Evelyn Reynolds

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    Biden’s Stimulus Juiced the Economy, but Its Political Effects Are Muddled

    Some voters blame the American Rescue Plan for fueling price increases. But the growth it unleashed may be helping the president stay more popular than counterparts in Europe.The $1.9 trillion economic stimulus package that President Biden signed shortly after taking office has become both an anchor and a buoy for his re-election campaign.The American Rescue Plan, which the Biden administration created and Democrats passed in March 2021, has fueled discontent among voters, in sometimes paradoxical ways. Some Americans blame the law, which included direct checks to individuals, for helping to fuel rapid inflation.Others appear upset that its relief to people, businesses and school districts was short-lived. The Federal Reserve Bank of Dallas reported recently that several business contacts in its district “expressed concern about the winding down of American Rescue Plan Act dollars and whether nonprofits and K-12 schools will be able to sustain certain programs without that funding.”Polls show that Americans continue to favor Mr. Biden’s opponent, former President Donald J. Trump, on economic issues. Often, they indicate that only relatively small slices of the electorate believe Mr. Biden’s policies have helped them or their family financially.At the same time, though, the stimulus may be lifting Mr. Biden’s chances for November in ways that pollsters rarely ask about.Economists say the relief package, along with stimulus measures Mr. Trump signed into law in 2020, has helped accelerate America’s recovery from the pandemic recession. The United States has grown and added jobs in a way that no other wealthy nation has experienced after the pandemic.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Can A.I. Answer the Needs of Smaller Businesses? Some Push to Find Out.

    Artificial intelligence tools like ChatGPT are finding widest use at big companies, but there is wide expectation that the impact will spread.The Nashville Area Chamber of Commerce has convened an annual meeting of local business leaders since the 1800s, but the most recent gathering had a decidedly modern theme: artificial intelligence.The goal was to demystify the technology for the chamber’s roughly 2,000 members, especially its small businesses.“My sense is not that people are wary,” said Ralph Schulz, the chamber’s chief executive. “They’re just unclear as to its potential use for them.”When generative A.I. surged into the public consciousness in late 2022, it captured the imagination of businesses and workers with its ability to answer questions, compose paragraphs, write code and create images. Analysts projected that the technology would transform the economy by driving a boom in productivity.Yet so far, the impact has been limited. Although adoption of A.I. is rising, only about 5 percent of companies nationwide are using the technology, according to a survey of businesses from the Census Bureau. Many economists predict that generative A.I. is years away from measurably affecting economic activity — but they say change will come.“To me, this is a story of five years, not five quarters,” said Philipp Carlsson-Szlezak, the global chief economist at Boston Consulting Group. “Over a five-year horizon, am I going to see something measurable? I think so.”Tell us how your workplace is using A.I.

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    Bank of Japan set to reduce JGB purchases, stands pat on interest rate

    The BOJ said in its statement it could reduce its purchases of Japanese government bonds after the next monetary policy meeting, scheduled to be held on July 30 and 31.
    During the intermeeting period, the BOJ said it will collect views from market participants and will decide on a detailed plan for the reduction of its purchase amount during the next one to two years or so.

    The Bank of Japan is largely expected to hold interest rates steady at the end of its 2-day meeting ending June 14, 2024. Seen here, the Japanese flag flying high at the BOJ headquarters in Tokyo.
    Kazuhiro Nogi | Afp | Getty Images

    The Bank of Japan kept its benchmark interest rate unchanged on Friday, but indicated it’s considering the reduction of its purchase of Japanese government bonds.
    The central bank left short-term rates unchanged at between 0% to 0.1% at the end of its two-day policy meeting, as widely expected.

    But notably, the bank said in its statement it could reduce its purchases of Japanese government bonds after the next monetary policy meeting, scheduled for July 30 and 31.
    The decision was passed with an 8-1 majority vote, with board member Nakamura Toyoaki dissenting.
    Toyoaki was in favor of reducing JGB purchases, but is of the view that the BOJ should only decide to reduce them after reassessing developments in economic activity and prices in the July 2024 outlook report, slated for July 31.
    Ahead of the next meeting, the BOJ said it will collect views from market participants and will decide on a detailed plan for the reduction of its purchase amount for the next one to two years.
    Purchases of JGBs, commercial paper and corporate bonds will also continue as decided in the March monetary policy meeting.

    Following the BOJ decision, the Japanese yen weakened 0.52% to 157.84 against the U.S. dollar, while the yield on 10-year JGB fell 44 basis points to 0.924.
    The benchmark Nikkei 225 rose 0.68%, reversing earlier losses, while the Topix was 0.71% higher.

    Bold policy moves

    In March, the BOJ raised interest rates for the first time in 17 years — ending the world’s last negative rate regime — and scrapped the yield curve control policy in a radical policy move.
    However, the central bank said at that time it would continue to purchase JGBs at a pace of about 6 trillion yen ($38.17 billion) per month.
    While the large scale purchases of JGBs achieved the effect of stabilizing 10-year JGB yields at around the 1% level, it indirectly put additional downward pressure on the weak yen, according to a note by advisory firm Teneo published on June 13.

    Stock chart icon

    On May 8, BOJ governor Kazuo Ueda said the central bank will scrutinize the yen’s recent declines in guiding monetary policy, according to a Reuters report.
    It came after the yen slipped to a 34-year low, trading at 160 against the dollar in late April, which prompted the BOJ to intervene to prop up the currency.
    “Sharp, one-sided yen falls are negative for the economy and therefore undesirable,” as it makes it difficult for companies to set business plans, Ueda told parliament.
    “If currency volatility affects, or risks affecting, trend inflation, the BOJ must respond with monetary policy,” he added. More

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    Supreme Court Backs Starbucks Over ‘Memphis 7’ Union Case

    In a blow to the National Labor Relations Board, the justices made it more difficult to order employers to reinstate fired workers.The Supreme Court ruled in favor of Starbucks on Thursday in a challenge against a labor ruling by a federal judge, making it more difficult for a key federal agency to intervene when a company is accused of illegally suppressing labor organizing.Eight justices backed the majority opinion, which was written by Justice Clarence Thomas. Justice Ketanji Brown Jackson wrote a separate opinion that concurred with the overall judgment but dissented on certain points.The ruling came in a case brought by Starbucks over the firing of seven workers in Memphis who were trying to unionize a store in 2022. The company said it had fired them for allowing a television crew into a closed store. The workers, who called themselves the Memphis Seven, said that they were fired for their unionization efforts and that the company didn’t typically enforce the rules they were accused of violating.After the firings, the National Labor Relations Board issued a complaint saying that Starbucks had acted because the workers had “joined or assisted the union and engaged in concerted activities, and to discourage employees from engaging in these activities.” Separately, lawyers for the board asked a federal judge in Tennessee for an injunction reinstating the workers, and the judge issued the order in August 2022.The agency asks judges to reinstate workers in such cases because resolving the underlying legal issues can take years, during which time other workers may become discouraged from organizing even if the fired workers ultimately prevail.In its petition to the Supreme Court, the company argued that federal courts had differing standards when deciding whether to grant injunctions that reinstate workers, which the N.L.R.B. has the authority to seek under the National Labor Relations Act.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Wholesale prices unexpectedly fell 0.2% in May

    The producer price index, a gauge of prices that producers get for their goods and services in the open market, declined 0.2% for the month against expectations for a 0.1% increase.
    PPI was held back by a 0.8% decrease in final demand goods prices, which was the largest decline since October 2023.
    In other economic news, initial claims for unemployment insurance jumped to 242,000 for the week ended June 8. That’s the highest level since August 2023.

    A measure of wholesale prices unexpectedly decreased in May, adding another piece of evidence that inflation is pulling back.
    The producer price index, a gauge of prices that producers get for their goods and services in the open market, declined 0.2% for the month, the Labor Department’s Bureau of Labor Statistics reported Thursday. That reversed a 0.5% increase in April and compared with the Dow Jones estimate for a 0.1% rise.

    Excluding food, energy and trade services, the PPI was unchanged, compared with expectations for a 0.3% increase.
    On an annual basis, the all-items PPI rose 2.2%.
    Stock market futures saw some modest gains following the report while Treasury yields moved lower.
    The release comes a day after the BLS reported that the consumer price index, a widely watched gauge of inflation that measures what consumers actually pay for goods and services, was unchanged on the month.
    From the wholesale perspective, the PPI was held back by a 0.8% decrease in final demand goods prices, which was the largest decline since October 2023. Within the category, the energy index tumbled 4.8%. Food prices fell 0.1%.

    On the services side, fuels and lubricants retailing margins surged 12.2%, but that was offset in part by a 4.3% plunge in airline passenger services prices.
    The release comes a day after the Federal Reserve noted “modest further progress” in bringing inflation back down to its 2% target, but not enough for the central bank to start lowering interest rates. The Fed has held its benchmark borrowing rate in a targeted range of 5.25%-5.5% since July 2023 as it awaits more evidence that inflation is heading back to the central bank’s 2% target.
    In other economic news Thursday, the Labor Department reported that initial claims for unemployment insurance jumped to 242,000 for the week ended June 8. That’s the highest level since August 2023 and an increase of 13,000 from the previous period. Economists surveyed by Dow Jones had been looking for 225,000.
    Continuing claims, which run a week behind, totaled 1.82 million, up 30,000 from the previous week.

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    Treasury Secretary Yellen says U.S. debt load is in ‘reasonable place’ if it remains at this level

    Treasury Secretary Janet Yellen on Thursday said the swelling national debt is manageable as long as it stays around where it is relative to the rest of the economy.
    In a CNBC interview, Yellen also noted that high interest rates are adding to the burden as the U.S. manages its massive $34.7 trillion debt load.

    “If the debt is stabilized relative to the size of the economy, we’re in a reasonable place,” she told CNBC’s Andrew Ross Sorkin during a “Squawk Box” live interview. “The way I look at it is that we should be looking at the real interest cost of the debt. That’s really what the burden is.”
    During the 2024 fiscal year, net interest costs on the debt have totaled $601 billion — more than the government has spent on health care or defense and more than four times what it has laid out for education.
    Multiple Congressional Budget Office reports have warned about the soaring costs of debt and deficits, cautioning that over the next decade the public share of the national debt — currently about $27.6 trillion — will hit a new record as a share of the total economy over the next decade.
    The public share of the national debt as a share of GDP is running at about 97% but is expected to soon top 100% at current spending rates.
    Yellen touted President Joe Biden’s plans to manage the situation.

    “In the budget the president presented for this coming fiscal year he proposes $3 trillion of deficit reduction over the next decade,” she said. “That’s sufficient to basically keep the debt to income ratio stable, and this interest burden would be stabilized.”
    The budget deficit for 2024 is running at $1.2 trillion with four months left in the fiscal year. In 2023, the shortfall totaled $1.7 trillion.
    The rising financing costs for the debt have come as the Federal Reserve pushed interest rates higher to bring down an inflation rate that had hit its highest level in more than 40 years in mid-2022. Inflation since has pulled back, but the Fed has held benchmark rates higher as it awaits more evidence that the rate of price increases is moving convincingly back to the central bank’s 2% target.
    Following its policy meeting this week, the Fed said it has seen “modest” progress on inflation but is not ready to start reducing rates. Yellen, a former Fed chair, declined to comment on the central bank’s actions. More

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    Montana Has More Cows Than People. Why Are Locals Eating Beef From Brazil?

    Cole Mannix, of Old Salt Co-op, is trying to change local appetites and upend an industry controlled by multibillion-dollar meatpackers.“Making It Work” is a series is about small-business owners striving to endure hard times.While many people can conjure up romantic visions of a Montana ranch — vast valleys, cold streams, snow-capped mountains — few understand what happens when the cattle leave those pastures. Most of them, it turns out, don’t stay in Montana.Even here, in a state with nearly twice as many cows as people, only around 1 percent of the beef purchased by Montana households is raised and processed locally, according to estimates from Highland Economics, a consulting firm. As is true in the rest of the country, many Montanans instead eat beef from as far away as Brazil. Here’s a common fate of a cow that starts out on Montana grass: It will be bought by one of the four dominant meatpackers — JBS, Tyson Foods, Cargill and Marfrig — which process 85 percent of the country’s beef; transported by a company like Sysco or US Foods, distributors with a combined value of over $50 billion; and sold at a Walmart or Costco, which together take in roughly half of America’s food dollars. Any ranchers who want to break out from this system — and, say, sell their beef locally, instead of as anonymous commodities crisscrossing the country — are Davids in a swarm of Goliaths.“The beef packers have a lot of control,” said Neva Hassanein, a University of Montana professor who studies sustainable food systems. “They tend to influence a tremendous amount throughout the supply chain.” For the nation’s ranchers, whose profits have shrunk over time, she said, “It’s kind of a trap.” Cole Mannix is trying to escape that trap.Mr. Mannix, 40, has a tendency to wax philosophical. (He once thought about becoming a Jesuit priest.) Like members of his family have since 1882, he grew up ranching: baling hay, helping to birth calves, guiding cattle into the high country on horseback. He wants to make sure the next generation, the sixth, has the same opportunity.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    The Fed Holds Rates Steady and Predicts Just One Reduction This Year

    Federal Reserve officials signaled that interest rates could stay higher this year as policymakers pause to ensure they’ve stamped out inflation.Federal Reserve officials left interest rates unchanged at their June meeting on Wednesday and predicted that they will cut borrowing costs just once before the end of 2024, taking a cautious approach as they try to avoid declaring a premature victory over inflation.While the Fed had been expected to leave rates unchanged, its projections for how interest rates may evolve surprised many economists.When Fed officials last released quarterly economic estimates in March, they anticipated cutting interest rates three times this year. Investors had expected them to revise that outlook somewhat this time, in light of stubborn inflation early in 2024, but the shift to a single cut was more drastic.Jerome H. Powell, the Fed chair, made clear in a postmeeting news conference that officials were taking a careful and conservative approach after months of bumpy inflation data.With price increases proving volatile and the job market remaining resilient, policymakers believe they have the wiggle room to hold interest rates steady to make sure they fully stamp out inflation without running too much of a risk to the economy. But the Fed chair also suggested that more rate cuts could be possible depending on economic data.“Fortunately, we have a strong economy, and we have the ability to approach this question carefully — and we will approach it carefully,” Mr. Powell said. He added that “we’re very much keeping an eye on downside economic risks, should they emerge.” More