Archives for August 2022

Core inflation slowed to a 4.6 percent annual increase, compared with 4.8 percent in June. On a monthly basis, the core index slowed to a 0.1 percent gain, down sharply from the prior month and less than the 0.2 percent economists in a Bloomberg survey had expected.

The decrease on overall inflation came as some durable goods, like household appliances, televisions and luggage, became cheaper, and as prices for financial services and insurance eased.

Fed officials are looking for decisive and sustained evidence before they deviate from their plans to restrain the economy to slow down lending and spending, and bring price increases under control. Friday’s report was likely an early, but not a conclusive, step in the right direction.

The central bank has sharply raised interest rates, which were near zero in March, to a range of 2.25 to 2.5 percent. Investors are keenly focused on the Fed’s Sept. 20-21 meeting, when, officials have signaled, they could lift interest rates by an unusually large three-quarters of a point — matching their last two moves — or a more modest but still meaningful half point.

Article source: https://www.nytimes.com/2022/08/26/business/economy/pce-inflation-federal-reserve.html

His marriage to Annie Lunel ended in divorce. His second wife, Margherita (Spanpinato) Rosenthal, died before him. In addition to his son Jean-Laurent, from his first marriage, he is survived by a daughter from that marriage, Illia Rosenthal; a son, Gil, from his second marriage; a sister, Susan Thorpe; and four granddaughters.

Predicting votes by members of Congress on the basis of statistical models built on previous votes was initially considered controversial. But one byproduct of those predictions, applied to election voters, went a long way toward establishing the model’s credibility.

“Challenged by a detractor to predict the 1994 midterm elections,” John B. Londregan, a political scientist at Princeton and a partner in one project, said in a statement, “we predicted a Republican majority in the U.S. House for the first time in almost 40 years, something that met with incredulity on the part of many colleagues.” They were, of course, right.

Professor Rosenthal was awarded the Duncan Black Prize from the Public Choice Society in 1980, the C.Q. Press Award from the American Political Science Association in 1985 and the William H. Riker Prize for Political Science from the University of Rochester in 2010.

In 1997, he and Professor Poole published “Congress: A Political-Economic History of Roll Call Voting.” With Professor McCarty, they wrote “Polarized America: The Dance of Ideology and Unequal Riches” (2006).

In 2007, after analyzing 2.8 million roll-call votes in the Senate and 11.5 million in the House, Professors Rosenthal and Poole produced an updated version of their 1997 book, which had predicted “a polarized unidimensional Congress with roll-call voting falling almost exclusively along liberal-conservative ideological lines.”

“We were right,” the authors concluded. “This makes us feel good as scientists, but lousy as citizens.”

Article source: https://www.nytimes.com/2022/08/25/us/politics/howard-rosenthal-dead.html

The next month, the company announced a series of new benefits — including additional career development opportunities, better tipping options and more sick time — but only for stores that hadn’t unionized or weren’t in the process of unionizing. The benefits were to begin in the coming months.

The company unveiled wage increases as well, some of which had already been announced and which the company said would apply to all workers. But other increases were new and would apply only to nonunion workers.

For example, according to Reggie Borges, a Starbucks spokesman, all employees stood to benefit from a companywide $15-an-hour minimum wage, but nonunion workers hired by May 2 would get a 3 percent raise if that proved higher than $15.

The wage policy appears to have sown confusion, with some employees briefly receiving a pay increase that was then withdrawn. Colin Cochran, a worker at a store near Buffalo that initially voted to unionize and then voted against the union in a rerun election decided this month, provided pay stubs showing that his $16.28 hourly wage had increased to $16.77 the first week of August, when Starbucks began the pay increases nationwide. But Mr. Cochran’s pay stub for the second week of August showed his hourly pay dropping back to $16.28. (The union is challenging the election loss at this store.)

Mr. Borges said that the reversion to the previous wage had resulted from an inadvertent error and that unionized stores would get wage increases in September.

Workers involved in union campaigns at other Starbucks locations said the denial of pay and benefit increases to unionized stores had slowed their organizing efforts.

Kylah Clay, a Starbucks worker in Boston who helped organize several stores in the area, said inquiries from employees at other stores who were interested in unionizing had dropped off substantially not long after the company’s pay and benefits announcement in May. But they picked up recently after the pay and many benefit changes took effect, she said.

Article source: https://www.nytimes.com/2022/08/25/business/economy/starbucks-union-howard-schultz-nlrb.html

Could you remind me how income-driven repayment, or I.D.R., works?

There’s a confusing assortment of plans available, and now there’s a new one coming. President Biden is proposing a rule to create a new plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.

For now, the alphabet soup includes PAYE, REPAYE, I.C.R., and I.B.R. (which comes in two versions; the latest has slightly better terms for newer borrowers).

The rules are complicated, but the gist is simple: Payments are calculated based on your earnings and readjusted each year.

After monthly payments are made for a set number of years — usually 20 — any remaining balance is forgiven. (The balance is taxable as income, though a temporary tax rule exempts balances forgiven through 2025 from federal income taxes.)

Monthly payments are often calculated as 10 or 15 percent of discretionary income, but one plan is 20 percent. Discretionary income is usually defined as the amount earned above 150 percent of the poverty level, which is adjusted for household size. PAYE usually has the lowest payment, followed by either I.B.R. or REPAYE, depending on the specific circumstances of the borrower, said Mark Kantrowitz, a student aid expert. The new plan will change that calculus (more on that below).

There’s a dizzying variety of rules, and the existing plans aren’t a cure-all. Even though some borrowers may be eligible for a $0 payment, the plans aren’t always affordable for everyone. The formulas aren’t adjusted for local cost of living, private student loans or medical bills, among other things.

Article source: https://www.nytimes.com/2022/08/24/business/biden-student-loan-forgiveness.html

Carbon taxes and emissions trading systems have been instituted in many places, such as Denmark and California. But a federal measure in the United States, setting a cap on carbon emissions and letting companies trade their allotments, failed in 2010.

At the same time, Dr. Nordhaus’s model was drawing criticism for underestimating the havoc that climate change would wreak. Like other models, it has been revised several times, but it still relies on broad assumptions and places less value on harm to future generations than it places on harm to those today. It also doesn’t fully incorporate the risk of less likely but substantially worse trajectories of warming.

Dr. Nordhaus dismissed the criticisms. “They are all subjective and based on selective interpretation of science and economics,” he wrote in an email. “Some people hold these views, as would be expected in any controversial subject, but many others do not.”

Heather Boushey, a member of the White House’s Council of Economic Advisers who handles climate issues, says the field is learning that simply tinkering with prices won’t be enough as the climate nears catastrophic tipping points, like the evaporation of rivers, choking off whole regions and setting off a cascade of economic effects.

“So much of economics is about marginal changes,” Dr. Boushey said. “With climate, that no longer makes sense, because you have these systemic risks.” She sees her current assignment as similar to her previous work, running a think tank focused on inequality: “It profoundly alters the way people think about economics.”

To many economists, the approach pioneered by Dr. Nordhaus was increasingly out of step with the urgency that climate scientists were trying to communicate to policymakers. But a carbon tax remained at the center of a bipartisan effort on climate change, supported by a panoply of large corporations and more than 3,600 economists, that also called for removing “cumbersome regulations.”

Article source: https://www.nytimes.com/2022/08/25/business/economy/economy-climate-change.html

After monthly payments are made for a set number of years — usually 20 — any remaining balance is forgiven. (The balance is taxable as income, though a temporary tax rule exempts balances forgiven through 2025 from federal income taxes.)

Monthly payments are often calculated as 10 or 15 percent of discretionary income, but one plan is 20 percent. Discretionary income is usually defined as the amount earned above 150 percent of the poverty level, which is adjusted for household size. PAYE usually has the lowest payment, followed by either I.B.R. or REPAYE, depending on the specific circumstances of the borrower, said Mark Kantrowitz, a student aid expert. The new plan will change that calculus (more on that below).

There’s a dizzying variety of rules, and the existing plans aren’t a cure-all. Even though some borrowers may be eligible for a $0 payment, the plans aren’t always affordable for everyone. The formulas aren’t adjusted for local cost of living, private student loans or medical bills, among other things.

How will the new plan work?

The proposed I.D.R. plan would reduce payments to 5 percent of discretionary income, down from 10 percent to 15 percent in many existing plans. Borrowers with original loan balances of less than $12,000 would make monthly payments for 10 years, while everyone else would pay for 20 years (similar to existing plans).

It would also allow more low-income workers to qualify for zero-dollar payments. The administration plans to tweak the payment formula by raising the amount of income deemed necessary for basic expenses, and thus shielded from the calculation: No borrower earning under 225 percent of the poverty level — or what a $15 minimum wage worker earns annually — will have to make a payment, the administration said.

There’s more: Unlike other existing income-driven plans, borrowers’ loan balances will not grow as long as they make their monthly payments, even when they are not required to make any payments because their income is too low.

Article source: https://www.nytimes.com/2022/08/24/business/biden-student-loan-forgiveness.html