It’s not clear yet to what extent factories are moving closer to home. A “reshoring index” published by Kearney, a management consulting firm, was negative in 2020 and 2021, indicating that the United States was importing more manufactured goods from low-cost countries.

But more firms reported moving their supply chains out of China to other countries, and American executives were more positive about bringing more manufacturing to the United States.

Duke Realty, which rents warehouse and industrial facilities in the United States, expects the change to be a source of demand in years to come, though the reworking may take a while. Customers are “now future-proofing their supply chains,” Steve Schnur, the firm’s chief operating officer, said on an earnings call last week.

“Some reshoring is occurring — let’s make no mistake about that,” Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said in an interview. But the data show that most businesses are mitigating risk by building up their inventories and finding additional suppliers in low-cost countries, Dr. Okonjo-Iweala said. That process could end up integrating poorer countries in Africa and other parts of the world more deeply into global value chains, she said.

Janet L. Yellen, the Treasury secretary, said last month that supply chains had proved too vulnerable given the pandemic and the war in Ukraine, and urged a reorientation around “a large group of trusted partners,” an approach she called “friendshoring.”

The approach might result in some higher costs, she said, but it would be more resilient, and a large enough group would allow countries to maintain efficiencies from the global division of labor.

“Our supply chains are not secure, and they’re not resilient,” Ms. Yellen said, adding, “that’s a threat that needs to be addressed.”

Article source: https://www.nytimes.com/2022/05/03/business/economy/pandemic-supply-chains-inflation.html

In a speech last week, Janet L. Yellen, the Treasury secretary, said the pandemic and the war had revealed that American supply chains, while efficient, were neither secure nor resilient. While cautioning against “a fully protectionist direction,” she said the United States should work to reorient its trade relationships toward a large group of “trusted partners,” even if it meant somewhat higher costs for businesses and consumers.

Ngozi Okonjo-Iweala, the director general of the World Trade Organization, said in a speech on Wednesday that the war had “justifiably” added to questions about economic interdependence. But she urged countries not to draw the wrong conclusions about the global trading system, saying it had helped drive global growth and provided countries with important goods even during the pandemic.

“While it is true that global supply chains can be prone to disruptions, trade is also a source of resilience,” she said.

The W.T.O. has argued against export bans since the early days of the pandemic, when countries including the United States began throwing up restrictions on exporting masks and medical goods and removed them only gradually.

Now, the Russian invasion of Ukraine has triggered a similar wave of bans focused on food. “It’s like déjà vu all over again,” Mr. Evenett said.

Protectionist measures have cascaded from country to country in a manner that is particularly evident when it comes to wheat. Russia and Ukraine export more than a quarter of the world’s wheat, feeding billions of people in the form of bread, pasta and packaged foods.

Mr. Evenett said the current wave of trade barriers on wheat had begun as the war’s protagonists, Russia and Belarus, clamped down on exports. The countries that lie along a major trading route for Ukrainian wheat, including Moldova, Serbia and Hungary, then began restricting their wheat exports. Finally, major importers with food security concerns, like Lebanon, Algeria and Egypt, put their own bans into effect.

Article source: https://www.nytimes.com/2022/04/30/business/economy/global-food-prices-ukraine.html

Demand has remained strong and supply chain disruptions have continued into 2022, making the central bank’s task ahead all the more difficult. The Fed has in the past caused recessions while trying to weigh down high inflation. Now, officials are constraining the economy just as the war in Ukraine ramps up uncertainty and threatens to keep prices for gas and other commodities elevated.

“It will be another extremely long and challenging year,” Diane Swonk, chief economist at Grant Thornton, wrote in a research note Friday after inflation and wage releases. “Buckle up.”

The outlook for inflation in the months ahead is wildly uncertain. On one hand, the Fed’s pivot on interest rates has pushed mortgage rates sharply higher, which may start to weigh down the housing market and cool off related types of demand. Already, some companies — like the washing-machine maker Whirlpool — are seeing consumer demand wane compared with last year, though it is higher than prepandemic levels.

But costs for key inputs continue to climb, and that may remain the case amid the war in Ukraine and as China locks down key cities to contain the coronavirus. At Whirlpool, higher input prices are prompting the company to charge consumers more.

“Historic levels of inflation, notably in raw materials, energy and logistics, will impact us throughout the year,” James W. Peters, the company’s chief financial officer, said Tuesday during a conference call. “However, our previously announced pricing actions are on track and position us to fully offset cost inflation as we exit the year.”

Many products were already struggling to return to normal inventory levels before Russia invaded Ukraine and roiled commodity markets. Cars and trucks, for instance, remained in short supply thanks to shortages of key parts — most critically, semiconductors. Executives at Ford Motor said this week that the company had 53,000 vehicles built but that they were awaiting chips to complete them.

“Customers’ demand is extremely strong,” Jim Farley, Ford’s chief executive, said in an earnings call on Wednesday. “However, we are still grappling with persistent supply chain issues that prevent us from posting an even stronger quarter.”

Article source: https://www.nytimes.com/2022/04/29/business/economy/pce-inflation-march-2022.html

Still, economists warned not to dismiss inventory and trade effects entirely. Both reflect the challenges that domestic producers are having meeting sky-high consumer demand.

“If we are importing things rather than making them here, that reflects that we are demanding more than we can produce,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution. “It suggests that our economy just does not have the capacity to meet demand.”

The Federal Reserve is trying to tamp down demand by raising interest rates, which policymakers hope will tame inflation. But Russia’s invasion of Ukraine and a new round of Covid lockdowns in China have complicated its job by prolonging supply disruptions, which the central bank can do little about.

Matt Younger, who owns a small construction firm in Annapolis, Md., is dealing with long delays and higher prices for just about everything that goes into building a house: two-by-fours, plywood, windows, garage doors.

“It’s like playing a game of chess — I’ve got to be a couple moves ahead on everything in case I can’t get something,” he said.

Now, rising interest rates are threatening to cool off the red-hot real estate market. Mortgage applications have fallen sharply, sales of new and existing homes have also dipped, and anecdotal evidence from across the country suggests that the madcap bidding wars that characterized the residential real estate market for much of the past two years may be starting to fade.

So far, however, none of that has led to a slowdown in the construction business. Residential construction grew 0.5 percent in the first quarter, only slightly slower than in the final quarter of 2021, and applications for building permits rose in March. Mr. Younger’s business is still booming.

Article source: https://www.nytimes.com/2022/04/28/business/economy/us-gdp-q1-2022.html

Other lawmakers, however, have been deeply skeptical of the loan, which is the subject of an investigation by the Congressional Oversight Commission, a bipartisan panel that was set up to oversee portions of the relief money. Representative French Hill, a Republican from Arkansas who sits on that commission, said the loan should not have been given.

“As I’ve previously said, the $700 million taxpayer-backed loan Treasury made to Yellow, formerly YRC, was a mistake, and now the commission is focused on how we can prevent this from happening again,” Mr. Hill said.

Yellow had many connections to the Trump administration. The company had financial backing from Apollo Global Management, a private equity firm with close ties to administration officials. Mr. Trump had selected the company’s chief executive, Darren D. Hawkins, to serve on a coronavirus economic task force. And he had nominated the company’s former chief executive, William D. Zollars, to the U.S. Postal Service’s board of governors.

The report accuses Yellow of misrepresenting its business to help secure the loan. It claimed to provide a larger share of trucking services to the Defense Department than the department assessed. Communications included in the report also showed a company executive discussing using funds to catch up on capital investments when the relief money was supposed to be used for offsetting losses from the pandemic. The executive said the company had its “hand in the cookie jar.”

Along with the release of the report, Mr. Clyburn sent a letter to the Treasury Department’s inspector general asking for an investigation into whether Yellow had violated the False Claims Act.

A law firm representing Yellow sent a letter to Mr. Clyburn before the release of the report defending the company’s actions and describing many of the allegations as “baseless.” The company stood by the trucking services data that it provided when applying for the loan and said that Yellow has paid more than $25 million in interest on the loan. The letter also noted that company had settled its dispute with the government last month.

The letter, which was written by Marc E. Kasowitz, who was previously Mr. Trump’s personal lawyer, was provided to The New York Times by Heather Nauert, an adviser to Yellow who was previously a spokeswoman for Mike Pompeo, Mr. Trump’s secretary of state.

Maggie Haberman contributed reporting.

Article source: https://www.nytimes.com/2022/04/27/us/politics/trump-pandemic-loan-yrc.html

In remarks to reporters on Tuesday, Liu Pengyu, the spokesperson for the Chinese Embassy in Washington, said the tariffs violated global trade rules, dragged down the global economic recovery and would ultimately hurt U.S. businesses and consumers.

“The Biden administration will not terminate tariffs on China, but is preparing to launch a new Section 301 investigation,” he said. “Facts have proved that a tariff war cannot solve the core issue of China-U.S. economic and trade frictions, nor will it truly balance U.S. foreign trade. It will only drive up inflation in the U.S. and increase the cost of living for ordinary American consumers and families.”

The report also said that Russia was posing various challenges, including copyright infringement and trademark counterfeiting, but that the ability of the administration to raise and resolve those intellectual property issues had been severely limited by Russia’s invasion of Ukraine and the subsequent efforts by the United States and its allies to isolate Russia from the global economy. The United States is monitoring recent proposals by Russia to try to counter international sanctions by allowing its companies to violate intellectual property rights held in the United States, Europe and other countries that have imposed sanctions on Russia, the report said.

It also expressed concerns with the European Union’s “aggressive promotion” of geographical indications, or rules that require goods to be from specific regions in order to use certain product names. Rules that restrict the use of common names for products, like Parmesan or feta cheese, impose barriers for U.S.-made goods and remain “highly concerning,” the U.S.T.R. said.

The office said it would also conduct a special review of Bulgaria’s practices to assess whether it had made progress with investigating and prosecuting online piracy cases. It removed some countries from a watch list, saying they had made progress on improving rights, including Kuwait, Saudi Arabia, Romania and Lebanon.

Katherine Tai, the trade representative, said in a statement that the administration would continue to engage with trade partners to address shortcomings, and that intellectual property protection was key to more than 60 million American jobs.

“We need robust protection and enforcement in foreign countries to protect these individuals, their livelihoods, and ensure they can fairly compete in the global marketplaces,” Ms. Tai said.

Article source: https://www.nytimes.com/2022/04/27/business/economy/china-trade-intellectual-property.html

That hope is under threat, as the Federal Reserve proceeds with a plan to increase borrowing costs by quickly raising interest rates to rein in some lending, consumer spending, business investment and demand for labor.

Despite various challenges, the most optimistic market participants predict that employers, workers and consumers can experience a so-called “soft landing” this year, in which the Fed increases borrowing costs, helping inflation and wage growth moderate without a painful slowdown that kills off the recovery: Morgan Stanley strategists, for instance, expect real wages to turn positive overall by midyear, outpacing price increases, as inflation eases and pay rates maintain some strength. That could be a boon for stocks as well.

“It’s possible that over the next few quarters the labor market continues to be tight despite the Fed hiking,” said Andrew Flowers, a labor economist at Appcast, a tech firm that helps companies target recruitment ads. He still sees an “overwhelming appetite” for hiring.

Although especially low unemployment isn’t typically a bullish sign for stocks, some recent years have bucked the trend. In 2019, when the SP 500 returned roughly 30 percent, unemployment by year’s end had fallen to 3.6 percent, in line with present levels.

In such an uncertain environment, forecasts for how stocks will fare by the end of the year are varying widely among top Wall Street firms. By several technical measures, the market’s trajectory is currently near “make or break” levels.

Public companies have “become massively efficient, so from an operating performance basis, they’ve been able to take on these extra costs,” said Brian Belski, the chief investment strategist at BMO Capital Markets. The outlook from Mr. Belski’s bank is among the most confident, with a call that the SP 500 index will finish 2022 at 5,300 — 27 percent above Tuesday’s close, and far above most estimates.

“At the end of the day, I think for the economy it’s good that we are seeing these sort of wages,” he said. “Don’t ever bet against the U.S. consumer, ever.”

Article source: https://www.nytimes.com/2022/04/26/business/economy/jobs-wall-street.html

Phil Levy, the chief economist at Flexport, a freight forwarder, said in an email that while Beijing is an important city, “it is not at the heart of factory production or supply chain operations.” He said lockdowns there would have a more limited impact than previous restrictions in Shanghai and Guangdong, where ports continued to mostly operate.

But the effects would depend on where outbreaks occurred — for example whether they shut down a port — and how long lockdowns persisted, Mr. Levy added. “This is a relatively slow part of the year, but there is plenty of catch-up to be done, and things will soon be due to build. The costs will mount the longer this lasts.”

The disruptions that are still unfolding in Shanghai and other Chinese cities are likely to reverberate along global supply chains in the coming months. Andrea Huang, a senior director at Overhaul, which monitors company supply chains, said with lockdowns not expected to ease until early or mid-May, the ripple effects for industries like auto and consumer electronics would extend into June or July.

In Shanghai, the local authorities on Friday selected some companies in the automotive, semiconductor and other key industries to restart production, but the vast majority of enterprises remain shuttered.

Activity at the port has also slowed. According to data from Project44, a logistics platform, the number of vessels that were berthing at the Shanghai port last week had dropped by about half since the lockdown began, while the number of vessels seeking to call at the nearby port of Ningbo jumped as shipping companies tried to get around restrictions. The time that imported containers were spending in the port had also risen sharply, from 4.6 days on March 28 to 14 days on April 23, the company said, as coronavirus testing requirements for truck drivers limited the ability to get containers in and out of the port.

Article source: https://www.nytimes.com/2022/04/25/business/china-supply-chain-covid.html

“It’s unsustainably hot,” Jerome H. Powell, the Fed chair, said of the job market during an event on April 21. “It’s our job to get it to a better place where supply and demand are closer together.”

America’s heady pay gains could mean that the Fed has to react more aggressively to slow down the economy. The central bank is trying to tame inflation by lifting interest rates in a bid to make money more expensive to borrow, which can slow spending and cool off economic conditions.

But if the Fed has to raise rates to high levels to restore economic calm, it could touch off a recession that pushes the unemployment rate higher. Mr. Powell and his colleagues have said they hope they can manage to land the economy softly without inducing that kind of pain — but they acknowledge that a downturn is a risk.

Ultimately, the legacy of America’s big relief programs may depend on what happens in the months ahead. If inflation moderates without painful action by the Fed — something some economists still believe is at least possible if the pandemic fades, supply chains normalize and workers return to the job market — then the brief period of rapid price gains may end up looking like a relatively small price to pay for a strong economic recovery that in some ways outstripped those staged abroad.

But if central bankers decide they need to take more drastic steps, resulting in a recession, it could reverse some of the recent progress — and the consequences are likely to be worse for low-wage workers who have experienced the strongest job and wage gains.

The war in Ukraine could complicate attempts to judge America’s performance against its global peers. Economic growth in Europe had been accelerating late last year, but the Russian invasion — and the spike in fuel costs that came with it — is threatening to derail the recovery there. The United States could also face consequences, but is comparatively insulated from the Russian and Ukrainian economies.

“Europe was doing well and I was very optimistic prior to the war,” said Gian Maria Milesi-Ferretti, an economist at the Brookings Institution who has studied the recoveries in the United States and Europe. “But now the war shock is completely asymmetric between the U.S. and Europe.”

Article source: https://www.nytimes.com/2022/04/25/business/economy/us-global-inflation-response.html

In addition to the war, the pandemic and rising interest rates, China is facing a downturn in its property sector, and the Brazilian economy could be damaged by political turmoil related to coming elections, she said.

New data show that Chinese economic growth and retail sales are flagging, as the government imposes sweeping lockdowns to stamp out the coronavirus. By April 11, 87 of China’s 100 largest cities had imposed some form of restriction on movement, according to Gavekal Dragonomics, an economic research firm.

The restrictions are again disrupting global supply chains for electronics, car parts and other goods, and dampening Chinese imports of oil, food and consumer goods. China is the world’s largest oil importer, and cooling demand there caused the International Energy Agency last week to trim its forecasts for oil demand growth this year to 1.9 million barrels a day, from an increase of 5.6 million barrels a day last year.

The Russian invasion of Ukraine, and the sanctions imposed to punish Moscow, also threaten to tip European economies into recession. Last week, forecasters at Germany’s top economic institutes projected that a full European ban on Russian energy imports would cause German output to contract 2.2 percent next year and push inflation up to 7.3 percent, a record for postwar Germany.

Global trade growth is also expected to slow this year. The World Trade Organization expects world merchandise trade volumes to expand 3 percent this year, down from a previous forecast of 4.7 percent. But depending on how the pandemic and the war unfold, trade growth could be as low as 0.5 percent or as high as 5.5 percent, Ngozi Okonjo-Iweala, the organization’s director general, said in a news conference last Tuesday.

The group forecast that global trade growth would rebound to 3.4 percent next year, though those estimates are also subject to change.

Dr. Okonjo-Iweala said the war prevented the organization’s economists from gathering key data on economic output, forcing them to rely on in-house simulations of how sanctions on Russian, the devastation of Ukrainian infrastructure, and the broader erosion of business and consumer confidence would affect global growth, she said.

Article source: https://www.nytimes.com/2022/04/19/business/economy/imf-world-economy-inflation.html