Archives for June 2022

“What Powell and the rest of the F.O.M.C. are saying is that restoring price stability is the primary focus — if they risk a mild recession, or a bumpy soft landing, that would still be successful,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. “The focus is greatly on inflation right now.”

Until late last week, investors and many economists expected the central bank to raise interest rates just half a percentage point at this week’s meeting. The Fed had lifted rates by a quarter point in March and half a point in May, and had signaled that it expected to continue that pace in June and July.

But central bankers have received a spate of bad news on inflation in recent days. The Consumer Price Index jumped 8.6 percent in May from a year earlier, the fastest increase since late 1981. The pace was brisk even after the stripping out of food and fuel prices.

While the Fed’s preferred price gauge — the Personal Consumption Expenditures measure — is climbing slightly more slowly, it remains too hot for comfort as well. And consumers are beginning to expect faster inflation in the months and years ahead, based on surveys, which is a worrying development. Economists think that expectations can be self-fulfilling, causing people to ask for wage increases and accept price jumps in ways that perpetuate high inflation.

“What we’re looking for is compelling evidence that inflationary pressures are abating, and that inflation is moving back down,” Mr. Powell said at his news conference Wednesday, noting that instead the inflation situation has worsened. “We thought that strong action was warranted.”

One Fed official, the president of the Federal Reserve Bank of Kansas City, Esther George, voted against the rate increase. Though Ms. George has historically worried about high inflation and favored higher interest rates, she would have preferred a half-point move in this instance.

Article source: https://www.nytimes.com/2022/06/15/business/economy/fed-interest-rates.html

Domestic trade groups, labor leaders and populist Democrats like Representative Tim Ryan of Ohio, who is locked in a competitive Senate race, have pushed Mr. Biden to keep the tariffs. Mr. Ryan held a news conference on Tuesday urging Mr. Biden not to yield any economic ground to Beijing.

Economists disagree on how much inflation relief the administration could get by removing the tariffs.

In part that’s because the inflation calculations cited by Mr. Summers and others include a far broader relaxation of policies than what Mr. Biden is actually considering, including popular “Buy America” programs that require the federal government and certain contractors to buy American-made goods, even if they are more expensive.

The Peterson Institute study is “something between fiction or an interesting academic exercise” that does not capture the real pain Americans are feeling, the United States trade representative, Katherine Tai, said in an interview last month.

Kim Glas, the president of the National Council of Textile Organizations, which has lobbied the administration to keep the tariffs, said that in her industry the tariffs amounted to “pennies on the dollar” for Chinese goods that were already priced far below alternatives from other countries.

Tariff prices are applied to the price of the good coming in at the border, not to the final retail price charged at a store. For a pair of jeans from China, that import price was $4.28 in the first two months of 2022, meaning the 7.5 percent tariff added just 32 cents to the consumer’s cost, Ms. Glas said. It was the markup at retail — which can bring jeans to $30, $40 or $100 — that represents the bulk of sticker shock, she added.

Article source: https://www.nytimes.com/2022/06/14/business/economy/biden-china-tariffs-inflation.html

It’s not just Wall Street that is increasingly glum. Consumer confidence fell to its lowest level on record in preliminary data from the University of Michigan survey, and expectations of higher unemployment in a New York Fed survey have been picking up.

Even if the Fed is also becoming more uncertain about its chances of setting the economy down gently, Mr. Powell may not say that. Coming from a top central bank official, a prediction that the economy is headed for tough times might become a self-fulfilling prophesy, shattering already fragile confidence.

“They went from soft to soft-ish — I don’t think there’s another term they can use to say ‘not a complete disaster,’” Ms. Misra said. “I think the markets are calling their bluff, that they won’t be able to achieve it.”

A recession would spell trouble for the White House. President Biden has been sure to emphasize that the Fed is independent and that he will respect its ability to do what it deems necessary to bring inflation under control, even as his approval ratings crack and as the economy heads toward a potentially tough transition period.

“The Federal Reserve has a primary responsibility to control inflation,” Mr. Biden wrote in a recent opinion column. He added that “past presidents have sought to influence its decisions inappropriately during periods of elevated inflation. I won’t do this.”

Even so, some have argued that the central bank should not be the only game in town when it comes to controlling inflation, given the pain its policies inflict. Skanda Amarnath, executive director of the employment advocacy group Employ America, argued that the White House should be taking more aggressive actions to improve gas supply, for instance, to try to offset inflationary pressures.

Article source: https://www.nytimes.com/2022/06/14/business/economy/federal-reserve-rates-economy.html

It’s not just Wall Street that is increasingly glum. Consumer confidence fell to its lowest level on record in preliminary data from the University of Michigan survey, and expectations of higher unemployment in a New York Fed survey have been picking up.

Even if the Fed is also becoming more uncertain about its chances of setting the economy down gently, Mr. Powell may not say that. Coming from a top central bank official, a prediction that the economy is headed for tough times might become a self-fulfilling prophesy, shattering already fragile confidence.

“They went from soft to soft-ish — I don’t think there’s another term they can use to say ‘not a complete disaster,’” Ms. Misra said. “I think the markets are calling their bluff, that they won’t be able to achieve it.”

A recession would spell trouble for the White House. President Biden has been sure to emphasize that the Fed is independent and that he will respect its ability to do what it deems necessary to bring inflation under control, even as his approval ratings crack and as the economy heads toward a potentially tough transition period.

“The Federal Reserve has a primary responsibility to control inflation,” Mr. Biden wrote in a recent opinion column. He added that “past presidents have sought to influence its decisions inappropriately during periods of elevated inflation. I won’t do this.”

Even so, some have argued that the central bank should not be the only game in town when it comes to controlling inflation, given the pain its policies inflict. Skanda Amarnath, executive director of the employment advocacy group Employ America, argued that the White House should be taking more aggressive actions to improve gas supply, for instance, to try to offset inflationary pressures.

Article source: https://www.nytimes.com/2022/06/14/business/economy/federal-reserve-rates-economy.html

In early March, the union signed a letter asking federal regulators to scrutinize the acquisition. “The potential takeover by Microsoft threatens to further undermine workers’ rights and suppress wages,” the letter said.

Microsoft has since tried to strike a conciliatory tone. It said it would not stop Activision from voluntarily recognizing the union before a formal election, which Activision did not do. After the Raven Q.A. workers voted in late May to form the first union at a major North American game publisher, Phil Spencer, the head of gaming at Microsoft, told employees that he would recognize the Raven union once the deal between the two companies closed, the gaming news site Kotaku reported, citing a video of an employee town hall.

Activision said on Friday that it was starting contract negotiations with the newly unionized Raven workers. “We decided to take this important step forward with our 27 represented employees and C.W.A. to explore their ideas and insights for how we might better serve our employees, players and other stakeholders,” Bobby Kotick, the company’s chief executive, said in a statement.

In a blog post this month that appeared to foreshadow the deal, Mr. Smith announced a set of principles to guide Microsoft’s response to labor organizing, an indication that it was taking a more open approach across the company’s businesses.

He wrote that he had observed Microsoft’s successful “collaborative experiences with works councils and unions” while working in Europe and said that in the United States the company would pursue “collaborative approaches that will make it simpler, rather than more difficult, for our employees to make informed decisions and to exercise their legal right to choose whether to form or join a union.”

In the interview, Mr. Smith called the neutrality agreement “our first opportunity to put those principles into practice.”

Article source: https://www.nytimes.com/2022/06/13/business/economy/microsoft-activision-union.html