“This is a big scientific finding,” said Martha J. Farah, a neuroscientist at the University of Pennsylvania, who conducted a review of the study for the Proceedings of the National Academies of Sciences, where it was published on Monday. “It’s proof that just giving the families more money, even a modest amount of more money, leads to better brain development.”

Another researcher, Charles A. Nelson III of Harvard, reacted more cautiously, noting the full effect of the payments — $333 a month — would not be clear until the children took cognitive tests. While the brain patterns documented in the study are often associated with higher cognitive skills, he said, that is not always the case.

“It’s potentially a groundbreaking study,” said Dr. Nelson, who served as a consultant to the study. “If I was a policymaker, I’d pay attention to this, but it would be premature of me to pass a bill that gives every family $300 a month.”

A temporary federal program of near-universal children’s subsidies — up to $300 a month per child through an expanded child tax credit — expired this month after Mr. Biden failed to unite Democrats behind a large social policy bill that would have extended it. Most Republicans oppose the monthly grants, citing the cost and warning that unconditional aid, which they describe as welfare, discourages parents from working.

Sharing some of those concerns, Senator Joe Manchin III, Democrat of West Virginia, effectively blocked the Biden plan, though he has suggested that he might support payments limited to families of modest means and those with jobs. The payments in the research project, called Baby’s First Years, were provided regardless of whether the parents worked.

Article source: https://www.nytimes.com/2022/01/24/us/politics/child-tax-credit-brain-function.html

Covid-related absences are creating headaches for businesses that were struggling to hire workers even before Omicron. Restaurants and retail stores have cut back hours. Broadway shows called off performances. Airlines canceled thousands of flights over the holidays because so many crew members called in sick; on one day last month, nearly a third of United Airlines workers at Newark Liberty International Airport, a major hub, called in sick.

At Designer Paws Salon, a pet grooming company with two locations in the Columbus, Ohio, area, business has been strong in recent months, thanks in part to a pandemic boom in pet ownership. But Misty Gieczys, the company’s founder and chief executive, has been struggling to fill 11 positions despite generous benefits and pay that can reach $95,000 a year in commissions and tips.

Omicron has only made things worse, she said. Since Christmas, she has received only three job applications, and just one applicant got back to her after she reached out. Then Ms. Gieczys, who has two young daughters, got Covid-19 herself for the second time, forcing her to stay home. That, on top of day care shutdowns because of the virus, has meant she has spent a significant amount of time away from work.

“If I wasn’t the owner, I think I would be fired, honestly,” she said.

But while the Omicron wave has contributed to businesses’ staffing woes, there is little sign so far that it has set back the job market recovery more generally. New filings for unemployment insurance have risen only modestly in recent weeks, suggesting that employers are holding on to their workers. Job postings on the career site Indeed have edged down only slightly from record highs.

“It’s a vast difference from 2020, where there were mass layoffs,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “Now employers are holding on to people because they expect to be in business in a month.”

The new variant could make inflation worse (or maybe better).

When the pandemic began in early 2020, it was a shock to both supply and demand, as companies and their customers pulled back in the face of the virus.

With each successive wave, however, the impact on demand has gotten smaller. Businesses and consumers learned to adapt. Federal aid helped prop up people’s income. And more recently, the availability of vaccines and improved treatment options have made many people comfortable resuming more normal activities.

Article source: https://www.nytimes.com/2022/01/24/business/economy/omicron-economy.html

It is the case that supply disruptions are leading to higher inflation in many places, including in large developing economies like India and Brazil and in developed ones like the euro area. Data released in the United Kingdom and in Canada on Wednesday showed prices accelerating at their fastest rate in 30 years in both countries. Inflation in the eurozone, which is measured differently from how the U.S. calculates it, climbed to an annual rate of 5 percent in December, according to an initial estimate by the European Union statistics office.

“The U.S. is hardly an island amidst this storm of supply disruptions and rising demand, especially for goods and commodities,” said Eswar Prasad, a professor of trade policy at Cornell University and a senior fellow at the Brookings Institution.

But some economists point out that even as inflation proves pervasive around the globe, it has been more pronounced in America than elsewhere.

“The United States has had much more inflation than almost any other advanced economy in the world,” said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster.

The difference, he said, comes because “the United States’ stimulus is in a category of its own.”

White House officials have argued that differences in “core” inflation — which excludes food and fuel — have been small between the United States and other major economies over the past six months. And the gaps all but disappear if you strip out car prices, which are up sharply and have a bigger impact in the United States, where consumers buy more automobiles. (Mr. Furman argued that people who didn’t buy cars would have spent their money on something else and that simply eliminating them from the U.S. consumption basket is not fair.)

Administration officials have also noted that the United States has seen a robust rebound in economic growth. The International Monetary Fund said in October that it expected U.S. output to climb by 6 percent in 2021 and 5.2 percent in 2022, compared with 5 percent growth last year in the euro area and 4.3 percent growth projected for this year.

“To the extent that we got more heat, we got a lot more growth for it,” said Jared Bernstein, a member of the White House Council of Economic Advisers.

Article source: https://www.nytimes.com/2022/01/22/business/economy/inflation-biden-pandemic.html

But the center of gravity for the global industry is still in East Asia. While the United States accounts for much cutting-edge research and design in the chip industry, it has gone from being the world’s largest producer of semiconductors several decades ago to mostly outsourcing production to Asian factories.

That has proved to be a vulnerability as pandemic-related shutdowns left companies around the world short of workers and raw materials, leading to shortages and spiraling prices for a variety of goods, especially semiconductors. Automakers in particular have been affected, with almost every major carmaker forced to curtail production last year.

Chip shortages have also become one of the largest single factors stoking inflation, now a key gripe among American voters as the midterm elections approach. Inflation hit a 40-year high in December, buoyed by a 37 percent increase in the price of used cars.

In an effort to ease the chip shortages, the Biden administration has convened gatherings with semiconductor executives, established a global alert system to identify shortages and requested vast amounts of information from chip companies on potential bottlenecks. The Commerce Department is expected to release some of that information publicly before the end of the month.

Gina Raimondo, the commerce secretary, said in a statement on Friday that Intel’s investment was a win for the company, for American manufacturing and for “American consumers who can look forward to lower prices as we bring home production of the semiconductors that keep our economy running.”

But analysts say the administration has little control over any short-term trends in the industry, given the long lead times necessary to build semiconductor facilities.

Mr. Neuffer said his industry applauded the attention the White House was giving to the sector, including encouraging companies to share more information. “But the reality is, there’s only so much government can do,” he said. “These are very complicated, deep global supply chains, and the market is just going to have to work through this.”

Catie Edmondson contributed reporting.

Article source: https://www.nytimes.com/2022/01/21/us/politics/biden-intel-semiconductors-china.html

What happens next comes from an established playbook. As William McChesney Martin, a former Fed chairman, said in 1955, the central bank finds itself acting as the adult in the room, “who has ordered the punch bowl removed just when the party was really warming up.”

The mood of the markets shifted on Jan. 5, Mr. Yardeni said, when Fed officials released the minutes of their December policymaking meeting, revealing that they were on the verge of embracing a much tighter monetary policy. A week later, new data showed inflation climbing to its highest level in 40 years.

Putting the two together, it seemed, the Fed would have no choice but to react to curb rapidly rising prices. Stocks began a disorderly decline.

Financial markets now expect the Fed to raise its key interest rate at least three times this year and to start to shrink its balance sheet as soon as this spring. It has reduced the level of its bond buying already. Fed policymakers will meet next week to decide on their next steps, and market strategists will be watching.

Low interest rates made certain sectors especially appealing, foremost among them tech stocks. The SP 500 information technology sector, which includes Apple and Microsoft, has risen 54 percent on an annualized basis since the market’s pandemic-induced trough in March 2020. One reason for this is that low interest rates amplify the value of the expected future returns of growth-oriented companies like these. If rates rise, this calculus can change abruptly.

The very prospect of higher interest rates has made technology the worst-performing sector in the SP 500 this year. Since its peak in late December, it has fallen more than 11 percent.

The SP’s three best-performing sectors in the early days of 2022, on the other hand, are energy, financial services and consumer staples.

Article source: https://www.nytimes.com/2022/01/21/business/economy/stock-markets-down-inflation.html

Legislation passed by the Senate with bipartisan support in June would provide $52 billion in subsidies for the chip industry, including grants to companies that build U.S. factories. The package has since become caught up in House bickering over the Biden administration’s priorities, though Mr. Gelsinger and others have said they are hopeful it will pass in the coming months.

In Europe, Mr. Gelsinger has also lobbied officials for a similar package of subsidies that could aid the construction of a big Intel factory there, with a projected price tag comparable to the U.S. expansion.

Ohio has not previously had a chip manufacturing presence. Moving to a state without existing chip factories presents challenges, such as obtaining permits and persuading suppliers of gases, chemicals and production machines to set up nearby offices, said Dan Hutcheson, an analyst at VLSI Research. On the other hand, having plants in more states provides lobbying leverage in Washington, he said.

Intel is not the only company expanding U.S. production. TSMC began construction last year on a $12 billion complex about 50 miles from Intel’s site near Phoenix. Samsung Electronics selected Taylor, Texas, for a $17 billion factory, with construction set to begin in 2022.

Mr. Gelsinger’s strategy is based partly on a bet that Intel can rival TSMC and Samsung in manufacturing chips to order for other companies. For most of its existence, Intel has built only the microprocessors and other chips it designs and sells itself.

The strategy is risky, as Intel has fallen behind its Asian rivals in packing more circuitry onto each slice of silicon, which increases the abilities of devices like smartphones and computers. Mr. Gelsinger has said Intel is on track to catch up over several years, but it won’t be easy, as those companies continue to make new developments of their own.

Intel “is catching up, but they have not caught up,” Mr. Hutcheson said.

Article source: https://www.nytimes.com/2022/01/21/technology/intel-chip-factories-ohio.html

Other, more worried commentators have drawn parallels between now and the 1970s, when the Fed was slow to raise rates as unemployment fell and prices rose — and inflation jumped out of control. But many economists have argued that important differences separate that period from this one: Workers were more heavily unionized and may have had more bargaining power to push for higher wages back then, and the Fed was slow to react for years on end. This time, it’s already gearing up to respond.

Why are price controls thought to be a highly disfavored response to inflation? — Jim Moher, San Leandro, Calif.

In the 1970s, President Richard Nixon tried wage and price controls — which put a cap on how much pay can rise — to control inflation. The freezes worked for a time, but prices rocketed up when they were lifted, and they got a bad rap among economists. That reputation has haunted them ever since. We asked experts about price controls in a recent article, and a vocal minority think that the 1970s experience unfairly tarnished the idea and that it might be worthwhile to reopen the debate.

“This is a great suppressed topic,” said James K. Galbraith, an economist at the University of Texas. “It was absolutely mainstream from the start of World War II until the Reagan administration.”

If inflation is being caused by supply chain problems, how will raising interest rates help? — Larry Harris, Ventura, Calif.

Kristin J. Forbes, an economist at the Massachusetts Institute of Technology, said a big part of today’s inflation ties to roiled supply chains, which monetary policy can’t do much to fix.

But trade is actually happening at elevated levels even amid the disruptions. Factories are producing, ships are shipping, and consumers are buying at a rapid clip. It is just that supply is not keeping up with that booming demand. Higher interest rates can relieve pressure on demand, making it more expensive to buy a boat or a car, cooling off the housing market and slowing business investment.

“A good part of the supply chain problems, you can’t do anything about,” Ms. Forbes said. “But you can affect demand. And it is the combination of the two which determines inflation.”

Article source: https://www.nytimes.com/2022/01/20/business/economy/inflation-questions-consumers.html

West Coast ports could see further disruptions this year as they renegotiate a labor contract for more than 22,000 dockworkers that expires on July 1. Previous negotiations led to work slowdowns and shipping delays.

“If you have four closed doors to get through and one of them opens up, that doesn’t necessarily mean quick passage,” said Phil Levy, the chief economist at Flexport. “We should not delude ourselves that if our ports become 10 percent more efficient, we’ve solved the whole problem.”

Chris Netram, the managing vice president for tax and domestic economic policy at the National Association of Manufacturers, which represents 14,000 companies, said that American businesses had seen a succession of supply chain problems since the beginning of the pandemic.

“Right now, we are at the tail end of one flavor of those challenges, the port snarls,” he said, adding that Chinese lockdowns could be “the next flavor of this.”

Manufacturers are watching carefully to see whether more factories and ports in China might be forced to shutter if Omicron spreads in the coming weeks.

Neither Xi’an nor Henan Province, the site of China’s most expansive lockdowns, has an economy heavily reliant on exports, although Xi’an does produce some semiconductors, including for Samsung and Micron Technology, as well as commercial aircraft components.

Handel Jones, the chief executive of International Business Strategies, a chip consultancy, said the impact on Samsung and Micron would be limited, but he expressed worries about the potential for broader lockdowns in cities like Tianjin or Shanghai.

Article source: https://www.nytimes.com/2022/01/16/business/economy/china-supply-chain-covid-lockdowns.html

Starbucks allows employees who work at least 20 hours a week to obtain health coverage, more generous than most competitors, and has said it will increase average pay for hourly employees to nearly $17 an hour by this summer, well above the industry norm. The company also offers to pay the tuition of employees admitted to pursue an online bachelor’s degree at Arizona State University, helping it attract workers with college aspirations.

Such people, in turn, tend to be sympathetic to unions and a variety of social activism. A recent Gallup poll found that people under 35 or who are liberal are substantially more likely than others to support unions.

Several Starbucks workers seeking to organize unions in Buffalo; Boston; Chicago; Seattle; Knoxville, Tenn.; Tallahassee, Fla.; and the Denver area appeared to fit this profile, saying they were either strong supporters of Mr. Sanders and other progressive politicians, had attended college or both. Most were under 30.

“I’ve been involved in political organizing, the Bernie Sanders campaign,” said Brick Zurek, a leader of a union campaign at a Starbucks in Chicago. “That gave me a lot of skill.” Mx. Zurek, who uses gender-neutral courtesy titles and pronouns, also said they had a bachelor’s degree.

Len Harris, who has helped lead a campaign at a Starbucks near Denver, said that “I admire the progressivism, the sense of community” of politicians like Mr. Sanders and Representative Alexandria Ocasio-Cortez, Democrat of New York. She said that she had graduated from college and that she was awaiting admissions decisions for graduate school.

And most union supporters have drawn inspiration from their colleagues in Buffalo. Sydney Durkin and Rachel Ybarra, who are helping to organize a Starbucks in Seattle, said workers at their store discussed the Buffalo campaign almost daily as it unfolded and that one reached out to the union after the National Labor Relations Board announced the initial results of the Buffalo elections in December. (The union’s second victory was announced Monday, after the labor board resolved ballot challenges.)

Ms. Ybarra said the victory showed workers it was possible to unionize despite company opposition. “The Buffalo folks became superheroes,” she said. “A lot of us spent so much time being afraid of retaliation — none of us could afford to lose our jobs, have our hours cut.”

Article source: https://www.nytimes.com/2022/01/14/business/economy/starbucks-union.html

A review of the surcharges last month by the fund’s executive directors ended without any agreement to halt the charges. An I.M.F. statement explained that while “some directors were open to exploring temporary surcharge relief” to free up resources to deal with the pandemic, most others preferred a comprehensive review later on in the context of the fund’s “overall financial outlook.”

Strapped countries that are subject to the surcharges like Argentina balked earlier at the extra payments, but their campaign has picked up momentum with the spread of Covid-19.

“I think the pandemic makes a big difference,” said Martín Guzmán, Argentina’s minister of economy.

He argues that the pandemic has turned what may have once been considered unusual circumstances into the commonplace, given the enormous debt that many countries have taken on to meet its rising costs. Government debt in emerging countries has hit its highest level in a half a century.

The number of nations subject to surcharges increased to 21 last year from 15 in 2020, according to the I.M.F. Pakistan, Egypt, Ukraine, Georgia, Albania, Tunisia and Ecuador are among those paying.

Argentina, which has long had a contentious and bitter relationship with the fund relating to a series of bailouts and defaults that date back decades, has been a leading opponent of the surcharges.

The country is trying to work out a new repayment schedule for $45 billion that the previous government borrowed as part of a 2018 loan package. By the end of 2024, the government estimates, it will have run up a tab of more than $5 billion in surcharges alone. This year, 70 percent of Argentina’s nearly $1.6 billion bill from the I.M.F. is for surcharges.

Article source: https://www.nytimes.com/2022/01/14/business/economy/imf-surcharges.html