Evelyn Reynolds

Heather Boushey made her comments during an interview with CNBC’s Charlotte Reed at the Aix-en-Provence economic forum in France.
“The inflation, the real cause was the global pandemic, and that is about the resiliency of our global supply chains,” Boushey said.
A $1.9 trillion relief package, the American Rescue Plan was announced in Jan. 2021 and passed by Congress in March of that year.

The Covid-19 pandemic, rather than Joe Biden’s economic policies and stimulus packages, is the “real cause” of high inflation, according to a member of the U.S. President’s Council of Economic Advisers.
In an interview over the weekend, it was put to Heather Boushey that a key criticism against “Bidenomics” and the huge stimulus it had brought, was that it had, to a certain extent, fueled inflation.   

Boushey, who was speaking to CNBC’s Charlotte Reed at the Aix-en-Provence economic forum in France, rejected this notion. “What the president did when he first came into office, the American Rescue Plan — we were in the middle of a pandemic, and he put in place a policy that gave us enough flexibility to deal with all the challenges that came our way,” she said.
A $1.9 trillion relief package, the American Rescue Plan was announced in Jan. 2021 and passed by Congress in March of that year.

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“Had we done that, and the United States’ inflation spiked higher than anyone else, well, maybe you could make the case that it was about that policy,” Boushey added.
“But the reality is, is that that isn’t what happened — yes, the United States had inflation, but so did other countries that did not have the same policies.”
“So the inflation, the real cause was the global pandemic, and that is about the resiliency of our global supply chains.”

Expanding on her point, Boushey said this was why the U.S. was “making the investments that we need to make.”

The world’s largest economy was also, she added, “encouraging our friends and allies around the world to work with us to foster the resiliency in supply chains that we will need, and to move us away from fossil fuels, which have these volatile prices, towards clean energy.”
The latter scenario would provide “more stable prices over time, where we can get away from some of the disruptions that the global economy can cause for domestic prices.”
Inflation in the U.S. rose at a 4% annual rate in May, according to the Labor Department, its lowest annual rate in over two years. In mid-2022, inflation in the U.S. topped 9% to reach a four-decade high with market commentators noting multiple factors, such as clogged supply chains, outsized demand for goods over services, and trillions of dollars in Covid-related stimulus spending.
Biden’s approval ratings hit an all-time low last year with polls showing Americans were unhappy with the state of the U.S. economy and soaring gas prices.
During her interview with CNBC, Boushey also noted that the inflation rate had “come down for 11 months now” and that the U.S. had also “seen stronger growth than other G7 countries, and we have not seen higher inflation.”
—CNBC’s Jeff Cox contributed to this article. More

Chipmakers are finding it increasingly hard to operate in China but say doing business in the country is still key to their survival.In May, Micron Technologies, the Idaho chipmaker, suffered a serious blow as part of the U.S.-China technology war. The Chinese government barred companies that handle crucial information from buying Micron’s chips, saying the company had failed a cybersecurity review.Micron said the change could destroy roughly an eighth of its global revenue. Yet in June, the chipmaker announced that it would increase its investments in China — adding $600 million to expand a chip packaging facility in the Chinese city of Xian.“This investment project demonstrates Micron’s unwavering commitment to its China business and team,” an announcement posted on the company’s Chinese social media account said.Global semiconductor companies are finding themselves in an extremely tricky position as they try to straddle a growing rift between the United States and China. The semiconductor industry has become ground zero for the technology rivalry between Washington and Beijing, with new restrictions and punitive measures imposed by both sides.U.S. officials say American products have fed into Chinese military and surveillance programs that run counter to the national security interest of the United States. They have imposed increasingly tough restrictions on the kind of chips and chip-making equipment that can be sent to China, and are offering new incentives, including grants and tax credits, for chipmakers who choose to build new operations in the United States.But factories can take years to construct, and corporate ties between the countries remain strong. China is a major market for chips, since it is home to many factories that make chip-rich products, including smartphones, dishwashers, cars and computers, that are both exported around the world and purchased by consumers in China.Overall, China accounts for roughly a third of global semiconductor sales. But for some chipmakers, the country accounts for 60 percent or 70 percent of their revenue. Even when chips are manufactured in the United States, they are often sent to China for assembly and testing.“We can’t just flip a switch and say all of sudden you have to take everything out of China,” said Emily S. Weinstein, a research fellow at Georgetown’s Center for Security and Emerging Technology.The industry’s reliance on China highlights how a close — but extremely contentious — economic relationship between Washington and Beijing is posing challenges for both sides.Those tensions were reflected during Treasury Secretary Janet L. Yellen’s visit to Beijing this week, where she tried to walk a fine line by faulting some of China’s practices while insisting the United States was not looking to sever ties with the country.Ms. Yellen criticized punitive measures China has recently taken against foreign firms, including limiting the export of some minerals used in chip making, and suggested that such actions were why the Biden administration was trying to make U.S. manufacturers less reliant on China. But she also affirmed the U.S.-China relationship as strategic and important.“I have made clear that the United States does not seek a wholesale separation of our economies,” Ms. Yellen said during a roundtable with U.S. companies operating in China. “We seek to diversify, not to decouple. A decoupling of the world’s two largest economies would be destabilizing for the global economy, and it would be virtually impossible to undertake.”The Biden administration is poised to begin investing heavily in American semiconductor manufacturing to lure factories out of China. Later this year, the Commerce Department is expected to begin handing out funds to help companies build U.S. chip facilities. That money will come with strings: Firms that take funding must refrain from expanding high-tech manufacturing facilities in China.The administration is also weighing further curbs on the chips that can be sent to China, as part of a push to expand and finalize sweeping restrictions it issued last October.These measures could include potential limits on sales to China of advanced chips used for artificial intelligence, new restrictions for Chinese companies’ access to U.S. cloud computing services, and restrictions on U.S. venture capital investments in the Chinese chip sector, according to people familiar with the plans.The administration has also been considering halting the licenses it has extended to some U.S. chipmakers that have allowed them to continue selling products to Huawei, the Chinese telecom firm.Japan and the Netherlands, which are home to companies that make advanced chip manufacturing equipment, have also put new restrictions on their sales to China, in part because of urging from the United States.China has issued restrictions of its own, including new export controls on minerals used in chip manufacturing.Amid tighter regulations and new incentive programs from the United States and Europe, global chip companies are increasingly looking outside China as they choose the locations for their next major investments. But these facilities will likely take years to construct, meaning any changes to the global semiconductor market will unfold gradually.John Neuffer, the president of the Semiconductor Industry Association, which represents the chip industry, said in a statement that the ongoing escalation of controls posed a significant risk to the global competitiveness of the U.S. industry.“China is the world’s largest market for semiconductors, and our companies simply need to do business there to continue to grow, innovate and stay ahead of global competitors,” he said. “We urge solutions that protect national security, avoid inadvertent and lasting damage to the chip industry, and avert future escalations.” More

Businesses around the country are facing what could be the latest disruption to how they get their goods to their customers in a timely and affordable fashion.Kathryn Keeler and her husband, Stuart de Haaff, own an olive oil company in the hills of central California. The couple spend their days harvesting olives, bottling the oil, labeling the glass bottles and shipping them out, relying primarily on UPS to get their product to kitchens throughout the United States. They are far from alone. UPS handles about a fourth of packages shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index, many of them for small businesses like Ms. Keeler’s company, Rancho Azul y Oro.But with the labor contract between UPS and 325,000 of its workers expiring at the end of the month and a potential strike looming, business owners around the country are facing what could be the latest in a series of supply chain disruptions they have confronted since the start of the pandemic.Some are pre-emptively turning to FedEx, the next largest private carrier in the United States, or the Postal Service. Others are calling their third-party shippers — firms that work with the likes of UPS, FedEx and DHL to handle their clients’ shipping needs — to ensure that their packages can still get to their final destinations even if there is a strike.The logistical challenge is just one more burden on businesses that have been stretched thin over the past few years.“Maybe a larger business can withstand those types of situations,” Ms. Keeler said. But as small-business owners, she and her husband “don’t have a lot of extra time in our day to be on the phone with the post office or FedEx.”Since 2020, the pandemic has strained the global supply chain in a number of ways. E-commerce reached record levels as stuck-at-home Americans bought clothes, furniture, workout equipment and groceries online. Companies had to navigate Covid-related shutdowns at factories in China and Vietnam. There were worldwide delays when a large container ship got stuck in the Suez Canal, leading to containers piling up at the Port of Los Angeles. Those situations affected the way goods came into the United States.A UPS strike could hobble the way brands move their wares domestically.“This is something that affects us on our home turf, and how do we solve for that?” said Ron Robinson, the chief executive of BeautyStat Cosmetics, which uses UPS to ship its skin care products to retailers like Ulta and Macy’s.One strategy that his team will lean on is trying to bundle packages, sending as many as it can out at once, he said.Switching to another carrier is going to cost some companies.Ryan Culver, the chief executive of Platterful, a monthly charcuterie board subscription service, also uses UPS. Switching over to FedEx Express — necessary to ensure that the meats in his packages reach consumers in time — would cost about $5 to $10 more per delivery.Using FedEx to ship goods can sometimes be more costly for small businesses.Hunter Kerhart for The New York TimesTeri Johnson, the founder of Harlem Candle Company, received an email on June 26 from her third-party shipper about a potential UPS strike. It suggested she switch to FedEx. That will cost her about $2 extra for each candle shipped in the greater New York area. Sending her candles to California will cost even more.“We don’t really have a choice right now,” Ms. Johnson said.FedEx said it was accepting additional volume for a limited time and would assess how much capacity its network could accommodate. “Shippers who are considering shifting volume to FedEx, or are currently in discussions with the company to open a new account, are encouraged to begin shipping with FedEx now,” the company said in a post on its website on Thursday.The Postal Service said in an emailed statement that it “has a strong network, and we have the capacity to deliver what is tendered to us.”Larger companies are relying on sophisticated backup plans that have been tested over the past few years. The pandemic and previous tariff trade wars pushed many major retailers with global supply chains to diversify the countries where their vendors are and the parcel carriers they use.“We’ve been focused on investing in a lot of transportation solutions that allow us to more nimbly move freight between carriers,” said Alexis DePree, the chief supply chain officer at Nordstrom. “We can do that with a lot more flexibility and speed than we were able to in the past.”Some third-party carriers are seeing a boost in their businesses as the possibility of a UPS strike comes into focus for their clients. Stord, a third-party logistics and technology provider based in Atlanta whose clients include apparel makers and consumer-package companies, has been sending emails out telling its clients not to worry. Stord uses a cloud-based platform to offer services like warehousing and fulfillment and handles tens of thousands of their packages a day.By combining the volume of its broad portfolio of client brands and using software to make decisions, Stord has the leverage to better negotiate prices with the large parcel carriers, said Sean Henry, the company’s chief executive.“We’ve been negotiating with FedEx and U.S.P.S. about rates around UPS so our customers don’t have to do that,” he said.Stord said more of its clients had asked it to negotiate with carriers on their behalf. He said that equated to “tens of millions of dollars of annual revenue” for his business.Still, some business owners are not letting the possibility of a UPS strike stress them out just yet.Bill McHenry, president of Widgeteer, which sells cookware to large retailers, said he felt “kind of numb” after navigating the pandemic-related challenges. “I’ve seen a lot of stuff and the stories that I’ve heard and things we’ve had to go through and survive — not just the pricing but the upheaval of thinking you have a container but don’t,” he said.He said the potential rail strike last December had been a bigger concern for him.In the meantime, the possibility that a deal could be reached between UPS and the union that represents its workers, the International Brotherhood of Teamsters, remains. The union announced on Wednesday that negotiations had broken down, after previously saying the sides had reached a tentative agreement. If an agreement is not reached, a strike could happen as early as Aug. 1.If that occurs, “we would be collateral damage,” Ms. Keeler said. More

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Chicago Fed President Austan Goolsbee told CNBC on Friday that he’s confident inflation can be tamed without a recession, even with additional interest rate increases likely.
Economists, including those working at the Fed, see credit contraction leading to at least a modest recession later this year.

Chicago Federal Reserve President Austan Goolsbee said Friday he’s confident inflation can be tamed without a recession, even with additional interest rate increases likely.
Speaking to CNBC following the release of the June nonfarm payrolls report, he said the ongoing job growth is part of the Fed’s “golden path” toward restoring price stability without taking the economy.

“What the Fed’s overriding goal right now is to get inflation down. We’re going to succeed at it and to do that without a recession would be a triumph,” Goolsbee told CNBC’s Steve Liesman during a “Squawk on the Street” interview. “That’s the golden path, and I feel like we’re on that golden path. So I hope we keep putting off the recession to forever. Let’s never have a recession again.”
Economists, including those working at the Fed, see credit contraction leading to at least a modest recession later this year or early in 2024.
However, one of the economy’s key cogs, the jobs market, is showing only slight signs of slowing down. Payrolls grew by just 209,000 in June, below Wall Street estimates, but an unemployment rate at 3.6% suggests a resilient economy.
“Overall, the jobs market is outstanding and is getting back to a balanced, sustainable level,” Goolsbee said.
Inflation, though, has remained stubbornly high and well above the Fed’s 2% goal.

Following the June meeting, a strong majority of Federal Open Market Committee officials indicated in their updated quarterly projections that they see at least two more quarter percentage point rate hikes before the end of 2023. Though Goolsbee said he is confident the that inflation is ebbing, he also sees more tightening as likely.
“The consensus of almost all the FOMC in the statement of projections is that over this year, we will have one or two more hikes. I haven’t seen anything that says that’s wrong,” he said. “That is on the golden path where we get inflation down to something like our target and we do it without a recession.”
Fed policy is seen as operating with a lag, meaning that the 10 rate hikes since March 2022 likely haven’t worked their way through the economy yet. Goolsbee said he is undecided about whether to hike at the July 25-26 FOMC meeting.
“There are some modest increases to come, but we’ve done a lot of the lifting and now we’re waiting for the impact,” he said. More

Hiring slowed last month, a sign that the Federal Reserve’s inflation-fighting campaign is taking hold. But with rising wages and low unemployment, the labor market remains resilient.The U.S. labor market showed signs of continued cooling last month but extended a two-and-a-half-year streak of job growth, the Labor Department said Friday.U.S. employers added 209,000 jobs, seasonally adjusted, and the unemployment rate fell to 3.6 percent from 3.7 percent in May as joblessness remained near lows not seen in more than half a century.June was the 30th consecutive month of job growth, but the gain was down from a revised 306,000 in May and was the lowest since the streak began.Wages, as measured by average hourly earnings for workers, rose 0.4 percent from the previous month and 4.4 percent from June 2022. Those increases matched the May trend but exceeded expectations, a potential point of concern for Federal Reserve officials, who have tried to rein in wages and prices by ratcheting up interest rates.Still, the response to the report from economists, investors and labor market analysts was generally positive. The resilience of the job market has bolstered hopes that inflation can be brought under control while the economy continues to grow.The year-over-year gain in wages exceeded that of prices for the first time since 2021Year-over-year percentage change in earnings vs. inflation More

Federal Reserve policymakers are keenly focused on the strength of the labor market as they debate how much further the economy needs to cool to ensure that quick inflation fades back to a normal pace. Fresh labor market data released on Friday probably offered little to dissuade them from raising interest rates at their meeting this month.The June data is the last payrolls report that officials will receive before the central bank’s July 25-26 meeting. It underscored many of the labor market themes that have been present for months: Although job growth is gradually slowing, wage growth remains abnormally quick and the unemployment rate is very low at 3.6 percent.Investors widely expected the Fed to raise rates at their July meeting even before the report, and the June data reinforced that prediction. Many paid especially close attention to the pay data: Average hourly earnings climbed 4.4 percent over the year through June, versus an expectation for 4.2 percent, and wage gains for May were revised higher. After months of slowing, those earnings figures have held roughly steady since March.“On balance, it’s strong enough for the Fed to think they still have some more work to do,” said Michael Gapen, chief U.S. economist at Bank of America, explaining that the report contained both signs of early weakness and signs of sustained strength. “Hiring is cooling, but the labor market is still hot.”Fed officials are closely watching wage data, because they worry that if pay growth remains unusually rapid, it could make it difficult to bring elevated inflation fully back to their 2 percent goal. The logic? When companies compensate their workers better, they might also raise their prices to cover their higher wage bills. At the same time, families earning more will be more capable of shouldering higher prices.Fed officials have been surprised by the economy’s staying power 16 months into their push to slow it down by raising interest rates, which makes borrowing money more expensive and is meant to cool consumer and business demand. Growth is slower, but the housing market has begun to stabilize and the job market has remained abnormally strong with plentiful opportunities and at least some bargaining power for many workers.That resilience — along with the stubbornness of quick inflation, particularly for services — is why policymakers expect to continue raising interest rates, which they have already lifted above 5 percent for the first time in about 15 years. Officials have ratcheted up rates in smaller increments this year than last year, and they skipped a rate move at their June meeting for the first time in 11 gatherings. But several policymakers have been clear that even as the pace moderates, they still expect to raise interest rates further.“It can make sense to skip a meeting and move more gradually,” Lorie K. Logan, the president of the Federal Reserve Bank of Dallas, said during a speech this week, while noting that it is important for officials to follow up by continuing to lift rates.She added that “inflation and the labor market evolving more or less as expected wouldn’t really change the outlook.”Fed officials predicted in June that they would raise interest rates twice more this year — assuming they move in quarter-point increments — and that the labor market would soften, but only slightly. They saw the unemployment rate rising to 4.1 percent by the end of the year.Policymakers will not release new economic projections until September, but Wall Street will monitor how policymakers are reacting to economic developments to gauge whether another move this year is likely.“Jobs growth has slowed but remains too strong to justify an extended Fed pause,” said Seema Shah, chief global strategist at Principal Asset Management, explaining that the fresh data gave the Fed “little reason” to hold off on a July increase. The question is what happens after that.For now, investors see another rate increase after July as possible but not guaranteed, and the June jobs report did little to change that. The yield on the two-year Treasury bond, which is sensitive to changes in investors’ expectations for interest rates going forward, eased to around 4.9 percent, from over 5 percent. The move reflected in part investors’ relief that the jobs numbers had not followed a series of other data points this week that exceeded expectations.Some on Wall Street expect the economy to soften more substantially in the coming months, which could prod the Fed to hold off on future rate moves. It often takes months or years for higher borrowing costs to have their full economic effect, so more slowing could be in the pipeline already.This month, one of Wall Street’s widely watched recession indicators, which compares yields on short- and long-dated government bonds, sent its strongest signal since the early 1980s that a downturn is coming.But Fed officials aren’t so sure. Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said on Friday on CNBC that getting inflation down without a recession would be a “triumph.”“That’s the golden path — and I feel like we’re on that golden path,” Mr. Goolsbee said. More

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The overall U.S. unemployment rate declined in June, but a negative trend among Black workers may be emerging, according to the latest nonfarm payrolls report.
Overall, the unemployment rate last month was 3.6%, a 0.1 percentage point decrease from May, the U.S. Department of Labor reported Friday. However, Black workers saw their unemployment rate rise to 6% in June from 5.6% in May, making it the second consecutive monthly increase.

Within that demographic, unemployment among women ticked higher to 5.4% in June from 5.3% in the prior month. Meanwhile, it grew to 5.9% in June, up from 5.6% in May, for men. The labor force participation rate for Black men inched downward, while women’s fell to 62.9% from 63.9%.

Economists will need to keep an eye out for the next round of payrolls data to determine whether a trend is developing.
“Sometimes we are cautious about saying a one-month change is very significant because sometimes the data is noisy, but a rule of thumb is three numbers is a trend,” said Carmen Sanchez Cumming, a research associate at the Washington Center for Equitable Growth. “If the employment level for Black workers has gone down pretty significantly for the last three months, then that is a red flag.”
Cumming attributed the increase in unemployment among Black workers to the mechanics of the economy slowing down. As the economy rebounded after the pandemic, companies made large leaps to recover the lost positions. For instance, employers boosted wages in a bid to hire more employees. Now that the labor market is reaching pre-pandemic capacity, companies are less likely to continue adding jobs at the same pace.
Additionally, the jobs market could finally be reacting to the Federal Reserve’s interest rate increases, she added.

Meanwhile, Latino workers also saw an increase in the unemployment rate, to 4.3% in June from 4% in May. However, labor force participation inched higher for the group, rising to 67.3%, compared to 66.9% in the previous month.
Hispanic men’s unemployment rate was 3.8% in June, reflecting a decline of 0.2 percentage point from May, while labor force participation held at nearly the same rate. Among Hispanic women, the unemployment rate jumped to 4.1% in June from 3.4% in May, with labor force participation at about the same level as the previous month.
“For Latino workers, it’s a little more murky because their unemployment rate increased this month but had decreased last month,” Cumming said. “Overall, their employment levels are still going up. So, a less clear picture there.” More

Nonfarm payrolls increased 209,000 in June, below the consensus estimate for 240,000.
The unemployment rate was 3.6%, down 0.1 percentage point. However, a more encompassing jobless level rose to 6.9%.
Government hiring led the job gains, followed by health care, social assistance and construction.
Wages rose 4.4% from a year ago, slightly higher than expectations.

Employment growth eased in June, taking some steam out of what had been a stunningly strong labor market.
Nonfarm payrolls increased 209,000 in June and the unemployment rate was 3.6%, the Labor Department reported Friday. That compared to the Dow Jones consensus estimates for growth of 240,000 and a jobless level of 3.6%.

The total, while still solid from a historical perspective, marked a considerable drop from May’s downwardly revised total of 306,000 and was the slowest month for job creation since payrolls fell by 268,000 in December 2020. The unemployment rate declined 0.1 percentage point.
Closely watched wages numbers were slightly stronger than expected. Average hourly earnings increased by 0.4% for the month and 4.4% from a year ago.

Job growth would have been even lighter without a boost in government jobs, which increased by 60,000, almost all of which came from the state and local levels.
Other sectors showing strong gains were health care (41,000), social assistance (24,000) and construction (23,000).
Leisure and hospitality, which had been the strongest job-growth engine over the past three years, added just 21,000 jobs for the month. The sector has cooled off considerably, showing only muted gains for the past three months.

The retail sector lost 11,000 jobs in June while transportation and warehousing saw a decline of 7,000.
There had been some anticipation that the Labor Department report could show a much higher than anticipated number after payrolls processing firm ADP on Thursday reported growth in private sector jobs of 497,000.
Markets moved lower following the release of the jobs report, with futures tied to the Dow Jones Industrial Average off nearly 90 points. Longer-dated Treasury yields were slightly higher.
“A 209,000 increase in payrolls can hardly be described as weak,” said Seema Shah, chief global strategist at Principal Asset Management. “But after yesterday’s ADP wrongfooted investors into expecting another bumper jobs number, the market may be disappointed.”
The labor force participation rate, considered a key metric for resolving a sharp divide between worker demand and supply, held steady at 62.6% for the fourth consecutive month and is still below its pre-pandemic level. However, the prime-age participation rate — measuring those between 25 and 54 years of age — rose to 83.5%, its highest in 21 years.
A more encompassing unemployment rate that includes discouraged workers and those holding part-time jobs for economic reasons rose to 6.9%, the highest since August 2022. At the same time, the unemployment rate for Blacks jumped to 6%, a 0.4 percentage point increase, and rose to 3.2% for Asians, a 0.3 percentage point rise.
In addition to a downward revision of 33,000 for the May count, the Bureau of Labor Statistics sliced April’s total by 77,000 to 217,000. That brought the six-month average to 278,000, down sharply from 399,000 in 2022.
The jobs numbers are considered a key in determining where Federal Reserve monetary policy is headed.
Policymakers see the strong jobs market and the supply-demand imbalance as helping propel inflation that around this time in 2022 was running at its highest level in 41 years.
They are using interest rate increases to try to cool the economy, but the labor market thus far has defied the central bank’s tightening efforts.
In recent days, Fed officials have provided indication that more rate hikes are likely even though they decided against moving at the June meeting.
Markets widely expect a quarter percentage point increase in July that would take the Fed’s benchmark borrowing rate to a targeted range between 5.25%-5.5%. The outlook was little changed following the release, with traders pricing in a 92.4% chance of a hike at the July 25-26 meeting.
The June report “suggests labor market conditions are finally beginning to ease more markedly,” wrote Andrew Hunter, deputy chief U.S. economist at Capital Economics. “That said, it is unlikely to stop the Fed from hiking rates again later this month, particularly when the downward trend in wage growth appears to be stalling.” More