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    Fed’s Waller expresses confidence that policy is in the right place to bring down inflation

    Fed Governor Christopher Waller said Tuesday he is “increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent.”
    Waller added that he could see a point where the Fed might start lowering rates if inflation continues to ease over the next three to five months.
    Governor Michelle Bowman offered a contrasting view, in which she reiterated her belief that more rate hikes likely will be needed as evolving dynamics keep inflation elevated.

    Federal Reserve Governor Christopher Waller said Tuesday he’s growing more confident that policy is in a place now to bring inflation back under control.
    There was nothing in Waller’s prepared remarks for a speech in Washington, D.C., that suggests he’s contemplating cutting interest rates, and he noted that inflation currently is still too high. But he pointed out a variety of areas where progress has been made, suggesting the Fed at least won’t need to hike rates further from here.

    “While I am encouraged by the early signs of moderating economic activity in the fourth quarter based on the data in hand, inflation is still too high, and it is too early to say whether the slowing we are seeing will be sustained,” he said. “But I am increasingly confident that policy is currently well positioned to slow the economy and get inflation back to 2 percent.”
    Waller added that he could see a point where the Fed might start lowering rates if inflation continues to ease over the next three to five months.
    “It has nothing to do with trying to save the economy. It is consistent with every policy rule,” he said. “There is no reason to say we will keep it really high.”
    A subsequent speech Tuesday morning from Governor Michelle Bowman offered a contrasting view, in which she reiterated her belief that more rate hikes likely will be needed as evolving dynamics keep inflation elevated.
    The commentary comes two weeks before the rate-setting Federal Open Market Committee’s Dec. 12-13 policy meeting. Markets largely expect the committee to hold its key lending rate steady in a target range between 5.25%-5.5%. But Fed officials have stressed the importance of remaining vigilant on inflation and keeping their options open.

    During the central bank’s ongoing battle against inflation, Waller has been one of the more hawkish members, meaning he has favored tighter policy and higher rates. However, he titled his Tuesday speech, “Something Appears to Be Giving,” a contrast to a recent speech titled “Something’s Got to Give.”
    “I am encouraged by what we have learned in the past few weeks — something appears to be giving, and it’s the pace of the economy,” he said.
    Waller cited a variety of areas where activity is moderating, from retail sales to the labor market to manufacturing. He also noted easing in supply chain pressures that were largely responsible for the initial jump in inflation, but he said that factor can’t be counted on to help bring inflation down further.
    “Monetary policy will have to do the work from here on out to get inflation back down to 2 percent,” he said.
    Waller noted easing in inflation gauges such as the consumer price index, which was flat in October and “what I want to see.” However, he said there will be multiple other data points in the next weeks that he will be watching closely, including Thursday’s report on inflation as measured by personal consumption expenditures.
    Core PCE, which excludes food and energy, is the Fed’s preferred benchmark for measuring longer-term inflation trends. For September, it was up 3.7% from a year ago; economists expect October to show a 3.5% acceleration.
    Bowman cited several factors as likely to keep inflation elevated.
    She echoed Waller’s point about supply chains and said further improvements in labor force participation could be limited, a situation that could boost pay as businesses struggle to find enough workers. Also, Bowman noted the uncertainty of future productivity gains due to education disruptions from the Covid pandemic.
    A switch back to heavy services consumption also could boost inflation, as could some sectors of the economy that are not sensitive to higher rates.
    “My baseline economic outlook continues to expect that we will need to increase the federal funds rate further to keep policy sufficiently restrictive to bring inflation down to our 2 percent target in a timely way,” Bowman said.
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    Bidder Aims to Save Bankrupt Trucking Firm Yellow

    The plan would put Yellow back on the road with thousands of unionized drivers, but would force the government to wait longer for a loan repayment.When Yellow abruptly shuttered its operations in the summer and filed for bankruptcy protection, few thought that a buyer would emerge and try to revive the long-troubled trucking giant.Now a prominent trucking executive has assembled a last-minute plan to acquire Yellow out of bankruptcy — a proposal that seeks not only to rehire many of the company’s employees but also to work with their union, the International Brotherhood of Teamsters, to create a healthy business.The plan rests on getting the Treasury Department to allow Yellow to postpone repayment of a $700 million rescue loan that it made to the company in 2020. The Treasury may not accept the plan because there are legal obstacles to extending the loan. And it stands to be repaid sooner under the plan that Yellow has already filed in the Delaware bankruptcy court, which involves selling the company’s terminals and other assets to raise hundreds of millions of dollars in cash. Some trucking analysts say reviving Yellow will be hard because many customers will have moved on to other trucking companies that are much better run than the old Yellow.But Sarah Riggs Amico, the trucking executive leading the deal, said only her plan could bring back thousands of jobs, adding that she had the experience to build a leaner company in partnership with the Teamsters and assemble an executive team that can win back customers.“Restructuring Yellow provides an opportunity to bring back tens of thousands of fair-wage, union truck-driving jobs while bolstering America’s supply chain,” said Ms. Riggs Amico, the executive chairwoman of Jack Cooper, a private auto-hauling trucking company. “Who wouldn’t find that a worthy effort?”Under the proposal, Ms. Riggs Amico’s group would extend the Treasury loan so that it would be repaid in 2026 instead of next year, according to a person familiar with the bid. The group would also borrow $1.1 billion to pay off other secured creditors and bankruptcy lenders, and provide the new company with cash to operate. And it would issue $1.5 billion of preferred shares to unsecured creditors — the biggest of which is the Central States Pension Fund — that don’t get all their claims paid in bankruptcy. The Central States fund would get some $500 million of the preferred shares, according to the plan, far less than the $4.8 billion that Yellow owes it.Ms. Riggs Amico’s bid will be submitted to the bankruptcy court on Tuesday, when an auction to sell Yellow’s assets will take place.Ms. Riggs Amico and other female executives would own 51 percent of the new company, which would be separate from Jack Cooper. The new Yellow plans to employ some 15,000 people, according to the person familiar with the plan, down from 30,000 earlier this year.“The Teamsters have a framework agreement to lay the foundation for good union jobs, fair wages and strong benefits once a new company is in place,” Kara Deniz, a Teamsters spokeswoman, said in a statement.Government labor market data suggest that roughly 10,000 Yellow employees have found jobs elsewhere, said Avery Vise, vice president of trucking at FTR, a forecasting firm that focuses on the freight industry.That implies that some 20,000 Yellow employees are still looking for work. “I have a lot of friends that are still without jobs,” said Mark Roper, a former Yellow driver from McDonough, Ga., who found a job at another trucking company. “I have a lot of friends that are on the verge of losing their house.”Sarah Riggs Amico, the trucking executive leading a bid for Yellow, ran in a U.S. Senate primary in 2020.Alyssa Pointer/Atlanta Journal-Constitution, via Associated PressThough bringing back lost trucking jobs and resurrecting a unionized company may appear attractive goals to the labor-friendly Biden administration, the Treasury may not believe it has the legal authority to extend the loan — it was made under the CARES Act, passed to provide relief early in the pandemic — and it may have qualms about further backing a company that struggled for years.“There is no clear authority for Treasury to compromise the claim in any way that does not maximize returns for the U.S. government,” said Adam Levitin, a law professor at Georgetown University who specializes in bankruptcy.In a statement, a Treasury spokesperson said: “Treasury is one of several creditors taking part in the bankruptcy process. We will continue to work to ensure taxpayers, and impacted workers and their families are treated fairly.”Thomas Nyhan, the executive director of the Central States Pension Fund, said on Sunday that the fund was trying to determine the financial benefit of each plan as the terms of the rescue bid changed. And he said there may be a legal obstacle: The Employee Retirement Income Security Act generally prevents a pension fund from owning securities issued by companies contributing to the fund — the preferred stock under the Yellow rescue plan — though there can be exemptions. “This is a very complicated problem,” Mr. Nyhan said. “We haven’t come to a conclusion, mainly because the deal keeps evolving.”Members of Congress from both parties have written to the Treasury, urging it to consider extending its loan, including Senators Josh Hawley, Republican of Missouri, and Elizabeth Warren, Democrat of Massachusetts. Mr. Hawley wrote this month that assisting the sale of Yellow to an acquirer was “a common-sense step to keep Yellow’s trucks on the road, and keep its work force gainfully employed.”The Treasury’s loan came from a pot of money to help companies designated as crucial to national security. It drew scrutiny because of the links between Yellow and the Trump administration, and because the Justice Department had sued the company, accusing it of overcharging the Department of Defense for freight services. Yellow last year agreed to pay a $7 million fine to resolve the case.Yellow was a big player — another is Old Dominion — in the less-than-truckload sector, in which a truck will carry goods for more than one customer. Companies in the sector often have a network of terminals and warehouses to store goods between shipments and typically travel shorter distances than truckload companies, whose vehicles carry goods for one customer over longer distances.Analysts say Yellow underperformed because it failed to effectively integrate big acquisitions and because it had higher costs, which some attribute in part to the unionization of its work force.Ms. Riggs Amico, a Democratic primary candidate in Georgia for the U.S. Senate in 2020, has experience restructuring Teamster trucking companies. She oversaw Jack Cooper’s acquisition of two auto-hauling trucking companies with Teamster work forces, and her plan for Yellow envisions hiring executives who specialize in the less-than-truckload business. (Jack Cooper, whose employees belong to the Teamsters, itself filed for bankruptcy in 2019.)Some of Yellow’s rivals are interested in snapping up its terminals under the current plan in Delaware bankruptcy court. Estes Express has submitted a stalking horse bid — an offer intended to set a minimum price for assets — of $1.53 billion for Yellow’s shipment centers. That sum would provide enough cash to pay off the Treasury and a secured loan of around $500 million now held by Citadel, a Wall Street firm. Ms. Riggs Amico’s plan would pay off Citadel but ask the Treasury to extend its loan. Some experts say this would mean taxpayers were taking a back seat to Wall Street.“It’s helping private parties make money off of a distressed-debt investment, and there’s no real reason for Treasury to do that,” Mr. Levitin, the Georgetown professor, said.Citadel declined to comment.In Congress, those open to Ms. Riggs Amico’s bid acknowledge that other creditors would be getting ahead of Treasury but think the compromise a necessary evil to save jobs.But it is not clear whether there would be much room left for a resurrected Yellow. Trucking experts say the market is gradually coping with the loss of the company, which once accounted for roughly 12 percent of drivers in the less-than-truckload sector. Mr. Vise, the trucking analyst, said Yellow’s exit had pushed trucking rates higher as customers scrambled to find other carriers. But he expects the sector to heal soon.“Yellow’s shutdown did not seriously disrupt the less-than-truckload market,” he said. More

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    Even Most Biden Voters Don’t See a Thriving Economy

    A majority of those who backed President Biden in 2020 say today’s economy is fair or poor, ordinarily a bad omen for incumbents seeking re-election.Presidents seeking a second term have often found the public’s perception of the economy a pivotal issue. It was a boon to Ronald Reagan; it helped usher Jimmy Carter and George H.W. Bush out of the White House.Now, as President Biden looks toward a re-election campaign, there are warning signals on that front: With overall consumer sentiment at a low ebb despite solid economic data, even Democrats who supported Mr. Biden in 2020 say they’re not impressed with the economy.In a recent New York Times/Siena College poll of voters in six battleground states, 62 percent of those voters think the economy is only “fair” or “poor” (compared with 97 percent for those who voted for Donald J. Trump).What the Economy Looks Like to Biden Voters in Swing StatesPercent of President Biden’s 2020 supporters who …

    Notes: Respondents of other races were omitted because of low sample sizes. The figures may not add up to 100 percent because of rounding.Source: New York Times/Siena College polls of 3,662 registered voters conducted Oct. 22 to Nov. 3 in Arizona, Georgia, Michigan, Nevada, Pennsylvania and WisconsinBy The New York TimesThe demographics of Mr. Biden’s 2020 supporters may explain part of his challenge now: They were on balance younger, had lower incomes and were more racially diverse than Mr. Trump’s. Those groups tend to be hit hardest by inflation, which has yet to return to 2020 levels, and high interest rates, which have frustrated first-time home buyers and drained the finances of those dependent on credit.But if the election were held today, and the options were Mr. Biden and Mr. Trump, it’s not clear whether voter perceptions of the economy would tip the balance.“The last midterm was an abortion election,” said Joshua Doss, an analyst at the public opinion research firm HIT Strategies, referring to the 2022 voting that followed the Supreme Court’s decision to overturn the Roe v. Wade ruling. “Most of the time, elections are about ‘it’s the economy, stupid.’ Republicans lost that because of Roe. So we’re definitely in uncharted territory.”There are things working in Mr. Biden’s favor. First, Mr. Doss said, the economic programs enacted under the Biden administration remain broadly popular, providing a political foundation for Mr. Biden to build on. And second, social issues — which lifted the Democrats in the midterms — remain a prominent concern.Take Oscar Nuñez, 27, a server at a restaurant in Las Vegas. Foot traffic has been much slower than usual for this time of year, eating into his tips. He’d like to start his own business, but with the rising cost of living, he and his wife — who works at home answering questions from independent contractors for her employer — haven’t managed to save much money. It’s also a tough jump to make when the economy feels shaky.Mr. Nuñez expected better from Mr. Biden when he voted blue in 2020, he said, but he wasn’t sure what specifically the president should have done better. And he is pretty sure another Trump term would be a disaster.“I’d prefer another option, but it seems like it will once again be my only option again,” Mr. Nuñez said of Mr. Biden. For him, immigrants’ rights and foreign policy concerns are more important. “That’s why I was picking him over Trump in the first place — because this guy’s going to do something that’s real dangerous at some point.”Mr. Nuñez isn’t alone in feeling dissatisfied with the economy but still bound to Mr. Biden by other priorities. Of those surveyed in the six battleground states who plan to vote for Mr. Biden in 2024, 47 percent say social issues are more important to them, while 42 percent say the economy is more important — but that’s a closer split than in the 2022 midterms, in which social issues decisively outweighed economic concerns among Democratic voters in several swing states. (Among likely Trump voters, 71 percent say they are most focused on the economy, while 15 percent favor social issues.)Kendra McDowell thinks President Biden is doing the best he can given the continuing challenges of the wars in Ukraine and Gaza. “People are shopping — you know why? Because they’ve got jobs,” she said.Hannah Yoon for The New York TimesDour sentiment about the economy also isn’t limited to people who’ve been frustrated in their financial ambitions.Mackenzie Kiser, 20, and Lawson Millwood, 21, students at the University of North Georgia, managed to buy a house this year. Mr. Millwood’s income as an information-technology systems administrator at the university was enough to qualify, and they worried that affordability would only worsen if they waited because of rising interest rates and prices. Still, the experience left a bitter taste.“The housing market is absolutely insane,” said Ms. Kiser, who wasn’t old enough to vote in 2020 but leans progressive. “We paid the same for our one-story, one-bedroom cinder-block 1950s house as my mom paid for her three-story, four-bedroom house less than a decade ago.”Ms. Kiser doesn’t think Mr. Biden has done much to help the economy, and she worries he’s too old to be effective. But Mr. Trump isn’t more appealing on that front.“It’s not that I think that anybody of a different party could do better, but more that someone with their mental faculties who’s not retirement age could do a better job,” Ms. Kiser said. “Our choices are retirement age or retirement age, so it’s rock and a hard place right now.”Generally, voters don’t think Republicans are fixing the economy, either. In a poll conducted this month by the progressive-leaning Navigator Research, 70 percent of voters in battleground House districts, including a majority of Republicans, said they thought Republicans were more focused on issues other than the economy.The health of the economy is still a major variable leading up to the election. A downturn could fray what the president cites as a signal accomplishment of Bidenomics: low unemployment. A study of the 2016 election found that higher localized unemployment made Black voters, an overwhelmingly Democratic constituency, less likely to vote at all.“I think the likelihood that they would choose Trump is not the threat,” Mr. Doss said. “The threat is that they would choose the couch and stay home, and enough of them would stay home for an electoral college win for Trump.”But in the absence of a competitive Democratic primary, the campaigning — and television spots — have yet to commence in earnest. When they do, Mr. Doss has some ideas.So far, Mr. Biden’s messaging has focused on macroeconomic indicators like the unemployment rate and tackling inflation. “The truth is, that’s not the economy to most people,” Mr. Doss said. “The economy to most people is gas prices and food and whether or not they can afford to throw a birthday party for their kid.”Mr. Millwood supports a higher federal minimum wage, and is impatient with the bickering and finger pointing he hears about in Washington.Audra Melton for The New York TimesIt’s difficult for presidents to directly control inflation in the short term. But the White House has addressed a few specific costs that matter for families, by releasing oil from the Strategic Petroleum Reserve to contain surging oil prices in late 2022, for example. The Inflation Reduction Act reduced prescription drug prices under Medicare and capped the cost of insulin for people with diabetes. The administration is also going after what it calls “junk fees,” which inflate the prices of things like concert tickets, airline tickets and even birthday parties.The more the administration talks about its concrete efforts to lower prices, the more Mr. Biden will benefit, Mr. Doss said. At the same time, Mr. Biden can lessen the blowback from persistent inflation by deflecting blame — an out-of-control pandemic was the original cause, he could plausibly argue, and most other wealthy countries are worse off.That’s how it seems to Kendra McDowell, 44, an accountant and single mother of four in Harrisburg, Pa. She feels the sting of inflation every time she goes to the grocery store — she spent $1,000 on groceries this past month and didn’t even fill her deep freezer — and in the health of her clients’ balance sheets. Despite her judgment that the economy is poor, however, she still has enough confidence to start a business in home-based care, a field in greater demand since Covid-19 ripped through nursing homes.“When I talk about the economy, it’s just inflation, and to me inflation is systemic and coming from the Trump administration,” Ms. McDowell said. If the pandemic had been contained quickly, she reasoned, supply chains and labor disruptions wouldn’t have sent prices soaring in the first place.Moreover, she sees the situation healing itself, and thinks Mr. Biden is doing the best he can given the challenges of the wars in Ukraine and now Gaza. “People are shopping — you know why? Because they’ve got jobs,” Ms. McDowell said. “God forbid, today or tomorrow, if I had to go find a job, it’s easier than it was before.”Ms. McDowell is what’s known in public opinion research as a high-information voter. Polls have shown that those less apt to stay up on the news tend to change their views when provided with more background on what the Biden administration has both accomplished and attempted.Ms. McDowell, a mother of four, said that she felt the sting of inflation every time she went to the grocery store, but that she didn’t blame Mr. Biden.Hannah Yoon for The New York TimesThe 15-month-old Inflation Reduction Act is still little known, for example. But this past March, the Yale Program on Climate Change Communication found that 68 percent of respondents supported it when filled in on its main components.A frequent theme of conversations with Democratic voters who see the economy as poor is that large corporations have too much power and that the middle class is being squeezed.Mr. Millwood, Ms. Kiser’s partner, said that he was concerned that society had grown more unequal in recent years, and that he didn’t see Mr. Biden doing much about it.“From what I see, it really doesn’t look like the working class is benefiting from many things recently,” said Mr. Millwood, who supports a higher federal minimum wage and is impatient with the bickering and finger pointing he hears about in Washington.After the phone conversation ended, Mr. Millwood texted to say that upon reflection, he would also like to see Mr. Biden push to lower taxes for low-income families and make it more difficult for the wealthiest to dodge them. After being sent news articles about Mr. Biden’s support for the extension of the now-expired Child Tax Credit and the appropriation of $80 billion for the Internal Revenue Service, in part to pursue tax evaders, he seemed surprised.“That is absolutely what I had in mind,” Mr. Millwood texted. “It’s been so noisy in the media lately I haven’t seen much that is covering things like that,” adding, “Biden doesn’t seem so bad after all haha.”Ruth Igielnik More

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    As Holiday Shopping Season Begins, Retailers Worry

    Consumer spending has been strong in 2023 despite higher prices and waning savings. But some retailers have jitters heading into Black Friday.Christina Beck is approaching this holiday season cautiously.Ms. Beck, a 58-year-old administrative director at a school, makes lists of gifts she plans to buy for her family and friends and sticks with it. But her spending this year will be kept in check by the high cost of food in grocery stores and restaurants, and the mortgage for a home in Minneapolis she bought last year with her best friend.That best friend, Kristin Aitchison, cannot wait for the holidays. Ms. Aitchison, 55, who works for a senior living home, advises her family each year that she plans to make the holidays smaller, spending less. And every year, she spends more than she did the year before.“I’m a huge gift giver,” Ms. Aitchison, who started her shopping in early November. “I have so much joy in giving gifts. I’m always running around the last week before Christmas because I have to find just a few more gifts.”There are many reasons for people to be more prudent in their holiday spending this year. While inflation is less rapid than it was a year ago, millions of shoppers still feel sticker shock when buying groceries. Payments on federal student loans, which were on pause during the pandemic, have resumed. And higher interest rates have meant larger credit card bills and, for home buyers, mortgage payments.Yet consumer spending has been surprisingly strong throughout 2023. For retailers, the question is whether people will continue to spend their way through the holiday season or decide this is the time to pull back.Predictions are murky. The National Retail Federation said it expected holiday sales to increase 3 to 4 percent from last year, without adjusting for inflation, on a par with the prepandemic 2019 season. But in a survey by the Conference Board, a nonprofit research group, consumers said they planned to spend an average of $985 on holiday-related items this year, down slightly from the $1,006 they anticipated spending last year.One closely watched early indicator, Amazon’s Prime Day in October, showed consumers were spending more, but only slightly. They spent an average of $144.53 on Prime Day, a 2 percent increase from the average the year before, according to Facteus, which analyzed credit and debit card transaction data.Last week, the Commerce Department reported that retail sales nationwide fell 0.1 percent in October from September, the first drop since March. Executives at Walmart also warned that consumer spending had weakened in the last two weeks in October, noting that people seemed to be waiting for sales.“It makes us more cautious on the consumer as we look into the fourth quarter,” John David Rainey, the chief financial officer of Walmart, said in an interview. “I think there’s likely more variability in the numbers.”Still, the retail sales pullback was smaller than the decline that many economists had expected after a very strong summer of spending, and some analysts saw it as a sign of continued consumer resilience.Holiday sales are likely to be decent by prepandemic standards, though not as strong as the gangbuster seasons in 2020 and 2021, said Tim Quinlan, a senior economist at Wells Fargo.Higher-income shoppers still have plenty of extra savings built up during and after the pandemic, but those with lower incomes have more fully used up their resources, Mr. Quinlan said. Higher interest rates may also deter shoppers from putting holiday shopping on credit cards. The combination of reduced savings and higher rates “makes it tougher to have a big pile of presents under the tree this year,” he said.For much of the year, consumer spending has been underpinned by continued strength in the job market and wage gains. Average hourly earnings in October were up 4.1 percent from a year earlier. That was faster than inflation. As measured by the Consumer Price Index, prices were up 3.2 percent.Those factors have helped to keep retail sales climbing on a yearly basis.It’s the Most Wonderful Time of the Year (for the Economy)Three decades of monthly retail spending show how important the holiday season is to our economy.Still, signs of slowing are beginning to show up. Wage growth is slowing, and the unemployment rate has risen over recent months. Like Mr. Quinlan, many economists think that consumers are getting closer to exhausting their savings, though some studies suggest that many have been drawing down their financial cushions only slowly.For many, the resumption of student-loan payments is putting a crimp in holiday spending plans. In a holiday survey by the consulting firm Deloitte, 17 percent of respondents said they had to resume student loan payments, and almost half of them said they planned to reduce their holiday spending as a result.In past years, Tara Cavanaugh, a 37-year-old marketing manager, spent as much as $1,500 on gifts for her family, friends and various office parties, she said. This year, after a move with her partner to Boulder, Colo., and the resumption of her $400-a-month student-loan payments — her partner also has student-loan debt — she said she was paring down her gift list and expected to spend closer to $200.Tara Cavanaugh outside her home in Boulder, Colo. She plans to pare down her gift list this year.Kevin Mohatt for The New York Times“We both make decent incomes and live simply, sharing an old car and our furniture is still from Ikea, but it still feels like we’re struggling,” Ms. Cavanaugh said of her and her partner. “I know a lot of us are feeling the pinch, so I’m not going to freak out about giving gifts to people who are older than me, are doing fine and don’t need anything.”As always, many people are looking for deals, whether on Black Friday or through other pre-Christmas sales. About 52 percent of consumers plan to watch for deals and special offers online and 39 percent plan to hunt for sales in stores this year, according to a survey by the research firm Forrester.When the Amazon toy catalog landed in Claire Kielich’s mailbox in Austin, Texas, her two daughters, ages 5 and 10, who also have birthdays in December, began circling what they wanted.“I’ll be watching to see if any of those things go on sale for Black Friday,” said Ms. Kielich, 40, who does product development and sourcing in the furniture industry. She said she expected to spend around $1,000 this holiday season and already had a stash of stocking stuffers hidden in one of her closets.Ms. Beck in Minneapolis started buying holiday gifts in July, making lists of what friends and family needed or liked, picking up unique items at local craft stores or from small local businesses and storing them in what she calls her “present drawer.” This approach, she said, helps her put more thought into her gifts and keeps her from spending beyond her budget.Her best friend, Ms. Aitchison, takes the opposite approach. While careful with her finances during the year, come the holidays she has no plan and, basically, no budget. Her oldest child has barred her from ever buying him another pair of corduroy pants. Last year, she bought four nine-foot-tall blow-up dinosaur costumes for her adult children.“Of course, nobody needs a blow-up dinosaur costume,” Ms. Aitchison conceded.This holiday season, she plans to shop until she drops.“I don’t think about what I’m going to spend,” she said. “In January and February, because I spent all my money, I’ll eat beans and rice while I pay the bills off.”Despite their different holiday shopping styles, Ms. Aitchison said she and Ms. Beck always had fun shopping together.“She doesn’t get nearly the amount of things that I do,” Ms. Aitchison said. “She’s always like: ‘Kristin stop. Put that down. You don’t need it.’” More

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    In Biden’s Climate Law, a Boon for Green Energy, and Wall Street

    The law has effectively created a new marketplace that helps smaller companies gain access to funding, with banks taking a cut.The 2022 climate law has accelerated investments in clean-energy projects across the United States. It has also delivered financial windfalls for big banks, lawyers, insurance companies and start-up financial firms by creating an expansive new market in green tax credits.The law, signed by President Biden, effectively created a financial trading marketplace that helps smaller companies gain access to funding, with Wall Street taking a cut. Analysts said it could soon facilitate as much as $80 billion a year in transactions that drive investments in technologies meant to reduce fossil fuel emissions and fight climate change.The law created a wide range of tax incentives to encourage companies to produce and install solar, wind and other low-emission energy technologies. But the Democrats who drafted it knew those incentives, including tax credits, wouldn’t help companies that were too small — or not profitable enough — to owe enough in taxes to benefit.So lawmakers have invented a workaround that has rarely been employed in federal tax policy: They have allowed the companies making clean-energy investments to sell their tax credits to companies that do have a big tax liability.That market is already supporting large and small transactions. Clean-energy companies are receiving cash to invest in their projects, but they’re getting less than the value of the tax credits for which they qualify, after various financial partners take a slice of the deal.Clean-energy and financial analysts and major players in the marketplace say big corporations with significant tax liability are currently paying between 75 and 95 cents on the dollar to reduce their federal tax bills. For example, a buyer in the middle of that range might spend $850,000 to purchase a credit that would knock $1 million off its federal taxes.The cost of those tax credits depends on several factors, including risk and size. Larger projects command a higher percentage. The seller of a tax credit will see its value diluted further by fees for lawyers, banks and other financial intermediaries that help broker the sale. Buyers are also increasingly insisting that sellers buy insurance in case the project does not work out and fails to deliver its promised tax benefits to the buyer.The prospect of a booming market and the chance to snag a piece of those transaction costs have raised excitement for the Inflation Reduction Act, or I.R.A., in finance circles. A new cottage industry of online start-up platforms that seeks to link buyers and sellers of the tax credits has quickly blossomed. An annual renewable energy tax credit conference hosted by Novogradac, a financial firm, drew a record number of attendees to a hotel ballroom in Washington this month, with multiple panels devoted to the intricacies of the new marketplace. The entrepreneurs behind the online buyer-seller exchanges include a former Biden Treasury official and some people in the tech industry with no clean-energy or tax credit experience.After President Biden signed the climate law last year, it effectively created a new financial marketplace.Doug Mills/The New York TimesTax professionals and clean-energy groups say the marketplace has widely expanded financing abilities for companies working on emissions-reducing technologies and added private-sector scrutiny to climate investments.But those transactions are also enriching players in an industry that Mr. Biden has at times criticized, while allowing big companies to reduce their tax bills in a way that runs counter to his promise to make corporate America pay more.“I wouldn’t call it irony. I would call it, sort of, this unexpected brilliance,” said Jessie Robbins, a principal of structured finance at the financial firm Generate Capital. “While it may be full of friction and transaction costs, it does bring sophisticated financial interests, investors” and corporations into the world of funding green energy, she said.Biden administration officials say many clean-tech companies will save money by selling their tax credits to raise capital, instead of borrowing at high interest rates. “The alternative for many of these companies was to take a loan, and taking that loan was going to be far more costly” than using the credit marketplace, Wally Adeyemo, the deputy Treasury secretary, said in an interview.Some backers of the climate law wanted an even more direct alternative for those companies: government checks equivalent to the tax benefits their projects would have qualified for if they had enough tax liability to make the credits usable. It was rejected by Senator Joe Manchin III of West Virginia, a moderate Democrat who was the swing vote on the law. A modest federal marketplace of certain tax credits, like those for affordable housing, existed before the climate law passed. But acquiring those credits was complicated and indirect, so annual transactions were less than $20 billion — and large banks dominated the space. The climate law expanded the market and attracted new players by making it much easier for a company with tax liability to buy another company’s tax credit.“There weren’t brokers in this space, you know, a year ago or 14 months ago before the I.R.A. came out,” said Amish Shah, a tax lawyer at Holland & Knight. “There are lots of brokers in this space now.” Mr. Shah said he expected his firm to be involved in $1 billion worth of tax credits this year.Mr. Biden’s signature climate law has spawned a growth industry on Wall Street and across corporate America.Gabby Jones for The New York Times“The discussion goes like this,” said Courtney Sandifer, a senior executive in the renewable energy tax credit monetization practice at the investment bank BDO. “‘Are you aware that you can buy tax credits at a discount, as a central feature of the I.R.A.? And how would that work for you? Like, is this something that you’d be interested in doing?’”Financial advisers say they have had interest from corporate buyers as varied as retailers, oil and gas companies, and others that see an opportunity to reduce their tax bills while making good on public promises to help the environment.Experts say large banks are still dominating the biggest transactions, where projects are larger and tax credits are more expensive to buy. For the rest of the market, entrepreneurs are working to create online exchanges, which effectively work as a Match.com for tax credits. Companies lay out the specification of their projects and tax credits, including whether they are likely to qualify for bonus tax breaks based on location, what wages they will pay and how much of their content is made in America. Buyers bid for credits.In order to sell tax benefits under the law, companies have to register their credits with the Treasury Department, which created a pilot registry website for those projects this month. The online platforms to connect buyers and sellers of the credits are not regulated by the government.Alfred Johnson, who previously worked as deputy chief of staff under Treasury Secretary Janet L. Yellen, co-founded Crux, one of the online exchanges, in January. The company has raised $8.85 million through two rounds of funding.Mr. Johnson said his business helped replace the “low-margin” administrative work that happens to facilitate deals. Lawyers and advisers will still be brought in for the more complicated parts of the deal.“It just requires more companies coming into the market and participating,” he said. “And if that doesn’t happen, the law will not work.”Seth Feuerstein created Atheva, a transferable credit exchange, last year. He has no clean-tech experience, but he has brought in green-energy experts to help get the exchange started.Atheva already has tens of millions of dollars in projects available for tax-credit buyers to peruse on the site, with hundreds of millions more in the pipeline, he said. On the site, buyers can browse credits by their estimated value and download documentation to help assess whether the projects will actually pay off. Mr. Feuerstein said that transparency helped to assure taxpayers that they were supporting valid clean-energy investments.“It’s a new market,” Mr. Feuerstein said. “And it’s growing every day.” More

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    U.S. Gas Prices Drop Ahead of Thanksgiving Travel

    With OPEC Plus members in disarray over production levels, oil prices have fallen nearly 20 percent in three months.U.S. gasoline prices are plunging just in time for Thanksgiving, and with the OPEC Plus oil cartel in apparent disarray, they could be heading lower for Christmas.Lower prices at the pump have helped ease the inflation rate most of this year. But this week, they fell to levels not seen at this time of year since 2021, according to the AAA motor club, before the Russian invasion of Ukraine sent energy prices higher.“For consumers it’s a terrific tailwind,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. “They are not going to have to spend an awful lot on travel in the next few months, and that should persist into the middle of the winter.”The national average price for a gallon of regular gasoline on Wednesday was $3.28, about 6 cents less than a week earlier and 27 cents less than a month ago. The price for a gallon of gas was $3.64 at the same time last year. Prices have dropped below $3 a gallon in more than a dozen states and are falling with particular speed in Montana, Florida and Colorado.The primary reason for lower gasoline prices is the recent weakness of oil prices, which have fallen by more than $15 a barrel, or nearly 20 percent, since early September. Demand for fuel has been weak in China and parts of Europe, while production has been strong in Brazil, Canada and the United States. Gasoline production at American refineries is running above demand in some parts of the country.Diesel prices have also eased, by about 23 cents a gallon over the last month and more than $1 a gallon in the last year. That should help reduce food prices because diesel is the primary fuel for agriculture and heavy transport.The drop in oil prices accelerated on Wednesday as reports emerged that the planned meeting of OPEC Plus, a group of 23 oil-producing countries led by Saudi Arabia, had been postponed from the weekend until next Thursday. Saudi Arabia had been expected to extend its cuts in production, while cajoling other countries to show restraint as well to bolster prices. But Nigeria and Angola are resisting, and lobbying for higher production quotas.“Reaching a new agreement to cut production will prove to be challenging,” said Jorge León, a senior vice president at Rystad Energy, a consulting firm.He said that although Russia and eight other members of the cartel agreed to cuts in June, “it would be difficult for these countries to accept even lower production quotas.”Energy experts say there could still be an agreement, especially if the United Arab Emirates, Kuwait and Iraq agree to voluntary cuts. Saudi Arabia might also be willing to go it alone with cuts because its government budget and ambitious economic plans depend on high prices.The uncertainty has served as a signal to traders to bail out of crude. “Savvy drivers will find savings on their way to a turkey dinner this year,” said Andrew Gross, a spokesman for AAA.AAA has predicted that more than 49 million Americans will drive to holiday destinations in the coming days, an increase of 1.7 percent from last year. Another 4.7 million will fly, a 6.6 percent increase from the last year and the highest number since 2005, according to the motor club.Airfares will be slightly more expensive than last year, the motor club said, but otherwise holiday travel should be cheaper. It said the average price for a domestic hotel stay is down 12 percent from last year, while rental car costs are 20 percent lower. More

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    It’s the Most Wonderful Time of the Year (for the Economy)

    For many Americans, the end of the year is a time for parties, family gatherings, festive meals and, of course, shopping. And all that holiday celebrating makes the fourth quarter the most important time of the year for the U.S. economy. 1995 2000 2005 2010 2015 2020 🎁 🎁 🎁 🎁 🎁 🎁 🎁 🎁 […] More

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    ‘Funflation’ drives sporting event ticket prices up a whopping 25%

    Prices for sports tickets have surged an eye-popping 25.1% between October 2022 and 2023, according to closely watched data from the Bureau of Labor Statistics.
    Sports have become the latest events to feel the impact of “funflation.”

    John Brown #16 of the Buffalo Bills celebrates with fans after catching a touchdown pass during the third quarter against the New England Patriots at Highmark Stadium on January 08, 2023 in Orchard Park, New York. (Photo by Bryan M. Bennett/Getty Images)
    Bryan M. Bennett | Getty Images Sport | Getty Images

    Dan Hornberger has been a fan of the National Football League’s Philadelphia Eagles for as long as he can remember. As an adult, his office has team memorabilia lining the walls.
    Last year, the devout supporter went to five home games, about an hour-and-a-half drive from his house. This year, however, Hornberger’s only on track to attend two games as costs soar.

    “I’m a huge fan,” Hornberger, 40, said. “Ultimately, what it comes down to is just outright refusal on my part to pay those kinds of prices.”
    Sports prices have surged this fall, according to federal data. That’s made game tickets the latest victim of “funflation,” a term used by economists to explain the increasing price tags of live events as consumers hanker for the experiences they lost during the pandemic.

    ‘A gigantic bounce back’

    Admission prices for sporting events jumped 25.1% in October 2023 from the same month a year prior, according to the Bureau of Labor Statistics’ consumer price index data. The category saw the highest annualized inflation rate out of the few hundred that make up the inflation gauge.
    CPI as a whole rose a relatively modest 3.2% on an annualized basis. The index tracks the prices of a broad basket of items including milk, jewelry and airline fares.
    “We’ve seen this through the entire leisure and hospitality sector,” said Victor Matheson, a professor and sports economist at the College of the Holy Cross. “People are getting back to things that they enjoy doing and are willing to pay a bunch.”

    Part of the reason consumers may be seeing higher ticket prices for their favorite sports teams is because of the increasing use of dynamic pricing models, Matheson said. These structures allow ticket-selling platforms to fetch more or less per ticket, depending on demand for the event at any given moment.
    There’s also an alignment of attention-grabbing sporting events taking place this fall. Beyond the typical major-league seasons, the Formula One race in Las Vegas last week and the announcement of soccer legend Lionel Messi’s move to the Inter Miami team this summer have boosted enthusiast spending.
    But a large reason for the eye-popping 25.1% jump is because of how low prices were a year ago, Matheson said. Teams slashed ticket values in 2022 in a bid to win back fans who had grown accustomed to watching at home.
    Sports ticket prices were 14.2% higher in October than in November 2019, a smaller gain than the entire index’s 19.6% increase, a CNBC analysis of CPI data shows. Much of the upward pressure on admission costs has come this year, underscoring the role of funflation as consumers shift their attention from Taylor Swift and Beyoncé concerts to NFL and Major League Baseball games.
    “We’re seeing a gigantic bounce back in prices,” Matheson said. 

    NFL and National Hockey League sales have approximately doubled in 2023 compared with the prior year, according to ticket platform StubHub. NBA sales were up nearly 60% at the start of the season compared with the last, while college football has seen an increase of around 50%.
    To be sure, not every sport this year has seen the same price growth. StubHub said ticket prices across the top 10 sporting events were 15% higher in 2022 than they were in 2023.
    Matheson said tamer inflation overall should help cool sector-specific growth. A return to a more normalized entertainment spending routine following the post-pandemic experience boom can also help quell demand and prices, he added.

    ‘Really upsetting’

    Rodney Paul, director of the sports analytics program at Syracuse University, said interest in attending games should be somewhat stable even if the economy worsens. That’s because a sizable portion of the consumer base is well-off enough to afford pro-sports tickets — which he said is essentially a luxury item — and should be able to better weather a downturn given their financial status.
    But Paul said a meaningful change to the state of the economy could push fans who are less financially stable to cut back on extraneous expenses, in turn hurting demand. Cash-strapped consumers may justify spending more than they’d like to this year by reminding themselves they didn’t splurge as much or at all on game tickets during the pandemic, Matheson said.

    Part of the financial stress comes from the resale market for tickets, some sports enthusiasts say. The rising price of parking and food inside of the stadium also have to be factored in to the financial calculation of fans such as Hornberger and Sara Weddington.
    Weddington was able to save enough enough to attend a Kansas City Chiefs game last season, but she said it feels out of the question this year as prices have climbed. The long-time resident of the Kansas City area said she feels for people who have never gotten to see a game before recent cost increases.
    “To have such a monumental part of the community be so out of reach for a lot of people is really upsetting,” the 23-year-old said. “Not being able to go to a game is like going to a candy store and not being able to get any candy.”
    Still, Paul of Syracuse University said sports have taken on a new meaning in the post-pandemic world. As people increasingly work from home, he said there’s a larger need for in-person social spaces — and those who can afford it are more willing to shell out.
    “There’s a real craving for that kind of feeling of togetherness that the sports world brings,” he said. It’s “a really exciting experience that maybe is even more exciting now because people had lost it in the past.”
    — CNBC’s Gabriel Cortes contributed to this report. More