Evelyn Reynolds

More stories

  • 100 Shares99 Views

    in Economy

    Democrats Question Semiconductor Program’s Ties to Wall St.

    Two progressive lawmakers warned the Biden administration against creating a revolving door between industry and government as it prepares to hand out $39 billion in grants.Two Democratic lawmakers on Tuesday expressed concerns about ex-Wall Street financiers overseeing the Commerce Department’s distribution of $39 billion in grants to the semiconductor industry, saying the staffing raised questions about the creation and abuse of a revolving door between government and industry.In a letter to the Commerce Department, Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington criticized the department’s decision to staff a new office overseeing grants to the chip industry with former employees of Blackstone, Goldman Sachs, KKR and McKinsey & Company.The lawmakers said the staffing decisions risked an outcome where staff members could favor past or future employers and spend taxpayer money “on industry wish-lists, and not in the public interest.”Commerce officials have rejected the characterization, describing the more than 200-person team they have built to review chip industry applications as coming from diverse backgrounds including investing, industry analysis, engineering and project management. In a statement, a Commerce Department representative said the agency had received the letter and would respond through appropriate channels.The criticism highlights the stakes for the Biden administration as it begins distributing billions of dollars to try to rebuild the country’s chip manufacturing capacity.More than 570 companies and organizations have expressed interest in obtaining some of the funding, and it is up to the Commerce Department to determine which of the projects deserve financing. Biden officials have said they will judge applications on their ability to enhance American manufacturing capacity and national security, as well as benefit local communities.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?  More

  • 175 Shares159 Views

    in Economy

    Consumer spending rises in December to end solid holiday season, CNBC/NRF Retail Monitor shows

    The Retail Monitor, which excludes autos and gas, rose 0.4% in December, down from a gain of 0.8% in November.
    The core retail gauge, which also takes out restaurants, climbed a more modest 0.2% after gaining 0.7% in the prior month.
    For the year, it increased by 3.1% and the core was up 2.4%.

    People carry shopping bags as they visit a department store during the holiday season in New York City.
    Eduardo Munoz | Reuters

    Retailers chalked up solid gains in the final month to wrap up the holiday season, according to the CNBC/NRF Retail Monitor for December.
    However, the data also shows the true state of consumer spending is now clouded by a new factor: deflation.

    The Retail Monitor, which excludes autos and gas, rose 0.4% in December, down from a gain of 0.8% in November, when the holiday shopping season traditionally kicks off. It’s just below the long-run average of 0.6%.

    Arrows pointing outwards

    The core retail gauge, which also takes out restaurants, climbed a more modest 0.2% after gaining 0.7% in the prior month. For the year, the Retail Monitor increased by 3.1% and the core was up 2.4%.
    Some give back from the strong November was inevitable, and economists expect the economy to cool from the outsized growth in the third quarter. One question is whether December marks the beginning of a long-predicted normalization in consumer spending.
    Spending was clearly hampered by the slowdown in the housing industry. Three of the biggest negative categories were housing related:

    Electronics and appliances (-3.2%)
    Building and garden supplies (-1.5%)
    Furniture and home furnishings (-0.9%).

    Furniture sales have been negative in four of the past five months.

    Traditional holiday-related retail categories did better, including a 0.9% gain in general merchandise stores and a 2.6% increase in nonstore retailers, which incorporates internet sales. Restaurants and bars posted a 1.5% rise, it’s best showing since July.

    Arrows pointing outwards

    Deflation

    Deflation is another factor. Goods prices, less food and energy, have fallen for six straight months. They are down 3.7% at an annualized rate from June through November.
    The Retail Monitor found sales of clothing and accessories down 0.4% but the November CPI showed prices fell a much larger 1.3%. The December CPI, set to be released Thursday, should show more clearly how prices affected sales.
    Wall Street is monitoring how retailers are managing profit margins amid deflation and whether they can be as profitable with falling prices as they were with rising prices. At issue is whether retailers can control costs and if input prices are falling faster or slower than selling prices.
    Wall Street has been bullish on retail, with the SPDR S&P Retail ETF (XRT) up 21% since late October despite some giveback beginning in the trading days after Christmas. Retail earnings will be released beginning in late February, but some companies — such as Lululemon, Crocs and Five Below — have guided higher on better holiday sales.

    Good, not great Christmas

    For the two critical months of the holiday season, November and December, the Retail Monitor rose 3.7% and core retail gained 3.3% making it a good, not great Christmas. But last October and January surprised with stronger gains than either November or December, suggesting the full holiday shopping season could be longer than it has been traditionally.

    Arrows pointing outwards

    The new Retail Monitor is a joint product of CNBC and the National Retail Federation based on data from Affinity, a leading consumer purchase insights company. The data is sourced from more than 9 billion annual credit and debit card transactions collected and anonymized by Affinity and accounting for more than $500 billion in sales. The cards are issued by more than 1,400 financial institutions.
    The data differs from the Census Bureau’s retail sales report as it is the result of actual consumer purchases, while the Census relies on survey data. The government data is frequently revised as additional survey data become available. The CNBC/NRF Retail Monitor is not revised as it’s calculated from actual transactions during the month. It is, however, seasonally adjusted, using the same program employed by the Census.
    Don’t miss these stories from CNBC PRO: More

  • 150 Shares169 Views

    in Economy

    Saudi Arabia nearly doubles estimate for the value of its mineral resources

    Saudi estimates for the kingdom’s untapped mineral reserves have jumped from $1.3 trillion in a 2016 forecast to $2.5 trillion.
    The Saudi government expects $20 billion in deals will be signed at the annual minerals forum in Riyadh this week.
    The concerted effort to invest in minerals exploration and mining and issue licenses to foreign investors is part of Saudi Arabia’s Vision 2030 program.

    Saudi Arabia nearly doubled the estimate for the value of its mineral resources and is seeing lucrative deals signed during its Future Minerals Forum held in Riyadh this week, ministers told CNBC.
    Estimates for the kingdom’s untapped mineral reserves have jumped from $1.3 trillion in a 2016 forecast to $2.5 trillion, according to Saudi Mineral Resources and Industry Minister Bandar Al Khorayef. The resources include gold, copper, phosphate and rare earth elements, offering new sources of subterranean wealth on top of Saudi Arabia’s mammoth oil reserves.

    “We are very excited about this news … it’s really a result of what we have been doing in the last four years,” Al Khorayef told CNBC’s Dan Murphy Wednesday.
    The Saudi government announced $20 billion in deals would be signed at the annual minerals forum, and the mining minister hailed recent reforms to the kingdom’s laws and business practices as being pivotal to that windfall.
    “Revamping our investment law has helped a lot of investment to come in the light, the number of licenses that we have issued in the last only two years is in the neighborhood of about 4,500,” Al Khorayef said.
    “Plus the amount of spending that we have been doing in our geological survey program; these two things alone allow us to access information and data on different reserves. And the beauty about the number … is really it’s the combination of new findings, especially with the rare earth metals, plus also more deposits of what we already know, in phosphate, gold, and copper, and zinc, and so on. So it’s a combination of all of this.”
    The minister noted that the figures were “only based on 30% of the Arabian shields exploration … which will continue hopefully to reach 100%.”

    Saudi Arabia has developed 33 new exploration sites for mining, and aims to award foreign investors more than 30 mining exploration licenses in 2024, it announced at the forum.

    The concerted effort to invest in minerals exploration and mining and issue licenses to foreign investors is part of Saudi Arabia’s Vision 2030 program, a multi-trillion dollar initiative launched by Crown Prince Mohammed bin Salman to diversify the kingdom’s economy away from oil, attract foreign investment and provide more jobs for its burgeoning youth population. Mining is seen by the Saudi government as the third industrial pillar that will move its economy away from reliance on hydrocarbons.
    Asked where the country was with respect to those Vision 2030 goals, the mining minister was optimistic.
    “You know, sectors such as tourism show quick results, we are maybe a slower sector. But when I see the pipeline, the different projects that we are doing, pipeline of private sector investment, pipeline infrastructure, that is really to me the true proof that we are also going to hopefully meet our targets.”
    “Our job actually today in the ministry and the ecosystem is to help accelerate, move projects much faster,” he said, stressing the importance of working with investors to address their needs. Part of that is the kingdom’s new mineral exploration incentive program, announced Wednesday, that has a budget of more than $182 million.
    “Generally speaking, I’m really very happy to see the progress,” Al Khorayef said. “I mean, in terms of policies, it’s all set in terms of enablers, it’s all set in terms of the infrastructure. In terms of budgeting and financing all of the infrastructures, we have been enabled. So, you know, it’s our job now to do it.” More

  • 150 Shares199 Views

    in Economy

    Mortgage Rates and Inflation Could Draw Attention to the Fed This Election

    The Federal Reserve is poised to cut rates in 2024 while moving away from balance sheet shrinking. Yet a key event looms in the backdrop: the election.This year is set to be a big one for Federal Reserve officials: They are expecting to cut interest rates several times as inflation comes down steadily, giving them a chance to dial back a two-year-long effort to cool the economy.But 2024 is also an election year — and the Fed’s expected shift in stance could tip it into the political spotlight just as campaign season kicks into gear.By changing how much it costs to borrow money, Fed decisions help to drive the strength of the American economy. The central bank is independent from the White House — meaning that the administration has no control over or input into Fed policy. That construct exists specifically so that the Fed can use its powerful tools to secure long-term economic stability without regard to whether its policies help or hurt those running for office. Fed officials fiercely guard that autonomy and insist that politics do not factor into their decisions.That doesn’t prevent politicians from talking about the Fed. In fact, recent comments from leading candidates suggest that the central bank is likely to be a hot topic heading into November.Former President Donald J. Trump, the front-runner for the Republican nomination, spent his tenure as president jawboning the Fed to lower interest rates and, in recent months, has argued in interviews and at rallies that mortgage rates — which are closely tied to Fed policy — are too high. It’s a talking point that may play well when housing affordability is challenging many American families.Still, Mr. Trump’s history hints that he could also take the opposite tack if the Fed begins to lower rates: He spent the 2016 election blasting the Fed for keeping interest rates low, which he said was giving incumbent Democrats an advantage.President Biden has avoided talking about the Fed out of deference to the institution’s independence, something he has referenced. But he has hinted at preferring that rates not continue to rise: He recently called a positive but moderate jobs report a “sweet spot” that was “needed for stable growth and lower inflation, not encouraging the Fed to raise interest rates.”The White House did not provide an on-the-record comment.Such remarks reflect a reality that political polling makes clear: Higher prices and steep mortgage rates are weighing on economic sentiment and turning voters glum, even though inflation is now slowing and the job market has remained surprisingly strong. As those Fed-related issues resonate with Americans, the central bank is likely to remain in the spotlight.“The economy is definitely going to matter,” said Mark Spindel, chief investment officer at Potomac River Capital and co-author of a book about the politics of the Fed.Fed policymakers raised interest rates from near zero to a range of 5.25 to 5.5 percent, the highest in 22 years, between early 2022 and summer 2023. Those changes were meant to slow economic growth, which would help to put a lid on rapid inflation.But now, price pressures are easing, and Fed officials could soon begin to debate when and how much they can lower rates. Policymakers projected last month that they could cut borrowing costs three times this year, to about 4.6 percent, and investors think rates could fall even further, to about 3.9 percent by the end of the year.Officials have also been shrinking their big balance sheet of bond holdings since 2022 — a process that can push longer-term interest rates up at the margin, taking some vim out of markets and economic growth. But officials have signaled in recent minutes that they might soon discuss when to move away from that process.Already, the mortgage costs that Mr. Trump has been referring to have begun to ease as investors anticipate lower rates: 30-year rates peaked at 7.8 percent in late October, and are now just above 6.5 percent.While the Fed can explain its ongoing shift based on economics — inflation has come down quickly, and the Fed wants to avoid overdoing it and causing a recession — it could leave central bankers adjusting policy at a critical political juncture.Jerome H. Powell, the Fed chair, was nominated to the role by former President Donald J. Trump, who quickly soured on Mr. Powell, calling him an “enemy.”Pete Marovich for The New York TimesFormer and current Fed officials insist that the election will not really matter. Policymakers try to ignore politics when they are making interest rate decisions, and the Fed has changed rates in other recent election years, including at the onset of the pandemic in 2020.“I don’t think politics enters the debate very much at the Fed,” said James Bullard, who was president of the Federal Reserve Bank of St. Louis until last year. “The Fed reacts the same way in election years as it does in non-election years.”But some on Wall Street think that cutting interest rates just before an election could put the central bank in a tough spot optically — especially if the moves occurred closer to November.“It will be increasingly uncomfortable,” said Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives, an economic research firm. Cutting rates sooner rather than later could help with those optics, several analysts said.And Mr. Spindel predicted that Mr. Trump was likely to continue talking about the Fed on the campaign trail — potentially amplifying any discomfort.Since the early 1990s, presidential administrations have generally avoided talking about Fed policy. But Mr. Trump upended that tradition both as a candidate and then later when he was in office, regularly haranguing Jerome H. Powell, the Fed chair, on social media and in interviews. He called Fed officials “boneheads,” and Mr. Powell an “enemy.”Mr. Trump had nominated Mr. Powell to replace Janet L. Yellen as Fed chair, but it did not take long for him to sour on his choice. Mr. Biden renominated Mr. Powell to a second term. Mr. Trump has already said he would not reappoint Mr. Powell as Fed chair if he was re-elected.Of course, this would not be the first time the Fed adjusted policy against a politically fraught backdrop. There was concern among some economists that rate cuts in 2019, when the Trump administration was pushing for them, would look like caving in. Central bankers lowered rates that year anyway.“We never take into account political considerations,” Mr. Powell said back then. “We also don’t conduct monetary policy in order to prove our independence.”Economists said the trick to lowering rates in an election year would be clear communication: By explaining what they are doing and why, central bankers may be able to defray concerns that any decision to move or not to move is politically motivated.“The key thing is to keep it legible and legitimate,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank. “Why are they doing what they are doing?” More

  • 138 Shares99 Views

    in Economy

    World Bank Warns of Energy Price Surge if Mideast War Spreads

    A new economic report predicted a year of weak growth and said the world faced a decade of “wasted opportunity.”The global economy is at risk of a “wasted” decade and the weakest stretch of growth in 30 years, the World Bank warned on Tuesday, saying a sluggish recovery from the pandemic and crippling wars in Ukraine and the Middle East are expected to weigh heavily on output.In its semiannual Global Economic Prospects report, the World Bank projected that the growth in world output will slow further in 2024, declining to 2.4 percent from 2.6 percent. Although the global economy has been surprisingly resilient, the report warned that its forecasts were subject to heightened uncertainty because of the two wars, a diminished Chinese economy and the increasing risks of natural disasters caused by global warming.The converging crises in recent years have put the world economy on track for the weakest half-decade in 30 years.“Without a major course correction, the 2020s will go down as a decade of wasted opportunity,” said Indermit Gill, the World Bank Group’s chief economist.Global growth is projected to slow for the third straight year in 2024. Developing countries are bearing the brunt of the slowdown, with high borrowing costs and anemic trade volumes weighing on their economies.Although policymakers have made progress in bringing inflation down from its 2022 high, the war in Gaza between Israel and Hamas is threatening to become a broader conflict that could spur a new bout of price increases by causing the cost of oil and food to spike.“The recent conflict in the Middle East, coming on top of the Russian Federation’s invasion of Ukraine, has heightened geopolitical risks,” the report said. “Conflict escalation could lead to surging energy prices, with broader implications for global activity and inflation.”The recent drone and missile attacks in the Red Sea by the Iranian-backed Houthi militia have already affected international commerce by pushing up oil prices and freight and insurance rates while diverting maritime traffic to a much longer and costlier route around Africa.Economists at Capital Economics wrote in a report this month that the redirecting of trade ships away from the Red Sea is unlikely to lead to a resurgence of global inflation, but they suggested that if the war became a broader regional conflict it could pose inflationary risks.The disruptions to shipping routes follow a year in which, other than during worldwide recessions, global trade growth was the slowest in the past 50 years, according to the World Bank.If the conflict in the Middle East does not widen, the World Bank expects that global oil prices will edge lower this year as growth weakens and production of oil increases.Beyond the ongoing wars, signs of fragility in the Chinese economy also remain a worry. World Bank economists pointed to lingering weakness in China’s property sector and lackluster consumer spending as evidence that the world’s second-largest economy will continue to underperform this year. They suggested that could pose headwinds for some of China’s trading partners in Asia.Chinese growth is expected to slow to 4.5 percent this year from 5.2 percent in 2023. Outside the pandemic-induced downturn, that would be China’s slowest expansion in 30 years.Europe and the United States are also poised for another year of weak output in 2024.The World Bank projects that economic growth in the euro area will rise to 0.7 percent in 2024 from 0.4 percent in 2023. Despite easing inflation and rising wages, tight credit conditions are expected to constrain economic activity.Growth in the United States is expected to slow to 1.6 percent this year from 2.5 percent in 2023. The World Bank attributes the slowdown to elevated interest rates — which are at their highest level in 22 years — and a pullback in government spending. Businesses are expected to be cautious about investing because of economic and political uncertainty, including around the 2024 election.Despite such slow growth, Biden administration officials say they deserve credit for corralling inflation while keeping the economy afloat.“I think we’ve made tremendous progress,” Treasury Secretary Janet L. Yellen told reporters on Monday. “It’s very unusual to have a period in which inflation declines as much it has while the labor market remains strong.”She added: “But that’s what we’re seeing, and that’s why I say we’re enjoying a soft landing.” More

  • 175 Shares129 Views

    in Economy

    Top Goldman Sachs analyst says the world is moving into a new super cycle

    The world economy is moving into a “different” super cycle, Peter Oppenheimer, head of macro research in Europe at Goldman Sachs, told “Squawk Box Europe.”
    Artificial intelligence and decarbonization are two of the key factors that could have a positive impact during this new cycle, he said.
    Oppenheimer also pointed out that there are historical parallels to current developments that could hold lessons for the future.

    A screen displays the Dow Jones Industrial Average after the closing bell on the floor at the New York Stock Exchange on Dec. 13, 2023.
    Brendan Mcdermid | Reuters

    The global economy is moving into a new “super cycle,” with artificial intelligence and decarbonization being driving factors, according to Peter Oppenheimer, the head of macro research in Europe at Goldman Sachs.
    “We are moving clearly into a different super cycle,” he told CNBC’s “Squawk Box Europe” Monday.

    Super cycles are commonly defined as lengthy periods of economic expansion, often accompanied by growing GDP, strong demand for goods leading to higher prices, and high levels of employment.
    The most recent significant super cycle that the world economy experienced began in the early 1980s, Oppenheimer said, discussing content from his newly launched book “Any Happy Returns.”
    This was characterized by interest rates and inflation peaking, before a decades-long period of falling capital costs, inflation and rates, as well as economic policies such as deregulation and privatization, he explained. Meanwhile, geopolitical risks eased and globalization grew stronger, Oppenheimer noted.
    But not all of these factors are now set to continue as they were, he added.
    “We’re not likely to see interest rates trending down as aggressively over the next decade or so, we’re seeing some pushback to globalization and, of course, we’re seeing increased geopolitical tensions as well.”

    The Russia-Ukraine war, tensions between the U.S. and China largely relating to trade, and the Israel-Hamas conflict which is raising concerns on the wider Middle East are just some geopolitical themes that markets have been fretting over in recent months and years.

    While current economic developments should theoretically lead to the pace of financial returns slowing, there are also forces that could have a positive impact — namely artificial intelligence and decarbonization, Oppenheimer said.
    AI is still in its early stages, he explained, however as it is used increasingly as the basis for new products and services, it could lead to a “positive effect” for stocks, he said.  
    The hot topic of AI and productivity, which has often gone hand-in-hand with debates and concerns around human jobs being replaced or changed, will likely impact the economy.
    “The second thing is [that] we haven’t yet seen, and I think we’re relatively positive that we will see, [is] an improvement in productivity on the back of the applications of AI which could be positive for growth and of course for margins,” Oppenheimer said.
    Despite AI and decarbonization both being relatively new concepts, there are historical parallels, Oppenheimer explained.
    One of the historical periods that stands out is the early 1970s and early 1980s, which he said were “not so dissimilar” to current developments. Elevated inflation and interest rates were perhaps more structural issues than compared to now, he said, however factors including growing geopolitical tensions, rising taxes and enhanced regulation appear similar.
    In other ways, current shifts can be seen as reflective of changes even further back in history, Oppenheimer explained.
    “Because of this tremendous twin shock that we’re likely to see, positive shock of technological innovation at a very rapid pace together with restructuring of economies to move towards decarbonization, I think that’s a period that’s more akin really to what we saw in the late 19th century,” he said.
    Modernization and industrialization fueled by infrastructure and technological developments alongside significant increases of productivity mark this historical period.
    Crucially, these historical parallels can provide lessons for the future, Oppenheimer pointed out.
    “Looking back in time, cycles and structural breaks do repeat themselves but never in exactly the same way. And I think we need to sort of learn from history what are the inferences that we can look at in order to position best for the sort of environment we’re moving into.” More

  • 100 Shares189 Views

    in Economy

    The 2023 U.S. economy, in a dozen charts

    The U.S. labor market ended the year strong, creating more than 200,000 jobs in the last month of the year and nearly 2.7 million jobs in all of 2023, when seasonally adjusted.
    Consumer spending remained robust throughout the year, with bright spots in travel and entertainment.
    There were some trouble areas for consumers, however, with mortgage rates high and existing home sales low.

    A pedestrian holds an umbrella as they walk along a street in the rain in Times Square, New York, on Sept. 26, 2023.
    Ed Jones | AFP | Getty Images

    The state of the U.S. economy may be a chief concern among Americans, but 2023 wound up as a pretty good year for the macroenvironment.
    Spending remained high, markets posted big gains and the Federal Reserve’s battle against inflation showed signs of cooling — without freezing. Then there’s the almost logic-defying resilience of the job market.

    The U.S. labor market ended the year strong, creating more than 200,000 jobs in December, according to figures released Friday by the U.S. Bureau of Labor Statistics. While previous job creation estimates for October and November were revised downward by a combined 75,000, the unemployment rate remained at a low 3.7%, and December marked the 36th consecutive month of job creation for the U.S. economy.

    In total, the U.S. created nearly 2.7 million jobs in 2023, when seasonally adjusted. That figure came despite concerns that the Federal Reserve’s ongoing fight against inflation through interest rate hikes might cool the labor market and put a chill on consumer spending.
    Neither of those concerns came to fruition, however. In fact, consumer spending remained robust throughout the year, with monthly advanced retail sales staying above the $600 million mark for most of 2023, proving that despite many economic headwinds, U.S. consumers could not be deterred.

    Here are nine other charts that show how the economy rounded out 2023.

    Inflation, wages and spending

    While inflation continues to be top of mind for U.S. consumers, the rate of inflation cooled significantly in 2023. Meanwhile, wages rose throughout the year, eventually outpacing price increases.

    U.S. consumers were in a mood to spend, particularly on experiences: 2023 was officially the year that travel rebounded, with the Thanksgiving holiday period breaking U.S. records. Nearly 150 million passengers were screened by the Transportation Security Administration across U.S. airports in November and December.

    Americans spent on entertainment, too. With major hits such as “Barbie,” “Oppenheimer” and Taylor Swift’s The Eras Tour concert film, the U.S. box office came back in a big way last year from its Covid-19 pandemic lows.

    Markets

    Even assets such as crypto saw a rebound in 2023 after hitting a low in November of the previous year. Bitcoin prices ended the year at almost three times that previous low.

    Interest rates and housing

    After its historic rate increases in 2022, the Federal Reserve tempered its war on inflation and only raised rates at four of its eight meetings in 2023. While the central bank’s target range for interest rates is the highest it has been since 2006, recent comments from Chair Jerome Powell have Fed watchers optimistic that rate cuts may be coming in 2024.

    There were some trouble areas for consumers, however. Mortgage rates continue to be high. The average 30-year fixed rate in October was nearly triple what it was at the end of 2020 — although rates came down significantly by the end of the year — and existing home sales remain low, according to data from the National Association of Realtors. Until more housing inventory comes online, those issues are likely to persist into 2024.

    Don’t miss these stories from CNBC PRO: More

  • 100 Shares139 Views

    in Economy

    U.S. Steel Acquisition Proposal Tests Biden’s Industrial Policy

    The president is under pressure from Democrats and Republicans to block the sale to Japan’s Nippon Steel, which could upset a key foreign ally.U.S. Steel is an iconic example of the lost manufacturing muscle that President Biden says his economic policies will bring back to the United States.But last month, the storied-but-diminished company announced plans to be acquired by a Japanese competitor. That development has put Mr. Biden in an awkward bind as he tries to balance attempts to revitalize the nation’s industrial sector with his efforts to rebuild international alliances.Mr. Biden’s administration has expressed some discomfort with the deal and is reviewing the proposed $14.1 billion takeover bid by Japan’s Nippon Steel. The company is offering a hefty premium for U.S. Steel, which has struggled to compete against a flood of cheap foreign metal and has been weighing takeover offers for several months.The proposal has quickly become a high-profile example of the difficult political choices Mr. Biden faces in his zeal to revive American industry, one that could test the degree to which he is willing to flex presidential power in pursuit of what is arguably his primary economic goal: the creation and retention of high-paying union manufacturing jobs in the United States.Mr. Biden is under pressure from the United Steelworkers union and populist senators from both parties, including Democrats defending crucial swing seats in Ohio and Pennsylvania this fall, to nix the sale on national security grounds. The senators contend that domestically owned steel production is critical to U.S. manufacturing and supply chains. They have warned that a foreign owner could be more likely to move U.S. Steel jobs and production overseas.“This really should be a no-brainer,” Senator Josh Hawley, Republican of Missouri, said in an interview last week. “I don’t know why it would be difficult to say, my gosh, we’ve got to maintain steel production in this country, and particularly a company like this one, where you have thousands of workers in good union jobs.”U.S. Steel executives say the deal would benefit workers and give the merged companies “world-leading capabilities” in steel production. They announced last month that Nippon Steel had agreed to keep the company’s headquarters in Pittsburgh and to honor the four-year collective bargaining agreement that the steelworkers’ union ratified in December 2022.Other supporters of the takeover bid say blocking the sale risks angering a key American ally. Mr. Biden has courted Japanese collaboration on a wide range of issues, including efforts to counter Chinese manufacturing in clean energy and other emerging technologies, and welcomed Japanese investment in new American manufacturing facilities including for advanced batteries.Wilbur Ross, a former steel company executive who served as commerce secretary under President Donald J. Trump, wrote last week in The Wall Street Journal that there is “nothing in the deal from which the U.S. needs defending. Attacks by Washington pols only create unnecessary geopolitical tensions, and those, not the acquisition itself, could endanger American national security.”Adding to the cross-pressures on Mr. Biden: It is unclear what would happen to the 123-year-old U.S. Steel if the administration scuttles the deal and whether doing so would actually guarantee greater job security for the company’s nearly 15,000 North American employees.U.S. Steel executives say the deal with Nippon Steel would benefit workers, but skeptics of the deal are urging President Biden to review it to prevent lost steel production and jobs.Lawrence Bryant/ReutersU.S. Steel has faced challenges for decades because of intensifying foreign competition, particularly from China, which has flooded the global market with cheap, state-subsidized steel. American presidents have spent years trying to bolster and protect domestic steel makers through a mix of subsidies, import restrictions and so-called Buy America requirements for government purchases.“No U.S. industry has benefited more from protection than the steel industry,” Scott Lincicome, a trade policy expert at the libertarian Cato Institute think tank, wrote in a 2017 research paper.In recent years, presidents have increased those protections further. Mr. Trump imposed tariffs on imported steel, including from Japan. Mr. Biden has partially rolled back those levies in an attempt to rebuild alliances. Mr. Biden also included strict Buy America provisions in sweeping new laws to invest in infrastructure, clean energy and other advanced manufacturing.Those efforts have not come close to bringing back the levels of domestic steel production that the United States enjoyed in the 1970s — or even of recent decades. Raw steel production reached higher levels under Presidents Bill Clinton, George W. Bush and Barack Obama than it has under Mr. Biden or Mr. Trump.Employment in the industry fell steadily in the 1990s and mid-2000s. In 2022, there were just over 83,000 workers in iron and steel mills in the United States, which was less than half the number from 1992.Senators including Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, and Mr. Hawley and J.D. Vance of Ohio, both Republicans, urged Mr. Biden to review the proposed U.S. Steel sale to guard against lost steel production and jobs. Mr. Brown cited Nippon Steel’s failure to notify or consult with union leaders ahead of making its bid for the company.“Tens of thousands of Americans, including many Ohioans, rely on this industry for good-paying, middle-class jobs,” he wrote in a letter to Mr. Biden last month. “These workers deserve to work for a company that invests in its employees and not only honors their right to join a union, but respects and collaborates with its work force.”The calls for an administrative review of the deal largely focused on the Committee on Foreign Investment in the United States, which is known as CFIUS and headed by Janet L. Yellen, the Treasury secretary. The committee scrutinizes possible sales of American firms to foreign ones for possible national security threats, then issues recommendations to the president, who can suspend or block a deal.Shortly before Christmas, Mr. Biden appeared to grant the request for review, while stopping short of saying he would block it.Lael Brainard, who chairs the White House National Economic Council, said in a news release that Mr. Biden welcomed foreign investment in American manufacturing but “believes the purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.”The administration, Ms. Brainard said, “will be ready to look carefully at the findings of any such investigation and to act if appropriate.”Steelworkers cheered the move. David McCall, president of United Steelworkers International, said in a statement that Mr. Biden was “demonstrating once again the president’s unwavering commitment to domestic workers and industries.”Independent experts say it would be well within historical norms for the committee to evaluate the sale. That will likely include a detailed economic analysis of whether the deal could lead to diminished steel production capacity in the United States, said Emily Kilcrease, a CFIUS expert and senior fellow at the Center for a New American Security.But Ms. Kilcrease said that based on the committee’s past decisions, she expected the review to stop well short of a recommendation to kill the sale. Instead, she said, CFIUS might require an agreement from Nippon Steel to maintain certain levels of U.S. employment or production as a condition of the sale’s going through.“I would be shocked if this deal got blocked,” she said.Mr. Hawley said the choice was ultimately Mr. Biden’s — and a test of his commitment to the industry.“If the administration wants to block the sale, they absolutely have grounds to do it and the legal authority,” he said. “So it’s just a question of, do they want to? And will they have the guts to do it?” More