“One can unambiguously root for higher labor force participation,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Beyond that, nothing else is unambiguous.”

Wage growth may need to slow.

Another number will be getting a lot of attention from economists, policymakers and investors: wage growth.

Employers have responded to the hot competition for workers exactly the way Econ 101 says they should, by raising pay. Average hourly earnings were up 5.5 percent in April from a year earlier, more than twice the rate they were rising before the pandemic.

Normally, faster wage growth would be good news. Persistently weak pay increases were a bleak hallmark of the long, slow recovery that followed the last recession. But even some economists who bemoaned those sluggish gains at the time say the current rate of wage growth is unsustainable.

“That’s something that we’re used to saying pretty unequivocally is good, but in this case it just raises the risk that the economy is overheating further,” said Adam Ozimek, chief economist of the Economic Innovation Group, a Washington research organization. As long as wages are rising 5 or 6 percent per year, he said, it will be all but impossible to bring inflation down to the Fed’s 2 percent target.

Fed officials are watching closely for signs of a “wage-price spiral,” a self-reinforcing pattern in which workers expect inflation and therefore demand raises, leading employers to increase prices to compensate. Once such a cycle takes hold, it can be difficult to break — a prospect Mr. Powell has cited in explaining why the central bank has become more aggressive in fighting inflation.

“It’s a risk that we simply can’t run,” he said at a news conference last month. “We can’t allow a wage-price spiral to happen. And we can’t allow inflation expectations to become unanchored. It’s just something that we can’t allow to happen, and so we’ll look at it that way.”

Article source: https://www.nytimes.com/2022/06/02/business/economy/jobs-wages-inflation-powell.html

Employment gaps remain largest in the services sector, where consumers have shifted more of their spending as pandemic restrictions have eased, but they are shrinking. The leisure and hospitality industry had a vacancy rate of 8.9 percent, for example, down from 9.7 percent in March.

The construction and manufacturing industries, however, had the greatest surge in openings. Both reached record highs, showing that demand for housing and goods hasn’t slowed enough to make a dent in available jobs.

Wages have escalated rapidly in recent months as employers have competed to fill positions, peaking in March at a 6 percent increase from a year earlier, according to a tracker published by the Federal Reserve Bank of Atlanta. Although not quite fast enough to keep up with inflation, growth has been stronger for hourly workers and those switching jobs. The millions of workers quitting each month tend to find new jobs that pay better, data shows.

Employers have struggled to bring workers back from the pandemic, which initially sent labor force participation down to levels not seen since the 1970s, before a wave of women entered the workplace. The economy remains more than a million jobs under its peak employment level in February 2020.

Steve Pemberton, chief human resources officer for the employee benefits platform Workhuman, said his firm’s clients gave out 50 percent more monetary awards to their employees in 2021 over the previous year in an effort to increase retention. But he doubts that work force participation will ever reach its prepandemic level given the options available outside traditional employment.

Article source: https://www.nytimes.com/2022/06/01/business/economy/job-openings-april-2022.html

“I think it’s very natural that given the enormous destruction in Ukraine and huge rebuilding costs that they will face, that we will look to Russia to help pay at least a portion of the price that will be involved,” she said. “It’s not something that is legally permissible in the United States.”

But within the Biden administration, one official said, there was reluctance “to have any daylight between us and the Europeans on sanctions.” So the United States is seeking to find some kind of common ground while analyzing whether a seizure of central bank funds might, for example, encourage other countries to put their central bank reserves in other currencies and keep it out of American hands.

In addition to the legal obstacles, Ms. Yellen and others have argued that it could make nations reluctant to keep their reserves in dollars, for fear that in future conflicts the United States and its allies would confiscate the funds. Some national security officials in the Biden administration say they are concerned that if negotiations between Ukraine and Russia begin, there would be no way to offer significant sanctions relief to Moscow once the reserves have been drained from its overseas accounts.

Treasury officials suggested before Ms. Yellen’s comments that the United States had not settled on a firm position about the fate of the assets. Several senior officials, speaking on the condition of anonymity to discuss internal debates in the Biden administration, suggested that no final decision had been made. One official said that while seizing the funds to pay for reconstruction would be satisfying and warranted, the precedent it would set — and its potential effect on the United States’ status as the world’s safest place to leave assets — was a deep concern.

In explaining Ms. Yellen’s comments, a Treasury spokeswoman pointed to the International Emergency Economic Powers Act of 1977, which says that the United States can confiscate foreign property if the president determines that the country is under attack or “engaged in armed hostilities.”

Legal scholars have expressed differing views about that reading of the law.

Laurence H. Tribe, an emeritus law professor at Harvard University, pointed out that an amendment to International Emergency Economic Powers Act that passed after the Sept. 11, 2001, terrorist attacks gives the president broader discretion to determine if a foreign threat warrants confiscation of assets. President Biden could cite Russian cyberattacks against the United States to justify liquidating the central bank reserves, Mr. Tribe said, adding that the Treasury Department was misreading the law.

Article source: https://www.nytimes.com/2022/05/31/us/politics/russia-sanctions-central-bank-assets.html

About 78 percent of the 160 major employers surveyed said they have adopted hybrid remote and in-person arrangements, up from 6 percent before the pandemic. Most workers plan to come into the office just a few days a week, the group said.

The seismic shift in office building usage has been one of the most challenging situations in decades for New York real estate, a bedrock industry for the city, and has upended the vast stock of offices in Manhattan, home to the two largest business districts in the country, the Financial District and Midtown.

About 19 percent of office space in Manhattan is vacant, the equivalent of 30 Empire State Buildings. That rate is up from about 12 percent before the pandemic, according to Newmark, a real estate firm. Office buildings have been more stable in Brooklyn, where the vacancy rate is also about 19 percent but has not fluctuated much since before the pandemic, Newmark said.

Daniel Ismail, the lead office analyst at Green Street, a commercial real estate research firm, predicted that the office market in Manhattan would worsen in the coming years as companies adjusted their work arrangements and as leases that were signed years ago started to expire. In general, companies that have kept offices have downsized, realizing they do not need as much space, while others have relocated to newer or renovated buildings with better amenities in transit-rich areas, he said.

Even before the pandemic, it was not uncommon for companies to move offices throughout the city or to open separate locations outside of Manhattan. The city offers a tax incentive for businesses that relocate to an outer borough, with up to $3,000 in annual business-income tax credits per employee.

Nearly 200 companies received it in 2018, for a total of $27 million in tax credits, the most recent data available, according to the city’s Department of Finance. But some office developers are betting on neighborhoods outside Manhattan becoming attractive in their own right, luring companies that specifically want to avoid the hustle-and-bustle of Midtown.

More than 1.5 million square feet of office space is under construction in Brooklyn, including a 24-story commercial building in Downtown Brooklyn.

Article source: https://www.nytimes.com/2022/05/30/nyregion/nyc-manhattan-brooklyn-commute-offices.html

But farmers found the H-2A process too expensive. Under the rules, they had to provide H-2A workers with housing, transportation to the fields and even meals. And they had to pay them the so-called adverse effect wage rate, calculated by the Agriculture Department to ensure they didn’t undercut the wages of domestic workers.

It remained cheaper and easier for farmers to hire the younger immigrants who kept on coming illegally across the border. (Employers must demand documents proving workers’ eligibility to work, but these are fairly easy to fake.)

That is no longer the case. There are some 35,000 workers on H-2A visas across California, 14 times as many as in 2007. During the harvest they crowd the low-end motels dotting California’s farm towns. A 1,200-bed housing facility exclusive to H-2A workers just opened in Salinas. In King City, some 50 miles south, a former tomato processing shed was retrofitted to house them.

“In the United States we have an aging and settled illegal work force,” said Philip Martin, an expert on farm labor and migration at the University of California, Davis. “The fresh blood are the H-2As.”

Immigrant guest workers are unlikely to fill the labor hole on America’s farms, though. For starters, they are costlier than the largely unauthorized workers they are replacing. The adverse effect wage rate in California this year is $17.51, well above the $15 minimum wage that farmers must pay workers hired locally.

So farmers are also looking elsewhere. “We are living on borrowed time,” said Dave Puglia, president and chief executive of Western Growers, the lobby group for farmers in the West. “I want half the produce harvest mechanized in 10 years. There’s no other solution.”

Produce that is hardy or doesn’t need to look pretty is largely harvested mechanically already, from processed tomatoes and wine grapes to mixed salad greens and tree nuts. Sabor Farms has been using machines to harvest salad mix for decades.

Article source: https://www.nytimes.com/2022/05/28/business/economy/immigration-california-farm-labor.html

Economists and investors closely watch the report’s Personal Consumption Expenditures price index, an alternative to the better-known Consumer Price Index, because the Fed prefers it as a measure of inflation. The central bank has been raising interest rates and has announced it will begin paring its assets in a bid to cool the economy and tame inflation.

In a statement released by the White House on Friday, President Biden called the dip in inflation “a sign of progress, even as we have more work to do.”

The slowdown in inflation in April was largely the result of a drop in the price of gasoline and other energy. Gas prices soared in February and March largely because of Russia’s invasion of Ukraine, then moderated somewhat in April. They have risen again in recent weeks, however, which could push measures of inflation back up in May. Food prices have also been rising quickly in recent months, a pattern that continued in April.

When the volatile food and fuel categories are stripped out, consumer prices were up 4.9 percent in April from a year earlier. That core measure, which some economists view as a more reliable guide to the underlying rate of inflation, was up 0.3 percent from a month earlier, little changed from the rate of increase in March.

The comparatively tame increase in core prices in the data released Friday stood in contrast to the sharp acceleration in the equivalent measure in the Consumer Price Index report released by the Labor Department this month. The divergence was mostly the result of differences in the way the two measures count airline fares, however, and economists said the Fed was unlikely to take much comfort from the Commerce Department data.

“My suspicion is they will probably look through the slowdown,” said Omair Sharif, the founder of the research firm Inflation Insights. He noted that the core index had also slowed in the fall, only to pick up again at the end of the year, catching the Fed off guard.

Many forecasters believe that the headline inflation rate peaked in March and that April marked the beginning of a gradual cool-down. But the recent rebound in gas prices threatens to complicate that picture. And even if inflation continues to ebb, prices are still rising far more quickly than the Fed’s target of 2 percent over time.

Article source: https://www.nytimes.com/2022/05/27/business/economy/pce-inflation-april.html

Still, as of the May meeting, “most participants judged that 50-basis-point increases in the target range would likely be appropriate at the next couple of meetings,” according to the minutes, which were released on Wednesday.

Fed officials have made clear that they will do what it takes to tame inflation, which hit 8.5 percent in the United States last month, the fastest 12-month pace since 1981. The Fed’s preferred measure of inflation, the Personal Consumption Expenditures price index, is also rising, though not as rapidly, climbing 6.6 percent in March from a year earlier.

While the Fed and many outside economists expected prices to ease as the economy reopened and snarled supply chains returned to more normal operations, that has not happened. Instead, prices have continued to rise, broadening to categories including food, rent and gas. China’s Covid lockdowns and the war in Ukraine have only exacerbated price increases for goods, food and fuel.

But as rates increase, the Federal Reserve will be watching keenly for signs that the trajectory of the economy is beginning to change. Data released Tuesday showed new home sales falling 16.6 percent in April from the month earlier, a sign that more expensive borrowing costs may be cooling the housing market. Surveys by SP Global on Tuesday also pointed to slowing activity at service businesses in the United States and elsewhere, and continued supply chain disruptions at global factories.

Data released after the Fed’s May meeting showed that the yearly pace at which prices are increasing moderated somewhat in April, but inflation rates were still uncomfortably rapid. The overarching question for the Fed is whether policymakers will be able to slow the economy enough to temper inflation without spurring a recession, which Mr. Powell and his colleagues have repeatedly acknowledged is likely to be a challenge. While Fed officials said their goal for now was to move policy back to a “neutral” stance, they may need to go beyond that if conditions deteriorate, essentially hitting the brakes on the economy, rather than just easing off the gas.

Participants “noted that a restrictive stance of policy may well become appropriate depending on the evolving economic outlook and the risks to the outlook,” according to the minutes.

“There are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so,” Mr. Powell said last week. “So the question whether we can execute a soft landing or not, it may actually depend on factors that we don’t control.”

Article source: https://www.nytimes.com/2022/05/25/business/economy/fed-interest-rates-inflation.html

In the near term, Russia has two foreign-currency bond payments due on Friday, both of which have clauses in their contracts that allow for repayment in other currencies if “for reasons beyond its control” Russia is unable to make payments in the originally agreed currency.

Russia owes about $71 million in interest payments for a dollar-denominated bond that will mature in 2026. The contract has a provision to be paid in euros, British pounds and Swiss francs. Russia also owes 26.5 million euros ($28 million) in interest payments for a euro-denominated bond that will mature in 2036, which can be paid back in alternative currencies including the ruble. Both contracts have a 30-day grace period for payments to reach creditors.

The Russian finance ministry said on Friday that it had sent the funds to its payment agent, the National Settlement Depository, a Moscow-based institution, a week before the payment was due.

The finance ministry said it had fulfilled these debt obligations. But more transactions are required with international financial institutions before the payments can reach bondholders.

Adam M. Smith, who served as a senior sanctions official in the Obama administration’s Treasury Department, said he expected that Russia would most likely default sometime in July and that a wave of lawsuits from Russia and its investors were likely to ensue.

Although a default will inflict some psychological damage on Russia, he said, it will also raise borrowing costs for ordinary Russians and harm foreign investors who were not involved in Russia’s invasion Ukraine.

“The interesting question to me is, What is the policy goal here?” Mr. Smith said. “That’s what’s not entirely clear to me.”

Alan Rappeport reported from Washington, and Eshe Nelson from London.

Article source: https://www.nytimes.com/2022/05/24/us/politics/russian-debt-treasury.html

The speech avoids explicitly addressing how the administration will deal with Mr. Trump’s tariffs, they say. Businesses have long complained that they hurt U.S. companies and their consumers rather than China. That concern has been heightened by the fact that prices are rising at their fastest rate in 40 years, creating a political problem for the White House, which has struggled to explain how it can alleviate soaring costs other than relying on the Federal Reserve.

But Republicans and Democrats who want more aggressive policies toward China — and toward some American companies that do business there — would try to draw blood if Mr. Biden eased the tariffs.

“We need to rebuild American industry, not reward companies that keep their supply chains in China,” Senator Marco Rubio, Republican of Florida, said this month after voting against a legislative amendment allowing carve-outs to the tariffs.

At a news conference in Japan on Monday, Mr. Biden said he would meet with Ms. Yellen when he returned from his trip to discuss her call to remove some of the China tariffs.

“I am considering it,” the president said. “We did not impose any of those tariffs; they were imposed by the previous administration, and they are under consideration.”

Public rifts among Biden officials have been rare, but when it comes to tariffs, the debate has spilled into the open.

“There are definitely different views in the administration, and they’re surfacing,” said Wendy Cutler, the vice president at the Asia Society Policy Institute and a former U.S. trade negotiator. “There are those who think that the tariffs didn’t work and are contributing to inflation. Then you have the trade negotiator side that says: ‘Why would we give them up now? They’re good leverage.’”

Article source: https://www.nytimes.com/2022/05/23/business/economy/china-trade-tariffs-biden.html

“We’ve got four companies making about 90 percent of the formula in this country, which we should probably take a look at,” Mr. Buttigieg said on CBS’s “Face the Nation.”

Today, Abbott is the biggest player. Mead Johnson, which is owned by the conglomerate Reckitt Benckiser, and Perrigo, which makes generic formula for retailers, control another 31 percent. Nestlé controls less than 8 percent.

In part, the lack of competition stems from simple math: Few companies or investors are eager to jump into the infant formula industry because its growth is tied to the nation’s birth rate, which held steady for decades until it began dropping in 2007.

But the factors that long ago led to the creation of an industry controlled by a handful of manufacturers are primarily rooted in a tangled web of trade rules and regulations that have protected the biggest producers and made it challenging for others to enter the market.

The United States, which produces 98 percent of formula consumed in the country, has strict regulations and tariffs as high as 17.5 percent on foreign formula. The Food and Drug Administration maintains a “red list” of international formulas, including several European brands that, if imported, are detained because they do not meet U.S. requirements. Those shortcomings could include labels that are not written in English or do not have all of the required nutrients listed. This week, the F.D.A. said it would relax some regulations to allow for more imports into the United States.

Trade rules contained in the United States Mexico Canada Agreement, which replaced the North American Free Trade Agreement, also significantly discourage Canadian companies from exporting infant formula to the United States. The pact established low quotas that trigger export charges if exceeded. American dairy lobbying groups had urged officials to swiftly pass the agreement and supported the quotas at the time.

But perhaps the biggest barrier to new entrants is the structure of a program that aims to help low-income families obtain formula. The Special Supplemental Nutrition Program for Women, Infants, and Children, better known as WIC, is a federally funded program that provides grants to states to ensure that low-income pregnant or postpartum women and their children have access to food.

Article source: https://www.nytimes.com/2022/05/20/business/economy/baby-formula-shortage-market.html