Evelyn Reynolds

More stories

  • 125 Shares169 Views

    in Economy

    U.A.W. Prepares for Partial Strike Against Detroit Automakers on Friday

    The union’s president, Shawn Fain, said negotiators were nowhere near an agreement and ruled out a contract extension while talks continued.Barely 24 hours before the contract deadline, the United Auto Workers leader said Wednesday that his members were prepared for a strike against the three Detroit automakers — first at a limited number of factories, with the walkout expanding if talks remain bogged down.The U.A.W. president, Shawn Fain, also ruled out any extension of the existing four-year contracts with General Motors, Ford Motor and Stellantis after they expire on Thursday night. “September 14 is a deadline, not a reference point,” he declared in an address to union members on Facebook Live.He said the initial strike locations would be “limited and targeted,” and would be communicated to members on Thursday night ahead of a Friday walkout.This tactic — a departure from the union’s usual strategy of staging an all-out strike against a single automaker chosen as a target — is intended to give the U.A.W. negotiators increased leverage in the talks, and to keep the manufacturers off balance.“It will keep them guessing on what’s going to happen next,” Mr. Fain said.Striking at even a handful of plants would disrupt the automakers’ production while ensuring that a large portion of the 150,000 U.A.W. members at the three companies continued to work and receive paychecks.The union plans to pay striking workers $500 per week and cover the cost of their health insurance premiums. The union has a strike fund of $825 million, which would cover payments to workers in a full strike against all three companies for about three months.In its initial proposal to the companies, the union demanded a 40 percent increase in wages over four years, on the premise that pay packages of the companies’ chief executives have on average risen that much over the last four years. The union has also sought regular cost-of-living adjustments that would nudge wages higher in response to inflation.The union is also seeking pensions for all workers, improved retiree benefits, shorter work hours and an end to a tiered wage system that starts new hires at about half the top U.A.W. wage of $32 an hour.The companies — each negotiating separately with the union — have made counterproposals raising wages by roughly half what the union is asking, according to Mr. Fain, and have done even less to satisfy the other demands.After Mr. Fain’s announcement, General Motors issued a statement saying in part: “We continue to bargain directly and in good faith with the U.A.W. and have presented additional strong offers. We are making progress in key areas.”Declaring that “the future of our industry is at stake,” Ford said it was “ready to reach a deal,” adding, “We should be working creatively to solve hard problems rather than planning strikes and P.R. events.”Stellantis said it had presented its latest offer to the union on Tuesday. “Our focus remains on bargaining in good faith to have a tentative agreement on the table before tomorrow’s deadline,” the company said.A week ago, the U.A.W. filed a complaint with the National Labor Relations Board saying G.M. and Stellantis had failed to respond to the union’s proposals and were bargaining unfairly.Erik Gordon, a business professor at the University of Michigan who follows the auto industry, said a strike was very likely. “I think they can reach an agreement on wages,” he said, “but these other issues are complicated and can’t be resolved in the last 36 hours by splitting the difference.”Mr. Fain’s 40-minute address was highlighted by citations from the Bible; memories of his grandfather, who was also a union autoworker; and plenty of fiery language.“For the last 40 years, the billionaire class has been taking everything and leaving everybody else to fight for the scraps,” he exclaimed at one point. “We are not the problem. Corporate greed is the problem.”He also showed a series of slides listing the union’s demands for wages, benefits, job security and other issues alongside what he said were the companies’ responses. And he contrasted his leadership team’s approach to the negotiations with that of the predecessors they ousted last year.In the past, the U.A.W. leadership typically gave union members little information on the state of the negotiations until a tentative agreement was reached. Mr. Fain said that members were “fed up with the company-union philosophy” and that dealings with the companies would be transparent to union members, “not behind closed doors as in the past.”The prospect of a large-scale strike comes as the automakers are reaping near-record profits but also contending with the transition to electric vehicles. G.M., Ford and Stellantis — the parent of Chrysler — are investing tens of billions of dollars to develop new technologies and electric models, build new battery plants, and retool older factories.The union is concerned about the potential loss of jobs as a result of the transition. Electric vehicles — which don’t have components like transmissions or fuel systems — require fewer workers to produce.All three companies are also building battery plants with partners that are not automatically covered by the U.A.W. contract. Workers at one G.M. battery plant in Ohio that started production late last year voted to join the U.A.W. and are negotiating a contract of their own with the company.Kurtis Lee More

  • 100 Shares149 Views

    in Economy

    What to Know About the Potential Autoworkers Strike

    The union and the carmakers remain far apart on wages.The United Auto Workers union, which represents about 150,000 workers at U.S. car plants, could strike against three of the country’s largest automakers on Friday if the union and the companies are unable to reach new contracts.The three automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — could be forced to stop or slow production if an agreement isn’t reached by midnight on Thursday. The president of the U.A.W., Shawn Fain, said that Thursday was the “deadline, not a reference point.”The union is negotiating a separate four-year contract with each automaker. The U.A.W. has never struck against all three companies at once, preferring to target one at a time. But Mr. Fain has said he and his members are willing to strike against all three this time.What’s at issue in the labor dispute?Compensation is at the forefront of negotiations.The U.A.W. is demanding 40 percent wage increases over four years, which Mr. Fain says is in line with how much the salaries of the companies’ chief executives have increased in the past four years.As of last Friday, the two parties remained far apart, with the companies offering to raise pay by 14 to 16 percent over four years. Mr. Fain called that offer “insulting” and has said that the union is still seeking a 40 percent pay increase.What role is the switch to electric cars playing in the negotiations?The auto industry is in the middle of a sweeping transition to battery-powered vehicles, and G.M., Ford and Stellantis are spending billions of dollars to develop new models and build factories. The companies have said those investments make it harder for them to pay workers substantially higher wages. Automakers say they are already at a big competitive disadvantage compared with nonunion automakers like Tesla, which dominates the sale of electric vehicles.The U.A.W. is worried that the companies will use the switch to electric cars to cut jobs or hire more nonunion workers. The union wants the automakers to cover workers at the battery factories in their national contracts with the U.A.W. Right now those workers are either not represented by unions or are negotiating separate contracts. But the automakers say they cannot legally agree to that request because those plants are set up as joint ventures.What happened in the last U.A.W. strike?The U.A.W. most recently went on strike in 2019 against General Motors. Nearly 50,000 General Motors workers walked out for 40 days. The carmaker said that strike cost it $3.6 billion.The strike ended after the two sides reached a contract that ended a two-tier wage structure under which newer employees were paid a lot less than veteran workers. G.M. also agreed to pay workers more.How would a strike against the three automakers affect the economy?A long pause in car production could have ripple effects across many parts of the U.S. economy.A 10-day strike could cost the economy $5 billion, according to an estimate from Anderson Economic Group. A longer strike could start affecting inventories of cars at dealerships, pushing up the price of vehicles.The auto industry is in a more vulnerable place than it was in 2019, the last time the U.A.W. staged a strike. In the earlier part of the pandemic, car production came to a halt, sharply reducing the supply of vehicles. Domestic car inventories remain at about a quarter of where they were at the end of 2019.Will a strike have political ramifications?It definitely could.President Biden has called himself “the most pro-labor union president” and sought to solidify his ties with labor unions ahead of his re-election campaign. But the U.A.W., which usually endorses Democratic candidates including Mr. Biden in his 2020 run, has held off endorsing him for the 2024 race.The union fears that Mr. Biden’s decision to promote electric vehicles could further erode union membership in the auto industry. Mr. Fain has criticized the administration for awarding large federal incentives and loans for new factories without requiring those plants to employ union workers.Former President Donald J. Trump, who is most likely to secure the Republican nomination, has been seeking to win over U.A.W. members. He has criticized Mr. Biden’s auto and climate policies as bad for workers and consumers. More

  • 113 Shares169 Views

    in Economy

    Defying Industry, California Lawmakers Vote for Employer-Paid Food Training

    The legislation would require state employers — not workers — to pay for mandatory safety instruction. It awaits the governor’s decision.The California Legislature is moving to require employers to compensate food service employees for the cost of food safety training mandated by the state’s public health laws. If signed into law, the legislation would overturn a common practice in which employees cover the expense of obtaining the certification themselves.The measure, Senate Bill 476, which cleared the State Senate by a wide margin in May, passed the Assembly on Tuesday, 56 to 18. After a Senate vote on concurrence with amendments, the bill will be sent to Gov. Gavin Newsom, who has not signaled whether he will sign it or veto it. Asked for comment for this article, the governor’s office said it had nothing to report.The bill’s sponsors cited a New York Times investigation published in January that showed how the National Restaurant Association, a lobbying group, raises millions of dollars from workers through the fees charged by a food safety training program it administers, ServSafe. The most widely used safety program in the country for food and beverage handling, it is used by waiters, cooks, bartenders and other retail food workers.The restaurant association, a business league representing over 500,000 businesses — along with state affiliates, including the California Restaurant Association — is frequently involved in political battles against increasing the minimum wage or the subminimum wage paid to tipped workers in most states.The investigation found that more than 3.6 million workers nationwide have paid for the industry group’s classes, bringing in roughly $25 million in revenue since 2010. That is more than the National Restaurant Association spent on lobbying during the same period and more than half of the amount association members paid in dues.Labor leaders and some business owners said they were unaware of the arrangement.“I had no idea that’s what they were doing,” said Christopher Sinclair, a restaurant owner from New York now based in Sacramento, who helped organize a push to outlaw the practice.The training, costing about $15 for most workers, involves mastering information in a set of slides, typically over a few days, and then passing a test that lasts about two hours. Much of the information is basic, with lessons like the importance of daily bathing and how to recognize mold on produce. In four of the largest states, including California, such training is mandated by law; in other cases, companies require the training for managers and some employees.The California Restaurant Association and the National Restaurant Association declined to comment for this article, but both have vocally opposed the bill, arguing that workers benefited from training. The “food handler” card received upon completion of the training is portable from job to job, and it is valid for three years before having to be renewed.At a rally with workers outside the State Capitol on Tuesday evening after the Assembly passed the legislation, Saru Jayaraman, the leader of the labor-advocacy group One Fair Wage, said the legislation could have an impact beyond California.“They are using that money from low-wage workers to fight us all over the country,” she said, referring to the restaurant association. “The biggest part of this bill is that it will stop the flow of cash from two million workers in California to the nation’s largest restaurant lobby.”Member dues typically make up a large share of funding for industry business leagues. But executives with the National Restaurant Association have noted that dues make up a small portion of the group’s revenue compared with ServSafe and other business initiatives. More

  • 113 Shares139 Views

    in Economy

    UAW Standoff Poses Risk for Biden’s Electric Vehicle Commitment

    A looming auto industry strike could test the president’s commitment to making electric vehicles a source of well-paying union jobs.President Biden has been highly attuned to the politics of electric vehicles, helping to enact billions in subsidies to create new manufacturing jobs and going out of his way to court the United Automobile Workers union.But as the union and the big U.S. automakers — General Motors, Ford Motor and Stellantis, which owns Chrysler, Jeep and Ram — hurtle toward a strike deadline set for Thursday night, the political challenge posed by the industry’s transition to electric cars may be only beginning.The union, under its new president, Shawn Fain, wants workers who make electric vehicle components like batteries to benefit from the better pay and labor standards that the roughly 150,000 U.A.W. members enjoy at the three automakers. Most battery plants are not unionized.The Detroit automakers counter that these workers are typically employed in joint ventures with foreign manufacturers that the U.S. automakers don’t wholly control. The companies say that even if they could raise wages for battery workers to the rate set under their national U.A.W. contract, doing so could make them uncompetitive with nonunion rivals, like Tesla.And then there is former President Donald J. Trump, who is running to unseat Mr. Biden and has said the president’s clean energy policies are costing American jobs and raising prices for consumers.White House officials say Mr. Biden will still be able to deliver on his promise of high-quality jobs and a strong domestic electric vehicle industry.The head of the United Automobile Workers, Shawn Fain, center, wants his union’s wages and labor standards to apply to nonunion workers who make electric vehicle components.Brittany Greeson for The New York Times“The president’s policies have always been geared toward ensuring not only that our electric vehicle future was made in America with American jobs,” said Gene Sperling, Mr. Biden’s liaison to the U.A.W. and the auto industry, “but that it would promote good union jobs and a just transition” for current autoworkers whose jobs are threatened.But in public at least, the president has so far spoken only in vague terms about wages. Last month, he said that the transition to electric vehicles should enable workers to “make good wages and benefits to support their families” and that when union jobs were replaced with new jobs, they should go to union members and pay a “commensurate” wage. He is encouraging the companies and the union to keep bargaining and reach an agreement, one of Mr. Biden’s economic advisers, Jared Bernstein, told reporters on Wednesday.A strike could force Mr. Biden to be more explicit and choose between his commitment to workers and the need to broker a compromise that averts a costly long-term shutdown.“Battery workers need to be paid the same amount as U.A.W. workers at the current Big Three,” said Representative Ro Khanna, a Democrat from California who has promoted government investments in new technologies.Mr. Khanna added, “It’s how we contrast with Trump: We’re for creating good-paying manufacturing jobs across the Midwest.”At the heart of the debate is whether the shift to electric vehicles, which have fewer parts and generally require less labor to assemble than gas-powered cars, will accelerate the decline of unionized work in the industry.Foreign and domestic automakers have announced tens of thousands of new U.S.-based electric vehicle and battery jobs in response to the subsidies that Mr. Biden helped enact. But most of those jobs are not unionized, and many are in the South or West, where the U.A.W. has struggled to win over autoworkers. The union has tried and failed to organize workers at Tesla’s factory in Fremont, Calif., and Southern plants owned by Volkswagen and Nissan.A Ford Lightning plant in Dearborn, Mich. The U.A.W. worries that letting battery makers pay lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor.Brittany Greeson for The New York TimesAs a result, the union has focused its efforts on battery workers employed directly or indirectly by G.M., Ford and Stellantis. The going wage for this work tends to be far below the roughly $32 an hour that veteran U.A.W. members make under their existing contracts with three companies.Legally, employees of the three manufacturers can’t strike over the pay of battery workers employed by joint ventures. But many U.A.W. members worry that letting battery manufacturers pay far lower wages will allow G.M., Ford and Stellantis to replace much of their current U.S. work force with cheaper labor, so they are seeking a large wage increase for those workers.“What we want is for the E.V. jobs to be U.A.W. jobs under our master agreements,” said Scott Houldieson, chairperson of Unite All Workers for Democracy, a group within the union that helped propel Mr. Fain to the presidency.The union’s officials have pressed the auto companies to address their concerns about battery workers before its members vote on a new contract. They say the companies can afford to pay more because they collectively earned about $250 billion in North America over the past decade, according to union estimates.But the auto companies, while acknowledging that they have been profitable in recent years, point out that the transition to electric vehicles is very expensive. Industry executives have suggested that it is hard to know how quickly consumers will embrace electric vehicles and that companies needed flexibility to adjust.Even if labor costs were not an issue, said Corey Cantor, an electric vehicle analyst at the energy research firm BloombergNEF, it could take the Big Three several years to catch up to Tesla, which makes about 60 percent of fully electric vehicles sold in the United States.A strike could force Mr. Biden to choose between his commitment to workers and the need to avert a costly shutdown of the U.S. auto industry.Bill Pugliano/Getty ImagesData from BloombergNEF show that G.M., Ford and Stellantis together sold fewer than 100,000 battery electric vehicles in the United States last year; in 2017, Tesla alone sold 50,000. It took Tesla another five years to top half a million U.S. sales. (The Big Three also sold nearly 80,000 plug-in hybrids last year.)The three established automakers had hoped to use the transition to electric cars to bring their costs more in line with their competitors, said Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, a research firm. If they can’t, he added, they will have to look for savings elsewhere.In a statement, Stellantis said its battery joint venture “intends to offer very competitive wages and benefits while making the health and safety of its work force a top priority.”Estimates shared by Ford put hourly labor costs, including benefits, for the three automakers in the mid-$60s, versus the mid-$50s for foreign automakers in the United States and the mid-$40s for Tesla.Ford’s chief executive, Jim Farley, said in a statement last month that the company’s offer to raise pay in the next contract was “significantly better” than what Tesla and foreign automakers paid U.S. workers. He added that Ford “will not make a deal that endangers our ability to invest, grow and share profits with our employees.”Mr. Biden and Democratic lawmakers had sought to offset this labor-cost disadvantage by providing an additional $4,500 subsidy for each electric vehicle assembled at a unionized U.S. plant, above other incentives available to electric cars. But the Senate removed that provision from the Inflation Reduction Act.Such setbacks have frustrated the U.A.W., an early backer of Mr. Biden’s clean energy plans. In May, the union, which normally supports Democratic presidential candidates, withheld its endorsement of Mr. Biden’s re-election.“The E.V. transition is at serious risk of becoming a race to the bottom,” Mr. Fain said in an internal memo. “We want to see national leadership have our back on this before we make any commitments.”The next month, Mr. Fain chided the Biden administration for awarding Ford a $9.2 billion loan to build three battery factories in Tennessee and Kentucky with no inducement for the jobs to be unionized.A BMW battery plant in South Carolina. The U.A.W. has struggled to unionize autoworkers in the South.Juan Diego Reyes for The New York TimesMr. Biden tapped Mr. Sperling, a Michigan native, to serve as the White House point person on issues related to the union and the auto industry around the same time. By late August, the Energy Department announced that it was making $12 billion in grants and loans available for investments in electric vehicles, with a priority on automakers that create or maintain good jobs in areas with a union presence.Mr. Sperling speaks regularly with both sides in the labor dispute, seeking to defuse misunderstandings before they escalate, and said the recent Energy Department funding reflected Mr. Biden’s commitment to jump-start the industry while creating good jobs.Complicating the picture for Mr. Biden is the growing chorus of Democratic politicians and liberal groups that have backed the autoworkers’ demands, even as they hail the president’s success in improving pay and labor standards in other green industries, like wind and solar.Nearly 30 Democratic senators signed a letter to auto executives this summer urging them to bring battery workers into the union’s national contract. Dozens of labor and environmental groups have signed a letter echoing the demand.The groups argue that the change would have only a modest impact on automakers’ profits because labor accounts for a relatively small portion of overall costs, a claim that some independent experts back.Yen Chen, principal economist of the Center for Automotive Research, a nonprofit group in Ann Arbor, Mich., said labor accounted for only about 5 percent of the cost of final assembly for a midsize domestic sedan based on an analysis the group ran 10 years ago. Mr. Chen said that figure was likely to be lower today, and lower still for battery assembly, which is highly automated.Beyond the economic case, however, Mr. Biden’s allies say allowing electric vehicles to drive down auto wages would be a catastrophic political mistake. Workers at the three companies are concentrated in Midwestern states that could decide the next presidential election — and, as a result, the fate of the transition to clean energy, said Jason Walsh, the executive director of the BlueGreen Alliance, a coalition of unions and environmental groups.“The economic effects of doing that are enormously harmful,” he said. “The political consequences would be disastrous.” More

  • 113 Shares99 Views

    in Economy

    Auto Strike by U.A.W. Could Have Wide Economic Effects

    An extended walkout by the United Auto Workers in a contract dispute could raise car prices and affect jobs at the companies’ suppliers.Two years after the auto industry survived the supply-chain upheaval of the pandemic, another disruption — the prospective strike by the United Auto Workers — threatens to upend the production and distribution of new cars, and the impact could be wide-ranging.A U.A.W. strike against one or more of Detroit’s Big Three — Ford Motor, General Motors and Stellantis, which owns Chrysler, Jeep and Ram — is likely to quickly affect the U.S. economy, particularly in the Midwest. And a prolonged strike, by crimping the availability of new vehicles, could lead to soaring car prices. The combination of slower growth and higher prices could complicate matters for the Federal Reserve, which has sought to bring down inflation while maintaining job growth.“We’ve been counting on vehicle prices coming down, adding to the disinflation and taking pressure off the Fed so the Fed doesn’t have to keep on raising interest rates,” said Mark Zandi, chief economist at Moody’s Analytics. “This makes that much more difficult.”According to an August report from the Anderson Economic Group, a 10-day strike against all three automakers would result in total economic losses of $5.6 billion. Around $3.5 billion of that would result from lost wages and production, with the remaining $2.1 billion borne by consumers, who wouldn’t be able to get necessary repairs and replacement parts, and by dealers and their employees.Mr. Zandi said a six-week strike would have a “measurable but ultimately modest” effect on overall gross domestic product, perhaps a decline of two- or three-tenths of a percentage point. But he said damage would start to mount, given economic headwinds like rising interest rates, the return of student-loan repayments and a potential government shutdown in October.If the strike lasted through the end of the year, Mr. Zandi said, “that would be enough to push this economy close to the edge of a recession, given everything else that’s going on.”A 40-day strike against General Motors in 2019 had limited economic effects. One key difference this time is inventories. Total domestic car inventories, which includes new and used cars, have increased from a record low in February 2022 but are less than a quarter of what they were in September 2019.“In 2019, General Motors could look at their inventory and say, ‘We can take a 10-day strike, and hardly anybody who wants one of our cars is going to be unable to get it,” said Patrick Anderson, the principal and chief executive of the Anderson Economic Group. “That’s not the case in 2023.”A strike could also have a spillover effect on the automotive supply chain. Gabriel Ehrlich, an economic forecaster at the University of Michigan, said the automakers’ suppliers — the businesses that make brakes, headlights and catalytic converters — would begin to be felt after about two weeks, with employers cutting back on employment and, as a result, those laid-off workers reducing their own spending.In Michigan, the auto industry has slipped in prominence but still contributes meaningfully to the economy. Mr. Ehrlich’s analysis, which assumes a six-week strike against just one automaker, forecasts a slowdown in payroll growth in the fourth quarter.How the individual automakers weather the storm could vary. Stellantis will be able to satisfy consumer demand longer than Ford or General Motors because it has greater inventories, according to Pat Ryan, the chief executive of Co-Pilot, a car-shopping app that tracks the inventories of car dealers. The result will still be higher prices for consumers, Mr. Ryan said, for both used and new vehicles.Ultimately, the automakers will be able to make up for lost production, and selling their vehicles at higher prices — in addition to not paying wages during the strike — will help for a time. But things will become more challenging if automakers are forced to stop making their most profitable and popular cars, which are already in short supply.“If you’re a G.M. dealer or G.M., you’re going to feel a lot of pain if the Tahoe line shuts down,” Mr. Ryan said. More

  • 113 Shares189 Views

    in Economy

    Wally Adeyemo, the Deputy Treasury Secretary, to Visit Nigeria

    Wally Adeyemo, the highest-ranking member of the African diaspora in the Biden administration, emigrated from Nigeria to the United States as a child.The Biden administration is dispatching Wally Adeyemo, the deputy Treasury secretary, to Nigeria next week as it seeks to deepen economic ties with Africa and counter China’s influence on the continent.The visit comes as Nigeria’s new president, Bola Tinubu, is embarking on reforms to revive his country’s sluggish economy and months after President Biden pledged to deepen the United States’ involvement with Africa with an investment of more than $50 billion over the next three years. The United States has been trying to make up lost ground in the geopolitical contest with China and Russia to cultivate relations in Africa.Nigeria, which is Africa’s largest economy, is key to those efforts. The Biden administration believes Nigeria, a democracy that is rich with natural resources, has the potential to be an economic anchor for the United States on the continent.Several Biden administration officials, including Secretary of State Antony J. Blinken, have visited Nigeria during Mr. Biden’s first term. However, Mr. Adeyemo is a unique emissary: He was born in Ibadan, one of Nigeria’s largest cities, and emigrated with his family to California when he was 2 years old.The trip will be Mr. Adeyemo’s first time going back to Nigeria in decades, he said, and he will be returning as the highest-ranking member of the African diaspora in the Biden administration. His ascension to the top ranks of the U.S. government has been watched with joy in Nigeria in recent years.“It’s one of those opportunities to go to a place that means a lot to me personally, but also to go to a place that means a lot to me professionally, just given that Nigeria is Africa’s largest economy with a huge demographic boom,” Mr. Adeyemo said in an interview with The New York Times. “It’s just a great chance for me to talk about how we can deepen the economic relationship and the strategic relationship at a moment when Nigeria has a government that’s already taken really important steps in terms of economic reform.”While in Lagos, Mr. Adeyemo plans to meet with government officials and executives from the technology, entertainment and finance sectors. He also plans to meet with American companies that operate in Nigeria and visit a local project that has received financing from the U.S. government.The Biden administration views Nigeria as an opportunity because of its large population of young workers. Nigeria’s government has tried to make the country more attractive to foreign investors by easing currency controls and removing fuel subsidies, which have for years strained its public finances.Mr. Adeyemo said that his message in Nigeria will be that “the United States wants to be your partner, not only to provide development assistance, but to think about how we deepen our investment and trade relationship.”While he is there, Mr. Adeyemo plans to talk to Nigerian officials about tackling corruption and protecting the financial system from illicit finance risks. He will also encourage Nigerian officials to continue to pursue ways of diversifying the economy away from its reliance on petroleum and embracing renewable energy.The outreach from the United States comes as Nigeria is grappling with the highest levels of inflation in nearly two decades and, like many African nations, a heavy debt burden.According to government statistics, Nigeria owes more than $20 billion to international financial institutions such as the World Bank and the International Monetary Fund. It also owes $4.7 billion to China, which is Nigeria’s largest bilateral creditor.The Biden administration has been pressuring China to offer debt relief to African countries. However, Nigeria has yet to seek debt relief through the “common framework” initiative that was established by the Group of 20 nations.Biden administration officials have been careful to avoid explicitly characterizing U.S. interests in Africa in the context of competition with China. During a trip to South Africa last year, Mr. Blinken said the administration’s Africa strategy was not centered on rivalry with China and Russia. But a White House document on Mr. Biden’s strategy in sub-Saharan Africa released the same day said the effort to strengthen “open societies” was partly intended to “counter harmful activities” by China, Russia and “other foreign actors.”Asked about China’s influence in Nigeria, Mr. Adeyemo underscored what the country shares with the United States and noted that both are large, multiethnic democracies with similar values. He pointed out that African countries are increasingly aware of China’s reluctance to restructure debt and that the United States is taking a different approach to its economic relationship with Nigeria.“We’re talking about investment and foreign direct investment in Nigerian companies, in Nigerian infrastructure, in a way that allows Nigerians to be able to build a thriving economy that isn’t overly reliant on external debt,” Mr. Adeyemo said. More

  • 150 Shares129 Views

    in Economy

    August core inflation, excluding food and energy, rose 0.3%, hotter than expected

    The consumer price index rose 0.6% in August, its biggest monthly gain of 2023. The inflation gauge rose 3.7% from a year ago.
    Core CPI increased 0.3% and 4.3% respectively, against estimates for 0.2% and 4.3%. Fed officials focus more on core as it provides a better indication of where inflation is heading over the long term.
    Energy prices fed much of gain, rising 5.6% on the month, an increase that included a 10.6% surge in gasoline.
    The jump in headline inflation hit worker paychecks. Real average hourly earnings declined 0.5% for the month.

    Inflation posted its biggest monthly increase this year in August as consumers faced higher prices on energy and a variety of other items.
    The consumer price index, which measures costs across a broad variety of goods and services, rose a seasonally adjusted 0.6% for the month, and was up 3.7% from a year ago, the U.S. Department of Labor reported Wednesday. Economists surveyed by Dow Jones were looking for respective increases of 0.6% and 3.6%.

    However, excluding volatile food and energy, core CPI increased 0.3% and 4.3% respectively, against estimates for 0.2% and 4.3%. Federal Reserve officials focus more on core as it provides a better indication of where inflation is heading over the long term.

    Energy prices fed much of gain, rising 5.6% on the month, an increase that included a 10.6% surge in gasoline.
    Food prices rose 0.2% while shelter costs, which make up about one-third of the CPI weighting, increased 0.3%. Within shelter, the rent of shelter primary residence index rose 0.5% and increased 7.8% from a year ago. Owners equivalent rent, a key measure that gauges what homeowners believe they could get in rent, increased 0.4% and 7.3% respectively.
    Elsewhere in the report, airfares jumped 4.9% but were still down 13.3% from a year ago. Used vehicle prices, an important contributor to inflation during its rise in 2021 and 2022, declined 1.2% and are down 6.6% year over year. Transportation services rose 2% on the month.
    Excluding shelter from CPI would have resulted in an annual increase of only about 1%, according to Lisa Sturtevant, chief economist at Bright MLS.

    “Housing continues to contribute an outsized share to the inflation measures,” Sturtevant said. “Rent growth has slowed considerably and median rents nationally fell year-over-year in August. … However, it takes months for those aggregate rent trends to show up in the CPI measures, which the Fed must take into account when it takes its ‘data driven’ approach to deciding on interest rate policy at their meeting … later this month.”
    Stock market futures initially fell following the report then rebounded. Treasury yields were higher across the board.
    The jump in headline inflation hit worker paychecks. Real average hourly earnings declined 0.5% for the month, though they were still up 0.5% from a year ago, the Labor Department said in a separate release.
    The data comes as Federal Reserve officials are looking to stake out a longer-term approach to solving the inflation problem.
    In a series of increases that began in March 2022, the central bank has boosted its benchmark borrowing rate by 5.25 percentage points in an effort to tackle inflation that had been running at a more than 40-year high in the summer of 2022.
    Recent remarks from officials have indicated a more cautious approach ahead. Whereas policymakers had preferred to overdo monetary policy tightening, they now see risks more evenly balanced and appear more cautious about future hikes.
    “Overall, there is nothing here to change the Fed’s plans to hold interest rates unchanged at next week’s [Federal Open Market Committee] meeting,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics.
    Markets largely expect the Fed to skip a hike at next week’s meeting. Futures pricing has been volatile beyond that, with traders putting about a 40% probability of a final hike in November, according to CME Group data. More

  • 138 Shares199 Views

    in Economy

    Biden’s Climate Law Is Reshaping Private Investment in the United States

    Lucrative tax incentives have fueled a surge in solar panels but failed to boost wind power, data from a new project show.Private investment in clean energy projects like solar panels, hydrogen power and electric vehicles surged after President Biden signed an expansive climate bill into law last year, a development that shows how tax incentives and federal subsidies have helped reshape some consumer and corporate spending in the United States.New data being released on Wednesday suggest the climate law and other parts of Mr. Biden’s economic agenda have helped speed the development of automotive supply chains in the American Southwest, buttressing traditional auto manufacturing centers in the industrial Midwest and the Southeast. The 2022 law, which passed with only Democratic support, aided factory investment in conservative bastions like Tennessee and the swing states of Michigan and Nevada. The law also helped underwrite a spending spree on electric cars and home solar panels in California, Arizona and Florida.The data show that in the year since the climate law passed, spending on clean-energy technologies accounted for 4 percent of the nation’s total investment in structures, equipment and durable consumer goods — more than double the share from four years ago.The law so far has failed to supercharge a key industry in the transition from fossil fuels that Mr. Biden is trying to accelerate: wind power. Domestic investment in wind production declined over the past year, despite the climate law’s hefty incentives for producers. And so far the law has not changed the trajectory of consumer spending on some energy-saving technologies like highly efficient heat pumps.But the report, which drills down to the state level, provides the first detailed look at how Mr. Biden’s industrial policies are affecting clean energy investment decisions in the private sector.The data come from the Clean Investment Monitor, a new initiative from the Rhodium Group, a consulting firm; and the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research. Its findings go beyond simpler estimates, from the White House and elsewhere, providing the most comprehensive look yet at the effects of Mr. Biden’s economic agenda on America’s emerging clean-energy economy.The researchers spearheading the first cut of the data include Trevor Houser, a former Obama administration official, who is a partner at Rhodium; and Brian Deese, a former director of Mr. Biden’s National Economic Council, who is an innovation fellow at M.I.T.The climate bill President Biden signed into law last year includes a wide range of lucrative incentives to encourage domestic manufacturing and speed the nation’s transition away from fossil fuels. Doug Mills/The New York TimesThe Inflation Reduction Act, which Mr. Biden signed into law in August 2022, includes a wide range of lucrative incentives to encourage domestic manufacturing and speed the nation’s transition away from fossil fuels. That includes expanded tax breaks for advanced battery production, solar-panel installation, electric vehicle purchases and other initiatives. Many of those tax breaks are effectively unlimited, meaning they could eventually cost taxpayers hundreds of billions of dollars — or even top $1 trillion — if they succeed at driving enough new investment.Biden administration officials have tried to quantify the effects of that law, along with bipartisan legislation on infrastructure and semiconductors signed by the president earlier in his term, by tallying up corporate announcements of new spending linked to the legislation. A White House website estimates that companies have so far announced $511 billion in commitments for new spending linked to those laws, including $240 billion for electric vehicles and clean energy technology.The Rhodium and M.I.T. analysis draws on data from federal agencies, trade groups, corporate announcements and securities filings, news reports and other sources to try to construct a real-time estimate of how much investment has already been made in the emissions-reducing technologies targeted by Mr. Biden’s agenda. For comparison purposes, its data stretch back to 2018, under President Donald J. Trump.The numbers show that actual — not announced — business and consumer investment in clean-energy technologies hit $213 billion in the second half of 2022 and first half of 2023, after Mr. Biden signed the climate law. That was up from $155 billion the previous year and $81 billion in the first year of the data, under Mr. Trump.Trends in the data suggest that the impact of Mr. Biden’s agenda on clean-energy investment has varied depending on the existing economics of each targeted technology.Mr. Biden’s biggest successes have come in spurring increased investment in American manufacturing, and in catalyzing investment in technologies that remain relatively new in the marketplace.Fueled partly by foreign investment, like in battery plants in Georgia, actual investment in clean-energy manufacturing more than doubled over the last year from the previous year, the data show, totaling $39 billion. Such investment was almost nonexistent in 2018.The bulk of that spending was focused on the electric-vehicle supply chain, including in the new Southwest cluster of activity across California, Nevada and Arizona. The Inflation Reduction Act includes multiple tax breaks for such investment, with domestic-content requirements meant to encourage production of critical minerals, batteries and automotive assembly in the United States.The big winners in manufacturing investment, though, as a share of states’ economies, remain traditional auto states: Tennessee, Kentucky, Michigan and South Carolina.Mr. Biden’s bipartisan infrastructure law targets the clean-energy economy, including spending to build out more charging stations for electric vehicles.Gabby Jones for The New York TimesThe climate law also appears to have supercharged investment in so-called green hydrogen, which splits water atoms to create an industrial fuel. The same is true of carbon management — which seeks to capture and store greenhouse gas emissions from existing energy plants or pull carbon out of the atmosphere. All those technologies struggled to gain traction in the United States before the law showered them with tax breaks.Hydrogen and much of the carbon-capture investment is concentrated along the coast of the Gulf of Mexico, a region filled with incumbent fossil fuel companies that have begun to branch into those technologies. Another cluster of carbon-capture investment is concentrated in Midwestern states like Illinois and Iowa, where companies that produce corn ethanol and other biofuels are beginning to spend on efforts to sequester their emissions.The incentives for those technologies in the Inflation Reduction Act, along with other support in the bipartisan infrastructure law, “fundamentally change the economics of those two technologies, making them broadly cost-competitive for the first time,” Mr. Houser said in an interview.Other incentives have not yet budged the economics of critical technologies, most notably wind power, which boomed in recent years but is now facing global setbacks as projects become increasingly expensive to finance.Wind investment was lower in the first half of this year than at any point since the database was started.In the United States, wind projects are struggling to navigate government processes for permitting, transmission and locating projects, including opposition from some state and local lawmakers. Solar projects and related investment in storage for solar power, Mr. Houser noted, can be built closer to power consumers and have fewer hurdles to clear, and investment in them grew by 50 percent in the second quarter of 2023 from a year earlier.Some consumer markets have yet to be swayed by the promise of tax breaks for new energy technologies. Americans have not increased their spending on heat pumps, even though the law covers up to $2,000 toward the purchase of a new one. And over the last year, the states with the highest spending as a share of their economy on heat pumps are all concentrated in the Southeast — where, Mr. Houser said, consumers are more likely to already own such pumps, and to be in need of a new one. More