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    Watch Federal Reserve Chair Jerome Powell speak live at Jackson Hole

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    Federal Reserve Chair Jerome Powell delivers a speech at the central bank’s annual economic symposium in Jackson Hole, Wyoming, on Friday at 10.a.m. ET.

    Market participants have eagerly awaited Powell’s comments, searching for guidance on the extent to which policymakers will push against inflation and the criteria the central bank will refer to as it makes its decisions.
    Powell’s comments come at a time when the Fed has taken drastic steps to tamp down rising prices. Though investors are looking for new guidance from the central bank leader, Powell is largely expected to issue the same inflation-fighting message, stressing that the Fed will use its rate-hiking power to rein in prices.
    Powell’s speech follows the release of one of the Fed’s favorite inflation metrics earlier Friday: the personal consumption expenditures price index. July’s PCE reading showed a year-over-year gain of 6.3% in July, down from 6.8% in June. The index slipped 0.1% month over of month.The core PCE index, which excludes food and energy prices, climbed 4.6% on an annualized basis, and rose 0.1% month over month.

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    U.S. income growth slowed in July, and consumer spending barely grew.

    Americans’ incomes rose more slowly last month — but, for once, those gains weren’t swallowed up by higher prices.Personal income, after taxes, rose 0.2 percent in July, the Commerce Department said Friday. That was slower than the 0.7 percent gain in June. But while the gains in June were more than offset by sharply higher prices, in July, Americans saw their inflation-adjusted incomes rise 0.3 percent as lower gas prices led to a respite from inflation.Consumer spending also cooled in July, as Americans pulled back on purchases of goods. Overall consumer spending rose 0.1 percent, the weakest showing since a decline in December and down from a 1 percent gain in June. Spending on services, which has rebounded sharply as the pandemic has ebbed, continued to rise, but more slowly than in prior months.The moderation in spending could be welcome news for policymakers at the Federal Reserve, who have been trying to tamp down demand without pushing the recovery into reverse.Income and spending, adjusted for inflation, are also among the indicators that economists at the National Bureau of Economic Research use to determine when a recession has begun. The gains in July are the latest evidence that the economy, though slowing, is not in a recession.Economists warn that the reprieve from inflation may prove temporary. But they say households should be able to keep spending as long as employers keep hiring and pay keeps rising. Income from wages and salaries rose 0.8 percent in July, the biggest gain since February. The Labor Department will provide data on employment and wages for August at the end of next week.Diane Swonk, chief economist at the accounting firm KPMG, said the underlying strength of the consumer economy reflected a handoff from the government, which helped support households and businesses with record spending earlier in the pandemic, to the private sector, which has roared back over the past year and a half.“We have seen the private sector really pick up that baton, which has been amazing,” she said. More

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    The Fed’s favorite inflation gauge cooled in July.

    The Federal Reserve’s preferred measure of inflation eased in July as gas prices fell following a sharp run-up earlier in the summer, a widely expected moderation that could nevertheless provide policymakers positive news as they battle the most rapid price gains in decades.The Personal Consumption Expenditures index, which the Fed tries to keep climbing at a 2 percent annual rate on average over time, was up by 6.3 percent in July compared to a year earlier. While that is still far more inflation than the central bank wants, it is a slowdown from 6.8 percent increase over the year through June.And on a monthly basis, the price index declined by 0.1 percent, an even bigger pullback than economists had expected.Because part of the decline was a result of falling gas prices, which are volatile and could jump again, officials may not take the cool-down in headline inflation alone as a major signal. But economists closely watch a so-called core inflation measure that strips out fuel and food prices to get a better sense of underlying price pressures, and that measure also offered some encouraging news.Core inflation slowed to a 4.6 percent annual increase, compared with 4.8 percent in June. And on a monthly basis, the core index slowed to a 0.1 percent gain, a pullback from the prior month and less than the 0.2 percent economists in a Bloomberg survey had expected.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    China’s Record Drought is Drying Rivers and Feeding Its Coal Habit

    Dry weather in southwestern China has crippled huge hydroelectric dams, forcing cities to impose rolling blackouts and driving up the country’s use of coal.HONG KONG — Car assembly plants and electronics factories in southwestern China have closed for lack of power. Owners of electric cars are waiting overnight at charging stations to recharge their vehicles. Rivers are so low there that ships can no longer carry supplies.A record-setting drought and an 11-week heat wave are causing broad disruption in a region that depends on dams for more than three-quarters of its electricity generation. The factory shutdowns and logistical delays are hindering China’s efforts to revive its economy as the country’s leader, Xi Jinping, prepares to claim a third term in power this autumn.The ruling Communist Party is already struggling to reverse a slowdown in China, the world’s second largest economy, caused by the country’s strict Covid lockdowns and a slumping real estate market. Young people are finding it hard to get jobs, while uncertainty over the economic outlook is compelling residents to save instead of spend, and to hold off on buying new homes.Now, the extreme heat is adding to frustration by snarling power supplies, threatening crops and setting off wildfires. Reduced electricity from hydroelectric dams has prompted China to burn more coal, a large contributor to air pollution and to greenhouse gas emissions that cause global warming.Many cities around the country have been forced to impose rolling blackouts or limit energy use. In Chengdu, the capital of Sichuan Province, several neighborhoods went without electricity for more than 10 hours a day.An electronic billboard shut down to save energy in Chengdu, China.Agence France-Presse — Getty ImagesVera Wang, a Chengdu resident, said that just to charge her electric car, her boyfriend waited in a long line overnight at a charging station that was only partly operating. It was 4 a.m. by the time he reached the front of the line.“The line was so long that it extended from the underground parking lot to the road outside,” she said.The heat wave has scorched China for more than two months, stretching from Sichuan in the southwest to the country’s eastern coast and sending the mercury above 104 degrees on many days. In Chongqing, a sprawling metropolis in the southwest with around 20 million people, the temperature soared to 113 degrees last week, the first time such a high reading had been recorded in a Chinese city outside the western desert region of Xinjiang.The searing heat set off wildfires in the mountains and forests on Chongqing’s outskirts, where thousands of firefighters and volunteers have worked to put out blazes. Residents said the air smelled of acrid smoke.The drought has dried up dozens of rivers and reservoirs in the region and cut Sichuan’s hydropower generation capacity by half, hurting industrial production. Volkswagen closed its sprawling, 6,000-employee factory in Chengdu for the past week and a half, and Toyota also temporarily suspended operations at its assembly plant.A villager attempting to put out a bush fire with a mop in his field during a drought in Xinyao, a village in Jiangxi Province, on Thursday.Thomas Peter/ReutersFoxconn, the giant Taiwanese electronics manufacturer, and CATL, the world’s largest maker of electric car batteries, have both curtailed production at factories in the vicinity.In Ezhou, a city in central China near Wuhan, the Yangtze River is now at its lowest level for this time of year since record-keeping began there in 1865. People’s Daily, the main newspaper of the Communist Party, reported on Aug. 19 that the Yangtze River had fallen to the same average level it normally reaches at the end of the winter dry season.Read More About Extreme WeatherRelics of the Past: As a drought starves Europe’s rivers and brings water levels down, shipwrecks, bombs and objects dating back thousands of years are turning up at the water’s surface.Preparing for Disaster: With the cost and frequency of weather-driven disasters on the rise,  taking steps to be ready financially is more crucial than ever. Here are some tips.Wildfires Out West: California and other Western states are particularly prone to increasingly catastrophic blazes. There are four key factors.Colorado River: With water levels near their lowest point ever, Arizona and Nevada faced new restrictions on the amount of water they can pump out of the river.But the disruptions from the hydropower shortfall are being felt far from the southwest, including in China’s eastern cities, which are buyers of hydropower. Some factories and commercial buildings in cities like Hangzhou and Shanghai are rationing electricity.Kevin Ni, an online marketing worker in Hangzhou, said that his office was stifling because few air-conditioners were allowed to run.“We have to eat ice pops and drink iced drinks,” he said. “I just put my hands on the ice pops, that cools me the most.”A satellite image showing the Yangtze River last August between Huanggang and Ezhou, in Hubei Province, China.Planet LabsThe same view this month, showing how much lower the water levels are than in the previous year.Planet LabsThe falling water levels in major rivers that serve the region’s main transport hubs have also led to delays elsewhere in the supply chain. The Yangtze River has receded so much that many oceangoing ships can no longer reach upstream ports. The upper Yangtze basin normally gets half its entire annual rainfall just in July and August, so the failure of this year’s rains may mean a long wait for more water.That is forcing China to divert large numbers of trucks to carry their cargo. A single ship can require 500 or more trucks to move its cargo.“We’re losing a few months of really efficient shipping,” said Even Rogers Pay, a food and agriculture analyst at Trivium, a Beijing consulting firm.The heat wave and drought are also starting to drive food prices higher in China, especially for fruit and vegetables. Farmers’ fields and orchards are wilting. Sichuan is a leading grower in China of apples, plums and other fruit, and fruit trees that die could take five years to replace. The price of bok choy, a popular cabbage, has nearly doubled in Wuhan this month.“That’s going to create more economic pain, which is the last thing the leadership wants to see,” Ms. Pay said.Ships sailing on the Yangtze River in Jiujiang, Jiangxi Province, on Tuesday. The Yangtze River has receded so low that many oceangoing ships can no longer reach upstream ports.Alex Plavevski/EPA, via ShutterstockThe Ministry of Agriculture and Rural Affairs and four other departments issued an emergency notice warning on Tuesday that the drought posed a “severe threat” to China’s autumn harvest. China’s cabinet on Wednesday approved $1.5 billion for disaster relief and assistance to rice farmers and another $1.5 billion for overall farm subsidies.The government has urged local officials to seek out more water sources and allocate more electricity to support farmers and promote the planting of leafy vegetables, which are highly perishable, in big cities. Fire trucks have been used to spray water on fields and deliver water to pig farms.The extreme weather sweeping across China also has potential implications for the world’s efforts to halt climate change. Beijing has sought to offset at least part of the lost hydropower from the drought by ramping up the use of coal-fired power plants. China’s domestic mining of coal has been at or near record levels, and customs data shows that its imports of coal from Russia reached a new high last month.But China’s reliance on the fossil fuel raises questions about its commitment to slowing the growth of its carbon emissions.“In the short term in China, the very, very painful realization is that only coal can serve as the base” for the electricity supply, said Ma Jun, the director of the Institute of Public and Environmental Affairs, a Beijing environmental group. Sichuan Province has lured energy-intensive industries like chemical manufacturing for many years with extremely low electricity prices, he said, and some of these industries have squandered power through inefficiency.A dry vegetable plot at a farm in Longquan, a village in Chongqing.Mark Schiefelbein/Associated PressMr. Ma struck an optimistic note, however, about the direction of China’s climate strategy, saying that in the medium term, “China is very committed to carbon targets and renewable energy.”The government has sought to mitigate the effects of global warming on its economy. The National Development and Reform Commission, China’s top economic planning ministry, set up a working group last winter to analyze the effects of climate change on water-related industries like hydroelectric dams.While such efforts may help China preserve the viability of renewable energy programs, they may not prompt China to limit the burning of coal this year as a quick fix, said Ed Cunningham, the director of the Asia Energy and Sustainability Initiative at the Harvard Kennedy School.“They’re much more comfortable with coal,” Mr. Cunningham said, “and the reality is that when there’s a shortage of hydro, they use coal.”Muyi Xiao More

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    Biden Student Loan Plan Squarely Targets Middle Class

    President Biden is offering what independent analysts suggest would be his most targeted assistance yet to middle-class workers — while trying to repair what he casts as a broken bridge to the middle class.WASHINGTON — The big winners from President Biden’s plan to forgive hundreds of billions of dollars in student loans are not rich graduates of Harvard and Yale, as many critics claim.In fact, the benefits of Mr. Biden’s proposals will largely go to the middle class. According to independent analyses, the people eligible for debt relief are disproportionately young and Black. And they are concentrated in the middle band of Americans by income, defined as households earning between $51,000 and $82,000 a year.The Education Department estimates that nearly 90 percent of affected borrowers earn $75,000 a year or less. Ivy League graduates make up less than 1 percent of federal student borrowers nationwide.Economists say the full scope of Mr. Biden’s plan, including significant changes meant to reduce the payments that millions of borrowers will make for years to come, will help middle-income earners from a wide range of schools and backgrounds.“You’ll have a lot more people who are making zero payments and will have significant loan forgiveness in the future,” said Constantine Yannelis, an economist at the University of Chicago’s Booth School of Business. “The relief to borrowers is going to be more targeted to the people who really need it.”Yet despite the appeal of such debt relief, the program still has set off a contentious debate as economists and political figures assess the full consequences of the plan. By some estimates, it will cost as much as a half-trillion dollars over the course of a decade, imposing a future burden on American taxpayers.The plan also could encourage colleges to raise tuition even faster than they already are. Schools could try to persuade borrowers to take on as much debt as possible to cover higher tuition, with the belief that the federal government would help pay it back.Some conservative and Democratic economists also say the program could add significantly to what is already the highest inflation rate in four decades. Evidence suggests those claims are overstated, however, and American shoppers are not likely to see prices spike because of the program.The announcements Mr. Biden made, including both debt forgiveness and a restart next year of loan payments for all borrowers after a nearly three-year pause, will most likely be a wash for consumer prices, a wide range of economists say.“Debt forgiveness that lowers monthly payments is slightly inflationary in isolation,” analysts from Goldman Sachs wrote in a research note on Thursday, “but the resumption of payments is likely to more than offset this.”What to Know About Student Loan Debt ReliefCard 1 of 5What to Know About Student Loan Debt ReliefMany will benefit. More

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    Howard Rosenthal, Who Quantified Partisanship in Congress, Dies at 83

    He took part in studies that found the widening ideological divide to be the largest since post-Civil War Reconstruction.Prof. Howard Rosenthal, a political scientist whose pioneering research confirmed quantitatively that Congress is more politically polarized than at any point since Reconstruction, died on July 28 at his home in San Francisco. He was 83.His son Prof. Jean-Laurent Rosenthal, a professor at the California Institute of Technology, said the cause was heart failure.There was good news from the algorithm that Professor Rosenthal and his colleagues developed to analyze congressional roll-call votes: The ideological gap between the left and right had grown so great that, mathematically at least, it could not get much worse.“Professor Rosenthal was a trailblazing figure in political science, who collaborated with economists and drew on game theory and other formal methods to help define the modern subfield of political economy,” said Prof. Alan Patten, chairman of the politics department at Princeton, where Professor Rosenthal taught between stints at Carnegie Mellon University in Pittsburgh and New York University.“With his co-authors,” Professor Patten said, “he was especially known for work measuring and analyzing political polarization, a phenomenon that is of more relevance than ever in contemporary American politics.”With his fellow professors Keith T. Poole of the University of Georgia and Nolan McCarty of Princeton, Professor Rosenthal systematically calculated the conservatism or liberalism of members of Congress.In 2002, they concluded that a representative’s votes can generally be predicted on the basis of his or her previous positions on issues regarding race and on government intervention in the economy, like tax rates and benefits for the poor.Their analysis showed that a legislator’s party affiliation was a much better augur of voting behavior than it had been 25 years earlier.Moreover, they concluded, from 1955 to 2004 the proportion of unalloyed centrists in the House of Representatives had declined to 8 percent from 33 percent, and the number of centrist senators had dropped to nine from 39.In 2013, with Professors Poole and McCarty and Prof. Adam Bonica of Stanford, Professor Rosenthal investigated why the nation’s political system had failed to come to grips with growing income inequality.Among other conclusions, they found a correlation between the changes in the share of income going to the top 1 percent and the level of polarization between the political parties in the House.The researchers also documented an increase in campaign contributions to Democratic candidates from millionaires listed in the Forbes 400 — as that list included more technology innovators than oil and manufacturing magnates — and a tack in the party’s platform from general social welfare policies to an agenda focused on identities of ethnicity, gender, race and sexual orientation.In 2014, Professors Rosenthal and Poole and their collaborators wrote in The Washington Post that “Congress is now more polarized than at any time since the end of Reconstruction” in the 19th centurySamuel L. Popkin, a professor emeritus of political science at the Massachusetts Institute of Technology who befriended Professor Rosenthal when they were classmates there, said in an email that he was “the instigator or spark for most of the advances” in studying legislatures and voting. He credited Professor Rosenthal with developing new statistical measurements for analyzing data.Howard Lewis Rosenthal was born on March 4, 1939, in Pittsburgh to Arnold Rosenthal, a businessman, and Elinor (Lewis) Rosenthal, a homemaker.He received a Bachelor of Science degree in economics, politics and science in 1960 and a doctorate in political science in 1964, both from M.I.T. He was a professor at Carnegie Mellon from 1971 to 1993 and at Princeton from 1993 to 2005, and had been at N.Y.U. since 2005.His marriage to Annie Lunel ended in divorce. His second wife, Margherita (Spanpinato) Rosenthal, died before him. In addition to his son Jean-Laurent, from his first marriage, he is survived by a daughter from that marriage, Illia Rosenthal; a son, Gil, from his second marriage; a sister, Susan Thorpe; and four granddaughters.Predicting votes by members of Congress on the basis of statistical models built on previous votes was initially considered controversial. But one byproduct of those predictions, applied to election voters, went a long way toward establishing the model’s credibility.“Challenged by a detractor to predict the 1994 midterm elections,” John B. Londregan, a political scientist at Princeton and a partner in one project, said in a statement, “we predicted a Republican majority in the U.S. House for the first time in almost 40 years, something that met with incredulity on the part of many colleagues.” They were, of course, right.Professor Rosenthal was awarded the Duncan Black Prize from the Public Choice Society in 1980, the C.Q. Press Award from the American Political Science Association in 1985 and the William H. Riker Prize for Political Science from the University of Rochester in 2010.In 1997, he and Professor Poole published “Congress: A Political-Economic History of Roll Call Voting.” With Professor McCarty, they wrote “Polarized America: The Dance of Ideology and Unequal Riches” (2006).In 2007, after analyzing 2.8 million roll-call votes in the Senate and 11.5 million in the House, Professors Rosenthal and Poole produced an updated version of their 1997 book, which had predicted “a polarized unidimensional Congress with roll-call voting falling almost exclusively along liberal-conservative ideological lines.”“We were right,” the authors concluded. “This makes us feel good as scientists, but lousy as citizens.” More

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    Starbucks Illegally Denied Raises to Union Members, Labor Board Says

    Federal labor regulators have accused Starbucks of illegally discriminating against unionized employees by denying them wage and benefit increases that the company put in place for nonunion employees.In a complaint on Wednesday, a regional office of the National Labor Relations Board accused the company of breaking the law when its chief executive, Howard Schultz, “promised increased wages and benefits at U.S. stores if its employees rejected the union as their bargaining representative,” and when it withheld raises and benefits from unionized workers.The labor board is seeking, among other things, that affected employees be made whole for the denial of benefits and wage increases. It is also asking that Mr. Schultz read a notice to all employees informing them that some had been unlawfully denied benefits and pay increases and explaining their rights under federal labor law. Alternatively, a board official could read this material to employees in Mr. Schultz’s presence.The labor board’s case is scheduled for a hearing on Oct. 25 before an administrative law judge, unless Starbucks settles with the agency beforehand. Starbucks could appeal any ruling by an administrative judge to the full board.In a statement, Starbucks said that it was required under federal law to negotiate changes in wages and benefits with the union and that it was therefore not allowed to make such changes unilaterally, as it can in nonunion stores. “Wage and benefits are ‘mandatory’ subjects of the collective bargaining process,” the statement said.Workers United, the union representing the company’s newly organized workers, said the complaint affirmed its contention that Starbucks was discouraging union activity.“He claims to run a ‘different kind of company,’ yet in reality, Howard Schultz is simply a billionaire bully who is doing everything he can to crush workers’ rights,” Maggie Carter, a worker who helped unionize her store in Knoxville, Tenn., said in a statement.More than 225 out of roughly 9,000 corporate-owned Starbucks locations in the United States have voted to unionize since last fall.Mr. Schultz began indicating that the company would roll out new benefits, but only for nonunion workers, shortly after he began his third tour as the company’s chief executive in April.The next month, the company announced a series of new benefits — including additional career development opportunities, better tipping options and more sick time — but only for stores that hadn’t unionized or weren’t in the process of unionizing. The benefits were to begin in the coming months.The company unveiled wage increases as well, some of which had already been announced and which the company said would apply to all workers. But other increases were new and would apply only to nonunion workers.For example, according to Reggie Borges, a Starbucks spokesman, all employees stood to benefit from a companywide $15-an-hour minimum wage, but nonunion workers hired by May 2 would get a 3 percent raise if that proved higher than $15.The wage policy appears to have sown confusion, with some employees briefly receiving a pay increase that was then withdrawn. Colin Cochran, a worker at a store near Buffalo that initially voted to unionize and then voted against the union in a rerun election decided this month, provided pay stubs showing that his $16.28 hourly wage had increased to $16.77 the first week of August, when Starbucks began the pay increases nationwide. But Mr. Cochran’s pay stub for the second week of August showed his hourly pay dropping back to $16.28. (The union is challenging the election loss at this store.)Mr. Borges said that the reversion to the previous wage had resulted from an inadvertent error and that unionized stores would get wage increases in September.Workers involved in union campaigns at other Starbucks locations said the denial of pay and benefit increases to unionized stores had slowed their organizing efforts.Kylah Clay, a Starbucks worker in Boston who helped organize several stores in the area, said inquiries from employees at other stores who were interested in unionizing had dropped off substantially not long after the company’s pay and benefits announcement in May. But they picked up recently after the pay and many benefit changes took effect, she said. More

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    At the Fed’s Big Conference, Investors Will Grasp for Hints About Rate Path

    The most anticipated economic event of the summer is set to happen on Friday, when Jerome H. Powell, the Federal Reserve chair, provides an update on the economic outlook that could detail how the central bank is thinking about inflation and the path ahead for interest rates.Mr. Powell’s speech at the Federal Reserve Bank of Kansas City’s annual conference near Jackson, Wyo., is always closely watched. But it is getting special scrutiny this year as investors grasp for any hint at what might come next for the Fed, which has been raising rates rapidly in its campaign to tamp down the fastest rate of inflation in 40 years. Markets are trying to guess when the central bank, which raised rates by an unusually quick three-quarters of a percentage point at each of its last two meetings, will slow down.Inflation has shown some early signs of moderating, which could point toward a less aggressive Fed policy path. But prices are still increasing at more than three times the pace the Fed aims for, creating a pressing challenge for consumers who are struggling to afford day-to-day necessities like rent and food as wages fail to keep up.As officials weigh both glimmers of hope and a still-worrying pace of inflation, they are attempting to achieve a delicate balancing act. The Fed is trying to avoid restricting the economy so much that it plunges the United States into an unnecessary recession, while restraining it enough to bring price increases fully and firmly back under control.Mr. Powell has historically used his remarks at the conference, colloquially called Jackson Hole for the area where it is held, to detail big ideas. He laid out a new framework for monetary policy at the gathering in 2020 and in 2021 provided reasons — which have since failed to pan out — for why inflation might fade.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More