Evelyn Reynolds

The Labor Department filed a lawsuit accusing Hyundai, one of its suppliers and a staffing company of jointly employing a 13-year-old on an auto body parts assembly line in Alabama.The Labor Department on Thursday sued Hyundai over the use of child labor in Alabama, holding the car manufacturer liable for the employment of children in its supply chain, including a 13-year-old girl who worked up to 60 hours per week making car parts.In the suit, filed in a federal court in Montgomery, Ala., the department said Hyundai was responsible for the employment of children at a Smart Alabama factory in Luverne, Ala., which produces parts like body panels that are shipped to a Hyundai factory in Montgomery. The suit also claimed a staffing agency, Best Practice Service, recruited the children to work at the supplier’s plant.In a statement, Hyundai said child labor was “not consistent with the standards and values we hold ourselves to as a company.” It added that the Labor Department used “an unprecedented legal theory that would unfairly hold Hyundai accountable for the actions of its suppliers.”Smart did not immediately respond to a request for comment. Representatives of Best Practice Service, which is no longer in business, could not be reached for comment.From July 2021 to February 2022, a 13-year-old girl worked at the Smart plant, where she was recruited to work by Best Practice Service, the suit claimed. The suit also contended that two other children were employed at the plant.The Labor Department said that through the employment of children at its supplier, Hyundai was in violation of the “hot goods” provision of the Fair Labor Standards Act, which prevents the interstate commerce of goods “that were produced in violation of the minimum wage, overtime or child labor provisions” of that law.“Companies cannot escape liability by blaming suppliers or staffing companies for child labor violations when they are in fact also employers themselves,” said Seema Nanda, the Labor Department’s chief legal officer, in a statement Thursday.The suit comes after investigations by Reuters and The New York Times documented the use of child labor by the suppliers of car companies. In 2022, Reuters found that Smart Alabama had used child labor at its facility, and that Kia, which is part of the same South Korean conglomerate as Hyundai, had also used child labor in the South. A 2023 investigation by The Times found children employed at the suppliers of General Motors and Ford Motor.Hyundai imports many of its vehicles from South Korea but has made big investments in factories in the South, spending nearly $8 billion on an electric vehicle plant in Georgia. The United Automobile Workers union has said it hopes to organize workers at Hyundai’s Montgomery plant. More

The Commerce Department’s measure of personal consumption expenditures prices will be released Friday morning and is expected to show inflation in April running at a 2.7% annual rate, according to Dow Jones.
Fed policymakers prefer the PCE measure as it accounts for shifts in consumer behavior, such as when shoppers will substitute less-expensive items for pricier ones.

People shop at a supermarket in Montebello, California, on May 15, 2024. 
Frederic J. Brown | AFP | Getty Images

Inflation is taking baby steps towards coming back to where policymakers want it, with a report due Friday expected to show more of that creeping progress.
The Commerce Department’s measure of personal consumption expenditures prices is expected to show inflation in April running at a 2.7% annual rate, according to the Dow Jones estimates both for overall inflation and the “core” that excludes food and energy costs.

If that forecast holds, it will represent a slight decline on the core measure and little change on the overall rate, though economists will be looking at both the annual and monthly measures. Core inflation is expected to have slowed to 0.2%, which would represent at least some further progress toward easing price pressure on weary consumers.
Overall, the report, due at 8:30 a.m. ET, likely will point to another incremental move back to the Federal Reserve’s 2% target.
“We do not expect any major upward or downward surprises in Friday’s PCE as most of the recent economic data is indicative of an economy that has settled into a nice long-term simmer of not too hot and not too cold,” said Carol Schleif, chief investment officer at BMO Family Office. “That said, getting to the Fed’s 2% target is apt to be a bumpy landing.”
Getting a handle on inflation is proving tricky these days.
The Fed parses the data in many ways, most recently introducing what has been known as the “super-core” level that looks at services costs excluding food, energy and housing as a way to measure longer-term trends.

However, policymakers’ expectations that housing inflation will cool this year have been largely thwarted, throwing another wrinkle into the debate.
Moreover, the Fed’s preference on PCE is a bit arcane, as the public focuses more on the Labor Department’s consumer price index, which has shown much higher trends. CPI inflation ran at 3.4% for the all-items measure in April and 3.6% for core, well above the Fed’s target.

How many cuts this year?

The Fed prefers the PCE measure as it accounts for shifts in consumer behavior, such as when shoppers will substitute less-expensive items for pricier ones. The theory is that the methodology provides a better look at the actual cost of living rather than just absolute prices. Fed officials particularly focus on core as it serves as a better longer-term indicator.
The Commerce Department delivered some good news Thursday — again, in modest terms — when it reported that PCE for the first quarter rose 3.3% on headline and 3.6% on core, both 0.1 percentage point lower than the initial estimate. Similarly, the “chain-weighted” price index was at 3%, also 0.1 percentage point below the first print.
However, those numbers are still a good deal from the Fed’s target. Markets have been sensitive to inflation movements, particularly as how they reflect on the central bank’s intentions with interest rates. Current expectations are for just one rate cut this year, likely in November, according to the CME Group’s FedWatch measure of futures pricing.
“Economists are optimistically expecting a lower monthly read in this report than the CPI, and any disappointment may lead markets to consider further the prospects for any cuts in 2024,” said Matthew Ryan, head of market strategy at global financial services firm Ebury.
New York Fed President John Williams, part of the leadership troika at the central bank that also includes Chair Jerome Powell and Vice Chair Philip Jefferson, said Thursday he expects PCE inflation to keep nudging lower, down to about 2.5% by the end of the year before eventually hitting 2% in 2026.
“We’ve got lot of dynamic supply and increasing productivity in the economy. So that’s how I know what’s happening,” Williams said. “It’s always a big question mark how that will evolve in the future.” More

Things look strong on paper, but many Americans remain unconvinced. We asked economic officials, the woman who coined “vibecession” and Charlamagne Tha God what they think is happening.The U.S. economy has been an enigma over the past few years. The job market is booming, and consumers are still spending, which is usually a sign of optimism. But if you ask Americans, many will tell you that they feel bad about the economy and are unhappy about President Biden’s economic record.Call it the vibecession. Call it a mystery. Blame TikTok, media headlines or the long shadow of the pandemic. The gloom prevails. The University of Michigan consumer confidence index, which looked a little bit sunnier this year after a substantial slowdown in inflation over 2023, has again soured. And while a measure of sentiment produced by the Conference Board improved in May, the survey showed that expectations remained shaky.The negativity could end up mattering in the 2024 presidential election. More than half of registered voters in six battleground states rated the economy as “poor” in a recent poll by The New York Times, The Philadelphia Inquirer and Siena College. And 14 percent said the political and economic system needed to be torn down entirely.What’s going on here? We asked government officials and prominent analysts from the Federal Reserve, the White House, academia and the internet commentariat about what they think is happening. Here’s a summary of what they said.Kyla Scanlon, coiner of the term ‘Vibecession’Price levels matter, and people are also getting some facts wrong.The most common explanation for why people feel bad about the economy — one that every person interviewed for this article brought up — is simple. Prices jumped a lot when inflation was really rapid in 2021 and 2022. Now they aren’t climbing as quickly, but people are left contending with the reality that rent, cheeseburgers, running shoes and day care all cost more.“Inflation is a pressure cooker,” said Kyla Scanlon, who this week is releasing a book titled “In This Economy?” that explains common economic concepts. “It hurts over time. You had a couple of years of pretty high inflation, and people are really dealing with the aftermath of that.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Consumers eased up on spending in the face of rising prices and high interest rates, Commerce Department data shows.Economic growth slowed more sharply early this year than initially estimated, as consumers eased up on spending amid rising prices and high interest rates.U.S. gross domestic product, adjusted for inflation, grew at a 1.3 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down from 3.4 percent in the final quarter of 2023 and below the 1.6 percent growth rate reported last month in the government’s preliminary first-quarter estimate.The data released on Thursday reflects more complete data than the initial estimate, released just a month after the quarter ended. The government will release another revision next month.The preliminary data fell short of forecasters’ expectations, but economists at the time were largely unconcerned, arguing that the headline G.D.P. figure was skewed by big shifts in business inventories and international trade, components that often swing wildly from one quarter to the next. Measures of underlying demand were significantly stronger.The revised data may be harder to dismiss. Consumer spending rose at a 2 percent annual rate — down from 3.3 percent in the fourth quarter, and 2.5 percent in the preliminary data for the last quarter — and measures of underlying demand were also revised down. An alternative measure of economic growth, based on income rather than spending, cooled to 1.5 percent in the first quarter, from 3.6 percent at the end of 2023.Still, the new data does little to change the bigger picture: The economy has slowed but remains fundamentally sound, buoyed by consumer spending that remains resilient even after the latest revisions. That spending is supported by rising incomes and the result of a strong job market that features low unemployment and rising wages. There is still no sign that the recession that forecasters spent much of last year warning about is imminent.Business investment, a sign of confidence in the economy, was actually revised up modestly in the latest data. Income growth, too, was revised up.Inflation, however, remains stubborn. Consumer prices rose at a 3.3 percent annual rate in the first three months of the year, slightly slower than in the preliminary data but still well above the Federal Reserve’s long-run target of 2 percent.In response, policymakers have raised interest rates to their highest level in decades and have said they will keep them there until inflation cools further. The modestly slower growth reflected in Thursday’s data is unlikely to change that approach.The Fed will get a more up-to-date snapshot of the economy on Friday, when the government releases data on inflation, income and spending in April. More

Agriculture Secretary Tom Vilsack has a line about the state of small-scale agriculture in America these days.It’s drawn from the National Agricultural Statistics Service, which shows that as the average size of farms has risen, the nation had lost 544,000 of them since 1981. “That’s every farm today that exists in North Dakota and South Dakota, added to those in Wisconsin and Minnesota, added to those in Nebraska and Colorado, added to those in Oklahoma and Missouri,” Mr. Vilsack told a conference in Washington this spring. “Are we as a country OK with it?”Even though the United States continues to produce more food on fewer acres, Mr. Vilsack worries that the loss of small farmers has weakened rural economies, and he wants to stop the bleeding. Unlike his last turn in the same job, under former President Barack Obama, this time his department is able to spend billions of dollars in subsidies and incentives passed under three major laws since 2021 — including the biggest investment in conservation programs in U.S. history.The plan in a nutshell: Multiply and improve revenue streams to bolster farm balance sheets. Rather than just selling crops and livestock, farms of the future could also sell carbon credits, waste products and renewable energy.“Instead of the farm getting one check, they potentially could get four checks,” Mr. Vilsack said in an interview. He is also helping schools, hospitals and other institutions to buy food grown locally, and investors to build meatpacking plants and other processing facilities to free farmers from powerful middlemen.American Farms Are DisappearingAs agriculture consolidates, fewer operations grow more crops.

Source: U.S. Department of AgricultureBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

Skyrocketing premiums are hitting homeowners hard, but they barely factor into common price measures.Holly Meyer Lucas estimates that as many as 30 of the 100 houses her real estate team sold in and around Jupiter, Fla., last year were put on the market because their owners could no longer keep up with skyrocketing home insurance.“It is the housing crisis that nobody is talking about,” Ms. Meyer Lucas said. The houses sold easily, but often to well-off cash buyers who could drop the insurance altogether because they did not have a mortgage that required them to carry it.Jumping insurance rates are acute in coastal Florida, with its exposure to big risks like hurricanes and coastal erosion, but they are also a nationwide phenomenon. Last year, premium rates for owner-occupied housing were up 11.3 percent on average nationally, based on data from S&P Global Market Intelligence.Insurance rates have been climbing for a number of reasons: Storms have become more frequent and severe, inflation and labor shortages have driven up the cost of repairs and home values have increased, requiring larger policies. The biggest jumps occurred in Texas, Arizona and Utah, which were among 25 states in total that posted double-digit surges last year. In some places, including Florida, rates are up more than 40 percent over the past five years.That can add up to a major additional annual expense for owners: The typical single-family homeowner with a mortgage backed by Freddie Mac was paying $1,522 in 2023, up from $1,081 in 2018. And that’s simply an average. Anecdotally, many people report seeing their premiums jump by thousands of dollars.Those higher insurance rates are bringing pain to many homeowners, forcing people out of their homes and communities while leaving others taking big risks as they drop insurance altogether. But the rising costs are not meaningfully boosting the nation’s official inflation data, which could help to explain a small part of the disconnect between how people feel about the economy and how it looks on paper. Economic confidence remains depressed and consumers continue to fret about high price levels, dogging the Biden administration, even though inflation has been cooling and the job market is strong.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The world is mired in $315 trillion of debt, according to the latest May report by the Institute of International Finance. 
This latest global debt wave has been the biggest, fastest, and most wide-ranging rise since World War II, coinciding with the Covid-19 pandemic.

The world is mired in $315 trillion of debt, according to a report from the Institute of International Finance.
This global debt wave has been the biggest, fastest and most wide-ranging rise in debt since World War II, coinciding with the Covid-19 pandemic.

“This increase marks the second consecutive quarterly rise and was primarily driven by emerging markets, where debt surged to an unprecedented high of over $105 trillion—$55 trillion more than a decade ago,”  the IIF said in its quarterly Global Debt Monitor report released in May.
Around two-thirds of the $315 trillion owed originates from mature economies, with Japan and the United States contributing the most to that debt pile.
However, the debt-to-GDP ratio for mature economies — which is seen as a good indicator of a country’s ability to service its debts — has been falling in general. 
On the other hand, emerging markets held $105 trillion in debt, but their debt-to-GDP ratio hit a new high of 257%, pushing the overall ratio up for the first time in three years.
China, India and Mexico were the biggest contributors, the report noted.

The IIF identified stubborn inflation, rising trade friction and geopolitical tensions as factors that could pose a significant risk to debt dynamics, “putting upward pressure on global funding costs.”
“While the health of household balance sheets should provide a cushion against ‘higher for longer rates’ in the near term, government budget deficits are still higher than pre-pandemic levels,” the IIF added.
Of the $315 trillion debt stock, household debt, which includes mortgages, credit cards and student debt, among others, amounted to $59.1 trillion.
Business debt, which corporations use to finance their operations and growth, stood at $164.5 trillion, with the financial sector alone making up $70.4 trillion of that amount. Public debt made up the rest at $91.4 trillion. More

Chief executives are vulnerable to the same forces buffeting their employees. Leadership is important, but so is efficiency — and cost-cutting.As artificial intelligence programs shake up the office, potentially making millions of jobs obsolete, one group of perpetually stressed workers seems especially vulnerable.These employees analyze new markets and discern trends, both tasks a computer could do more efficiently. They spend much of their time communicating with colleagues, a laborious activity that is being automated with voice and image generators. Sometimes they must make difficult decisions — and who is better at being dispassionate than a machine?Finally, these jobs are very well paid, which means the cost savings of eliminating them is considerable.The chief executive is increasingly imperiled by A.I., just like the writer of news releases and the customer service representative. Dark factories, which are entirely automated, may soon have a counterpart at the top of the corporation: dark suites.This is not just a prediction. A few successful companies have begun to publicly experiment with the notion of an A.I. leader, even if at the moment it might largely be a branding exercise.A.I. has been hyped as the solution to all corporate problems for about 18 months now, ever since OpenAI rolled out ChatGPT in November 2022. Silicon Valley put $29 billion last year into generative A.I. and is selling it hard. Even in its current rudimentary form, A.I. that mimics human reasoning is finding a foothold among distressed companies with little to lose and lacking strong leadership.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More