Evelyn Reynolds

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    It Was the Housing Crisis Epicenter. Now the Sun Belt Is an Inflation Vanguard.

    A.J. Frank watched the Phoenix real estate market and its entire economy implode as he was graduating from high school in 2009, a scarring experience that has made him a cautious saver. He is again living through a major economic upheaval as the cost of living climbs sharply.Phoenix — among the hardest-hit cities during the housing crisis — is now on the leading edge of another painful economic trend as the United States faces the most rapid inflation in 40 years. The city is experiencing some of the fastest price increases in the nation, something Mr. Frank has felt firsthand.His landlord tried to raise his rent nearly 30 percent this year, prompting him to move. Mr. Frank, a 31-year-old engineer, is still paying $250 a month more than he was previously, and rising grocery and gas bills have reduced his disposable income.“It’s always traditionally been a pretty affordable city to live in, but it’s getting more expensive,” Mr. Frank said of Phoenix.While inflation has been rising quickly across the country, it is especially intense in Sun Belt cities like Phoenix, Atlanta, Miami and Tampa, which have experienced price increases well above 10 percent this year, much higher than the national rate of 8.5 percent in July. Prices in the Southern United States have risen 9.4 percent over the past year, the fastest pace of any large region in the nation and more rapid than in the Northeast, where prices are up 7.3 percent.Inflation Is Fastest in the SouthPrices have been increasing rapidly in cities including Atlanta, Tampa and Miami, even as Northeastern inflation has been more moderate.

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    Price Increase from Year Earlier
    Source: Bureau of Labor StatisticsBy The New York TimesPart of the divide can be traced to fuel and electricity costs, which surged earlier this year. Because many Sun Belt cities depend on cars and air-conditioning, those purchases make up a larger percentage of consumer budgets in the region. And, just as it did in 2008, housing is playing a crucial role — this time, through the rental market, which is a major contributor to overall inflation. In Phoenix, rents are up 21 percent from a year ago, and in Miami, they are up about 14 percent. For urban dwellers nationally, rent is up only about half as much, 6.3 percent.The Sun Belt’s intense bout of inflation matters for several reasons. While inflation is painful everywhere, it is having a disproportionate impact on families in cities like Tampa Bay, where prices have shot up faster than in areas like New York City. Demand at food banks and for eviction counselors has jumped across the region, providers said, as signs of that distress manifest.And as in 2008, the Sun Belt could serve as a sort of bellwether. Inflation is showing early signs of moderating nationwide, with price increases slowing to 8.5 percent in the year through July, from 9.1 percent the previous month. Still, the same forces that are now causing prices to surge across the South could keep inflation elevated for a longer period.That’s because a less-intense version of the rent surge that is pushing inflation higher across cities in the American south is beginning to play out in bigger cities in the Northeast and on the West Coast. Real-time market rent trackers that reported prices shooting up in Sun Belt cities last year are now showing bigger increases in places like New York, San Jose and Seattle.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    Britons Brace for More Hardship as Prices Soar Amid Inflation

    Cutting back on meat. Choosing cheaper supermarket brands. Stockpiling soap. Soaring prices force more sacrifices.LONDON — Stacey Smith grabbed some boxes of tea from a low shelf of a London supermarket on Wednesday, and then phoned the neighbor who had asked her to buy them.“They have gone up 20 pence,” she said. “Do you still want them?”Her neighbor agreed to accept the price increase, something that Ms. Smith, a teaching assistant and a single mother of three, has been unable to do with her own shopping. After she bought the tea, she headed to Aldi, a cheaper supermarket, to shop for her family.In the past months, as food prices have soared in Britain, she has cut down on meat and relied on pasta and sauces instead. Her children have stopped attending swimming lessons, she has limited their trips to the fridge for snacks and she has turned down their requests for money to spend at the bowling alley.“We need that money for food,” said Ms. Smith, who makes 1,200 pounds (about $1,400) a month. “Before, we were keeping our head just above the water. Now, we are literally sinking.”In Britain, inflation rose 10.1 percent in July compared to a year earlier, with consumer prices growing at their fastest pace since 1982. Many Britons, especially the most vulnerable, who have borne the brunt of the effects of inflation, braced for more sacrifices: for saying “no” more often to their children, for making more trips to multiple supermarkets to find discounts, for joining lines at the food banks and for making more compromises to their health.Many Britons are concerned that their leaders have left the country rudderless during the growing economic crisis. The government is embroiled in a leadership transition, with Prime Minister Boris Johnson working out his last few weeks in Downing Street before a successor is announced on Sept. 5. Parliament itself is not in session, and vacation season is in full swing, with Mr. Johnson being spotted in Greece over the weekend — his second foreign holiday in recent weeks.In the meantime, residents are scrambling to cope, often forced to make hard choices.At Iceland, a low-cost supermarket with an emphasis on frozen food, Tainara Graciano, 51, a housekeeper in London, carried a basket with two cartons of eggs and discounted chicken nuggets that were expiring on the same day. She had cut back on bottled water since prices began spiraling up.“He drinks a lot,” she said of the water, looking at her 11-year-old son as he strolled by. Then she pointed at her half-empty basket and said, “Five months ago, I carried two of those.”Britons have been making more trips to multiple supermarkets to seek out lower prices.Andy Rain/EPA, via ShutterstockAcross the street, Arwen Joseph, 47, was shopping for house supplies at the low-cost store Poundland.Ms. Joseph, who is on government benefits and sometimes uses a food bank, said it had been harder to buy healthful food that was compatible with her allergies, which give her severe eczema. As a result, she has cut back on other items.“We used to have ice cream or bubble tea maybe once a week,” said her 9-year-old daughter, Georgia Gold. “Now we haven’t had it so much.”Volunteers at food banks say they have been caught off guard and are now struggling to keep up as more people arrive asking for help.Solomon Smith, who runs the Brixton Soup Kitchen in South London, which provides hot meals and other food bank services to those in need, said the number of people using the service had more than doubled in recent months.“People are telling us they haven’t eaten properly for days,” he said. “Some of them have been forced to go into shops to steal. Others don’t know if they should pay their gas bills or eat food.”The food bank itself has not escaped the inflation squeeze. It has had to cut back on hot meals and food purchases, and has seen public donations dry up, according to Mr. Smith.“We just don’t have enough to give to everyone,” he said, his voice wavering. “I don’t know what is going to happen next week.”People across Britain are confronting similar problems.At the Blackburn Food Bank, in the north of England, more people with full-time employment are turning up as wages have not kept up with the inflation.“People are very shocked that they have to be here,” said Gill Fourie, operations manager at Blackburn. “People don’t even have gas and electricity to cook,” she said, referring to mounting household energy prices which are forecast to climb to 3,500 pounds (about $4,240) a year in October, triple what they were a year ago. She added, however, that the facility continued to receive support from the community. Even people who are in less vulnerable situations have had to watch their wallets.“I would love to get some Mutti, but I cannot afford it,” said Melanie McHugh, an actress, as she looked at cans of tomato sauce at her local supermarket in south London. She said she was going to make shakshuka, a vegetable dish that could last for several days. She went for a cheaper brand of sauce.Ms. McHugh, who has stopped buying butter, also grabbed a lower cost brand of chorizo.“I am aware that I am lucky,” she said. “But I am also aware my habits have changed.”The British government has allocated £15 billion (about $18 billion) in benefits for the most vulnerable families. Ms. Smith, the mother of three, said she had received about 300 pounds this month. She has also stockpiled laundry soap, but said that did not ease her worries. She has started thinking of giving up her car and getting another job, as a cleaner, on weekends.“It’s not what I would like to do,” she said. “But you have to do what you need to survive.” More

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    Inflation Hits the British Breakfast Table With Rising Food Prices

    From bread to butter to baked beans, a survey of typical breakfast items makes clear that there’s no relief from rising inflation for Britons when they sit down for their morning meal.LONDON — Britons can’t escape inflation. They’re reminded first thing every morning — when they tuck into breakfast.As soaring inflation takes its toll in the country — consumer prices rose in July 10.1 percent from the previous year, according to official statistics released on Wednesday — the prices for items associated with a basic breakfast in Britain have jumped.The squeeze isn’t just being felt at the breakfast table, either, with the overall rise in inflation being attributed in large part to higher food and drink prices across the board, according to data from the Office for National Statistics.Assosia, a retail research firm, compared prices from Britain’s four largest supermarket chains, and the data showed significant increases for branded items on the shelves on Tuesday, when compared with exactly one year ago, from bread to butter to baked beans. Here’s what that looks like (1 British pound = $1.20).Bread: The price of 800 grams (about 1.75 pounds) of Hovis soft medium slices of bread rose from an average of £1.05 to £1.20, an increase of 15 percent.Butter: Two hundred and fifty grams of Lurpak unsalted butter is now £2.50, up from £1.94, an increase of 29 percent.Eggs: Six large free-range eggs from the Happy Egg Co. now runs £1.97, compared to £1.72 a year ago, an increase of nearly 15 percent.Sausages: A package of eight Richmond Thick Sausages is now £2.26, a rise of 26 pence from a year ago, a 13 percent increase.Bacon: The price of 200 grams of Finnebrogue Artisan Naked bacon slices surged more than 32 percent, from £2.03 to £2.68.Baked Beans: A 415-gram can of Heinz Baked Beans went from 85 pence to £1.21, increasing almost 43 percent.Coffee: Two hundred grams of Nescafé instant coffee jumped from £4.56 to £5.25, up 15 percent.Tea: 80 bags of PG tips Original Biodegradable Black Tea rose a little less than 9 percent, going from £2.13 to £2.31. More

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    Biden Signs Climate, Health Bill Into Law as Other Economic Goals Remain

    The bill is the latest victory for the president on overhauling the physical economy, but he has found less support for plans to help workers.President Biden signed an expansive health, climate and tax law after more than a year of on-again, off-again negotiations with Congress.Doug Mills/The New York TimesWASHINGTON — President Biden signed into law a landmark tax, health and energy bill on Tuesday that takes significant steps toward fulfilling his goal to modernize the American economy and reduce its dependence on fossil fuels.The vast legislation will lower prescription drug costs for seniors on Medicare, extend federal subsidies for health insurance and reduce the federal deficit. It will also help electric utilities switch to lower-emission sources of energy and encourage Americans to buy electric vehicles through tax credits.What it does not do, however, is provide workers with many of the other sweeping economic changes that Mr. Biden pledged would help Americans earn more and enjoy the comforts of a middle-class life.Mr. Biden signed the bill, which Democrats call the Inflation Reduction Act, in the State Dining Room at the White House. He and his allies cast the success of the legislation as little short of a miracle, given it required more than a year of intense negotiations among congressional Democrats. In his remarks, Mr. Biden proclaimed victory as he signed a compromise bill that he called “the biggest step forward on climate ever” and “a godsend to many families” struggling with prescription drug costs.“The bill I’m about to sign is not just about today; it’s about tomorrow. It’s about delivering progress and prosperity to American families,” Mr. Biden said.Administration officials say Mr. Biden has passed far more of his economic agenda than they could have possibly hoped for, given Republican opposition to much of his agenda on taxes and spending and razor-thin Democratic majorities in the House and Senate. His wins include a $1.9 trillion economic rescue plan last year designed to get workers and businesses through the pandemic and a pair of bipartisan bills aimed at American competitiveness: a $1 trillion infrastructure bill and $280 billion in spending to spur domestic semiconductor manufacturing and counter China.But there is little dispute that Mr. Biden has been unable to persuade lawmakers to go along with one of his biggest economic goals: investing in workers, families, students and other people.Both parts of the equation — modernizing the physical backbone of the economy and empowering its workers — are crucial for Mr. Biden’s vision for how a more assertive federal government can speed economic growth and ensure its spoils are widely shared.In a warming world with increased economic competition from sometimes adversarial nations, Mr. Biden considers investment in low-emission energy sources and advanced manufacturing critical to American businesses and the nation’s economic health.Mr. Biden also sees human investment as crucial. The American economy remains dominated by service industries like restaurants and medicine. Its recovery from the pandemic recession has been stunted, in part, by breakdowns in support for some of the workers who should be powering those industries’ revival. The cost and availability of child care alone is keeping many potential workers sidelined, leading to an abundance of unfilled job openings and costing business owners money.What’s in the Inflation Reduction ActCard 1 of 8What’s in the Inflation Reduction ActA substantive legislation. More

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    Prosecutors Struggle to Catch Up to a Tidal Wave of Pandemic Fraud

    Investigators say there was so much fraud in federal covid-relief programs that — even after two years of work and hundreds of prosecutions — they’re still just getting started.In the midst of the pandemic the government gave unemployment benefits to the incarcerated, the imaginary and the dead. It sent money to “farms” that turned out to be front yards. It paid people who were on the government’s “Do Not Pay List.” It gave loans to 342 people who said their name was “N/A.”As the virus shuttered businesses and forced people out of work, the federal government sent a flood of relief money into programs aimed at helping the newly unemployed and boosting the economy. That included $3.1 trillion that former President Donald J. Trump approved in 2020, followed by a $1.9 trillion package signed into law in 2021 by President Biden.But those dollars came with few strings and minimal oversight. The result: one of the largest frauds in American history, with billions of dollars stolen by thousands of people, including at least one amateur who boasted of his criminal activity on YouTube.Now, prosecutors are trying to catch up.There are currently 500 people working on pandemic-fraud cases across the offices of 21 inspectors general, plus investigators from the F.B.I., the Secret Service, the Postal Inspection Service and the Internal Revenue Service.The federal government has already charged 1,500 people with defrauding pandemic-aid programs, and more than 450 people have been convicted so far. But those figures are dwarfed by the mountain of tips and leads that investigators still have to chase.Agents in the Labor Department’s inspector general’s office have 39,000 investigations going. About 50 agents in a Small Business Administration office are sorting through two million potentially fraudulent loan applications.Officials already concede that the sheer number of cases means that some small-dollar thefts may never be prosecuted. Earlier this month, President Biden signed bills extending the statute of limitations for some pandemic-related fraud to 10 years from five, a move aimed at giving the government more time to pursue cases. “My message to those cheats out there is this: You can’t hide. We’re going to find you,” Mr. Biden said during the signing at the White House.Investigators say they hope the extra time will allow them to ensure that those who defrauded the government are ultimately punished, restoring a deterrent that had vanished in a flood of lies and money.President Biden signed bills extending the statute of limitations for some pandemic-related fraud to 10 years.Pete Marovich for The New York Times“There are years and years and years of work ahead of us,” said Kevin Chambers, the Department of Justice’s chief pandemic prosecutor. “I’m confident that we’ll be using every last day of those 10 years.”The federal government provided about $5 trillion in relief money in three separate legislative packages — an enormous sum that is credited with reducing poverty and saving the country from a prolonged, painful recession.But investigators say that Congress, in its haste to get money out the door quickly, designed all three packages with the same flaw: relying on the honor system.For example, an expanded unemployment benefit gave workers an extra $600 per week in federal jobless funds on top of what they received from their state. The program was funded by the federal government but administered by states, which often had loose rules around qualifying. Applicants did not need to provide proof they had lost income because of Covid-19; they simply had to swear it was true.A similar we’ll-take-your-word-for-it approach was used in two loan programs run by the Small Business Administration.Millions of Americans sought unemployment benefits during the height of the pandemic.Hiroko Masuike/The New York TimesThey were the Paycheck Protection Plan, in which the government guaranteed loans made by private lenders, and the Economic Injury Disaster Loan program, in which the government itself gave out loans and smaller advance grants that didn’t have to be repaid. In both, the government trusted businesses to self-certify that they met key requirements.Both the Labor Department and the Small Business Administration said they tried to screen those claims — and that they did reject billions of dollars’ worth of applications that didn’t make sense. But that wasn’t enough.In some cases, the programs missed schemes that were comically easy to spot: In one instance, 29 states paid unemployment benefits to the same person. In another, a Postal Service employee got $82,900 loan for a business called “U.S. Postal Services.” Another individual got 10 loans for 10 nonexistent bathroom-renovation businesses, using the email address of a burrito shop.In the Paycheck Protection Plan, private banks were supposed to help with the screening, since in theory they were dealing with customers they already knew. But that left out many small businesses, and the government allowed online lenders to enter the program. This year, University of Texas researchers found that some of those “fintech” lenders appeared less diligent about catching fraud.As the virus shuttered businesses and forced people out of work, Congress and federal agencies sent relief money into programs aimed at supporting the jobless and helping the economy stay afloat.Brittainy Newman/The New York TimesIn another case, a mother and daughter in Westchester County, N.Y., stand accused of turning fraud into a franchise — helping other people cook up fake businesses in order to get loans from the Economic Injury Disaster program.Andrea Ayers advised one client to tell the government she ran a baking business from home, although she was not a baker, prosecutors said.“You bake,” Ms. Ayers texted to the client, adding four laugh-crying emojis, according to charging documents.“Lol,” the client wrote back.The scheme was designed, prosecutors said, to take advantage of the Small Business Administration’s advance grant program, which provided applicants up to $10,000 up front while the agency decided whether to award an a larger loan. Even if the loan was rejected, in many cases the applicant could still keep the grant.Prosecutors said that Ms. Ayers’s daughter, Alicia Ayers, texted another client that the small size of the grants meant they were unlikely to be punished: “10k is not enough for jail time lol.”The government charged both Ayerses with wire fraud. They have pleaded not guilty. Their lawyers did not respond to requests for comment.In some corners of the internet, schemes to defraud were discussed in chat rooms and YouTube videos, where scammers offered to help for a cut of the proceeds. Some used the money on necessities, like mortgage bills or car payments. But many seemed to act out of opportunism and greed, splurging on a yacht, a mansion, a $38,000 Rolex or a $57,000 Pokemon trading card.Vinath Oudomsine bought a $57,000 Pokemon card after receiving a pandemic loan from the Small Business Administration for a nonexistent business.U.S. Attorney’s Office for the Southern District of GeorgiaVinath Oudomsine bought the Pokemon card in January 2021, after receiving a loan from the Small Business Administration for a nonexistent business. He pleaded guilty to defrauding the loan program in October 2021, leaving the U.S. government responsible for selling the card.Pandemic fraud became such an open secret that it ceased to be much of a secret at all. In September 2020, a California rapper named Fontrell Antonio Baines, who performs as Nuke Bizzle, posted a music video on YouTube, bragging in detail about how he’d gotten rich by submitting false unemployment claims. His song was called “EDD,” after California’s Employment Development Department, which paid the benefits.“I just seen 30 cards land in one day. Got straight on the phone and activate,” Mr. Baines rapped in the song, flashing cash and envelopes with preloaded debit cards from the state.“Unemployment so sweet,” Mr. Baines said.All three of those programs are now over. There is no official estimate for the amount of money that was stolen from them — or from pandemic-relief programs in general. The Justice Department has charged people with about $1 billion in fraud so far, and is investigating other cases involving $6 billion more, investigators said.But other reports have suggested the real number could be much higher. One official said the total of “improper” unemployment payments could be more than $163 billion, as first reported by The Washington Post. In the Economic Injury Disaster Loan program, a watchdog found that $58 billion had been paid to companies that shared the same addresses, phone numbers, bank accounts or other data as other applicants — a sign of potential fraud.“It’s clear there’s tens of billions in fraud,” said Michael Horowitz, the chairman of the Pandemic Response Accountability Committee, which includes 21 agency inspectors general working on fraud cases. “Would it surprise me if it exceeded $100 billion? No.”The effort to catch fraudsters began as soon as the money started flowing, and the first person was charged with benefit fraud in May 2020. But investigators were quickly deluged with tips at a scale they’d never dealt with before. The Small Business Administration’s fraud hotline — which had previously received 800 calls a year — got 148,000 in the first year of the pandemic. The Small Business Administration sent its inspector general two million loan applications to check for potential identity theft. At the Department of Labor, the inspector general’s office has 39,000 cases of suspected unemployment fraud, a 1,000 percent increase from prepandemic levels.But prosecutors face a key disadvantage: While fraud takes minutes, investigations take months and prosecutions take even longer.Mr. Baines, who detailed his jobless benefit scheme on YouTube, was arrested in September 2020, when Las Vegas police found other people’s unemployment-benefit cards in his car. Mr. Baines pleaded guilty to mail fraud last month. His attorneys declined to comment.Fontrell Antonio Baines, a rapper who performs as Nuke Bizzle, posted a video in which he bragged about getting rich by submitting false unemployment claims.Nuke Bizzle, via YouTubeHannibal Ware, the Small Business Administration inspector general, said his office has tried to focus on cases involving large thefts, career criminals or ringleaders who organized a fraud operation.“Only about 50 working field agents, right? So how do I take one of my agents off of a $20 million case to work a $10,000 case?” said Mr. Ware, who is known as Mike. “Because they will tell me, ‘Mike, the work is the same.’”That has allowed many individuals who took advantage of government programs to go unpunished. Despite ample evidence of people fraudulently obtaining $10,000 advance grants, Mr. Ware’s office has not sought charges for cases involving only a single grant, falsely obtained. It would cost more than $10,000 just to investigate each one.In all, that program awarded 3.9 million loans totaling about $389 billion, on top of $27 billion in grants that did not have to be repaid, according to the Small Business Administration. Many of the allegations of fraud in the grants program date to the first weeks of the pandemic, when the government gave out 5.8 million advance grants worth $19.7 billion in just over 100 days. In that program, fraud was easy to pull off, according to a government watchdog, which cited numerous loans given to businesses that were ineligible for funding.Mr. Ware said that he recently limited his agents to working 10 cases at a time, telling them, “You’re killing yourself. I have to protect you from you.”In some cases, lawyers for those charged with committing pandemic fraud have sought to argue that their clients should be judged less harshly for stealing because the government made it so easy.The government “was handing out money with no checks and a lot of people took advantage of that,” Ashwin J. Ram, an attorney for convicted fraudster Richard Ayvazyan, told The New York Times in November.“It’s a honey trap,” he added. “Richard Ayvazyan fell into that trap.” Mr. Ayvazyan was sentenced to 17 years in prison for participating in a ring that sought $20 million in fraudulent loans.Richard Ayvazyan was convicted in a scheme to steal $20 million in Covid-19 relief funds.Gary Coronado/Los Angeles Times, via Getty ImagesIn the case of Mr. Oudomsine, the Pokemon card purchaser, his lawyers argued in March that a judge should be lenient in deciding his sentence because the fraud had taken hardly any time at all.“It is an event without significant planning, of limited duration,” said lawyer Brian Jarrard, who was Mr. Oudomsine’s attorney at the time.That didn’t work.U.S. District Judge Dudley H. Bowen Jr. sentenced Mr. Oudomsine to three years in prison, more than prosecutors had asked for, to “demonstrate to the world that this is the consequence” of fraud, according to a transcript of the sentencing.Now, Mr. Oudomsine is appealing, with a new lawyer and a new argument. Deterrence, the new lawyer argues, is moot here because the pandemic-relief programs are over.“There’s no way to deter someone from doing it, when there’s no way they can do it any longer,” said David Rafus, Mr. Oudomsine’s new lawyer.Biden administration officials say they’re trying to prepare for the next disaster, seeking to build a system that would quickly check applications for signs of identity theft.“Criminal syndicates are going to look for weak links at moments of crisis to attack us,” said Gene Sperling, the White House coordinator for pandemic aid. He said the White House now aims to build an ongoing system that would detect identity theft quickly in applications for aid: “The right time to start building a stronger system to prevent identity theft is now, not in the middle of the next serious crisis.”In the meantime, the arrests go on.Last week, prosecutors charged a correctional officer at a federal prison in Atlanta with defrauding the Paycheck Protection Program, saying she had received two loans totaling $38,200 in 2020 and 2021. The officer, Harrescia Hopkins, has pleaded not guilty. Her attorney did not respond to a request for comment.“You can’t have a system where crime pays,” said Mr. Horowitz, of the federal Pandemic Response Accountability Committee. “It undercuts the entire system of justice. It undercuts people’s faith in these programs, in their government. You can’t have that.”Seamus Hughes contributed reporting. More

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    Falling Oil Prices Defy Predictions. But What About the Next Chapter?

    Oil is under $90 a barrel, and consumers are benefiting. Geopolitics, the economy and unforeseen events will determine whether the relief will last.When Russia invaded Ukraine last spring, energy experts were predicting that oil prices could reach $200 a barrel, a price that would send the costs of shipping and transportation into the stratosphere and bring the global economy to its knees.Now oil prices are lower than they were when the war began, having dropped more than 30 percent in barely two months. On Monday, news of a slowing Chinese economy and a cut in Chinese interest rates sent prices down further, to less than $90 a barrel for the American benchmark.Gasoline prices have fallen every day over the last nine weeks, to an average of less than $4 nationwide, and prices of jet fuel and diesel are easing as well. That should translate eventually to lower prices for things as diverse as food and airline tickets.But it would be premature to celebrate. Energy prices can spike as easily as they can plummet, unexpectedly and suddenly.China, where Covid-19 lockdowns remain widespread, will eventually reopen its cities to more commerce and traffic, increasing demand. Withdrawals of oil from the U.S. Strategic Petroleum Reserve will end in November, and it will need to be refilled. And a single unexpected event — say, a hurricane flooding the Houston Ship Channel and taking several Gulf of Mexico refineries out of commission for weeks or even months — could send fuel prices soaring.That sort of catastrophe could send tidal waves though the American and even global economy since energy prices are fundamental to the prices of everything that is shipped and produced, whether it be grain or building supplies.Down from recent peaks, oil prices remain highPrice of West Texas Intermediate crude oil

    Source: FactSetBy The New York Times“Oil prices always have the capacity to surprise,” said Daniel Yergin, the energy historian and author of “The New Map: Energy, Climate and the Clash of Nations.” Prices could ease further if Iran agrees to a new draft nuclear agreement after it backed off from its demand that the Islamic Revolutionary Guards be removed from the U.S. terrorism list, opening a potential spigot of at least one million more barrels a day of Iranian petroleum exports.In addition, the prospect of a continuing increase in interest rates has many investors and economists predicting a recession — and a reduction in demand — even though unemployment is low and profits remain resilient.Understand the Decline in U.S. Gas PricesCard 1 of 5Understand the Decline in U.S. Gas PricesGas prices are falling. More

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    Goldman sees a 'feasible but difficult path' for the Fed to defeat inflation without a recession

    The Fed’s path to bringing down inflation while keeping the economy from a downturn is still open but getting narrower, according to Goldman Sachs.
    The biggest problem remains stubbornly high inflation, against which the Fed has “shown little convincing progress so far,” the firm said.
    Former New York Fed President Bill Dudley said he thinks the central bank will have to raise interest rates more than the market thinks.

    Construction workers outside the Marriner S. Eccles Federal Reserve Building, photographed on Wednesday, July 27, 2022 in Washington, DC.
    Kent Nishimura | Los Angeles Times | Getty Images

    The Federal Reserve’s path to bringing down runaway inflation while keeping the economy from slipping into a major downturn is still open but is getting narrower, according to Goldman Sachs.
    As the central bank looks to keep raising interest rates, the economy is teeming with mixed signals: rapidly rising payroll figures against sharply declining housing numbers, falling gasoline prices vs. surging shelter and food costs, and low consumer sentiment against steady spending numbers.

    Amid it all, the Fed is trying to strike a balance between slowing things down, but not by too much.
    On that score, Goldman economists think there have been clear wins, some losses and a landscape ahead that poses substantial challenges.
    “Our broad conclusion is that there is a feasible but difficult path to a soft landing, though several factors beyond the Fed’s control can ease or complicate that path and raise or lower the odds of success,” Goldman economist David Mericle said in a client note Sunday.

    Slow growth, high inflation

    One of the biggest inflation drivers has been outsized growth that has created imbalances between supply and demand. The Fed is using interest rate increases to try to damp down demand so supply can catch up, and supply chain pressures, as measured by a New York Fed index, are at their lowest since January 2021.
    So on that score, Mericle said the Fed’s efforts have “gone well.” He said the rate increases — totaling 2.25 percentage points since March — have “achieved a much-need deceleration” regarding growth and specifically demand.

    In fact, Goldman expects GDP to grow at just a 1% pace over the next four quarters, and that’s coming off consecutive declines of 1.6% and 0.9%. Though most economists expect that the National Bureau of Economic Research will not declare the U.S. in recession for the first half of the year, the slow-growth path makes the Fed’s balancing act more difficult.
    On a similar count, Mericle said the Fed’s moves have helped narrow the supply-demand gap in the labor market, where there are still nearly two job openings for every available worker. That effort “has a long way to go,” he wrote.
    However, the biggest problem remains stubbornly high inflation.
    The consumer price index was flat in July but still rose 8.5% from a year ago. Wages are surging at a strong clip, with average hourly earnings up 5.2% from a year ago. Consequently, the Fed’s efforts to halt a spiral in which higher prices feed higher wages and perpetuate inflation have “shown little convincing progress so far,” Mericle said.
    “The bad news is that high inflation is broad-based, measures of the underlying trend are elevated, and business inflation expectations and pricing intentions remain high,” he added.

    Doubts about the Fed’s policy path

    Fighting inflation might require higher rate hikes than the market currently anticipates.
    Goldman’s projection is that the Fed raises benchmark rates by another percentage point before the end of the year, but Mericle acknowledged that there is “upside risk” due to “the recent easing in financial conditions, the robust pace of hiring, and signs of stickiness in wage growth and inflation.”
    Indeed, former New York Fed President William Dudley said Monday he thinks the market is underestimating the future path of rate hikes and, consequently, the risks of a hard landing or recession.

    “The market is misunderstanding what the Fed is up to,” he told CNBC’s “Squawk Box” in a live interview. “I think the Fed is going to be higher for longer than what market participants understand at this point.”
    In Dudley’s view, the Fed will keep hiking until it is sure inflation is heading back to the central bank’s 2% target. Even by the most generous inflation measure, the core personal consumption expenditures price index that the Fed follows, inflation is still running at 4.8%.
    “The labor market is much tighter than the Fed wants. The wage inflation rate is too high, not consistent with 2% inflation,” he added.
    Dudley expects the rates to keep going up until the employment dynamic has shifted enough to get the unemployment rate “well above 4%,” compared to its current level of 3.5%.
    “Whenever the unemployment rate has risen by a half percentage point or more, the result has been full-blown recession,” he said.
    One measure of the relationship between unemployment and a recession is called the Sahm Rule, which states that recessions do follow when the three-month average of unemployment rises half a percentage point above its lowest over the previous 12 months.
    So that would only require a rate of 4% under the Sahm Rule. In their most recent economic projections, members of the rate-setting Federal Open Market Committee don’t see the jobless level breaking that rate until 2024.

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    If the Job Market Is So Good, Why Is Gig Work Thriving?

    Conventional employment opportunities abound, but online platforms still have appeal — for flexibility or additional income.American workers are experiencing, by many measures, one of the best job markets ever. The unemployment rate has matched a 53-year low. Job listings per available worker are at historic highs. Wages, while not quite keeping up with inflation, are rising at their fastest pace in decades.So why would people keep doing gig work, a notoriously difficult and insecure way to make a living?Online platforms like Uber and Lyft say the number of people providing services on their networks is rebounding steadily after a sharp decline early in the pandemic, while businesses like hotels and restaurants are breaking work into hour-by-hour increments available on demand.Picking up shifts offers something that traditional permanent employment still generally doesn’t: the ability to work when and as much as you want, demand permitting, which is often essential to balance life obligations like school or child care.And lately, inflation has provided an extra incentive. As the cost of rent and food soars, gig work can supplement primary jobs that don’t provide enough to live on or are otherwise unsatisfying.Lexi Gervis, an executive at a financial management app called Steady, said that users’ data showed that more people were involved in gig work — and that the average gig income per worker grew — from the start of the pandemic through this summer.“We were seeing this move towards multiple income streams, because that work was picked up as a stopgap and then continued,” Dr. Gervis said.Take Denae Bettis, a 23-year-old Steady user living in Severn, Md. After dropping out of college, she got a job at UPS, and after a few years rose to become a safety supervisor, usually starting at 4 a.m. During the pandemic, she took on more responsibilities.“The job got really stressful, and I felt like I had no way out,” Ms. Bettis said. So in June 2020, she started a side gig through Instacart, shopping for people holed up at home. The next month, she quit her job, making it easier for her to pursue her passion: working as a personal makeup artist, which often requires taking early-morning appointments.Surviving on income from gigs — which for Ms. Bettis now include DoorDash as well as Instacart — isn’t easy. But Ms. Bettis thinks she can save enough money to open her own storefront.“We just went through a period where millions died, so are you going to spend your time at your job if it doesn’t fulfill you?” Ms. Bettis said, summing up gig work’s appeal. “Everybody loves stability, but if the flexibility isn’t there, I don’t think a lot of people are going to go back.”The State of Jobs in the United StatesEmployment gains in July, which far surpassed expectations, show that the labor market is not slowing despite efforts by the Federal Reserve to cool the economy.July Jobs Report: U.S. employers added 528,000 jobs in the seventh month of the year. The unemployment rate was 3.5 percent, down from 3.6 percent in June.Care Worker Shortages: A lack of child care and elder care options is forcing some women to limit their hours or has sidelined them altogether, hurting their career prospects.Downsides of a Hot Market: Students are forgoing degrees in favor of the attractive positions offered by employers desperate to hire. That could come back to haunt them.Slowing Down: Economists and policymakers are beginning to argue that what the economy needs right now is less hiring and less wage growth. Here’s why.Labor advocates have long been concerned about businesses that depend on independent contractors, since those workers aren’t entitled to the rights and benefits that come with employee status, like employer contributions to payroll taxes and unemployment insurance. But while the model has gained traction, it has been difficult to pin down how fast the ranks of gig workers are growing.The most accurate measure is Internal Revenue Service data on 1099 tax forms — the freelancers’ counterpart to the W-2 forms filed for employees — but that is available only to select researchers and released with a lag of several years. At last count, in 2018, a team of economists found that about 1.2 percent of workers with any earnings had at least some income from online platform work. (A Pew survey from 2021 found that the share of all adults with gig income in a 12-month period was about 9 percent.)The closest government metric that is more timely comes from the Bureau of Labor Statistics, which asks people whether they count themselves as self-employed. That number rose significantly as a share of the labor force from early 2020 to early this year. But it generally captures people for whom self-employment is the main source of income — which, for most gig workers, it isn’t. More likely, the bump represents an increase in the number of people working as home improvement contractors and owner-operator truck drivers — two longtime means of self-employment that surged during the pandemic — and some white-collar freelancers.Less comprehensive but more specific data comes from third-party platforms like Steady, which allows nearly six million workers to track their often-variable sources of income and posts incentives from gig platforms to try working for them. From February 2020 to June 2022, Steady recorded a 31 percent increase in the share of workers on the app with 1099 income. More of those were women than men, with particular growth among single mothers. Freelance income per gig worker increased 13 percent.Ms. Bettis hopes that doing deliveries will allow her to save enough money to open her own storefront.Rosem Morton for The New York TimesAt the same time, the lines between gig work and traditional employment are blurring.Staffing agencies have long supplied temporary workers for industries like warehousing and light manufacturing, where they would have to show up at a certain time on certain days until the business no longer needed the extra labor. Now, some agencies also offer one-off, no-commitment shifts in workplaces that rarely used temp labor before, like restaurants, hotels and retailers.Under this approach, while offering the flexibility of gig work, the staffing agencies usually serve as the employer and administer benefits. Workers are paid as W-2 employees, not independent contractors, which means that they’re still protected by federal labor laws and elements of the social safety net, including workers’ compensation in the event of an injury.Snagajob, an hourly work platform, says that those shifts tripled from 2020 to 2021, and that they will probably quintuple in 2022 — mostly as side income because people’s regular jobs weren’t sufficient.“I think if they were getting the ultimate flexibility and all the compensation they wanted from their full-time employer, there’s probably less of a need for shifts,” said Snagajob’s chief executive, Mathieu Stevenson. “But the reality is, at the overwhelming majority of businesses, you can’t offer as much flexibility. So this is a way to say, ‘If you do want to add an extra $150 because you need it, whether because you want to do something special with your family or you need to pay the light bill, this is an avenue.’”More so than online gig jobs, it can also be a springboard to other opportunities.It worked for Silvia Valladares, 24, who started picking up Snagajob shifts a few years ago to support herself as a college student studying fine arts in Richmond, Va., the company’s initial market. Dishwashing and catering at different places allowed her to fit work in between her classes. But while working at an event venue called Dover Hall, she took a shine to hospitality, and decided to make that her career.“I got to know the regular staff and the management, and they got to know me,” Ms. Valladares said. “Eventually I asked if I could just work here, and they just put me on the regular staff.” Now, as bed-and-breakfast director, she’s the one posting gigs on Snagajob — which lately have been filling quickly.Worker advocates say allowing many competing employers to post last-minute shifts through an intermediary is probably a better model than a world of platforms that change rates at will and lack many of the legal obligations that employers must meet. But they say it still leaves workers on the margins of the labor market. Research on labor outsourcing has generally shown that temp workers are compensated less generously than co-workers who are hired directly.“You can look at it and say, ‘This is great, people need jobs, these companies can do the matching, it’s a win-win,’” said Daniel Schneider, a professor of public policy at Harvard’s Kennedy School of Government who has studied low-wage work. “The broader context is that it’s really not. It’s just a way for companies to shift costs and avoid economic responsibility.”And while gig work has retained and even enhanced its appeal through the pandemic and recovery, it is not clear what will happen if the economy tips into recession and the number of conventional jobs starts to shrink.Gig companies say it will bolster their labor supply, as the hardship caused by rising prices has. Uber said on its second-quarter earnings call that for 70 percent of its new drivers, the cost of living influenced their decision to join. “There’s no question that this operating environment is stronger for us,” said Dara Khosrowshahi, the chief executive.But in an economic downturn, an increase in worker availability for online platforms could coincide with a fall in demand. If customers reduce delivery orders and take fewer cab rides, it would be harder for those who depend on the apps to make a living.That worries Willy Solis, a driver for the Target-owned delivery service Shipt in the Dallas area who has been an organizer for better conditions.“When people are desperate for work, that’s usually what they want to do, is find something that’s easily obtainable,” he said. But what is good for the gig-work companies may not be good for the workers, he added. “Whenever they do hiring sprees,” he said, “we see an influx in gig work and a decrease in the amount of work that’s available to us.” More