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    CEOs say they are raising prices, cutting costs as inflation dominates post-earnings conversations

    Company leaders say they’ve managed to navigate difficult times spurred by inflationary pressures at their highest level in more than 40 years.
    “Our primary response to the environmental challenge of inflation is higher pricing,” Travelers executive Michael F. Klein said.
    Higher prices certainly haven’t hurt profitability, with results so far countering the generally pessimistic attitude heading into earnings season.

    NEW YORK, NEW YORK – MAY 02: Elon Musk attends the 2022 Costume Institute Benefit celebrating In America: An Anthology of Fashion at Metropolitan Museum of Art on May 02, 2022 in New York City. (Photo by Sean Zanni/Patrick McMullan via Getty Images)
    Sean Zanni | Patrick Mcmullan | Getty Images

    Goldman Sachs CEO David Solomon set the tone early this earnings season when he said inflation is “deeply entrenched” in the U.S. economy and impacting conditions on a multitude of fronts.
    Since then, company leader after company leader has expressed similar sentiments.

    Most say they’ve managed to navigate difficult times spurred by inflationary pressures at their highest level in more than 40 years. They report cutting costs, raising prices and generally trying to adapt models to the uncertainty of what’s ahead.
    Tesla founder Elon Musk was practically apologetic on his company’s earnings call for hiking prices to meet higher costs.
    “So I do feel like we’ve raised our prices. Well, we’ve raised our prices quite a few times. They’re frankly at embarrassing levels,” the mercurial electric vehicle pioneer told analysts. “But we’ve also had a lot of supply chain and production shocks, and we’ve got crazy inflation. So I am hopeful, this is not a promise or anything, but I’m hopeful that at some point we can reduce the prices a little bit.”
    Nothing, however, seems certain at the moment, other than that inflation is on everyone’s mind.
    Of the 91 S&P 500 companies that have reported so far, inflation has been mentioned on 85 of the analysts calls, according to a search of FactSet transcripts.

    Consumers paying the prices

    Like Musk, company officials generally expect inflation to come down from the 8.6% quarterly growth rate from a year ago, as measured by the consumer price index. The CPI accelerated 9.1% in July, the highest number since November 1981.
    But they’re also not taking any chances, using pricing power now to bolster their top and bottom lines amid a highly uncertain environment.
    “Our primary response to the environmental challenge of inflation is higher pricing,” said Michael F. Klein, the president of personal insurance for Dow component Travelers. “We are pleased with our actions to increase rates over the past few quarters and remain confident in our ability to achieve further increases.”
    The higher prices certainly haven’t hurt profitability, with results so far countering the generally pessimistic attitude on Wall Street heading into earnings season.
    With nearly 20% of the S&P 500 companies reporting so far, 78% have beaten estimates for profits, which are up 6.3% from a year ago, according to Refinitiv. The beat rate on the revenue side is 72.5%, with sales up 11.3%.
    Though energy companies have been a major boost to the aggregate top and bottom lines, the overall feeling is that cash-rich consumers are able to handle the burden of soaring prices, at least for now.
    “We have been able to and continue to be able to pass through our product cost inflation to our customers, and they are increasingly finding ways to pass that through to their consumers as well,” said Sysco Chief Financial Officer Aaron Alt. “We’re confident that will continue to be the case certainly in here and now.”

    Defying recession fears

    Economists have worried that a looming recession could chill consumer spending that has been persistent but short of the pace of inflation.
    Citigroup CEO Jane Fraser said the company has been focused on what she calls the “three Rs”: Russia, rates and recession.
    Russia’s invasion of Ukraine has been a contributor towards the supply chain difficulties that have aggravated inflation, which the Federal Reserve is seeking to tamp down through aggressive interest rate increases. The rate hikes are aimed at slowing an economy that contracted by 1.6% in the first quarter and is on track to have shrunk by the same amount in the Q2, according to Atlanta Fed projections.
    Still, Fraser said she thinks the U.S. will avoid an official recession or at least a deep one, even though two consecutive quarters of negative growth fits the rule-of-thumb definition. The National Bureau of Economic Recession is the official arbiter on recessions and expansions.
    “It’s just an unusual situation to be entering into this choppy environment when you have a consumer with strong health and such a tight labor market,” Fraser said on Citi’s earnings call. “And I think that’s where you hear so many of us not so much concerned about an imminent recession in the [United] States.”
    But Solomon, the Goldman CEO, said the company is playing it safe even though its economists expect inflation to pull back in the second half of the year.
    “I think our tone is cautious because the environment is uncertain. The environment is very uncertain,” he said. “There’s no question that economic conditions are tightening to try to control inflation, and as economic conditions tighten, it will have a bigger impact on corporate confidence and also consumer activity in the economy. I think it’s hard to gauge exactly how that will play out, and so I think it’s prudent for us to be cautious.”

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    West Coast ports reduce idling vessels as container supply increases

    The queue of vessels waiting to unload goods at the Port of Los Angeles, North America’s busiest container port, has fallen 80% since the start of the year.
    While improved, conditions in U.S. logistics have not returned to pre-Covid levels and more improvements to supply chains are needed, in particular the delivery of goods inland.
    But while more containers bring welcomed relief for those paying for freight, supply chain disruptions linger.

    The queue of vessels waiting to unload goods at the Port of Los Angeles, North America’s busiest container port, has fallen 80% since the start of the year as global container prices continue to slide, pointing to more easing in supply chain disruptions. 
    The backlog of vessels waiting outside Los Angeles has fallen from a record high of 109 to 20 and the port moved 876,611 twenty-foot equivalent units (TEUs) in June in its best record in over 100 years.

    “We’re going box for box with the record that we set for the first half just last year. So the cargo keeps moving. And the efficiencies of getting that cargo from the ship to shore by rail and truck continues to improve,” Port of Los Angeles Executive Director Gene Seroka told CNBC’s “Squawk Box Asia” on Friday. 
    “We reduced that backlog of ships since the beginning of the year … now we want to get that number to zero.”
    The increased efficiency is a contrast to the delays triggered by the pandemic in 2020 and 2021.

    We’ve got to get the cargo picked up at the inland rail facilities by our importers much quicker than they’ve been doing thus far.

    Gene Seroka
    Port of Los Angeles executive director

    At the height of supply chain crisis, these 100 odd vessels idled outside Los Angeles and Long Beach, waiting to unload. Before Covid-19, little wait time was needed for a berth. The pandemic also hurt domestic transportation as a result of trucker shortages due to Covid-19 infections. 
    While improved, conditions have not returned to pre-Covid levels and more improvements are needed, in particular the delivery of goods inland after the vessels have unloaded, Seroka said. 

    “We’ve got to get the cargo picked up at the inland rail facilities by our importers much quicker than they’ve been doing thus far,” he said. 
    “That’ll help the Western railroads get the equipment engine power and cruise back here to Los Angeles and keep evacuating this cargo at a faster pace than we witnessed so far.”
    Seroka said the trucker strike protesting California’s new “gig worker” law at the Port of Oakland should not affect the improved pace set so far.

    In an aerial view, shipping containers sit idle at the Port of Oakland on July 21, 2022 in Oakland, California. Truckers protesting California labor law Assembly Bill 5 (AB5) have shut down operations at the Port of Oakland after blocking entrances to container terminals at the port for the past four days. An estimated 70,000 independent truckers in California are being affected by the state AB5 bill, a gig economy law passed in 2019 that made it difficult for companies to classify workers as independent contractors instead of employees. The port shut down is contributing to ongoing supply-chain issues. 
    Justin Sullivan | Getty Images

    The easing bottlenecks on the West Coast come as container prices continue to fall from their pandemic records.
    Port lockdowns and a shortage of containers in 2020 and 2021 contributed to skyrocketing leasing costs. But now there is an oversupply of containers and prices have been falling since September.
    “The current situation of oversupply of containers is a result of a series of reactionary market disruptions that began soon after the outbreak of the pandemic in early 2020,” logistics platform Container xChange chief executive Christian Roeloffs said in a new analysis this week. 
    “With the rise in demand, congestion at ports increased and the container capacity was held up for a considerably long period of time. This led to the panic ordering of new boxes at record levels,” he said.
    “With time, as markets reopen and demand softens, the oversupply is a natural outcome of demand-supply forces balancing at new levels.”

    According to Drewry’s recently published container leasing report, the global pool of shipping containers increased by 13% to almost 50 million TEUs in 2021. There is now a surplus of 6 million TEUs globally. 
    While more containers bring welcomed relief for those paying for freight, Roeloffs said freight prices will not fall quickly as disruptions, while eased, remain acute. 
    Economic shifts such as cooler demand in response to monetary policy and inflation will also contribute to fresh supply chain disruptions. 
    “The main factor that has driven up [freight] prices has been a supply-side crunch over the past two years because of lengthening turnaround times of containers … that still holds true,” Roeloffs said. 
    “Demand on the other hand has softened now.”

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    Truckers’ Protests Over Labor Law Block Access to Oakland’s Port

    For days, a convoy of truckers has blocked the roads that serve the Port of Oakland, crippling a major West Coast cargo hub already hampered by global supply chain disruptions.The protest is meant to send a message to Gov. Gavin Newsom: Keep the drivers clear of a California labor law that they say threatens their livelihood.The truckers, primarily independent owners and operators, are demonstrating in opposition to Assembly Bill 5, a law passed in 2019 that requires gig workers in several industries to be classified as employees with benefits, including minimum wage and overtime pay.Along with a coalition of trade groups, the truckers want Mr. Newsom to issue an executive order putting off the application of the 2019 law to their work and to bring labor and industry to the table to negotiate a path forward.A representative of Mr. Newsom said the state would “continue to partner with truckers and the ports to ensure the continued movement of goods to California’s residents and businesses, which is critical to all of us.”Smaller protests were organized last week at the twin ports of Los Angeles and Long Beach.In a statement, Danny Wan, executive director of the Port of Oakland, said he understood the displays of frustration. But he warned against more delays surrounding the ports, a vital link in a supply chain already hemorrhaging from Russia’s invasion of Ukraine and Covid-19 lockdowns in China.“Prolonged stoppage of port operations in California for any reason will damage all the businesses operating at the ports and cause California ports to further suffer market share losses to competing ports,” he said.When Mr. Newsom signed the measure into law, it received immediate rebukes from companies like Uber and Lyft, whose leaders argued that the law would change their businesses so severely that it might well destroy them.The state law codified a California Supreme Court ruling from 2018 that said, among other things, that people must be classified as employees if their work was a regular part of a company’s business.Both Uber and Lyft, along with DoorDash, quickly lobbied for a ballot measure that would allow gig economy companies to continue treating their drivers as independent contractors.California voters passed the measure, Proposition 22, in 2020, but last year a California Superior Court judge ruled that it was unconstitutional. Uber and Lyft quickly appealed and have been exempt from complying with Assembly Bill 5 while the court proceedings play out.But that wasn’t the case for the truckers. In June, the U.S. Supreme Court declined to hear a challenge by California truckers, who under the new law are viewed as employees of the trucking companies they do business with.Nearly 70,000 California truck drivers work as independent owners and operators, ferrying goods from ports to distribution warehouses. Trucking companies and the protesting drivers argue — as Uber and Lyft did — that if Assembly Bill 5 is applied to them, the drivers will have less flexibility in when and how they work.Proponents of the law say the companies could simply take the drivers on as full- or part-time employees and continue to offer them flexible schedules.A majority of port truckers in California are independent operators and do not work for a single company. A smaller number of drivers are unionized and are represented primarily by the Teamsters.Matt Schrap, chief executive of the Harbor Trucking Association, a trade group for transportation companies serving West Coast ports, said the “frustration is that there is no pathway for folks to have independence.”“That frustration is boiling over into action,” Mr. Schrap said.Lorena Gonzalez Fletcher, a former state lawmaker who was an architect of the labor bill, rejected the idea that applying the law to the trucking industry would be a disservice to drivers.“These truck companies have a business model that is misclassifying workers,” said Ms. Gonzalez Fletcher, who is about to take over as head of the California Labor Federation. “How they have been operating has been illegal.”The trucker protests come as the International Longshore and Warehouse Union is engaged in contract negotiations with the Pacific Maritime Association, representing the shipping terminals at 29 ports from San Diego to Seattle.Farless Dailey III, president of Local 10 of the longshore union, said that for their own safety, his members were not trying to get through the truck blockade.“They don’t get paid when they don’t get in,” he said. “But we’re not going to put our members in harm’s way to pass through the line of truckers.”Officials at the port said the largest marine terminal had been closed since Monday because of the protests. Three other smaller terminals have operated, but with a limited capacity.Christopher S. Tang, a distinguished professor at the University of California, Los Angeles, Anderson School of Management, who studies supply chains, said the shutdowns at the Port of Oakland should not — for now — cause major issues for consumers.“The impact will not be significant in the short term,” he said. “Many retailers have stockpiled inventory.”On Thursday, German Ochoa, a trucker who lives in Oakland, arrived at the port, as he had every day this week.As horns from semitrucks blared in the background, Mr. Ochoa said by phone that he was standing shoulder to shoulder with other truckers. Some held poster boards that read, “Take down AB 5!!!” and “AB 5 Has Got to Go!,” he said.“This is taking away my independence,” Mr. Ochoa said. “It’s my right to be an independent driver.”Noam Scheiber More

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    Jobless claims rise again in another sign that labor market is cooling

    Initial claims totaled 251,000 for the week ended July 16, up 7,000 from the week before and above the 240,000 Dow Jones estimate.
    That was the highest weekly level since mid-November.
    The Philadelphia Fed manufacturing index fell to a reading of -12.3, and produced the lowest employment reading since May 2021.

    A woman walks in front of a store on February 22, 2021, in New York City.
    John Smith | Corbis News | Getty Images

    Initial jobless claims hit their highest level since mid-November last week, the latest sign that a historically tight labor market is beginning to slow, according to Labor Department data released Thursday.
    Claims totaled 251,000 for the week ended July 16, up 7,000 from the week before and above the 240,000 Dow Jones estimate.

    The gain brought filings for unemployment insurance to their highest weekly level since Nov. 13, 2021 and provided another indicator that a jobs market on fire in 2021 has begun to cool this year.
    Continuing claims, which run a week behind the headline number, increased to 1.384 million, the highest total since April 23.
    A separate release Thursday also showed some weakness in the jobs picture.
    The Philadelphia Fed manufacturing index fell to a reading of -12.3, a 9-point slide from a week ago and a considerably worse level than the 1.6 Dow Jones estimate. The number represents the percentage difference between companies reporting expansion in activity against those seeing contraction.
    In particular, the employment index was 19.4, also a 9-point decline. Though that indicates continued expansion in hiring, it is the lowest reading since May 2021 and also is indicative that hiring is slowing. The average work week reading was 6.4, falling for the fourth consecutive month and an indication that productivity could be declining.

    Companies in the survey reported higher costs for salaries, with 78.6% saying they have increased wages and compensation over the past three months, with no respondents saying they cut.
    The survey also showed inflation pressures still high but cooling. The prices paid and prices received indexes both fell from a month ago but remained high, with respective readings of 52.2 and 30.3.
    The data comes with uncertainty running high about the direction of the economy.
    Employment has been the primary bright spot, with nonfarm payroll gains averaging a robust 457,000 a month through the first half of the year. However, those increases have been slowing lately, with the last three months averaging 375,000.
    Most other data indicates the U.S. could be in the midst of meeting the rule-of-thumb definition for a recession, with two consecutive quarters of negative growth. Gross domestic product fell 1.6% in the first quarter and is on track to decline another 1.6% in Q2, according to the Atlanta Federal Reserve.
    Fed officials are expected next week to raise interest rates another 0.75 percentage point, taking benchmark overnight borrowing rates up to a range of 2.25%-2.5%. The Fed is seeking to slow an economy that has produced the highest inflation rate since 1981.

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    Mortgage demand drops to a 22-year low as higher interest rates and inflation crush homebuyers

    Surging inflation and interest rates are hammering American consumers and weighing on the housing market.
    Mortgage demand fell last week, hitting the lowest point since 2000, according to the Mortgage Bankers Association.
    Buyers have lost considerable purchasing power as rates have almost doubled since earlier this year.

    The pain in the mortgage market is only getting worse as higher interest rates and inflation hammer American consumers.
    Mortgage demand fell more than 6% last week compared with the previous week, hitting the lowest level since 2000, according to the Mortgage Bankers Association’s seasonally adjusted index.

    Applications for a mortgage to purchase a home dropped 7% for the week and were 19% lower than the same week in 2021. Buyers have been contending with high prices all year, but with rates almost double what they were in January, they’ve lost considerable purchasing power.

    Read more real estate coverage

    “Purchase activity declined for both conventional and government loans as the weakening economic outlook, high inflation and persistent affordability challenges are impacting buyer demand,” said Joel Kan, an economist for the MBA.

    While buyers are less affected by weekly moves in interest rates, the broader picture of rising rates has already taken its toll. Mortgage rates moved higher again last week after falling slightly over the past three weeks.
    The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.82% from 5.74%, with points increasing to 0.65 from 0.59 (including the origination fee) for loans with a 20% down payment. That rate was 3.11% the same week one year ago.
    Demand for refinances, which are highly rate sensitive, fell 4% for the week and were 80% lower than the same week last year. Those applications are also at a 22-year low, but the drop in demand from homebuyers caused the refinance share of mortgage activity to increase to 31.4% of total applications from 30.8% the previous week.
    Mortgage interest rates haven’t moved much this week, but that could change very soon due to increasing bond market volatility. The Federal Reserve is expected to hike rates by another 75 basis points next week, and other central banks are taking similar action against inflation. A basis point equals 0.01%.
    “This is especially true next week as markets digest the newest Fed policy announcement next Wednesday, but Thursday’s policy announcement from the European Central Bank could also cause enough of a stir to impact U.S. rates,” noted Matthew Graham, chief operating officer of Mortgage News Daily.

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    Chipotle Closes Maine Store Looking to Unionize, Workers Say

    Workers who filed for a union election at a Chipotle in Augusta, Maine, are accusing the company of seeking to undermine their campaign by closing the restaurant.The company notified employees of the closing on Tuesday morning, hours before the two sides were scheduled to take part in a hearing before the National Labor Relations Board about the possible election.“We have been unable to adequately staff this remote restaurant,” Laurie Schalow, the company’s chief corporate affairs officer, said in a statement. Ms. Schalow added that “because of these ongoing staffing challenges, there is no probability of reopening in the foreseeable future, so we’ve made the decision to permanently close the restaurant.”A lawyer representing the workers filed a charge with the labor board contending that the closing was an illegal act of retaliation.“I’m referring to this as Union Busting 101,” said the lawyer, Jeffrey Neil Young, who frequently represents unions in the state. “It’s a classic response — employees decide to organize and the employer says it’s closing the store.”Read More on Organized Labor in the U.S.Apple: Employees at a Baltimore-area Apple store voted to unionize, making it the first of the company’s 270-plus U.S. stores to do so. The result provides a foothold for a budding movement among Apple retail employees.Starbucks: When a Rhodes scholar joined Starbucks in 2020, none of the company’s 9,000 U.S. locations had a union. She hoped to change that by helping to unionize its stores in Buffalo. Improbably, she and her co-workers have far exceeded their goal.Amazon: A little-known independent union scored a stunning victory at an Amazon warehouse on Staten Island. But unlike at Starbucks, where organizing efforts spread in a matter of weeks, unionizing workers at Amazon has been a longer, messier slog.A Shrinking Movement: Although high-profile unionization efforts have dominated headlines recently, union membership has seen a decades-long decline in the United States.The labor board will investigate the charge and issue a formal complaint if it finds merit in the accusation, at which point the case would go before an administrative law judge. The two sides could reach a settlement beforehand.A handful of workers at the store walked off the job in mid-June to protest what they said were unsafe conditions that stemmed from understaffing and insufficient training.“Not being properly trained to prepare food has a lot of risks to both the preparer and the people eating the food,” said Brandi McNease, a worker involved in the walkout and the union campaign. “You worry about knife skills, using equipment that is dangerous — hot, sharp.”Within a few days, the company closed the store to the public while it sought to improve staffing, including retaining two recruiting experts, according to Ms. Schalow. During this time, workers continued to report to the store, where they received some training and helped clean it, but often for fewer hours a week than they previously worked.On June 22, workers filed a petition to hold a union election. The labor board requires at least 30 percent of workers to indicate their support before it will order one.The hearing scheduled for Tuesday was meant to consider arguments from the two sides about the proposed election. Chipotle had asserted in filings that the election should not go forward, partly because the store was understaffed and so the workers eligible to vote would not be fully representative of its eventual work force.Mr. Young, the lawyer representing the workers, said the closing could chill organizing efforts at other stores in the chain, including those underway in Lansing, Mich., where workers have also filed for a union election, and New York City.“By closing the Augusta store, it’s signaling to Chipotle workers elsewhere who are involved in or contemplating nascent organizational drives that if you organize, you might be out of job,” Mr. Young said.Ms. Schalow, the Chipotle official, said in her statement that closing the store “has nothing to do with union activity.” The company said it had closed 13 locations out of about 3,000 because of staffing issues, performance, lease agreements and other business reasons over the past 18 months. Most of the closings appear to have come in the first half of last year.Chipotle has offered the Augusta workers four weeks of severance pay based on their hours over the past two weeks, which have typically been lower than before the restaurant closed to the public. It has not offered to place the workers at other locations in Maine, the nearest of which is roughly an hour away, according to the company.Ms. McNease said she and her co-workers planned to fight to have the store reopened. “No one is bailing now,” she said.Chipotle is among several employers in the service industry whose workers have sought to unionize over the past year. Roughly 200 corporate-owned Starbucks locations have voted to unionize since last fall, as have workers at an Amazon warehouse on Staten Island, an REI store in Manhattan and an Apple store in Maryland.The labor board has formally accused Starbucks of closing certain stores in retaliation for union organizing. The company has denied the accusations.Last week, Starbucks said it was closing 16 additional stores because of safety concerns like crime, which it said have been reflected in incident reports over the past year. The union representing the newly unionized Starbucks workers has filed charges of unfair labor practices, accusing the company of closing the stores to undermine organizing activity or avoid bargaining with unionized workers. More

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    America’s Safety Net for Workers Hurt by Globalization Is Falling Apart

    A 60-year-old program that provides retraining to workers whose jobs are eliminated because of foreign competition has expired, leaving many at risk.WASHINGTON — In September, the lighting factory in Logan, Ohio, where Jeff Ogg has clocked in nearly every day for the last 37 years, will shut its doors, driven out of business by a shift from fluorescent lighting toward LED technology that is often made cheaply in China.At 57, Mr. Ogg is not yet ready to retire. But when he applied to a national retraining program that helps workers who have lost their jobs to foreign competition, he was dismayed to see his application rejected. A follow-up request for reconsideration was immediately denied.The program that Mr. Ogg looked to for help, known as Trade Adjustment Assistance, has for the past 60 years been America’s main antidote to the pressures that globalization has unleashed on its workers. More than five million workers have participated in the program.But a lack of congressional funding has put the program in jeopardy: Trade assistance was officially terminated on July 1, though it continues to temporarily serve current enrollees. Unless Congress approves new money for the $700 million program, it will cease to exist entirely.Established in 1962, trade assistance was intended to help workers whose factory and other jobs were increasingly moving overseas as companies chased cheap labor outside the United States. It provides services like subsidies for retraining, job search assistance, health coverage tax credits and allowances for relocation.But the benefits have been gradually scaled back given a lack of funding, including limiting who qualifies for assistance. A year ago, the program was restricted to workers who make goods, even though jobs in services have also undergone a wave of offshoring as companies set up call centers and accounting departments overseas. In addition, only those whose jobs shifted to countries that have a free-trade agreement with the United States — like Canada and Mexico, but not China — were eligible for assistance.On July 1, the program stopped reviewing new applications and appeals from workers whose applications have been rejected, and it will be phased out.While often criticized as inefficient and bureaucratic, the program has been the country’s primary answer to trade competition for decades. Its disappearance may leave thousands of workers without critical support as they seek new jobs. In 2021, the Department of Labor certified 801 petitions for trade adjustment assistance from various workplaces, covering an estimated 107,454 American workers.The decision over whether to reauthorize the program has become a casualty of an intense fight in Congress over what to include in a sprawling bill aimed at making America more competitive with China. The centerpiece of the legislation is $52 billion in funding for semiconductor manufacturing in the United States, but lawmakers have been clashing over whether to include other provisions related to trade, such as funding for worker retraining.House Democrats had proposed including other trade provisions as well, including measures to increase scrutiny on investments that might send American technology overseas and eliminate tariff exemptions for small-value goods imported from China.The State of Jobs in the United StatesJob gains continue to maintain their impressive run, easing worries of an economic slowdown but complicating efforts to fight inflation.June Jobs Report: U.S. employers added 372,000 jobs and the unemployment rate remained steady at 3.6 percent ​​in the sixth month of 2022.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.On Tuesday, the Senate voted to advance a smaller legislative package that includes funding for the chips industry and broader research and development, but lacks funding for Trade Adjustment Assistance or other trade-related measures. The chips legislation will still require further approval in both the House and Senate.Supporters of Trade Adjustment Assistance say that they will not stop pushing for its reauthorization, and that funding for the program could still be included in other legislation.Senator Sherrod Brown, Democrat from Ohio, blamed Republican lawmakers for “holding T.A.A. hostage” and said he would continue fighting to reauthorize the program.“They have sold out American manufacturing over and over by voting for trade deals and tax policy that send jobs overseas, and continue to block investments to empower workers who lose their jobs because of those bad trade deals,” Mr. Brown said in emailed remarks. “T.A.A. serves workers — like those in Logan, Ohio — who have their lives upended through no fault of their own.”The program and its benefits are already out of reach for Mr. Ogg and 50 others who work at the Logan plant, which manufactures the glass tubes in fluorescent lighting fixtures that were once ubiquitous in schools and offices. The plant tried to transition to making LED lights in recent years, but found those lights could be purchased more cheaply from abroad.“Our plant, our people, most of them have been there 25-plus years,” said Mr. Ogg, who is the president of the local United Steelworkers union. “You work in the same place that long, that’s all you know.”Mr. Ogg said he had no complaints about his career at the plant, where he estimates the average wage is between $25 and $30 an hour — enough for him to buy a home and raise three children. But he’s feeling unsure about what to do next. He previously worked as a mechanic, but said the type of machinery that he had worked on was no longer around.“A lot has changed,” Mr. Ogg added. “If you’ve been stuck in one place for 30-some years, you’re going to need some help to go to the next level.”Trade Adjustment Assistance was intended to do just that — help workers who need new skills to compete in a more globalized economy. The program offered income support to workers who lost their jobs and exhausted unemployment benefits while they retrained for other jobs. Those who are 50 and older and take on lower-paying jobs could qualify for a wage insurance program that temporarily boosted their take-home pay.Some academic research has found benefits for those who enrolled in the program. Workers gave up about $10,000 in income while training, but 10 years later they had about $50,000 higher cumulative earnings than those who did not retrain, according to research from 2018 by Benjamin G. Hyman, an economist at the Federal Reserve Bank of New York.Still, those relative gains decayed over time, Mr. Hyman’s research shows. After 10 years the incomes of those who received assistance and those who did not were the same — perhaps because the jobs that workers in T.A.A. trained for had also become obsolete as a result of automation and trade competition. Yet Mr. Hyman concluded that earnings returns from the program “may be larger and more effective than previously thought.”The United Steelworkers Local 1999 in Indianapolis, which fought to save manufacturing jobs from companies like Rexnord, which moved its operations to Mexico in 2017.Alyssa Schukar for The New York TimesThe program fell victim to concerns over its expense and efficiency, as well as what was left out of the broader package of trade legislation. In the past, the funding for the program was coupled with something called Trade Promotion Authority, which streamlined the process for congressional approval of U.S. trade agreements.The combination of Trade Promotion Authority and Trade Adjustment Assistance was a political formula that worked for decades, said Edward Alden, a senior fellow at the Council on Fore­­­ign Relations. Presidents promised businesses more access to foreign markets, and they made commitments to providing labor unions and their supporters with compensation if jobs were lost in the process.But American views on trade have turned more negative in recent years, as China began dominating global industries and as income inequality widened. Democrats have grown so disillusioned with the effects of global trade and split over its benefits that the Biden administration has declined to push for new pacts.Before writing any new trade deals, Mr. Biden said he would first focus on boosting American competitiveness, including by investing in infrastructure, clean energy, and research and development. And when Trade Promotion Authority expired last year, Biden administration officials did not lobby Congress to reauthorize it.Some Republicans are balking at reapproving trade adjustment assistance when the president shows little intention to open up new overseas business opportunities through trade agreements.“America’s on the sidelines right now on trade, and President Biden’s moratorium on new trade agreements seems firm,” Representative Kevin Brady, Republican of Texas, told reporters late last month. “There would have to be a much stronger ironclad commitment to resuming American leadership in trade to even begin this discussion on extending T.A.A.”“We’re open to creative ideas here, but if we don’t have a serious, significant trade agenda that opens up markets for American workers, T.A.A. doesn’t make much sense,” Mr. Brady added.Mr. Biden’s plans to boost American competitiveness have only been partly fulfilled. While Congress approved billions of dollars for new infrastructure investments, other aspects of the president’s domestic agenda, including funding for the energy transition, have crumbled. Lawmakers have struggled to amass the support even for legislation in favor of expanded funding for the semiconductor industry, which is widely seen as key to American industry and national security.With so many other legislative goals at stake, the termination of a decades-old solution to the economic trade-offs of free trade has garnered little attention.“The old consensus on trade is gone,” said Mr. Alden of the Council on Foreign Relations. “And we don’t have a new one.”Catie Edmondson More

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    June home sales fall 5.4% from May, as prices set yet another record

    Sales of previously owned homes in June fell 5.4% from May, according to a monthly report from the National Association of Realtors.
    This is the slowest sales pace since the same month in 2020, when sales dropped very briefly at the start of the Covid pandemic.
    The median price of an existing home sold in June set yet another record at $416,000, an increase of 13.4% year over year.

    Sales of previously owned homes in June fell 5.4% from May, according to a monthly report from the National Association of Realtors, as prices set records and rates surged.
    The sales count declined to a seasonally adjusted annualized rate of 5.12 million units last month, the group said. Sales were 14.2% lower compared with June 2021.

    This is the slowest sales pace since the same month in 2020, when sales dropped very briefly at the start of the Covid pandemic. Outside of that, it is the slowest pace since January 2019, and below the annual 2019 total, pre-pandemic.
    These numbers are based on home closings, so the contracts were likely signed in April and May, before the average rate on the 30-year fixed mortgage shot above 6% and as inflation was surging toward rates not seen since the early 1980s.

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    “It is clearly due to the plunging affordability,” said Lawrence Yun, chief economist for the Realtors. “We have never seen mortgage rates shoot up this fast at this magnitude. Even people who want to buy, they are priced out.”

    A sign is posted in front of a home for sale on July 14, 2022 in San Francisco, California.
    Justin Sullivan | Getty Images

    There were 1.26 million homes for sales at the end of June. That is an increase of 2.4% from the previous June, and the first year-over-year gain in three years. At the current sales pace, inventory now stands at a three-month supply. That is still considered low, but improving. Supply is increasing both because more sellers are trying to take advantage of perhaps the last of the red-hot, pandemic-induced housing boom, and because homes are now sitting on the market longer.
    The still-tight supply, however, is keeping the heat under home prices. The median price of an existing home sold in June set yet another record at $416,000, an increase of 13.4% year over year.
    Activity continues to be stronger on the higher end of the market, where there is more supply. Sales of homes priced between $100,000 and $250,000, for example, were 31% lower annually, while sales of homes priced between $750,000 and $1 million increased by 6%. Sales of homes priced over $1 million rose 2%. The upper end appears to be weakening, as annual comparisons in recent months were much higher.
    While sales are falling, the market is still incredibly fast. The average time a home spent on the market was 14 days, a record low.
    “This is a head-scratching number, given slower sales,” said Yun. “People are trying to take advantage of their interest rate lock. That may explain why the days on the market are so swift.”
    Sales will likely fall more sharply in the coming months, as more recent indicators point to much weaker buyer demand. Mortgage applications fell to a 22-year low last week, with demand from homebuyers down 19% from the same week one year ago, according to the Mortgage Bankers Association.
    “Based on trends at this stage in the housing and business cycle, I expect affordability to be the bigger driver than availability moving forward,” said Danielle Hale, chief economist at Realtor.com. “Already, we see that affordable areas in the Northeast and Midwest top the Realtor.com June hottest housing markets, as home shoppers continue to leverage workplace flexibility in looking for ways to reduce their housing costs.”

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