Archives for June 2022

“A hack I would love to have is car-pooling,” said Alexa Lopez. But she has not found a viable options near where she lives in Kissimmee, Fla. She has a long commute: 51 miles each day from her home to her job at a plumbing supply company in Melbourne. So to save money on gas, she has cut down on extracurricular driving, as well as some more essential activities.

Ms. Lopez, 30, used to make trips to the grocery store without thinking twice. Now, because of inflation and the high prices of getting herself to the store, she goes only every two weeks. Previously, she said, she would buy “anything and everything,” including snacks like chips for her son. But, she said, “I can’t really buy too much of those any more.”

She added, “I’m feeling like pretty much the average American right now: struggling.”

For the first time in years, some who had been doing relatively well are facing hard trade-offs. As the war in Ukraine and the pandemic continue to roil the economy, concerns are growing that the U.S. economy may be on the brink of a recession. People are moving to ease their commutes. Family visits are being minimized. Future savings are being funneled toward ballooning grocery prices. It has been a hard jolt.

Elizabeth Hjelvik, 26, a graduate student in materials science at the University of Colorado at Boulder, watches her budget closely. She recently started riding her bike to campus. She has also started working from home more often, using her parents’ Kroger fuel points to fill up the tank of her 2005 Honda and cutting back on spontaneous weekend trips.

Ms. Hjelvik recalled saying, as she and her partner were recently driving back from a trip to Fort Collins, Colo., about 50 miles away, “This drive is so beautiful, but it might be something we can’t do in the future.” Her family lives in New Mexico, within driving distance of Boulder. “Ideally we would be able to go see them more often, but it’s a lot of gas,” she said.

Kaitlyn Thomas, 25, a medical resident living in Horseheads, N.Y., said she sometimes Googles gas prices in nearby Pennsylvania. She also has a running note on her phone where she tracks what’s advertised at the stations she passes on her commute. Next week, she is moving to Sayre, Penn., in order to live within walking distance of work.

Article source: https://www.nytimes.com/2022/06/25/business/gas-prices-hacks.html

The global supply of goods has been curtailed by one issue after another since the onset of the pandemic, from lockdowns in China that slowed the production of computer chips and other goods to Russia’s invasion of Ukraine, which has limited gas and food availability.

At the same time, demand has been heady, boosted by government pandemic relief checks and a strong labor market. Businesses have been able to charge more for their limited supply, and consumer prices have been picking up sharply, climbing 8.6 percent over the year through May.

Research from the Federal Reserve Bank of San Francisco released this week found that demand was driving about one-third of the current jump in inflation, while issues tied to supply or some ambiguous mix of supply-and-demand factors were driving about two-thirds.

That means that returning demand to more normal levels should help ease inflation somewhat, even if supply in key markets remain roiled. The Fed has been clear that it cannot directly lower oil and gas prices, for instance, because those costs turn more on the global supply than they do on domestic demand.

“There’s really not anything that we can do about oil prices,” Mr. Powell told senators on Wednesday. Still, he added later, “there is a job to moderating demand so that it can be in better balance with supply.”

But it also means that if the supply shortages that are driving so much of inflation today fail to ease, the Fed could need a more punishing response — one that weakens the economy drastically to bring demand in line — to return annual price increases to more normal 2 percent levels.

Article source: https://www.nytimes.com/2022/06/24/business/economy/fed-inflation.html

But at the same time, he would end a pause on student loan interest payments for all borrowers, which was imposed in March 2020 and has been extended seven times, most recently until Aug. 31. That would effectively force many of those borrowers to spend less on goods and services to resume their loan payments.

Mr. Biden’s aides believe that pairing the two policies could pull a small amount of consumer buying power out of the economy. By some administration estimates, the two policies could bring inflation down very slightly. At minimum, aides say, they would cancel each other out.

“Given that fighting inflation is the president’s top domestic priority,” Jared Bernstein, a member of the White House Council of Economic Advisers, said in an interview, “the key economic fact here is that if debt payment restart and debt relief were to occur at roughly the same time, the net inflationary effect should be neutral.”

Designing a plan to be inflation-neutral, at worst, under the administration’s accounting would require limiting the debt relief to far less than what more liberal Democrats have pushed Mr. Biden to grant.

Opponents of debt cancellation would prefer Mr. Biden restart loan payments and not forgive any debt, which they say would have a better chance of dampening inflation. And they say the administration is making its inflation math appear rosier by looking at the resumption of interest payments as a new policy that could work as a counterbalance to canceling some debt, when the pause was always intended to be only temporary.

The administration’s math showing the paired policies to be neutral for inflation “is not the way I would prefer to think about it,” said Marc Goldwein, the senior policy director at the Committee for a Responsible Federal Budget, a nonpartisan fiscal watchdog group in Washington, and a critic of cancellation proposals. “But it’s not totally bizarre for somebody to think about it that way.”

Article source: https://www.nytimes.com/2022/06/22/us/politics/biden-student-debt-inflation.html

It’s a strategy that Richard Mojica, a lawyer at Miller Chevalier Chartered, said “should suffice,” since the jurisdiction of U.S. customs extends just to imports, although Canada, the United Kingdom, Europe and Australia are considering their own measures. Instead of moving their operations out of China, some multinationals are investing in alternative sources of supply, and making new investments in mapping their supply chains.

At the heart of the problem is the complexity and opacity of the supply chains that run through China, the world’s largest manufacturing hub. Goods often pass through many layers of companies as they make their way from fields, mines and factories to a warehouse or a store shelf.

Most companies are well acquainted with their direct suppliers for parts or materials. But they may be less familiar with vendors that their primary supplier does business with. Some supply chains have many layers of specialized suppliers, some of whom may contract out their work to other factories.

Take carmakers, who may need to procure thousands of components, like semiconductors, aluminum, glass, engines and seat fabric. The average carmaker has about 250 tier-one suppliers but exposure to 18,000 other companies across its full supply chain, according to research by McKinsey Company, the consultancy firm.

Article source: https://www.nytimes.com/2022/06/22/us/politics/xinjiang-uyghur-forced-labor-law.html

Some laborers were sent to the company’s copper-nickel mine and smelter, which are operated by Xinjiang Xinxin Mining Industry, a Hong Kong-listed subsidiary that has received investment from the state of Alaska, the University of Texas system and Vanguard. Other laborers went to subsidiaries that produce lithium, manganese and gold.

Before being assigned to work, predominantly Muslim minorities were given lectures on “eradicating religious extremism” and becoming obedient, law-abiding workers who “embraced their Chinese nationhood,” Xinjiang Nonferrous said.

Inductees for one company unit underwent six months of training including military-style drills and ideological training. They were encouraged to speak out against religious extremism, oppose “two-faced individuals” — a term for those who privately oppose Chinese government policies — and write a letter to their hometown elders expressing gratitude to the Communist Party and the company, according to the company’s social media account. Trainees faced strict assessments, with “morality” and rule compliance accounting for half of their score. Those who scored well earned better pay, while students and teachers who violated rules were punished or fined.

Even as it promotes the successes of the programs, the company’s propaganda hints at the government pressure on it to meet labor transfer goals, even through the coronavirus pandemic.

A 2017 article in the Xinjiang Daily quoted one 33-year-old villager as saying that he was initially “reluctant to go out to work” and “quite satisfied” with his income from farming, but was persuaded to go to work at Xinjiang Nonferrous’ subsidiary after party members visited his house several times to “work on his thinking.” And in a visit in 2018 to Keriya County, Zhang Guohua, the company president, told officials to “work on the thinking” of families of transferred laborers to ensure that no one abandoned their jobs.

Chinese authorities say that all employment is voluntary, and that work transfers help free rural families from poverty by giving them steady wages, skills and Chinese-language training.

Article source: https://www.nytimes.com/2022/06/20/business/economy/forced-labor-china-supply-chain.html

As part of the agreement, negotiations will continue with the goal of making recommendations on additional provisions to be considered at next year’s ministerial conference.

World Trade Organization members also agreed to loosen intellectual property rules to allow developing countries to manufacture patented Covid-19 vaccines under certain circumstances. Katherine Tai, the U.S. trade representative, said in a statement that the trade organization’s members “were able to bridge differences and achieve a concrete and meaningful outcome to get more safe and effective vaccines to those who need it most.”

The issue of relaxing intellectual property rights for vaccines had become highly controversial. It pitted the pharmaceutical industry and developed countries that are home to their operations, particularly in Europe, against civil society organizations and delegations from India and South Africa.

Stephen J. Ubl, the president and chief executive of the Pharmaceutical Research and Manufacturers of America, said the agreement had “failed the global population.” Global vaccine supplies are currently plentiful, he said, and the agreement did little to address “real issues affecting public health,” such as supply chain bottlenecks or border tariffs on medicines.

Lori Wallach, the director of the Rethink Trade program at the American Economic Liberties Project, called the outcome “a dangerous public health fail” and “a vulgar display of multilateralism’s demise” in which a few rich countries and pharmaceutical companies blocked the will of more than 100 countries to improve access to medicines. The agreement did not loosen intellectual property rights for treatments or therapeutics, as civil society groups had wanted.

Divisions between rich and poor countries and between big business and civil society groups were apparent in other negotiations, which were also overlaid with the geopolitical challenges of a global pandemic and the Russian invasion of Ukraine.

Article source: https://www.nytimes.com/2022/06/17/business/economy/wto-covid-patents-fisheries.html

“The hunger of children is not a necessary cost to pay to bring down inflation,” Ms. Ananat, of Barnard, said.

Republicans, meanwhile, have blamed the Biden administration — and in particular, the $1.9 trillion American Rescue Plan that Democrats passed early last year — for making inflation worse. Many economists, among them Democrats, agree that the spending did drive at least some of the inflation, making the politics of economic aid even more fraught.

The economy remains strong for now, but early signs of a pullback are surfacing. Job growth, while fast, is slowing. Jobless claims, still low, have picked up. Evictions are mounting in some cities where bans have expired, and retail sales fell in May.

“I think we are starting to see indications that the good times are coming to an end for some people,” said Karen Dynan, a former Treasury Department chief economist who is now at Harvard University. “There will be some generalized pain.”

For many families, that pain has already arrived, and it feels very specific.

Brandy Sandersfeld gave birth to a boy in March 2020 — the same week that her older son’s school shut down because of the pandemic, and the month that her husband’s pizza business had to close for good.

After a few months of trying to ride out the pandemic, Ms. Sandersfeld and her husband, Kurtis, moved to a more rural part of their home state of Arkansas, where they owned some land. Unemployment benefits helped pay for the move, and last year the expanded child tax credit provided a much-needed financial cushion. Those payments ended in January — just before Ms. Sandersfeld, 37, hit a deer in her S.U.V. Replacing it wiped out their savings.

Article source: https://www.nytimes.com/2022/06/17/business/economy/inflation-economy-recession.html