Jason Furman, an economist at Harvard University, said many forecasters had been doing what investors sometimes refer to as “pricing to perfection”: assuming that everything is going to go well, even if that is not the most likely outcome.

“You can look at the individual items: There’s been a lot of: What if inflation in X, Y, Z goes down?” he said. “And not: What if inflation in A, B, C goes up?”

Many of the factors prompting economists to mark up their inflation forecasts now are not even tied to supply chains.

Matthew Luzzetti, chief U.S. economist at Deutsche Bank, recently revised up his inflation projections because rent costs are rising so rapidly in the Consumer Price Index. Between that and wage growth, he thinks, high inflation will last unless the Fed intervenes.

“For a while, inflation forecasters had been anticipating that the goods side of things would return to more normal dynamics” just as service prices, like rent, began to increase, he said. Services prices have indeed picked up, but normalization in good prices keeps getting “pushed out.”

Consumers continue to spend a bigger share of their budgets on goods instead of services — purchases like travel and manicures — compared with before the pandemic. That has meant global producers are still struggling to keep up with demand. Even potentially short-lived disruptions, like the ones taking place in China, can add to a snowball of delays and shortages.

Data released this month showed that the U.S. trade deficit hit a record in January, the height of the Omicron wave, in part because of surging imports of cars and energy. The average time to ship a container from a Chinese factory to a U.S. warehouse had stretched to 82 days in February, according to Freightos, a logistics platform, up from 45 days two years before.

Article source: https://www.nytimes.com/2022/03/15/business/economy/inflation-rates-global-economy.html

Investors have already taken the financial hit, he added. Russian bonds are trading at an average of about 20 cents on the dollar as traders have priced in a default. There has also been forced selling of bonds after the assets were kicked out of indexes, pushing the prices down further.

Some of the institutional investors with larger holdings include BlackRock, Pimco, Capital Group and Vanguard, according to data compiled from Bloomberg. Vanguard, a large provider of mutual and exchange-traded funds, recently said it had suspended purchases of Russian securities in its actively managed funds and was working on exiting the positions in its index funds. Pimco, the large asset manager that specializes in bonds, and had built up a sizable exposure to Russian debt, declined to comment on its holdings. Carmignac, a French asset manager, said last week that it was divesting from its Russian holdings.

Officials have been trying to assess the impact the war and the sanctions leveled at Russia could have on the global financial system. In late February, members of the Financial Stability Oversight Council, part of the Treasury Department, received a briefing on international market developments related to Ukraine and noted that the U.S. financial system continued to function in an orderly manner.

Andrea Enria, the chair of the European Central Bank’s supervisory board, said on Tuesday that the direct exposure of banks in the eurozone to Russian assets appeared contained and manageable. For example, Russian and Ukrainian debt securities made up about half a percent of eurozone investment fund debt holdings.

“So far we have seen nothing particularly disruptive,” even in indirect exposure to Russia, he added. Still, there are risks stemming from a Russian debt default and broader financial market volatility, especially in markets linked to oil, gas and other commodities, he said.

“In the aggregate, Russia is not systemically risky, however there are people that hold big chunks of Russian debt and they have to figure out what to do,” said Paul Cadario, a former World Bank official who in the 1990s oversaw the bank’s budget for Central and Eastern Europe and the former Soviet Union.

Article source: https://www.nytimes.com/2022/03/15/business/russia-debt-bonds-default.html

The war in Ukraine threatens to keep costs elevated for longer. Gas prices have already surged, lifting headline inflation as consumers pay more at the pump. Disruptions to supply chains — and shortages in Russian and Ukrainian exports like neon, palladium and wheat — could curtail car and food production and the transport of goods, exacerbating global shortages.

Now, fresh coronavirus restrictions in Shanghai and Shenzhen, China, a major technology manufacturing hub and port city, are boosting the risk that supply chains remain roiled in the coming months. Those shocks from outside come when price pressures have already begun broadening to categories like rent, another development that could make inflation last.

It is not clear whether those factors will keep inflation drastically higher, but Fed officials will be watching warily.

If the Fed has to raise interest rates to painful levels to cool off the economy and put a lid on prices, it could send financial markets tumbling, erasing stock and housing wealth. It could also slow wage increases and throw people out of jobs as companies retrench, curtailing investment and hiring.

But Fed inaction — or under-action — would also carry risks. High prices that chip away at consumer buying power year after year would make it hard for families and businesses to plan for the future. They could especially hurt people who are out of work and living on savings, or the poor, who devote a big chunk of their budgets to necessities and have less room to cut back if costs get out of control.

Mr. Volcker, Mr. Powell’s long-ago predecessor, one of his professional idols and — potentially, if things go wrong — his muse, died in 2019. But he had thoughts on the trade-off.

Maintaining confidence that a dollar will be able to buy tomorrow what it can today “is a fundamental responsibility of monetary policy,” Mr. Volcker wrote in his 2018 memoir. “Once lost, the consequences can be severe and stability hard to restore.”

Article source: https://www.nytimes.com/2022/03/14/business/economy/powell-fed-inflation-volcker.html

The Biden administration is seeking to lay out for China the consequences of its alignment with Russia and penalties it will incur if it continues or increases its support. Some U.S. officials argue it might be possible to dissuade Beijing from ramping up its assistance to Moscow. Chinese leaders may be content to offer rhetorical support for Moscow and may not want to further enmesh themselves with Mr. Putin by providing military support for the war, those U.S. officials say.

Mr. Sullivan said China “was aware before the invasion took place that Vladimir Putin was planning something,” but added that the Chinese might not have known the full extent of the Russian leader’s plans. “It’s very possible that Putin lied to them, the same way he lied to Europeans and others,” he said.

Mr. Xi has met with Mr. Putin 38 times as national leaders, more than with any other head of state, and the two share a drive to weaken American power.

Traditionally, China has bought military equipment from Russia rather than the other way around. Russia has increased its sales of weaponry to China in recent years. But China has advanced missile and drone capabilities that Russia could use in its Ukraine campaign.

Although Russia on Sunday launched a missile barrage on a military training ground in western Ukraine that killed at least 35 people, there has been some evidence that Russian missile supplies have been running low, according to independent analysts.

Last week, the White House criticized China for helping spread Kremlin disinformation about the United States and Ukraine. In recent days, Chinese diplomats, state media organizations and government agencies have used a range of platforms and official social media accounts to amplify a conspiracy theory that says the Pentagon has been financing biological and chemical weapons labs in Ukraine. Right-wing political figures in the United States have also promoted the theory.

On Friday, Russia called a United Nations Security Council meeting to present its claims about the labs, and the Chinese ambassador to the U.N., Zhang Jun, supported his Russian counterpart.

Article source: https://www.nytimes.com/2022/03/13/us/politics/russia-china-ukraine.html

The 1930s tariffs were crafted to charge high levies on imports of manufactured goods and farm products but low rates on imports of raw materials — a design that would limit costs for U.S. factories, Mr. Gresser wrote in a blog post.

The U.S. tariff on palladium, for example, which is used in catalytic converters, would remain at 0 percent after the change, according to Mr. Gresser’s research. Tariffs on other significant exports from Russia, like king crab, uranium and urea, which is used in fertilizer, would also remain at 0 percent.

Tariffs would be somewhat higher for other products, like unwrought aluminum alloy, birch-faced plywood, bullets and certain steel products.

Energy imports from Russia — which accounted for about 60 percent of what the United States imported from the country last year — would face slightly higher tariffs. But Mr. Biden already announced this week that the United States would stop all shipments of Russian oil, gas and coal, a far more sweeping measure.

Mr. Gresser wrote that revoking Russia’s preferential trading status would impose some penalties, “but in most cases not very significant ones.”

“It may nonetheless be an appropriate symbolic and moral gesture, in particular if many W.T.O. members join in it,” he wrote. “But as a policy measure meant specifically to impose economic cost, the energy import ban is the one with practical real-world impact.”

Russia or another country, such as China, could challenge the decision to strip Russia of its trade status by bringing a case against the United States, the European Union or other countries at the World Trade Organization. But the global trade body offers large exceptions for actions taken to protect national security, and the United States and Europe could cite that rationale in their defense.

Reporting was contributed by Catie Edmondson, Katie Rogers, Alan Rappeport and Liz Alderman.

Article source: https://www.nytimes.com/2022/03/11/business/economy/russia-trade-status-us.html

Dutchess County residents were similarly agitated, if less rowdy, at their June 14 meeting about the stadium. Guidance on using the funds issued by the Treasury Department specifically cited stadiums as “generally not reasonably proportional to addressing the negative economic impacts of the pandemic.”

So why, those in attendance asked, was this happening?

Marc Molinaro, the county executive, defended the spending, saying Dutchess County had identified $33 million in lost revenue as a result of the pandemic and that, according to the Biden administration’s guidance, stimulus funds could indeed go toward investing in things like the stadium.

“It’s basically any structure, facility, thing you own as a government, you can invest these dollars in with broad latitude,” Mr. Molinaro said.

In a recent interview, Mr. Molinaro said that because the funds were one-time money, the county needed to be careful not to create expenses that could not be paid for once the federal funds ran out.

He added that investing in the stadium would produce an ongoing revenue stream for Dutchess County — money that he said would allow the government to pay for the types of programs that Democrats wanted.

The investment, he said, “allows us to create 25 years of revenue that we can invest in the expansion of mental health services, homelessness and substance abuse.”

That explanation has not mollified everyone.

“I was just devastated that we spent the money that way,” Ms. Kearney, the Democratic legislator, said in an interview. “It was such a betrayal of our community. So grossly inappropriate and grossly tone deaf to the needs of the people in Dutchess who have suffered.”

Article source: https://www.nytimes.com/2022/03/11/us/covid-stimulus-money-fight.html

Ronna McDaniel, the chairwoman of the Republican National Committee, accused the Biden administration on Thursday of refusing to take responsibility for rising costs.

“Prices continue to skyrocket under Biden and Democrats’ reckless policies,” Ms. McDaniel said in a statement. “Biden’s attempt to deflect blame is an insult to every American and small-business owner struggling to afford the cost of everyday goods.”

Jen Psaki, the White House press secretary, told reporters on Thursday that there was “no question that inflation may be higher for the next few months than it would have been” without the Russian invasion of Ukraine, and that the administration’s focus would be to mitigate the long-term effects of rising costs.

Democratic strategists pointed out that much of the criticism of Mr. Biden from Republicans is that he has not done even more to confront Russia. The president has repeatedly said he is unwilling to send American troops into Ukraine, and the United States declined this week to take fighter jets from Poland and station them at an American air base for eventual use in Ukraine.

Each decision Mr. Biden is making, the strategists from his party argue, is rooted in strategic decision making, not political calculation.

“Being in the situation he’s in carries a kind of political freedom,” said David Axelrod, a former senior adviser to President Barack Obama. “Virtually every indicator is working against him relative to these midterm elections, and many of them are beyond anyone’s control. The best service that he can perform for himself, for Democrats, is to be intrepid and as strong and as honest as he can be about the situation we’re in.”

Article source: https://www.nytimes.com/2022/03/10/us/politics/biden-putin-inflation.html

The price burst presents a challenge for President Biden, especially given that November’s midterm elections are fast approaching. Democrats will need to battle to retain control of Congress at a time when voters are feeling the squeeze of higher expenses. On Thursday, Mr. Biden acknowledged the pain consumers are feeling from rapid inflation but pointed a finger at President Vladimir V. Putin of Russia, blaming his invasion of Ukraine for fueling higher gas prices. Democrats tweeted about the report on Thursday using the hashtag #PutinPriceHike.

“Today’s inflation report is a reminder that Americans’ budgets are being stretched by price increases and families are starting to feel the impacts of Putin’s price hike,” Mr. Biden said in a statement. “As I have said from the start, there will be costs at home as we impose crippling sanctions in response to Putin’s unprovoked war, but Americans can know this: The costs we are imposing on Putin and his cronies are far more devastating than the costs we are facing.”

The Ukraine invasion is poised to compound a stubborn inflation problem. Cost increases had been running fast for a year and accelerating for months, posing a problem for the Federal Reserve, which is in charge of achieving price stability. The central bank has signaled it will raise interest rates by a quarter percentage point at its meeting next week, probably the first in a series of moves meant to increase the cost of borrowing and spending money and slow down the economy. By reducing consumption and slowing the labor market, the Fed is able to take some pressure off inflation over time.

Broadening price pressures and high gas costs could become a serious issue for central bank policymakers if they help convince consumers that the run-up in prices will last. If people begin expecting inflation, they may change their behavior in ways that make it more permanent: accepting price increases more readily, and asking for bigger raises to keep up.

“It was another bad report,” said Laura Rosner-Warburton, senior economist at MacroPolicy Perspectives. “Inflation was already way too high before the invasion of Ukraine.”

Article source: https://www.nytimes.com/2022/03/10/business/economy/cpi-inflation-february-2022.html

“Mortgage rates will go up, the rates for car loans — all of those rates that affect consumers’ buying decisions,” Jerome H. Powell, the Fed chair, told Congress last week. “Housing prices won’t go up as much, and equity prices won’t go up as much, so people will spend less.”

Even as the Fed prepares to rein in demand, high gas costs tied to the conflict in Ukraine threaten to keep inflation elevated for longer. They could become a serious issue for central bank policymakers if they help convince consumers that the burst in prices will last. If people begin to expect inflation, they may change their behavior in ways that make it more permanent — accepting price increases more readily and asking for bigger raises to keep up.

This is just the latest instance, as far as prices go, in which what can go wrong does seem to be going wrong.

Fast inflation began to kick in early last year, and economists initially predicted that it would fade by the end of 2021 as the economy reopened from the pandemic and conditions returned to normal.

Instead, turmoil in supply chains collided with strong consumer demand for goods, and price gains accelerated. Now, how quickly and how much prices will moderate in 2022 are increasingly uncertain as the war in Ukraine threatens to keep shipping routes tangled and key parts scarce. Ukraine is an important producer of neon, which could keep computer chips in short supply, perpetuating the shortages that have plagued automakers. Higher energy costs could ricochet through other industries.

Article source: https://www.nytimes.com/2022/03/10/business/economy/cpi-inflation-february-2022.html

“Starbucks is also using policies that have not previously been enforced, and policies that would not have resulted in termination, as a pretext for firing union leaders,” the union said in a statement, adding that it was confident that the fired workers would be reinstated.

Last week, the union filed about 20 unfair labor practice charges, many of which accused Starbucks of singling out union supporters for harsher treatment.

Mr. Borges said in an email that “any claims of anti-union activity are categorically false.” He said the company was not systematically cutting hours, which typically fall in the slow winter months of January and February. Starbucks generally tries to honor workers’ preferences for lower availability, he added, but it was unable to at a Buffalo store where several employees had sought to cut their availability at once. He said a worker fired because of time and attendance issues had previously been cited for instances of tardiness.

Amy Zdravecky, a management-side lawyer at Barnes Thornburg, said it was hard to imagine the union losing momentum at this point except as a result of developments at the bargaining table — for example, if the union negotiated a contract that workers considered disappointing.

“Until employees see what, if anything, they’re going to get or not get in negotiations, the union has the advantage — they can go out and tell employees that we’ll do all these things for you,” Ms. Zdravecky said.

Starbucks workers in Buffalo filed in an initial round of petitions to hold union elections in late August, citing concerns like understaffing and workplace safety amid the pandemic, as well as a desire to have a greater say in how their stores are run.

The company soon dispatched out-of-town managers and officials to the city, including Starbucks’s president of retail for North America, whose presence union supporters have said they found intimidating and at times surreal.

Article source: https://www.nytimes.com/2022/03/09/business/economy/starbucks-union-vote-buffalo.html