“That is a pretty monumental improvement,” she added.

The bill springs from an agreement between Senator Chuck Schumer of New York, the majority leader, and Senator Joe Manchin III of West Virginia, a key centrist Democrat. President Biden blessed it last week, and it carries what remains of what was once his $4 trillion domestic agenda.

Its centerpiece is a package of measures meant to fight climate change by encouraging transitions to lower-emission sources of energy, along with expanded health insurance subsidies and a move to reduce prescription drug costs for seniors by allowing Medicare to negotiate the prices.

Over a decade, the centerpiece provisions of the deal include about $68 billion in net tax increases, according to the Joint Committee’s modeling. The bill would impose a new 15 percent minimum tax on corporations that report a profit to shareholders but use deductions, credits and other preferential tax treatments to reduce their effective tax rate well below the statutory 21 percent. It would also narrow the benefits of the so-called carried interest tax provision, which largely benefits high earners who work in private equity and other parts of the financial industry.

The Joint Committee estimates those provisions would raise about $326 billion over a decade in new tax revenue. That’s a tax increase on companies that take advantage of current tax law, even though Democrats like Mr. Manchin and Mr. Schumer insist that it is not.

Much of that increase would be offset, overall, by tax credits for clean-energy initiatives such as electric vehicle purchases, renewable electricity generation and other carrots meant to reduce the fossil fuel emissions driving climate change. That would amount to tax cuts for some people, companies and electric utilities.

Since the deal was announced, Republicans have attacked it as classic tax and spending — the same terms they have used to deride much of Mr. Biden’s agenda. Last weekend, Republican senators released a companion analysis from the Joint Committee that they said was proof the entire bill would raise taxes on the middle class, though it did not actually show middle-class Americans would pay more taxes under the plan.

Article source: https://www.nytimes.com/2022/08/02/us/politics/biden-climate-tax-bill-cost.html

“It’s unprecedented,” said Chuck Johnston, a former Walmart executive, who is now chief strategy officer at goTRG, a firm which helps retailers manage returns. “I have never seen the pressure in terms of excess inventory as I am seeing right now.”

So, much of the industry’s flotsam and jetsam washes up in warehouses like this one, located off Interstate 81, a few exits from the President Biden Expressway in Scranton, the president’s hometown.

The giant facility is part of an industrial park that was built above a reclaimed strip mine dating back to when this region was a major coal producer. Today, the local economy is home to dozens of e-commerce warehouses that cover the hilly landscape like giant spaceships, funneling goods to the population centers in and around New York and Philadelphia.

Liquidity Services, a publicly traded company founded in 1999, decided to open its new facility as close as it could to the Scranton area’s major e-commerce warehouses, making it easy for retailers to dispense with their unwanted and returned items.

Even before the inventory glut appeared this spring, returns had been a major problem for retailers. The huge surge in e-commerce sales during the pandemic — increasing more than 40 percent in 2020 from the previous year — has only added to it.

The National Retail Federation and Appriss Retail calculate that more than 10 percent of returns last year involved fraud, including people wearing clothing and then sending it back or stealing goods from stores and returning them with fake receipts. But more fundamentally, industry analysts say the increasing returns reflect consumer expectations that everything can be taken back.

Article source: https://www.nytimes.com/2022/07/30/business/retail-returns-liquidation.html

Yet that transition has happened only slowly. Spending on services rose in June, but so did spending on goods, even adjusted for inflation. Spending on cars and car parts rose 2.5 percent in June after falling in May.

“We had this narrative going into the year that consumption would shift from goods to services, but consumers continued to spend” on goods, said Blerina Uruci, an economist at T. Rowe Price.

Still, incomes rose more slowly than prices in June, and consumers compensated by saving at the lowest rate since 2009 — a trend that won’t be sustainable in the long run. And there are other reasons to think that both price growth and spending may soon crack.

Airfares have been declining this month, economists said, which should take some pressure off inflation in July, and the broader economy shows some signs of cooling. Used cars, which have been in short supply for more than a year and a big factor in inflation, are finally returning to some car sales lots as demand for pre-owned vehicles wanes.

“In our bifurcated economy, used-vehicle buyers are more likely to be more negatively impacted by higher prices for energy, food and rent,” Jonathan Smoke, chief economist at Cox Automotive, wrote in a research note this week.

Large retailers including Walmart have noted that consumers are buying fewer goods as they pay more for food and find their budgets strained.

Article source: https://www.nytimes.com/2022/07/29/business/economy/fed-inflation-wage-growth.html

Jerome H. Powell, the Fed chairman, acknowledged that the path to avoiding a downturn was “narrowing,” in part because of global forces, including the war in Ukraine and strict pandemic policies in China, that are beyond the central bank’s control.

“When you’re skating on thin ice, you wonder about what it would take to push you through, and we’re on thin ice right now,” said Diane Swonk, the chief economist for KPMG.

Matthew Martin, 32, is paying more for the butter and eggs that go into the intricately decorated sugar cookies he sells as part of a home business. At the same time, his sales are falling.

“I guess people don’t have as much money to toss at cookies right now,” he said.

Mr. Martin, a single father of two, is trying to cut back on spending, but it isn’t easy. He has replaced trips to the movies with day hikes, but that means spending more on gas. He is hoping to sell his house and move into a less expensive place, but finding a house he can afford to buy has proved difficult, especially as mortgage rates have risen. He has thought about finding a conventional 9-to-5 job to pay the bills, but he would then need to pay for child care for his 4-year-old twins.

“Honestly, I’m not 100 percent sure what I’m going to do,” he said.

Article source: https://www.nytimes.com/2022/07/28/business/economy/gdp-q2-economy.html

While Mr. An said he is concerned about the economic slowdown, he remains optimistic that the market for health products in China, and a familiarity with ginseng — an aromatic root said to have health benefits — will continue to benefit sales. To hedge his bets, though, he is also seeking regulatory approval to sell in Europe.

That is a far cry from the unbridled optimism of the past.

In 2016, when China was its fastest growing and most profitable market, Kasper Rorsted, the chief executive at Adidas, declared that the country was “the star of the company.” Adidas invested aggressively to expand its foothold. It went from 9,000 stores in China in 2015 to its current 12,000, though only 500 are operated by Adidas. Then the music stopped.

After initially projecting that sales in China would accelerate this year, Adidas ratcheted down expectations in May as Covid lockdowns continued to spread. The company said it now expects China revenue to “decline significantly” and that a sudden rebound is unlikely.

For now, Adidas remains undeterred. Mr. Rorsted said on a call with analysts that the company is not planning to slash costs or pull back from the country. Instead, it will “do whatever we can to double down and accelerate the growth.”

Many foreign companies had bet on the rise of a Chinese middle class as a dependable source of that growth. Bain Company, a consulting firm, said it expects China to be the world’s largest luxury market by 2025, fueled in part by what Federica Levato, a senior partner, said is still “a big wave” of a rising middle class.

Article source: https://www.nytimes.com/2022/07/28/business/economy/china-foreign-business-economy-covid.html

“We might do another unusually large rate increase,” Mr. Powell said on Wednesday. “But that is not a decision we have made at all.”

Mr. Powell said the likely path of interest rates that the Fed outlined earlier this year — in which rates rise to about 3.5 percent this year — remains reasonable. The Fed will likely lift borrowing costs to “at least a moderately restrictive level,” at which they are more actively weighing down the economy, he said.

But the mere recognition that growth is cracking and that rate increases will eventually slacken was enough to appease investors. The SP 500 stock index ended the day up 2.6 percent, and the Nasdaq Composite posted its best day since April 2020. Markets can quickly change their tune, though. The last two times the Fed has raised rates, the SP 500 has rallied on the day of the announcement, only to fall the day after.

“At some point it will be appropriate to slow down,” Mr. Powell said. “We are going to be guided by the data.”

For now, the data — at least when it comes to inflation — remain worrying.

Consumer prices climbed by 9.1 percent in the year through June, with costs picking up quickly across an array of goods and services, from food and fuel to rent and dry cleaning.

The Fed will receive a new reading of its preferred inflation measure, the Personal Consumption Expenditures index, on Friday. That report is likely to confirm the signal sent by the more timely Consumer Price Index: Inflation was extremely rapid in June, rising at the fastest pace in decades.

Article source: https://www.nytimes.com/2022/07/27/business/economy/fed-interest-rate-inflation.html

America’s central bank has for decades been what Paul Volcker, its chair in the 1980s, called “the only game in town” when it comes to fighting inflation. While there are things that elected leaders can do to combat rising prices — raising taxes to curb consumption, spending more on education and infrastructure to improve productivity, helping flailing industries — those targeted policies tend to take time. The things that elected policymakers can do quickly generally help mainly around the edges.

But time is of the essence when it comes to controlling inflation. If price increases run fast for months or years on end, people begin to adjust their lives accordingly. Workers might ask for higher wages, pushing up labor costs and prompting businesses to charge more. Companies might begin to believe that consumers will accept price increases, making them less vigilant about avoiding them.

By making money more expensive to borrow, the Fed’s rate moves work relatively quickly to temper demand. As buying a house or a car or expanding a business becomes pricier, people pull back from doing those things. With fewer consumers and companies competing for the available supply of goods and services, price gains are able to moderate.

Unfortunately, that process could come at a hefty cost at a moment like this one. Bringing the economy into balance when supply is constrained — cars are hard to find because of semiconductor shortages, furniture is on back order, and jobs are more plentiful than laborers — could require a big decline in demand. Slowing the economy down that meaningfully could tip off a recession, leaving workers unemployed and families with lower incomes.

Article source: https://www.nytimes.com/2022/07/27/business/economy/interest-rate-inflation-impact.html

In October, the Treasury Department warned that cryptocurrencies “potentially reduce the efficacy of American sanctions.” It released a 30-page compliance manual that recommended cryptocurrency companies use geolocation tools to weed out customers in restricted regions.

“The fact that crypto can move without a bank or intermediary means that exchanges are responsible for certain types of financial regulatory compliance,” said Hailey Lennon, a lawyer at Anderson Kill who handles regulatory issues in crypto.

Kraken and the issue of sanctions surfaced in a November 2019 lawsuit by a former employee from the finance department, Nathan Peter Runyon, who accused the start-up of generating revenue from accounts in countries that were under sanctions. He said he had taken the matter to Kraken’s chief financial officer and top compliance official in early 2019, according to legal filings. (The suit was settled last year.)

That same year, O.F.A.C. began investigating Kraken, focusing on the company’s accounts in Iran, the people familiar with the investigation said. Kraken’s customers have also opened accounts in Syria and Cuba, two other countries under U.S. sanctions, the people said.

In 2020, O.F.A.C. fined BitGo, a digital wallet service with an office in Palo Alto, Calif., more than $98,000 in 2020 for 183 apparent sanctions violations. Last year, it fined BitPay, an Atlanta-based crypto payment processor, more than $500,000 for 2,102 apparent violations. Coinbase also disclosed in a 2021 financial filing that it had sent notices to O.F.A.C. flagging transactions that may have violated sanctions, though the agency hasn’t taken any enforcement action.

Mr. Powell co-founded Kraken in 2011 and was an early proponent of Bitcoin, a digital currency that was marketed as being free of any government’s influence or regulation.

Article source: https://www.nytimes.com/2022/07/26/technology/kraken-crypto-iran.html

Operations that arose from the pandemic had advantages: no business practices to upend, or legacy costs like office leases to carry. Many businesses were built around remote operating environments and sanitary precautions. But they weren’t any more ready than existing businesses for soaring inflation and rising interest rates. And, unlike established enterprises, they didn’t have access to most relief programs offered by the federal government.

Irina Sirotkina sold her stake in a construction company early in the pandemic, when contracts for new hotels and office buildings dried up. She used that money to open a bakery in October in Battle Ground, Wash. Although orders for her cakes and pies have been pouring in, customers have resisted even the smallest price increases. The costs of her main ingredients — eggs, butter, milk and flour — have climbed 13 to 49 percent since she first fired up the ovens. So far, profits have been elusive, would-be customers are cutting down on car trips into town and there’s no new Paycheck Protection Program in sight.

“We’ve used all our resources to make it, because we didn’t qualify the first, second or third round” of that program, Ms. Sirotkina said. “But how far are we going to have to make it before we get help?”

New businesses and those run by people of color have particular difficulty obtaining bank loans, so they’re often driven to online lenders that charge steep interest rates for short-term financing. Last year, hoping to ease access to credit, Congress allocated $10 billion to be funneled through lenders with the express purpose of reaching underserved entrepreneurs; the money is still trickling out.

Nevertheless, signs of weakness are appearing. Gusto, a payroll and benefits provider that serves 200,000 small businesses, has seen an uptick in layoffs among its users. That’s significant, said the company’s economist, Luke Pardue, because smaller employers are typically loath to let people go.

“For a small business, 10 percent of its work force might be its H.R. department,” Dr. Pardue said. “Every employee really does have some specialized importance that might not be present in a larger company, so every swing you might see is more meaningful.”

Article source: https://www.nytimes.com/2022/07/26/business/economy/small-business-recession.html

Consumer spending, for example, grew at a solid 1.8 percent annual rate in the first quarter, adjusted for inflation, and most forecasters believe it grew in the second quarter, too, albeit more slowly. Job growth has remained robust. Other measures, such as industrial production and inflation-adjusted income, have stalled in recent months, but haven’t fallen significantly.

Those indicators are backward-looking, however. To assess conditions in real time, forecasters typically look at other measures that have historically been better at showing the economy’s direction. The pandemic has made that more difficult, however, by scrambling typical patterns in spending and investment.

“It’s harder than usual to read the economy because we’re still in such an odd period,” said Karen Dynan, a Harvard economist and former Treasury Department official under President Barack Obama. “We’re seeing this post-Covid reorganization of the economy in addition to the loss of momentum, so the signals aren’t clean.”

Ms. Dynan said auto sales, for example, were usually a reliable signal of a slowing economy, because cars were a major purchase that consumers could put off if they were worried about losing their jobs. But supply-chain disruptions have depressed auto sales during the pandemic, making the data hard to interpret. If sales pick up in coming months, for example, does that suggest rising consumer confidence — or simply better availability of cars?

Still, forecasters say there are some numbers they will be watching closely — most important, the job market. Recessions, almost by definition, result in lost jobs and increased unemployment. And increases in unemployment, even fairly small ones, nearly always signal a recession.

The number of unfilled job openings has fallen a bit from record highs at the end of last year, according to data from the career site Indeed. Filings for unemployment insurance, an indicator of layoffs, have risen a bit in recent weeks. If those trends continue, a recession will seem more likely, said Aneta Markowska, chief financial economist for Jefferies, an investment bank.

Article source: https://www.nytimes.com/2022/07/26/business/economy/recession-economy.html