Evelyn Reynolds

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    Higher Rates Stoke a Growing Chorus of Deficit Concerns

    A long period of higher interest rates would make the government’s large debt pile costly, a possibility that is fueling a conversation about debt sustainability.The U.S. government’s persistent budget deficit and growing debts were low on Wall Street’s list of worries when interest rates were at rock bottom for years. But borrowing costs have risen so sharply that it is causing many investors and economists to fret that the United States’ big debt pile could prove less sustainable.Federal Reserve officials have raised interest rates to about 5.3 percent since early 2022 in a bid to control inflation. Officials predicted at their meeting last month that interest rates could remain high for years to come, shaking expectations among investors who had bet on rates falling notably as soon as next year.The realization that the Fed could keep borrowing costs high for a long time has combined with a cocktail of other factors to send long-term interest rates soaring in financial markets. The rate on 10-year Treasury bonds has been climbing since July, and reached a nearly two-decade high this week. That matters because the 10-year Treasury is like the market’s backbone: It helps drive many other borrowing costs, from mortgages to corporate debt.The exact cause of the latest run-up in Treasury rates is hard to pinpoint. Many economists say a combination of drivers is probably helping to drive the pop — including strong growth, fewer foreign buyers of America’s debt, and concerns about debt sustainability in and of itself.What’s clear is that if rates remain elevated, the federal government will need to pay investors more interest in order to fund its borrowing. America’s gross national debt stands just above $33 trillion, more than the total annual output of the American economy. The debt is projected to keep growing both in dollar figures and as a share of the economy.While the climbing cost of holding so much debt is stoking conversations among economists and investors about the appropriate size of the government’s annual borrowing, there is no consensus in Washington for deficit reduction in the form of either higher taxes or big spending cuts.Still, the renewed concern is a stark reversal after years in which mainstream economists increasingly thought that the United States might have been too timid when it came to its debt: Years of low interest rates had convinced many that the government could borrow cheap money to pay for relief in times of economic trouble and investments in the future.The deficit as a share of the economy rose this year under President Biden even though the economy was growing.Pete Marovich for The New York Times“How big of a problem deficits are depends — and it depends very critically on interest rates,” said Jason Furman, an economist at Harvard and former economic official under the Obama administration. “That’s changed a lot,” so “your view on the deficit should change as well.”Mr. Furman had previously estimated that the growing cost of interest on federal debt would remain sustainable for some time, after factoring in inflation and economic growth. But now that rates have climbed so much, the calculus has shifted, he said.Since 2000, the United States has run an annual budget deficit, meaning it spends more than it receives in taxes and other revenue. It has made up the gap by borrowing money.Tax cuts, spending increases and emergency economic assistance approved by both Democratic and Republican presidents has helped fuel the rising deficits in recent years. So has the aging of America’s population, which has driven up the costs of Social Security and Medicare without corresponding increases in federal tax rates. The deficit as a share of the economy rose this year under President Biden even though the economy was growing, just as it did in the prepandemic years under President Donald J. Trump.Now, borrowing costs are poised to add to the gap.Higher interest rates are a leading cause, along with surprisingly weak tax collections, of what the Congressional Budget Office projects will be a doubling of the federal budget deficit over the last year. The deficit, when properly measured, grew from $1 trillion in the 2022 fiscal year to an estimated $2 trillion in the 2023 fiscal year, which ended last month.If borrowing costs climb further — or simply remain where they are for an extended period — the government will accumulate debt at a much faster rate than officials expected even a few months ago. A budget update released by Biden administration economists in July predicted annual average interest rates on 10-year Treasury bonds would not exceed 3.7 percent at any time over the next decade. Those rates are now hovering around 4.7 percent.That recent surge in longer-term bond yields ties back to a number of factors.While the Federal Reserve has been raising short-term interest rates for roughly 18 months, rates on longer-term bonds had remained fairly stable over the first half of this year. But investors have been slowly coming around to the possibility that the Fed will leave interest rates higher for longer — partly because growth has remained solid even in the face of elevated borrowing costs.At the same time, there have been fewer buyers for government bonds. The Fed has been shrinking its balance sheet of bonds as it reverses a pandemic-era stimulus policy, which means that it is no longer buying Treasuries — taking away a source of demand. And key foreign governments have also pulled back from bond purchases.“We’ve whittled down to a smaller universe of buyers,” said Krishna Guha, head of global policy and central bank strategy at Evercore ISI.Some analysts have suggested that the pickup in bond yields could also tie back to concerns about debt sustainability. To pay higher interest costs, the government may need to issue even more debt, compounding the problem — and focusing attention on America’s mammoth debt pile, said Ajay Rajadhyaksha, global chairman of research at Barclays.“The problem is not just that number,” he said, referencing the increasing deficit. “The problem is that this economy is as good as it gets.”The economy has remained strong even though the Federal Reserve has raised borrowing costs. That has many expecting the Fed to leave rates higher for longer.Jim Wilson/The New York TimesThat, several economists have said, is the core of the issue: America is borrowing a lot even at a time when the unemployment rate is very low and growth is strong, so the economy does not need a lot of government help.“Right now we have an incredible amount of issuance at the same time as the Fed is messaging higher for longer,” said Robert Tipp, chief investment strategist at PGIM Fixed Income, noting that typically higher issuance comes in periods of turmoil when central bank policy is more accommodative. “This is like a wartime budget deficit but without any help from the central bank. That is why this is so different.”White House officials say it is too early to know whether rising bond yields should spur Mr. Biden to add new deficit-reduction proposals to the $2.5 trillion in plans he included in this year’s budget. Those proposals consist largely of tax increases on corporations and high earners.“We might be having a different discussion about this a month from now,” said Jared Bernstein, the chair of the White House Council of Economic Advisers. “And when you’re writing budgets, you don’t go back and change your path lightly.”The Treasury Department has sold close to $16 trillion of debt for the year through September, up roughly 25 percent from the same period last year, according to data from the Securities Industry and Financial Markets Association. Much of that issuance replaced existing debt that was coming due, leaving a net debt issuance of around $1.7 trillion, more than at any other point over the past decade except for the pandemic-induced bond binge in 2020. The Treasury’s own advisory committee forecasts the size of government debt sales to rise another 23 percent in 2024.Maya MacGuineas, the president of the bipartisan Committee for a Responsible Federal Budget and a longtime proponent of reducing deficits, said it was hard to tell what had caused rates to climb recently. Still, she said, the move serves as a “reminder.”“From a fiscal perspective, the story is very simple: If you borrow too much, you become increasingly vulnerable to higher interest rates,” she said.Santul Nerkar More

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    Here’s what you need to know about the big jobs report Friday

    Friday’s nonfarm payrolls report will provide a major test for Wall Street, which has been on edge all week about a surprisingly resilient labor picture.
    Economists surveyed by Dow Jones expect that September will show a 170,000 net gain in nonfarm payrolls.
    Expectations for a Fed rate hike, low now, could change with a hot payrolls number, which is what some on Wall Street are expecting.

    Columbia South Carolina, Chick-fil-A, fast food restaurant with sign advertising $15 an hour to be hospitable. 
    Jeff Greenberg | Universal Images Group | Getty Images

    A strong jobs market could equal a weak stock market if current trends hold up.
    Friday’s nonfarm payrolls report will provide a major test for Wall Street, which has been on edge all week about a surprisingly resilient labor picture. The fear is that if the tight labor market holds up, the Federal Reserve will hold interest rates high and jeopardize the U.S. economy at a critical time.

    Economists surveyed by Dow Jones expect that September will show a net 170,000 new jobs. Significantly more than that could provide a good-news-is-bad-news jolt to an already reeling market.
    “The market views all components of the report via the eyes of the Fed,” said Quincy Krosby, chief global strategist at LPL Financial. “Clearly the market is hoping for a headline number that reinforces a labor market that has slowed but remains resilient.”
    Earlier this week, the Labor Department reported that job openings posted a surprising jump in August, rising to their highest level since the springtime and reversing a recent trend of declines. Fed officials watch the metric closely as an indicator of tightness in the labor market.
    Stocks tumbled Tuesday following the report, called the Job Openings and Labor Turnover Survey, triggering concerns that another slide could be in store if Friday’s count also is strong. Treasury yields also hit a 16-year high, possibly indicating fear of higher rates from the Fed.

    “You get a slew of strong data here, you can very easily put a November rate hike back on the table for the” Federal Open Market Committee, UBS chief economist Jonathan Pingle said Thursday on CNBC. The FOMC is the central bank’s rate-setting body.

    As of now, markets see little chance of a Fed move when its next meeting ends Nov. 1. There’s just a 19.6% chance of a hike, according to fed funds futures prices measured by the CME Group’s FedWatch Tool as of Thursday afternoon. Even for December, the probability is just 32.6%.
    However, that could change with a hot payrolls number, which is what some on Wall Street are expecting.
    Goldman Sachs, for one, is forecasting job growth of 200,000. Citigroup is even higher, looking for 240,000. ADP reported Wednesday that private payrolls increased by just 89,000 in September, though that report often differs sharply from the Labor Department’s official count.
    Indeed, weekly jobless claims have been trending lower the past few weeks, indicating a reluctance on the part of employers to cut payrolls.
    “Bottom line, the first response on the part of an employer when the economic visibility gets more cloudy is to hire less,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “We’ll most likely see more evidence of that [Friday], but employers in the aggregate are not yet looking to trim the size of the workforce, as evidenced by a still-low level of initial claims.”
    Markets also will be looking closely at worker wages and the labor force participation number.
    The expectation on the wage side is for an increase of 0.3% in average hourly earnings, a number that was up just 0.1% in August. The unemployment rate, which is influenced by participation, is expected to nudge lower to 3.7%. More

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    Happy meal? Steady demand for french fries is good news for U.S. economy

    The rate of customers ordering french fries with meals at fast-food restaurants has remained above pre-pandemic levels, potato supplier Lamb Weston said Thursday.
    That can indicate a willingness of consumers to continue splurging even as inflation remains high.
    Still, the company noted shifts in consumer behavior, such as a move toward quick-service food providers from casual dining and full-service restaurants.

    Image source: Jaromila | E+ | Getty Images

    Consumers are still splurging for a side of fries with their meals. That can have a positive read-through for the economy.
    Frozen potato supplier Lamb Weston Holdings has seen the share of consumers ordering the iconic side with fast food meals — known as the fry attachment rate — remain above pre-pandemic levels, CEO Tom Werner told analysts on the company’s earnings call Thursday. That could indicate a resilient consumer even as inflation has pinched pocketbooks and fears of a recession have mounted.

    “The global frozen potato category continues to be solid with overall demand and supply balanced,” Werner said. “Fry attachment rate, which is the rate at which consumers order fries when visiting a restaurant or other food service outlets across our key markets, [has] remained largely steady and above pre-pandemic levels.”
    When consumers feel financial pressure, a natural reaction is to cut back on spending through measures such as trading down to cheaper brands or cutting extraneous expenses. In the case of Lamb Weston and fast-food companies, that can manifest in the form of customers opting to skip fries or other side orders in a bid to keep spending restricted.
    The impact of inflation can affect the business in ways other than fry sales, of course. Lamb Weston saw little change in total traffic in key U.S. markets, but evidence of a shift in consumer behavior was there: Growth in quick-service food providers, which are typically more affordable, balanced out declines seen in full-service and casual-dining restaurants.
    Werner also said inflation can continue to drive up costs for the company, specifically related to potato contract prices.
    He pointed to June as a source of restaurant traffic weakness seen in the fiscal fourth quarter. But Werner said it has been reassuring to see trends improve since then, while remaining confident in the ability of the company’s potato offerings to weather an economic slowdown.

    “We suspect that restaurant traffic trends will be volatile in the near term as high interest rates, high inflation and uncertainty continues to affect consumer,” Werner said. “That said, frozen potato demand has proven resilient during the most challenging economic times, and we continue to be confident in the long-term growth prospect for the global category.”
    Lamb Weston stock jumped more than 9% in Thursday’s session. The stock has performed almost in line with the broader market in 2023, up almost 11% since the year began. More

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    Women Could Fill Truck Driver Jobs. Companies Won’t Let Them.

    Three women filed a discrimination complaint against a trucking company over its same-sex training policy, which they say prevented them from being hired.The trucking industry has complained for years that there is a dire shortage of workers willing to drive big rigs. But some women say many trucking companies have made it effectively impossible for them to get those jobs.Trucking companies often refuse to hire women if the businesses do not have women available to train them. And because fewer than 5 percent of truck drivers in the United States are women, there are few female trainers to go around.The same-sex training policies are common across the industry, truckers and legal experts say, even though a federal judge ruled in 2014 that it was unlawful for a trucking company to require that female job candidates be paired only with female trainers.Ashli Streeter of Killeen, Texas, said she had borrowed $7,000 to attend a truck driving school and earn her commercial driving license in hopes of landing a job that would pay more than the warehouse work she had done. But she said Stevens Transport, a Dallas-based company, had told her that she couldn’t be hired because the business had no women to train her. Other trucking companies turned her down for the same reason.“I got licensed, and I clearly could drive,” Ms. Streeter said. “It was disheartening.”Ms. Streeter and two other women filed a complaint against Stevens Transport with the Equal Employment Opportunity Commission on Thursday, contending that the company’s same-sex training policy unfairly denied them driving jobs. The commission investigates allegations made against employers, and, if it determines a violation has occurred, it may bring its own lawsuit. The commission had brought the lawsuit that resulted in the 2014 federal court decision against similar policies at another trucking company, Prime.Critics of the industry said the persistence of same-sex training nearly a decade after that ruling, which did not set national legal precedent, was evidence that trucking companies had not done enough to hire women who could help solve their labor woes.“It’s frustrating to see that we have not evolved at all,” said Desiree Wood, a trucker who is the president and founder of Real Women in Trucking, a nonprofit.Ms. Wood’s group is joining the three women in their E.E.O.C. complaint against Stevens, which was filed by Peter Romer-Friedman, a labor lawyer in Washington, and the National Women’s Law Center.Companies that insist on using women to train female applicants generally do so because they want to avoid claims of sexual harassment. Trainers typically spend weeks alone with trainees on the road, where the two often have to sleep in the same cab.Critics of same-sex training acknowledge that sexual harassment is a problem, but they say trucking companies should address it with better vetting and anti-harassment programs. Employers could reduce the risk of harassment by paying for trainees to sleep in a hotel room, which some companies already do.Women made up 4.8 percent of the 1.37 million truck drivers in the United States in 2021, according to the most recent government statistics, up from 4 percent a decade earlier.Long-haul truck driving can be a demanding job. Drivers are away from home for days. Yet some women say they are attracted to it because it can pay around $50,000 a year, with experienced drivers making a lot more. Truck driving generally pays more than many other jobs that don’t require a college degree, including those in retail stores, warehouses or child care centers.Women made up 4.8 percent of truck drivers in 2021, according to the most recent government statistics.Mikayla Whitmore for The New York TimesThe infrastructure act of 2021 required the Federal Motor Carrier Safety Administration to set up an advisory board to support women pursuing trucking careers and identify practices that keep women out of the profession.Robin Hutcheson, the administrator of the agency, said requiring same-sex training would appear to be a barrier to entry. “If that is happening, that would be something that we would want to take a look at,” she said in an interview.Ms. Streeter, a mother of three, said she had applied to Stevens because it hired people straight out of trucking school. She told Stevens representatives that she was willing to be trained by a man, but to no avail.Bruce Dean, general counsel at Stevens, denied the allegations in the suit. “The fundamental premise in the charge — that Stevens Transport Inc. only allows women trainers to train women trainees — is false,” he said in a statement, adding that the company “has had a cross-gender training program, where both men and women trainers train female trainees, for decades.”Some legal experts said that, although same-sex training was ruled unlawful in only one federal court, trucking companies would struggle to defend such policies before other judges. Under federal employment discrimination law, employers can seek special legal exemptions to treat women differently from men, but courts have granted them very rarely.“Basically, what the law says is that a company needs to be able to walk and chew gum at the same time,” said Deborah Brake, a professor at the University of Pittsburgh who specializes in employment and gender law. “They need to be able to give women equal employment opportunities and prevent and remedy sexual harassment.”Ms. Streeter said she had made meager earnings from infrequent truck driving gigs while hoping to get a position at Stevens. Later this month, she will become a driver in the trucking fleet of a large retailer.Kim Howard, one of the other women who filed the E.E.O.C. complaint against Stevens, said she was attracted to truck driving by the prospect of a steady wage after working for decades as an actor in New York.“It was very much a blow,” she said of being rejected because of the training policy. “I honestly don’t know how I financially made it through.”Ms. Howard, who is now employed at another trucking company, said she had worked briefly at a company where she was trained by two men who treated her well. “It’s quite possible for a woman to be trained by a man, and a man to be a professional about what the job is,” she said.Other female drivers said they had been mistreated by male trainers who could be relentlessly dismissive and sometimes refused to teach them important skills, like reversing a truck with a large trailer attached.Rowan Kannard, a truck driver from Wisconsin who is not involved in the complaint against Stevens, said a male trainer had spent little time training her on a run to California in 2019.At a truck stop where she felt unsafe, Ms. Kannard said, the trainer demanded that she leave the cab — and then locked her out. She asked to stop the training and was flown back to Wisconsin. Yet she said she did not believe that same-sex training for women was necessary. “Some of these men that are training, they should probably go through a course.”Desiree Wood, the president of Real Women in Trucking, says the trucking industry has not evolved to hire and train more women.Mikayla Whitmore for The New York TimesMs. Wood, of Real Women in Trucking, said trucking companies’ training policies were misguided for another reason — there is no guarantee that a woman will treat another woman better than a male trainer. She said a female trainer had once hurled racist abuse at her and told her to drive dangerously.“I’m Mexican — she hated Mexicans and wanted to tell me all about it the whole time I was on the truck,” Ms. Wood said, “She screamed at me to speed in zones where it was not safe.”Still, some women support same-sex training policies.Ellen Voie, who founded the nonprofit Women in Trucking, said truck driving should be treated differently from other professions because trainers and trainees spent so much time together in close quarters.“I do not know of any other mode of transportation that confines men and women in an area that has sleeping quarters,” Ms. Voie said.Lawyers for Prime, the company that lost the E.E.O.C. suit in 2014 challenging its same-sex training policy, called Ms. Voie as an expert witness to defend the practice. In her testimony, she contended that women who were passed over by companies that didn’t have female trainers available could have found work at other trucking companies. She still believes that.But Ms. Voie added that trucking companies also needed to do more to improve training for women, including placing cameras in cabs to monitor bad behavior and paying for hotel rooms so trainers and trainees can sleep separately.Steve Rush, who recently sold his New Jersey trucking company, stopped using sleeper cabs over a decade ago, sending drivers to hotels. He said fewer of his drivers quit compared with the rest of the industry, as a result.“What woman in her right mind wants to go out and learn how to drive a truck and have to jump into the sleeper that some guy’s just crawled out of,” he said.Ben Casselman More

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    U.A.W. Chief Shawn Fain Has a Nonnegotiable Demand: Eat the Rich

    For as long as anyone can remember, the Indiana city of Kokomo has been a conservative stronghold. Ronald Reagan crushed Walter Mondale in Kokomo. Bill Clinton lost twice. So did Barack Obama. The current mayor, a Republican, is running unopposed for re-election. It’s a town known for something it would prefer to forget: a Ku Klux Klan rally in 1923 that was the largest ever.Yet somehow Kokomo produced a union leader whose rhetoric is aimed at toppling the conservative and moneyed classes — a rebel who rejects the niceties of an earlier era in favor of a sharp-edged confrontation.“Billionaires in my opinion don’t have a right to exist,” says Shawn Fain, who is leading the United Automobile Workers in a multifront labor battle against the Big Three carmakers that has little precedent and is making a lot of noise.In interviews, in speeches and on social media, Mr. Fain hammers the wealthy again and again, making the cause of the union’s 150,000 autoworkers at General Motors, Ford Motor and Stellantis something much broader.“There’s a billionaire class, and there’s the rest of us,” he said at an impromptu news conference outside a Ford plant in Wayne, Mich. “We’re all expected to sit back and take the scraps and live paycheck to paycheck and scrape to get by. We’re second-class citizens.”Mr. Fain introduced President Biden on his visit to a U.A.W. picket line last month in Michigan.Pete Marovich for The New York TimesBefore Mr. Fain took over in March, the U.A.W. leadership did not so much scorn the billionaires as strive to emulate them. One executive spent $2 million in embezzled funds on gambling, cocaine and fancy cars. Another bought $13,000 worth of cigars in one day. A federal investigation won 17 convictions against the leadership.Mr. Fain defeated the incumbent by the thinnest of margins. That might have given another candidate an incentive to keep a low profile, secure an adequate contract and declare victory.Not this fellow. He is playing a very high-stakes game.First, there are the aggressive demands and the unusual tactics. The union wants a 40 percent pay raise over four years to make up for much smaller increases in past years, a four-day workweek, annual cost-of-living adjustments, paid health care for retirees and the elimination of a lower pay tier for newer workers. To secure these benefits, the U.A.W. is challenging all three companies at once, which it had never done, by staging a targeted, escalating walkout.Mr. Fain, 54, has made himself the face of the strike, which is in its third week. On Facebook Live in August, he literally threw away a contract proposal from Stellantis, the automaker that absorbed what was once Chrysler. “That’s where it belongs: the trash,” he explained.During a rally with President Biden last week, Mr. Fain invoked President Franklin D. Roosevelt’s hallowed phrase about American factories being the arsenal of democracy. “Today, the enemy isn’t some foreign country miles away — it’s right here in our own area,” he said, casting the automakers in the role of the Axis powers. “It’s corporate greed.”Since U.A.W. members began targeted walkouts over their contract demands, Mr. Fain has made himself the face of the strike.Brittany Greeson for The New York TimesWhether Mr. Fain’s fiery words will lead to effective negotiations is an open question. Fiery words can inspire, but they can also anger. Stellantis said the union leaders seemed “more concerned about pursuing their own political agendas than negotiating.” G.M. denounced the union’s “rhetoric and theatrics,” and Ford said the U.A.W. should focus on talks and not “planning strikes and P.R. events.”“I’m subtle as a hammer,” Mr. Fain acknowledged in an interview. “Probably always was. That’s in my work life. Privately, I’m more shy.” Even his official U.A.W. biography calls him “outspoken” and says he was “ostracized” for his contentious assertions in union meetings.The people who knew him in high school in Kokomo in the 1980s definitely did not see this rise to national prominence coming. They recall an easygoing guy with a lot of respect for authority.“I don’t think Kokomo was a breeding ground for radicals,” said Paul Nicodemus, another member of the class of 1987, adding that the city was “known for having the biggest tree trunk and the largest stuffed bull,” two longtime local tourist attractions. Malcolm X, whom Mr. Fain recently invoked, wasn’t on the curriculum.A closer look, however, reveals how Mr. Fain’s upbringing may have played a role in creating a confrontational figure who vilifies the automakers while alarming Wall Street. “Like watching a slow-moving car crash take place on black ice,” Wedbush analysts wrote as the strike expanded last week to more factories.Mr. Fain’s great-grandparents Gordon and Effie Fain were economic migrants, moving to Kokomo from Kentucky in the 1920s.Mr. Fain’s hometown, Kokomo, Ind., is a traditional Republican bastion.Lee Klafczynski for The New York Times“My grandparents came from poverty,” Mr. Fain said. “When I see people from Mexico or Venezuela being vilified, I see my grandparents. They were born in Kentucky and Tennessee rather than across the border, but I don’t see them as different.”When the Fains arrived, the auto industry in Kokomo was consolidating. In 1937, Chrysler bought a dormant auto plant to make transmissions. Stanley Fain, Shawn’s grandfather, worked for Chrysler for 35 years. Other relatives worked for General Motors.Shawn’s father, Rodger, broke with tradition. He was the Kokomo chief of police; his wife, Stella, was a nurse. In Rodger’s career, there are echoes of his son’s situation. He was hired to clean up a mess.Kokomo had several high-profile murders in the 1970s, making the populace more fearful, but it was also a time when relations between the police and the city were strained. There were allegations that the police were hostage to political whims, which led to a chief’s resignation. The police protested low wages by driving past the mayor’s house with sirens blaring and similar antics, according to a 2014 history of law enforcement in the county. They also went on strike for a day.The first Chrysler pay stub received by Mr. Fain’s grandfather Stanley Fain, a union member, in 1937.Sarah Rice for The New York TimesKokomo has a long automaking history. Chrysler took over a dormant plant in the 1930s and remained the dominant local employer when Mr. Fain was growing up.Lee Klafczynski for The New York TimesRodger Fain, who became chief in 1980, is credited with professionalizing the force and ending the acceptance of gratuities. When the Klan decided to march through town shortly after he took the job, it was a high-tension moment. There were vivid memories of a 1979 march in North Carolina where Klan members shot and killed five participants in a counterdemonstration organized by the Communist Party.The Kokomo march took place without incident, and Chief Fain got credit for an absence of violence. Still, the work wasn’t the sort of thing he wanted his son to do.“My father steered me away from a career in law enforcement,” Mr. Fain said. “When he retired in 1987, he told me that back in his day, you only had to worry about someone pulling a knife. Now everyone was arming themselves.”The 1987 yearbook for Taylor High School had the theme “… lovin’ every minute of it!” There was nothing Shawn loved more than sports. He played basketball all four years of high school. Football, golf, cross-country and baseball took up other seasons.“In Indiana, you have one option, and that’s basketball,” Mr. Fain said. “It was religion. Fathers pushed their sons and even their daughters to play basketball. I had a pretty hard-core basketball coach, in your face all the time, and I adopted a lot of that mentality.”Mr. Fain was an avid athlete in high school, with a particular passion for basketball. In Indiana, “it was religion,” he said.Paul Sancya/Kokomo TribuneThat aggressive attitude on the court served him and the team well, to an extent. The yearbook put a good face on it, calling it an “educational” season, but the record was 5-16.His teammates remember the good parts.“There was one game when we were down by one,” Brian Tate said. “The ball came back to us, I dribbled the length of the court, looked to my right, saw Shawn was open. I said, ‘This is the guy.’ I got it to him, and he nailed it at the last second — game over. He was clutch.”Dr. Tate, now an endodontist, does not recall any budding activists.“We were pretty simple kids,” he said. “I don’t ever remember Shawn by any stretch expressing a political opinion. We never talked about billionaires.”There weren’t many billionaires to talk about. In 1982, Forbes found only 13 when it started listing the country’s richest people. In 1986, there were 26. In 1987, Forbes listed 49.In Kokomo, the non-billionaires were not doing as well. The economy had recovered from the devastating recession of the early 1980s, when one in four workers in the area was unemployed. But it wasn’t moving forward. Local average wages were stagnant, the Labor Department reported.A high school yearbook photo of Mr. Fain, second from right in the back row. “We were pretty simple kids,” a classmate recalled.Lee Klafczynski for The New York Times“Some of them may grow up knowing what they want to do,” Mr. Fain said of teenagers, “but I wasn’t one of them.”Lee Klafczynski for The New York TimesMr. Fain had no idea what to do with his life. “A lot of young teenagers are pushed to pick out a career in the eighth grade, but they haven’t experienced life, they haven’t experienced reality,” he said. “Some of them may grow up knowing what they want to do, but I wasn’t one of them.”He attended the Kokomo branch of Indiana University, not a top-tier basketball school. He got some attention for a good game or two, but dropped out before getting a degree.There were hard times. Mr. Fain married a high school classmate in 1991 and had two girls. “When you go through hardship and are laid off, live on $80-a-week unemployment, apply for government aid to get formula and diapers for your child, it makes you realize what it takes to survive in this world,” he said. (The marriage ended in divorce. He is engaged to Keesha McConaghie, a financial analyst for the U.A.W.)It was a neighbor in the electricians’ union who set Mr. Fain on a viable path. “If you had asked me, ‘Do you want to be an electrician?’ — I probably would have laughed. I knew nothing about that trade. I applied, got in, and the rest is history.” He began working for Chrysler in 1994.His father provided a final element that shaped the future union leader. Rodger Fain ran for the Indiana legislature as a Democrat in 1986. His platform included supporting economic development, attracting high-paying jobs and tearing down the “walls” between labor and management. The vote was close, but as usual Kokomo went for the Republican.Mr. Fain talking to U.A.W. members at a Michigan plant during his run for the union presidency early this year.Jim West/AlamyShawn Fain, raised to be active in the community, ran for the school board in 1998. He wasn’t elected but liked the idea of service.“Some people, when they see things happening they disagree with, let it happen,” Mr. Nicodemus, the former classmate, said. “And there are others like Shawn. Instead of sitting back, he steps up and says, ‘I’ll be the guy.’”That was what happened at the U.A.W., even if for the longest time the union leadership didn’t want the guy.“I didn’t like the way things were going in my plant, was elected, and the rest was history,” Mr. Fain said, who won five terms as a skilled trades committeeman and held other posts.In 2007, he was a leader in a grass-roots campaign to reject a contract with Chrysler that would pay new workers at a lower rate and made other concessions. In accepting the deal, he told U.A.W. leadership, “you might as well get a gun and shoot yourself in the head.”The contract was approved, but Mr. Fain gained a reputation as a rebel. Eleven years ago, he moved from Kokomo to Detroit to work directly for the union. In the ensuing years, corruption scandals at the top of the U.A.W. ended with two successive union presidents in prison, along with a mandate from a court-appointed monitor for the top posts to be elected by popular vote for the first time.It was an opening for reformers, and Mr. Fain led an insurgent ticket that ousted the old guard. He pledged not only to end corruption but also to jettison a go-along, get-along approach that he denounced as “company unionism.” One of his first public acts was to decline the traditional handshake with the automakers at the start of negotiations in July.“I never planned on running for U.A.W. president,” Mr. Fain said. “It wasn’t on my radar. But things change.”Brittany Greeson for The New York TimesHe calls his caustic attitude “a migration,” something he took on “just from experience.” Likewise with his political journey. “I never planned on running for U.A.W. president,” he said. “It wasn’t on my radar. But things change.”The inexorable rise of the billionaires offered more motivation. There are an estimated 750 of them in the United States now, and they are quite a bit richer than they were. “We’re all fed up with seeing the rich get richer,” Mr. Fain declared recently. (His own income last year was $160,000; the U.A.W. lists the president’s base salary at $207,000.)Nelson Lichtenstein, a labor historian, said he saw Mr. Fain as a throwback.“He is using more forceful rhetoric than any U.A.W. leadership in a long while, reaching back to the 1930s and 1940s,” Mr. Lichtenstein said. “The idea of mutual accommodation with the companies is gone.”Mr. Fain took Senator Bernie Sanders, the progressive Vermont independent, to a September rally and cites Walter Reuther, the U.A.W. leader during the postwar years, as an inspiration, along with the Rev. Dr. Martin Luther King Jr. and the “pyramid of success” developed by John Wooden, the coach who produced a U.C.L.A. basketball dynasty. The Wooden principles include at the apex a suggestion about “enjoyment of a difficult challenge.”A strike is a double-edged sword, said Patrick Anderson, chief executive of Anderson Economic Group in East Lansing, Mich. The greater the number of striking workers, the more pressure on the employer. But as the strike goes on, the people who will feel it the worst are those very workers, which gives them an incentive to settle. The automakers know this, of course, which makes for a difficult challenge indeed.Mr. Fain copes with stress by working out and listening to music, cranking up selections from the entire spectrum — hip-hop, ’80s rock, Metallica, Frank Sinatra. He’s still getting used to the job, and to the fact that Shawn Fain from Kokomo Local 1166 is the U.A.W. president.“Surreal,” he calls it. If anything will keep him grounded, he figures it might be this: “U.A.W. leaders in the past tended to forget who they’re here to represent. I don’t forget.” More

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    Private payrolls rose 89,000 in September, far below expectations, ADP says

    ADP reported that private job growth totaled just 89,000 for the month, down from an upwardly revised 180,000 in August and below the 160,000 estimate from Dow Jones.
    Job gains came almost exclusively from services, which contributed 81,000 to the total.
    The report comes a day after the Labor Department said job openings unexpectedly rose sharply in August.

    Private payroll growth tailed off sharply in September, according to an ADP report Wednesday that provides a counterweight to other signs that the labor market is still running strong.
    The payroll processing firm said job growth totaled just 89,000 for the month, down from an upwardly revised 180,000 in August and below the 160,000 estimate from economists polled by Dow Jones.

    Perhaps more importantly, the report provides some sign that a historically tight labor market could be loosening and giving the Federal Reserve some incentive to stop raising interest rates. ADP also said annual wage growth slowed to 5.9%, the 12th consecutive monthly decline.
    However, the ADP numbers can differ significantly from the government’s official count, which comes Friday. Economists estimate nonfarm payrolls increased by 170,000 in September, down from a 187,000 rise in August, according to Dow Jones.
    Job gains, according to Wednesday’s report, came almost exclusively from services, which contributed a net 81,000 to the total. Of that total, virtually all came from leisure and hospitality, which added 92,000.
    Other sectors posting gains included financial activities (17,000), construction (16,000), and education and health services (10,000). However, they were offset by losses of 32,000 in professional and business services, 13,000 in trade, transportation and utilities, and 12,000 in manufacturing.
    “We are seeing a steepening decline in jobs this month,” said Nela Richardson, chief economist at ADP.”Additionally, we are seeing a steady decline in wages in the past 12 months.”

    The report comes a day after the Labor Department said job openings unexpectedly rose sharply in August. The Job Openings and Labor Turnover Survey results sent a jolt into financial markets, aggravating worries that the Fed will need to keep monetary policy restrictive to control inflation.
    However, the ranks of those the department considers unemployed also rose considerably, taking down the ratio of job openings to available workers to 1.5 to 1, where it previously had been as high as 2 to 1.
    ADP said job growth was strongest at companies with fewer than 50 employees, a sector that added 95,000 positions. Medium-sized companies contributed 72,000, while those with 500 or more employees lost 83,000. More

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    JOLTS Report Shows Job Openings Up, Shaking Markets

    The NewsThe number of job openings rose in August, the Labor Department reported on Tuesday, after three consecutive months of falling numbers.There were 9.6 million job openings in the month, up from a revised total of 8.9 million in July, according to seasonally adjusted figures in the latest Job Openings and Labor Turnover Survey, known as JOLTS. The increase was larger than expected.Investors balked at the fresh numbers, fearful that they would signal to the Federal Reserve that the economy was still running too quickly, requiring even higher interest rates to slow it.Construction workers at an apartment building in Oakland, Calif.Jim Wilson/The New York TimesWhy It Matters: The economy nears prepandemic measures.Job openings are closely monitored by the Fed, which has tried to fight inflation over the past 19 months by increasing interest rates, aiming to cool the economy and reduce labor demand, though it took a pause at its most recent meeting.“The Fed won’t make policy decisions based on one JOLTS report, but it does keep the risks tilted toward another rate hike,” Nancy Vanden Houten, lead U.S. economist for Oxford Economics, said of the August increase in job openings.The S&P 500 slumped 1.4 percent, while the yield on the 10-year Treasury bond, a crucial benchmark interest rate around the world, rose 0.1 percentage points to 4.8 percent, indicative of investors’ betting on stronger growth ahead.Job openings have gradually come down from the 12 million recorded in April 2022, while the rate of workers leaving their jobs is down by nearly a percentage point, approaching what it was right before the pandemic. Openings rose in August, but because unemployment also ticked up, the number of openings per unemployed worker was flat, at around 1.5.“The labor market is tight, but it’s easing, and gracefully so,” said Mark Zandi, the chief economist at Moody’s Analytics. He added that slowdowns in monthly job growth, wage growth and hours worked, along with businesses using fewer temporary workers, all pointed to a cooling of the labor market.And so far, the labor market and economy have managed to throttle back without a big jump in unemployment, indicators of a so-called soft landing.The rate of people quitting their jobs, a measure of workers’ confidence in the labor market, was unchanged in August at 2.3 percent.Layoffs have also been flat, suggesting that employers are reluctant to part ways with workers in a tight labor market. And though overall inflation sped up, driven largely by increases in fuel costs, the Fed’s preferred measure of inflation slowed.Background: A resilient economy faces some headwinds.Despite the moderate uptick in job openings, there are still some potential headwinds on the horizon.Because there’s a lag in the JOLTS report, labor stoppages like the United Automobile Workers union strike, which now involves around 25,000 workers, are not captured in the data. And though a government shutdown was narrowly avoided over the weekend, one could happen next month, potentially taking thousands of government employees off payrolls and sapping consumer spending.Other factors that indicate softening demand are the resumption of mandatory student loan repayments and higher oil prices, which have in turn spooked the stock market. The economy, which had a strong third quarter of growth, could see a slowdown to close the year.What matters more than the JOLTS report is the Fed’s projection of the unemployment rate, said Preston Mui, a senior economist at Employ America, a research and advocacy group focused on the job market. The Fed last month revised its median estimate of unemployment by the end of 2023 to 3.8 percent, down from a June projection of 4.1 percent. That suggests the Fed does not view a tight labor market as a problem it needs to fix with further rate increases, Mr. Mui said.Mr. Zandi cautioned against declaring a soft landing until the Fed starts to roll back interest rates. But given the gradual slowdown so far, and with financial conditions tightening overall, he said the Fed should be pleased with its progress.What’s Next: The September jobs report on Friday.September’s jobs report will be released on Friday by the Labor Department.The consensus estimate is that the economy added 170,000 jobs in September, according to Bloomberg, and that the unemployment rate declined to 3.7 percent from 3.8 percent.Joe Rennison More

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    A Rural Michigan Town Is the Latest Battleground in the U.S.-China Fight

    Firestorms over Chinese investments, like a battery factory in Green Charter Township, are erupting as officials weigh the risks of taking money from an adversary.Yard signs along the quiet country roads of Green Charter Township, Mich., home to horse farms and a 19th-century fish hatchery, blare a message that an angered community hopes is heard by local leaders, the Biden administration and China: “No Gotion.”The opposition is to a plan by Gotion, a subsidiary of a Chinese company, to build a $2.4 billion electric vehicle battery factory on roughly 270 acres of largely uninhabited scrub land. An investment of that magnitude can transform a local economy, but in this case it is unwelcome by many. Residents fear that the company’s presence is a dangerous infiltration by the Chinese Communist Party and it has led to backlash, death threats and an attempt to unseat the elected officials who backed the project.The debate over the factory has turned a township of about 3,000 people located 60 miles north of Grand Rapids against each other and into an unlikely battleground in the economic contest between the United States and China. The resistance is part of a broader movement by states to erect new barriers to Chinese investment amid concerns about national security and growing anti-China sentiment.“It’s the Communist influences that I’m bothered by, because they have shown repeatedly that they don’t care about our rules, our laws or anything,” said Lori Brock, who lives on a 150-acre horse farm near where the battery factory is being built. “They shouldn’t be able to buy here.”Gotion purchased 270 acres of land in Green Charter Township with plans to build an electric vehicle battery plant.Cydni Elledge for The New York TimesThat sentiment has been reverberating in the United States and on the Republican presidential campaign trail this year. In August, the campaign of Nikki Haley called Michigan’s Democratic governor, Gretchen Whitmer, a “comrade” for backing the Gotion factory. On Wednesday, Vivek Ramaswamy, a Republican candidate who has called for banning Chinese investments, will hold a rally at Ms. Brock’s farm.Gotion has insisted that it has no ideological ties to China. John Whetstone, a company spokesman, said Gotion was “in no way affiliated with any political party,” explaining that it had pledged to the township not to partake in any activity that supports or encourages any political philosophy.Animosity toward China has been deterring Chinese investment in the United States in recent years. Annual investment by Chinese companies has fallen to $5 billion in 2022 from $46 billion in 2016, according to a recent report by Rhodium Group, as relations between the world’s two largest economies soured. Employment at Chinese firms in the United States has declined by nearly 40 percent since 2017, to 140,000 workers.But investment is starting to turn around as a result of new federal incentives — included in the 2022 Inflation Reduction Act — that were meant to spur American production of electric vehicles. Foreign companies, including those from China, are trying to capitalize on tax credits for businesses that manufacture renewable energy products inside the United States.The Coalition for a Prosperous America, which represents American manufacturers, estimates that Chinese companies could gain access to $125 billion in U.S. tax credits related to “green energy manufacturing” investments.“There are really strong commercial logics driving this, and those commercial logics aren’t going away anytime soon,” said Kyle Jaros, a professor at the University of Notre Dame, who studies Chinese investment in the United States.The possibility that American taxpayers could subsidize Chinese firms has stoked anger in local communities and in Congress, where lawmakers are scrutinizing transactions involving companies with ties to China and urging the Biden administration to block them.Experts predict that Chinese companies will continue to pursue investments in the United States but concerns at the local level and in Washington are mounting.Cydni Elledge for The New York TimesSenator Marco Rubio of Florida, a Republican, has introduced legislation that would block subsidies to Chinese battery companies. A House committee has demanded answers about a licensing agreement between Ford and the Chinese battery company Contemporary Amperex Technology Co. Limited. Ford has defended the project and described it as an effort to strengthen domestic battery production.House Republicans have also urged Treasury Secretary Janet L. Yellen to withhold any federal subsidies for the Gotion facility and questioned why the Committee on Foreign Investment in the United States did not block its investment.Gotion has said that it voluntarily submitted documents to the interagency panel, known as CFIUS, and the committee declined to block the transaction.The Inflation Reduction Act does restrict American consumers from getting tax credits if they buy electric cars that have parts that come from “foreign entities of concern,” such as China. However, the law does not allow the Treasury to block Chinese companies from securing tax credits if they build factories in the United States.“We know that the vast majority of investments made through the Inflation Reduction Act are being made by American companies,” said Wally Adeyemo, the deputy Treasury Secretary.The Treasury estimates that only 2 percent of the electric vehicle and battery investments that have been made during the Biden administration involve Chinese companies.Gotion already has operations in California and Ohio and plans to open a $2 billion lithium battery manufacturing plant in Illinois. The company chose Michigan last year after securing nearly $800 million in grants and tax exemptions from the state’s strategic fund, whose officials said the investment would bring jobs, customers and economic vitality to the region. At the time, Ms. Whitmer hailed the factory as a win for the state.Since then, a growing and vocal contingent has been working to halt the project.Much of that effort has been directed at Green Charter Township’s board of trustees, a group of local Republican officials who voted to allow Gotion to secure the state tax breaks. When residents realized that the company that was coming to town had ties to China, township meetings that usually drew a handful of people attracted hundreds of angry critics.Green Charter Township’s supervisor, Jim Chapman, sees the advantages of having a Gotion electric vehicle battery plant in the region.Cydni Elledge for The New York TimesJim Chapman, the township supervisor, has heard residents suggest that they would call in the Michigan militia or exercise their Second Amendment rights to stop Gotion from building the factory. Mr. Chapman, a lifelong Republican and former police officer, has found himself in the position of trying to convince his neighbors that allowing Gotion to bring more than 2,000 new jobs to the area will create a housing boom and bring other new businesses to the area.Yet residents have confronted Mr. Chapman with a host of conspiracy theories including that the plant is a “Trojan Horse” and that it will be used to spy on Americans. Some in town believe that the plant will employ cheap Chinese labor, instead of local workers, and erect cooling towers to conceal ballistic missiles.“No Gotion” groups active on Facebook and other social media platforms have seized on the company’s bylaws, which say the company operates in accordance with the Constitution of the Communist Party of China.Kelly Cushway, an organizer in the Gotion resistance movement, opposes the facility and is running for trustee of Green Charter Township.Cydni Elledge for The New York Times“I will go to my grave and people will curse me for this project,” Mr. Chapman said during an interview in his office inside the Green Charter Township building.After researching the company and the actions of other Chinese businesses that operate in the United States, Mr. Chapman concluded that Gotion was not a threat and that the opportunity to invigorate a relatively poor part of the state was worthwhile.“What are they going to spy on us for in Big Rapids? Are they going to steal Carlleen Rose’s fudge recipe?” Mr. Chapman asked, referring to the owner of a popular confectionery in Big Rapids.Opponents hope that a November recall election can replace the board and stop Gotion in its tracks. Residents are raising money to file lawsuits and petition against every permit that Gotion will need to construct a factory that is expected to span more than a million square feet.“I’m worried about environmental catastrophes — there’s going to be 200 to 300 truckloads of chemicals coming in every day,” said Kelly Cushway, who opposes Gotion and is running for a seat on the Green Charter Township board. “We know China has not worried too much about their environment.”Some community activists such as Ms. Brock are coordinating with counterparts in other states including North Dakota, where Fufeng USA tried and failed to construct a corn mill, to learn how to terminate a Chinese investment.Ms. Brock said she remained hopeful that the Gotion factory in her town could be halted.“We haven’t even started,” Ms. Brock said. “We haven’t even hit them with one lawsuit yet, and it’s coming.” More