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

American employers added 372,000 jobs in June, and wages continue to climb strongly. Consumer spending has eased somewhat, but less than expected. While the housing market is slowing, rents continue to pick up in many markets.

Plus, the outlook for inflation is dicey. While gas prices may be slowing for now, risks of a resurgence lie ahead, because, for example, the administration’s efforts to impose a global price cap on Russian oil exports could fall through. Rising rents mean that housing costs could help to keep inflation elevated.

While Mr. Powell made clear at his June news conference that three-quarter-point rate increases were out of the ordinary and that he did “not expect” them to be common, Fed officials have also been clear that they would like to see a string of slowing inflation readings before feeling more confident that price increases are coming under control.

“We at the Fed have to be very deliberate and intentional about continuing on this path of raising our interest rate until we get and see convincing evidence that inflation has turned a corner,” Loretta Mester, the president of the Federal Reserve Bank of Cleveland, said in a Bloomberg interview this month.

The central bank will get a fresh reading on the Personal Consumption Expenditures index — its preferred inflation gauge — on Friday. That data will be for June, and it is expected to show continued rapid inflation both on a headline basis and after volatile food and fuel prices are stripped out. The Employment Cost Index, a wage and benefits measure that the Fed watches closely, will also be released that day and is expected to show compensation climbing quickly.

Given the recent decline in prices at the gas pump, at least two months of slower inflation readings by September are possible — but not guaranteed.

“They cannot prematurely hint that they think victory over inflation is coming,” Mr. Shepherdson of Pantheon wrote.

Article source: https://www.nytimes.com/2022/07/25/business/economy/fed-interest-rate-increase.html

“While there’s a lot that goes into setting the global oil and gas price,” Jared Bernstein, a member of the White House Council of Economic Advisers, said in a news briefing on Monday, “the historic actions taken by President Biden to address the impact of Putin’s invasion of Ukraine have helped and continue to help to increase the global supply of oil and therefore are in the mix of factors driving down the price.”

Republicans say they are surprised the administration is celebrating at all, when prices remain more than $2 a gallon higher than they were when Mr. Biden took office. (They do not mention that he inherited an economy where global demand for oil was suppressed by the coronavirus pandemic.)

It might also seem counterintuitive that the president is encouraging lower gasoline costs while he pursues what aides promise will be an ambitious unilateral agenda to cut greenhouse gas emissions.

“The real answer,” Mr. Biden said on Friday, “is to get to a clean-energy economy as soon as possible, turn this into something positive.”

Economists largely agree that raising the prices of fossil fuels like coal and gasoline is a way to ensure that consumers burn less of them and to encourage switching to lower-emission alternatives like electric vehicles. The Energy Department reported on Wednesday that gasoline use in the United States was down nearly 8 percent over the past four weeks compared with the same period a year ago. That continued for the second quarter of the year, which the Energy Information Administration said might have been the result of rising gasoline prices.

But Biden administration officials — even economists who have previously favored steps to raise taxes on fossil fuels — say the high prices are not helping the president’s climate agenda.

Article source: https://www.nytimes.com/2022/07/22/us/politics/biden-gas-prices.html

On June 22, workers filed a petition to hold a union election. The labor board requires at least 30 percent of workers to indicate their support before it will order one.

The hearing scheduled for Tuesday was meant to consider arguments from the two sides about the proposed election. Chipotle had asserted in filings that the election should not go forward, partly because the store was understaffed and so the workers eligible to vote would not be fully representative of its eventual work force.

Mr. Young, the lawyer representing the workers, said the closing could chill organizing efforts at other stores in the chain, including those underway in Lansing, Mich., where workers have also filed for a union election, and New York City.

“By closing the Augusta store, it’s signaling to Chipotle workers elsewhere who are involved in or contemplating nascent organizational drives that if you organize, you might be out of job,” Mr. Young said.

Ms. Schalow, the Chipotle official, said in her statement that closing the store “has nothing to do with union activity.” The company said it had closed 13 locations out of about 3,000 because of staffing issues, performance, lease agreements and other business reasons over the past 18 months. Most of the closings appear to have come in the first half of last year.

Chipotle has offered the Augusta workers four weeks of severance pay based on their hours over the past two weeks, which have typically been lower than before the restaurant closed to the public. It has not offered to place the workers at other locations in Maine, the nearest of which is roughly an hour away, according to the company.

Article source: https://www.nytimes.com/2022/07/20/business/economy/chipotle-union-maine.html

The combination of Trade Promotion Authority and Trade Adjustment Assistance was a political formula that worked for decades, said Edward Alden, a senior fellow at the Council on Fore­­­ign Relations. Presidents promised businesses more access to foreign markets, and they made commitments to providing labor unions and their supporters with compensation if jobs were lost in the process.

But American views on trade have turned more negative in recent years, as China began dominating global industries and as income inequality widened. Democrats have grown so disillusioned with the effects of global trade and split over its benefits that the Biden administration has declined to push for new pacts.

Before writing any new trade deals, Mr. Biden said he would first focus on boosting American competitiveness, including by investing in infrastructure, clean energy, and research and development. And when Trade Promotion Authority expired last year, Biden administration officials did not lobby Congress to reauthorize it.

Some Republicans are balking at reapproving trade adjustment assistance when the president shows little intention to open up new overseas business opportunities through trade agreements.

“America’s on the sidelines right now on trade, and President Biden’s moratorium on new trade agreements seems firm,” Representative Kevin Brady, Republican of Texas, told reporters late last month. “There would have to be a much stronger ironclad commitment to resuming American leadership in trade to even begin this discussion on extending T.A.A.”

“We’re open to creative ideas here, but if we don’t have a serious, significant trade agenda that opens up markets for American workers, T.A.A. doesn’t make much sense,” Mr. Brady added.

Article source: https://www.nytimes.com/2022/07/20/business/economy/trade-adjustment-assistance-jobs.html

“If Congress doesn’t adopt, that doesn’t prevent the European Union and Japan and others from moving forward in this area, at which point, I think, Congress would see it’s in the U.S. interest to adopt, because otherwise our companies will also get hit by this enforcement principle,” Kimberly Clausing, who recently left her job as Treasury’s deputy assistant secretary for tax analysis, said at a Tax Policy Center event last month.

Barbara Angus, the global tax policy leader at Ernst Young, said a failure by the United States to comply with the deal would have “significant implications” for American companies.

“For this framework to work as it’s intended, there really does need to be consistency and coordination,” said Ms. Angus, who is also a former chief tax counsel on the House Ways and Means Committee.

The Treasury Department could not provide an estimate for how much additional tax American companies would have to pay to foreign governments if the United States was left out of the global agreement. If fully enacted, the agreement is projected to raise about $200 billion of tax revenue for the United States over a decade.

Pascal Saint-Amans, director of the center for tax policy and administration at the Organization for Economic Cooperation and Development, said he thought that the European Union would find a way to move beyond member state opposition and that, once it ratified that agreement, the United States would come under pressure to join.

“Once E.U. has moved, U.S. has the following choice: Either they move or they leave the taxing right on U.S. multinational enterprises to the Europeans,” Mr. Saint-Amans said in a text message. “Even the Republicans would not let this go.”

Article source: https://www.nytimes.com/2022/07/18/us/politics/joe-manchin-tax.html

Ms. Georgieva pointed out that about three-quarters of the institutions the fund tracks have raised interest rates since July 2021. Developed economies have lifted them by 1.7 percentage points on average, while emerging economies have moved by more than 3 percentage points.

In recent years, emerging markets have often raised interest rates in anticipation of the Fed’s slow and steady moves to avoid big swings in their currency values, which depend partly on interest rate differences across borders. But this set of rate increases is different: Inflation is running at its fastest pace in decades in many places, and a range of developed-economy central banks, including the European Central Bank, the Swiss National Bank, the Bank of Canada and the Reserve Bank of Australia, are joining — or may join — the Fed in pushing rates quickly higher.

“It’s not something we’ve seen in the last few decades,” said Bruce Kasman, chief economist and head of global economic research at JPMorgan Chase.

The last time so many major nations abruptly raised rates in tandem to fight such rapid inflation was in the 1980s, when the contours of global central banking were different: The 19-country euro currency bloc that the E.C.B. sets policy for did not exist yet, and global financial markets were less developed.

That so many central banks are now facing off against rapid inflation — and trying to control it by slowing their economies — increases the chance for market turmoil as an era of very low rates ends and as nations and companies try to adjust to changing capital flows. Those changing flows can influence whether countries and businesses are able to sell debt and other securities to raise money.

“Financial conditions have tightened due to rising, broad-based inflationary pressures, geopolitical uncertainty brought on by Russia’s war against Ukraine, and a slowdown in global growth,” Janet L. Yellen, the U.S. Treasury secretary, said in speech last week. “Now, portfolio investment is beginning to flow out of emerging markets.”

Article source: https://www.nytimes.com/2022/07/17/business/economy/global-central-banks-inflation.html

In May, Li Keqiang, China’s premier, called an emergency meeting and sounded the alarm about the need to gin up economic growth to more than 100,000 officials from businesses and local governments. The stark warning cast doubt about China’s ability to reach its earlier growth target of 5.5 percent for the year.

China’s slowing growth complicates an already fragile global economy. Surging inflation has heightened the risk of recession in the United States, while Russia’s invasion of Ukraine has pushed up energy prices and disrupted supply chains across Europe. In previous moments of economic crises, China alleviated financial pressures with access to cheap manufacturing and a largely untapped market of consumers eager to spend.

But China is no longer growing by leaps and bounds. The Covid restrictions and policies carried out in recent years — such as cracking down on speculation in real estate and curbing the power of China’s tech giants — have combined to exacerbate the slowdown. So far this year, Starbucks, Nike and Hilton have all warned that weak spending in China had brought down sales.

While much of the world has learned to live with the coronavirus, China has adopted a zero-Covid policy to do whatever necessary to prevent infection. Under that policy, residents of an entire apartment building can be confined to their homes for weeks if a single tenant is infected. A few positive cases could cause an entire section of a city to lock down.

Even as the toll from those policies has become apparent, Mr. Xi has not flinched. He has said he is willing to endure some temporary economic pain in order to keep Chinese citizens free from Covid.

The most recent economic malaise hit in April and May, when Shanghai, China’s largest city, went into lockdown for nearly two months and the impact rippled through the economy. Office buildings were closed, and workers were ordered to remain at home. Throughout China, hundreds of millions of consumers were shut in — leaving stores, restaurants and service providers to carry on without customers.

Article source: https://www.nytimes.com/2022/07/14/business/economy/china-economy-slows.html

Jamie O’Regan makes a six-figure salary as the director of alumni relations for a Brooklyn private school, and lives in a Jersey City apartment with a rooftop pool.

But Ms. O’Regan, 38, is feeling the pinch of higher prices. Starting July 1, her landlord raised her rent by $500, to $2,900 a month. She got rid of her car, which was costing $600 a month between parking, insurance and loan payments. Able to work from home during the summer, she has saved $100 per week by not commuting. She’d like to buy a house, but sees no path to doing so, and now is considering taking on a roommate.

“If I feel like I’m living paycheck to paycheck, how does the average person function?” Ms. O’Regan said. “There doesn’t seem to be anyone who feels immune to this.”

Economists say weak consumer sentiment isn’t likely to turn an otherwise healthy economy into a sick one. But it could amplify or prolong an already-bad situation. In marginal cases, an official recession declaration — and the attendant media attention — can create markedly worse outcomes than weak economies that barely escape recession.

The relatively brief recession of 1990 and 1991, for example, didn’t have an obvious cause like an asset bubble. For that reason, scholars have theorized that it may have been fueled by a poor national mood brought on by the Gulf War, an oil price shock and the interest-rate increases.

Still, the link between consumers’ perceptions and economic outcomes is not straightforward. Sentiment dropped sharply following the terrorist attacks of Sept. 11, 2001, for example, but actual spending rebounded rapidly, possibly because of a rally-around-the-flag effect that helped buoy the economy quickly past the dot-com bust.

Article source: https://www.nytimes.com/2022/07/15/business/economy/inflation-economy-polling.html

Mr. Faber thinks investors benefit twice when they buy value stocks.

“Value is good because it’s cheap and because you’re avoiding something that’s stupid expensive,” he said. “Avoiding the really expensive stuff in the last year has really saved everyone’s bacon.”

Saira Malik, chief investment officer at Nuveen, a fund management company, prefers American stocks. In a presentation of the company’s investment outlook, she emphasized quality, as Mr. Faber did, highlighting characteristics like resilient balance sheets and an ability to increase dividends. But she favors growth stocks — stocks of companies whose earnings are less sensitive to economic ups and downs.

Among bonds, she and her colleagues favor municipal and high-yield issues and would limit exposure to long-term Treasuries.

Mr. Temple said he considered it counterproductive to try to choose between value and growth stocks. His advice is to go with either as long as you stick with quality, which he defines as “companies with high returns on capital that can be sustained.” Stocks in those companies usually do better when the economy weakens as investors seek safety. This year, though, quality has underperformed.

Companies that he likes and that have been marked down include Microsoft, Amazon and Google’s parent, Alphabet. All three stand to benefit from a continued move of business computing to the cloud. Mr. Temple also recommends the payment card networks Visa and American Express.

He acknowledged that these companies’ stocks, like the market broadly, may have further to fall. But he said he expected them to be solid buys over the long haul, even if holding them for the next few months may get uncomfortable.

“I’m not smart enough to pick the absolute low,” Mr. Temple said. “There are really good, quality companies that are on sale that you want to own for the next three to five years. We’re seeing more opportunities as this sell-off continues.”

Article source: https://www.nytimes.com/2022/07/15/business/stock-market-recession-half-year.html