to change that by aggressively raising interest rates to ease demand for everything from cars and homes to appliances.

The pace of job growth is expected to be roughly cut in half during the fourth quarter of this year, Bank of America told clients in a report Friday.

As pressure from the Fed’s war on inflation builds, nonfarm payrolls will begin shrinking early next year, translating to a loss of about 175,000 jobs a month during the first quarter, the bank said. Charts published by Bank of America suggest job losses will continue through much of 2023.

“The premise is a harder landing rather than a softer one,” Michael Gapen, head of US economics at Bank of America, told CNN in a phone interview Monday.

In a perfect world, the Fed would slow the jobs market enough to get inflation back to healthy levels, but not so much that it causes significant and persistent job losses. Bank of America doesn’t think the Fed will be able to pull that off.

“We are looking for a recession to begin in the first half of next year,” Gapen said.

Unemployment to peak at 5.5%, Bank of America says

Last Friday’s jobs report showed that although the jobs market is slowing down, the United States added a stronger-than-expected 263,000 jobs in September. The unemployment rate dropped to 3.5%, tied for the lowest level since 1969.

But Gapen expects the unemployment rate will climb to around 5% or 5.5% over the next year. By comparison, the Fed expects the unemployment rate to hit 4.4% next year.

The US central bank is raising interest rates at the fastest pace in at least four decades in a bid to cool inflation. Fed officials have made clear they are in no rush to shift out of inflation-fighting mode to save the economy from a slowdown or even a recession.

“They’ll accept some weakness in labor markets in order to bring inflation down,” Gapen said.

Fed officials have said interest rates will need to stay at “restrictive” levels for a period of time.

Gapen said that although recessions tend to have “quick snapbacks,” the Fed’s stance on keeping rates high for an extended period suggests “maybe this plays out a little longer.”

“We could see six months of weakness in the labor market,” he said.

‘Mild’ recession

Some forecasters are more bullish on the state of the jobs market. The Conference Board said Monday its employment trend index, a combination of leading job market indicators, ticked up last month.

The Conference Board said this is a signal that “employment will continue to grow over the coming months,” though job gains are likely to “decelerate from their recent pace.”

The good news is that even those calling for a recession don’t see the unemployment rate skyrocketing as it did in 2020 or 2008.

Bank of America expects the unemployment rate will top out at 5.5% next year, well below the peak of nearly 15% in April 2020.

“Although nobody wants to be callous about someone losing their job,” Gapen said, “this could be classified as a mild recession.”

Gas prices are in the danger zone. Biden can't do much about it ...

New York CNN Business —

President Joe Biden’s 2022 is off to a dreadful start. Prices at the pump could make it even worse.

Crude oil has already zoomed back to two-month highs. Gasoline prices, which move with a lag, have stopped their muted decline. And they’re starting to creep higher again.

The energy resurgence is only going to add to the economic anxiety gripping the United States and sinking Biden’s poll numbers.

“This is a terrible situation. Gas prices are in this political danger zone,” Helima Croft, head of global commodity strategy at RBC Capital Markets, told CNN.

The White House knows how deeply unpopular high gas prices are. That’s why Biden took sweeping action in November to intervene. The administration announced the largest-ever release of emergency crude reserves from the Strategic Petroleum Reserve (SPR) in US history.

The return of $85 oil will pile pressure on Biden to act once again — and the administration is signaling further action is on the table.

“Tools continue to remain on the table for us to address prices. This is something the administration is continuing to watch and monitor very closely,” a White House official told CNN.

Yet presidents have limited power to lower gas prices. While Biden has options, they all have drawbacks.

“They are in a difficult situation. There are no magic wands here,” said Bob McNally, president of consulting firm Rapidan Energy Group and a former energy adviser to former President George W. Bush.

Emergency release Part II

If crude prices stay elevated, Biden may be tempted to take another stab at knocking them down.

“President Biden has taken strong, aggressive measures to combat these challenges,” the White House official told CNN, citing the SPR release from November.

And the official reiterated that Biden “stands ready to take additional action, if needed,” to maintain adequate supply, echoing what the administration said last fall.

Located along the US Gulf Coast, the SPR is an underground series of caverns that contains crude stockpiled for break-the-glass moments like hurricanes or wars.

Biden’s SPR intervention was met with mixed results.

Oil prices began tumbling in early November on rumors that the White House would step in. By the time of the announcement, crude was down about 10% from the highs.

Days later, US crude crashed to as low as $65.76 a barrel on December 1. But that late November selloff was driven by Omicron fears, and it proved short-lived. Crude is now trading at around $85 a barrel, up 29% from that December 1 low.

The gas price relief was fleeting.

After hitting a seven-year high of $3.42 a gallon in early November, the national average briefly dropped below $3.30 a gallon. But they have since rebounded to $3.31 a gallon — and the market is signaling further gains ahead. Gasoline futures are now trading at two-month highs.

Some energy analysts say the SPR failed to work, while others argue energy prices would have been much higher if Biden hadn’t acted.

Croft, the RBC strategist and a former CIA analyst, said the SPR release may have succeeded as a diplomatic tool used to get oil producers to add supply. She noted that despite Omicron, OPEC and its allies, known as OPEC+, went ahead and increased oil production in December.

Still, barely two months after Biden’s historic intervention, he’s under pressure to tap the SPR again. That underscores the SPR’s limitations.

After all, emergency reserves have a finite number of barrels. Washington can’t simply release barrels every month.

A more extreme step

In November, nearly a dozen Congressional Democrats urged Biden to ban US oil exports, a dramatic step that some Wall Street banks and industry experts have warned would badly backfire. At least one powerful official inside the administration backed that idea: White House chief of staff Ron Klain.

As CNN reported last fall, the soaring price of gasoline so alarmed Klain that at one point he suggested halting US exports.

However, Energy Secretary Jennifer Granholm later told oil executives in December that the administration is not considering an oil export ban.

“I’ve heard you loud and clear, and so has the White House,” Granholm told the National Petroleum Council in December. “We wanted to put that rumor to rest.”

McNally, the energy consultant, said an export ban would be a disaster.

“They may be looking for stronger medicine but this would be poison,” McNally said.

That’s because oil is a globally traded commodity and US gas prices are set by Brent, the world benchmark. If the world lost access to US barrels, Brent prices would likely rise due to less supply.

Make nice with MBS

Energy diplomacy may be Biden’s best option for driving down gas prices. Only OPEC has enough firepower to quickly add barrels on the market.

“We are in a supply crunch engineered by OPEC+,” said Claudio Galimberti, senior vice president of analysis at Rystad Energy.

The administration’s efforts to get OPEC to open the spigots have not been helped by the tense relationship between the United States and Saudi Arabia, the cartel’s kingpin.

Making nice with Saudi Crown Prince Mohammed bin Salman, known as MBS, could help. But that would come at a cost given that US intelligence found that MBS approved the operation to capture or kill journalist Jamal Khashoggi in 2018.

“Does Biden have to pick up the phone and call MBS as opposed to outsourcing it to his lieutenants?” RBC’s Croft asked. “None of this is easy.”

Meet with Big Oil

In recent months, the Biden administration has begun to take a friendlier tone with a key group in this inflation crisis: the US oil industry.

During Granholm’s virtual address to the National Petroleum Council last month, the Energy Secretary asked the industry to ramp up production to meet demand.

“Consumers, as you know, are hurting at the pump…You clearly have some important tools to alleviate that pain,” Granholm said. “Please, take advantage of the leases you have. Hire workers. Get your rig count up.”

Granholm added: “I do not want to fight with any of you.”

In theory, Biden could take this a step further by meeting with oil CEOs at the White House and considering requests to cut red tape (or at least promise not to add more regulation).

However, Biden ran on the most aggressive climate agenda in US history, and climate scientists say the world needs less, not more, fossil fuels. Cozying up to Big Oil isn’t really an option for this White House.

Wait it out

There is a lot of uncertainty over how much higher gas prices will go.

Much will depend on the path of the pandemic and supply. But the good news is that as long as Russia doesn’t invade Ukraine and disrupt gas supply, some energy analysts expect gas prices will cool off later this year as supply meets demand.

McNally said his advice to Biden would be not to overreact to rising prices.

“Stand pat. Don’t commit mistakes,” he said. “Wait for prices to come down.”

Of course, presidents with low approval ratings in election years aren’t known for their patience.


Cindy Williams, 'Laverne & Shirley' star, dies at 75

Andrew Dalton

The Associated Press

Cindy Williams, who played Shirley opposite Penny Marshall's Laverne on the popular sitcom "Laverne & Shirley," has died, her family said Monday.

Williams, 75, died in Los Angeles on Wednesday after a brief illness, her children, Zak and Emily Hudson, said in a statement released through family spokeswoman Liza Cranis.

"The passing of our kind, hilarious mother, Cindy Williams, has brought us insurmountable sadness that could never truly be expressed," the statement said. "Knowing and loving her has been our joy and privilege. She was one of a kind, beautiful, generous and possessed a brilliant sense of humor and a glittering spirit that everyone loved."

Williams worked with some of Hollywood's most elite directors in a film career that preceded her full-time move to television, appearing in George Cukor's 1972 “Travels With My Aunt,” George Lucas' 1973 “American Graffiti” and Francis Ford Coppola's "The Conversation" from 1974.

But she was by far best known for "Laverne & Shirley," the "Happy Days" spinoff that ran on ABC from 1976 to 1983. In its prime, "Laverne & Shirley" was among the most popular shows on TV.

Lisa Loring:Actor who played Wednesday in original ‘Addams Family’ series dies at 64

Barrett Strong:Motown trailblazer with the Temptations and Marvin Gaye dies at 81

Williams played the straitlaced Shirley Feeney to Marshall's more libertine Laverne DeFazio on the show about a pair of blue-collar roommates who toiled on the assembly line of a Milwaukee brewery in the 1950s and ’60s.

“They were beloved characters,” Williams told The Associated Press in 2002.

DeFazio was quick-tempered and defensive; Feeney was naive and trusting. The actors drew upon their own lives for plot inspiration.

“We’d make up a list at the start of each season of what talents we had,” Marshall told the AP in 2002. “Cindy could touch her tongue to her nose and we used it in the show. I did tap dance.”

Williams told the AP in 2013 that she and Marshall had “very different personalities,” but tales of the two clashing during the making of the show were “a bit overblown.”

The series was the rare network hit about working-class characters, with its self-empowering opening song: “Give us any chance, we’ll take it, read us any rule, we’ll break it."

That opening would become as popular as the show itself. Williams’ and Marshall’s chant of “schlemiel, schlimazel” as they skipped together became a cultural phenomenon and oft-invoked piece of nostalgia.

Marshall, whose brother Garry Marshall co-created the series, died in 2018.

The show also starred Michael McKean and David Lander as Laverne and Shirley's oddball hangers-on Lenny and Squiggy. Lander died in 2020.

As ratings dropped in the sixth season, the characters moved from Milwaukee to Burbank, California, trading their brewery jobs for work at a department store.

In 1982, Williams became pregnant and wanted her working hours curtailed. When her demands weren’t met, she walked off the set and filed suit against its production company. She appeared infrequently during the final season.

Williams was born one of two sisters in the Van Nuys area of Los Angeles in 1947. Her family moved to Dallas soon after she was born, but returned to Los Angeles, where she took up acting while attending Birmingham High School and majoring in theater arts at LA City College.

Annie Wersching:24' actor and Tess in 'The Last of Us' video game dies at 45

Tom Verlaine:Guitarist and co-founder of influential band Television dies at 73

Her acting career began with small roles in television starting in 1969, with appearances on “Room 222,” “Nanny and the Professor” and ”Love, American Style."

Her part in Lucas' “American Graffiti” would become a defining role. The film was a forerunner to a nostalgia boom for the 1950s and early 1960s that would follow. “Happy Days," starring her “American Graffiti” co-star Ron Howard, would premiere the following year. The characters of Laverne and Shirley made their first TV appearance as dates of Henry Winkler's Fonzie before they got their own show.

Lucas also considered her for the role of Princess Leia in “Star Wars,” a role that went to Carrie Fisher.

In the past three decades, Williams made guest appearances on dozens of TV series including “7th Heaven,” “8 Simple Rules” and “Law and Order: Special Victims Unit.” In 2013, she and Marshall appeared in a “Laverne & Shirley” tribute episode of the Nickelodeon series “Sam and Cat.”

Last year, Williams appeared in a one-woman stage show full of stories from her career, “Me, Myself and Shirley," at a theater in Palm Springs, California, near her home in Desert Hot Springs.

Williams was married to singer Bill Hudson of the musical group the Hudson Brothers from 1982 until 2000. Hudson was the father to her two children. He was previously married to Goldie Hawn and is also the father of actor Kate Hudson.

Polo Polo:Mexican comedian dies at 78: 'Everything he wanted, he was able to achieve'

David Crosby:Co-founder of Crosby, Stills & Nash, The Byrds, dies at 81, reports say

Actresses Cindy Williams, Louise Fletcher to appear at Plaza ...

Dave Acosta

ElPaso

"Schlemiel! Schlimazel! Hasenpfeffer Incorporated!"

Many fans remember actress Cindy Williams as Shirley Feeney in the popular television series "Laverne & Shirley," reciting the now-famous hopscotch chant during the show's opening sequence alongside her co-star Penny Marshall.

Williams, as well as actress Louise Fletcher, will be the celebrity guests at this year's Plaza Classic Film Festival, organizers announced Tuesday.

The annual movie celebration begins Aug. 5 at the Plaza Theatre in Downtown El Paso.

Williams will appear at the screening of George Lucas' 1973 blockbuster "American Graffiti" at 7 p.m. Aug. 14.

Williams, who grew up in Texas, starred in the film alongside then-up-and-comers Harrison Ford, Ron Howard and Richard Dreyfus. The film sparked an interest in 1950s and early-1960s America and is said to have influenced the television show "Happy Days," and in turn was spun-off into "Laverne & Shirley."

Fletcher, an Academy Award winner, will be the guest at the screening of director Milos Forman's "One Flew Over the Cuckoo's Nest" at 7 p.m. Aug. 7. Fletcher won the best supporting actress Oscar for her portrayal of the evil Nurse Ratched in the 1975 drama.

Fletcher first appeared on the small screen in shows such as "Maverick" and "Playhouse 90" during the 1950s. She made her first big-screen appearance in the 1974 cult hit "Thieves Like Us."

In addition, Fletcher also will headline a private reception for festival pass-holders and will appear at the screening of "Thieves Like Us" at 1 p.m. Aug. 8. Fletcher will sign autographs at 4 p.m. Aug. 8 in the El Paso Community Foundation's Foundation Room, 333. N. Oregon. Admission is free, but there will be a charge for autographs.

Williams will sign copies of her new memoir "Shirley, I Jest!" at noon Aug. 15 in the Foundation Room. Admission is free and books can be purchased there.

Additionally, El Paso-raised actress Yvette Yates will make her return to the festival, where she first appeared in 2014. Yates will appear at the screening of the new comedy horror movie "Bloodsucking Bastards" at 7:30 p.m. Aug. 7 at the Plaza's Philanthropy Theatre.

Tickets for "One Flew Over the Cuckoo's Nest" and "American Graffiti" are $10, while tickets for "Thieves Like Us" are $6 and $4 for "Bloodsucking Bastards." Festival passes are $200 and include admission to all ticketed events. Film Club passes, for ages 14 to 18, are $100.

Tickets are available at the Plaza Theatre Box Office, all Ticketmaster outlets, online via plazaclassic.com and ticketmaster.com, and by phone at 800-745-3000.

Dave Acosta may be reached at 546-6138

Click here to read the full story on the El Paso Times Entertainment blog, The Beat ››

Actress Cindy Williams at Plaza Classic tonight

Dave Acosta

ElPaso

Related ›› See select Plaza Classic clips

It's been 33 years since actress Cindy Williams left behind the character of Shirley Feeney on the popular television show "Laverne & Shirley" to begin a new journey — parenthood.

In that time, her co-star Penny Marshall became a well-respected movie director, as did Ron Howard her co-star in the 1973 movie "American Graffiti." Harrison Ford and Richard Dreyfuss, who also appeared as newcomers in the George Lucas-directed blockbuster, saw their stars rise throughout the 1980s.

Looking back, Williams doesn't regret walking away from the show in 1983 to start a family, she said. Her career, though she continued to appear in several TV shows, movies and on stage, just took a back seat.

"I wouldn't change anything for the world. I wanted my family and I got them," Williams told the El Paso Times. "I always wanted (to start a family) from the time I can remember. The other night at a film school talk I was asked, 'Can you have it all? A family and a career?' I know in my experience some things have to be sacrificed. You can't spend as much time on your family if you want to further your career, and you can't spend as much time trying to further your career if you want to raise a family."

Williams is set to talk about her life and more Friday night at the Plaza Classic Film Festival. She also will introduce the film that made stars out of her, Howard, Dreyfuss and Ford, and helped Lucas launch his dream of making a big-budget "space opera" come true — the legendary "Star Wars."

The actress recently penned a memoir, "Shirley, I Jest!," in which she recounts her years growing up in Dallas, her family's move to Los Angeles, and her rise to become one of television's biggest stars in the late-1970s and early-1980s.

"I wanted to write a book while I could still remember things," Williams, now 67, said with a laugh. "It started as a book of anecdotes and fun stories about my career. Then, the publisher asked me to write a bit more about my life."

One of those stories involves the first movie Williams appeared in, 1970's "Gas-s-s-s," which was filmed about three hours away in Socorro, N.M. Williams and co-star Talia Shire — who went on to play the roles of Connie Corleone in "The Godfather" series and Adrian Balboa in the "Rocky" series — were driven to a hotel on a dirt road called "The Hub," Williams said.

"Our room shared a common wall with Ramirez Mortuary," Williams said. "We got in the room and started crying. But we grew to love (New Mexico) and I do love Texas."

But it would be Williams' next movie that would guide her career, even though it took some convincing from director Francis Ford Coppola for her to actually audition for his friend's movie, "American Graffiti." Williams, who had just returned from shooting a movie in Spain, initially told producers she was too jet lagged to do a screen test. After being convinced to read the script by friend and casting director Fred Roos, she initially wanted to play the part of Debbie, "the fast girl," Williams said. That part, she was informed, had already been cast.

"The other part I wanted was for a 12-year-old girl and I wasn't," Williams said. "But I went over and met this kid (Lucas) who didn't say four words to me except terrific ... And I thought, 'This is the wunderkind?' "

It wasn't until Williams and Howard had a meeting with Lucas that they finally saw his vision. Lucas imagined the film as a musical, telling them that at no time would the music stop except when the sources of the music — car radios, jukeboxes — are gone. It was then that she realized that Coppola had been right, the film would be something special.

"Until then, I thought we were just making a hot-rod movie," Williams said.

It was that film that led to a 1950s revival on TV, influencing the creation of the show "Happy Days," also starring Howard, and its immensely popular spin-off show, "Laverne & Shirley," with stars Williams and Marshall.

Williams had been working with Marshall prior to the creation of the show. The two had been paired by Coppola to write for a musical and comedy sketch movie he was producing and have been friends ever since.

"We could make each other laugh," Williams said, adding that she had recently stayed at Marshall's home for a weekend. "We're better friends now than when we were on the show, even. But to do comedy like that, you have to have a relationship like that. When it worked, it really worked."

Dave Acosta may be reached at 546-6138.

Who: Television and movie actress Cindy Williams at the screening of 1973's "American Graffiti" at the Plaza Classic Film Festival

When: 7 p.m. Friday

Where: Plaza Theatre in Downtown El Paso

Tickets: $10; available at the Plaza Theatre Box Office, all Ticketmaster outlets, online at ticketmaster.com and by phone at 800-745-3000

Of note: Williams also will sign copies of her book "Shirley, I Jest" at noon Saturday in the Foundation Room, 333 N. Oregon; admission to the signing is free, however, purchase of the book is required

Information: 231-1100; plazaclassic.com

El Paso

Organizers of the Plaza Classic Film Festival announced today in a release that actresses Cindy Williams and Louise Fletcher will appear at this year’s festival which begins Aug. 5.

Williams will appear at the screening of George Lucas’ 1973 blockbuster “American Graffiti” at 7 p.m. Aug. 14 at the Plaza Theatre in Downtown El Paso. Williams, who grew up in Texas, starred in the film alongside then-up-and-comers Harrison Ford and Richard Dreyfus. She went on to co-star as Shirley Feeney in the hit television series “Laverne & Shirley” from 1976 to 1983.

Fletcher, an Academy Award winner, will be the guest at the screening of director Milos Forman’s “One Flew Over the Cuckoo’s Nest” at 7 p.m. Aug. 7 at the Plaza. Fletcher won the best supporting actress Oscar for her portrayal of the evil Nurse Ratched in the 1975 drama.

In addition, Fletcher also will headline a private reception and will appear at the festival’s

screening of the 1974 cult hit “Thieves Like Us,” her first credited movie role, at 1 p.m. Aug. 8 at the Plaza Theatre.

Tickets for “Cuckoo’s Nest” and “American Graffiti” are $10 at the Plaza Theatre box office, Ticketmaster, online via plazaclassic.com and by phone at 800-745-3000.

Plaza Classic Film Festival rolls credits

Dave Acosta

ElPaso

The lines outside of the Plaza Theatre in Downtown were abuzz Sunday afternoon as the Plaza Classic Film Festival was set to roll the credits on its eighth year of silver screen gems.

The final day of the festival, presented each year by the El Paso Community Foundation, featured a screening of "Follow Thru" with the Laurel and Hardy short "Brats" — the first films shown at the theater when it originally opened in 1930.

The theater, which was nearly demolished in the 1980s in favor of a parking lot, was renovated and re-opened in 2006 thanks to a partnership between the foundation and the City of El Paso.

Also being screened on Sunday afternoon were a sold-out showing of the film "Selena," the biopic about the beloved fallen Tejano singer starring Jennifer Lopez, and the Audrey Hepburn musical "Funny Face." Closing out the fest Sunday night was the classic British comedy "Monty Python and the Holy Grail," which is celebrating its 40th anniversary.

"My parents used to come and drop us off here when we were kids," East El Pasoan Manny Martinez said. "We would buy 10-cent hot dogs — my cousin, myself and my brother. That's part of the fun of coming to the festival, I make it a point to come every year, at least to a couple of showings."

This year, the festival, which regularly brings in celebrity guests to talk about the classic films in which they starred, included appearances by actress Louise Fletcher and Cindy Williams. Fletcher won an Academy Award for her portrayal of Nurse Ratched in the 1975 film "One Flew Over the Cuckoo's Nest." Williams, best known for her role as Shirley Feeney in the hit television show "Laverne & Shirley" in the 1970s and '80s, appeared at a screening of George Lucas' first hit film "American Graffiti" on Friday.

"Cindy Williams is a sweetheart," Doug Pullen, the festival's creative director, said. "We had a private reception for her before (her appearance). When we walked her over to the theater for the red carpet and the line was outside all the way around the building. Before I knew it she was greeting people and taking pictures with them. She had a cold the whole time so instead of hugging and shaking hands she was rubbing elbows with people. And Fletcher was great too."

One of the festival's best attended events was the Aug. 8 free outdoor screening of the campy musical "The Rocky Horror Picture Show," Pullen said. He estimated more than 4,000 film-lovers enjoyed the cult classic whose fans enjoy dressing up as its characters, acting out the film as it plays and various other traditions such as throwing toast and rice at various points in the movie.

The 1939 epic Civil War romance "Gone With the Wind" and the 1985 time travel adventure "Back to the Future," were both equally well attended, attracting about 1,600 people each, Pullen said.

"I think it's great that we have people interested in seeing films spanning 46 years," Pullen said.

Another annual tradition which has kept people coming to the festival year after year is the theater's light show, which illuminates the ceiling in a night sky scene, and the Mighty Wurlitzer Organ, played on the final day by Ken Fedorick and several other volunteers throughout the festival.

"I love the theater," West El Pasoan Debbie Hinshaw said. "I love when they show the stars and the organ. I like that it's very diverse and that they have things for all age groups and different interests."

Something new at the Plaza Classic this year was the addition of a two-week kids camp. Campers were taught filmmaking basics and made short films which were screened, along with other local shorts and features, in the El Paso Community Foundation's Foundation Room, located just around the corner from the Plaza on Oregon Street. The camp had 18 participants and Pullen said it will return for next year's festival.

The Local Flavor series, featuring local filmmakers, has also continued to grow, Pullen said. Some of the screenings played to a capacity audience, he said.

"Last year we tripled the previous year's attendance (for Local Flavor) and we can safely say we had a higher attendance this year," Pullen said.

Part of what makes the festival possible each year is the work of many volunteers who take tickets, usher people to their seats and answer questions for festival-goers.

Luis Suira is a second-year volunteer. He decided to volunteer because he liked the festival and the theater it calls home.

"I think bringing classic films to El Paso is a great way to bring the community together in a truly fantastic place," Suira said. "I've seen some people that genuinely didn't realize that the Plaza was still (around). People come in and you see the amazement in their eyes. They look around the main hall and see the huge ceilings, the colors, the bar — its really nice to see."

Organizing the festival is a year round affair, Pullen said. He's already making mental notes for next year's Plaza Classic, which is set for Aug. 4-14, and the festival's tenth anniversary in two years.

While no concrete plans are in place yet, other than the dates, he hopes to continue the Plaza Classic's partnerships with the El Paso Chihuahuas and with the El Paso museums of art and history.

The baseball movie "The Natural," starring Robert Redford kicked off the festival two weeks ago at Southwest University Park and the two Downtown museums hosted events and exhibits around the screenings of "Gone With the Wind" and several of pop artist Andy Warhol's films.

"We're already getting requests to show "Back to the Future (Part II)," Pullen said. "People have asked me for more sci-fi and horror. There's ideas and we have meetings with the committee and between them me and (El Paso Community Foundation president) Eric (Pearson) we already have 30-40 ideas we're kicking around."

Dave Acosta may be reached at 546-6138.

Penny Marshall's death: Co-star Cindy Williams, Tom Hanks, stars ...

Penny Marshall's death from complications relating to diabetes moved the Hollywood community to grieve on social media.

Marshall was best know to millions as Laverne DeFazio on "Laverne & Shirley," the gravel-voiced, gangly Milwaukee brewery worker with the tough act, soft heart and the big “L” on her sweater.

Cindy Williams, who played the Shirley to Marshall's Laverne, mourned her old co-star.

"What an extraordinary loss," she said in a statement to USA TODAY. "My good friend, Penny Marshall is gone one in a million. Utterly unique, a truly great talent. And, oh what fun we had! Can't describe how I'll miss her."

Director and actor Rob Reiner tweeted that he was "so sad" about Marshall's passing. The two were married from 1971-1981.

"I loved Penny," he continued. "I grew up with her. She was born with a great gift. She was born with a funnybone and the instinct of how to use it. I was very lucky to have lived with her and her funnybone."

Fellow "Laverne & Shirley" co-star Michael McKean was left speechless following the news of Marshall's death. "I don't know what to say," he tweeted.

Aside from acting, Marshall became one of the most successful female film directors of all time, with hits such as "Big," "Awakenings" and "A League of Their Own" to her credit.

Tom Hanks, who starred in "Big" and "A League of Their Own," said his final "goodbye" to Marshall: "Man, did we laugh a lot! Wish we still could. Love you. Hanx."

Geena Davis, who starred in the film about a women’s baseball team during World War II, wrote, “Penny brought so much joy to so many and will be sorely missed. I will be forever grateful to her for letting me be a part of ‘A League of Their Own.’”

Rosie O'Donnell, another star of "A League of Their Own," said she was "simply heartbroken. She shared an ad she did with Marshall.

Madonna, who also starred in "A League of Their Own," shared a photo from set of herself and Marshall.

"So Lucky to have known you and worked with you Penny Marshall!!" she wrote in an Instagram post. "Your Talent was as BIG as your Heart! and you were a Trailblazer For Women In Hollywood!"

The All-American Girls Professional Baseball League said without Marshall and "A League of Their Own," "the AAGPBL would still be 'the best kept secret in baseball.'"

“RIP to a beautiful friend,” wrote NFL great-turned-"Good Morning America" host Michael Strahan. “You will be missed but you were definitely loved and appreciated when you were here. Prayers and love for you and the family!"

Fellow director and basketball fan Spike Lee, who was often spotted sitting courtside next to Marshall at NBA games, simply posted the New York Daily News' cover tribute.

"Rest in peace to my great friend, Penny Marshall," wrote Lakers icon Magic Johnson. "We shared a lot of laughs and good times together."

Donyell Marshall, who transitioned to collegiate-level coaching after leaving the NBA, wrote, "Still remember when you asked me for my game Jersey. You said you would go around telling people I was your nephew. We always talked before and after games when we played against the Lakers."

Ron Howard, whose career track mirrored Marshall's, noted, "She made the transition from sitcom star to A List movie director with ease & had a major impact on both mediums. All that & always relaxed, funny & totally unpretentious. I was lucky to have known & worked with her."

"Thank you for what you contributed to us girls," wrote Viola Davis. "Grateful to have worked with you. Rest well you great Broad!!!"

Barbra Streisand tweeted that she was "so sorry to hear" about Marshall's passing.

"I have great memories of attending many of her birthday parties with Carrie Fisher in the early days... and she came to so many of my concerts," she continued. "May she rest in peace.

Bette Midler said it is the "end of an era." "The Marshall family grieves again as the great #PennyMarshall dies at age 75. What an extraordinary family they were and continue to be, and how much love and sympathy my family and I send their way," she tweeted.

Danny DeVito remembered her as a "sweet woman."

"I was very fortunate to spend time with her," he tweeted. "So many laughs. She had a heart of gold. Tough as nails. She could play round ball with the best of them."

Actress Olivia Munn called Marshall "one of the most important trailblazers. Her comedic talents brought success & fame, but she truly broke the mold with her directing."

Josh Gad celebrated Marshall and her impact.

"At a time when men dominated, #pennymarshall broke barriers as a director, giving us hit after hit," he tweeted. "A League of their Own, Awakenings, & Big aren’t simply great movies. They (are) classics made by a director who was simultaneously setting up shots while breaking down walls."

"Farewell to the lady I imitated as a kid before becoming her neighbor years later, legendary sitcom star and BIG director Penny Marshall," wrote Kevin Smith. "I got to tell Penny that LEAGUE OF THEIR OWN is one of my favorite films when we recorded 4 epic podasts at my house."

Hollywood wasn’t the only institution to pay tribute. Major League Baseball paid tribute to the director, tweeting, "We join the baseball community in mourning the passing of Penny Marshall, director of 'A League of Their Own.' "

Larry King also remembered Marshall on Twitter, sharing a memory of her sports memorabilia collections.

"So saddened by Penny Marshall's passing. Her work entertained us for years — what a remarkable woman! One thing I'll always remember about Penny — & maybe some people don't know this — she had one of the best sports memorabilia collections I've ever seen," he wrote.

Trisha Yearwood thanked Marshall in a tribute tweet.

"RIP Penny Marshall. You were my childhood, and forever after. Thank you for sharing your gifts with the world. xoxo," she wrote.

Mark Wahlberg shared a photo with Marshall along with a sweet message.

"Rest in peace, Penny. Such a wonderful, funny and talented lady," he wrote, adding a broken heart emoji. "Without her support and encouragement, I would not be where I am today. She will be missed."

"Seinfeld" star Jason Alexander fondly recalled auditioning for Marshall.

"Penny Marshall had me audition 6 times for a role and then I didn’t get it. She didn’t know that I would audition for her forever," he wrote. "It was a treat to be in the room.

"Brady Bunch" actress Maureen McCormick wrote to Marshall: "Your comedic talent and gift for directing have forever inspired me."

Rapper Bow Wow remembered taking in "plenty of Laker games" with Marshall, a noted basketball fan.

"Great woman with a great soul!" he tweeted.

"Crazy Rich Asians" actress Awkwafina simply tweeted: "Rest in Power, Penny Marshall."

Billy Crystal recognized Marshall as “a great comedienne, a terrific director and a dear friend.”

“Oh Rest In Peace dear Penny Marshall,” actress Rosanna Arquette posted, “we have had many laughs through the years. This is very sad news.”

George Takei remembered her as a person who "brought us great laughter and truly broke new ground as a director."

He added: "Neither a schlemiel, or ever a schlimazel, she shall be missed by her many fans."

Journalist Dan Rather dubbed Marshall a "funny, poignant, and original American voice."

"Penny Marshall was a pioneer in television and the big screen who understood humor comes in many forms and some of life's deeper truths require a laugh," he tweeted. "She will be missed."

“Googled this and realized after all these years ... I Remembered every word,” tweeted “Today” co-anchor Hoda Kotb, sharing the opening to 'Laverne & Shirley.'

“We will miss you,” Kotb continued.

Russell Crowe tweeted that just yesterday, he held a Golden Globe award from the 1930s that Marshall gave to him.

"Hadn't seen it in years. Then today's news..." the actor wrote. "She was kind, she was crazy, so talented and she loved movies."

Comedian Kathy Griffin tweeted a photo of herself with Marshall.

"Penny Marshall was a loyal friend, a pioneer for women in film, and true supporter of women in the industry," she wrote. "Rest In Peace my friend."

"I Dream of Jeannie" actress Barbara Eden tweeted that she was "such an admirer of (Marshall's)."

"She and a her wonderful brother are reunited," she continued, referencing director Gary Marshall, who died in 2016.

William Shatner hailed her “a true treasure!”

Director Ava DuVernay expressed gratitude to Marshall "For the trails you blazed. The laughs you gave. The hearts you warmed."

Busy Philipps was brokenhearted over the news.

"Rest In Peace and thank you for everything," the talk show host tweeted.

Lin-Manuel Miranda joined those in mourning, tweeting "#RIPPennyMarshall."

Actor Sean Astin said he was reflecting on "so many of her brilliant moments."

Mayim Bialik referred to Marshall as "Comedy gold" in a tweet.

"I grew up wanting to be as funny as Penny Marshall," she wrote, "and had the pleasure of meeting her a few times."

Actor James Woods, who was featured in Marshall's 2001 film "Riding in Cars with Boys," remembered her as one of his "dearest friends."

"I loved her," he continued. "Funny, warm, a true individual and remarkable talent."

"Blockers" actor Ike Barinholtz reminded his followers, " 'A League of Their Own' is such a great movie and if you haven't seen it you should."

"Sabrina, the Teenage Witch" actress Melissa Joan Hart thanked Marshall for being a "special role model for female comedians."

"The Marshall family holds a special place in my heart for being so kind and creative and encouraging to other artists," she wrote in an Instagram post.

Justine Siegal, the first woman to coach for a Major League Baseball organization, praised the filmmaker for “A League of Their Own.” Marshall directed the 1992 flick.

“Your movie... inspired others to play baseball," Siegal wrote. “You made a difference. Thank you.”

Comedian Christopher Titus shared, "This news hits with amazingly deep sadness. The world lost a lot of funny today."

"Men in Black" actor Vincent D'Onofrio recalled Marshall inviting him over to discuss a movie she was working on. "She was so kind to me," he tweeted. "She was so smart and funny. I will never forget that afternoon. My heart goes out to her family and friends."

"The Simpsons" producer David Silverman remembered Marshall as the long-time cartoon's first guest star in the Season 1 finale. "Great comedic actor and director," he wrote.

CNN anchor Jake Tapper simply tweeted "RIP Penny Marshall" with a GIF.

Actor Albert Brooks remembered Marshall as "so talented and funny."

"A big loss," he added.

Writer Matt Oswalt, brother of comic Patton Oswalt, lauded Marshall as one of the top directors.

"Her movies blended comedy and drama better than anyone," he posted.

Blogger Perez Hilton shared with followers his heart was "heavy" since learning the loss of the "TV legend".

"I grew up watching 'Laverne & Shirley,' like so many," he reminisced.

Penny Marshall, star of 'Laverne & Shirley,' died of heart failure

Penny Marshall died of heart failure caused by atherosclerotic cardiovascular disease and diabetes, according to E! and Us Weekly. The Blast published a copy of the death certificate, which was issued Monday by the Los Angeles Department of Public Health.

Marshall's body was cremated Dec. 26 and given to her sister, Ronny Marshall, the following day, according to the reports.

Marshall died Dec. 17 at age 75. Family spokeswoman Michelle Began confirmed at the time that the cause was complications from diabetes.

One of the most successful female film directors of all time, Marshall was responsible for "Big," "Awakenings" and "A League of Their Own." She also co-starred as Laverne DeFazio on the hit television series "Laverne & Shirley."

More:Penny Marshall, 'A League of Their Own' director and TV's 'Laverne,' dies at 75

More:Penny Marshall mourned by co-star Cindy Williams, ex-husband Rob Reiner and more stars

Marshall spent much of the ’70s perfecting her comedy skills, starting off as Oscar’s woebegone secretary Myrna on "The Odd Couple." After a somewhat similar stint as Mary’s new neighbor on "The Mary Tyler Moore Show," she made a 1975 guest appearance with Cindy Williams on "Happy Days," and a classic character was born.

For millions of Americans, she remains Laverne, the gravel-voiced, gangly Milwaukee brewery worker with the tough act, soft heart and the big “L” on her sweater. Easily riled and easily hurt, Laverne was the more down-to-earth realist to Shirley Feeney’s (Williams) boo-boo-kitty-loving idealist. They were vastly different but shared the same dream in their 1950s-set blue-collar sitcom: to find true love and a way out of that basement apartment.

"Laverne" ended in 1983, and for all intents and purposes, so did Marshall’s acting career. She seemed more comfortable behind the camera, making her big-screen directorial debut with the 1986 comedy "Jumpin' Jack Flash" and following it with "Big," a breakout role for Tom Hanks in 1988, and "A League of Their Own," which starred Madonna and Rosie O'Donnell as members of a World War II women's baseball league.

Contributing: Robert Bianco, USA TODAY

Penny Marshall, TV's Laverne and 'A League of Their Own' director ...

USA TODAY

This story has been updated since its original publication.

Who’s going to help Shirley make her dreams come true now?

Penny Marshall – who died Monday at 75 of complications from diabetes, family spokeswoman Michelle Bega confirmed – became one of the most successful female film directors of all time, with hits such as "Big," "Awakenings" and "A League of Their Own" to her credit.

Yet for millions of Americans, she remains Laverne DeFazio of ABC's "Laverne & Shirley," the gravel-voiced, gangly Milwaukee brewery worker with the tough act, soft heart and the big “L” on her sweater. Easily riled and easily hurt, Laverne was the more down-to-earth realist to Shirley Feeney’s (Cindy Williams) boo-boo-kitty-loving idealist. They were vastly different but shared the same dream in their 1950s-set blue-collar sitcom: to find true love and a way out of that basement apartment.

It was a role Marshall was born to play, and not just because her brother Garry was the show’s producer (though that family tie, and the corresponding hints of favoritism, eventually caused backstage problems with Williams).

Remembering those we lost: Celebrity Deaths 2018

Marshall spent much of the ’70s perfecting her comedy skills, starting off as Oscar’s woebegone secretary Myrna on "The Odd Couple," another Garry Marshall series. After a somewhat similar stint as Mary’s new neighbor on "The Mary Tyler Moore Show," she made a 1975 guest appearance with Williams on "Happy Days," and a classic character was born.

Well, almost. Laverne and Shirley were softened considerably – made a bit more feminine and a bit less sexually voracious – for the 1976 debut of ABC’s spinoff. What remained was an instantly likable yin-yang onscreen chemistry between the stars. And that, along with terrific supporting work from Michael McKean and David Lander as the girls’ gross neighbors, Lenny and Squiggy, vaulted the show to the top of the ratings.

"Laverne & Shirley" was loud and silly and, aside from those four stars, often incredibly badly acted. Often, it was also wildly funny, particularly when it exploited Marshall and Williams’ complementary slapstick skills. Marshall was never a subtle actress, and Laverne was not a subtle role. But when she and Williams were clicking along at their best, they produced some comedic physical stunts that held their own with the best of Lucy and Ethel.

Their sitcom didn’t stay hugely popular for long; bad scheduling decisions and Williams’ departure saw to that. But there’s no denying the breadth of its appeal, and the series lasted eight seasons.

"Laverne" ended in 1983, and for all intents and purposes, so did Marshall’s acting career. She seemed more comfortable behind the camera, making her big-screen directorial debut with the 1986 comedy "Jumping Jack Flash" and following it with "Big," a breakout role for Tom Hanks in 1988, and "A League of Their Own," which starred Madonna and Rosie O'Donnell as members of a World War II women's baseball league.

She appeared on screen only rarely in recent years, including a brief role in CBS' short-lived 2016 remake of "The Odd Couple." Marshall revealed she was diagnosed with lung cancer in 2010, but said two years later she was in remission.

But as fine as her film work may have been, for many of us, she’ll always hopping down that Milwaukee street, arm in arm with Shirley chanting “Schlemiel, schlemazel, hasenpfeffer incorporated.”

In our dreams, if nowhere else.

Marshall is survived by her older sister Ronny, daughter Tracy Reiner (with ex-husband Rob Reiner) and three grandchildren, Spencer, Bella and Viva. A memorial will be scheduled later.

Eddie Mekka, 'Laverne & Shirley' actor, dies at 69: reports

Eddie Mekka, known for his role as Carmine Ragusa on the ABC sitcom "Laverne & Shirley," has died. He was 69.

Mekka's brother Warren Mekjian confirmed the news of his brother's death to NBC News and Fox News.

The actor's Facebook fan page also announced that Mekka "passed away peacefully" Saturday at his home in Newhall, California.

"Laverne & Shirley" was a spin-off of the ABC 1970s sitcom "Happy Days," which Mekka briefly appeared in as his "Laverne & Shirley" character Carmine.

In the spin-off, Mekka's character, nicknamed "The Big Ragoo," took on a lead role as Shirley's (Cindy Williams) high school sweetheart and hot-and-cold romantic interest.

Emmy-winning "Laverne & Shirley" ran for eight seasons from 1976 to 1983.

The actor also took on roles on the stage, and he was nominated for a Tony Award for his lead role in the rock opera musical "The Lieutenant."

The actor added more TV show and movie appearances throughout his career. He earned acting credits in series like "Family Matters," "The Jamie Foxx Show" and 1997's "Top of the World," according to IMDb.

More deaths:Arlene Dahl, actress in 'One Life to Live,' dies at 96

In 2006, Mekka was cast as a club owner in the Oscar-winning movie musical "Dreamgirls," starring Jamie Foxx, Jennifer Hudson and Beyoncé.

Some of the actor's most recent movie appearances included "Diary of a Lunatic," and "Silver Twins" in 2017 as well as "Hail Mary!" in 2018.

"Laverne & Shirley" co-star Micheal McKean gave Mekka "a sad goodbye" on Twitter Thursday.

"A genuinely good guy and purveyor of cheer whenever things got cheerless. Value these people. RIP, Eddie," McKean wrote.

For 10 years, Bronze Fonz has been a favorite for Milwaukee visitors

On Aug. 19, 2008, Milwaukee got what's now one of its most "selfied" landmarks: the Bronze Fonz.

The life-size statue of "Happy Days" character Arthur Fonzarelli, aka The Fonz, is a must-see for visitors. Lake Mills, Wisconsin-based artist Gerald Sawyer created the sculpture. Last year, Sawyer gave The Fonz a little update: He changed his pants from teal to blue.

The TV show was based in Milwaukee and ran for 11 seasons – from 1974 to 1983. "Happy Days" was so popular that it spawned several spinoffs, including "Laverne & Shirley," "Mork & Mindy" and "Joanie Loves Chachi."

The Bronze Fonz arrived with a lot of fanfare and quite a few celebrities. Henry Winkler, the actor who played The Fonz, came. He was one of the first to get a photo with, er, himself. He rode a car in a parade that went from downtown Milwaukee to Miller Park, where Winkler threw the opening pitch at a Brewers' game.

Anson Williams (Potsie) and Erin Moran (Joanie) were there to celebrate. Cindy Williams (Shirley) and Penny Marshall (Laverne) were there too.

But before The Bronze Fonz was solidified in Milwaukee concrete, it was the source of controversy.

The statue site was planned for three different locations before it settled on the east side of the Riverwalk near Wells Street.

Journal Sentinel art critic Mary Louise Schumacher wrote in 2008 that the Milwaukee Art Museum director came out against the statue. Two gallery owners were so adamantly opposed to The Bronze Fonz that they claimed they would close down their galleries if the planning went through.

Nevertheless, The Bronze Fonz and its supporters prevailed. Visit Milwaukee spearheaded an effort that raised $75,000 for the statue. Henry Winkler loves it.

Fans send him photos of them in Milwaukee with the Bronze Fonz. Those fans share their photos on social media, too, often mimicking the classic "ayyyy" and Arthur Fonzarelli thumbs up. The Bronze Fonz even has a Yelp page; it has 64 reviews, 48 photos and four stars. It has a Twitter page, too.

Winkler told columnist Jim Stingl, "It is a great honor. You cannot be blase about that, no matter how much time goes by."