Evelyn Reynolds

More stories

  • 125 Shares149 Views

    in Economy

    Yellen Says Bid to Decouple From China Would Be ‘Disastrous’

    The Treasury secretary, speaking to a House committee, said trade and investment were crucial in U.S.-Chinese relations.Treasury Secretary Janet L. Yellen said on Tuesday that it would be a mistake for the United States to try to “decouple” from China and called for deepening economic ties between the world’s two largest economies.The comments came as the Biden administration has been seeking to improve relations with China, which faced a setback this year when a Chinese surveillance balloon was found flying across the United States. Secretary of State Antony J. Blinken is planning to travel to Beijing next week, and Ms. Yellen hopes to make a trip there soon.Speaking at a House Financial Services Committee hearing on Tuesday, Ms. Yellen made clear that she believes the economic relationship with China is critical.“I think we gain and China gains from trade and investment that is as open as possible, and it would be disastrous for us to attempt to decouple from China,” Ms. Yellen said.The United States maintains tariffs that the Trump administration imposed on billions of dollars’ worth of Chinese imports, and the Biden administration is developing new restrictions on how U.S. companies can invest in China. But Ms. Yellen said that the United States intended only to “de-risk” the relationship and that it had no intention of inflicting economic harm on China.“I certainly do not think it is in our interest to stifle the economic progress of the Chinese people,” Ms. Yellen said. “China has succeeded in lifting hundreds of millions of people out of poverty, and I think that’s something that we should applaud.”Although she struck an accommodating tone, Ms. Yellen also laid out concerns likely to arise in meetings with her Chinese counterparts.Because of national security concerns, she said, the administration is considering restrictions on American private equity firms’ investments in Chinese firms that have connections with China’s military. She also said the Treasury Department was examining additional sanctions on China in response to human rights abuses against Uyghurs in Xinjiang.In recent months, the United States has been ratcheting up pressure on China to provide debt relief to Zambia and other developing countries. Ms. Yellen lamented that despite some signs of a willingness to cooperate and help poor countries avoid defaults, China had not done enough. She emphasized a growing need for international financial institutions like the World Bank and the International Monetary Fund to help the most vulnerable economies.“These institutions reflect American values,” Ms. Yellen said. “It serves as an important counterweight to nontransparent, unsustainable lending from others like China.”Asked about Ms. Yellen’s comments on Tuesday, Wang Wenbin, a spokesman for China’s Foreign Ministry, rejected the idea that the I.M.F. or the World Bank is meant to further American interests.“The I.M.F. is not the I.M.F. of the United States, nor is the World Bank for that matter,” he said. More

  • 175 Shares149 Views

    in Economy

    Inflation rose at a 4% annual rate in May, the lowest in 2 years

    The inflation rate cooled in May to its lowest annual rate in about two years, the Labor Department reported Tuesday.
    The consumer price index, which measures changes in a multitude of goods and services, increased just 0.1% for the month, bringing the annual level down to 4%. That 12-month increase was the smallest since March 2021, when inflation was just beginning to rise to what would become the highest in 41 years.

    Excluding volatile food and energy prices, the picture wasn’t as optimistic.
    So-called core inflation rose 0.4% on the month and was still up 5.3% from a year ago, indicating that while price pressures have eased somewhat, consumers are still under fire.

    All of those numbers were exactly in line with the Dow Jones consensus estimates.
    A 3.6% slide in energy prices helped keep the CPI gain in check for the month. Food prices rose just 0.2%.
    However, a 0.6% increase in shelter prices was the biggest contributor to the increase for the all-items, or headline, CPI reading. Housing-related costs make up about one-third of the index’s weighting.

    Elsewhere, used vehicle prices increased 4.4%, the same as in April, while transportation services were up 0.8%.
    Markets showed little reaction to the release, despite its expected prominence in the decision the Federal Reserve will make at this week’s meeting regarding interest rates. Stock market futures were slightly positive, though Treasury yields fell sharply.
    Pricing did shift notably in the fed funds market, with traders now pricing in a nearly 100% chance that the Fed will not raise benchmark rates when its meeting concludes Wednesday.
    “The encouraging trend in consumer prices will provide the Fed some leeway to keep rates unchanged this month and if the trend continues, the Fed will not likely hike for the rest of the year,” said Jeffrey Roach, chief economist at LPL Financial.
    The tame CPI reading was good news for workers. Average hourly earnings adjusted for inflation rose 0.3% on the month, the Bureau of Labor Statistics said in a separate release. On an annual basis, real earnings are up 0.2% after running negative for much of the inflation surge that began about two years ago.
    The consumer price report featured a growing discrepancy between the core and headline numbers. The all-items index usually runs ahead of the ex-food and energy measure, but that hasn’t been the case lately.
    The year-over-year discrepancy between the two measures stems from gas prices that were surging at this time in 2022. Ultimately, prices at the pump would exceed $5 a gallon, which had never happened before in the U.S. Gasoline prices have fallen 19.7% over the past year, Tuesday’s BLS report showed.
    Food prices, however, were still up 6.7% from a year ago. Shelter prices have risen 8% and transportation services are up 10.2%, though airline fares have declined 13.4% after surging in the early days of the economic recovery. More

  • 163 Shares179 Views

    in Economy

    UK short-term borrowing costs shoot past ‘mini-budget’ crisis levels on strong labor data

    The U.K. Treasury building.
    Matthew Lloyd | Bloomberg | Getty Images

    LONDON — U.K. borrowing costs, as measured by the yield on short-dated government bonds, rose above levels last seen following Britain’s market-destabilizing “mini-budget” after labor market data showed rising wage growth on Tuesday.
    The yield on two-year gilts was up 18 basis points to 4.828% at 11:40 a.m. London time, according to Refinitiv data, surpassing the 4.75% set on Sept. 28 and marking the highest level since July 2008.

    U.K. annual average wage growth excluding bonuses accelerated from 6.7% to 7.2% in the February-April quarter, the fastest rate on record. Economists polled by Reuters had expected 6.9% wage growth for the reported first period since the national hourly minimum wage was increased to £10.42 ($13.1), from £9.50.
    Real pay, adjusted for inflation, showed pay growth was down by 2% including bonuses, and by 1.3% excluding them.
    The report from the British Office for National Statistics showed the employment rate rose 0.2 percentage points over the same period, as the number of people in work hit a record high. Unemployment was 0.1 percentage points higher because of a decline in the number of “economically inactive” people not in work or looking for work.

    Economists were quick to forecast a sharp rise in gilt yields on the back of the data, which fueled expectations for the Bank of England’s rate hikes.
    Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, said the numbers were “fanning the impression that the U.K. has a unique problem with ingrained high inflation.”

    The central bank is attempting to tame price rises that are among the steepest of all developed economies, coming in at 8.7% in April.
    “While we think next week’s inflation print will be softer and, more broadly, we see inflation releases ahead of the August meeting as more in line with the BoE’s expectations from May, the April beat and today’s Labour Force Survey beat imply more hikes will be needed,” said Bruna Skarica, U.K. economist at Morgan Stanley.
    It comes as markets price in a more than 81% chance the U.S. Federal Reserve will opt to pause rate increases at its meeting this week, according to the CME FedWatch Tool.
    The “mini budget” crisis in gilts that sparked chaos in the mortgage market and threatened to topple pension funds occurred after former Prime Minister Liz Truss and former Finance Minister Kwasi Kwarteng’s announced a package of unfunded tax cuts in September last year.
    — CNBC’s Ganesh Rao contributed to this report More

  • 150 Shares129 Views

    in Economy

    Inflation report Tuesday will be critical for the direction of Fed policy

    The consumer price index is set to be released Tuesday at 8:30 a.m. ET.
    The report is expected to show that all-items inflation increased just 0.1% in May, equating to a 4% annual rate. Core inflation is projected to run at a faster rate.
    Tuesday’s report is expected to convince policymakers on the Federal Open Market Committee to skip a rate hike at its meeting this week.

    Gas prices on a sign at a Shell gas station in San Francisco, California, US, on Tuesday, May 23, 2023.
    Bloomberg | Bloomberg | Getty Images

    Inflation data from May will show that the price increases that have been bedeviling consumers for the past two years are slowing down.
    The question, though, will be whether that deceleration will be enough to convince Federal Reserve officials that they can stop raising interest rates and let the U.S. economy breathe on its own for a while.

    The consumer price index, set to be released Tuesday at 8:30 a.m ET, is expected to show that all-items inflation increased just 0.1% last month, equating to a 4% annual rate, according to the Dow Jones consensus estimate. Excluding the volatile food and energy components, CPI is forecast to rise 0.4% and 5.3%, respectively.
    Those kinds of numbers could encourage policymakers that inflation is headed in the right direction, after it peaked above 9% in June 2022.
    “The most encouraging thing is the year-over-year growth rates are going to come down pretty sharply,” said Mark Zandi, chief economist at Moody’s Analytics. “The headline number is going to feel good, it’s going to be encouraging, showing inflation is moving in the right direction. More fundamentally, I think inflation is moving in the right direction.”
    Indeed, inflation has come a long way since it began surging in the spring of 2021. Pandemic-related factors such as clogged supply chains and outsized demands for goods over services combined with trillions in monetary and fiscal stimulus to send inflation to its highest level since the early 1980s.
    After a year of insisting inflation wouldn’t last, the Fed in March 2022 began what would be a series of 10 interest rate hikes. Since then, inflation has been on a gradual descent, but still far away from the central bank’s 2% target.

    Tuesday’s report is expected to be enough to convince policymakers on the Federal Open Market Committee to skip a rate hike at its meeting this week as they await incoming data and decide the longer-term policy trajectory.
    “Inflation is coming in and they might get a number that gives them comfort that things are moving in the right direction,” Zandi said. “They don’t need to raise rates again.”

    What to watch

    There will be several key variables to watch in the May CPI report.
    One will be an anomaly: Core inflation likely will look much stronger than headline, an unusual occurrence being that the former takes into account fewer variables and excludes food and energy that tend to run hotter. The discrepancy is largely the result of year-over-year comparisons that will entail a period when gasoline was on its way to over $5 a gallon at the pump, a condition that has since abated.
    Other parts of the report worth looking at closely are used vehicle prices, which jumped 4.4% on a monthly basis in April and are expected to be high again in May. Shelter costs make up about one-third of the CPI weighting, but Fed officials are counting on them to decline later this year. Economists also are looking for airfare and lodging costs to rebound in May.

    “Inflation has been trending downward for the last year,” said Dean Baker, co-founder of the Center for Economic and Policy Research. “If this trend continues, the Fed can declare victory and focus on the employment side of its mandate. However, inflation is still well above the Fed’s [2%] target, so the question is whether the downward path is continuing or whether we have hit a plateau.”
    While market expectations are for the Fed to skip a rate hike at its Tuesday-Wednesday meeting, one final increase is considered likely in July before an extended pause that now is projected to last into the early part of 2024, according to a CME Group gauge of trading in the fed funds futures market.
    The CPI report, plus another month’s worth of data before the Fed’s July 25-26 meeting, could go a long way in determining whether the market is correct — or if officials decide they have more work to do.
    “Whether or not they can get a soft landing depends on large part on how inflation plays out,” said Bill English, a former Fed official who is now a finance professor at the Yale School of Management. “If inflation stays high, they just have to raise rates more. It may be the path for employment and output that’s consistent with getting inflation down to 2% in a couple of years is not one that you would like.” More

  • 138 Shares139 Views

    in Economy

    Inflation outlook hits two-year low in latest New York Fed survey

    The New York Fed’s monthly Survey of Consumer Expectations for May showed one-year inflation expectations down 0.3 percentage point to a 4.1% rate.
    That’s the lowest annual outlook since May 2021, just as inflation was beginning to spike to its highest level in more than 41 years.
    Household spending is expected to increase 5.6% over the next year, up 0.4 percentage point from April.

    Shell gas station prices are seen on May 30, 2023 in Austin, Texas.
    Brandon Bell | Getty Images

    Consumers are growing more optimistic that inflation is on the way down, according to a New York Federal Reserve survey released Monday.
    The central bank’s monthly Survey of Consumer Expectations for May showed one-year inflation expectations down 0.3 percentage point to a 4.1% rate.

    That’s the lowest annual outlook since May 2021, just as inflation was beginning to spike to its highest level in more than 41 years. The one-year expectation then was 4%; inflation as measured by the consumer price index actually would rise to 8.6% a year later.
    In the current case, the survey matches general expectations that while prices are still well above the Fed’s 2% annual target, the general trend is lower as some of the Covid pandemic-specific factors such as outsized demand for big-ticket goods and supply chain clogs are easing.
    Still, median inflation expectations over the longer run edged higher. The three- and five-year outlooks both increased 0.1 percentage point to respective readings of 3% and 2.7%.
    Some of the inflation rise has been fed by accelerating wages, and the survey showed the outlook there is also diminishing. One-year expected earnings growth fell to 2.8%, down 0.2 percentage point since April and in keeping with the general range since September 2021.
    The survey also reflected how resilient the labor market has been.

    Expectations for losing one’s job fell 1.3 percentage points to 10.9%, the lowest since April 2022. The mean likelihood of leaving one’s job also fell half a percentage point to 19.1%.
    The job market strength has come despite a series of 10 Fed interest rate hikes aimed in large part at correcting a labor imbalance in which there were 1.8 job openings for every available worker in April. Markets largely expect the Fed to skip hiking rates at its meeting this week as policymakers process the impact that their moves have had on economic conditions.
    The survey also showed household finances remain solid, with spending expected to increase 5.6% over the next year, up 0.4 percentage point from April but below the 6.7% average over the previous 12 months.
    Correction: The three- and five-year outlooks both increased 0.1 percentage point to respective readings of 3% and 2.7%. An earlier version misstated the move. More

  • 150 Shares199 Views

    in Economy

    As the Fed Meets, It Shares an Inflation Problem With the World

    Inflation is stubborn across a range of economies. Given its staying power, investors expect the Fed to pause rate moves only temporarily.The Federal Reserve on Wednesday is expected to stop raising interest rates for the first time in 11 policy meetings. But investors are betting that the pause will not last.The pattern of stopping and then restarting rate increases is becoming well-established around the world. The Reserve Bank of Australia paused its own campaign earlier this year only to raise rates again twice, including last week. The Bank of Canada had left rates unchanged for four months before raising them again in a surprise move on June 7.That’s because inflation is proving stubborn. Across a range of economies, from Melbourne to Munich to Miami, it has been hard to stamp out. Many central banks are contending with price increases that are only moderating slowly, propped up by higher service costs, which include things like concert tickets, rent and hotel rooms.“Everyone has a kind of similar problem,” said William English, a former Fed staff member who is now at Yale University, noting that policymakers in Britain and the eurozone are facing inflation problems that have a lot in common with the Fed’s. The European Central Bank’s policymakers also meet this week, and they are expected to continue raising rates.Policy may be tougher to predict in the months ahead as officials try to judge whether interest rates are high enough to ensure that their economies slow enough to restrain price increases.“We’re into the period where we’re kind of groping a bit,” Mr. English said. “It’s going to be a period of considerable uncertainty.”

    .dw-chart-subhed {
    line-height: 1;
    margin-bottom: 6px;
    font-family: nyt-franklin;
    color: #121212;
    font-size: 15px;
    font-weight: 700;
    }

    Central bank policy rates
    Source: FactSetBy The New York TimesThe Fed has already raised rates sharply over the past 15 months, to just above 5 percent as of May, and those higher interest rates are trickling through the economy. In recent speeches, Fed officials have hinted that they could soon “skip” a rate increase to give themselves time to assess the effects of their changes so far, and investors are betting that Fed officials will hold policy steady at their meeting on Tuesday and Wednesday before lifting rates one more time in July. But those forecasts are uncertain: Traders typically have a fairly clear idea of what the Fed might do heading into its meetings, but this time markets see a small but real chance that U.S. central bankers will raise rates this week.The doubt partly owes to the fact that the Fed will receive an important inflation reading, the Consumer Price Index, on Tuesday. But it also reflects what a fraught time this is for economic policy in the United States and around the world.This is the worst inflationary episode in America and many of its peer economies since the 1970s and 1980s, so it has been a long time since the world’s policymakers contended with the issue. And while inflation has been fading, it has also demonstrated staying power.In the United States and elsewhere, inflation started in goods like cars and furniture but has moved into services like airfares, education and haircuts. That’s concerning because price increases for services tend to be driven by broad economic trends rather than one-off supply problems, and can be more lasting.“Services price inflation is proving persistent here and overseas,” Philip Lowe, the governor of the Reserve Bank of Australia, said in a speech explaining the central bank’s surprise move last week.Fed officials have been fretting that today’s price increases could prove sticky.Wage gains remain fairly rapid, which could limit how quickly prices fall as employers try to cover climbing labor bills. And while slowing rent increases should cool overall inflation, some economists have questioned whether that will be enough to steadily lower inflation.“A rebound in the housing market is raising questions about how sustained those lower rent increases will be,” Christopher Waller, a Fed governor who often favors higher interest rates, said in a recent speech.At the same time, central bankers want to avoid plunging the economy into a recession that is more painful than necessary.That is why the Fed may hit pause this week. Officials are aware that monetary policy takes months or years to have its full effect. And recent bank turmoil could further slow down lending and spending, a situation officials are still monitoring.“Anecdotally, it’s not really that bad — but we don’t have even enough survey data,” said Yelena Shulyatyeva, senior U.S. economist at BNP Paribas. For more evidence, she will be watching a Dallas Fed bank survey this month.Still, after Australia and Canada increased rates last week, investors asked: Could this mean that the Fed, too, would be more aggressive than expected?“It is a mistake to make simplistic comparisons,” Krishna Guha, head of the global policy and central bank strategy team at Evercore ISI, said, noting that the Fed still seemed likely to pause in June while teeing up a possible move in July. While the rate increases abroad underscored that inflation is proving sticky globally, he said, that’s no surprise.“We know that inflation has been frustratingly slow to come down,” he said. More

  • 138 Shares119 Views

    in Economy

    Mortgage Transfers Pick Up as a Way to Beat Rising Rates

    Real estate agents are pushing sub-3 percent mortgages as an amenity, just like marble countertops or a view of the mountains.The only goal was to not lose money.When Matthew Kilboy listed the Washington, D.C., condominium that he and his husband had bought in 2017, they accepted that higher interest rates and a soft market for condos meant any dollar over the $529,000 they had paid was a dollar they would thank their lucky stars for.A similar two-bedroom and two-bath unit in the building had recently gone for just under half a million. The $549,000 price they listed in April was basically a wish.A month later, the couple closed at $565,000 — thanks to a little-known amenity that has become increasingly popular as mortgage rates have risen. Their unit came with an assumable 30-year mortgage, with a 2.25 percent fixed rate that the couple had locked in after a November 2020 refinancing. By advertising that the buyer could inherit the mortgage, the couple, who have moved to Denver, got several over-asking-price bids that seemed like a relic from the warped real estate market during the Covid lockdown.“It was the very first sentence of the listing,” said Mr. Kilboy, 39, a former Navy nurse whose loan, backed by the Department of Veterans Affairs, could be passed to the buyer. “No one could find an interest rate that low, so we were really pushing it.”The Federal Reserve might have slowed interest rate increases, but monthly mortgage costs remain more than double their levels from 18 months ago. This has significantly lowered the supply of for-sale inventory by discouraging the millions of homeowners who locked in bargain rates during the pandemic from selling their home and incurring potentially hundreds of dollars a month in extra borrowing costs on a new one.Because so little is for sale, home prices have remained stable, and even resumed their ascent, despite a huge increase in borrowing costs. The refrain among real estate agents and economists is that anyone who secured a mortgage rate of 3 percent or lower owns a valuable asset that they are loath to give up.But every asset has a price. And now an emerging cadre of investors and real estate agents are trying to, in effect, sell mortgage rates from several years ago by transferring them to new buyers.Redfin, the real estate brokerage, has seen a steep rise in listings like Mr. Kilboy’s that have comments like “beautiful home with assumable loan at 3.25 percent.” Facebook groups have popped up to find buyers for them, while new companies are pitching services to speed up the transfer.“Homeowners with mortgages that are capable of being assumed have something valuable that many home buyers want and would be willing to pay for,” said Daryl Fairweather, chief economist at Redfin. “For people who bought when home prices were near the peak but mortgage rates were still low, it may be an attractive way to get out of a remorseful purchase.”The assumable mortgage on Matthew Kilboy’s previous home had a 2.25 percent fixed rate, making it very attractive to buyers.Benjamin Rasmussen for The New York TimesInvestors are just as eager: The euphemistic “creative finance” has become a huge topic of conversation on sites like BiggerPockets, a forum where landlords trade tips on topics like operating short-term rentals and buying a first investment property. In books, seminars and YouTube videos, influencers peddle advice on how to find struggling homeowners willing to transfer a low-rate mortgage without their bank’s knowledge — a valuable but immensely risky strategy that title companies say they’ve seen more of.“It’s just too appealing,” said Scott Trench, chief executive of Bigger Pockets, adding the disclaimer that many of these strategies frequently involve extra risks and paperwork that most people are unfamiliar with.From the pedestrian to the dodgy, it all seems to underscore the manner in which the nation’s real estate market has been frozen by regret. Buyers are resentful that the low-cost mortgages are gone. Sellers are reluctant to lower their prices from the peaks of the pandemic. In lieu of acceptance, a determined few are trying to use imagination and fine print to build a portal to the cheap-money days of 2021.Most U.S. mortgages are not directly assumable. However, a host of popular government-backed mortgages — such as those insured by the Federal Housing Administration, the Department of Veterans Affairs and the Department of Agriculture — typically are, said Michael Fratantoni, chief economist at the Mortgage Bankers Association. These loans are frequently used by first-time buyers and account for roughly a quarter of outstanding mortgages, according to Black Knight, a mortgage technology and data provider.In theory, any of the millions of homeowners holding a assumable low-rate mortgage have a valuable perk to sell with their home. Still, real estate agents say it can be hard in practice to transfer them. For instance, homeowners who transfer a V.A.-backed mortgage can lose their ability to get another similar loan unless they can find a V.A.-eligible buyer to take their original mortgage.Or consider a homeowner who has a low-rate mortgage but has paid a chunk of it down: To assume the loan, a buyer would have to come up with a large down payment to account for the seller’s equity — something that very few people can do.Craig O’Boyle is hoping to create a business making assumptions faster and easier. Mr. O’Boyle is a real estate agent who has been selling homes in Colorado for three decades, long enough that he remembers having to read through the door-stopper contracts that buyers and sellers now just click through on DocuSign. Reading over the lines about certain loans being assumable, he said, he had long thought that if rates ever spiked those owners would suddenly discover that their debts had value.“And then here comes this shift in the interest rate market,” Mr. O’Boyle said.Last year, he and a partner started Assumption Solutions, a consulting firm that, for a $1,100-per-deal processing fee, helps real estate agents navigate transferring mortgages between sellers and buyers. In his pitch to agents, Mr. O’Boyle argues that they push sub-3 percent rates as they do marble countertops or a view of the mountains.“You market this, and let’s say you’re competing against the house next door, your house should sell either faster or for more money,” he said.Even for the vast majority of people using a conventional mortgage that can’t be transferred, some sort of rate compensation is becoming the norm. While home prices have fallen from their all-time high last June, they haven’t come down nearly enough to make up for the increase in mortgage rates, and they’re rising again.To stimulate new loans, mortgage companies have started marketing products in which borrowers can “buy down” rates by paying several thousand dollars for a year or two of significantly lower interest. One of the more popular products is a “2/1 buydown,” in which a borrower pays for an interest rate reduction of two percentage points during the first year and one percentage point in the second.Put simply: “Most homes are unaffordable at today’s rates,” said Luis Solis, a real estate agent in Phoenix and Portland, Ore.A majority of Mr. Solis’s recent deals have had some form of interest rate compensation that is a price cut in all but name, he said. Usually it’s a lump sum at closing that buyers use to buy temporarily lower rates. Sellers with a lot of equity can cut out the middleman and finance the buyer’s purchase below prevailing rates by acting as a lender — seller financing, it’s called.Assuming mortgages, paying down rates: These are creative but straightforward solutions to rising borrowing costs. But on the margins, a rising number of investors looking to buy homes with minimal cash are trying a gray technique of finance — known as “Subject to” or “Subto” — in which they try to find people who have fallen behind on their debts and make a side agreement to take over their (low-interest) payments. (The deal is said to be “subject to” an existing loan.)The strategy has obvious appeal when interest rates are high, but it comes with a huge asterisk: Once a home has changed hands, banks typically have the right to call the loan — that is, demand that the seller’s mortgage balance be paid in full immediately. Also, if the buyer falls behind on the payments, the property can be still foreclosed on — ruining the seller’s credit, for a home that he or she no longer owns.Despite this, Bill McAfee, president of Empire Title, said he has seen an increase in customers looking to change their title under these terms, and has stock disclosures warning both sides what can go wrong.“I’m not saying I agree with doing this, but it’s a way to get into property with very little money,” he said. “They have to figure out if it’s worth the risk.” More

  • 150 Shares169 Views

    in Economy

    William E. Spriggs, Economist Who Pushed for Racial Justice, Dies at 68

    An educator who served in the Obama administration, he championed workers, especially Black workers, and challenged his profession’s racial assumptions.William E. Spriggs, who in a four-decade career in economics sought to root out racial injustice in society and in his own profession, died on Tuesday in Reston, Va. He was 68.The A.F.L.-C.I.O., for which Dr. Spriggs had been chief economist for more than a decade, announced his death. His wife of 38 years, Jennifer Spriggs, said the cause was a stroke.One of the most prominent Black economists of his generation, Dr. Spriggs served as an assistant secretary of labor in the Obama administration and held other public-sector roles earlier in his career. But he was best known for his work outside of government as an outspoken and frequently quoted advocate for workers, especially Black workers.In addition to his role at the A.F.L.-C.I.O., based in Washington, he was a professor at Howard University, where he mentored a generation of Black economists while pushing for change within a field dominated by white men.“Bill was somebody who was deeply committed to the idea that we do economics because we have a social purpose,” William A. Darity Jr., a Duke University economist and longtime friend, said in a phone interview. “That this is not a discipline that should be deployed just for playing parlor games, and that we should use the ideas that we develop from economics for the design of social policy that will make the lives of most people far better.”Dr. Spriggs worked on varied issues, including trade, education, the minimum wage and Social Security. But the topic he came back to most frequently, and spoke most passionately about, was that of racial disparities in the labor market. Black Americans, he pointed out time and again, consistently experienced unemployment at double the rate of white people — a troubling fact that he argued got too little attention among economists.“Economists have tried to rationalize this disparity by saying it merely reflects differences in skill levels,” Dr. Spriggs wrote in an opinion article in The New York Times in 2021, before going on to dismiss that claim with a striking statistic: The unemployment rate for white high school dropouts is almost always below that of overall Black unemployment.During the nationwide racial reckoning after the death of George Floyd in 2020, Dr. Spriggs wrote an open letter to his fellow economists that was sharply critical of the field’s approach to race — not just in its failure to recruit and retain Black economists, which had been widely documented, but also in economic research.“Modern economics has a deep and painful set of roots that too few economists acknowledge,” Dr. Spriggs wrote. “In the hands of far too many economists, it remains with the assumption that African Americans are inferior until proven otherwise.”Biden administration officials said they had discussed appointing Dr. Spriggs to senior economic policy roles as recently as this year. In the end, he remained on the outside, nudging the administration in public and private not to back off its commitment to ensuring a strong economic recovery. In recent months he was a vocal critic of the Federal Reserve’s aggressive efforts to tame inflation, which Dr. Spriggs warned would disproportionately hurt Black workers.“Bill was a towering figure in his field, a trailblazer who challenged the field’s basic assumptions about racial discrimination in labor markets, pay equity and worker empowerment,” President Biden said in a statement on Wednesday.Mr. Spriggs speaking with Janet Yellen, then the chair of the Federal Reserve, at a conference in 2014. More recently he was a critic of the Federal Reserve’s aggressive efforts to tame inflation, which he said would disproportionately hurt Black workers.Jonathan Ernst/ReutersWilliam Edward Spriggs was born on April 8, 1955, in Washington to Thurman and Julienne (Henderson) Spriggs. He was reared there and in Virginia. His father had served during World War II as a fighter pilot with the Tuskegee Airmen and went on to become a physics professor at Norfolk State University in Virginia and at Howard, in Washington, both historically Black institutions.His mother was also a veteran and became a public-school teacher in Norfolk after earning her college degree while her son was in elementary school.“I remember studying history together,” Dr. Spriggs later recalled of his mother in a White House blog post written while he was at the Labor Department. “She would check out children’s books covering the topics she was learning about.”Dr. Spriggs earned a bachelor’s degree in economics and political science from Williams College in Massachusetts and attended graduate school at the University of Wisconsin, where he earned a master’s degree in 1979 and a doctorate in 1984, both in economics. While in graduate school, he served as co-president of the graduate student teachers union, helping to rebuild it after a largely unsuccessful strike the year before.Dr. Spriggs stood out at Wisconsin, and not only because he was the only Black graduate student in the economics department, recalled Lawrence Mishel, a classmate who was later president of the Economic Policy Institute in Washington, where Dr. Spriggs also worked for several years.Even as a graduate student, Dr. Mishel said, Mr. Spriggs was skeptical of the orthodox theories that his professors were teaching about how companies set workers’ wages — theories that left no room for discrimination or other forces beyond supply and demand. And unlike most students, Mr. Spriggs wasn’t interested in working for the top-ranked school where he could find a job; he wanted to work for a historically Black institution, as his father had.He got his wish, teaching first at North Carolina Agricultural and Technical State University in Greensboro and then at Norfolk State University — where his father also worked — before taking a series of jobs in government and left-leaning think tanks. He returned to academia in 2005, when he joined Howard. He was chairman of its economics department from 2005 to 2009.In addition to his wife, whom he met in graduate school, his survivors include their son, William; and two sisters, Patricia Spriggs and Karen Baldwin. Dr. Spriggs had a shaping hand in the careers of dozens of younger economists.“I would not be an economist today without Bill Spriggs,” said Valerie Wilson, director of the Program on Race, Ethnicity and the Economy at the Economic Policy Institute.Dr. Wilson was taking a break from graduate school and considering leaving the field altogether when one of her professors recommended her for a job working for Dr. Spriggs at the National Urban League. He helped restore her passion for economics by showing her an approach to the work that was less theoretical and more focused on the real world, she said. After two years at the Urban League, she told Dr. Spriggs that she was going back to graduate school.His response: “We need you in the profession.”Jim Tankersley More