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    Global Economy Shows Signs of Resilience Despite Lingering Threats

    The International Monetary Fund upgraded its global growth forecast for 2023.The world economy is showing signs of resilience this year despite lingering inflation and a sluggish recovery in China, the International Monetary Fund said on Tuesday, raising the odds that a global recession could be avoided barring unexpected crises.The signs of optimism in the I.M.F.’s latest World Economic Outlook may also give global policymakers additional confidence that their efforts to contain inflation without causing serious economic damage are working. Global growth, however, remains meager by historical standards, and the fund’s economists warned that serious risks remained.“The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods,” Pierre-Olivier Gourinchas, the I.M.F.’s chief economist said a news conference on Tuesday.The I.M.F. raised its forecast for global growth this year to 3 percent, from 2.8 percent in its April projection. It predicted that global inflation would ease from 8.7 percent in 2022 to 6.8 percent this year and 5.2 percent in 2024, as the effects of higher interest rates filter throughout the world.The outlook was rosier in large part because financial markets — which had been roiled by the collapse of several large banks in the United States and Europe — have largely stabilized. Another big financial risk was averted in June when Congress acted to lift the U.S. government’s borrowing cap, ensuring that the world’s largest economy would continue to pay its bills on time.The new figures from the I.M.F. come as the Federal Reserve is widely expected to raise interest rates by a quarter point at its meeting this week, while keeping its future options open. The Fed has been aggressively raising rates to try to tamp down inflation, lifting them from near zero as recently as March 2022 to a range of 5 percent to 5.25 percent today. Policymakers have been trying to cool the economy without crushing it and held rates steady in June in order to assess how the U.S. economy was absorbing the higher borrowing costs that the Fed had already approved.As countries like the United States continue to grapple with inflation, the I.M.F. urged central banks to remain focused on restoring price stability and strengthening financial supervision.“Hopefully with inflation starting to recede, we have entered the final stage of the inflationary cycle that started in 2021,” Mr. Gourinchas said. “But hope is not a policy and the touchdown may prove quite difficult to execute.”He added: “It remains critical to avoid easing monetary policy until underlying inflation shows clear signs of sustained cooling.”Fed officials will release their July interest rate decision on Wednesday, followed by a news conference with Jerome H. Powell, the Fed chair. Policymakers had previously forecast that they might raise rates one more time in 2023 beyond the expected move this week. While investors doubt that they ultimately will make that final rate move, officials are likely to want to see more evidence that inflation is falling and the economy is cooling before committing in any direction.The I.M.F. said on Tuesday that it expected growth in the United States to slow from 2.1 percent last year to 1.8 percent in 2023 and 1 percent in 2024. It expects consumption, which has remained strong, to begin to wane in the coming months as Americans draw down their savings and interest rates increase further.Growth in the euro area is projected to be just 0.9 percent this year, dragged down by a contraction in Germany, the region’s largest economy, before picking up to 1.5 percent in 2024.European policymakers are still occupied by the struggle to slow down inflation. On Thursday, the European Central Bank is expected to raise interest rates for the 20 countries that use the euro currency to the highest level since 2000. But after a year of pushing up interest rates, policymakers at the central bank have been trying to shift the focus from how high rates will go to how long they may stay at levels intended to restrain the economy and stamp out domestic inflationary pressures generated by rising wages or corporate profits.Policymakers have raised rates as the economy has proved slightly more resilient than expected this year, supported by a strong labor market and lower energy prices. But the economic outlook is still relatively weak, and some analysts expect that the European Central Bank is close to halting interest rate increases amid signs that its restrictive policy stance is weighing on economic growth. On Monday, an index of economic activity in the eurozone dropped to its lowest level in eight months in July, as the manufacturing industry contracted further and the services sector slowed down.Next week, the Bank of England is expected to raise interest rates for a 14th consecutive time in an effort to force inflation down in Britain, where prices in June rose 7.9 percent from a year earlier.Britain has defied some expectations, including those of economists at the I.M.F., by avoiding a recession so far this year. But the country still faces a challenging set of economic factors: Inflation is proving stubbornly persistent in part because a tight labor market is pushing up wages, while households are growing increasingly concerned about the impact of high interest rates on their mortgages because the repayment rates tend to be reset every few years.A weaker-than-expected recovery in China, the world’s second-largest economy, is also weighing on global output. The I.M.F. pointed to a sharp contraction in the Chinese real estate sector, weak consumption and tepid consumer confidence as reasons to worry about China’s outlook.Official figures released this month showed that China’s economy slowed markedly in the spring from earlier in the year, as exports tumbled, a real estate slump deepened and some debt-ridden local governments had to cut spending after running low on money.Mr. Gourinchas said that measures that China has taken to restore confidence in the property sector are a positive step and suggested that targeted support for families to bolster confidence could strengthen consumption.Despite reasons for optimism, the I.M.F. report makes plain that the world economy is not in the clear.Russia’s war in Ukraine continues to pose a threat that could send global food and energy prices higher, and the fund noted that the recently terminated agreement that allowed Ukrainian grain to be exported could portend headwinds. The I.M.F. predicts that the termination of the agreement could lead grain prices to rise by as much as 15 percent.“The war in Ukraine could intensify, further raising food, fuel and fertilizer prices,” the report said. “The recent suspension of the Black Sea Grain Initiative is a concern in this regard.”It also reiterated its warning against allowing the war in Ukraine and other sources of geopolitical tension to further splinter the world economy.“Such developments could contribute to additional volatility in commodity prices and hamper multilateral cooperation on providing global public goods,” the I.M.F. said. More

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    Russian Attack Threatens Even Alternative Routes for Ukrainian Grain

    The attack on a grain hangar on the Danube River, an alternative export route that has become an economic lifeline, complicates Ukraine’s efforts to export its grain.For shipping companies looking for a way to bring Ukrainian grain to global markets, the options keep dwindling, escalating a trade crisis that is expected to add pressure on global food prices.Russia last week pulled out of an agreement that had allowed for the safe passage of vessels through the Black Sea. On Monday it threatened an alternative route for grain, attacking a grain hangar at a Ukrainian port on the Danube River that has served as a key artery for transporting goods while the Black Sea remains blockaded. “It’s opening a new front in the targeting of Ukrainian grain exports,” said Alexis Ellender, an analyst at Kpler, a commodities analytics firm, adding that the route had been considered safe because of its proximity to Romania, a NATO member.“This will potentially close off that route,” he said. It could also raise rates for shipping insurance and further cripple Ukraine’s ability to export grain.Hours after the predawn attack on the hangar at the Ukrainian port of Reni, dozens of vessels that had been bound to collect grain from Ukraine were clustered at the mouth of the Danube. More

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    Tech Firms Once Powered New York’s Economy. Now They’re Scaling Back.

    For much of the last two decades, including during the pandemic, technology companies were a bright spot in New York’s economy, adding thousands of high-paying jobs and expanding into millions of square feet of office space.Their growth buoyed tax revenue, set up New York as a credible rival to the San Francisco Bay Area — and provided jobs that helped the city absorb layoffs in other sectors during the pandemic and the 2008 financial crisis.Now, the technology industry is pulling back hard, clouding the city’s economic future.Facing many business challenges, large technology companies have laid off more than 386,000 workers nationwide since early 2022, according to layoffs.fyi, which tracks the tech industry. And they have pulled out of millions of square feet of office space because of those job cuts and the shift to working from home.That retrenchment has hurt lots of tech hubs, and San Francisco has been hit the hardest with an office vacancy rate of 25.6 percent, according to Newmark Research.New York is doing better than San Francisco — Manhattan has a vacancy rate of 13.5 percent — but it can no longer count on the technology industry for growth. More than one-third of the roughly 22 million square feet of office space available for sublet in Manhattan comes from technology, advertising and media companies, according to Newmark.Consider Meta, which owns Facebook and Instagram. It is now unloading a big chunk of the more than 2.2 million square feet of office space it gobbled up in Manhattan in recent years after laying off around 1,700 employees this year, or a quarter of its New York State work force. The company has opted not to renew leases covering 250,000 square feet in Hudson Yards and for 200,000 square feet on Park Avenue South.Spotify is trying to sublet five of the 16 floors it leased six years ago in 4 World Trade Center, and Roku is offering a quarter of the 240,000 square feet it had taken in Times Square just last year. Twitter, Microsoft and other technology companies are also trying to sublease unwanted space.“The tech companies were such a big part of the real estate landscape during the last five years,” said Ruth Colp-Haber, the chief executive of Wharton Property Advisors, a real estate brokerage. “And now that they seem to be cutting back, the question is: Who is going to replace them?”Ms. Colp-Haber said it could take months for bigger spaces or entire floors of buildings to be sublet. The large amount of space available for sublet is also driving down the rents that landlords are able to get on new leases.“They are going to undercut every landlord out there in terms of pricing, and they have really nice spaces that are already all built out,” she said, referring to the tech companies.The tech sector has been a driver of New York’s economy since the late-90s dot-com boom helped to establish “Silicon Alley” south of Midtown. Then, after the financial crisis, the expansion of companies like Google supported the economy when banks, insurers and other financial firms were in retreat.Spotify is trying to sublet five of the 16 floors it leased six years ago in 4 World Trade Center, right.George Etheredge for The New York TimesSmall and large tech companies added 43,430 jobs in New York in the five years through the end of 2021, a 33 percent gain, according to the state comptroller. And those jobs paid very well: The average tech salary in 2021 was $228,620, nearly double the average private-sector salary in the city, according to the comptroller.The growth in jobs fueled demand for commercial space, and tech, advertising and media companies accounted for nearly a quarter of the new office leases signed in Manhattan in recent years, according to Newmark.Microsoft and Spotify declined to comment about their decision to sublet space. Twitter and Roku did not respond to requests for comment. Meta said in a statement that it was “committed to distributed work” and was “continuously refining” its approach.A few big tech companies are still expanding in New York.Google plans to open St. John’s Terminal, a large office near the Hudson River in Lower Manhattan, early next year. Including the terminal, Google will own or lease around seven million square feet of office space in New York, up from roughly six million today, according to a company representative. (Google leases more than one million square feet of that space to other tenants.) The company has more than 12,000 employees in the New York area, up from over 10,000 in 2019.Amazon, which in 2019 canceled plans to build a large campus in Queens after local politicians objected to the incentives offered to the company, has nevertheless added 200,000 square feet of office space in New York, Jersey City and Newark since 2019. The company will have added roughly 550,000 square feet of office space later this summer, when it opens 424 Fifth Avenue, the former Lord & Taylor department store, which it bought in 2020 for $1.15 billion.“New York provides a fantastic, diverse talent pool, and we’re proud of the thousands of jobs we’ve created in the city and state over the past 10 years across both our corporate and operations functions,” Holly Sullivan, vice president of worldwide economic development at Amazon, said in a statement.And though many tech companies continue to let employees work from home for much of the week, they are also trying to woo workers back to the office, which could help reduce the need to sublet space.Salesforce, a software company that has offices in a tower next to Bryant Park, said it was not considering subletting its New York space.“Currently I’m facing the opposite problem in the tower in New York,” said Relina Bulchandani, head of real estate for Salesforce. “There has been a concerted effort to continue to grow the right roles in New York because we have a very high customer base in New York.”New York is and will remain a vibrant home for technology companies, industry representatives said.“I have not heard of a single tech company leaving, and that matters,” said Julie Samuels, the president of TECH:NYC, an industry association. “If anything, we are seeing less of a contraction in New York among tech leases than they are seeing in other large cities.”Google plans to open St. John’s Terminal, right, a new campus near the Hudson River in Lower Manhattan, early next year.Tony Cenicola/The New York TimesFred Wilson, a partner at Union Square Ventures, said tech executives now felt less of a need to be in Silicon Valley, a shift that he said had benefited New York. “We have more company C.E.O.s and more company founders in New York today than we did before the pandemic,” Mr. Wilson said, referring to the companies his firm has invested in.David Falk, the president of the New York tristate region for Newmark, said, “We are right now working on several transactions with smaller, young tech firms that are looking to take sublet space.”Many firms are still pulling back, however.In 2017 and 2019, Spotify, which is based in Stockholm, signed leases totaling more than 564,000 square feet of space at 4 World Trade Center, becoming one of the largest tenants there. It soon had a space with all the accouterments you would expect at a tech firm — brightly colored flexible work areas, eye-popping views and Ping-Pong tables.But in January, Spotify said it was laying off 600 people, or about 6 percent of its global work force. The company, which allows employees to choose between working fully remotely or on a hybrid schedule, is also reducing its office space, putting five floors up for sublet.“On days when I’m by myself, I end up sitting in a meeting room all day for focus time,” said Dayna Tran, a Spotify employee who regularly works at the downtown office, adding that the employees who come in motivate themselves and create community by collaborating on an office playlist. More

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    What new norm of slower Chinese growth could mean for the global economy

    The Chinese government is ramping up a host of measures aimed at boosting the economy, with a key Politburo meeting scheduled later this week to review the country’s first-half performance.
    The most immediate spillover of a Chinese slowdown will likely come in commodities and the industrial cycle, said Rory Green, chief China economist at TS Lombard.
    Beyond the immediate loss of demand for commodities, Green said China’s recalibration of its key sectors drivers will also have “second order impacts” for the global economy.

    A view of high-rise buildings is seen along the Suzhou Creek in Shanghai, China on July 5, 2023.
    Ying Tang | NurPhoto | Getty Images

    The Chinese economy could be facing a prolonged period of lower growth, a prospect which may have global ramifications after 45 years of rapid expansion and globalization.
    The Chinese government is ramping up a host of measures aimed at boosting the economy, with leaders on Monday pledging to “adjust and optimize policies in a timely manner” for its beleaguered property sector, while pushing stable employment towards a strategic goal. The Politburo also announced pledges to boost domestic consumption demand and resolve local debt risks.

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    Chinese gross domestic product grew by 6.3% year-on-year in the second quarter, Beijing announced Monday, below market expectations for a 7.3% expansion after the world’s second-largest economy emerged from strict Covid-19 lockdown measures.
    On a quarterly basis, economic output grew by 0.8%, slower than the 2.2% quarterly increase recorded in the first three months of the year. Meanwhile, youth unemployment hit a record high 21.3% in June. On a slightly more positive note, the pace of industrial production growth accelerated from 3.5% year-on-year in May to 4.4% in June, comfortably surpassing expectations.
    The ruling Chinese Communist Party has set a growth target of 5% for 2023, lower than usual and notably modest for a country that has averaged 9% annual GDP growth since opening up its economy in 1978.
    Over the past few weeks, authorities announced a series of pledges targeted at specific sectors or designed to reassure private and foreign investors of a more favorable investment environment on the horizon.

    However, these were largely broad measures lacking some major details, and the latest readout of the Politburo’s quarterly meeting on economic affairs struck a dovish tone but fell short of major new announcements.

    Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note Monday that the country’s leadership is “clearly concerned,” with the readout calling the economic trajectory “tortuous” and highlighting the “numerous challenges facing the economy.”
    These include domestic demand, financial difficulties in key sectors such as property, and a bleak external environment. Evans-Pritchard noted that the latest readout mentions “risks” seven times, versus three times in the April readout, and that the leadership’s priority appears to be to expand domestic demand.
    “All told, the Politburo meeting struck a dovish tone and made it clear the leadership feels more work needs to be done to get the recovery on track. This suggests that some further policy support will be rolled out over the coming months,” Evans-Pritchard said.
    “But the absence of any major announcements or policy specifics does suggest a lack of urgency or that policymakers are struggling to come up with suitable measures to shore up growth. Either way, it’s not particularly reassuring for the near-term outlook.”
    Triple shock
    The Chinese economy is still suffering from the “triple shock” of Covid-19 and prolonged lockdown measures, its ailing property sector and a swathe of regulatory shifts associated with President Xi Jinping’s “common prosperity” vision, according to Rory Green, head of China and Asia research at TS Lombard.
    As China is still within a year of reopening after the zero-Covid measures, much of the current weakness can still be attributed to that cycle, Green suggested, but he added that these could become entrenched without the appropriate policy response.
    “There is a chance that if Beijing doesn’t step in, the cyclical part of the Covid cycle damage could align with some of the structural headwinds that China has — particularly around the size of the property sector, decoupling from global economy, demographics — and push China on to a much, much slower growth rate,” he told CNBC on Friday.

    TS Lombard’s base case is for a stabilization of the Chinese economy late in 2023, but that the economy is entering a longer-term structural slowdown, albeit not yet a Japan-style “stagflation” scenario, and is likely to average closer to 4% annual GDP growth due to these structural headwinds.
    Although the need for exposure to China will still be essential for international companies as it remains the largest consumer market in the world, Green said the slowdown could make it “slightly less enticing” and accelerate “decoupling” with the West in terms of investment flows and manufacturing.
    For the global economy, however, the most immediate spillover of a Chinese slowdown will likely come in commodities and the industrial cycle, as China reconfigures its economy to reduce its reliance on a property sector that has been “absorbing and driving commodity prices.”
    “Those days are gone. China is still going to invest a lot, but it’s going to be sort of more advanced manufacturing, tech hardware, like electric vehicles, solar panels, robotics, semiconductors, these types of areas,” Green said.
    “The property driver — and with that, that pool of iron ore from Brazil and/or Australia and machines from Germany or appliances from all over the world — has gone, and China will be a much less important factor in the global industrial cycle.”
    Second order impacts
    The recalibration of the economy away from property and toward more advanced manufacturing is evident in China’s massive push into electric vehicles, which led to the country overtaking Japan earlier this year as the world’s largest auto exporter.
    “This shift from a complementary economy, where Beijing and Berlin kind of benefit from each other, to now being competitors is another big consequence of the structural slowdown,” Green said.
    He noted that beyond the immediate loss of demand for commodities, China’s reaction to its shifting economic sands will also have “second order impacts” for the global economy.
    “China is still making a lot of stuff, and they can’t consume it all at home. A lot of the stuff they’re making now is much higher quality and that will continue, especially as there’s less money going into real estate, and trillions of renminbi going into these advanced tech sectors,” Green said.

    “And so the second order impact, it’s not just less demand for iron ore, it’s also much higher global competition across an array of advanced manufactured goods.”
    Though it is not yet clear how Chinese households, the private sector and state-owned enterprises will look after the transition from a property and investment-driven model to one powered by advanced manufacturing, Green said the country is currently at a “pivotal point.”
    “The political economy is changing, partly by design, but also partly by the fact that the property sector is effectively dead or if not dying, so they have to change and there’s emerging a new development model,” he said.
    “It won’t just be a slower version of the China we had before Covid. It’s going to be a new version of the Chinese economy, which will also be slower, but it’s going to be one with new drivers and new kinds of idiosyncrasies.” More

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    Flood of Workers Has Made the Fed’s Job Less Painful. Can It Persist?

    Federal Reserve officials thought job gains would taper off more, but they’ve remained strong. An improving supply of workers has been crucial.Hotels in New York’s Adirondack Mountains are having an easier time hiring this summer, partly as immigrants enter the country in greater numbers and provide a steady supply of seasonal help that was hard to come by in and just after the pandemic.It is making staffing less stressful for companies like Weekender, a brand that includes seven rustic hotels in and around the region. The company has managed to get six cultural exchange workers this summer, up from four last year. And similar stories are playing out across the country, offering good news for the Federal Reserve.Fed officials are trying to wrestle inflation down by raising interest rates and slowing the economy. A big part of the task hinges on restoring balance to the labor market, which for 23 straight months had notably more jobs available than workers to fill them. Officials worry that if competition for workers remains fierce and wages continue to rise as quickly as they have been, it will be hard to fully stamp out fast price increases. Companies that are paying up to lure workers will try to charge more to cover their climbing labor bills.The Fed can help to cool the labor market by lowering demand, but the central bank has been getting more help than expected from a growing supply of workers. In recent months, workers have piled into the labor market in numbers that have surprised policymakers and many economists.The development is owed partly to a rebound in immigration as the United States has eased pandemic-related restrictions, cleared processing backlogs and enacted more permissive policies. Labor supply has also received a boost as some demographic groups — including women in their prime working years — have returned to the job market in bigger numbers than anticipated, pushing their employment rates to record highs.That influx has made the Fed’s job a little less painful. Hiring has been able to chug along at a solid clip without further overheating the labor market because job seekers are becoming available to replace those who are getting snapped up. Unemployment has held steady around 3.5 percent, and some data even suggests that staffing is becoming less strained. Wage growth has begun to slow, for instance, and workers are no longer pulling such long hours.“Monetary policy is part of the story to get demand moving towards supply, but any help we can get from supply increasing, that’s good news,” John C. Williams, the president of the Federal Reserve Bank of New York, said in an interview with The Financial Times this month.Employers have added about 280,000 workers per month so far in 2023. Job gains have been gradually slowing, but that is nearly triple the 100,000 pace that Jerome H. Powell, the Fed chair, suggested he expected would be necessary to provide jobs for a steadily growing population.The expanding supply of workers has allowed the Fed to accept the faster-than-expected hiring without slamming the brakes on the economy even more aggressively. Fed officials, who have raised interest rates above 5 percent from near zero in March 2022, have nudged them up more and more slowly over recent months. Policymakers are expected to raise rates by a quarter-point at their meeting this week, to a range of 5.25 to 5.5 percent. Many investors are betting the decision, which will be announced on Wednesday, could be the Fed’s final move for now.What the Fed does in the remainder of 2023 will depend on economic data. Does inflation, which slowed considerably from its peak in June 2022, continue to moderate? Do job gains and wage growth continue to drift lower? If the economy keeps a lot of momentum, officials might feel the need to make another move this year. If it cools, they might feel comfortable stopping rate increases. In either case, policymakers have been signaling that rates will probably need to remain high for some time.When it comes to the labor market part of that puzzle, key officials have signaled that they think the next phase of restoring balance could be the more difficult one. Policymakers have welcomed newfound labor supply in recent months, but some doubt the trend can continue. Mr. Williams suggested that immigration could remain strong, but that it might be difficult for participation — the share who are working or looking — to climb much higher.Great Pines is part of Weekender, a brand that includes seven rustic hotels in and around the Adirondacks.Amrita Stuetzle for The New York Times“I don’t think there is a lot of space for that to continue to be a big driver of the rebalancing of supply and demand,” Mr. Williams said in his July interview — explaining that the Fed will need to keep using policy to slow labor demand in order to lower inflation.Some economists and labor groups think officials like Mr. Williams are being overly glum about the prospects for continued improvement in labor supply: Immigration numbers are still climbing, and flexible and remote work arrangements might mean that people who could not work in past eras now can.“That ability for the labor supply side to continue to improve, I think the Fed has probably undersold it,” said Skanda Amarnath, executive director at Employ America, a research and advocacy group focused on the job market. “I think they’re probably underselling it even now.”Worker shortages began to bite in late 2020, after deep layoffs and curbs on immigration shrank the labor pool. The civilian labor force — which includes people who are working or looking for work — plummeted by eight million people in early 2020.But the supply of workers has since rebounded by about 10.6 million people. That recovery has owed partly to a pickup in the foreign-born labor force, which has accounted for roughly one in every three potential workers added since the pandemic low point, based on Labor Department data.Legal immigration has been gaining steam as processing backlogs clear and Biden administration policies allow more refugees into the country, said Julia Gelatt, associate director of the U.S. Immigration Policy Program at the Migration Policy Institute. Undocumented immigration has also been notable, increased by political turmoil abroad and the draw of a comparatively strong and stable American economy.“We are seeing a sizable increase in immigration,” Ms. Gelatt said. “Certainly a rebound to the pre-Trump, prepandemic normal.”The recovery in documented immigration is clear in visa data. About 1.7 million workers may enter the country this year if current trends continue, about 950,000 more than at the low point during the pandemic, Courtney Shupert, an economist at MacroPolicy Perspectives, found in an analysis.In fact, immigration may be even stronger than before the pandemic, when policies by President Donald J. Trump reduced the number of foreigners entering the United States. The number of potential workers coming into the country on visas in May alone stood about 50,000 more than was normal from 2017 to 2019, she found.Weekender’s six cultural-exchange visa workers are spread across three of its seven properties, and are a small but important chunk of its 85-person work force.Amrita Stuetzle for The New York TimesImmigration is not the only potential source of new labor supply. Employment rates have been climbing across the board, with the share of disabled people and women between the ages of 25 to 54 who work reaching new highs, possibly bolstered by a shift to more remote work and more flexible hours that took place amid the pandemic.“It’s given us a supply of workers we haven’t had before, because workplaces are more flexible,” said Diane Swonk, chief economist at KPMG.The result has been helpful for businesses like the Weekender hotels in the Adirondacks. The firm’s six cultural-exchange visa workers are spread across three of its seven properties, said Keir Weimer, the founder of the company, and are a small but important chunk of its 85-person work force.The company has also been having an easier time competing for employees in general after a few years of adaptation. Mr. Weimer estimated that pay was up 10 to 15 percent over the past 15 months, but said wage growth was beginning to cool.“We’re starting to now get more defined on career-track progression and having wages tied to performance and promotion, rather than just market,” he said. “There’s definitely less wage pressure than there was a year ago.”Of course, new labor supply can also bolster demand: As more people work, they earn money and spend it, said Jason Furman, an economist at Harvard, counteracting any drag on inflation. That does not mean that improving labor supply is not helpful.“It is a way to have a higher pace of job growth without inflationary pressure,” he said.But even as employers and economists embrace a slowly normalizing labor market, the supply of workers faces a big headwind: an aging population. America is graying as baby boomers, a big generation, move into their retirement years, and older people are much less likely to work.That is why some officials at the Fed doubt that climbing labor supply can do a lot of the heavy lifting when it comes to rebalancing the labor market — a skepticism some economists share.“I think we will have a lack of supply, still,” said Yelena Shulyatyeva, senior economist at BNP Paribas. More

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    UPS Contract Talks Go Down to the Wire as a Possible Strike Looms

    With the Teamsters contract set to expire Aug. 1, pay for part-time workers is a major hurdle. A walkout could rattle the U.S. economy.Barely a week before the contract for more than 325,000 United Parcel Service workers expires, union and company negotiators have yet to reach an agreement to avert a strike that could knock the American economy off stride.UPS and the union, the International Brotherhood of Teamsters, have resolved a variety of thorny issues, including heat safety and forced overtime. But they remain stalemated on pay for part-time workers, who account for more than half the union’s workers at UPS.A strike, which could come as soon as Aug. 1, could have significant consequences for the company, the e-commerce industry and the supply chain.UPS handles about one-quarter of the tens of millions of packages that are shipped daily in the United States, according to the Pitney Bowes Parcel Shipping Index. Experts have said competitors lack the scale to seamlessly replace that lost capacity.The Teamsters have cited the risks its members took to help generate the company’s strong pandemic-era performance as a reason that they deserve large raises. UPS’s adjusted net income rose more than 70 percent between 2019 and last year, to over $11 billion.The contract talks broke down on July 5 in vituperation. The two sides are to resume negotiations in the coming days, but the window for an agreement before the current five-year contract expires is tight.In a Facebook post this month, the union said the company’s latest offer would have “left behind” many part-timers, whose jobs include sorting packages and loading trucks. The post said part-timers earned “near-minimum wage in many parts of the country.”UPS, which says it relies heavily on part-timers to navigate bursts of activity over the course of a day and to ramp up its work force during busier months, said it had proposed significant wage increases before the talks broke down. According to the company, part-timers currently earn about $20 an hour on average after 30 days as well as paid time off, health care and pension benefits. The company noted that many part-timers graduated to jobs as full-time drivers, which pay $42 an hour on average after four years.The union has gone out of its way to highlight the challenges facing part-time workers. In television interviews and at rallies, the Teamsters president, Sean O’Brien, has emphasized what the union calls “part-time poverty” jobs. He has frequently been joined by leaders of other unions and politicians, including Representative Alexandria Ocasio-Cortez, the New York Democrat.UPS said Wednesday that it was “prepared to increase our industry-leading pay and benefits.” But it is unclear if the company will satisfy the union’s demands.“UPS certainly wants to reach an agreement, but not at the expense of its ability to compete long-term,” said Alan Amling, a former UPS executive and a fellow at the University of Tennessee’s Global Supply Chain Institute.Professor Amling estimated that it would cost the company $850 million per year to increase wages $5 an hour for all part-time employees represented by the Teamsters.The company, which normally reports its second-quarter earnings in late July, has delayed the report this year until after the strike deadline. UPS said that the timing was within the required window for reporting its earnings and that it had never published a date other than Aug. 8 for the coming release.The sometimes-volatile negotiations began in April, and the Teamsters announced in mid-June that their UPS members had voted, with a 97 percent majority, to authorize a strike.Less than two weeks later, the union said that it was walking away from the table over an “appalling counterproposal” from the company on raises and cost-of-living adjustments and that a strike “now appears inevitable.”The two sides resumed their discussions the week before the Fourth of July and soon resolved what was arguably their most contentious issue: a class of worker created under the existing contract.UPS said the arrangement was intended to allow workers to take on dual roles, like sorting packages some days and driving on other days — especially Saturdays — to keep up with growing demand for weekend delivery.UPS handles about one-quarter of the tens of millions of packages that are shipped daily in the United States.Maansi Srivastava/The New York TimesBut the Teamsters said that the hybrid idea hadn’t come to pass, and that in practice the new category of workers drove full time Tuesday through Saturday, only for less pay than other drivers. (The company said some employees did work under the hybrid arrangement.)Under the agreement reached this month, the lower-paid category would be eliminated and workers who drove Tuesday through Saturday would be converted to regular full-time drivers.That agreement also stipulated that no driver would be required to work an unscheduled sixth day in a week, which drivers had at times been forced to do to keep up with Saturday demand.Despite progress on these issues, Mr. O’Brien could face a delicate test persuading members to approve a deal if it falls short of the lofty expectations he helped set. He won the union’s top position in 2021 while regularly criticizing his immediate predecessor, James P. Hoffa, for being too accommodating toward employers.Mr. O’Brien argued that Mr. Hoffa had effectively forced UPS workers to accept a deeply flawed contract in 2018, even after they voted it down, and accused his rival in the race to succeed Mr. Hoffa of being reluctant to strike against the company.He began focusing members’ attention on the contract and a possible strike even before formally taking over as president in March last year, and has spoken in superlative terms about the union’s goals for a new contract.“This UPS agreement is going to be the defining moment in organized labor,” he told activists with Teamsters for a Democratic Union, a group that backed his candidacy, in a speech last fall.The union under Mr. O’Brien has held training sessions in recent months for strike captains and contract action team members, who rally co-workers to help pressure the company.And he has strongly urged the White House not to wade into the contract negotiation. In his Boston youth, “if two people had a disagreement, and you had nothing to do with it, you just kept walking,” he said during a recent webinar with members. “We echoed that to the White House on numerous occasions.” (Administration officials have said they are in touch with both sides.)In some ways the context for this year’s negotiations resembles the circumstances of the nationwide Teamsters strike at UPS in 1997. UPS was also in the midst of several profitable years, and the rapid growth in its part-time work force loomed large.Sean O’Brien, the Teamsters president, right, at the Los Angeles rally. He was elected in 2021 after criticizing his predecessor as having been too accommodating toward employers.Jenna Schoenefeld for The New York TimesBut while a reformist president, Ron Carey, had mobilized the union for a fight, its ranks appeared divided between his supporters and those of Mr. Hoffa, who had narrowly lost an election for the union’s presidency the year before. The union may have more leverage this time because its members appear far more unified under Mr. O’Brien.Barry Eidlin, a sociologist at McGill University in Montreal who studies labor and follows the Teamsters closely, said that while the ramp-up to the current contract fight had lagged in some parts of the country, where more conservative local officials are less enthusiastic, Mr. O’Brien had no serious opposition within the union.“Not everybody is a fan of O’Brien, but they’re not actively organizing to undermine him the way people were with Ron Carey in the ’90s,” Dr. Eidlin said. “It’s a huge, huge difference.”Still, for all his pugilistic statements, Mr. O’Brien remains an establishment figure who appears to prefer reaching a deal to going on strike, and he has subtly acted to make one less likely.Earlier in the negotiations, Mr. O’Brien had said that UPS employees wouldn’t work beyond Aug. 1 without a ratified contract, and that the two sides needed to reach a deal by July 5 to give members a chance to approve it in time. But last weekend he said UPS employees would continue working on Aug. 1 as long as the two sides had reached a tentative deal.“This isn’t a shift,” a Teamsters spokeswoman said Friday by email. “This is how you get a contract. Our pressure and deadline on UPS forced them to move in ways they hadn’t before.”Niraj Chokshi More

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    Lawmakers Challenge Ford and Chinese Battery Partner Over Forced Labor

    Republicans are raising fresh concerns about CATL, the battery maker Ford is working with to bring new technology to the U.S., and its connections to Xinjiang.A partnership between Ford Motor and a major Chinese battery maker is facing scrutiny by Republican lawmakers, who say it could make an American automaker reliant on a company with links to forced labor in China’s Xinjiang region.In a letter sent to Ford on Thursday, the chairs of the House Select Committee on the Chinese Communist Party and the House Ways and Means Committee demanded more information about the partnership, including what they said was a plan by Ford to employ several hundred workers from China at a new battery factory in Michigan.Ford announced in February that it planned to set up the $3.5 billion factory using technology from Contemporary Amperex Technology Ltd., known as CATL, the world’s largest maker of batteries for electric vehicles. CATL produces about a third of electric vehicle batteries globally and supplies General Motors, Volkswagen, BMW, Tesla and other major automakers.Ford has defended the partnership, saying it will help diversify Ford’s supply chain and allow a battery that is less expensive and more durable than current alternatives to be made in the United States for the first time, rather than imported.But lawmakers, who previously criticized the partnership, cited evidence that CATL had not relinquished its ownership of a company it helped set up in Xinjiang, where the United Nations has identified systemic human rights violations.CATL publicly divested its share of the company, Xinjiang Zhicun Lithium Industry Company, in March, after its deal with Ford was announced. But the shares were bought by an investment partnership in which CATL owned a partial stake and a former CATL manager who holds leadership roles in other companies owned by the battery maker, corporate records show.The circumstances of the sale raise “serious questions about whether CATL is attempting to obscure links to forced labor,” wrote Representatives Mike Gallagher of Wisconsin, the chairman of the select committee, and Jason Smith of Missouri, the chairman of the Ways and Means Committee. The lawmakers, citing details of Ford’s licensing agreement that are on file with the select committee, also criticized the automaker’s commitment to employ several hundred Chinese workers. Employees from China would set up and maintain CATL’s equipment at the Michigan factory until about 2038, the lawmakers said. The factory is expected to employ 2,500 U.S. workers, Ford has said.“Ford has argued that the deal will create thousands of American jobs, further Ford’s ‘commitments to sustainability and human rights’ and lead to American battery technology advancements,” they wrote. “But newly discovered information raises serious questions about each claim.”T.R. Reid, a spokesman for Ford, said the company was going through the letter and would respond in good faith. He said that human rights were fundamental to how Ford did business, and that the automaker was thorough in assessing such issues.“There has been an awful lot said and implied about this project that is incorrect,” Mr. Reid said. “At the end of the day, we think creating 2,500 good-paying jobs with a new multibillion investment in the U.S. for great technology that we’ll bring to bear in great electric vehicles is good all the way around.”CATL’s collaboration with Ford could be a bellwether for the electric vehicle industry in the United States. Critics have labeled the agreement a “Trojan horse” for Chinese interests and called for scuttling the partnership. If it succeeds, they say, reliance on Chinese technology could become the norm for the U.S. electric vehicle industry.Ultimately, China’s control over key technologies like batteries could leave the United States “in a far weaker position,” said Erik Gordon, a clinical assistant professor at the University of Michigan’s Ross School of Business.“The profit margins go to the innovators who provide the advanced technology, not the people with screwdrivers that assemble the advanced technology,” he said.But CATL and other Chinese companies have battery technology not readily available from suppliers in the United States or Europe. The Michigan plant would be the first in the United States to produce so-called LFP batteries that use lithium, iron and phosphate as their main active materials.They are heavier than the lithium, nickel and manganese batteries currently used by Ford and other automakers but less expensive to make and more durable, able to withstand numerous charges without degrading. They also do not use nickel or cobalt, another battery material, which are often mined in environmentally damaging ways, and sometimes with child labor.Without the most advanced or least expensive batteries, U.S. carmakers could fall behind Chinese rivals like BYD that are pushing into Europe and other markets outside China. Americans may also have to pay more for electric cars and trucks, which would slow sales of vehicles that do not emit greenhouse gases.A battery unveiled by CATL last year delivers hundreds of miles of driving range after a charge of just 10 minutes.“The hard truth is that the Chinese took a huge gamble on electric vehicles and plopped down over a trillion Chinese dollars and subsidies on this industry, and it just so happens that gamble came up all aces,” said Scott Kennedy, a China expert at the Center for Strategic and International Studies.“If you decide not to partner with a very large battery maker, then you’re essentially committing to delaying the U.S. energy transition,” he added.Ford plans to use batteries made with CATL technology in lower-priced versions of vehicles like the Mustang Mach-E and F-150 Lightning pickup. The least expensive version of Tesla’s Model 3 sedan comes with an LFP battery that CATL is widely reported to have supplied.For decades, Western companies have had a monopoly on the world’s most advanced technologies, and have sought access to the Chinese market while also safeguarding their intellectual property.But China’s dominance in electric vehicle batteries, as well as in the production of solar panels and wind turbines, has flipped that dynamic. It has created a particularly tricky dilemma for the Biden administration and other Democrats, who want to reduce the country’s reliance on China but also argue that the United States must quickly make a transition to cleaner energy sources to try to mitigate climate change.The solar and electric vehicle battery industry’s exposure to Xinjiang further complicates the situation. The Biden administration has condemned the Chinese government for carrying out genocide and crimes against humanity in the region.The United States last year barred imports of products made in whole or in part in Xinjiang, saying companies operating in the region are not able to ensure that their facilities are free of forced labor.In 2022, CATL and a partner registered a lithium processing company in the region called Xinjiang Zhicun Lithium Industry Company, which promoted plans to become the world’s largest producer of lithium carbonate, a key battery component.Through a series of subsidiaries and shareholder relationships, that Xinjiang lithium company has financial ties to a Chinese electricity company, Tebian Electric Apparatus Stock Company, or TBEA, according to records that The New York Times reviewed through Sayari Graph, a mapping tool for corporate ownership. TBEA has participated extensively in so-called poverty alleviation and labor transfer programs in Xinjiang that the United States considers a form of forced labor.A CATL battery plant under construction in Ningde, China, in 2021. The company has said it prohibits any form of forced labor in its supply chain.Qilai Shen for The New York TimesWhile the Chinese government argues that labor transfer and poverty alleviation programs are aimed at improving living standards in the region, human rights experts say that they are also directed at pacifying and indoctrinating the population, and that Uyghurs and other minority groups there cannot say no to these programs without fear of detention or punishment.CATL did not respond to a request for comment. In December, it told The Times that it was a minority shareholder in the Xinjiang company and strictly prohibited any form of forced labor in its supply chain.The Republican lawmakers also raised concerns about whether batteries made at Ford’s Michigan plant would qualify for tax credits that the Biden administration was offering consumers who bought electric vehicles as part of the Inflation Reduction Act.The law prohibits “foreign entities of concern” — like companies in China, Russia, Iran or North Korea — from benefiting from government tax credits. But because Ford is licensing CATL technology for the plant — rather than forming a joint venture, as has often been the case with automakers and battery suppliers — the batteries made in Michigan may still qualify for those incentives.The Biden administration has not yet clarified exactly how the restriction on foreign entities will be applied. But Ford officials said they had been in conversation with the administration about the Michigan plant, and were confident that the partnership would qualify for all of the law’s benefits.“We think batteries built by American workers in an American plant run by the wholly owned subsidiary of an American company will and should qualify,” Mr. Reid, the Ford spokesman, said. More

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    Who Will Stand Up for Renters? Their Elected Representatives, Who Also Rent.

    In California, legislators come out as tenants to form a renters’ caucus.When Matt Haney entered the California Legislature, he discovered he was part of a tiny minority: a legislator who rents.Mr. Haney has never owned property and, at 41 years old, has spent his adult life as a tenant. His primary residence is a one-bedroom apartment near downtown San Francisco. The rent is $3,258 a month. (He also paid a $300 deposit for Eddy and Ellis, two orange cats he adopted from a shelter during the pandemic.)“When I got there last year, it seemed that there were only three of us out of 120,” Mr. Haney said of the renters in the Legislature. “That’s a very small number.”Looking to highlight their renter status and the 17 million California households that are tenants — a little less than half the state — last year, Mr. Haney and two Assembly colleagues, Isaac Bryan and Alex Lee, founded the California Renters Caucus. A fourth Assembly member, Tasha Boerner, joined after the caucus was formed. The group added a state senator, Aisha Wahab, after she entered office this year.Mr. Haney said there was briefly a sixth, more politically conservative member who attended one meeting but never came back. It’s possible they have other colleagues who are renters and have yet to come out.“Being a renter is not necessarily something people project or put on their website,” Mr. Haney said.That much seems to be changing. From cities and statehouses to U.S. Congress, elected officials are increasingly playing up their status as tenants and forming groups to push for renter-friendly policies.Politics is about being relatable. Candidates pet dogs and hold babies and talk about their children. Given how many families are struggling with the cost of housing and have lost hope that they could ever buy, it makes sense that elected officials would now start talking about being tenants.London Breed, the mayor of San Francisco, talks frequently about her rent-controlled apartment in the city’s Haight-Ashbury district. Lindsey Horvath, a member of the Los Angeles County Board of Supervisors — the powerful body that oversees a $43 billion budget and more than 100,000 employees — predicates discussions of housing policy with her status as a renter.In June, federal legislators followed California with a renter caucus of their own, although that one has looser criteria. Representative Jimmy Gomez, who is chair of the Congressional Renters Caucus as well as a Democrat from Los Angeles, said instead of actual tenants his group targeted members from renter-heavy districts, even if they own a home, as he does.“Good elected officials are going to fight for their constituents, no matter what,” Mr. Gomez said.Besides, he added, the strictest definition of “renter” can obscure economic insecurity. His parents, for instance, were homeowners who never made more than $40,000 combined and lived in inland California without air conditioning. Other people own nothing but rent a $7,000-a-month penthouse.“Are they considered the same?” he said.When asked how many of his colleagues did not own a home, Mr. Gomez said, “My gut is that it’s less than 10.”The five members of the Renters Caucus: from left, Isaac Bryan, Tasha Boerner, Matt Haney, Aisha Wahab and Alex Lee, at the Capitol Building in Sacramento, Calif.Aaron Wojack for The New York TimesIn addition to advancing Democratic priorities like subsidized housing and tenant protections, these legislators are making a bet that being perceived as a pro-renter is politically advantageous in an era in which a growing number of Americans are renting for longer periods, and often for life. Mr. Haney and Mr. Gomez both describe their caucuses — subsets of legislators organized around a common purpose — as a first for their bodies. Which is easy to believe.Homeownership is synonymous with the American dream. It is supported by various federal and state tax breaks and so encoded in the American mythology and financial system that historians and anthropologists assert that it has come to symbolize a permanent participation in society. The underlying message is that renting is temporary, or should be.“There is a pretty foundational bias against renters in American sociological and political life,” said Jamila Michener, a professor of government and public policy at Cornell. “So when policymakers say, ‘Hey, this is an identity that’s relevant, and one we are willing to own and lean into,’ that’s significant.”About two-thirds of Americans own their dwellings, and survey after survey shows that the aspiration of owning a home is no less potent today than it was for previous generations. But the number of renters has grown steadily over the past decade to about 44 million households nationwide, while punishing housing costs have migrated from coastal enclaves to metropolitan areas around the nation.More salient to politicians, perhaps, is that renters are increasingly well-off — households that make more than $75,000 have accounted for a large majority of the growth in renters over the past decade, according to the Harvard Joint Center for Housing Studies. At the same time, the struggle to find something affordable has escalated from lower-income tenants to middle-income families that in past generations would very likely have owned their homes.In other words, renter households are now composed of families much more likely to vote. And after a pandemic in which homeowners gained trillions in home-equity wealth while renters had to be supported with eviction moratoriums and tens of billions in assistance, the fragility of their position has been made clearer.“As cost burdens show up in places where we don’t expect it, there seems to be more political momentum around addressing these problems,” said Whitney Airgood-Obrycki, senior research associate at the Harvard Joint Center for Housing Studies.By organizing around an economic condition, lawmakers are embracing a concept that renter advocates refer to as “tenants as a class.”The idea is that while renters are a large and politically diverse group — low-income families on the edge of eviction, high-earning professionals renting by choice, couples whose desire for suburban living but inability to afford a down payment has made single-family house rentals one of the hottest corners of the real estate business — they still have common interests. Those include the rising cost of housing and the instability of being on a lease.“It’s a lens that I don’t think has been captured in the same way as race, gender, age, ability, et cetera,” said Mr. Bryan, the California Assembly member and renters’ caucus member whose district is in Los Angeles. “I’m excited to be among the first five legislators in California history to develop what the political consciousness is around this status.”That the ranks of tenants also include legislators, albeit not many of them, is one of the points California lawmakers said they wanted to make by forming the renters’ caucus. It also plunged them into the surprisingly thorny question of who is and is not a tenant.Does the list include lawmakers who rent a dwelling in Sacramento but own a house or condominium in their district, a criterion that would qualify a good chunk of the Legislature? The group decided no. How about Mr. Lee, the Assembly member and renters’ caucus member, whose district residence is his childhood bedroom, in a home his mother owns? He doesn’t own property, so sure.Despite having only five members, the California Renters Caucus, like the state it represents, is racially diverse but dominated by Democrats (there are no Republicans in the caucus). Its members are white, Black and Asian. Mr. Lee is a member of the Legislature’s L.G.B.T.Q. caucus. Ms. Wahab is the first Muslim American elected to the California Senate.Politically speaking, the outlier is Tasha Boerner, who lives in the San Diego suburb Encinitas and is the caucus’s more conservative member (as California Democrats go). Despite being the group’s longest-serving member in the Legislature, Ms. Boerner, 50, was initially not identified as a tenant by her colleagues on the renters’ caucus.“No one ever called my office because I’m a white mom living in Encinitas,” she said. “They thought, ‘She must be a homeowner.’”Ms. Boerner frequently disagrees with her colleagues about the efficacy of policies like rent-control, she said, though she voted for a statewide rent cap several years ago. She is also more skeptical of the state’s efforts to speed construction by taking land-use control from cities, and she voted against a bill that effectively ended single-family zoning in the state.And yet Ms. Boerner is also a lifetime renter who has moved three times since assuming office. Her current home is a three-bedroom apartment that she shares with her two children and her ex-husband, in part because it’s cheaper than if the parents had separate places.“Families who rent come in all shapes and sizes, and what I hope to bring is a little diversity,” she said. “We have disagreements, as any caucus does, but coming together and saying, ‘Hey, this is a demographic who matters’ — that is the importance.” More