Archives for August 2022

“But the alternative,” Mr. Summers argued — “simply pretending” the U.S. labor market can remain this hot — “is setting the stage for the mistakes we made in the 1970s, and ultimately for a far larger recession, to contain inflation.”

“These arguments have nothing to do with how much you care about unemployment, or how much you care about the unemployment of disadvantaged groups,” he continued. “They only have to do with technical judgment.”

Many progressive economists have been sharply critical of that view, arguing that Black workers should not be the collateral damage in a war on inflation. William Spriggs, an economist at Howard University, cautioned against overstating the Fed’s ability to bring inflation under control — especially when inflation is being driven in part by global forces — and underestimating the potential damage from driving interest rates much higher.

Black workers will suffer first under a Fed-induced recession, Mr. Spriggs said. When that happens, he added, job losses across the board tend to follow. “And so you pay attention, because that’s the canary in the coal mine,” he said.

In a 2020 research paper, the economists Jared Bernstein and Janelle Jones — both of whom subsequently joined the Biden administration — laid out the increasingly popular argument that in light of this, the Fed “should consider targeting not the overall unemployment rate, but the Black rate.”

In an accompanying essay in The Washington Post, they noted that Fed policy implicitly treats 4 percent unemployment as a long-term goal, but “because Black unemployment is two times the overall rate, targeting 4 percent for the overall economy means targeting 8 percent for blacks.”

Article source: https://www.nytimes.com/2022/08/24/business/economy/black-workers-recession.html

What is happening at the William Temple House is emblematic of the economic situation. Demand for food is swelling again, and officials here blame rising prices and lost federal aid. The people seeking help come from a wide variety of backgrounds: parents, retirees struggling to stretch Social Security benefits, immigrants who speak Mandarin, college graduates with jobs.

Waiting in line on a recent Wednesday, Susan B. Smith said federal aid had helped her family endure the pandemic over the last year. Direct payments, along with three months’ worth of rental assistance, “got us through a lot last winter,” she said. “Every little bit of help, we appreciate it. We just want to make it through, not starve.”

Now, most of that assistance is gone, and food and housing cost more, a reality that has forced Ms. Smith and one of her daughters, Tamela Clover, to seek help at the food pantry. Ms. Clover, a college graduate who works part time for a social services agency, said her salary had not kept pace with her cost of living: “Everything’s so expensive.”

Mr. Biden frequently acknowledges the high inflation is hurting people and has taken several steps to try to mitigate rising costs. He and his aides insist that while the pain is real, last year’s stimulus package has made the country and its most vulnerable people better positioned for any economic troubles ahead.

Administration officials point to a stronger job market, a lower eviction rate and healthier household finances than the nation has typically experienced at this point in a recovery from a recession, which the economy briefly entered early in the pandemic. They say the $350 billion that Congress gave to state, local and tribal governments should help fuel some assistance programs even after federal aid runs out.

Article source: https://www.nytimes.com/2022/08/23/us/politics/food-insecurity-biden-stimulus.html

In most cases, an industry without enough workers to meet customer demand would simply hire more, or at least raise wages to attract them.

Yet, according to the Bureau of Labor Statistics, neither of those things happened last year. The number of pharmacists employed in the United States dropped about 1 percent from 2020 to 2021. On balance, employers did not raise wages — in fact, median pay fell slightly, even without adjusting for inflation.

While this data is not yet available for 2022, a contract signed in March by a union of Chicago-area Walgreens pharmacists reflected a similar approach. It provided maximum base pay of $64.50 per hour, the same as the previous contract, but lowered the starting wage from $58 per hour to $49.55 per hour by September. (Like many retail pharmacists, the union members also receive bonuses.)

CVS and Walgreens said they had made hiring pharmacists a priority during the pandemic — CVS said it employed nearly 6 percent more pharmacists today than it did in early 2020; Walgreens declined to provide a figure. CVS said its compensation was “very competitive” for pharmacists, and Walgreens cited “ongoing phased wage increases”; both chains have offered signing bonuses to recruit pharmacists. The Chicago union said Walgreens had recently offered to raise pay for about one-quarter of its lowest-paid members.

To explain the wage stagnation of upper-middle-class workers during the pandemic, some economists have suggested that affluent workers are willing to accept lower wage growth for the ability to work from home. Dr. Katz, of Harvard, said the wages of many affluent workers might simply be slower to adjust to inflation than the wages of lower-paid workers.

But Marshall Steinbaum, an economist at the University of Utah, said the fact that upper-middle-class workers were not able to claim a larger share of last year’s exceptionally high corporate profits “speaks to the disempowerment of workers at all levels of status.”

Article source: https://www.nytimes.com/2022/08/20/business/economy/pharmacists-job-inflation.html

The strategy of discounting might not actually get to the root cause, analysts say.

“There is a point at which lower prices don’t trigger incremental demand because the consumers already have it,” said Simeon Siegel, a managing director at BMO Capital Markets. “It’s not an indication that the company is dead. It’s not an indication that they’re never going to buy it again. They just need the time lag.”

Retailers need to realize that consumers are thinking differently, Mr. Siegel said. Some big-ticket purchases — like an exercise bike, living room couch or patio grill — will happen just once. In other cases, the amount of time between purchasing and replenishing will be longer. A person might now buy a candle every few months, compared to doing it every month in the early stages of the pandemic when they were home more often. And more people are choosing to spend their money on things like air travel and movie tickets this summer compared to last.

With all of these variables, lowering prices might not trigger the demand a retailer wants, Mr. Siegel said. It might simply just cut into a company’s profits.

For the stores that did see sales growth, like the big-box retailers Walmart and Target, most of that volume was attributed to higher food prices. Groceries have narrower margins than, say, a retailer’s private-label dress brand, and the shift in sales from one category to another affects the company’s overall profitability.

Along with pricing, retailers need to figure out how to deal with their inventory issues, especially with the all-important holiday season just a few months away.

“Getting through the inventory levels allows them to have a cleaner store, a cleaner supply chain,” said Bobby Griffin, equity research analyst at Raymond James. “They won’t be able to predict it perfectly, but getting through excess inventory will give them more flexibility to try to adapt to what the holiday is throwing at them.”

Article source: https://www.nytimes.com/2022/08/19/business/retailers-sales-inflation.html

That’s because a less-intense version of the rent surge that is pushing inflation higher across cities in the American south is beginning to play out in bigger cities in the Northeast and on the West Coast. Real-time market rent trackers that reported prices shooting up in Sun Belt cities last year are now showing bigger increases in places like New York, San Jose and Seattle.

Those market rent increases take time to trickle into official inflation figures because of the way the government calculates its data. Much as Phoenix’s official inflation numbers are surging now partly because of the run-up in market rents in 2021, nascent increases in big coastal cities could keep pressure on inflation in months to come. And the effect could be palpable at a national level: New York and its suburbs account for about 11 percent of the nation’s rental housing-related costs in the Consumer Price Index, compared to about 1 percent for Phoenix.

“Even if we get a slowdown in the Sun Belt, it may not be enough to offset what we’re seeing in other markets,” said Omair Sharif, founder of Inflation Insights.

Federal Reserve officials noted that risk at their July meeting, according to minutes released Wednesday, observing that “in some product categories, the rate of price increase could well pick up further in the short run, with sizable additional increases in residential rental expenses being especially likely.”

The Fed has been raising interest rates since March to try to slow consumer and business demand and cool inflation and is expected to lift them again at its meeting in September.

To date, much of the regional divide in price increases — from rents to consumer goods and services — has traced back to migration. People have been flocking to less expensive cities from big coastal ones for years, but that trend accelerated sharply with the onset of the pandemic. The pattern is playing out across both the Mountain West, where inflation is also remarkably high, and the Sun Belt.

Article source: https://www.nytimes.com/2022/08/18/business/economy/sun-belt-inflation.html

“We just don’t have enough to give to everyone,” he said, his voice wavering. “I don’t know what is going to happen next week.”

People across Britain are confronting similar problems.

At the Blackburn Food Bank, in the north of England, more people with full-time employment are turning up as wages have not keep up with the inflation.

“People are very shocked that they have to be here,” said Gill Fourie, operations manager at Blackburn. “People don’t even have gas and electricity to cook,” she said, referring to mounting household energy prices which are forecast to climb to 3,500 pounds (about $4,240) a year in October, triple what were a year ago. She added, however, that the facility continued to receive support from the community.

Even people who are in less vulnerable situations have had to watch their wallets.

“I would love to get some Mutti, but I cannot afford it,” said Melanie McHugh, an actress, as she looked at cans of tomato sauce at her local supermarket in south London. She said she was going to make shakshuka, a vegetable dish that could last for several days. She went for a cheaper brand of sauce.

Ms. McHugh, who has stopped buying butter, also grabbed a lower cost brand of chorizo.

“I am aware that I am lucky,” she said. “But I am also aware my habits have changed.”

The British government has allocated £15 billion (about $18 billion) in benefits for the most vulnerable families. Ms. Smith, the mother of three, said she had received about 300 pounds this month. She has also stockpiled laundry soap, but said that did not ease her worries. She has started thinking of giving up her car and getting another job, as a cleaner, on weekends.

“It’s not what I would like to do,” she said. “But you have to do what you need to survive.”

Article source: https://www.nytimes.com/2022/08/17/world/europe/britain-inflation-prices.html