Evelyn Reynolds

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    As the Fed Raises Rates, Worries Grow About Corporate Bonds

    Executives, analysts and bond traders are all wondering if corporate finance is about to unravel as interest rates rise.As the Federal Reserve raises interest rates in an effort to tame inflation, the corporate bond market, which lends money to many companies, has been hammered particularly hard.The steep rise in interest rates has caused bond values to tumble: From October 2021 to October 2022, an index that tracks investment-grade corporate bonds is down by roughly 20 percent. By some measures, overall bond market losses have been worse than at any time since 1926.Even the price of bonds issued by the highest-rated corporations have cratered this year.The ICE BofA US Corporate Index, which tracks the performance of U.S. dollar denominated investment grade rated U.S. corporate debt, has severely declined.

    Source: Federal Reserve Bank of St. LouisBy The New York TimesThe yield on bonds issued by solid businesses is now about 6 percent, about twice as much as it was a year ago. That number indicates how high of an interest rate rock-solid corporations would have to pay to borrow more money right now; rates are even higher for smaller businesses or those that investors consider risky.Corporate bankruptcies and defaults remain low by historical standards, but a growing number of companies are struggling financially. Businesses in industries like retail, manufacturing and real estate are especially vulnerable because their sales are weak or falling. In many cases, their customers have also been hurt by higher interest rates because the higher borrowing costs have effectively raised the costs of big-tickets items like homes and cars.Until recently, for example, Carvana was a fast growing used car retailer with a soaring stock. The number of cars the company sold fell 8 percent in the third quarter, and its spending on interest payments tripled compared with the same period a year earlier. The interest rate on a big chunk of its debt issued this year that matures in 2030 is 10.25 percent. Its bonds are trading at less than 50 cents to the dollar, suggesting that investors would require Carvana to pay an interest rate of nearly 30 percent if it were to borrow more money for the same amount of time. The company’s stock is down more than 90 percent over the last year.“There’s certainly a lot of headwinds,” Ernest Garcia III, Carvana’s chief executive, said on a conference call with analysts last week. “Recently, we’ve seen car prices depreciate to the tune of give or take 10 percent so far this year, but we’ve also seen interest rates shoot up very rapidly and I think that overall has harmed affordability,” he added, even as he expressed optimism about the company’s ability to weather the financial storm.Carvana, Co. has paid more in interest payments in the last quarter compared to last year and sold fewer cars.Joe Raedle/Getty ImagesBefore rates jumped, companies borrowed a ton of money last year, with lower-rated firms selling more new bonds in 2021 than in any other year. But that flow has turned into a trickle as interest rates have risen and investors have grown more discerning about whom they lend money to. Banks are still making more commercial and industrial loans, but they are also becoming more discerning and are charging higher interest rates.Most investors, executives and economists expect a recession or anemic growth next year, which could make doing business, borrowing money and paying off loans even more difficult.What the Fed’s Rate Increases Mean for YouCard 1 of 4A toll on borrowers. More

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    Price of Diesel, Which Powers the Economy, Is Still Climbing

    Russia’s invasion of Ukraine is one reason that the fuel is scarce. Another is a series of yearslong, intertwined events that cover the globe.HOUSTON — Gasoline prices have dropped as much as a dollar a gallon since early summer, easing a financial strain on many people. But the price of diesel, the fuel that moves trucks, trains, barges, tractors and construction equipment, has remained stubbornly high, helping to prop up the prices of many goods and services.On Wednesday, a gallon of diesel fuel in the United States cost $5.357 on average, according to AAA. That was down from a record of $5.816 in June but well above the $3.642 it cost a year ago. (A gallon of regular gasoline now averages $3.805.)The surge in diesel costs has not garnered the attention from politicians and the public that the jump in gasoline prices did, because most of the cars in the United States run on gas. But diesel prices are a critical source of pain for the economy because they affect the cost of practically every product.“The economic impact is insidious because everything moves across the country powered by diesel,” said Tom Kloza, the global head of energy analysis at the Oil Price Information Service. “It’s an inflation accelerant, and the consumer ultimately has to pay for it.”Sherri Garner Brumbaugh, the president of Garner Trucking in Findlay, Ohio, said the weekly cost of fueling one of her heavy-duty trucks in September was $1,300, more than double the $600 she paid two years earlier. “A good portion gets passed onto my customers with a fuel surcharge,” she said.Both gasoline and diesel prices are tied to the price of oil, which is set on the global market. The price of each fuel immediately shot up after Russia invaded Ukraine in February. But their paths have diverged sharply. Over the last year, the cost of diesel has ballooned by over 40 percent, compared with 11 percent for gasoline.Diesel prices are high because the fuel is scarce worldwide, including in the United States, which in recent years became a net exporter of oil and petroleum products. Oil analysts said there were simply not enough refineries to meet the demand for diesel, especially after Russia’s energy exports fell when the United States, Britain and some other countries stopped buying them.Diesel inventories are always a bit low in the spring and fall, during agricultural planting and harvesting seasons, but this fall supplies are at their lowest level since 1982, when the government began reporting data on the fuel.The tightest market is in the Northeast, where oil refineries have closed in recent years and where the diesel crunch is complicated by winter demand for heating oil. The two fuels are virtually the same but are taxed differently. An especially cold winter could make the situation worse by increasing the demand for heating oil.In Massachusetts, for example, diesel is selling for more than $5.90 a gallon (about $2.33 more than it did a year earlier). In Texas, it costs $4.73 a gallon.Trucks, trains, barges, tractors and construction equipment all use diesel, and its price affects the cost of practically every product.Jim Watson/Agence France-Presse — Getty ImagesWhile Russia’s war in Ukraine sent diesel prices soaring, the current situation is partly the result of an interconnected, slow-building series of events that extends across the globe. Some analysts trace the roots of the U.S. diesel shortage to a fire at Philadelphia Energy Solutions in 2019, which forced the refinery to shut down, taking out one of the Northeast’s important diesel producers.But refineries have been closing elsewhere. Over the last several years, 5 percent of U.S. refinery capacity, and 6 percent of European refinery capacity, has been shut down. A few refineries closed or scaled back because of the collapse in energy demand in the early months of the coronavirus pandemic. Some older refineries were shut down because they were inefficient and their profits weren’t large enough for Wall Street investors. Other refineries were closed so that their owners could convert them to produce biofuels, which are made from plants, waste and other organic material.“Because we shut those refineries down, we don’t have enough capacity,” said Sarah Emerson, the president of ESAI Energy, a consulting firm.As much of the global economy recovered in 2021 and 2022, demand for diesel climbed quickly. But then, after Russia invaded Ukraine, the Biden administration banned Russian oil and petroleum imports, which amounted to 700,000 barrels of diesel and other fuels a day, much of it intended for the Northeast.Diesel prices have also soared so much higher than the cost of gasoline in part because of a decision by the International Maritime Organization several years ago to require most oceangoing ships to replace their high-sulfur bunker fuel with less polluting fuels starting in 2020. That has slowly increased demand for diesel over the last two years.“A substantial amount of diesel is needed in the new bunker blends, and that is a hidden demand for diesel molecules,” said Richard Joswick, the head of global oil analysis for S&P Global Platts. He estimated that the global shipping fleet was now consuming half a million barrels of diesel a day, or roughly 2 percent of the world’s supplies.At the same time, while American refiners are now making tidy profits, 30 percent of their production is being exported. Latin America has become a particularly profitable market, as American diesel replaces fuel from Venezuela, where the state-controlled oil sector has been hobbled by corruption, mismanagement and U.S. sanctions. Some American diesel also goes to Europe.The impact of exports on domestic prices has led some analysts to speculate that the Biden administration could eventually restrict exports to boost supplies at home. But energy experts said that might not have the desired effect because diesel had become a globally traded commodity. Denying Latin America fuel could also backfire because many countries in the region sell crude oil to the United States.“We have a symbiotic relationship with Latin America on diesel and crude,” said Ms. Emerson of ESAI Energy. “We can disrupt that, but it doesn’t immediately fix the problem.”The global diesel shortage was also exacerbated by labor strikes at French refineries this fall. And utilities in Europe have been stockpiling diesel in case they cannot find enough natural gas to fuel their power plants.Russian diesel has continued to flow to Europe since the war began, but stricter sanctions that the European Union plans to impose on Russia in February could potentially cause havoc to the diesel business of traders, banks, insurance companies and shippers.Still, some energy experts said prices could soon begin to ease.Help may be on the way from an unlikely source: China. In recent months, China has been loosening export controls on diesel. Its exports rose from 200,000 barrels a day in August to 430,000 barrels a day in September, and the country has the capacity to sell even more, according to estimates by ESAI Energy.Nearly a third of Chinese diesel exports went to the Netherlands in recent months, taking some pressure off the European market. And oil refineries being built in Kuwait and China could come online as early as next year, further increasing supply.Demand for diesel and its price could also fall if much of the world slides into a recession next year, as some economists and policymakers are expecting.“A deep recession would certainly cut into diesel demand,” said Mr. Joswick of S&P Global Platts. “We don’t forecast a recession, but that is certainly a possibility.” More

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    Tech’s Talent Wars Have Come Back to Bite It

    Hiring the best, the brightest and the highest number of employees was a badge of honor at tech companies. Not anymore as layoffs surge.When Stripe, a payments start-up valued at $74 billion, laid off more than 1,000 employees this month, its co-founders blamed themselves. “We overhired for the world we’re in,” they wrote. “We were much too optimistic.”After Elon Musk, Twitter’s new owner, slashed the company’s staffing in half last week, Jack Dorsey, a founder and former chief executive of the social media service, claimed responsibility. “I grew the company size too quickly,” he wrote on Twitter.And on Wednesday, when Meta, the parent company of Facebook and Instagram, shed 11,000 people, or about 13 percent of its work force, Mark Zuckerberg, the chief executive, blamed overzealous expansion. “I made the decision to significantly increase our investments,” he wrote in a letter to employees. “Unfortunately, this did not play out the way I expected.”The chorus of conceding by tech executives that they hired too many people is ricocheting across Silicon Valley as the industry rushes to make cuts, blaming a worsening economy.But at least part of the surge in layoffs was self-inflicted. When the companies enjoyed soaring profits and a belief that the pandemic-fueled boom times would keep going, they aggressively expanded by hoarding the most fought-over and expensive resource in the software business: talent.Silicon Valley tech companies have long seen hiring as more than just filling openings. The industry’s fierce talent wars showed that companies like Google and Meta were gaining the best and brightest. Ballooning staffs and a long reign atop lists of the most-desired jobs for college graduates were emblems of growth, deep pockets and prestige. And to employees, the work became something larger — it was an identity.The Austin, Texas, campus of Google, a veteran of the tech industry’s hiring wars.Brandon Thibodeaux for The New York TimesThis mentality became ingrained at the largest tech companies, which offer numerous perks on lavish corporate campuses that rival universities. It was echoed by smaller start-ups, which dangle a chance at life-changing wealth in the form of stock options.Now these practices are giving the tech industry indigestion.“When times are flush, you get excesses, and excesses lead to overhiring and optimism,” said Josh Wolfe, an investor at Lux Capital. “For the past 10 years, the abundance of cash led to an abundance of hiring.”More than 100,000 tech workers have lost their jobs this year, according to Layoffs.fyi, a site that tracks layoffs. The cuts range from well-known publicly traded companies like Meta, Salesforce, Booking.com and Lyft to highly valued private start-ups such as the Gopuff delivery service and the Chime and Brex financial platforms.More on Big TechMeta Layoffs: The parent of Facebook said it was laying off more than 11,000 people, or about 13 percent of its work force, in what amounted to the company’s most significant job cuts.Seeking Alternatives: Since Elon Musk bought Twitter, some of its users have sought out other social media platforms. Here is a closer look at Mastodon, one of the most popular alternatives.An Empire in Danger: U.S. lawmakers’ objections to an obscure Chinese semiconductor company and tough Covid-19 restrictions are hurting Apple’s ability to make new iPhones in China.Big Tech’s Slowdown: Amid inflation and rising interest rates, Silicon Valley’s most powerful companies are signaling that tough days may be ahead. Some have already announced hiring freezes and job cuts.Many of the job losses have taken place in tech’s most experimental areas. Astra, a rocket company, cut 16 percent of its staff this week after tripling its head count last year. In the cryptocurrency industry, which has suffered a meltdown this year, high-value companies including Crypto.com, Blockchain.com, OpenSea and Dapper Labs have cut hundreds of workers in recent months.Tech leaders were too slow to react to signs of an economic slowdown that emerged this spring, after many of the companies had already been on hiring sprees for several years, tech analysts said.Meta, whose valuation soared past $1 trillion, doubled its staff to 87,314 people over the past three years. Robinhood, the stock trading app, expanded its work force nearly sixfold in 2020 and 2021.“They’ve charged ahead with these plans that are no longer based on reality,” said Caitlyn Metteer, director of recruiting at Lever, a provider of recruiting software.For many, it’s a moment of shock. “Are we in a bubble” panics in the tech industry over the last decade have always been short-lived, followed by a rapid return to even frothier good times. Even those who predicted that pandemic behaviors enabled by the likes of Zoom, Peloton, Netflix and Shopify would ebb now say they underestimated the extent.Many believe this downturn will last longer because of the macroeconomic factors that created it. For the past decade, low interest rates pushed investors into riskier assets that offered higher returns. Those investors valued fast growth over profits and rewarded companies that took big risks.Jack Dorsey wrote on Twitter, which he helped start, that he had expanded the company too quickly.Marco Bello/Agence France-Presse — Getty ImagesIn recent years, tech companies responded to the flood of cash from investors and a rapidly growing business by pouring money into expansion via sales and marketing, hiring, acquisitions and experimental projects. The excess capital encouraged companies to staff up, adding fuel to the war for talent.“The pressure is to just spend the money quick enough so you can grow fast enough to justify the kinds of investments V.C.s want to make,” said Eric Rachlin, an entrepreneur who co-founded Body Labs, an artificial intelligence software company that Amazon bought.Expanding head count was also a way for managers to advance their careers. “Getting more people on the team is easier than telling everyone to just work super hard,” Mr. Rachlin said.That led the tech industry to gain a reputation for corporate bloat. Rumors often circulated of highly compensated workers who clocked just a few hours of work a day or juggled multiple remote jobs at once, alongside elaborate office perks like free laundry, massages and renowned cafeteria chefs. This spring, Meta scaled back its perks, including laundry service.In the past, tech workers could quickly change jobs or land on their feet if they were cut because of the plethora of open positions, but “I don’t think we know yet if everyone in this wave of layoffs will be able to do that,” Mr. Rachlin said.Some people see a chance to help those entering a difficult job market for the first time. Stephen Courson recently left a career in sales and strategy at Gartner, the research and consulting firm, and Salesforce to create financial content. He initially planned to focus on time management, but after many of his friends went through painful layoffs he began working on a course that helps people prepare for job interviews. It’s a skill that many of today’s job hunters never had to hone in flush times.“This isn’t going to get better quickly,” he said.Amid the drumbeat of layoff announcements, investors see an opportunity. They are quick to point out that well-known successes of the last decade — companies like Airbnb, Uber, Dropbox — were created in the aftermath of the Great Recession.This week, Day One Ventures, a venture capital firm, announced Funded Not Fired, a program that aims to invest $100,000 into 20 new start-ups where at least one founder was laid off from a tech company. Within 24 hours, hundreds of people had applied, said Masha Bucher, founder of the firm.“Some of the people are saying, ‘This is a sign I’ve been waiting for,’” she said. “It really gives people hope.”In the meantime, there may be more layoff announcements — delivered through the now standard form of a letter from the chief executive posted to a company blog.These letters have taken on a familiar format. The bosses explain the grim economic outlook, citing inflation, “energy shocks,” interest rates, “one of the most challenging real estate markets in 40 years” or “probable recession.” They take the blame for growing too fast. They offer up support to those affected — severance, visa help, health care, career guidance. They express sadness and thank everyone.And they reaffirm the company’s mission. More

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    Lucid Said It Will Raise Up to $1.5 Billion in Capital

    The electric carmaker made the announcement on the same day it reported losing $670 million in the third quarter.Lucid Group, an electric car company that has struggled to ramp up manufacturing, said on Tuesday that it had reached agreements to raise up to $1.5 billion, shoring up its financial position as it works to streamline and expand its production operations.The company said in a regulatory filing that it planned to sell up to $600 million in new shares through Bank of America, Barclay’s Capital and Citi. It also said it reached an agreement to sell up to $915 million in stock to the sovereign wealth fund of Saudi Arabia, which already owns a majority of Lucid’s stock.Shares of Lucid were down about 12 percent in after-hours trading on Tuesday following the disclosure of its plans in the securities filing. The company’s stock was trading at just under $12, down from more than $50 last November.Separately on Tuesday, Lucid said that it had lost $670 million in the third quarter, compared with a loss of $524 million in the same period a year earlier. The company said it had significantly increased production in the third quarter.Revenue rose significantly to $195.5 million, from $97.3 million in the second quarter and just $232,000 in the third quarter of 2021. It delivered 1,398 cars to customers in the third quarter, more than twice as many as in the second quarter.The fledgling company, based in Newark, Calif., said it produced 2,282 electric cars in the three months that ended in September, more than three times as many as it made in the previous three months. “We’ve made great strides in ramping up our production,” Lucid’s chief executive, Peter Rawlinson, said in an interview. “We are gradually improving things and there’s a real belief we are on the right track here.”He added that the automaker was on track to hit its revised target of making 6,000 to 7,000 cars this year.The company said it had taken reservations for 34,000 cars from individuals. Its only model, the Air sedan, has won accolades from car magazines and websites. The car can travel up to 520 miles on a full charge, more than any other electric vehicle on the market. The company said it would begin taking reservations for a second model, the Gravity sport-utility vehicle, early next year.But Lucid still faces a number of challenges, including increasing production and turning a profit. With the exception of Tesla, most recent automotive start-ups have struggled to mass produce their promising designs and create self-sustaining businesses. Lucid had $3.85 billion in cash and cash equivalents at the end of September.Saudi Arabia’s government has agreed to buy up to 100,000 cars from Lucid and the company is planning to build a manufacturing facility in that country. It currently makes cars at a factory in Arizona.This year investors have lost much of their enthusiasm for start-up carmakers, making it harder and more expensive for them to raise financing. Rivian, another electric car company, reports its third-quarter earnings on Wednesday. Rivian’s shares soared to as high as $180 after its initial public offering late last year, but have since fallen sharply. On Tuesday Rivian’s stock closed at under $32 a share. More

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    Herman Daly, 84, Who Challenged the Economic Gospel of Growth, Dies

    Perhaps the best-known ecological economist, he faulted his mainstream peers for failing to account for the environmental harm growth can bring.Herman Daly, who for more than 50 years argued that the economic gospel of growth as synonymous with prosperity and progress was fundamentally, and dangerously, flawed because it ignored its associated costs, especially the depletion of natural resources and the pollution it engenders, died on Oct. 28 in Richmond, Va. He was 84.The death, at a hospital, was caused by a brain hemorrhage, his daughter Karen Daly Junker said.Dr. Daly, an ecological economist, was almost surely his field’s chief popularizer through his more than a dozen books and many journal articles, his faculty positions at the University of Maryland and, earlier, Louisiana State University, and his somewhat incongruous six-year stint at the World Bank.Although he was branded a heretic for his theories — or, worse, ignored — among traditional economists, he had plenty of adherents, who saw him as prophetic for anticipating climate change’s increasingly harmful impact and the vast sums of money needed to address it.“His ideas are really relevant now, unlike most other economists, whose ideas tend to lose relevance as time passes and circumstances change,” Peter A. Victor, an ecological economist and the author of the 2021 biography “Herman Daly’s Economics for a Full Word,” said in a phone interview.One of Dr. Daly’s key principles was that growth is “uneconomic” when its costs outweigh its benefits. That idea was tied to another: Earth, once empty, is now full — of people and what they produce — and charting a more sustainable path requires the use of fewer natural resources and the making of less waste.“That’s not really hard to understand,” Dr. Daly said in a 2011 video interview with WWF Sweden. “I can explain that to my grandchildren.”Yet another foundational concept was that the economy does not exist apart from the Earth’s biosphere but within it, and that its scale is limited by its reliance on finite natural resources.Such propositions might seem simple, but arguing against economic growth, Dr. Daly wrote in a foreword to Mr. Victor’s book, was like poking “a big hornets’ nest with a short stick.”“It rudely upsets a very large and comfortable consensus,” he added.He urged politicians, governments and other economists to abandon the relentless pursuit of growth in favor of a so-called steady-state economy, which would achieve a stable balance between supporting human life and preserving the environment. He employed an aircraft metaphor to explain his preferred approach.“The failure of a growth economy to grow is a disaster,” he told The New York Times Magazine in a profile of him this year. “The success of a steady-state economy not to grow is not a disaster. It’s like the difference between an airplane and a helicopter. An airplane is designed for forward motion. If an airplane has to stand still, it’ll crash. A helicopter is designed to stand still, like a hummingbird.”He proposed replacing gross domestic product with metrics like an “index of sustainable economic welfare,” which would tally not just the value of goods and services produced but also the ecological harm done in the process. To him, “sustainable growth” was nonsensical; “sustainable development” was the goal.In an interview, Joshua Farley, an economist and co-author with Dr. Daly of “Ecological Economics: Principles and Applications” (2004), boiled his colleague’s animating philosophy down concisely: “More isn’t always better.”Dr. Daly’s economic beliefs were grounded in hard sciences like the laws of thermodynamics, but also in ethical ideals, like the fair distribution of wealth, and in his faith as a Methodist who saw the Earth as the handiwork of an almighty creator.Even as his theories gained currency in recent years, they remained outside economic thinking’s mainstream. He did not seem to mind.“My duty is to do the best I can and put out some ideas,” he said in The Times Magazine interview. “Whether the seed that I plant is going to grow is not up to me. It’s just up to me to plant it and water it.”Dr. Daly received the Right Livelihood Award, which is sometimes called an alternative Nobel Prize, in 1996.Eric Roxfelt/Associated PressHerman Edward Daly was born on July 2l, l938, in Houston to Edward Joseph Daly, who owned a service station in Beaumont, Texas, where the family lived at the time, and Mildred (Herrmann) Daly, a homemaker who had worked as a bookkeeper before marrying. The family later moved to Houston, where Ed Daly opened a hardware store.Shortly before Herman turned 8, he contracted polio, which rendered his left arm useless. After unsuccessful efforts to repair it over several years, he opted for amputation when he was about to enter high school.“As traumatic as this was, it stopped me from wasting my time hoping I would recover and saved me from using lots of energy going through treatment that would be of little or no benefit,” he wrote in a 2014 personal history. “This painful experience taught me to concentrate on what I am able to do and not waste energy on things that I can’t do.”After graduating from high school in 1956, he entered what was then known as the Rice Institute (now Rice University) in Houston. When the time came to declare a major, he chose economics because, he said, he felt it merged science and the humanities.“As he later discovered,” Dr. Victor wrote in his biography, “that turned out not to be true.”Dr. Daly earned his bachelor’s degree in 1960 and then enrolled in a doctorate program at Vanderbilt University with a focus on development in Latin America.Two people he met while at Vanderbilt would play major roles in his life.One, his original thesis adviser, the Romanian mathematician and economist Nicolas Georgescu-Roegen, helped lay the groundwork for what became ecological economics with his 1971 book “The Entropy Law and the Economic Process,” which argued that all natural resources are permanently degraded when used for economic activity.The other was Marcia Damasceno, a Brazilian college student whom he married in 1963. Along with his daughter Karen, she survives him, as do another daughter, Terri Daly Stewart; his sister, Denis Lynn (Daly) Heyck, professor emeritus of Spanish language and literature at Loyola University Chicago; and three grandchildren.By the time Dr. Daly received his doctorate from Vanderbilt in 1967, he was teaching at L.S.U. There, he began to focus more closely on the interconnections between the economy, the environment and ethics, with an emphasis on the steady-state principles articulated by the 19th-century British economist John Stuart Mill. Dr. Daly published his first book, “Toward a Steady-State Economy,” in 1973. Dr. Daly’s 1996 book “Beyond Growth: The Economics of Sustainable Development,” one of some 20 he wrote detailing his theories.He remained at L.S.U. until 1988, when, in an unlikely move, he joined the World Bank in Washington as a senior economist in the environment department. “It was a big surprise for me that the World Bank, whose basic policy was economic growth, offered me a job,” he wrote.While there, he developed his “three rules for sustainable development” and worked with others to try to change the bank’s system for measuring G.D.P. to reflect environmental costs. The efforts, he wrote, were “to little or no avail.” He moved to the University of Maryland’s School of Public Policy in 1994, taking emeritus status in 2010.Dr. Daly’s other notable books include “For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future” (1989), written with the theologian John B. Cobb Jr.John Fullerton, a former commercial banker who now leads the Capital Institute, a research organization based in Stonington, Conn., whose work is aligned with the book’s prescriptions, is among those who have been influenced by “For the Common Good.”In an interview, Mr. Fullerton said one of Dr. Daly’s most important contributions was his focus on “a pursuit of development that was not physical to achieve prosperity.” Another, he said, was to argue that traditional approaches to finance and economics “lead us off a cliff.”Kirsten Noyes contributed research. More

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    Consumer confidence is near its lowest in a decade, and that could be a problem for Biden

    Anxiety over the economy could prove costly to President Biden and his fellow Democrats.
    A separate University of Michigan survey found consumers worried about inflation and indicating they thought Republicans were the better choice to fix the economy.

    US President Joe Biden speaks during a DNC rally in Miami Gardens, Florida, US, on Tuesday, Nov. 1, 2022.
    Eva Marie Uzcategui | Bloomberg | Getty Images

    Anxiety over the cost of living and the direction of the economy could prove costly to President Joe Biden and his fellow Democrats in Tuesday’s election.
    Recent surveys show consumer sentiment has risen only modestly and remains well below where it was a year ago, when inflation worries first began to grip policymakers, shoppers and business executives.

    A report released Friday outlined the problem for Washington’s current ruling party. The University of Michigan, which releases a closely watched sentiment survey each month, asked respondents who they trusted more when it came to the economy and which would better for personal finances.
    The result: overwhelmingly Republican.
    The survey of 1,201 respondents saw Republicans with a 37%-21% edge on the question of which party is better for the economy. While that left a wide swath — 37% — of consumers who don’t think it makes a difference, the disparity of those with a preference is huge. (The survey did not distinguish whether respondents were likely voters.)

    In fact, among all demographics, the only one in the Democrats’ favor was the sole party group. Whether it was age, household income or education, all other groups favored the GOP.
    On overall sentiment, the Michigan survey saw a reading of 59.9 for October, 2.2% better than September but 16.5% below the same period a year ago. The reading is just off its all-time low in June 2022 and is running close to its lowest level in more than 11 years, according to data that goes back to 1978.

    “It’s a huge problem” for Democrats, said Greg Valliere, chief U.S. policy strategist at AGF Investments, who specializes on the impact of politics on the financial markets. “They’ve seen enough evidence since Labor Day showing how the economy dwarfs every other issue, but they didn’t do anything about it. They didn’t say the right thing, they didn’t show enough empathy. To me, this was a really sorry performance.”
    Valliere thinks the issue could get so large that Biden may have to announce soon that he will not seek a second term in 2024.
    “I think the Democrats have a lot of problems right now,” he added.

    Consumer confidence also hit an all-time low on housing, with just 16% of respondents saying they think now is a good time to buy, according to a Fannie Mae survey that goes back to 2011.
    Those types of readings have not boded well for the party in power.
    Former President Donald Trump lost his bid for reelection in 2020 when the Michigan poll was just above its early Coronavirus pandemic low. Conversely, Barack Obama won reelection in 2012 when the survey was riding a five-year high. George W. Bush captured his bid for a second term in 2004 when sentiment was middling, but Bill Clinton triumphed in 1996 when the Michigan gauge was at a 10-year high.
    As for congressional control, in the 2010 midterm election, when the Obama-Biden administration lost a stunning 63 House seats, the biggest rout since 1948, the reading was at 71.6. That was only narrowly better than the year before when the economy was still climbing out of the financial crisis.
    Today, the public is particularly anxious about inflation.

    After declining for two months in a row, October’s one-year inflation outlook stood at 5%, up 0.3 percentage point from September and the highest reading since July. The five-year outlook also rose, up to 2.9%, and tied for the highest level since June.
    The University of Michigan survey also found respondents had more trust in Republicans when it came to the fate of their personal finances.
    The GOP held a 15-point lead against Democrats in that category, including a 19-point edge among independents.
    The survey showed expectations running high that Republicans will prevail in Tuesday’s election and wrest control of Congress back from Democrats.

    On both the general economy and personal finance questions, Republicans did far better among those holding a high school diploma or less, with a 25-point edge in both questions. Those holding a college degree gave the GOP an 8-point edge on the economy and a 10-point advantage on personal finances.

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    Inflation Plagues Democrats in Polling. Will It Crush Them at the Ballot Box?

    Americans are extremely attuned to the cost of living, and as midterm election voters head to the polls, they are divided over whom to blame.Inflation has roared back onto the scene as a key issue ahead of the 2022 midterm elections, after five decades during which slow and steady price increases were a political nonissue.It was once a potent driver of politics in America, one that panicked former President Richard M. Nixon and his administration, and later helped to make Jimmy Carter a one-term president. As prices surge, inflation is again taking center stage, and could help decide who controls Congress.Household confidence has plummeted as inflation has climbed, and economic issues have shot to the top of what voters are worried about. A full 49 percent of voters overall said that the economy is an extremely important issue to them in an October Gallup survey, notably outranking abortion, crime and relations with Russia. That’s the highest level of economic concern headed into a midterm election since 2010, when the economy was coming out of the worst downturn since the Great Depression.Inflation is almost certainly the issue pushing the economy to its current prominence. Consumer prices picked up by 8.2 percent in the year through September, far faster than the roughly 2 percent annual gains that were normal in the years leading up to the pandemic. That has left many families feeling like they are falling behind, even as unemployment lingers near a 50-year low, employers hire at a solid clip and job openings abound.The disconnect between the strength of the economy and the way that voters feel about it illustrates why Democrats are barreling into the midterms on the defensive. Elected politicians have a limited role to play in fighting inflation, a job that falls mostly to the Federal Reserve. That has made talking about price increases all the more challenging.Survey data suggest that while voters disagree over whom to blame for today’s rapid price increases, a larger share of independent voters believe that Republicans would be better for the economy and their finances. And irritation over the state of the economy could be enough to prompt some people to vote for change even if the other party doesn’t offer clearly better solutions, according to political scientists. The question is less whether inflation will be a factor driving votes — and more whether it will be a decisive one.“It matters enormously to the election this week,” said Elaine Kamarck, a senior fellow in the Governance Studies program at the Brookings Institution, noting that gas and grocery prices are omnipresent realities for most families. “It is obvious what is happening in inflation every single day: Voters don’t get to forget it.”Across the political spectrum, many Americans are feeling less positive about their personal finances: An AP-NORC Center for Public Affairs Research poll from October found that 36 percent of Democrats now say their finances are in bad shape, up from 28 percent in March. Among Republicans, that number was 53 percent, up from 41 percent. Independents were fairly unchanged, with 53 percent feeling negative.That could be particularly bad for Democrats, because they are often seen as less strong on the economy.Which Party Is Better for the National Economy?Independents and Republicans both tend to rank Republicans ahead of Democrats economically, based on University of Michigan data.

    Note: Survey from September and October 2022.Source: University of MichiganBy The New York TimesNew survey data from the University of Michigan showed that 41 percent of voters felt neither party had an advantage when it came to helping their personal finances. But of those who did think there was a difference, 35 percent thought Republicans would be better — versus 20 percent for Democrats. Consumers also expected Republicans to win in national races.“By and large, respondents expect Republicans to gain control of both the House and the Senate,” Joanne Hsu, director of the University of Michigan’s consumer surveys, wrote in the Nov. 4 release.Which Party Is Better for Your Personal Finances? Republicans and Independents tend to rank Republicans higher on issues of personal finance, though many see no difference.

    Note: Survey from September and October 2022.Source: University of MichiganBy The New York TimesWhether they are right could hinge on whether inflation proves as salient for actual votes as it is in sentiment surveys.Prices may be rising quickly — annoying consumers and occupying their attention — but unemployment is very low, which Ms. Kamarck said might alleviate the angst. Plus, she said, critical groups of voters — most notably women — may focus on other issues including a Supreme Court ruling from earlier this year that overturned Roe v. Wade and ended the constitutional right to abortion.Hally Simpson Wilk, 36, from Broadview Heights, Ohio, is feeling inflation at the grocery store, but she does not think that Republicans would necessarily be better at solving the problem than Democrats. Plus, she said, the abortion ruling had “lit a fire under” her. She expects to vote Democrat.It is hard to guess whether unhappiness over rising prices will drive actual votes in part because there isn’t much recent precedent. While inflation has a history of driving politics in America, it hasn’t been a major issue in 50 years.Back in the 1970s and 1980s, inflation was even faster, touching peaks as high as 12 and 14 percent. Those price increases, and the nation’s response to them, played a big role in driving the national conversation and deciding elections during that era. Mr. Nixon in 1971 instituted wage and price caps to try to temporarily keep prices under control ahead of the 1972 election, for instance.“Inflation robs every American, every one of you,” Mr. Nixon said during his surprise announcement, which included other major economic policy changes. “Homemakers find it harder than ever to balance the family budget. And 80 million American wage earners have been on a treadmill.”.css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}Our needle is back. The needle is an innovative forecasting tool that was created by The Times and debuted in 2016. It is intended to help you understand what the votes tallied so far suggest about possible winners in key contests, before the election is called. Look for one needle on which party will control the House and one on which party will control the Senate.Here’s a deeper dive into how it works.Those wage and price caps may have been politically astute, but research since has showed they just delayed price jumps — they didn’t stop them. When Mr. Carter became president in 1977, inflation was still raging. The Fed wrestled it under control with super-high interest rates that sent unemployment soaring, a campaign that is widely credited with helping to cost Mr. Carter a second term.America’s experience during the 1970s also illustrates a harsh reality: Even if inflation drives the nation’s politics, there is relatively little politicians can do to address it, aside from trying to avoid making the problem worse by stimulating the economy. Taxing and spending policies to offset price increases mostly have comparatively small effects.The country’s main tool for fighting rapid price increases is Fed policy — and that is a painful solution. When the central bank lifts interest rates, it slows economic demand, cools hiring, moderates wage growth and eventually drags prices lower as shoppers pull back and companies find that they can no longer charge more.“There is not an easy fix for inflation — the fix is a recession,” Ms. Kamarck said. For Democrats, “it is very hard to have an economic message.”Economists typically attribute today’s rapid price increases partially to government spending, including a package that Democrats passed in 2021 that helped to fuel consumer demand. But they are also global in nature, tied partly to lingering supply issues amid the pandemic, and food and fuel market disruptions caused by Russia’s invasion of Ukraine.Many voters believe that today’s price increases are not wholly — even principally — the Democratic administration’s fault. But that assessment divides along party lines.About 87 percent of Democrats attribute inflation to factors outside of President Biden’s control, versus 48 percent of independents and 21 percent of Republicans, based on AP-NORC polling data from last month.What Is to Blame for Rapid Inflation?A poll asked voters what was to blame for higher-than usual prices: President Biden’s policies, or factors outside of his control.

    Note: Survey from October 6-10, 2022Source: AP-NORCBy The New York Times People who were already on the fence could have their minds swayed by inflation — especially in places where it is particularly painful. Price increases are reported at a metro level, and some cities in key battleground states are facing particularly rapid price increases: Inflation was at 11.7 percent in Atlanta; 13 percent in Phoenix; and 9 percent in the Seattle metro area as of the latest available data.And even if inflation is hovering near the national average in some places, it is still the fastest pace in decades.Pennsylvania’s Senate race is closely contested, and Christopher Borick, director of the Muhlenberg College Institute of Public Opinion in Allentown, Pa., thinks that rapid price increases could be one factor that is helping the Republican candidate Mehmet Oz run a competitive race despite very low favorability ratings.“We often see in midterm races that if people aren’t happy, a price is paid by the incumbent party,” Mr. Borick said. Inflation “places people in a mood that really does open up the door to alternatives that might not otherwise be acceptable.” More

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    Meta Is Said to Plan Significant Job Cuts This Week

    Mark Zuckerberg, Meta’s chief executive, said last month that many “teams will stay flat or shrink over the next year” as his company faces economic challenges.SAN FRANCISCO — Meta plans to lay off employees this week, three people with knowledge of the situation said, adding that the job cuts were set to be the most significant at the company since it was founded in 2004.It was unclear how many people would be cut and in which departments, said the people, who declined to be identified because they were not authorized to speak publicly. The layoffs were expected by the end of the week. Meta had 87,314 employees at the end of September, up 28 percent from a year ago.Meta has been struggling financially for months and has been increasingly clamping down on costs. The Silicon Valley company, which owns Facebook, Instagram, WhatsApp and Messenger, has spent billions of dollars on the emerging technology of the metaverse, an immersive online world, just as the global economy has slowed and inflation has soared.At the same time, digital advertising — which forms the bulk of Meta’s revenue — has weakened as advertisers have pulled back, affecting many social media companies. Meta’s business has also been hurt by privacy changes that Apple enacted, which have hampered the ability of many apps to target mobile ads to users.Last month, Meta posted a 50 percent slide in quarterly profits and its second straight sales decline. The company said at the time that it would be “making significant changes across the board to operate more efficiently,” including by shrinking some teams and by hiring only in its areas of highest priority.More on Big TechMusk’s Twitter Takeover: Elon Musk has moved quickly to overhaul Twitter since he completed his $44 billion buyout of the company. But can he make the math work?Big Tech’s Slowdown: Amid stubborn inflation and rising interest rates, Google, Meta, Microsoft and other tech companies are signaling that tough days may be ahead. Some have already announced hiring freezes and job cuts.App Store Battle: Spotify wants to get into the audiobooks business, but Apple has rejected its new app three times. The standoff is the latest in a series of confrontations between the companies.Inside Meta’s Struggles: After a rocky year, employees at Meta are expressing skepticism, confusion and frustration over Mark Zuckerberg’s vision for the metaverse.Mark Zuckerberg, Meta’s chief executive, had added that most “teams will stay flat or shrink over the next year.” He said the company would “end 2023 as either roughly the same size, or even a slightly smaller organization than we are today.”The Wall Street Journal earlier reported Meta’s plans for layoffs this week.Mr. Zuckerberg has been signaling tougher times ahead for months. In July, he told employees that the company was facing one of the “worst downturns that we’ve seen in recent history” and that workers should prepare to do more work with fewer resources. Their performances would also be graded more intensely than previously, he said.“I think some of you might decide that this place isn’t for you, and that self-selection is OK with me,” Mr. Zuckerberg told employees in a call at the time. “Realistically, there are probably a bunch of people at the company who shouldn’t be here.”Meta joins other tech companies that have been laying off employees as economic conditions have grown more challenging. Tech companies boomed during the coronavirus pandemic but many of the largest firms reported financial results in recent weeks that showed they were feeling the impact of global economic jitters.On Friday, Elon Musk, the world’s richest man and the new owner of Twitter, laid off half of the company’s staff. Last week, Lyft also said it would cut 13 percent of its employees, or about 650 of its 5,000 workers. Stripe, a payment processing platform, said it would cut 14 percent of its employees, roughly 1,100 jobs. Snap, Robinhood and Coinbase are among other companies that have announced job cuts this year.Other tech companies are freezing their hiring. Last week, Amazon said it had decided to pause incremental corporate hiring because the economy was “in an uncertain place.” The move added to a freeze from last month, when the e-commerce giant halted corporate and technology hiring in its retail business for the rest of the year. More