Evelyn Reynolds

Pandemic stimulus, a strong job market and climbing stock and home prices boosted net worth at a record pace, Federal Reserve data showed.American families saw the largest jump in their wealth on record between 2019 and 2022, according to Federal Reserve data released on Wednesday, as rising stock indexes, climbing home prices and repeated rounds of government stimulus left people’s finances healthier.Median net worth climbed 37 percent over those three years after adjusting for inflation, the Fed’s Survey of Consumer Finances showed — the biggest jump in records stretching back to 1989. At the same time, median family income increased 3 percent between 2018 and 2021 after subtracting out price increases.While income gains were most pronounced for the affluent, the data showed clearly that Americans made nearly across-the-board financial progress in the three years that include the pandemic. Savings rose. Credit card balances fell. Retirement accounts swelled.Other data, from both government and private-sector sources, hinted at those gains. But the Fed report, which is released every three years, is considered the gold standard in data about the financial circumstances of households. It offers the most comprehensive snapshot of everything from savings to stock ownership across racial, wealth and age groups.This is the first time the Fed report has been released since the onset of the coronavirus, and it offers a sense of how families fared during a tumultuous economic period. People lost jobs in mass numbers in early 2020, and the government tried to soften the blow with multiple relief packages.More recently, the job market has been booming, with very low unemployment and rapid wage growth that has helped to bolster incomes. At the same time, rapid inflation has eroded some of the gains by making everyday life more expensive.Without adjusting for inflation, median income would have risen 20 percent, for instance, based on the report released Wednesday.The job market has been booming, and at the same time, rapid inflation has eroded some of the gains by making everyday life more expensive.Hiroko Masuike/The New York TimesThe financial progress, particularly for poorer families, is especially remarkable when compared with the aftermath of the last recession, which lasted from 2007 to 2009. It took years for household wealth to rebound fully after that crisis, and for some families it never did.Income climbed across all groups between 2019 and 2022, though gains were biggest toward the top — meaning that income inequality widened.That made for a big difference between median income — the number at the midpoint among all households — and the average, which tallies all earnings and divides them by the number of households. Average income climbed 15 percent, one of the largest three-year pops on record.Wealth inequality was more complicated. Because the rich hold such a large share of financial assets in America, wealth gaps tend to grow in absolute terms when stocks, bonds and houses are climbing in price. True to that, wealth climbed much more in dollar terms for rich families.But in the three years covered by the survey, growth in wealth was actually the largest in percentage terms for poorer families. People in the bottom quarter had a net worth of $3,500 in 2022, up from $400 in 2019. Among families in the top 10 percent, median net worth climbed to $3.79 million, up from $3.01 million three years earlier.Because of the way the data is measured, it is difficult to break out just how much pandemic-related payments would have mattered to the figures. To the extent that families saved one-time checks and other help they received during the pandemic, those would have been included in the measures of net worth.Families were also still receiving some pandemic payments when the income measures were collected in 2021, which means that things like enhanced unemployment insurance probably factored into the data.Some Americans appear to have taken advantage of their improved financial positions to invest in stocks for the first time: 21 percent of families owned stocks directly in 2022, up from 15 percent in 2019, the largest change on record. Many of those new stock owners appear to have been relatively small investors, likely reflecting at least in part Americans’ enthusiasm for “meme stocks” like GameStop during the pandemic.The Fed’s newly released figures show that significant gaps in income and wealth persist across racial groups, although Black and Hispanic families saw the largest percentage gains in net worth during the pandemic period.Black families’ median net worth climbed 60 percent, to $44,900. That was a bigger jump than the 31 percent increase for white families, which lifted their household wealth to $285,000. Hispanic families saw a 47 percent increase in net worth.At the same time, racial and ethnic minorities saw slower income gains in the period through 2021. Black and Hispanic households saw small declines in earnings after adjusting for inflation, while white families saw a modest increase.For the first time, the report included data on Asian families, who had the highest median net worth of any racial or ethnic group.While the data in the report is slightly dated, it underscores what a strong position American families were in as they exited the pandemic. Solid net worth and growing incomes have helped people to continue spending into 2023, which has helped to keep the economy growing at a solid pace even when the Fed has been lifting interest rates to cool it down.That resilience has stoked hope that the Fed might be able to pull off a “soft landing,” one in which it slows the economy gently without crushing consumers so much that it plunges America into a recession. More

As a 25-year-old junior executive at the car company that bears his last name, William Clay Ford Jr. had a bracing introduction to labor negotiations when a union official demanded that he stand up and vouch that he was made of the same stuff as his great-grandfather Henry Ford.Mr. Ford, now the company’s executive chair, harked back to the moment in an interview this week about how he and his company are navigating one of their most difficult labor negotiations in decades.The United Automobile Workers union has shut down three Ford plants, including its largest, and other plants and distribution centers at General Motors and Stellantis, which owns Chrysler. The union’s new president, Shawn Fain, has said he is prepared to call workers out at more plants if his demands for big raises, better benefits and job security are not met. He has referred to the companies as “the enemy,” and has said the union is fighting “corporate greed” and standing up to the “billionaire class.”In a speech this week, Mr. Ford said the strikes were helping nonunion automakers like Tesla, Toyota and Honda. Mr. Fain responded that workers at those companies were future U.A.W. members.In an interview after his speech, Mr. Ford said he had been counseling his executives not to let Mr. Fain’s words get to them and focus on getting a deal done. Mr. Ford also recalled his first difficult conversation with a union official.In 1982, Mr. Ford said, his father invited him to sit in the room for talks with the U.A.W. As a newcomer, he was not allotted a seat at a table where about 50 union negotiators sat on one side and an equal number of Ford executives on the other.Sitting against the wall, he was approached by an older union representative. “You, stand up,” the man said. “What are you made of? I knew your great-grandfather and your grandfather. I knew what they were made of. What the hell are you made of?”Mr. Ford said he had replied sheepishly that he had never known his great-grandfather and grandfather but that he shared their values. Similar confrontations followed daily — “I lived in terror of going to work,” Mr. Ford said.Then about a week later, the union officials invited him to a local bar. “Come with us,” Mr. Ford said they had told him. “You passed the test.”This interview was condensed and edited for clarity.Have you been involved in any talks that are comparable to the current negotiations?No, but every negotiation is different, and every leader is different. What I keep saying to our executives is: ‘Don’t take this personally. A lot of it is theater. The most important thing is get the deal done. The rhetoric doesn’t matter.’ Every negotiation is a roller coaster. Some are not pleasant, and some sting. Don’t overreact. And when it’s all over, we are still one team again, and have to go forward.Are you going to be on the same team at the end of these talks?I believe we will. I know many on their negotiating team personally, and some of them, I play hockey with them and consider them very close friends.You’ve said the real competition is not U.A.W. vs. Ford but the U.A.W. and Ford against Toyota, Honda, Tesla and the Chinese automakers. Do you think the union’s leadership agrees with that?I hope so, because if they don’t, it will be catastrophic. They can have disagreements with us and bargain hard, but we are not the enemy. I will never consider our employees the enemy. I think the employees know who the real competition is, and they will come together with us when this is over. We made a conscious decision to add jobs here in America when our competitors were moving production to Mexico.Would the offer you have on the table now put Ford at a significant disadvantage to other automakers?It certainly won’t be an advantage. We could live with the deal we have proposed, but just barely. If you go beyond that, we are going to have to start making hard decisions in terms of investments and future products.Shawn Fain has said the workers have fallen behind while the automakers and executives like Jim Farley, Ford’s chief executive, and Mary Barra, G.M.’s chief executive, have prospered. How do you respond?Everyone’s going to have their own viewpoint on executive compensation, and I totally get that. But I also know what the market is for top talent. You have entertainers and athletes who are making more than Jim Farley and Mary Barra. But that’s what the market is, and the company with the best talent wins, period.There were some years in the lean years when I took no pay, and I would do it again if I had to.You have three plants shut down by the strike. How is that affecting your operations?It’s messy, and it’s going to become messier. The most immediate effects will be on the suppliers. The supply base is very fragile. It barely survived Covid, and is not all the way back, so a prolonged strike will start collapsing the supply base, and then making anything in this country will be difficult.Manufacturing is a matter of national security, and we saw that during Covid. And I hope with all my heart we never get into another war, but if we did, this industry would be critical to defending our nation, as it was in World War I and World War II. Other industries can make small numbers of things. The auto companies can turn that into tens of thousands of things.“I never thought I would see the day when our products were so heavily politicized, but they are.” — William Clay Ford Jr.What’s your outlook on the U.S. economy?I think it’s fragile. Inflation is taking its toll. The consumer is still spending, but we’re watching it very carefully. On the other hand, there’s still strong employment, and we are seeing our sales hold up. There are conflicting signals, for sure.Let’s talk about electric vehicles. About 18 months ago, you launched the F-150 Lightning pickup. It seemed like electric vehicle sales were going to take off. But now Ford is slowing production of that truck. What happened?E.V. sales are still up 50 percent this year, so sales are growing very fast. But we’ve also seen a politicization of E.V.s. Blue states say E.V.s are great and we need to adopt them as soon as possible for climate reasons. Some of the red states say this is just like the vaccine, and it’s being shoved down our throat by the government, and we don’t want it. I never thought I would see the day when our products were so heavily politicized, but they are.The other is prices. Electric vehicles are expensive. We know prices will come down, and as that happens, we will have a bigger ramp-up of E.V.s. Keep this in mind: The most valuable company that our industry has ever seen is Tesla, and it’s growing. That’s a very instructive point when people say E.V.s are not desired.Are you concerned about some of Donald Trump’s comments? He just came into Michigan and said that the transition to electric vehicles is going to result in almost all auto production moving to China.I don’t want to personalize this, because, frankly, we have to pick a path forward and our lead times are longer than political lead times. So we can’t overreact to one bit of rhetoric or another. We have to deal with the most likely scenario, and how we can create the most value for our company, so we are pushing ahead with E.V.s because we do believe they have great application for a lot of people. And once people drive E.V.s, they will see that it’s a great experience.Electric vehicles are expensive. Did Tesla’s price cuts have a big effect on your business?That’s what we have seen with every new technology that has been adapted. You come down the cost curve pretty quickly as batteries get better.With our first-generation E.V.s, the Lightning and the Mustang Mach-E, they were done with a lot of internal combustion engineering in them. The next generation, which will start coming quite quickly, was developed with a clean sheet of paper. When you do that you can really start taking cost out, and then you can start pricing them accordingly.Tesla has been leading the price cuts, because they can with their scale. That’s something we are actually counting on in the future. And we will have products that compete and make money in that world. More

Mexico is the second-largest recipient of remittances from abroad after India.
The soaring peso this year has forced many in the United States to increase the amounts they are sending back to Mexico.
Remittances’ buying power this year in Mexico is on track to fall for the first time in a decade.

A board displays the exchange rates for Mexican Peso and U.S. Dollar in Mexico City, Mexico March 13, 2023.
Raquel Cunha | Reuters

People sending money back to Mexico this year have faced a new challenge: the “super peso.”
The Mexican currency reached the strongest levels against the U.S. dollar in almost eight years over the summer.

The skyrocketing peso has eroded the purchasing power of households in Mexico who rely on remittances from abroad. The currency’s rise means every dollar sent home yielded fewer pesos than before.

Lea este artículo en español aquí.

Coupled with inflation at home, the buying power of remittances is set to fall this year over last for the first time in a decade, according to Gabriela Siller Pagaza, chief economist at Banco Base.
“What is truly important for recipients of remittances is not the amount they receive in dollars but the how much they can buy with that in Mexico,” Siller Pagaza said.
In the 12 months ended in August, people sent more than $62 billion in remittances to Mexico, according to Banco Base. Over the same period, the peso advanced more than 15.6% and annual inflation came in at 4.64%.
Siller Pagaza estimates that the spending power of remittances in Mexico will decline 9.9% this year, the first drop in a decade and the largest percentage fall in 13 years.

The peso is down from its highs of less than 17 pesos per U.S. dollar in July, recently at around 18 pesos per dollar this week. At the start of the year, each U.S. dollar was worth 19.46 pesos.

The currency’s surge has drawn more from the pockets of those sending U.S dollars to Mexico. People looking to send money to the country from the U.S. have found themselves forced to increase the amount to try to keep up.
For example, at the peso’s peak in July, a person who wanted to get 1,000 pesos to someone in Mexico would have to send about $60. A year earlier, it took around $49.
Eric Vasquez, a 44-year-old busboy at a New York City diner, is one of those people who has had to increase his contributions for his wife and three children who live in Mexico City.
“Before I used to send $100,” Vasquez said outside of a money transfer business in the Corona section of Queens, New York. “Now I have to send $130, $140 to cover expenses.”
Those money transfers include fees for school for his children, food and transportation.
Vasquez said he has lately been sending closer to $200 a week back home: “The more my children grow, the more money I have to send.”

Arrows pointing outwards

Buying power of remittances in Mexico
Banco de Mexico, Grupo Financiero Base

Melchor Magdaleno, 33, said for the last three to four months, he’s been sending $120 a month back to his wife and five children in Tlapa de Comonfort, in the southern Guerrero state of Mexico. He used to send $100 every two weeks, he said, but this year increased the amount due to the exchange rate and higher costs in Mexico.
Mexico’s inflation has eased in recent months but is still up 4.45% on the year, according to the latest read.
Dilip Ratha, an economist at the World Bank who focuses on remittances, noted that money transfers into Mexico have soared in recent years, driven in large part by the strong U.S. economy.

Arrows pointing outwards

Remittances to Mexico

But the peso’s appreciation, tied in part to near-shoring of manufacturing from Asia to Mexico and economic strength in both the U.S. and Mexico, could hurt Mexican households that use remittances for household budgets.
Ratha said some families could cut back on certain spending to handle fixed costs like rent or mortgages.
“People will continue to send money but the fact that economies are slowing, inflation is up, their purchasing power is eroding,” said Ratha. “The welfare effects of the situation will be quite significant.”
Mexico is the second-largest recipient of remittances worldwide after India. The transfers make up around 4% of the country’s gross domestic product.
While remittances are likely to reach a record again this year, the rate of growth will likely slow, economists said, as senders and recipients grapple with inflation, squeezing household budgets.
And the impacts could be felt in both the U.S. and Mexico.
“Mexicans in the U.S. and their relatives back home are both facing higher inflation, and wage growth has not kept up in both places,” Ratha said. “Consumption has to adjust.” More

Consumers showed surprising strength in September, boosting retail sales well above expectations despite high interest rates and worries over a weakening economy.
Retail sales rose 0.7% on the month, well above the 0.3% Dow Jones estimate, according to the advance report the Commerce Department released Tuesday. Excluding autos, sales were up 0.6%, also well ahead of the forecast for just 0.2%.

The numbers are not adjusted for inflation, so they indicate that consumers more than kept up with price increases. The consumer price index, released last week, showed headline inflation up 0.4% in September.
On a year-over-basis, sales rose 3.8%, compared to the 3.7% increase for CPI.
Treasury yields moved higher following the report while stock market futures added to losses.
Sales gains were broad-based on the month, with the biggest increase coming at miscellaneous store retailers, which saw an increase of 3%. Online sales rose 1.1% while motor vehicle parts and dealers saw a 1% increase and food services and drinking places grew by 0.9%, good for a yearly increase of 9.2%, which led all categories.
There were only a few categories that showed a decline; electronics and appliances stores as well as clothing retailers both saw decreases of 0.8% on the month.

The retail report is considered an important factor for the Federal Reserve as officials contemplate the future of monetary policy. While markets largely expect the Fed is done raising rates for this cycle, an unexpectedly strong consumer complicates the equation.
Fed Chair Jerome Powell speaks Thursday in New York, an event that markets will be watching closely for some indication about where he thinks rates are headed. The rate-setting Federal Open Market Committee next meets Oct. 31-Nov. 1. Market pricing assumes a near-certainty that the FOMC will not hike then, but it could choose to do so at future meetings if economic data remains strong.
Consumers face growing headwinds going into the end of the year.
Employment growth is expected to slow though it, too, has defied expectations. Credit card balances are rising, and the resumption of student loan payments also is expected to impact spending.
Still, third-quarter economic growth is likely to be strong, with the Atlanta Fed’s GDP tracker showing a potential annualized gain of 5.1%.
This is breaking news. Please check back here for updates. More

The further limits on shipments could cripple Beijing’s A.I. ambitions and dampen revenues for U.S. chip makers, analysts said.The Biden administration on Tuesday announced additional limits on the kinds of advanced semiconductors that American firms can sell to China, shoring up restrictions issued last October to limit China’s progress on artificial intelligence.The rules appear likely to bring to a halt most shipments of advanced semiconductors from the United States to Chinese data centers, which use them to produce models capable of artificial intelligence. More U.S. companies seeking to sell China advanced chips, or the machinery used to make them, will be required to notify the government of their plans, or obtain a special license.To prevent the risk that advanced U.S. chips travel to China through third countries, the United States will also require chip makers to obtain licenses to ship to dozens of other countries that are subject to U.S. arms embargoes.The Biden administration argues that China’s access to such advanced technology is dangerous because it could aid the country’s military in tasks like guiding hypersonic missiles, setting up advanced surveillance systems or cracking top-secret U.S. codes.But artificial intelligence also has commercial applications, and the tougher restrictions may affect Chinese companies that have been trying to develop A.I. chatbots like ByteDance, the parent company of TikTok, or the internet giant Baidu, industry analysts said. In the longer run, the limits could also weaken China’s economy, given that A.I. is transforming industries ranging from retail to health care.The limits also appear likely to cut into the money that U.S. chip makers such as Nvidia, AMD and Intel earn from selling advanced chips to China. Some chip makers earn as much as a third of their revenue from Chinese buyers and spent recent months lobbying against tighter restrictions.U.S. officials said the rules would exempt chips that were purely for use in commercial applications, like smartphones, electric vehicles and gaming systems. Most of the rules will take effect in 30 days, though some will become effective sooner.In a statement, the Semiconductor Industry Association, which represents major chip makers, said it was evaluating the impact of the updated rules.“We recognize the need to protect national security and believe maintaining a healthy U.S. semiconductor industry is an essential component to achieving that goal,” the group said. “Overly broad, unilateral controls risk harming the U.S. semiconductor ecosystem without advancing national security as they encourage overseas customers to look elsewhere.” In a call with reporters on Monday, a senior administration official said that the United States had seen people try to work around the earlier rules, and that recent breakthroughs in generative A.I. had given regulators more insight into how the so-called large language models behind it were being developed and used.Gina M. Raimondo, the secretary of commerce, said the changes had been made “to ensure that these rules are as effective as possible.”Referring to the People’s Republic of China, she said, “The goal is the same goal that it’s always been, which is to limit P.R.C. access to advanced semiconductors that could fuel breakthroughs in artificial intelligence and sophisticated computers that are critical to P.R.C. military applications.”She added, “Controlling technology is more important than ever as it relates to national security.”The tougher rules could anger Chinese officials when the Biden administration is trying to improve relations and prepare for a potential meeting between President Biden and China’s top leader, Xi Jinping, in California next month.The Biden administration has been trying to counter China’s growing mastery of many cutting-edge technologies by pumping money into new chip factories in the United States. It has simultaneously been trying to set tough but narrow restrictions on exports of technology to China that could have military uses, while allowing other trade to flow freely. U.S. officials describe the strategy as protecting American technology with “a small yard and high fence.”But determining which technologies really pose a threat to national security has been a contentious task. Major semiconductor companies like Intel, Qualcomm and Nvidia have argued that overly restrictive trade bans can sap them of the revenue they need to invest in new plants and research facilities in the United States.Some critics say the limits could also fuel China’s efforts to develop alternative technologies, ultimately weakening U.S. influence globally.The changes announced Tuesday appear to have particularly significant implications for Nvidia, the biggest beneficiary of the artificial intelligence boom.In response to the Biden administration’s first major restrictions on artificial intelligence chips a year ago, Nvidia designed new chips, the A800 and H800, for the Chinese market that worked at slower speeds but could still be used by Chinese firms to train A.I. models. A senior administration official said the new rules would restrict those sales.In addition to those expanded restrictions, the United States will create a “gray list” that requires makers of certain less advanced chips to notify the government if they are selling them to China, Iran or other countries subject to a U.S. arms embargo.In a note to clients last week, Julian Evans-Pritchard, the head of China economics at the research firm Capital Economics, said the effects of the controls would become more apparent as non-Chinese companies rolled out more advanced versions of their current products and the amount of computing power needed to train A.I. models rose as their data sets grew larger.“The upshot is that China’s ability to reach the technological frontier in the development of large-scale A.I. models will be hampered by U.S. export controls,” Mr. Evans-Pritchard wrote. That could have broader implications for the Chinese economy, he added, since “we think A.I. has the potential to be a game changer for productivity growth over the next couple decades.” More

Homebuilders are responding to rising interest rates with an innovation: a small house in the traditionally spacious exurbs.The American home is shrinking.With interest rates rising and mortgage costs with them, homebuilders are pulling in yards, tightening living rooms and lopping off bedrooms in an attempt to keep the monthly payment in line with what families can afford. The result is that new home buyers are paying more and getting less, while far-flung developments where people move for size and space are now being reimagined as higher-density communities where single-family houses have apartment-size proportions.In a recent survey of architects, John Burns Research and Consulting found that about half expected their average house size to decline. New communities will have more duplexes or small-lot single-family homes that are just a few feet apart. Even in Texas, where land is abundant, builders are adding more homes per acre, the company found.“The monthly payment matters more than anything else and builders have responded with smaller, more efficient homes,” said John Burns, the company’s chief executive.Consider Hayden Homes, a Pacific Northwest builder that focuses on small towns and exurbs where middle-class families (its typical buyer has a household income of $90,000 a year) have historically traded more house for a longer commute.Two years ago, when interest rates were low, the average Hayden home was a 1,900 square-foot three-bedroom that cost $500,000, or about $2,000 a month, said Steve Klingman, the company’s president, in an interview. This assumed a 5 percent down payment and a 30-year fixed-rate mortgage with a 3 percent interest rate.Now, as borrowing costs consume more of buyers’ mortgage payments, Hayden is lowering prices and square footage to keep customers’ payments stable. The average Hayden home is now 1,550 square feet and costs about $400,000, or $2,100 a month, Mr. Klingman said. To buy it, however, a customer has to produce a 10 percent down payment and, even with incentives, is paying a 6 percent rate on a 30-year fixed-rate mortgage.“We are reconfiguring our floor plans, our features and community design all to get to that payment buyers can afford,” Mr. Klingman said. “People want to own if we can make it attainable.”In dense areas like Southern California, the high cost of land has long led developers to focus on compact homes. Trade-offs like a side yard instead of a backyard, or a garage that opens to the street instead of a driveway, have compressed size and reduced cost. Now those kinds of urban designs are arriving in the exurbs.For instance, in Hayden’s hometown, Redmond, Ore., a city of 35,000 about 30 minutes from Bend, Ore., its Cinder Butte Village development now has homes as small as 400 square feet (a one-bedroom, one-bath with a garage on the back alley). The average is around 1,000 — half the typical home size in the community two years ago.Mr. Klingman expects smaller homes to drive the market in the coming years. Hayden shifted all of its floor plans down as mortgage rates started rising and has prototypes for new communities that are twice as dense as the ones it built during the pandemic.“I think this is for the long haul,” Mr. Klingman said.In Cinder Butte Village, new homes will be much closer together than those built a few years ago.Amanda Lucier for The New York TimesNew homes are a tiny slice of the U.S. housing stock — builders started about 1.5 million houses and apartments last year, while 142 million already existed — but since they are built in every market and bought almost entirely with mortgages, their size and cost are relatively sensitive to changes in the economy. This makes fresh construction a useful picture of how families are affected by higher borrowing costs.American families have for generations had more space than households elsewhere in the developed world, but their homes were shrinking even before interest rates rose. The median new U.S. home peaked around 2,500 square feet in 2015. Over the next five years, new homes shed about 200 square feet as costs rose, urban living boomed and smaller families became more common.The pandemic, with its rock-bottom interest rates, led to what seems poised to be a short-lived increase. As white-collar workers ditched their commutes, and home-based offices went from perk to necessity, builders added rooms and exurban subdivisions thrived.Today’s buyers are dealing with the hangover. The average rate on a 30-year fixed-rate mortgage has roughly doubled over the past two years, to 7.57 percent, according to Freddie Mac. This has all but frozen the market for existing homes by making buyers who locked in low rates reluctant to trade up or move, keeping home prices stable despite a huge increase in borrowing costs.The price that sellers will accept “is unusually high,” said Daryl Fairweather, chief economist at Redfin, the real estate brokerage. “They need somebody to buy them out of their mortgage.”The decline in the inventory of existing homes for sale has made new homes a much bigger slice of the market. New home sales have consumed about a third of the market this year, or double the level in 2019, according to Redfin.Homeowners who can’t get their price can always sit out the market. But homebuilders have to sell to survive. And in a market where borrowing costs are consuming more of their buyers’ payments, and after years of rising material and labor costs, that means selling less house.The cuts will not be equal. In its survey, the John Burns consultancy found that dining and children’s rooms are being sacrificed to preserve bigger kitchens and primary bedrooms. To do this, builders are replacing tubs with showers. They’re expanding kitchen islands so they double as a dinner table. Outdoor spaces are being connected by covered patios and wall-size sliding doors that make a smaller living room seem open.Bigger is still better, even if it only feels like it. More

Retailers are expanding their own private-label food and beverage offerings, attracting customers looking for less expensive options.The snack chips had become pretty pricey.For years, customers stopping at Casey’s General Stores, a convenience store chain in the Midwest, hadn’t thought twice about snagging a soda and a bag of Lay’s or Doritos chips. But over the past year, as the price of a bag of chips soared and some customers felt squeezed by the high cost of gas and other expenses, they began picking up Casey’s less-expensive store brand.So Casey’s began stocking more of its own chips, in a variety of new flavors. This summer, Casey’s brand made up a quarter of all bags of chips sold, eating into the sales of big brands like Frito-Lay, which is owned by PepsiCo.“As inflation continues to ratchet up, more people are open to trying alternatives,” said Darren Rebelez, the chief executive of Casey’s, which has 350 private-label products and plans to add 45 this year. “If you put the alternative right on the shelf, right next to the expensive option, people may say, ‘What the heck,’ and give it a try.”Large food companies gobbled up market share during the pandemic. With supply chain issues affecting what was on the shelves, people were buying basically whatever they could find. And they kept buying even as prices soared when the food and beverage brands raised prices to maintain their profit levels while still covering rising ingredient and labor costs.But with retailers now expanding their store-owned food and beverage offerings, consumers are slowly shifting their spending. Overall, private-label foods and beverages have crept up to a 20.6 percent share of grocery dollars from 18.7 percent before the pandemic, according to the market research firm Circana.In some categories like canned vegetables and cheese, private-label goods have garnered a significant portion of the market.Andres Kudacki for The New York TimesBut a deeper look at some categories reveals private-label goods are gaining significant ground on national brands. Private labels snagged 38 percent of canned vegetable sales in the three months that ended June 30, according to Numerator, another market research firm. Numerator’s data also shows private-label cheese held 45 percent of the market and coffee nearly 15 percent.The shift in spending reflects a customer base that is nearing or at its tipping point. Inflation, which climbed to 3.7 percent in September, is running at a less-rapid pace than a year ago, but millions of shoppers still face increasingly high prices in grocery stores.The trend is having a greater effect among those with lower incomes, who spend a greater share of their paycheck on food, even as a pandemic-era policy that increased the amount of money that food-stamp recipients received over the last three years has ended. This month, payments on federal student loans, which had been on pause for the pandemic, also resumed. Adding to the financial burden, rates on credit cards and mortgages are rising.Two-thirds of consumers said in July that they bought less-expensive groceries at retailers, an increase of four percentage points from a year earlier, according to the consulting firm McKinsey. The shift, the firm said, was particularly pronounced among those with incomes less than $100,000 in categories such as meat, dairy and staples.“Consumers are trading down,” said Rupesh D. Parikh, an equity analyst at Oppenheimer & Company who covers food, grocery and consumer products. He recently bought a box of Kellogg’s Mini Wheats cereal at Walmart along with the Walmart version. “The Kellogg’s cereal was 75 percent more expensive, and I couldn’t tell the difference between them,” he said.Big brands, in response, are already starting to offer small sale prices on certain foods, like salty snacks. “The question is how deep they are willing to go in promotions,” Mr. Parikh said.The expansion in private-label goods is also a response to a changing grocery landscape. Competition is revving up because of consolidation, led by Kroger’s proposed $24.6 billion merger with Albertsons, and the push into the United States by entrants like the German discount chain Aldi, which stocks 90 percent of its shelves with private-label goods. In August, Aldi agreed to acquire 400 Winn Dixie and Harveys Supermarket stores, giving it a significant presence in the Southeast.Retailers say they need the private-label goods to give consumers a broader array of choices. The store brands are also typically more profitable for the retailers than products from big food companies.But perhaps the biggest factor is a seismic shift in consumer attitudes. Older generations that grew up with “generic” ketchup or soup recall them as bland, tasteless versions of the name brands. Retailers, which have dumped the term “generic,” insist that the quality of the private-label foods and beverages has improved substantially. Social media platforms like TikTok and Reddit are filled with young people hyping their favorite store brand foods at Aldi and Trader Joe’s.“If the food is not good quality, our reputation is at risk,” said Scott Patton, the vice president of national buying for Aldi, who said the chain was seeing increased traffic in all income levels. “If you’re going to sell a store-branded apple cinnamon ice cream, it had better be the best apple cinnamon ice cream you’ve ever had.”Retailers are offering customers “belly fillers,” basic foods at low prices that are virtual clones of national brands, but they are also hunting for ways to differentiate themselves, said Jordan Bouey, the owner of Silver State Baking, a Las Vegas-based manufacturer that makes cookies, bars and breads for grocery chains and retailers.“If there’s a category that doesn’t have a big national brand, retailers are looking to be unique and give the shoppers what they’re looking for, like a protein cookie,” Mr. Bouey said.The private-label pasta carried by Wegmans includes more high-end varieties aimed at “the food enthusiast,” an executive said.Andres Kudacki for The New York TimesAt a Wegmans in Hanover, N.J., the dried pasta aisle was stocked with fettuccine, shells and spaghetti from well-known brands like Barilla and De Cecco. But the vast majority of the pasta on the shelves was Wegmans’ own brand, one line priced at 99 cents a box and another, Amore, that is imported from Italy and $4.99 a box, about $2 more than some of the national brands.“We want our brand to serve the value customer who is on a budget,” said Nicole Wegman, who was named president of Wegmans Brand in 2021. Wegmans has expanded its private-label business in recent years to more than 17,000 products, including deli and prepared meals, frozen vegetables and healthy snacks.“But we also want products, like our cheese and our breads, that are fun for the food enthusiast,” Ms. Wegman said. “They’re specialty items and more expensive to make, so we have to charge more for them.”Indeed, executives at Casey’s, which started dabbling in private-label goods three years ago, said they were trying not to compete with the national brands but rather expand what’s available for customers. In some cases, that means offering flavors the national brands do not.Sales of limited-edition Casey’s chips in flavors like sweet corn, barbecue brisket and jalapeño Cheddar sold well this summer. “Those are the kind of products that a Frito-Lay is not going to make because it is not a national flavor profile that is going to work for their business,” Mr. Rebelez said.But he also acknowledged that some Casey’s customers were simply looking for deals.Take candy bars. For years, retailers would not compete against behemoths like Hershey and Mars because customers remained loyal to the brands they had grown up eating. But as the price of candy bars rose in recent years, some customers stopped buying.So Casey’s created four of its own lower-priced candy bars, including a chocolate with mint and a chocolate caramel.“I was skeptical going in, but those candy bars have performed really well,” Mr. Rebelez said, adding that Casey’s was working on more iterations. “There is a breaking point for consumers, and in certain products and categories we’ll provide an alternative.” More

Mr. Ford, the executive chairman of Ford Motor, said nonunion automakers would make gains against Michigan automakers because of strikes by the United Automobile Workers union.The monthlong strike by the United Automobile Workers and the union’s demands for substantial pay and benefits increases risk damaging the U.S. auto industry, hurting its ability to compete against nonunion foreign rivals, the executive chairman of Ford Motor said on Monday.The fight should not be seen as the U.A.W. against Ford, or its crosstown rivals, General Motors and Stellantis, said William C. Ford Jr., the great-grandson of the company’s founder Henry Ford, noting that at times U.A.W. officials have referred to the automakers as the union’s “enemy.”“It should be Ford and the U.A.W. against Toyota, Honda, Tesla and all the Chinese companies that want to enter our home market,” Mr. Ford said at the company’s Rouge plant in Dearborn, Mich.“Toyota, Honda, Tesla and the others are loving the strike, because they know the longer it goes on, the better it is for them,” the executive chairman said. “They will win, and all of us will lose.”Mr. Ford’s remarks alluded to a period several decades ago when the U.A.W. won increasingly rich contracts that were later seen by many industry experts as having hobbled the three Michigan automakers in the face of competition from Japanese and European carmakers. Ford came to the brink of collapse, and G.M. and Chrysler — now part of Stellantis — had to seek bankruptcy protection after the 2008 financial crisis.“Ford’s ability to invest in the future isn’t just a talking point,” Mr. Ford said. “It is the absolute lifeblood of our company. And if we lose it, we will lose to the competition. Many jobs will be lost.”In a statement, the U.A.W. president, Shawn Fain, said Mr. Ford should “stop playing games” and meet the union’s demands, or “we’ll close the Rouge for him.” Mr. Fain added that the U.A.W. was not fighting the company but “corporate greed.”“If Ford wants to be the all-American auto company, they can pay all-American wages and benefits,” Mr. Fain said. “Workers at Tesla, Toyota, Honda and others are not the enemy — they’re the U.A.W. members of the future.”Ford, G.M. and Stellantis have been negotiating new labor contracts with the U.A.W. since July. Over the past month, the union has called on workers at a few plants to go on strike. The action has idled three Ford plants, two G.M. factories and one Stellantis plant. Workers at 38 G.M. and Stellantis spare-parts warehouses are also on strike.The strategy is intended to increase pressure on the companies to meet the union’s demands for significantly higher wages, shorter working hours and expanded pensions, and to end a system that pays new hires just over half of the top U.A.W. wage of $32 an hour.The companies have offered wage increases of more than 20 percent over the next four years and certain other measures in line with the union’s demands, but the U.A.W. is pressing for greater concessions.Last week, the union called for a strike by 8,700 workers at Ford’s Kentucky truck plant in Louisville, the company’s largest.Ford executives said last week that the company had made a record offer to the union and that sweetening the deal would hurt the automaker’s ability to invest in electric vehicles and other new models and technologies.Mr. Ford, who has had a role in every round of negotiations with the U.A.W. since 1982, said the talks had reached “a crossroads” and warned that labor contracts that burdened the automakers with heavy costs could affect the U.S. economy.“The price of failure should be clear to everyone,” he said. “Let’s come together and reach an agreement, so we can take the fight to the real competition.” More