June 24, 2021

Federal Reserve Expects to Raise Interest Rates in 2023

Fed officials also tweaked their economic estimates. They now see inflation averaging 3.4 percent in the final three months of 2021, before stripping out volatile food and fuel. They expect that headline inflation gauge to retreat quickly, however, falling to 2.1 percent next year and 2.2 percent in 2023.

Wall Street has been eager to hear the Fed’s latest assessment of inflation as it tries to gauge whether the central bank might start to dial back its support for the economy faster than expected. If that happened, it would weigh down stock prices and could roil bond markets.

The Fed’s view of inflation is also being closely watched in Washington as President Biden tries to rally congressional support for his ambitious and expensive economic agenda.

Persistently higher inflation could make it more difficult for Democrats to make a case for additional spending on priorities like infrastructure, even though the suggested outlays would trickle out over time. Republicans have blasted the spike in prices as a sign of economic mismanagement, while the White House insists that higher prices are likely to fade over time.

“The current burst of inflation we’ve seen reflects the difficulties of reopening an economy that’s been shut down,” Janet Yellen, the Treasury secretary, said in response to lawmaker questions during testimony before the Senate Finance Committee earlier on Wednesday.

Slowing down bond buying is likely to be the first step in the process toward a more normal monetary policy setting. Because the economy is healing, a “number” of officials at the Fed’s April meeting suggested that they would like to start talking about how and when to begin the so-called “taper” soon, minutes from that gathering showed.

Officials including Robert S. Kaplan, the president of the Federal Reserve Bank of Dallas, and Patrick Harker, the president of the Federal Reserve Bank of Philadelphia, have signaled that they think it would be appropriate to get those discussions going. Other important policymakers have sounded patient, with John Williams, the New York Fed president, saying that “we’re not near the substantial further progress marker,” in a June 3 Yahoo Finance interview.

Article source: https://www.nytimes.com/2021/06/16/business/economy/fed-meeting-inflation.html

The Recession Isn’t Over Till They Say It’s Over. (But Who Are They?)

“I think way back in March of 2020 there was a question of: ‘Should we call this a recession?’” said Tara Sinclair, an economist at George Washington University who studies business cycles. “Or if this is something that is going to last a few weeks, then the economy bounces right back, should it be treated as a recession or as the equivalent of a natural disaster?”

Waiting to call an endpoint made sense, she said, as the committee was watching for evidence of a second wave of virus outbreak that might cause the economy to tumble again. In fact, a wave of infections in the fall dragged down employment numbers for a single month, but by most evidence it did not cause a broad or sustained contraction in economic activity.

But “at this point, they are taking a particularly long time to call a particularly clear trough,” Professor Sinclair said.

There’s one more wrinkle that shows how the pandemic recession is a weird one. Another common definition of recession, used especially widely outside the United States, is two straight quarters of contraction in G.D.P.

Even though the actual economic contraction lasted only a few weeks in early 2020, it appears in the G.D.P. tables as having stretched over two quarters. The economy was shutting down in mid-March severely enough to cause the economy to shrink at a 5 percent annual rate in the first quarter that ended March 31.

Then the continued collapse of the economy into early April meant that the second quarter, which began April 1, recorded a further 31 percent rate of shrinkage. If the pandemic had started at the beginning of a quarter rather than the end, the data would most likely have shown only a single quarter of declining G.D.P.

The exact start date and end date aren’t of great importance, of course, unless you’re a chart maker focused on where the gray bars should go in an economic data visualization, or a politician looking for talking points on the campaign trail. What matters for people is how long and how severe the bad times turn out to be.

Article source: https://www.nytimes.com/2021/06/14/upshot/pandemic-recession-endpoint.html

OSHA Issues Covid Workplace Safety Rule, but Only for Health Care

Ms. Berkowitz and Mr. Perrone had expressed hope that Mr. Biden would chart a different course from his predecessor, under whom OSHA declined to issue a standard related to Covid-19.

During the Trump administration, OSHA adopted a policy of largely limiting Covid-related inspections to a small number of high-risk industries like health care and emergency response. It did not include meatpacking — which studies indicated was a major source of virus transmission — in this high-risk group.

Some worker groups gave OSHA credit under President Donald J. Trump for enforcing safety rules in the health care industry, including proposed penalties of over $1 million for violations at dozens of health care facilities and nursing homes. But critics accused the agency of largely failing to fine meat processors for lax safety standards, such as failure to adequately distance workers.

Mr. Walsh indicated that the risks to most workers outside health care had eased as cases had fallen and vaccination rates had risen. He also indicated that guidance by the Centers for Disease Control and Prevention last month advising those who have been vaccinated that they generally need not wear a mask indoors played a role in OSHA’s decision to forgo a broader Covid-19 standard.

“OSHA has tailored the rule that reflects the reality on the ground, the success of the vaccine efforts, plus the latest guidance from C.D.C. and the changing nature of pandemic,” Mr. Walsh said on the call.

David Michaels, a head of OSHA during the Obama administration, said the C.D.C. guidance had made a broader OSHA rule more difficult to enact. “To justify an emergency standard, OSHA has to show there’s a grave danger,” Dr. Michaels said. “For that to happen, the C.D.C. would have needed to clarify its recommendation and say that for many workers, there remains a grave danger.”

Without such clarification, said Dr. Michaels, now a professor at the George Washington University School of Public Health, employer groups would probably have challenged any new OSHA rule in court, arguing that the C.D.C. guidance indicated that a rule was unnecessary.

Article source: https://www.nytimes.com/2021/06/10/business/economy/osha-covid-rule.html

Starbucks, Flush With Customers, Is Running Low on Ingredients

Although most people are familiar with the problems in the global supply chain to some extent, some Starbucks customers are still shocked — even incensed — by their inability to get their coffee exactly how they want it. Others laugh it off.

“I was told they couldn’t give me an extra shot of caramel because there was a national shortage,” Nicole Brashear, a 24-year-old pharmacy student at the University of Louisiana at Monroe, said of ordering an iced caramel macchiato with extra caramel drizzle in late May. “I just sort of laughed and was like, ‘Isn’t caramel just burnt sugar?’”

The problem for Starbucks is that it was never just selling a simple cup of coffee. For many, the experience of visiting the chain is a self-indulgent treat.

Customers learn the language regarding sizes and special drinks and then share their customized, 12-ingredient drink orders on social media. Many look forward to seasonal specials, like this summer’s Unicorn Cake Pop and Strawberry Funnel Cake Frappuccino, which are available for a limited time.

Orders are not barked out by number as they are at other fast-food chains but rather are announced by name, suggesting customers are friends or part of the Starbucks club, said Bryant Simon, a history professor at Temple University and author of “Everything but the Coffee: Learning About America From Starbucks.”

“Starbucks did something remarkable: taking a really ordinary product, coffee, and remaking it as an identifier of class, of culture, of discernment and of knowledge,” Mr. Simon said. “Starbucks is a way to communicate something about yourself to other people. While it has become more complicated over time, that drink still says: ‘I deserve a break in my life. I can afford to waste money on coffee.’”

There were earlier hints that supply issues could be bubbling up for Starbucks. In a late April call with Wall Street analysts, the chief executive of Starbucks, Kevin Johnson, voiced some concerns about companies in its supply chain that were struggling to hire the staff they needed.

Article source: https://www.nytimes.com/2021/06/10/business/starbucks-shortages.html

OSHA Issues Covid Workplace Safety Rule, But Only for Health Care

During the Trump administration, OSHA adopted a policy of largely limiting Covid-related inspections to a small number of high-risk industries like health care and emergency response. It did not include meatpacking — which studies indicated was a major source of virus transmission — in this high-risk group.

Some worker groups gave OSHA credit under President Donald J. Trump for enforcing safety rules in the health care industry, including proposed penalties of over $1 million for violations at dozens of health care facilities and nursing homes. But critics accused the agency of largely failing to fine meat processors for lax safety standards, such as failure to adequately distance workers.

Mr. Walsh indicated that the risks to most workers outside health care had eased as cases had fallen and vaccination rates had risen. He also indicated that guidance by the Centers for Disease Control and Prevention last month advising those who have been vaccinated that they generally need not wear a mask indoors played a role in OSHA’s decision to forgo a broader Covid-19 standard.

“OSHA has tailored the rule that reflects the reality on the ground, the success of the vaccine efforts, plus the latest guidance from C.D.C. and the changing nature of pandemic,” Mr. Walsh said on the call.

David Michaels, a head of OSHA during the Obama administration, said the C.D.C. guidance had made a broader OSHA rule more difficult to enact. “To justify an emergency standard, OSHA has to show there’s a grave danger,” Dr. Michaels said. “For that to happen, the C.D.C. would have needed to clarify its recommendation and say that for many workers, there remains a grave danger.”

Without such clarification, said Dr. Michaels, now a professor at the George Washington University School of Public Health, employer groups would probably have challenged any new OSHA rule in court, arguing that the C.D.C. guidance indicated that a rule was unnecessary.

Dr. Michaels said that the new standard was an overdue step but that it was disappointing that no Covid-specific standard was issued for industries like meatpacking, corrections and retail. “If exposure is not controlled in these workplaces, they will continue to be important drivers of infections,” he said.

Article source: https://www.nytimes.com/2021/06/10/business/economy/osha-covid-rule.html

New York Rents Appear Close to Bottom

And there are thousands of New Yorkers at risk of losing their homes later this summer, when a statewide eviction moratorium is expected to end. The pandemic drastically deepened debt for low-income renters who were already at risk of eviction. While a roughly $2.4 billion state program for emergency rental assistance opened to applicants on June 1, some tenant groups have questioned whether the funding and outreach will be sufficient.

New York’s price reset is part of a nationwide trend spurred by tenants seeking lower rents and more space, said Brian Carberry, a senior managing editor with Apartment Guide, a listing aggregation site.

In April, among 100 U.S. markets, Las Vegas had the biggest average rent increase for one-bedroom apartments at $1,653, or 44 percent higher than the same month in 2020, according to the site. It was followed by Virginia Beach, Va., where rents for a one-bedroom rose 32 percent to $1,603, and Mesa, Ariz., where they rose 25 percent to $1,268.

Among the cities with the biggest average price declines for one-bedroom apartments from the same month last year were San Francisco, down 19 percent to $3,137, Washington, D.C., down 17 percent to $2,181, and New York, down 15 percent to $3,684.

“If you always wanted to live somewhere expensive, now is the time to go there,” Mr. Carberry said.

But while deals persist, some landlords are starting to draw back on those sweeteners.

“The prices are coming up, and the concessions are coming off,” said Beatriz Moitinho, an agent with Keller Williams NYC, noting that some buildings that once offered four or five months free on a 16-month lease in the winter are now down to one or two months free.

There has been especially strong activity downtown, in neighborhoods like the East Village, Ms. Moitinho said, where inbound college students — or their parents, more likely — are once again bidding on apartments sight unseen. Areas like the Upper East Side have been slower to rebound, but there, too, prices are rising.

Article source: https://www.nytimes.com/2021/06/10/realestate/new-york-rents.html

U.S. and Europe Look for Tariff Cease-Fire as Biden Heads Overseas

In March, the United States and European Union agreed to temporarily suspend tariffs on billions of dollars of each other’s aircraft, wine, food and other products as both sides try to find a negotiated settlement to a dispute over the two leading airplane manufacturers.

The World Trade Organization had authorized both the United States and Europe to impose tariffs on each other as part of two parallel disputes, which began almost two decades ago, over subsidies the governments have given to Airbus and Boeing. The European Union had imposed tariffs on about $4 billion of American products, while the United States levied tariffs on $7.5 billion of European goods.

The two governments are also trying to resolve a fight over the steel and aluminum tariffs that Mr. Trump imposed in 2018. The 25 percent tariffs on imports of European steel and 10 percent on aluminum spurred retaliation from Europe, which imposed similar duties on American products like bourbon, orange juice, jeans and motorcycles.

The negotiations come as the United States is broadly reviewing its trade policy with a new focus on multilateralism.

Last week, the Biden administration suspended retaliatory tariffs on European countries in response to digital services taxes that they have imposed as negotiations over a broader tax agreement play out.

As part of the effort to deepen ties, the United States and European Union plan to establish a trade and technology council to help expand investment and prevent new disputes from emerging. It will also focus on strengthening supply chains for critical technology such as semiconductors, which have been in short supply in the last year.

The alliance represents another tool the administration intends to use to push back against China’s growing economic influence, which Mr. Biden has repeatedly referred to as a threat to the United States. While the president has so far steered clear of hitting China with new tariffs, he has yet to remove the levies Mr. Trump imposed on $360 billion worth of Chinese goods. Last week, the administration barred Americans from investing in Chinese companies linked to the country’s military or engaged in selling surveillance technology used to repress dissent or religious minorities.

Article source: https://www.nytimes.com/2021/06/09/us/politics/us-europe-tariffs.html

Uber and Lyft Ramp Up Efforts to Shield Business Model

Some labor groups involved in the discussions, like the state A.F.L.-C.I.O., became tepid in their support. John Samuelsen, the president of the Transport Workers Union, backed away from the proposal, citing concerns that workers wouldn’t be allowed to strike and opposition from delivery workers.

An Uber official who was not authorized to speak publicly said the company was open to changes that would make it easier for more than one union to represent workers in the ride-hailing or delivery industries. A subsequent draft eased restrictions on striking during negotiations with the companies.

Uber, Lyft and DoorDash said in statements that they remained interested in working with “stakeholders” on legislation.

But for all the opposition to the proposal, the episode suggested that some sort of deal remains possible in New York and other states where gig companies or industry groups have explored independent contractor legislation, including Illinois, Massachusetts and Connecticut, all with legislatures controlled by Democrats. Some of these states have policies allowing drivers to be deemed employees.

State Senator Diane J. Savino, who has been a key participant in the New York legislative efforts, said in an interview on Monday that she had recently reached out to a broader set of groups and that the discussion would continue in the coming weeks. “The clock may have run out on the legislative session, but it has not run out on the issue,” she said.

Critically, even many labor groups dismissive of the New York proposal have stopped short of insisting on all the rights and protections of employee status. “Their priorities are to have a living wage, have the right to organize and have more safety protections,” said Ms. Guallpa of the Workers Justice Project when asked how important it is to delivery workers to be classified as employees. “No one’s organizing around that issue.”

If the gig companies make more meaningful concessions, such as ensuring a more independent union, then a number of labor groups may be ready to take them up on it, ceding employee status in exchange.

Article source: https://www.nytimes.com/2021/06/09/business/economy/uber-lyft-gig-workers-new-york.html

Senate Passes Bill to Bolster Competitiveness With China

The measure, the core of which was a collaboration between Mr. Schumer and Senator Todd Young, Republican of Indiana, would prop up semiconductor makers by providing $52 billion in emergency subsidies with few restrictions. That subsidy program will send a lifeline to the industry during a global chip shortage that shut auto plants and rippled through the global supply chain.

The bill would sink hundreds of billions more into scientific research and development pipelines in the United States, create grants and foster agreements between private companies and research universities to encourage breakthroughs in new technology.

“When future generations of Americans cast their gaze toward new frontiers, will they see a red flag planted on those new frontiers that is not our own?” Mr. Young said during a speech on the Senate floor. “Today, we answer unequivocally, ‘No.’

“Today we declare our intention to win this century, and those that follow it as well,” he added.

President Biden hailed the passage of the legislation on Tuesday shortly after the Senate approved it, adding that he hoped to sign it into law “as soon as possible.”

“We are in a competition to win the 21st century, and the starting gun has gone off,” he said in a statement. “As other countries continue to invest in their own research and development, we cannot risk falling behind.”

While the legislation’s centerpiece is focused on bolstering research and development in emerging technologies, it also includes major trade and foreign policy measures. Those would again allow for the temporary suspension of tariffs on specific imports and would call on the Biden administration to impose sanctions on those responsible for forced labor practices and human rights abuses in and around the Xinjiang region of China.

With Mr. Schumer intent on using his power as majority leader to push the legislation through and lawmakers eager to attach personal priorities to the bill, the package moved swiftly through the Senate, picking up provisions as diverse as a fresh round of funding for NASA and a ban on the sale of shark fins.

Article source: https://www.nytimes.com/2021/06/08/us/politics/china-bill-passes.html

Biden Administration Moves to Fix Supply Chain Bottlenecks

As part of his plans to address climate change, Mr. Biden wants Americans to drive millions of new electric vehicles and get more of their energy from renewable sources like wind and solar power. But experts have long pointed out that the shift to cleaner energy will require vast supplies of critical minerals, many of which are currently produced and processed overseas.

Most of the world’s lithium, a key ingredient in the batteries that power electric vehicles, is mined in Australia, China, Chile and Argentina. China dominates global production of rare earth minerals such as neodymium, used to make magnets in wind turbines. It has also largely cornered the market in lithium-ion batteries, accounting for 77 percent of the world’s capacity for producing battery cells and 80 percent of its raw-material refining, according to BloombergNEF, an energy research group.

The United States lags far behind other countries in manufacturing many clean energy technologies, leaving it heavily reliant on imports.

The Biden administration has vowed to bring back more of that manufacturing and mining, but progress has been slow. In the United States, companies are racing to unlock lithium supplies in states like Nevada and North Dakota, though those efforts face opposition because of their environmental effects. The country also has only one mine that produces rare earth minerals, in Mountain Pass, Calif.

As part of its announcement on Tuesday, the Biden administration said it would work to identify new domestic sites where such critical minerals could be mined with environmental safeguards, asking Congress to increase funding for a mapping program at the U.S. Geological Survey.

The Energy Department announced that it would offer loans for companies that could sustainably refine, process and recycle rare earths and other materials used in electric vehicles. The agency on Tuesday will also release a plan to develop a domestic supply chain for lithium-ion batteries.

The Energy Department has $17.7 billion in authority to issue loans under the Advanced Technology Vehicles Manufacturing Loan Program, which Congress created in 2007 and used in 2010 to support the electric-vehicle manufacturer Tesla in its early days. In its announcement, the agency said it would seek to offer loans to manufacturers of advanced battery technology that established factories in the United States. It also announced a new policy in which future funding of new clean-energy technologies would require recipients to “substantially manufacture those products in the United States.”

Article source: https://www.nytimes.com/2021/06/08/us/politics/biden-supply-chain.html