Evelyn Reynolds

More stories

  • 163 Shares179 Views

    in Economy

    A Spirited Start to the U.A.W. Strike at a Ford Plant Near Detroit

    Rodney Cornett got up at 4:30 a.m. on Friday, hopped in his F-150 pickup and reported as usual for a morning shift at the Ford Motor plant in Wayne, a gritty city just west of Detroit.But this morning Mr. Cornett, 56, a veteran union member who has worked at Ford for 28 years, wasn’t heading to the axle assembly area where he’s a team leader. Instead, his work was putting in six hours on the picket line with a dozen co-workers at the plant’s Gate 1 as part of the strike called by the United Auto Workers late Thursday.“We really haven’t had much of a raise in 15 years,” Mr. Cornett said, holding a sign that read, “Fair Pay Now!” while cars and trucks constantly whizzed by, honking in support of the strikers. “We’ve gone through several contracts, and the company keeps saying how they’re hurting, but they’re making record profits. It can’t be the status quo.”The U.A.W. has been negotiating a new labor contract with the three Detroit automakers, but since the sides remain far apart on wages and most other issues, the union called a strike that began when the current bargaining agreement expired at midnight.In a first, the U.A.W. is striking against all three manufacturers — General Motors, Ford and Stellantis — but has limited the stoppages to one plant at each of the companies. At Ford’s Michigan Assembly Plant in Wayne, only the 3,300 workers in the assembly area and paint shop have walked off the line, but that is enough to idle the factory.Dottie Lenard, center, with her sister Gail Spring, left, and daughter Rebeccah Lenard. They were on strike on Friday in Wayne.Shantell Johnson works at the Ford plant.All 5,800 U.A.W. workers at Stellantis’s Jeep complex in Toledo, Ohio, and 3,600 union members at G.M.’s pickup truck factory in Wentzville, Mo., also went on strike.While limited, the strike will have an impact on the automakers. The affected vehicles are among their most popular and profitable. The Ford plant makes the Bronco, a rugged sport utility vehicle, and is preparing to make a new version of the Ranger pickup. Jeep makes its Gladiator and Wrangler models in Toledo. The G.M. plant produces the Chevrolet Colorado and GMC Canyon pickups.The U.A.W.’s president, Shawn Fain, said the union could extend the strike to additional plants if the talks failed to produce an agreement. “That will supercharge the leverage we have in negotiations, and will create confusion for the companies,” he said in a video streamed on Facebook on Thursday night.Mr. Fain joined workers outside the Ford plant in Wayne after the strike began at midnight. The union broke off discussions with the companies for a day but said it expected the talks to resume on Saturday.The union has demanded wage increases of 40 percent over the next four years, roughly the same pay gains the chief executives of the three companies have seen over the last four years.A U.A.W. member who isn’t on strike showed support for the walkout at the Wayne plant, which produces the Bronco sport utility vehicle and is preparing to make a new version of the Ranger pickup. Among its other demands, the union wants to end a pay scale where new hires make about a third less than the veteran wage of $32 an hour and have to work eight years before reaching the top of the pay scale. It also wants the companies to pay for health insurance for retirees, offer more paid time off and provide pensions for workers who now have only 401(k) savings accounts for retirement.The companies have offered wage increases of roughly 20 percent but have denied most of the union’s other wishes.At the Ford plant, several strikers said a raise of 30 percent or more was needed to make up for concessions that the union had to make in previous years to help the automakers survive the 2007-8 financial crisis.Jason Vinson, 42, a forklift driver, started as a temporary worker in 2007 making about $17 an hour, then worked his way up to $25 until he was laid off. When he was rehired in 2012, he had to start over at $17 an hour, he said.“I had to get used to it, just pay the necessities,” he said with a shrug. Now he earns $32 an hour, he said, but thinks a substantial raise is warranted because of the profits his plant generates and the sacrifices he made in the past.The strikers, many wearing red T-shirts, waved placards and acknowledged honks of support from passing motorists. The picketing is being conducted in six-hour shifts; the plan is for union members to take on one shift per week.Drawing on a strike fund of $825 million, the union will pay the striking workers $500 a week and cover their health insurance premium. That helps, but still puts some workers in a pinch.The union is demanding 40 percent raises over the next four years.Lisa Bell at the Ford plant in Wayne.“I’m getting rid of my cable TV,” said Diana Osborne, 42, an assembly worker who has worked for Ford for 16 years. And her 18-year old daughter, who just enlisted in the National Guard, has offered to lend her money if things get really tight.Mr. Cornett, the team leader in axle assembly, makes $32 an hour but said he fretted about sending his son to college. If he works 40 hour a week, he will earn about $67,000 a year. “There’s college, plus property taxes are going up, the price of gas is through the roof,” he lamented.Aside from a raise, the thing he wants is an end to the tiered wage system, under which newer workers and veterans are paid on different scales, saying it’s “disheartening” seeing colleagues doing the same work while making $22 or $24 an hour.“We all labor hard,” he said. “You have a precise amount of time to do your job on the line, and our jobs are timed to the second. When the line starts, it doesn’t stop until we go on break. A lot of new hires come in and they have aches and pains, the same aches and pains that I have, so they should get paid the same as me.” More

  • 150 Shares99 Views

    in Economy

    Will Restart of Student Loan Payments Be the Last Straw for Consumers?

    Americans have continued spending despite dwindling savings and inflation. But retailers worry resuming loan payments could push some over the edge.Mykail James has a plan for when payments on her roughly $75,000 in student loans restart next month. She’ll cut back on her “fun budget” — money reserved for travel and concerts — and she expects to limit her holiday spending.“With the holidays coming up — I have a really big family — we will definitely be scaling back how much we’re spending on Christmas and how many things we can afford,” Ms. James said. “It’s just going to be a tighter income overall.”In October, roughly 27 million borrowers like Ms. James will once again be on the hook for repaying their federal student loans after a three-year hiatus. President Biden tried to use his executive powers to forgive about $400 billion in student debt last year, but the Supreme Court overruled that decision in June, and payments kick in again in October.Now, there are big questions about how those people — many of whom had expected to have at least some of their debt erased — may change their spending habits as they budget for student loan payments again. It could crimp the economy if a large share of consumers cut back simultaneously, especially because the resumption in payments comes just as the retail and hospitality industry begin to eye the crucial holiday shopping season.Most economists think that while the hit could be substantial, it will not be so big that it would plunge America into a recession. Goldman Sachs analysts expect renewed student loan payments to cost households about $70 billion per year. That would probably be enough to subtract 0.8 percentage points from consumer spending growth in the fourth quarter, helping to slow it to 1.4 percent, they estimate.Yet major uncertainties remain. Such estimates of just how big the drag will be are rough at best, it is unclear when exactly it will bite and economists are unsure what it will do to consumer confidence. There are factors that could make the impact smaller: The Biden administration has taken steps to ease the pain, allowing for people with lower incomes to repay their loans more slowly and creating a one-year grace period in which missed payments will not be reported to credit rating agencies.But the student loan payments will also restart at the same time consumers face a number of other headwinds, including shrinking savings piles, a cooler job market and higher price levels after two years of rapid inflation. It could also coincide with major strikes — Hollywood actors and writers have been locked in a work stoppage all summer, and the United Auto Workers began a targeted strike on Friday, one that economists warn could be disruptive if it lasts. Adding another source of looming uncertainty, Congress could fail to reach a funding agreement by the end of this month, forcing a government shutdown.Retailers have begun to publicly fret that the resumption of student loan payments could collide with those other developments, pushing their shoppers closer to a breaking point. Executives from companies like Walmart, Macy’s, Best Buy and Gap have all warned analysts and investors that student loan payments may put pressure on shoppers’ budgets, eating into some of their sales in the process.“I don’t think we have a very good grasp” on how the hit to consumers will play out, said Julia Coronado, the founder of MacroPolicy Perspectives, a research firm. “It’s still very unclear exactly what the impact will be.”Consumers have, so far, been surprisingly resilient in the face of rapid inflation, higher Federal Reserve interest rates and a gradually cooling economy.Retail sales came in stronger than many economists had expected in August, data released Thursday showed. Companies have regularly predicted a pullback that has been more modest than expected, as still-low unemployment and decent pay gains have proved enough to buoy shoppers.But some companies worry that student loans could pile on — finally cracking the American consumer.Marc Rosen, the chief executive of J.C. Penney said, “I do think that student loans are going to have an impact.”Gene J. Puskar/Associated PressThe resumption of student loan payments for a retailer like J.C. Penney, which caters to middle-income consumers, would be the latest, unwelcome squeeze on their budgets. Their core customer makes an annual income of $55,000 to $75,000 and has had their monthly household expenses increase by $700 from two years ago. The department-store chain said 17 percent of its credit card customers have student loans.“I do think that student loans are going to have an impact,” Marc Rosen, the chief executive of J.C. Penney, said in an interview. “It’s another thing that comes into that family that puts another stress on their budget and, again, brings back trade-offs, forces them to make other trade-offs.”Ms. James is among the many American consumers expecting to make tough decisions. The 27-year-old, who works in aerospace defense and whose parents owe additional student loans on her behalf, said she had been spending hours doing research on her options for debt relief. She’s even contemplating a job switch to the public sector, which might require a pay cut but offers a clearer path to loan forgiveness.In addition to cutting back on travel and concerts, she plans to work more on her side jobs to earn extra cash. In the past, she’s driven for UberEats and Instacart. (She said she would also continue expanding her financial education business.)Phil Esempio, a 65-year-old high school chemistry and biology teacher in Nazareth, Pa., who owes around $150,000 in student loans, also expects to rein in his budget. Coming out of the pandemic, he excitedly returned to attending live shows in places like New York City — 78 concerts last year — and eating out while he’s there with his friends.But Mr. Esempio said that his period of big spending might have been an overreaction to the end of the pandemic. As the restart of student loan payments looms, “a lot of that is being throttled back,” he said. He expects to make it to 35 shows this year. He thinks he’ll have to start paying $1,100 a month on his federal loans, which is equivalent to what he’s been paying for his private loans.If other consumers behave similarly, it could come as an unpleasant surprise to companies including Live Nation, which owns Ticketmaster. Live Nation executives on a recent earnings call predicted that people’s excitement for live events would outweigh any additional financial burdens.Still, it is possible that other retailers are being overly glum, given the Biden policies and a few other factors that could help to limit the impact of student loans restarting. In fact, Alec Phillips, a Goldman Sachs economist, said that he thought his projection for a $70 billion annual cost from the payment restart was probably pessimistic.“I don’t think that there’s a scenario where it turns out to be substantially worse,” Mr. Phillips said.Among the factors that could limit the hit, borrowers may enroll in a new income-based repayment program offered by the administration, which would decrease monthly payments for people earning low and moderate incomes. If everyone who is eligible did so, it could reduce student loan payments by around $14 billion per year, Mr. Phillips estimates.Supporters of student debt forgiveness demonstrated outside the Supreme Court in June.Olivier Douliery/Agence France-Presse — Getty ImagesAnd some borrowers may simply not pay, at least for a while. Because missing payments will not be reported to credit reporting agencies for a year — the so called “on-ramp” period — households have wiggle room, said Constantine Yannelis, an economist at the University of Chicago Booth School of Business.Finally, debt holders are more heavily middle- and high-earning workers. Those people may have more budgetary leeway to help deal with the renewed payments, Mr. Phillips said.That is not to say that no groups will suffer. Many low-income people do have outstanding balances, just smaller ones, and Black borrowers in particular hold an outsize chunk of student debt. And the hit could come at a moment when some household budgets are already coming under stress amid high prices and high interest rates. Delinquencies on credit cards have recently jumped back above their levels from before the pandemic.The result may be a painful strain on some families — but a more muted one for the economy as a whole.The upshot is that “it will matter economically,” Mr. Yannelis said of the student loan resumption. “It is most likely not going to be huge, though, and it’s not likely to be the type of thing that would tip us into recession.” More

  • 125 Shares179 Views

    in Economy

    What Retail Sales and Other Data Say About China’s Economy

    Consumers are spending a little more, but apartment prices and the pace of construction keep falling.China’s trains, planes, stores and beaches were a little fuller last month than a year ago, and the pace of activity picked up at factories, particularly those making mobile phones and semiconductors.A batch of numbers released on Friday by China’s National Bureau of Statistics showed a modest improvement in the country’s overall retail sales and industrial production during August. A series of small steps taken by the government over the summer, including two rounds of interest rate cuts, seems to be yielding a slightly better-than-expected improvement in the country’s economy.“The national economy has accelerated its recovery, production and supply have increased steadily, market demand has gradually improved,” Fu Linghui, China’s director of national economic statistics, said at a news conference.But many foreign economists were more guarded.“Some may be of the view that China’s economy has already bottomed out, but we remain cautious,” said a research note from Nomura, a Japanese bank.Real estate remains a persistent risk.The broad troubles of China’s real estate sector continue to cast a long shadow over the country’s economic prospects. Property investment plummeted nearly a fifth in August from the same month a year ago, an even steeper decline than in July.Construction sites around China appear visibly less busy, although activity has not stopped entirely and tower cranes still dot the skyline.Construction of new apartment towers has faltered because of falling apartment prices.Based on data released on Friday for prices of new apartments in 70 large and medium-sized cities across China, Goldman Sachs calculated that prices were falling in August at a seasonally adjusted annual rate of 2.9 percent, compared with 2.6 percent in July.Construction sites around China appear visibly less busy, although activity has not stopped entirely and construction cranes still dot the skyline.Qilai Shen for The New York TimesThe statistics for new apartments considerably understate the speed and extent of price declines, however, as local governments have put heavy pressure on developers not to cut prices.Prices of existing homes in 100 cities across China fell an average of 14 percent by early August from their peak two years earlier, according to the Beike Research Institute, a Tianjin research firm. Rents have fallen 5 percent.Construction and related activities, including public works projects, make up at least a quarter of the Chinese economy. The government has tried to offset the plunge in apartment construction by demanding that already deeply indebted local and provincial governments undertake a debt-fueled wave of large projects, including new subways, municipal water systems, highways, public parks, high-speed rail lines and other infrastructure.Banks are being squeezed.Loans that China’s banks have made to property developers, dozens of which have defaulted on debt payments, are in trouble. So are loans to local governments and their financial affiliates involved in real estate. Banks are allowed to demand immediate repayment if work on a construction project has stopped, but they are reluctant to do so. Demand for new real estate loans remains weak.The central bank, the People’s Bank of China, announced on Thursday that it was freeing banks to set aside smaller reserves and start extending more credit. The move was widely seen as intended to accommodate an upcoming large batch of bond issuance by local and provincial governments to pay for their infrastructure projects.Investment in fixed assets was held back by property woes.Overall investment in what are known as fixed assets was up 3.2 percent for the first eight months of this year compared to the same months last year — infrastructure spending plus some manufacturing investment offset the property nosedive. The pace through August represented a slowdown from 3.4 percent the prior month.The value of China’s industrial production, a proxy for the activity of factories, rose 4.5 percent in August from a year ago.Agence France-Presse — Getty ImagesThe production of semiconductors rose 21.1 percent in August from a year earlier. The government has more heavily subsidized chip-making as the United States has restricted the export to China of a few of the highest-speed computer chips and of the gear to manufacture them.The value of China’s industrial production, a proxy for the activity of factories, rose 4.5 percent in August from a year ago after adjusting for considerable deflation in wholesale prices for factory goods over the past year. The increase had been 3.7 percent in July.Consumers are changing how they spend.Retail sales were up 4.6 percent in August from the same month last year, as rising energy prices likely pushed up retail sales, Nomura said.A main reason that retail sales rebounded was because a year ago, people in China were still living under stringent “zero Covid” measures that restricted their activity.Beer and wine production dropped from a year ago while output rose for bottled water, carried by many Chinese people during outdoor activities, and production of fruit and vegetable juices climbed sharply. More

  • 113 Shares119 Views

    in Economy

    U.A.W. Goes on Strike at 3 Plants in Midwest

    Workers walked off the job at 3 initial sites in a targeted labor action against Ford, General Motors and Stellantis — the first ever of all three at once.In Detroit, Shawn Fain, president of the United Auto Workers union, announced a strategy on Thursday calling on select facilities to strike in order to “keep the companies guessing.”U.A.W. via ReutersThousands of members of the United Automobile Workers union went on strike Friday at three plants in three Midwestern states in what was the first strike simultaneously affecting all three Detroit automakers.The union and the companies — General Motors, Ford Motor and Stellantis, the parent of Chrysler — remained deadlocked in negotiations over a new collective bargaining agreement when the current contract expired at 11:59 p.m. on Thursday.As the deadline neared, workers started to fan out at the targeted plants — in Michigan, Missouri and Ohio — to protest.At the outset, the strike will idle one plant owned by each automaker, and could force the automakers to halt production at other locations, shaking local economies in factory towns across the Midwest.“We are using a new strategy,” the union’s president, Shawn Fain, said in a video streamed via Facebook on Thursday night. “We are calling on select locals to stand up and go out on strike.”In the 88 years since it was founded, the union has called strikes aimed at a single automaker, and a handful have halted production for several weeks. G.M. plants were idle for 40 days in 2019 before the company and the union agreed on a new contract.The plants designated for walkouts on Friday represent only a small portion of all the unionized factories of G.M., Ford and Stellantis and of those companies’ 150,000 U.A.W. members.Where Auto Workers Are Walking Out More

  • 88 Shares139 Views

    in Economy

    Biden Accuses Republicans of Undercutting Working-Class Americans

    President Biden trained his criticism on House Republicans who are threatening to shut down the federal government if their budget cuts are not enacted.President Biden challenged his Republican opponents on Thursday in their area of political strength, arguing that he has done a better job of managing the economy than former President Donald J. Trump did and accusing his predecessor’s congressional allies of undercutting working-class Americans.While Mr. Trump has long made his stewardship of the economy his most salient bragging point, Mr. Biden declared that his “Bidenomics” program had done more to help everyday Americans make a living than what he termed “MAGAnomics” ever did. He framed the argument in terms of the fall’s coming budget battles, but it also represented a preview of next year’s campaign.“They have a very different vision for America,” Mr. Biden said in a speech at Prince George’s Community College in Largo, Md., just outside the nation’s capital, where he held up a copy of budget plans by House Republicans. “Their plan, MAGAnomics, is more extreme than anything America has ever seen before.”Mr. Biden trained his criticism on Republicans who are threatening to shut down the federal government if their plans are not enacted. The president accused the Republicans of caring more about the wealthy than the working class, pointing to proposals to cut taxes for high-income households and corporations; wring savings from Social Security, Medicare and Medicaid; and reverse initiatives to lower the cost of insulin and other prescription medicine.The intensified criticism of Republicans follows months of speeches and other messaging by the president and his team promoting the benefits of Bidenomics, a phrase used by critics that they have chosen to embrace. But the credit-taking has not budged Mr. Biden’s poll numbers, and so White House officials now plan to spend the next few weeks or longer emphasizing the contrast with his opponents.“House Republicans have understandably been reluctant to tout the MAGAnomics Budget — but the White House is going to spend much of this fall doing it for them,” Anita Dunn, a senior adviser to the president, wrote in a memo released to reporters.Mr. Biden faces strong political headwinds on the economy. A new poll released on Thursday by USA Today and Suffolk University found that only 22 percent of Americans think the economy is improving while 70 percent think it is getting worse. Asked to volunteer a single word to describe the economy, a majority came up with terms like “horrible,” “terrible,” “crashing,” “shambles,” “chaotic” and “expensive.”Just 34 percent of Americans approved of Mr. Biden’s handling of the economy and, when asked to choose, more expressed faith in his predecessor to improve the country’s economic health than they did in the incumbent, 47 percent to 36 percent.Mr. Trump sought to rebut Mr. Biden even before the speech. “The public has not been fooled,” his campaign said in a statement. “They see Bidenomics for what it is: inflation, taxation, submission and failure.”“With polls confirming that Americans overwhelmingly reject Biden’s effort to whitewash his abysmal economic record,” the statement added, “he will now attempt to reverse his message 180 degrees, ludicrously trying to blame President Trump for the destruction and misery that Joe Biden himself has wrought.”Mr. Trump has always used superlatives to exaggerate the strength of the economy while he was in office. While he presided over a strong and generally healthy economy, it was not the best in history, as he has often stated, and before the pandemic it was roughly comparable in many ways to the economy of the last few years of his predecessor, President Barack Obama.During Mr. Trump’s first two years in office, the economy grew an average of 2.5 percent per quarter on an annualized basis, while it grew an average of 3.1 percent per quarter in Mr. Biden’s first two years coming out of the pandemic, according to a comparison by Barron’s. The stock market soared by 21 percent during the early part of Mr. Trump’s tenure compared with 8.5 percent during a comparable period under Mr. Biden.Unemployment has been roughly similar during the two administrations, at 3.8 percent near a record low, but job growth under Mr. Biden has far surpassed that under Mr. Trump as the economy rebounds from Covid-19 lockdowns. By last spring, monthly job growth had averaged 470,000 since Mr. Biden took office, compared with 180,000 in the start of Mr. Trump’s administration, Barron’s calculated.Where Mr. Biden has struggled most economically is with inflation, which averaged around 2 percent under Mr. Trump but peaked at 9 percent last year under Mr. Biden before falling to about 3.7 percent now. Inflation has increased the cost of groceries, clothes, household goods and housing, while eating away at rising wages. The federal deficit is also rising sharply, as have interest rates.Still, the recession many feared has yet to materialize, and many experts now are more optimistic about what they call a soft landing. Mr. Biden argues that his expansive legislative program has positioned the country for the future better than Mr. Trump ever did through new or repaired airports, roads, bridges and other infrastructure; vast investment in the semiconductor industry; ambitious clean energy programs to combat climate change; and initiatives to bring down the cost of prescription drugs.“America has the strongest economy in the world of all major economics,” Mr. Biden said. “But all they do is attack it. But you notice something? For all the time they spend attacking me and my plan, here’s what they never do — they never talk about what they want to do.” He added: “It’s like they want to keep it a secret. I don’t blame them.” More

  • 100 Shares99 Views

    in Economy

    August wholesale inflation rises 0.7%, hotter than expected

    The producer price index increased a seasonally adjusted 0.7% in August, higher than the 0.4% estimate and the biggest monthly gain since June 2022.
    However, excluding food and energy, core PPI rose 0.2%, in line with the estimate.
    Elsewhere, retail sales climbed a higher-than-expected 0.6% in August, well above the 0.1% estimate.
    Initial jobless claims nudged up to 220,000 for the week ended Sept. 9, below the 225,000 estimate.

    A shopper peruses the meats section of a grocery store on September 12, 2023 in Los Angeles, California. 
    Mario Tama | Getty Images

    Inflation at the wholesale level rose more than expected in August, countering recent data showing that price increases have tempered lately.
    The producer price index, a measure of what producers get for their goods and services, increased a seasonally adjusted 0.7% in August and 1.6% on a year-over-year basis, the U.S. Department of Labor reported. That monthly gain was above the Dow Jones estimate for a 0.4% rise and was the biggest single-month increase since June 2022.

    However, excluding food and energy, the PPI climbed 0.2%, in line with the estimate. Excluding food, energy and trade services, the PPI increased 0.3%.
    The data comes a day after the more closely followed consumer price index showed a rise of 0.6% on a monthly basis and 3.7% from a year ago. Excluding food and energy, core CPI increased 0.3% and 4.3% respectively.
    As with the CPI, the upward pressure on the PPI came largely from a big jump in energy prices. The PPI energy index rose 10.5% on the month, spurred by a 20% surge in gasoline.
    Final demand goods prices rose 2% in August, the biggest one-month gain since June 2022. Services prices increased 0.2%.
    In other economic news Thursday, the Commerce Department estimated that retail sales increased a higher-than-expected 0.6% in August, well above the Dow Jones estimate for a 0.1% rise. Excluding autos, sales also increased 0.6% against the 0.4% estimate.

    Those numbers are not adjusted for inflation, indicating that consumers continue to hold up well despite rising prices and increasing levels of credit card debt.
    The retail report also reflected higher energy prices, as gas station sales rose 5.2%.
    Markets took both reports in stride, with futures tied to the Dow Jones Industrial Average up about 80 points heading into the open. Treasury yields were slightly higher across the board.
    The PPI focuses on domestic prices and generally represents the cost of producing goods and services. By contrast, the CPI gauges what consumers pay in the marketplace and includes import prices.
    Both gauges are showing that while inflation remains a problem for U.S. households, the rate of increase generally had appeared to be slowing in recent months. That’s been an important consideration for the Federal Reserve as it plots its future course after a series of 11 interest rate increases totaling 5.25 percentage points.
    Market pricing indicates a near certainty that the Fed will not raise benchmark rates next week. Though Fed officials in June indicated they expect one more rate hike before the end of the year, market futures on Thursday morning pointed to a 42% chance of a move in November, according to CME Group data.
    A third economic report Thursday showed that initial jobless claims nudged higher to 220,000 for the week ended Sept. 9, according to the Labor Department. However, that was slightly below the 225,000 Dow Jones estimate. More

  • 200 Shares189 Views

    in Economy

    Shipping giant Maersk unveils ‘trendsetter’ green vessel as it aims to be carbon neutral by 2040

    The new container ship, ordered in 2021, has two engines: one moved by traditional fuels and another run with green methanol — an alternative component, which uses biomass or captured carbon and hydrogen from renewable power.
    Practically speaking, the new vessel emits 100 tons of carbon dioxide less per day compared to diesel-based ships.
    “It’s a really symbolic day of our energy transition, really becoming a reality, something concrete that we can actually demonstrate, not just commitments and hard work, but actually something that everybody can see,” Maersk CEO Vincent Clerc told CNBC.

    Copenhagen, DENMARK — Shipping giant Maersk on Thursday presented its first container vessel moved with green methanol, a landmark moment for one of the world’s most polluting industries.
    The new container ship, ordered in 2021, has two engines: one moved by traditional fuels and another run with green methanol — an alternative component, which uses biomass or captured carbon and hydrogen from renewable power. Practically speaking, the new vessel emits 100 tons of carbon dioxide less per day compared to diesel-based ships.

    “It’s a really symbolic day of our energy transition, really becoming a reality, something concrete that we can actually demonstrate, not just commitments and hard work, but actually something that everybody can see,” Maersk CEO Vincent Clerc told CNBC.
    This is “the first step for us. But it’s the first step for the industry as well. The ship was ordered only in 2021, and she was really the first of its kind. Today, just a couple of years later, we have 125 ships that have been ordered by different companies to actually work on the same technology and the same energy transition. So this ship is really a trendsetter for a whole industry,” Clerc said.
    Evergreen and other shipping firms have ordered similar vessels, though they have less ambitious carbon neutrality targets than Maersk.
    Shipping accounts for around 3% of global carbon emissions, an amount comparable to major polluting countries. However, decarbonizing the sector has been challenging.

    Denmark’s Minister of Industry Morten Bodskov said this is because it is a global industry.

    Around 90% of the traded goods in the world are carried via ocean shipping, according to the Organization for Economic Cooperation and Development.
    “And if you want to make a global agreement, you have to have, I mean, more or less all countries behind the agreement, and then it is a industry in a highly competitive market. That has also been a key factor,” Bodskov told CNBC.
    A so-called shipping tax is a good example of the challenging global conversations on how to accelerate decarbonization efforts.
    In June, a group of 20 nations supported a plan for a levy on shipping industry emissions. But China, Argentina and Brazil were among the nations pushing back against such an idea.
    Speaking to CNBC, Maersk’s chief said his firm is supportive of such a tax.
    “We’ve long advocated the implementation of a carbon tax to really level the playing field and provide the right economic incentives for companies to really lean into the green transition,” he said.
    “I’m worried about the rhetoric that energy transition is a downside and not really a great opportunity,” he added.

    Supply concerns

    This vessel is the first of a wider order of 25 that are due to arrive in 2024. Maersk is looking to become climate neutral by 2040, so these new vessels will be an important part of meeting that deadline and updating its fleet of about 700 ships.
    However, analysts are worried that Maersk and its competitors might struggle to find enough supply of green methanol. The fuel is scarce and costly to transport.
    “When I look at the market for these green fuels, methanol is definitely one of the most advanced products out there at the moment. But what I can hear from the industry and from market participants is that the wrap up of methanol, green methanol, it hasn’t ramped up very fast,” Ulrik Bak, research analyst at SEB, told CNBC on Wednesday.
    “There will be a significant time where I believe that we will have more methanol vessels, then there will be green methanol to [supply] those vessels,” he said.
    Maersk has signed at least nine agreements with suppliers of green methanol from all over the world in an attempt to push these firms to produce more of the commodity.
    “This has been actually the main, the main headache for a while,” Clerc said.
    “And it continues to be as we need to scale this up … It continues to be one of the key focus areas that we need to have today,” he said, adding “we are more confident today than we were a year ago (regarding securing supply)”. More

  • 88 Shares169 Views

    in Economy

    Meet the Man Making Big Banks Tremble

    Michael Barr, whom President Biden appointed as the Federal Reserve’s top bank cop, has drawn blowback for his bank regulation push.Yelling at Michael Barr, the Federal Reserve’s top banking regulator, has never been particularly effective, his friends and co-workers will tell you. That hasn’t stopped America’s biggest banks, their lobbying groups and even his own colleagues, who have reacted to his proposal to tighten and expand oversight of the nation’s large lenders with a mix of incredulity and outrage.“There is no justification for significant increases in capital at the largest U.S. banks,” Kevin Fromer, the president of the Financial Services Forum, said in a statement after regulators released the draft rules spearheaded by Mr. Barr. The proposal would push up the amount of easy-access money that banks need to have at the ready, potentially cutting into their profits.Even before its release, rumors of what the draft contained triggered a lobbying blitz: Bank of America’s lobbyists and those affiliated with banks including BNP Paribas, HSBC and TD Bank descended on Capitol Hill. Lawmakers sent worried letters to the Fed and peppered its officials with questions about what the proposal would contain.The Bank Policy Institute, a trade group, recently rolled out a national ad campaign urging Americans to “demand answers” on the Fed’s new capital rules. On Tuesday, the organization and other trade groups appeared to lay the groundwork to sue over the proposal, arguing that the Fed violated the law by relying on analysis that was not made public.Some of Mr. Barr’s own colleagues have opposed the proposed changes: Two of the Fed’s seven governors, both Trump appointees, voted against them in a stark sign of discord at the consensus-oriented institution.“The costs of this proposal, if implemented in its current form, would be substantial,” Michelle Bowman, a Fed governor and an increasingly frequent critic of Mr. Barr’s, wrote in a statement.The reason for all of the drama is that the proposal — which the Fed released alongside two other banking agencies — would notably tighten the rules for both America’s largest banks and their slightly smaller counterparts.Michelle Bowman, a Fed governor, has become increasingly critical of Mr. Barr. Ann Saphir/ReutersIf adopted, it would mark both the completion of a process toward tighter bank oversight that started in the wake of the 2008 financial crisis and the beginning of the government’s regulatory response to a series of painful bank blowups this year.For the eight largest banks, the new proposal could raise capital requirements to about 14 percent on average, from about 12 percent now. And for banks with more than $100 billion in assets, it would strengthen oversight in a push that has been galvanized by the implosion of Silicon Valley Bank in March. Lenders of its size faced less oversight because they were not viewed as a huge risk to the banking system if they collapsed. The bank’s implosion required a sweeping government intervention, proving that theory wrong.Mr. Barr does not seem, at first glance, like someone who would be the main character in a regulatory knife fight.The Biden administration nominated him to his role, and Democrats tend to favor tighter financial rules — so he was always expected to be harder on banks than his predecessor, a Trump nominee. But the Fed’s vice chair for supervision, who was confirmed to his job in July 2022, has a knack for coming off as unobtrusive in public: He talks softly and has a habit of smiling as he speaks, even when challenged.If the proposal is adopted, it would mark both the completion of a process toward tighter bank oversight that started in the wake of the 2008 financial crisis and the beginning of the government’s regulatory response to a series of bank blowups earlier this year.Stephen Crowley/The New York TimesAnd Mr. Barr came into his job with a reputation — correct or not — for being somewhat moderate. As a top Treasury official, he helped design the Obama administration’s regulatory response to the 2008 financial crisis and then negotiated what would become the 2010 Dodd-Frank law.The changes that he and his colleagues won drastically ramped up bank oversight — but the Treasury Department, then led by Secretary Timothy Geithner, was often criticized by progressives for being too easy on Wall Street.That legacy has, at times, dogged Mr. Barr. He was in the running for a seat on the Fed’s Board of Governors in 2014, but progressive groups opposed him. When he was floated as the likely candidate to lead the Office of the Comptroller of the Currency in 2021, a similar chorus objected, with powerful Democrats including Senator Sherrod Brown, the chair of the Banking Committee, lining up behind another candidate.Mr. Barr’s chance to break back into Washington policy circles came when Sarah Bloom Raskin, a law professor nominated for vice chair for supervision at the Fed, was forced to drop out. In need of a new candidate, the Biden administration tapped Mr. Barr.Suddenly, the fact that he had just been accused of being too centrist to lead the Office of the Comptroller of the Currency was a boon. He needed a simple majority in the 100-seat Senate to pass, and received 66 votes.By then, the idea that he would have a mild touch had taken hold. Analysts predicted “targeted tweaks” to regulation on his watch. But banks and some lawmakers have found plenty of reasons to complain about him in the 14 months since.Wall Street knew that Mr. Barr would need to carry out the U.S. version of global rules developed by an international group called the Basel Committee on Banking Supervision. Banks initially expected the American version to look similar to, perhaps even gentler than, the international standard.But by early this year, rumors were swirling that Mr. Barr’s approach might be tougher. Then came the collapse this spring of Silicon Valley Bank and other regional lenders — whose rules had been loosened under the Trump administration. That seemed destined to result in even tighter rules.In one of his first acts as vice chair, Mr. Barr wrote a scathing internal review of what had happened, concluding that “regulatory standards for SVB were too low” and bluntly criticizing the Fed’s own oversight of the institution and its peers.Mr. Barr’s conclusions drew some pushback: Ms. Bowman said his review relied “on a limited number of unattributed source interviews” and “was the product of one board member, and was not reviewed by the other members of the board prior to its publication.”But that did little to stop the momentum toward more intense regulation.When Jerome H. Powell, the Fed chair, gave his regular testimony on the economy before Congress in June, at least six Republicans brought up the potential for tighter regulation, with several warning against going too far.After Silicon Valley Bank and other regional lenders collapsed this spring, Mr. Barr wrote a scathing internal review concluding that “regulatory standards for SVB were too low.” Jim Wilson/The New York TimesAnd when the proposal was finally released in July, it was clear why banks and their allies had worried. The details were meaningful. One tweak would make it harder for banks to game their assessments of their own operational risks — which include things like lawsuits. Both that and other measures would prod banks to hold more capital.The plan would also force large banks to treat some — mostly larger — residential mortgages as a riskier asset. That raised concerns not just from the banks but from progressive Democrats and fair housing groups, who worried that it could discourage lending to low-income areas. News of the measure came late in the process — surprising even some in the White House, according to people familiar with the matter.Representative Andy Barr, a Kentucky Republican, said that aspects of the proposal went beyond the international standard, which “caught a lot of people off guard,” and that the Fed had not provided a clear cost-benefit analysis.“Vice Chair Barr is using some of the bank failures as a pretext,” he said.The banks “feel like he’s being obstinate,” said Ian Katz, an analyst at Capital Alpha Partners, a research firm in Washington. “They feel like he’s the guy making the decisions, and there are not a lot of workarounds.”Andrew Cecere, the chief executive of U.S. Bancorp, said of Mr. Barr, “We may not agree on everything, but he tries to understand.”Andrew Harnik/Associated PressBut he does have fans. Andrew Cecere, the chief executive of U.S. Bancorp and a member of a Fed advisory council, said Mr. Barr was “quite collaborative” and “a good listener.”“We may not agree on everything, but he tries to understand,” Mr. Cecere said.The Fed did not provide a comment for this article.The question now is whether the proposal will change before it is final: Bankers have until Nov. 30 to offer suggestions for how to adjust it. Colleagues who worked with Mr. Barr the last time he was reshaping America’s bank regulations — in the wake of the 2008 financial collapse — suggested that he could be willing to negotiate but not when he viewed something as essential.Amias Gerety, a Treasury official during the Obama administration, joined him and other government policymakers for those discussions over consumer protection and big bank oversight. He watched Mr. Barr leave some ideas on the cutting-room floor (such as an online marketplace that would allow consumers to compare credit card terms), while fighting aggressively for others (such as a powerful structure for the then-nascent Consumer Financial Protection Bureau).When people disagreed with Mr. Barr, even loudly, he would politely listen — often before forging ahead with the plan he thought was best.“Sometimes to his detriment, Michael is who he is,” Mr. Gerety said. “He is very willing to sacrifice small-p interpersonal politics to achieve policy goals that he thinks are good for people.”Some tweaks to the current proposal are expected: The residential mortgage suggestion is getting a closer look, for instance. But several analysts said they expected the final rule to remain toothy.In the meantime, Mr. Barr appears to have shaken his reputation for mildness. Dean Baker, an economist at a progressive think tank who, in 2014, was quoted in a news article saying Mr. Barr could not “really be trusted to go after the industry,” said his view had shifted.“I definitely have had a better impression of him over the years,” Mr. Baker said. More