January 23, 2022

As Infrastructure Money Flows, Wastewater Improvements Are Key

“A lot of people know that the bill isn’t just about drinking water, but the wastewater part is just as important,” said Senator Tammy Duckworth, Democrat of Illinois, who helped draft the provisions after assisting two small cities in her state, Cahokia Heights and Cairo, upgrade failing sewer systems that flooded neighborhoods with raw sewage.

The Environmental Protection Agency, which is administering the program, said in November that the first tranche of funding for drinking water and wastewater projects, $7.4 billion, would be sent to states in 2022, including about $137 million for Alabama.

Biden administration officials are confident the scale of the new spending — which represents a threefold increase in clean water funding over the next five years — will be enough to ensure poor communities gets their fair share.

“We want to change the way E.P.A. and states work together to ensure overburdened communities have access to these resources,” said Zachary Schafer, an agency official overseeing the implementation of the program.

But major questions remain — including whether individual homeowners without access to municipal systems can tap the money to pay for expensive septic systems — and the guidelines will not be ready until late 2022.

While the revolving loan fund is generally regarded as a successful program, a study last year by the Environmental Policy Innovation Center and the University of Michigan found that many states were less likely to tap revolving loan funds on behalf of poor communities with larger minority populations.

Alabama’s revolving loan fund has financed few projects in this part of the state in recent years, apart from a major wastewater system upgrade in Selma, according to the program’s annual reports.

Article source: https://www.nytimes.com/2022/01/12/us/politics/infrastructure-environmental-racism-alabama-black-belt.html

CPI December 2021: Inflation Jumped at Fastest Pace Since 1982

Policymakers and economists had initially hoped that rapid price gains would fade quickly in 2021, and many still expect them to moderate throughout 2022. But economists are paying attention to a few factors that could keep prices rising too quickly for comfort.

Housing costs, based on what it costs to rent a place to live, make up about a third of the Consumer Price Index, so the fact that landlords are charging more will matter to overall inflation.

“My gut feeling is that the pace of appreciation is going to be slower in 2022 than it was in 2021,” said Jeff Tucker, a senior economist at Zillow. “But I don’t see rents actually dropping or getting more affordable.”

Global supply chains also continue to experience disruptions that are leading to shortages of parts and products and pushing costs higher across broad array of consumer goods.

The price of food grew 6.3 percent and apparel rose 5.8 percent in the year to December. Used cars and trucks — a big factor in price gains since last spring, along with new vehicles — surged 37.3 percent. Auto manufacturers have been struggling to obtain parts — particularly computer chips imported from Asia — delaying production of new vehicles and pushing up demand for a finite supply of used ones.

More disruptions could be in store. The Omicron variant of the coronavirus is leading to worker shortages for factories, ports, trucking companies and warehouses in the United States and overseas. And recent lockdowns in China meant to contain the coronavirus, inspired by the country’s continued embrace of a zero-tolerance policy when it comes to the pandemic, could exacerbate the chip shortage, among other supply chain issues.

“If they stick to their zero-case doctrine, a global supply chain disaster is on the horizon,” Tinglong Dai, a professor of operations management at Johns Hopkins University Carey Business School, said about China.

Article source: https://www.nytimes.com/2022/01/12/business/economy/cpi-inflation-december-2021.html

CPI Report Is Expected to Show Inflation Popped Again

Inflation closed out 2021 on a high note, bad news for the Biden White House and for economic policymakers, as rapid price gains erode consumer confidence and cast a shadow of uncertainty over the economy’s future.

The Consumer Price Index most likely climbed 7 percent in the year through December, and 5.4 percent after volatile prices such as food and fuel are stripped out, economists in a Bloomberg survey estimated. The last time the main inflation index eclipsed 7 percent was 1982.

Policymakers have spent months waiting for inflation to fade, hoping that supply chains would catch up with booming consumer demand. Instead, continued waves of coronavirus infections have locked down factories, and shipping routes have struggled to work through extended backlogs as consumers continue to buy goods from overseas at a rapid clip. What happens next may be the biggest economic policy question of 2022.

Here is what to watch when fresh C.P.I. data are released on Wednesday at 8:30 a.m.:

  • Used cars. Prices for used cars and trucks have been a big factor in recent inflation, and that most likely continued in December. Wholesale vehicle prices continued to climb in December, according to a closely watched index. Cars are expensive because manufacturers have been struggling to get their hands on parts, and particularly computer chips imported from Asia. Recent lockdowns in China meant to contain the coronavirus could exacerbate the shortage, which has pumped up demand for used cars. When it comes to rising vehicle prices, “it’s not over yet,” said Jim O’Sullivan, chief U.S. macro strategist at TD Securities.

  • Groceries and gas. Economists and Wall Street analysts tend to focus on a measure of prices that strips out food and fuel costs, because those prices jump around a lot from month to month. But they matter a lot to households. While gas prices moderated somewhat in December, food has been growing steadily more expensive. The fact that high prices are taking a bite out of household budgets seems to be one of the reasons that consumer confidence has faltered — and gas and food tend to be the most salient costs for shoppers.

  • Rising rents. While inflation pressures were centered squarely on goods early in the pandemic, they have recently been creeping into services — and, importantly, into rents. Housing costs make up about a third of the Consumer Price Index, so the fact that landlords are charging more matters a lot for overall inflation.

  • Supply chain kinks. The Federal Reserve is pulling back its support for the economy, which should make borrowing money to buy a car or house more expensive and slow demand, weighing on inflation. But the supply side is more of a wild card: It is unclear when businesses will be able to produce and transport enough goods and services to work through backlogs and stem shortages. There are early signs that snarls in the shipping routes and depleted inventories may be moderating, but other signals suggest that a return to normal will take time.

    “You always see a few snowflakes, but it doesn’t amount to a storm yet,” Jerome H. Powell, the Fed chair, said of signs that kinks in the supply chain are resolving themselves, during Senate testimony on Tuesday.

  • The likely takeaway. Just about everyone expects inflation to fade somewhat as the economy moves into 2022. Even with Wednesday’s fresh data, though, it is going to remain tough to guess how soon — and how quickly.

Article source: https://www.nytimes.com/2022/01/12/business/economy/cpi-inflation-december-2021.html

Economists Pin More Blame on Tech for Rising Inequality

Mr. Acemoglu and Mr. Restrepo have published papers on the impact of robots and the adoption of “so-so technologies,” as well as the recent analysis of technology and inequality.

So-so technologies replace workers but do not yield big gains in productivity. As examples, Mr. Acemoglu cites self-checkout kiosks in grocery stores and automated customer service over the phone.

Today, he sees too much investment in such so-so technologies, which helps explain the sluggish productivity growth in the economy. By contrast, truly significant technologies create new jobs elsewhere, lifting employment and wages.

The rise of the auto industry, for example, generated jobs in car dealerships, advertising, accounting and financial services.

Market forces have produced technologies that help people do their work rather than replace them. In computing, the examples include databases, spreadsheets, search engines and digital assistants.

But Mr. Acemoglu insists that a hands-off, free-market approach is a recipe for widening inequality, with all its attendant social ills. One important policy step, he recommends, is fair tax treatment for human labor. The tax rate on labor, including payroll and federal income tax, is 25 percent. After a series of tax breaks, the current rate on the costs of equipment and software is near zero.

Well-designed education and training programs for the jobs of the future, Mr. Acemoglu said, are essential. But he also believes that technology development should be steered in a more “human-friendly direction.” He takes inspiration from the development of renewable energy over the last two decades, which has been helped by government research, production subsidies and social pressure on corporations to reduce carbon emissions.

“We need to redirect technology so it works for people,” Mr. Acemoglu said, “not against them.”

Article source: https://www.nytimes.com/2022/01/11/technology/income-inequality-technology.html

For Retail Workers, Omicron’s Impact Isn’t Just About Health

Ms. Milliam, a member of the Retail, Wholesale and Department Store Union, is vaccinated but contracted the virus during the holidays, experiencing mild symptoms. She said that fewer employees were working registers and organizing clothing and that her store had been closing the fitting rooms in the mornings because nobody was available to monitor them.

Macy’s said last week that it would shorten store hours nationally on Mondays through Thursdays for the rest of the month. At least 20 Apple Stores have had to close in recent weeks because so many employees had contracted Covid-19 or been exposed to someone who had, and others have curtailed hours or limited in-store access.

At a Macy’s in Lynnwood, Wash., Liisa Luick, a longtime sales associate in the men’s department, said, “Every day, we have call-outs, and we have a lot of them.” She said the store had already reduced staff to cut costs in 2020. Now, she is often unable to take breaks and has fielded complaints from customers about a lack of sales help and unstaffed registers.

“Morale could not be lower,” said Ms. Luick, who is a steward for the local unit of the United Food and Commercial Workers union. Even though Washington has a mask mandate for indoor public spaces, “we get a lot of pushback, so morale is even lower because there’s so many people who, there’s no easy way to say this, just don’t believe in masking,” she added.

Store workers are navigating the changing nature of the virus and trying their best to gauge new risks. Many say that with vaccinations and boosters, they are less fearful for their lives than they were in 2020 — the United Food and Commercial Workers union has tracked more than 200 retail worker deaths since the start of the pandemic — but they remain nervous about catching and spreading the virus.

Article source: https://www.nytimes.com/2022/01/11/business/retail-workers-omicron-pandemic.html

Checking Privilege in the Animal Kingdom

Next, she’s planning to expand her survey, looking at wealth and privilege across thousands more animal species.

“The use of terms like ‘privilege’ and ‘perpetuating the cycle of privilege’ is a little bit unusual” in animal research, said Jenny Tung, an evolutionary anthropologist and geneticist at Duke University who focuses on how social factors affect health in primates. “In part because they’re a bit loaded for us as humans to read.” But she thinks the idea of using a human lens to look at how animals pass down resources has promise.

“That is potentially tremendously useful,” Dr. Tung said. The idea “opens up a whole tool chest of ways to understand” where inequality comes from among animals, she said.

Siobhán Mattison, an evolutionary anthropologist at the University of New Mexico who has studied inequality in human societies, also thinks that combining the anthropology of privilege with animal biology has potential. “Humans are animals,” she said. “We are undoubtedly influenced by some of the same things that drive inequality in other animals.”

That doesn’t mean animals can answer every question about how inequality arises in humans, Dr. Mattison added: “Humans are vastly more cooperative than most other species.” Our cultural institutions can reinforce inequality, she said, but they can also fight against it.

Although Dr. Smith is primarily hoping that insights from humans can teach her more about inequality in animals, she does think the science could work in the opposite direction too. Some of the rules scientists discover in animals might apply to humans.

She stresses, though, that finding inequality in nature isn’t the same as justifying it. Her research “could be misinterpreted as saying, ‘Well, it exists everywhere, so we can do nothing about it,’” Dr. Smith said.

Article source: https://www.nytimes.com/2022/01/11/science/inequality-intergenerational-wealth-animals.html

Richard Clarida Is Resigning From the Fed Early After New Questions on Trades

Mr. Powell and his colleagues have in recent months revamped the central bank’s ethics guidelines — in October releasing plans to overhaul them and prevent many types of financial activity, including trading during times of turmoil. He may point to that as a sign of how seriously the Fed has taken the issue.

Mr. Clarida’s resignation is the latest development in a monthslong trading scandal that has embroiled top officials and prompted high-profile departures at the Fed.

Financial disclosures released in late 2021 showed that Robert S. Kaplan, the former president of the Federal Reserve Bank of Dallas, had made big individual-stock trades, while Eric S. Rosengren, the former Boston Fed president, had traded in real estate securities. Those moves drew immediate and intense backlash from lawmakers, ethics experts and former Fed employees.

Fed officials were actively rescuing a broad swath of markets in 2020. In March and April, they slashed rates to zero, bought mortgage-tied and government bonds in mass quantities, and rolled out rescue programs for corporate and municipal debt.

The concern is that continuing to deal in affected securities for their own portfolios throughout the year could have given officials room to profit from their privileged knowledge.

Mr. Kaplan resigned in September, citing the scandal; Mr. Rosengren resigned simultaneously, citing health issues.

Mr. Clarida’s term was scheduled to end at the close of this month because his seat as governor was expiring. Bloomberg News first reported on his stock fund purchase — what was visible before he corrected the disclosure — in October.

Article source: https://www.nytimes.com/2022/01/10/business/economy/richard-clarida-fed-resign.html

December Jobs Report: U.S. Added 199,000 Jobs

“We’re all sort of at the whims of these variants and surges in cases, and it’s hard to know when they might strike,” said Nick Bunker, director of economic research at the Indeed Hiring Lab. “Any sort of projections or outlook on the pace of gains over the next year or so is still dependent on the virus.”

Employment levels are still depressed compared with the period before the pandemic, even as job openings remain remarkably high by historical standards. The economy has added 18.8 million jobs since April 2020 — when pandemic-related lockdowns were at their peak — but still has 3.6 million fewer positions than in February 2020.

Part of the worker shortage may reflect retirement decisions prompted by the pandemic. Some people may be waiting to go back when health risks from the virus are less pronounced, or may be struggling to find child care during school and day care shutdowns.

Dana Ewer, 42, a nurse in Salt Lake City, said she and her husband were steeling themselves for the possibility that the day care center where they send their two sons, ages 5 and 2, would close because of a staffing shortage or virus spread.

Should that happen, or if anyone in the family got sick, she isn’t sure how they would manage work and child care during the day, she said.

“There is a possibility that I could work from home on a very temporary basis, but it would be hard to negotiate,” Ms. Ewer said, adding, “I’m more worried about what would happen with my husband.” He has just a handful of days off from work a year, and they do not know how his employer would handle a longer absence.

There was also a sharp divergence in employment along racial lines in December. White employment rose by 665,000, while Black employment fell by 86,000. The unemployment rate for Black workers rose to 7.1 percent, compared with 3.2 percent for white workers. Hispanic employment fell slightly as well.

Article source: https://www.nytimes.com/2022/01/07/business/economy/jobs-report-december-2021.html

December Jobs Report: U.S. Added Only 199,000 Jobs

Some of those workers may have retired. Others may be waiting to come back when health risks from the virus are less pronounced, or may be struggling to find child care amid regular school shutdowns.

Still, there is plenty of evidence of momentum underlying the uneven economic recovery. A record number of Americans quit their jobs in November, as intense competition, especially in lower-wage sectors, has presented workers with opportunities to demand and seek higher wages and better working conditions.

“We’ve seen these subsequent waves,” Mr. Bunker said. “And then things have reverted to the underlying strength.”

Economic policymakers at the Federal Reserve are aware that many workers are still missing from the labor force, but they have increasingly signaled that they will not wait for workers to return to remove help for the economy. With wages rising and inflation at its highest in nearly 40 years, officials are trying to make sure that prices remain under control.

The figures released on Friday will probably confirm to them that the economy is closing on their full employment goal.

“A lot of the focus at the Fed will be on the lower unemployment rate,” said Gennadiy Goldberg, senior rates strategist at TD Securities, noting that markets actually increased their expectations of rate increases in 2022 after the data release.

Officials have signaled that they could raise interest rates several times this year in a bid to slow spending and cool off a fast-growing economy, and economists think those moves could start as soon as this spring. For now, Fed policymakers seem content to define “full employment” — their job-market goal — as low joblessness.

“I don’t think it’s a matter of some internal conflict between hiking and full employment,” said Michael Feroli, chief U.S. economist at J.P. Morgan. When it comes to declaring victory on job-market progress, he said, “most of them are already there.”

Article source: https://www.nytimes.com/2022/01/07/business/economy/jobs-report-december-2021.html

As Unemployment Falls, Interest Rate Increases Creep Nearer

“It makes sense to get going sooner rather than later,” James Bullard, president of the Federal Reserve Bank of St. Louis, said during a call with reporters on Thursday, suggesting that the moves could come very soon. “I think March would be a definite possibility.”

And officials have signaled that once rate increases start, they could promptly begin to shrink their balance sheet — where they hold the bonds they have purchased to stoke growth throughout the pandemic downturn. Doing that would help to lift longer-term interest rates, reinforcing rate increases and helping to further slow lending and spending.

Economists speculated following the jobs report that the new figures made an imminent rate increase even more likely, and that the central bank might even be prodded to remove its economic support more quickly as wages take off.

“We think that today’s report adds to the case for the Fed to kick off its hiking cycle in March,” researchers at Bank of America wrote following the release of the data. “The economy appears to be operating below maximum employment and inflation remains sticky-high.”

Krishna Guha, an economist at Evercore ISI, argued that the combination of rapidly declining unemployment and heady wages might even prompt central bankers to increase interest rates faster than once every three months — the fastest pace they increased in their last set of interest rate increases, which took place from 2015 to 2018.

“The Fed might end up having to hike at a pace faster than the baseline one hike per quarter,” Mr. Guha wrote.

Investors will get a chance to hear from key Fed officials themselves next week. Jerome H. Powell, whom President Biden has renominated as Fed chair, has a confirmation hearing on Tuesday before the Senate Banking Committee. Lael Brainard, now a governor and Mr. Biden’s pick to be vice chair, has a hearing on Thursday.

Article source: https://www.nytimes.com/2022/01/07/business/economy/jobs-interest-rates-federal-reserve.html