Evelyn Reynolds

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    How Pharmacy Work Stopped Being So Great

    If any group of workers might have expected their pay to rise last year, it would arguably have been pharmacists. With many drugstores dispensing coronavirus tests and vaccines while filling hundreds of prescriptions each day, working as a pharmacist became a sleep-deprived, lunch-skipping frenzy — one in which ornery customers did not hesitate to vent their frustrations over the inevitable backups and bottlenecks.“I was stressed all day long about giving immunizations,” said Amanda Poole, who left her job as a pharmacist at a CVS in Tuscaloosa, Ala., in June. “I’d look at patients and say to them, ‘I’d love to fill your prescriptions today, but there’s no way I can.’”Yet pay for pharmacists, who typically spend six or seven years after high school working toward their professional degree, fell nearly 5 percent last year after adjusting for inflation. Dr. Poole said her pay, about $65 per hour, did not increase in more than four years — first at an independent pharmacy, then at CVS.For many Americans, one of the pandemic’s few bright spots has been wage growth, with pay rising rapidly for those near the bottom and those at the top. But a broad swath of workers in between has lagged behind.In the two years after February 2020, income for those between the middle and the top tenth of earners grew less than half as quickly as income for those in the top 1 percent, according to data collected by a team of economists at the University of California, Berkeley.The gap is part of a long-term trend made worse by a slowdown in pay gains for middle- and upper-middle-income workers in the 2000s. “If you’re going to a hedge fund or investment bank or a tech company, you’ve done enormously well,” said Lawrence Katz, a labor economist at Harvard. Typical college graduates, he said, “have not done that great.”The stagnation appears to have moved up the income ladder in the last few years, even touching those in the top 10 percent.In some cases, the explanation may be a temporary factor, like inflation. But pharmacists illustrate how slow wage growth can point to a longer-term shift that renders once sought-after jobs less rewarding financially and emotionally.Growing Chains, Falling WagesIn 2018, Suzanne Wommack moved from western Missouri, where she had worked for several years as a pharmacist at a Hy-Vee supermarket, to the eastern part of the state, where she and her husband had relatives. The job she landed as a Walgreens pharmacy manager in Hannibal, roughly an hour-and-a-half outside St. Louis, paid her about $62 per hour — nearly $6 below her previous hourly wage, though regional pay differences helped to explain the drop.More striking was how few pharmacists Walgreens appeared to employ. At Hy-Vee, Dr. Wommack worked with one or two other pharmacists for most of the day. At Walgreens, the volume of business was similar, she said, but she was almost always the only pharmacist on duty during her shift, which often ran from 8 a.m. until the pharmacy closed at 8 p.m.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    Retail sales little changed in July amid fall in gas prices and drop in auto sales

    Retail sales for July were flat, compared with the estimate for a 0.1% gain.
    Excluding autos, sales increased 0.4% against expectations for no gain.
    Falling fuel prices held back receipts at gas stations, while consumers took those savings and spent at other retailers.

    Retail activity was flat in July as falling fuel prices held back gas station sales and consumers turned more heavily to online shopping, the Census Bureau reported Wednesday.
    While advance retail sales were unchanged, total receipts excluding autos rose 0.4%. Economists surveyed by Dow Jones had been looking for a 0.1% increase in the top-line number and a flat total ex-autos. June’s gain was revised down to 0.8% from 1%.

    Retail and food sales excluding gasoline and autos rose 0.7% from a month ago.
    The numbers are adjusted seasonally but not for inflation, and come during a month when the consumer price index also was flat.
    A tumble in fuel prices off their record nominal highs pushed down sales at the pump, with gas station receipts off 1.8%. Motor vehicle and parts dealers sales also fell sharply, declining 1.6%.
    Gas prices had eclipsed $5 a gallon in many locations earlier in the summer, but fell through July and most recently were at $3.94 a gallon for regular unleaded, according to AAA.
    “People appear to have used some of the savings from lower gas prices to spend more on other items, both in nominal and — very likely — real terms,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Auto sales have been severely constrained by the chip shortage, so pent-up demand likely is substantial. July’s other losers were department stores and clothing retailers, but all these components are noisy and subject to revisions.”

    Those pullbacks in gas and auto sales were offset by a 2.7% increase in online sales and a 1.5% gain in miscellaneous stores.
    Consumers have been fighting to keep up with an inflationary environment that has seen prices overall increase 8.5% from a year ago, close to the highest level in 40 years. Price rises have been especially pernicious in the food and energy category; even with the July slide in energy prices, gas station receipts climbed 39.9% from a year ago.
    July provided some respite from inflation pressures, and the decline in fuel costs particularly allowed consumers to spend elsewhere.
    Food sales rose just 0.2%, however, even as the food price index as measured by the Bureau of Labor Statistics increased 1.1% for the month. Sales at bars and restaurants also struggled, rising just 0.1%.
    Some retailers also have struggled in the current environment.
    Target on Wednesday said its earnings tumbled close to 90% from a year ago as it has had to mark down prices on unwanted inventory.
    The Federal Reserve has been using interest rate increases to hold back inflation. The central bank enacted consecutive 0.75 percentage point hikes in June and July and is expected to keep moving rates higher until inflation comes down to the Fed’s 2% goal.
    Correction: Target on Wednesday said its earnings tumbled close to 90% from a year ago. An earlier version misstated the metric.

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    Inflation peaking? 10 common consumer items where prices are falling

    A customer shops for eggs in a Kroger grocery store on August 15, 2022 in Houston, Texas.
    Brandon Bell | Getty Images

    July’s consumer price index report finally showed a sign of potential relief – inflation ticked up less than expected from a year ago, and was flat on the month, meaning that a basket of items and services generally stayed the same price.
    But some items have fallen, on a monthly and weekly basis, potentially signaling that inflation has passed its peak and may be cooling off.

    This is welcome news to consumers who have been squeezed by higher prices and are looking for any sign of relief. Some of the top items whose prices have come down include eggs, milk and gasoline.

    “Fuel inflation was really big and that’s going to have a pretty meaningful impact on consumers and their spending patterns,” said John Leer, chief economist at Morning Consult. “I think that’s actually a good thing for the economy.”

    Grocery aisle prices down

    Many of the items that have declined are tied to food and energy, often the most volatile costs that consumers deal with.
    Grocery store staples have dipped. Large white eggs cost, on average, $2.14 for a dozen, during the week of Aug. 15-21, according to the USDA. That’s a whopping 60 cent drop from the prior week, when the average was $2.74 per dozen.

    The average price for a gallon of milk slipped to $3.16 from $3.24 during the period of Aug. 8-12 from the previous month, and the average price of butter fell to $3.67 from $4.68 in the same timeframe, per USDA data.

    Chicken breast prices also slipped on a weekly basis during the period of Aug. 8-12, but other parts of the chicken are declining as well – chicken wing prices have been trending down and are now cost less than they did pre-pandemic, according to data from the Department of Agriculture.

    Oil pulled down fuel prices

    Outside of food, declines can be seen in consumer goods and services related to energy.
    This is because oil prices are often subject to big price swings as the balance between supply and demand shifts. This year, the war between Russia and Ukraine threw that balance off and the price of oil spiked when countries stopped buying from Russia, a major exporter.
    However, oil prices have come back down, lowering the cost of energy and particularly gasoline. The national average for a gallon of regular gasoline is $3.918 as of Friday, according to AAA. While that’s higher than it was a year ago, it’s a solid decline from the $4.495 consumers were paying for gas a month ago, and a sharp drop from the recent high of $5.016 hit in June.

    I think consumers increasingly believe that inflation is going to come down.

    chief economist at Morning Consult

    That also potentially affected another area of the economy that saw a price dip month over month – airfares. The average price of a domestic airline ticket has dropped to $295 in August from $332 in July, according to travel site Hopper. That’s also back in-line with the average price for a domestic ticket in the same month in 2019.
    Outside of fuel costs, this dip in ticket prices could be because consumer demand is fading, according to according to Kevin Gordon, a senior investment research manager at Schwab.
    “That could be demand destruction,” he said, adding that the reopening from pandemic lockdowns inflated the price of things as consumers rushed to take vacations again. Now, as vacation season is winding down, that demand has fallen off.

    One month doesn’t make a trend

    Of course, one month of prices falling in some categories isn’t a trend.
    The slowdown in price increases – and dips of costs of some items and services – may mark the beginning of declines, but more months of data would be needed to know for sure.
    “I think it’s way too early to start taking a victory lap,” said Leer, adding that consumers should expect to be living in a world with elevated inflation for the next year and a half to two years.
    In addition, it’s important to remember that falling prices, or inflation cooling off, may ultimately signal that the U.S. economy is slowing down.  
    “You want the price pressures relieved, but what the end goal with that is probably that we’re getting closer to a recession,” said Gordon. As the Federal Reserve continues to increase its benchmark interest rate, it wants the economy to slow down but will try not to tip the U.S. into a recession which would lead to job losses.
    Further, prices of other common items have remained stubbornly high and are still climbing. The price of most fruit, for instance, continues to stay high and even increase week after week, according to USDA data. Swift changes are normal as well — even though dairy fell through Aug. 12, prices of milk and butter ticked back up through Aug. 19, USDA found.
    Coffee prices were up 3.5% from June to July, according to the Bureau of Labor Statistics. Housing costs such as rent have also remained high and are some of the hardest to pull back down, Gordon noted.
    Still, seeing the prices of common items trend back down is a good thing for consumers and sentiment.
    “I think consumers increasingly believe that inflation is going to come down,” said Leer.

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    Retailers Stumble Adjusting to More Selective Shoppers

    In earnings reports this week, companies showed it has been a struggle to adapt to a consumer mind-set that is vastly different from what it was during much of the pandemic.This hasn’t been the year retailers planned for.After two years of navigating the pandemic — which brought record online sales and shoppers willing to buy all manners of items, to the point that the global supply chain became strained — executives knew a new normal would take shape.Sales might slow, the thinking went, but people would still want TVs, fashionable dresses and throw pillows. So, with supply chain issues in mind, companies stocked up. But this spring it became clear that those items weren’t selling quickly enough. As people watched the prices of food and gas rise, their spending became more selective, leaving retailers with shelves of inventory they couldn’t get rid of.The magnitude of the miscalculation was crystallized this week in a batch of quarterly earnings from major retailers like Walmart and Target, which showed a mix of declining sales of discretionary goods and lower profits. A number revised their guidance, lowering expectations for both sales and profits for the rest of the year. A glut of inventory weighed on companies’ balance sheets: Inventory at Walmart rose 25 percent from this time last year. At Target, it increased 36 percent. And Kohl’s said inventory was up 48 percent. “Since our last earnings call in May, a weakening environment, high inflation and dampened consumer spending are having broad implications across much of retail, especially in discretionary categories like apparel,” Michelle Gass, the chief executive of Kohl’s, said on a call with analysts. “Given our penetration in these categories, this is disproportionately impacting Kohl’s.”Taken together, the results show that the robust sales retailers grew accustomed to during the course of the pandemic have ceased — and the consumer landscape that awaits may be more austere than what they prepared for. (There were exceptions. Home Depot, for instance, said sales were still strong, driven by home improvement projects.) On earnings calls, executives said lower- to middle-income consumers were the most hesitant to spend. Stores are responding by pushing more discounts and highlighting private-label brand to shoppers, and, in some cases, canceling billions of dollars’ worth of orders with vendors. It remains to be seen which strategies will be most effective.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    'You've got to eat': Energy bills are squeezing businesses and people as UK costs soar

    U.K. inflation jumped to a 40-year high of 10.1% in July as food and energy costs continued to soar, exacerbating the country’s cost of living crisis.
    The Bank of England expects consumer price inflation to top out at 13.3% in October.
    The country’s average energy bills (set via a price cap) are expected to rise sharply in the fourth quarter to eventually exceed an annual £4,266 ($5,170) in early 2023.

    A high street decorated with British Union Jack bunting in Penistone, UK. The End Fuel Poverty Coalition has warned “a tsunami of fuel poverty will hit the country this winter.”
    Bloomberg | Bloomberg | Getty Images

    LONDON — Facing soaring energy bills, rising costs and rapidly declining consumer purchasing power, small businesses across the U.K. are struggling to make ends meet.
    New data on Wednesday showed U.K. inflation jumped to a 40-year high of 10.1% in July as food and energy costs continued to soar, exacerbating the country’s cost-of-living crisis.

    The Bank of England expects consumer price inflation to top out at 13.3% in October, with the country’s average energy bills (set via a price cap) expected to rise sharply in the fourth quarter to eventually exceed an annual £4,266 ($5,170) in early 2023.
    On Wednesday, a director of U.K. energy regulator Ofgem quit over its decision to add hundreds of pounds to household bills, accusing the watchdog of failing to strike the “right balance between the interests of consumers and the interests of suppliers.”
    Real wages in the U.K. fell by an annual 3% in the second quarter of 2022, the sharpest decline on record, as wage increases failed to keep pace with the surging cost of living.
    A new survey published Friday also showed consumer confidence falling to its lowest level since records began in 1974.
    ‘Absolute madness’
    “While the energy price caps do not apply to businesses directly, millions of small business owners are still experiencing increased energy bills at a time when costs are rising in most operational areas,” said Alan Thomas, U.K. CEO at insurance firm Simply Business.

    “Simultaneously, consumer purchasing power is going down as Brits cut back on non-essential spending, harming the books of SME [small and medium-sized enterprise] owners.”
    This assessment was echoed by Christopher Gammon, e-commerce manager at Lincs Aquatics — a Lincolnshire-based store and warehouse providing aquariums, ponds and marine livestock.
    The business has seen its energy costs rise by 90% so far since the war in Ukraine began, Gammon told CNBC on Thursday, and its owners are provisioning for further increases in the coming months.

    “We are combating the rising cost with switching everything to LED, solar panels, wind turbines (planning in process) and closing down unused systems,” Gammon said.
    “We have also had to increase the price of products — most of these have been livestock as they are now costing more to look after.”
    Customers are increasingly withdrawing from keeping fish and reptiles due to the cost of maintenance, and on Wednesday the store had a customer bring in a snake they could no longer afford to care for.
    The spiraling costs forced Lincs Aquatics to close a store in East Yorkshire, laying off several workers, while trying to offer pay rises to staff at its two remaining locations in Lincolnshire in order to help them through the crisis.
    The business is also working to expand its online shop due to rising in-store upkeep costs, as heating water for marine aquariums and purchasing pump equipment become ever more expensive.
    In early July, a quarterly survey from the British Chambers of Commerce found that 82% of businesses in the U.K. saw inflation as a growing concern for their business, with growth in sales, investment intentions and longer-term turnover confidence all slowing.

    “Businesses face an unprecedented convergence of cost pressures, with the main drivers coming from raw materials, fuel, utilities, taxes, and labor,” said BCC Head of Research David Bharier.
    “The continuing supply chain crisis, exacerbated by conflict in Ukraine and lockdowns in China, has further compounded this.”
    BCC Director General Shevaun Haviland added that “the red lights on our economic dashboard are starting to flash,” with almost every indicator deteriorating since the March survey.
    Phil Speed, an independent distributor for multiservice company Utility Warehouse, based in Skegness, England, liaises with brokers to find energy deals for business clients.
    He told CNBC earlier this week that for the first time in 10 years, he had been unable to obtain a better deal for a client than their out-of-contract rate — the typically expensive rates paid when a business or individual does not have a contracted deal in place.
    “I think the unit rate she was quoting was 60p [pence] a unit for gas, which is just ridiculous. I’d imagine a year ago, we’d have been looking at 5 or 6p. It’s just absolute madness,” Speed said.
    “We’ve got no idea what’s going to be presented to us, because we’ve got no idea what’s going to happen. The price is just going ballistic. No-one’s going to buy it.”
    The cost of gas for both businesses and consumers are only expected to increase through the colder winter months. Speed noted that local cafes cooking on gas will likely struggle, as they have no choice but to continue using it, unless they can replace gas appliances with electric ones.
    ‘Scream very loudly at somebody’
    Rail strikes have already brought the country to a halt on multiple days throughout the summer and look set to continue, while postal workers, telecoms engineers and dock workers have all voted to strike as inflation erodes real wages.
    Conservative leadership favorite Liz Truss was earlier this month forced into a dramatic U-turn on a plan to cut public sector pay outside London, which would have axed wages for teachers, nurses, police and the armed forces alike.
    Local authorities recently offered state school support staff a flat pay rise of £1,925 per year, meaning a 10.5% increase for the lowest-paid staff and just over 4% for the highest earners, after pressure from three of the country’s largest unions.
    One woman in her early fifties – a member of support staff at a state school in Lincolnshire who asked not to be named due to the sensitive situation and concerns on public reprisals – told CNBC that years of real-terms pay cuts had left many low-paid public sector workers struggling to make ends meet.

    The British government in 2010, in the aftermath of the global financial crisis, announced a two-year pay freeze for public sector workers, followed by a 1% average cap on public sector pay awards which was lifted in 2017, with average pay rises increasing to roughly 2% by 2020.
    While the 10.5% rise for the lowest-paid school support staff will ease the pressure, the woman said her energy costs had doubled and her private landlord had attempted to increase her rent by £40 per month, which she had not agreed to and which may mean she would need to sell her car to cover basic living expenses.
    She called on the government to temporarily reduce the “standing charge,” a fixed daily amount households have to pay on most gas and electricity bills no matter how much they actually use, and to up its efforts to recoup one-off “windfall taxes” from energy companies such as BP, Shell and Centrica, which are reporting record profits..
    “I think this is an even bigger crisis than [the Covid-19 pandemic], because this is going to affect not just lower earners, but maybe even middle earners as well, because I don’t see how anybody can absorb those kinds of energy costs,” she said.

    The pressure being exerted on businesses and the government to increase wages in the face of skyrocketing living costs has raised further concerns about inflation becoming entrenched – but this consideration is far removed from the reality of working families increasingly being forced to cut back on essentials.
    “It’s alright saying ‘we can’t keep putting people’s pay up, that will make the cost of living worse,’ but the cost of living is out of control already, and the only way for people to survive is if their wages increase,” the woman said.
    “I know it’s a catch 22, but I don’t see a way around that really — you’ve got to eat.”
    The situation in recent months, even before the anticipated worsening of the energy crisis, has already begun to take a toll.
    “I just think I’m a very honest, hardworking person. I’ve never committed a crime, always done things right, but now I’m starting to feel like that gets you nowhere in this country,” she said.
    “For the first time in my life, I want to go out and march in protest and scream very loudly at somebody, and you just think ‘what does it take?'”

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    As Soaring Prices Roil Britain, Its Leader Vacations and a Likely Successor Sidesteps the Issue

    Britain is facing multiple economic shocks, from soaring energy prices to the hollowing out of the labor market by Brexit. But these issues seem disconnected from the fight to replace Boris Johnson.LONDON — The last time Britain suffered double-digit inflation, in 1982, Margaret Thatcher was prime minister, the nation was about to go to war with Argentina over the Falkland Islands, nurses and miners went on strike, and Prince William was born to Prince Charles and his wife, Princess Diana.This week, Britain is again in upheaval, with an inflation rate of 10.1 percent in July, a looming recession and a Conservative Party in the throes of a rancorous campaign to choose a new leader. If, as expected, Liz Truss is elected next month, she would take power during a period of economic stress comparable to what Thatcher confronted. And yet the multiple shocks Britain faces — from soaring energy prices because of the war in Ukraine, supply-chain disruptions after the coronavirus pandemic, and the hollowing out of the British labor market by Brexit — seem strangely disconnected from the contest to replace Prime Minister Boris Johnson.The untethered nature of the campaign is all the more striking because Britain is faring worse economically than its major European neighbors, not to mention the United States. Stagflation, another bleak relic of Thatcher’s early years, seems likely to haunt whoever succeeds Mr. Johnson.Ms. Truss, the foreign secretary, has stuck to an agenda focused on cutting taxes, which could aggravate rather than help solve those problems. Her goal is to appeal to the affluent, older Conservative Party members who choose the leader — a strategy that has helped her amass a so-far-unassailable lead over her opponent, Rishi Sunak, the former chancellor of the Exchequer. In polls of party members, Ms. Truss has an advantage over Mr. Sunak of between 22 and 38 percentage points.Liz Truss, the foreign secretary and a Conservative candidate for prime minister, campaigning last week in Cheltenham.Neil Hall/EPA, via Shutterstock“The whole campaign has been conducted in this bubble of unreality,” said Tim Bale, a professor of politics at Queen Mary, University of London. He blamed the problem in part on the news media, which he said had failed to pin down the candidates on how they would confront inflation.“There’s also a degree of fatalism about the crisis,” Mr. Bale added. “It’s put down to external events, and — by some — to the Bank of England’s tardy response.”The blinkered nature of the debate, analysts say, also reflects the peculiarities of the British political system. Only rank-and-file members of the Conservative Party can vote for the next leader, a constituency estimated at around 160,000 people. Older, whiter, and wealthier than most Britons, these voters are far less vulnerable to the ravages of a cost-of-living crisis than the broader population. To this rarefied slice of the electorate, Ms. Truss’ promise of tax cuts is more alluring than stark warnings that Britain needs to batten down the hatches before an approaching storm.Mr. Johnson, for his part, is on vacation in Greece, having skipped the chance to hold a crisis meeting with his would-be successors, as George W. Bush famously did during the presidential campaign in 2008, when he summoned Barack Obama and John McCain to the White House to discuss an emergency plan to confront the financial crisis.Pedestrians walked past shuttered retail stores on Oxford Street in central London on Tuesday.Andy Rain/EPA, via Shutterstock“It is pathetic that we have a government in which the leader is on a paid holiday, while the candidates to succeed him are just talking about pure nonsense,” said Jonathan Portes, a professor of economics and public policy at Kings College London. “The only person who seems to be thinking seriously about this is Gordon Brown.”Mr. Brown, a former Labour prime minister who led Britain’s response to the 2008 crisis, wrote recently that Mr. Johnson and the two candidates should agree on an emergency budget to cushion the blow of looming fuel price increases. Otherwise, he said, they would risk consigning “millions of vulnerable and blameless children and pensioners to a winter of dire poverty.”The inflation data, Mr. Portes said, showed that Britain was suffering from the “worst of both worlds.” It has been hit by the soaring fuel prices that have afflicted other European countries. The European Union said on Thursday that inflation in the 19 countries that use the euro rose to a record 8.9 percent in July. But it was lower in France, where the government has capped fuel prices.Britain also has the acute post-Covid labor market shortages that have plagued the United States, putting pressure on wages. In Britain’s case, those shortages have been aggravated by Brexit, which has reduced the influx of migrant workers from elsewhere in Europe.Ms. Truss has pledged aid to people who will be hard hit by the next planned increase in household fuel bills, in October, though she has refused to be drawn out on what such a package would look like. She has also raised the prospect of reviewing the anti-inflation mandate of the Bank of England, Britain’s central bank. It has come under fire in recent days for failing to act quickly enough to stem spiraling prices.Rishi Sunak, the other candidate to lead the Conservative Party, spoke during a campaign event last week in Cheltenham.Toby Melville/ReutersThe bank recently hiked interest rates sharply, and it is expected to double them again in the next six months. Yet the bank predicts that inflation will keep rising until it peaks at 13.2 percent in October, while it forecasts that a tighter money supply will plunge the economy into a recession that it says will last through 2023.Mr. Sunak also holds out the promise of lower taxes, though he argues that the government must tame inflation before it passes tax cuts. He has accused his opponent of fairy-tale economics. Ms. Truss counters that swift tax cuts will stimulate commercial activity and offer the surest path out of the economic wilderness.Economists, however, warn that cutting taxes would further strain Britain’s public services, most notably the National Health Service, which is already frayed after the pandemic.“It is hard to square the promises that both Ms. Truss and Mr. Sunak are making to cut taxes over the medium term with the absence of any specific measures to cut public spending and a presumed desire to manage the nation’s finances responsibly,” said Carl Emmerson, the deputy director of the Institute for Fiscal Studies, a research organization that just published a report on the government’s deteriorating finances.On Wednesday, as the new inflation numbers were announced, Ms. Truss was in Belfast, vowing to pass legislation on trade in Northern Ireland that is likely to ignite a new round of post-Brexit tensions with the European Union.Other than its effect on Northern Ireland, the role of Brexit in Britain’s woes is also largely absent from the campaign. Both candidates are appealing to the Brexiteer wing of the Conservative Party, especially Ms. Truss, who opposed the 2016 referendum to leave the European Union, but now displays the fervor of a convert.Prime Minister Boris Johnson, left, attempted to talk to a worker who spoke no English, as he helped to pack broccoli during a visit to a farm in southwest England in June. Brexit has caused a hollowing out of the British labor market.Justin Tallis/Agence France-Presse, via Pool/Afp Via Getty ImagesIn truth, there is lively debate among economists about how much Britain’s inflation can be blamed on Brexit. Mr. Portes said it was not a key driver but has “increased pressure on the margins” by worsening labor shortages, depressing the value of the pound, and raising the costs of imports, owing to customs paperwork.Adam Posen, an American economist who once served as an external member of the Bank of England’s Monetary Policy Committee, estimated in May that 80 percent of Britain’s inflation could be blamed on Brexit, mainly because of the loss of European migrant labor. This week, he stood by his aggressive claim.“Events have sadly played out about how I and others forecast,” Mr. Posen said. More

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    Jobless claims edge lower as Fed looks to cool labor market

    Jobless claims totaled 250,000 for the week ended Aug. 13, down 2,000 from the previous week and below the 260,000 Dow Jones estimate.
    Continuing claims, which run a week behind the headline number, totaled 1.437 million, an increase of 7,000.
    In other economic news, the Philadelphia Fed reported that its monthly manufacturing survey for August rose to a reading of 6.2

    A “We’re Hiring” sign is posted at a Target store on August 05, 2022 in San Rafael, California.
    Justin Sullivan | Getty Images

    Initial filings for unemployment benefits declined slightly last week though they were consistent with a drift higher in layoffs that began in the spring, the Labor Department reported Thursday.
    Jobless claims totaled 250,000 for the week ended Aug. 13, down 2,000 from the previous week and below the 260,000 Dow Jones estimate.

    The four-week moving average for claims, which helps smooth out weekly volatility, also fell by 2,750 to 246,750.
    Earlier this year, claims had hit their lowest level in more than 50 years, but began moving higher in April after bottoming at 166,000. The four-week moving average has risen during that time by nearly 80,000.
    Continuing claims, which run a week behind the headline number, totaled 1.437 million, an increase of 7,000.
    Policymakers are watching the jobs market closely at a time when inflation is running near 40-year highs. Federal Reserve officials have instituted a series of interest rate increases aimed in part at cooling a labor market in which there are nearly two jobs open for every available worker.
    At their July meeting, Fed officials noted “tentative signs of a softening outlook for the labor market” that included a rise in weekly claims. Policymakers said they were determined to continue to raise interest rates until inflation under control even if meant more a slowdown in hiring.

    In other economic news Thursday, the Philadelphia Fed reported that its monthly manufacturing survey for August rose to a reading of 6.2, representing the percentage difference between companies expecting expansion vs. contraction.
    That was above the estimate for a minus-5 reading and helped quell fears that manufacturing might be headed for a major slowdown. A similar survey on Monday from the New York Fed fell a stunning 40 points as respondents indicated that business conditions were deteriorating.
    This is breaking news. Please check back here for updates.

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    in Economy

    Taiwan and U.S. to Begin Formal Trade Talks

    The Biden administration said on Wednesday that it would begin formal trade negotiations with Taiwan this fall, after several weeks of rising tensions over the island democracy that China claims as its own.The announcement marks a step toward a pact that would deepen economic and technological ties between the United States and Taiwan, after initial talks were announced in June. But relations between the United States and China have markedly deteriorated since then, on the heels of visits by two delegations of U.S. lawmakers to Taiwan this month, including by Speaker Nancy Pelosi.The trips angered the Chinese government, which sees the island as an incontestable part of its territory, and it has responded by ramping up military drills and firing missiles into the waters around Taiwan. The United States, in turn, has accused China of using the visits as a pretext to step up operations to intimidate Taiwan, and has vowed to maintain its own military operations in the region.Despite its small size, Taiwan is the United States’ eighth-largest trading partner. It is an important market for U.S. agriculture and a key supplier of technology, particularly advanced semiconductors.Talks for the pact, called the U.S.-Taiwan Initiative on 21st-Century Trade, will focus on 11 trade areas, the announcement from the Office of the United States Trade Representative said, including expanding trade in agriculture and digital industries, raising labor and environmental standards, and enhancing trade between small and medium-size businesses.The governments also said they would combat market distortions caused by state-owned enterprises, as well as nonmarket policies and practices — an apparent nod at China, where such practices are common.China responded to the news of the trade talks with displeasure. Shu Jueting, a representative for China’s Ministry of Commerce, said: “China always opposes any form of official exchanges between any country and the Taiwan region of China, including negotiating and signing any agreements with sovereign connotations or an official nature.”She added that China would “take all necessary measures to resolutely safeguard sovereignty, security and development interests.”The U.S.-Taiwan trade initiative will be negotiated by the American Institute in Taiwan, which is the unofficial U.S. embassy in Taipei, and the Taipei Economic and Cultural Representative Office in the United States, which represents Taiwan in Washington in the absence of diplomatic recognition.The Biden administration is also carrying out a separate trade negotiation with 13 Asian nations to form a pact known as the Indo-Pacific Economic Framework. Taiwan has expressed interest in joining those talks, but given its contested status, it has not been invited to participate.In a briefing on Wednesday, Daniel J. Kritenbrink, the assistant secretary of state for East Asian and Pacific affairs, defended what he called “an ambitious road map for trade negotiations” with Taiwan.“We will continue to fulfill our commitments under the Taiwan Relations Act,” he said. “That includes supporting Taiwan’s self-defense and maintaining our own capacity to resist any resort to force or other forms of coercion that would jeopardize Taiwan’s security. And we will continue, consistent with our ‘one China’ policy, to deepen our ties with Taiwan, including through continuing to advance our economic and trade relations.”Austin Ramzy More