Burned-Out Boomers

This may also have been the year that “OK, Boomer” ceded the floor to “You OK, Boomer?”

A recent Federal Reserve survey of business contacts found that several “noted that baby boomers were leaving jobs and selling businesses to retire early — a trend that was due (1957 marked the peak year for births among baby boomers; those babies turn 65 next year) but has accelerated because of pandemic burnout.”

That shows up in the data. People over the age of 45 have been slower to return to the job market since the start of the pandemic. That group includes members of Generation X, which ranges in age from 41 to 56, and baby boomers, who are roughly 57 to 75. It’s not clear if the apparent rush toward early retirement is going to stick: People may go back once the health scare of the pandemic is behind us, or if stocks return to less buoyant valuations, reducing the value of retirement portfolios.

What happens next with the middle-age-and-up work force will be pivotal to the future of the labor market. If older workers stay out, America’s labor force participation rate — and the pool of workers available to employers — may remain depressed compared with levels that prevailed before the pandemic. That will be bad news for employers, who are increasingly desperate to hire.

Generational Warfare, Skinny Jean Edition

Don’t shed all of your tears for the baby boomers, because millennials also had a tough time in 2021. They divided the year between reminding the internet that they are graying, keeping Botox boutiques in business, and feeling aghast as Generation Z, their successors, accused them of being old. A generation that made the poorly informed decision to recycle the low-rise trend also had the gall to claim that side parts make people look aged and skinny jeans are out.

Whether their elders are ready for it or not, the reality is that Gen Z, the group born from 1997 to 2012, began to enter adulthood and the labor market in full force during the pandemic. It is a comparatively small generation, but its members could shake things up. They are fully digital natives and have different attitudes toward, and expectations of, work life from those of their older counterparts.

If office workers ever actually meet their new colleagues, things could get interesting.

Everyone Hates ‘Hard Pants’

Speaking of the office, this year put the initials “R.T.O.” firmly into the professional lexicon. Return-to-office planning was repeatedly upended by rolling waves of infection, but that didn’t stop cries of outrage. Many professionals began to question the utility of high heels and slacks — known derisively as “hard pants” — as opposed to their far more beloved and couch-friendly “soft pant” alternative.

Whether the future of work-wear will involve more elastic waistbands remains an open question, but it is increasingly clear that America is unlikely to return to many of its old workday habits. Surveys of workers suggest that many did not miss the office, and employers are increasingly turning to hybrid work models and location flexibility, in part to avoid fueling further resignations.

Article source: https://www.nytimes.com/2021/12/29/business/economy/us-economic-trends-2021.html

Xinjiang’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration, which is counting on solar power to help the United States reach its goal of significantly cutting carbon emissions by the end of the decade.

In meetings this year, Biden administration officials weighed how difficult it would be for importers to bypass Xinjiang and relocate supply chains for solar goods and other products, according to three government officials. Officials from the Labor Department and the United States Trade Representative were more sympathetic to a far-reaching ban on Xinjiang goods, according to three people familiar with the discussions. Some officials in charge of climate, energy and the economy argued against a sweeping ban, saying it would wreak havoc on supply chains or compromise the fight against climate change, those people said.

Ana Hinojosa, who was the executive director of Customs and Border Protection and led the government’s enforcement of forced labor provisions until she left the post in October, said that agencies responsible for “competing priorities” like climate change had voiced concerns about the legislation’s impact. Companies and various government agencies became nervous that the law’s broad authorities could prove “devastating to the U.S. economy,” she said.

“The need to improve our clean energy is real and important, but not something that the government or the U.S. should do on the backs of people who are working under conditions of modern-day slavery,” Ms. Hinojosa added.

In a call with Speaker Nancy Pelosi of California this year, Mr. Kerry conveyed concerns about disrupting solar supply chains while Ms. Sherman shared her concerns with Senator Jeff Merkley, Democrat of Oregon, according to people familiar with the conversations.

Mr. Merkley, one of the lead sponsors of the bill, said in an interview that Ms. Sherman told him she was concerned the legislation was not duly “targeted and deliberative.” The conversation was first reported by The Washington Post.

“I think this is a targeted and deliberative approach,” Mr. Merkley said. “And I think the administration is starting to see how strongly Republicans and Democrats in both chambers feel about this.”

Article source: https://www.nytimes.com/2021/12/23/us/politics/china-uyghurs-forced-labor.html

The inflation data released on Thursday came alongside data on incomes and spending that showed that consumers saved less in November and that their consumption barely budged after adjusting for inflation, which could simply be a sign that consumers did their holiday shopping early amid supply chain snarls. Should slower spending last, weaker demand could eventually weigh down price increases. But the United States could end up in an unpleasant situation in which growth is less robust while inflation is still high.

“Consumers are able to purchase less because prices are rising, and that is starting to put the brakes on real spending growth,” said Andrew Hunter, senior U.S. economist at Capital Economics. That could eventually push down prices, he said, but “inflation is likely to remain certainly higher than the Fed wants for a while.”

The fresh inflation reading is further evidence of the pop in prices that a more timely and related measure — the Consumer Price Index — had previously shown.

In doing so, it keeps pressure on officials at the Fed, who are tasked with keeping inflation moderate and setting the stage for full employment, and who have grown increasingly worried about the surge in prices. They pivoted on policy this month, speeding up their plans to cut back on economic support and preparing to raise interest rates early next year if necessary. Higher interest rates can weaken down demand for everything from homes to cars, helping to slow down the economy and restrain inflation.

The big question for officials at the central bank — and in the Biden administration — is what will come next. With the Omicron variant of the coronavirus surging around the world, it is unlikely that tangled supply chains will return to normal quickly. At the same time, rising housing costs could keep inflation high even as some of the most painful trends of 2021, including a surge in used-car prices tied to a computer chip shortage, moderate.

Article source: https://www.nytimes.com/2021/12/23/business/economy/inflation-pce-index-fed.html

Looking Upwards, like many similar organizations across the country, receives most of its funding through state contracts that pay a fixed reimbursement rate for the services they provide. In many states, including Rhode Island, funding levels had been failing to keep up with rising costs even before the pandemic.

But the recent acceleration in wage growth, particularly in low-paying industries, has left them hopelessly behind the curve. At Looking Upwards, pay starts at $15.75 an hour for jobs that can be physically taxing and emotionally draining; the Wendy’s down the street is offering $17 an hour for some positions.

“We used to compete with hospitals and other health care entities, and now we’re competing with the convenience stores, the fast food places, the coffee shops,” Ms. Miranda said. “I’ve heard more and more people say, ‘I’d love to stay in this job, I’m passionate about the work, but I need to feed my family, I have to pay my rent.’”

When Steffy Molina graduated from college in 2017, she wanted a job where she could make a difference in the lives of people like her, an immigrant who spoke no English when she came to the United States at age 17. She moved to Providence, where she found a job with Family Service of Rhode Island, helping to arrange health care, nutrition support and other services for families with young children.

Ms. Molina, now 27, found the work rewarding. But at $16 an hour, it was hard to make ends meet. Even after earning a master’s degree, she saw little path toward a livable wage.

Article source: https://www.nytimes.com/2021/12/23/business/economy/nonprofit-jobs-wages.html

“We are committed to supporting the people of Afghanistan,” Wally Adeyemo, the deputy Treasury secretary, said in a statement.

The department’s general licenses allow financial transactions involving the Taliban and members of the Haqqani network, who share power in the new Afghan government, as long as the money is used for purposes such as projects to meet basic human needs, civil society development, environmental and natural resource protection and similar efforts. The United States considers both groups terrorist organizations.

The Treasury move expands the type of relief activity that can take place in Afghanistan and broadens the level of contact that international groups can have with the Taliban. It also allows the Taliban to collect taxes related to that assistance.

Alex Zerden, the Treasury Department’s financial attaché at the U.S. Embassy in Kabul from 2018 to 2019, called the move “absolutely a step in the right direction,” saying it addressed requests for clarity from private sector and nongovernmental organizations about how to operate in Afghanistan without violating U.S. sanctions and providing the Taliban with illegal revenue.

But many close observers said far more remained to be done.

“We need a bigger humanitarian response, but without a functioning economy and banking system, we are facing terrible odds,” David Miliband, the president and chief executive of the International Rescue Committee, wrote on Twitter. “Need massive economic stabilization package to stop the rip current.”

The United States provided Afghanistan with $3.95 billion in foreign aid last year, about two-thirds of which was security assistance for the former government’s fight against the Taliban. U.S. humanitarian aid for the country and for Afghan refugees in the region has totaled nearly $474 million so far this year.

“We’re very conscious of the fact that there is an incredibly difficult humanitarian situation right now, one that could get worse as winter sets in,” Secretary of State Antony J. Blinken said in a news conference on Tuesday.

Article source: https://www.nytimes.com/2021/12/22/us/politics/afghanistan-sanctions-aid-taliban.html

The jobless rate has fallen to 4.2 percent, and Fed officials expect it to drop to 3.5 percent next year. That would match the rate that prevailed before the pandemic, and would be a marked improvement from a pandemic high of 14.8 percent in April 2020. Black unemployment is dropping swiftly, too.

“The economy has been making rapid progress toward maximum employment,” Jerome H. Powell, the Fed chair, said during a news conference this month.

Yet that unemployment rate tells just part of the story, because it counts only people who are actively applying for jobs. The share of people in their prime employment ages, between 25 and 54, who are either working or looking for work has dropped notably, and is only starting to recover.

Ms. Daly said she was thinking about the Fed’s full employment target in terms of what is achievable in the short term, as the coronavirus keeps many workers at home, and in the longer term, when more employees may be able to return because the virus is more under control.

“There’s the labor market we can get eventually, after Covid,” she said. “And there’s the labor market that we have to deal with today.”

For now, job openings far exceed the number of people applying for positions, and wages are climbing briskly, two signs that suggest that workers are — at least temporarily — scarce.

It may be the case that “in the short run, this is all the workers we have,” Ms. Daly said. “But in the long run, we expect more workers to come.”

Article source: https://www.nytimes.com/2021/12/21/business/economy/mary-daly-federal-reserve-inflation.html

Today’s inflationary surge stems from a confluence of factors, many of them related to the pandemic. The coronavirus has caused factories to shutter and clogged ports, disrupting the supply of goods that Americans stuck at home have wanted to buy, like electronics, televisions and home furnishings.

That high demand has been fueled in part by consumers who are flush with cash after months of lockdown and repeated government payments, including stimulus checks. Research from the Federal Reserve has shown that inflation is most likely getting a temporary increase from the coronavirus relief package in March, which included $1,400 direct checks to families and generous unemployment benefits. But Mr. Biden’s social policy bill would do relatively little to spur increased consumer spending next year and not enough to offset the loss of government stimulus to the economy as pandemic aid expires.

White House aides have tried to make that case to Mr. Manchin — and the public — in recent weeks, pointing to a series of analyses that have dismissed inflationary fears pegged to the bill. That includes analysis from a pair of Democratic economists who warned about rising inflation earlier this year — Harvard’s Lawrence H. Summers and Jason Furman — and from the nonpartisan Penn Wharton Budget Model at the University of Pennsylvania. All of those analyses conclude that the bill would add little or nothing to inflation in the coming year.

The disconnect between economic reality and Mr. Manchin’s stated concerns has exasperated the White House, which is struggling with voter discontent toward Mr. Biden over rising prices, as well as an unyielding pandemic.

In a scathing statement about Mr. Manchin on Sunday, the White House press secretary, Jen Psaki, noted that the Penn Wharton analysis found Mr. Biden’s bill “will have virtually no impact on inflation in the short term, and in the long run, the policies it includes will ease inflationary pressures.”

White House officials, who along with party leaders have spent weeks trying to bring Mr. Manchin to a place of comfort with Mr. Biden’s bill, registered a sense of betrayal after the senator’s declaration.

Ms. Psaki said Mr. Manchin had last week personally submitted to the president an outline for a bill “that was the same size and scope as the president’s framework, and covered many of the same priorities.” He had also promised to continue discussions toward an agreement, she said.

Article source: https://www.nytimes.com/2021/12/19/us/politics/biden-agenda-ambitions.html

As a designer who specializes in residential structures, Luis Martinez has lived this at home, and has now made it his career. His design business, Studioo15, has surged over the past two years as residents across Los Angeles have used the new state laws to add thousands of backyard units. Yet about half of his clients, he said, are people like his parents who want to have existing units legalized.

Bernardo and Tomasa Martinez, both in their early 60s, immigrated to Los Angeles from Mexico in 1989. Working in the low-wage service sector — she was a waitress; he worked as a laborer loading a truck — they settled in a two-bedroom house in South Los Angeles that had four families and 16 people. Luis Martinez, who crossed the border as a child, was surrounded by love and family, in a house where money was tight and privacy nonexistent.

Eventually the family was able to buy a small three-bedroom in Boyle Heights, on the east side of Los Angeles. It sits on a block of fading homes that have chain link fences in the front and a detached garage out back. To supplement the family income, the Martinezes converted the garage into a rental unit without a permit. Bernardo Martinez and a group of local handymen raised the floor and installed plumbing that fed into the main house, while Luis helped with painting.

Luis remembers that nobody complained, probably because the neighbors were doing the same thing. “It was normal,” he said, “like, ‘I live in the garage’ and some garages were nicer than others.”

Mr. Martinez went to East Los Angeles College after high school, then transferred to the University of California, Berkeley, where he got an architecture degree in 2005. In the years after graduation, when the Great Recession struck, his father lost his job and, after a spell of unemployment, took a minimum wage job mowing the lawn at a golf course. To help with bills, they rented the garage unit to Bernardo Martinez’s brother for $500 a month. “With the minimum wage, you can’t afford to pay a mortgage and food for everybody,” Tomasa Martinez said.

‘Home Sweet Legal Home’

The point of informal housing is that it’s hard to see — it is built to elude zoning authorities or anyone else who might notice from the street.

Jake Wegmann, a professor of urban planning at the University of Texas at Austin, describes this as “horizontal density,” by which he means additions that make use of driveways and yard space, instead of going up a second or third floor. Because both the tenants and owners of these units don’t want to be discovered, there is essentially no advocacy on behalf of illegal housing dwellers, even though the number of tenants easily goes into the millions nationwide.

Article source: https://www.nytimes.com/2021/12/18/business/economy/california-housing.html

The trajectory of the global economy is also a concern, as lockdowns and downturns in other countries could spill over into the U.S. financial system. Regulators pointed specifically to the prospect of a “hard landing” in China as a potential worry and noted that the Chinese real estate sector is “heavily leveraged.” A slowdown in the real estate market there could hurt global commodity markets because China is such a major consumer of steel, copper and iron ore.

The report also highlighted the fact that the pandemic has ushered in changes to the economy that remain hard to grasp.

The F.S.O.C. is closely watching the commercial real estate sector, for instance, out of concern that the rise of teleworking could permanently shift demand away from office space in cities. If this shift leads to a rapid drop in valuations at some point, it could deal a blow to small and midsize banks that hold property loans and destabilize the financial system.

Corporate credit also remains a concern, with leverage at non-financial corporations elevated compared with historical levels. Regulators are watching the airline, hospitality and restaurant industries, which have been hit hard by the pandemic, and warned that a wave of defaults or downgrades could be difficult for the financial sector to absorb.

The financial system is also facing an array of new threats.

Digital assets, known as stablecoins, are another potential source of vulnerability, regulators said, adding that more coordinated oversight is needed because the sector is evolving so quickly. They said that the value of digital assets remained highly volatile and that they could be subject to “the risk of operational failures, fraud, and market manipulation.”

The new technology could pose risks to the broader financial system if investors in digital currencies are suddenly unable to cash them in. The regulators also said that stablecoins could pose risks related to cybersecurity and illicit finance.

The F.S.O.C. does not have rule-writing power but it can prod regulators into addressing market vulnerabilities, and it has the power to designate certain entities or activities as “systemic” and in need of stricter oversight.

Article source: https://www.nytimes.com/2021/12/17/us/politics/climate-change-us-financial-threat.html

Ending the Fed’s bond purchases sooner would give the central bank room to react to a wider range of economic outcomes next year, Mr. Powell said.

“The data is pretty glaring,” Mr. Turner of UBS said of recent statistics on inflation and employment. “There’s only so much caution you can get away with,” before central banks need to take action, he said.

Omicron has created uncertainty in the face of a strong recovery, Christine Lagarde, the president of the European Central Bank said on Thursday after she outlined how the bank would end its largest pandemic-era stimulus measure.

Vaccine-makers are still testing their shots against Omicron and medical officials are encouraging restraint when it comes to socializing rather than implementing new lockdowns, but central bankers are marching ahead because time isn’t on their side. The effect of monetary policy decisions on the wider economy isn’t immediate.

The Bank of England is forecasting that inflation will peak at 6 percent in April, three times the central bank’s target. Within such a short time frame, there is little policymakers can do to stop that from happening, but they can try to signal to businesses and unions setting wages that they will act to stop higher inflation from becoming entrenched, said Paul Mortimer-Lee, the deputy director of the National Institute of Economic and Social Research in London. This may prevent higher prices from spilling over into significantly higher wages, which could cause businesses to raise prices even more.

While all three central banks are facing similar problems with high inflation and are keeping watch over wage negotiations, their future challenges are different.

The Federal Reserve and Bank of England are worried about the persistence of high inflation. For the European Central Bank, inflation in the medium term is too low, not too high. It is still forecasting inflation to be below its 2 percent target in 2023 and 2024. To help reach that target in coming years, the central bank will increase the size of an older bond-buying program beginning in April, after purchases end in the larger, pandemic-era program. This is to avoid “a brutal transition,” Ms. Lagarde said.

Article source: https://www.nytimes.com/2021/12/16/business/economy/omicron-inflation.html