Evelyn Reynolds

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    E.V. Tax Credits Are a Plus, but Flaws Remain, Study Finds

    The Inflation Reduction Act was a compromise between competing priorities. Evaluating the law on the effectiveness of the $7,500 tax credit for E.V.s is tricky.A team of economists has taken on a central component of the Inflation Reduction Act: the $7,500 tax credit for U.S.-made electric vehicles.The challenge in evaluating it is that the policy has sometimes conflicting goals. One is getting people to buy electric vehicles to lower carbon emissions and slow climate change. The other is strengthening U.S. auto manufacturing by denying subsidies to foreign companies, even for better or cheaper electric vehicles.That’s why totaling those pluses and minuses is complex, but overall the researchers found that Americans have seen a two-to-one return on their investment in the new electric vehicle subsidies. That includes environmental benefits, but mostly reflects a shift of profits to the United States. Before the climate law, tax credits were mainly used to buy foreign-made cars.“What the I.R.A. did was swing the pendulum the other way, and heavily subsidized American carmakers,” said Felix Tintelnot, an associate professor of economics at Duke University who was a co-author of the paper.Those benefits were undermined, however, by a loophole allowing dealers to apply the subsidy to leases of foreign-made electric vehicles. The provision sends profits to non-American companies, and since those foreign-made vehicles are on average heavier and less efficient, they impose more environmental and road-safety costs.Also, the researchers estimated that for every additional electric vehicle the new tax credits put on the road, about three other electric vehicle buyers would have made the purchases even without a $7,500 credit. That dilutes the effectiveness of the subsidies, which are forecast to cost as much as $390 billion through 2031. “The I.R.A. was worth the money invested,” said Jonathan Smoke, the chief economist at Cox Automotive, which provided some of the data used in the analysis. “But in essence, my conclusion is that we could do better.”How the Environmental and Safety Costs of Gas- and Electric-Powered Cars Stack UpMeasuring the cost to society of carbon emissions from driving and manufacturing, local air pollutants and the danger of crashes, a new economic analysis finds that some gas-powered vehicles are less damaging than electric and hybrid vehicles.

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    The five least and most costly gas- and electric-powered vehicles
    Averages are weighted by the number of each model registered within each powertrain category. Total costs subtract fiscal benefits from gas taxes and electricity bills.Source: Hunt Allcott, Stanford; Joseph Shapiro, U.C. Berkeley; Reigner Kane and Max Maydanchik, University of Chicago; and Felix Tintelnot, Duke UniversityBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump’s Plans Could Increase U.S. Debt While Raising Costs for Most Americans

    A new analysis estimates that the former president’s proposals could grow deficits by as much as $15 trillion over a decade.Former President Donald J. Trump’s economic proposals could inflame the nation’s debt burden while ultimately raising costs for a vast majority of Americans, according to a pair of new economic analyses that are among the most in-depth studies to date of the Republican nominee’s plans.The Committee for a Responsible Federal Budget, a nonpartisan group that seeks lower deficits, found that Mr. Trump’s various plans could add as much as $15 trillion to the nation’s debt over a decade. That is nearly twice as much as the economic plans being proposed by Vice President Kamala Harris.And an analysis from the Institute on Taxation and Economic Policy, a liberal think tank, found that Mr. Trump’s tax and tariff plans would, on average, amount to a tax increase for every income group except the top 5 percent of highest-earning Americans.The two new studies differ in some respects. The budget group looked at the cost of both candidates’ tax and spending plans over 10 years, while the tax institute focused on what the impacts of Mr. Trump’s tax and tariff plans would be in 2026. But together they show that Mr. Trump’s agenda could be both costly and regressive by placing a greater burden on those making the least amount of money.Over the course of his campaign, Mr. Trump has floated a flurry of potentially far-reaching policies, including exempting certain forms of pay from taxes and levying broad tariffs on nearly all imports to the United States. He also wants to extend elements of the tax law he enacted in 2017 that are set to expire after next year.“It’s almost difficult to come up with a tax plan that would raise taxes on most Americans, but still increase the deficit by hundreds of billions of dollars a year — and that’s what this does,” Steve Wamhoff, the federal policy director at I.T.E.P., said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Ports Rush to Reopen After Dockworker Strike Is Suspended

    Days after tens of thousands of longshoreman along the East and Gulf Coasts walked out, their union and their bosses reached a tentative agreement on wages.Hours after a longshoremen’s union on the East and Gulf Coasts agreed to suspend its strike, major ports rushed to reopen on Friday and get cargo to businesses that have spent the last few days racked with fear over lost sales.The strike, which began on Tuesday and shut down many of the nation’s largest shipping hubs, threatened to weaken the economy weeks ahead of a national election. The Biden administration spent the last few days pressing the United States Maritime Alliance, the group representing port employers, and the union, the International Longshoremen’s Association, to find a way to end the strike.The two sides announced late Thursday that they had reached a tentative agreement on wages — a 62 percent increase over six years — and said they were extending the current contract until mid-January to negotiate other issues. The biggest remaining one is the use of automated machinery at the ports, which the I.L.A. considers a job killer. It was the first full-scale stoppage at East and Gulf Coast ports since 1977.Labor experts say the I.L.A. has more leverage in contract negotiations than unions in most other industries, because a walkout can shut down shipping facilities for which there are no practical alternatives. Labor experts said the wage increase was a big victory for the I.L.A. and its combative president, Harold J. Daggett, a 78-year-old, third-generation dockworker.“The I.L.A. seized the moment,” said William Brucher, an assistant professor at the Rutgers School of Management and Labor Relations. “Things really aligned in their favor.”Analysts said the strike was unlikely to lead to higher prices for consumers. Many businesses, anticipating the walkout, sped up their shipments so they could receive them before this week, softening the blow for many.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Port Strike’s End Is an Economic Relief to Savannah, Ga.

    Viewed through a narrow lens, Savannah is a popular tourist destination with a seemingly aesthetic profile, accentuated by its Revolutionary War history, historic Black churches and colorful Victorian homes surrounded by Spanish moss.For big companies, the city’s primary attraction has been a grittier side that has fueled an economic transformation over the decades: Savannah is the No. 2 ocean cargo complex on the East Coast, home to thriving container terminals that handle millions of tons of freight each year.That economic motor for the city and the region sputtered to a stop this week after thousands of dockworkers represented by the International Longshoremen’s Association, or I.L.A., went on strike from Maine to Texas.Instead of a stream of trucks moving big boxes in and out of the port, a group of around 100 dockworkers stood outside the main gates on Tuesday, intermittently chanting, “No contract, no work,” with traffic reduced to vehicles that drove by honking in solidarity with the striking workers.But after three days, the group representing port operators made a new pay offer, and the union suspended the walkout.On Friday, the Port of Savannah was humming again.Trucks started lining up in front of the gates of the Garden City Terminal before sunrise, and by midmorning, large container ships made their way down the Savannah River, in clear view of the city’s downtown.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    U.S. Employers Add 254,000 Jobs in September as Economic Growth Remains Solid

    U.S. employers added 254,000 jobs in September, a sign that economic growth remained solid. The unemployment rate fell to 4.1 percent.Many have doubted it. Even the optimists have worried about it. But despite the hand-wringing, the American economy appears to be in remarkably good shape.Businesses added 254,000 jobs in September, the government reported on Friday, far surpassing forecasts. It was a sign that the economy, rather than stumbling into a slowdown, still has a spring in its step.The unemployment rate declined to 4.1 percent, from 4.2 percent. Reported pay gains for workers were also better than expected, at 4 percent over the previous 12 months, an uptick from the August reading. With inflation continuing to ease substantially, that is welcome news for households trying to gain financial traction.A Slight DropUnemployment rate More

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    Fed close to pulling off the elusive economic soft landing in 2024 after great September jobs report

    September’s outsized payrolls boost takes the U.S. economy out of the shadows of recession and gives the Fed a glide path to a soft landing.
    The big jobs gain virtually eliminated any chance that the central bank would be repeating its half percentage point interest rate cut from September anytime soon.
    The Fed next meets Nov. 6-7, right after the U.S. presidential election and a five-week span during which it will get plenty more to digest.

    A hiring sign is posted on the exterior of Urban Outfitters at the Tysons Corner Center mall on August 22, 2024 in Tysons, Virginia. 
    Anna Rose Layden | Getty Images

    September’s outsized payrolls boost takes the U.S. economy out of the shadows of recession and gives the Federal Reserve a fairly open glide path to a soft landing.
    If that sounds like a Goldilocks scenario, it’s probably not far from it, even with the lingering inflation concerns that are straining consumers’ wallets.

    A gravity-defying jobs market, at least a slowing pace of price increases and declining interest rates puts the macro picture in a pretty good place right now — a critical time from a policy and political standpoint.
    “We’ve been expecting a soft landing. This just gives us more confidence that it seems to remain in place,” Beth Ann Bovino, chief economist at U.S. Bank, said after Friday’s nonfarm payrolls report. “It also increases the possibility of a no-landing as well, meaning even stronger economic data for 2025 than we currently expect.”
    The jobs count certainly was better than virtually anyone figured, with companies and the government combining to boost payrolls by 254,000, blowing away the Dow Jones consensus for 150,000. It was a big step up even from August’s upwardly revised numbers and reversed a trend that started in April of decelerating job numbers and rising concern for a broader slowdown — or worse.

    Beyond that, it virtually eliminated any chance that the Federal Reserve would be repeating its half percentage point interest rate cut from September anytime soon.
    In fact, futures markets reversed positioning after the report, pricing in a near-certain probability of just a quarter-point move at the November Fed meeting, followed by another quarter point in December, according to the CME Group’s FedWatch gauge. Previously, markets had been looking for a half-point in December followed by the equivalent of quarter-point cuts at each of the eight Federal Open Market Committee meetings in 2025.

    Not a perfect picture

    No more, though, as the Fed, barring any more disappointments from the labor market, can stake a moderate pace through its easing cycle.
    “If we continue to see a stronger-than-expected economy that may give the Fed reasons to slow the pace of rate cuts through 2025 with that exit rate being a little bit higher than they currently expect, all with the economy still maintaining its strength,” Bovino said. “That would be good news for both the Fed and the economy.”
    To be sure, there remain some blemishes in the jobs picture.
    More than 60% of the growth for September came from the usual suspects — food and drinking establishments, health care, and government — that have all been the beneficiaries of fiscal largesse that has pushed the 2024 budget deficit to the brink of $2 trillion.
    There also were a few technical factors with the report, such as a low response rate from survey participants, that could cast some clouds over Friday’s sunny report and lead to downward revisions in subsequent months.
    But broadly speaking, the news was very good and raised questions over just how aggressive the Fed will need to be.

    Questions for the Fed

    Bank of America economists, for instance, asked “Did the Fed panic?” in a client note referencing the half percentage point, or 50 basis point, cut in September, while others wondered about the wild vacillations and miscalculations among Wall Street experts. David Royal, chief financial and investment officer at financial services firm Thrivent, speculated that “it is doubtful” the Fed would have cut by so much “if it had known this report would be so strong.”
    “The question becomes, how does everybody keep getting it wrong?” said Kathy Jones, chief fixed income strategist at Charles Schwab. “How is it we can’t get this number right with all the information we get?”
    Jones said the Fed will have a dilemma on its hand as it figures out the proper policy response. The FOMC next meets Nov. 6-7, right after the U.S. presidential election and following a five-week span during which it will get plenty more to digest.
    Some commentary after the report suggested the Fed may have to raise its estimate of the “neutral” rate of interest that neither boosts nor restricts growth, an indication that benchmark interest rates will settle at a higher place than they have in the recent past.
    “What does the Fed do with this? Certainly, 50 basis points is off the table for the next meeting. I don’t think there’s any case to be made there,” Jones said. “Do they pause? Do they do another 25 [basis points] because they’re still far from neutral? Do they just weigh this against other data that might not be as strong? I think they have a lot of figuring out to do.”
    In the meantime, though, officials are likely to be content knowing that the economy is stable, the labor market isn’t in nearly as much trouble as had been suspected, and they have time to weigh their next move.
    “We’ve witnessed a pretty remarkable economy over the past few years, despite some naysayers and lackluster consumer sentiment,” said Elizabeth Renter, senior economist at NerdWallet. “In an election year, passions run high and every economic report or event can garner intense reaction. But the economic aggregates tell us the U.S. economy has been and is strong.”

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    Jobs Report Gives Kamala Harris Another Boost

    Vice President Kamala Harris probably could not have hoped for a better run of pre-election economic data than what the United States has enjoyed over the last month.In recent weeks, key inflation indicators have fallen close to the Federal Reserve’s 2 percent target rate, after years of running hot under Ms. Harris and President Biden. Federal Reserve officials cut interest rates by a half percentage point, immediately bringing mortgage rates to their lowest level in two years. The Commerce Department confirmed that the economy has grown at a robust 3 percent clip over the last year, after adjusting for rising prices. The Census Bureau reported that the typical household’s inflation-adjusted income jumped in 2023.Those numbers had encouraged Democrats, including policymakers in the White House and close to Ms. Harris’s campaign team. Recent polls have shown Ms. Harris closing the gap, or pulling even, with former President Donald J. Trump on the question of who can best handle the economy and inflation.But it was Friday’s employment report — 254,000 jobs gained, with wages growing faster than prices — that appeared to give Harris boosters a particularly large dose of confidence. The report came less than a day after striking dockworkers agreed to return to work through the end of the year, avoiding what could have been a major economic disruption with a month to go before the election.“The combination of this great job market and easing inflation is generating solid real wage and income gains,” said Jared Bernstein, the chairman of the White House Council of Economic Advisers. “While those continue to power this expansion forward, we’re also seeing record investment in key sectors, an entrepreneurial boom and gains in worker bargaining power to help ensure that workers get their fair share of all this growth.”Even Mr. Biden, who has attempted to strike a balance between cheering the economy’s performance and acknowledging the struggles created by years of fast-rising prices, sounded more upbeat than normal on Friday. He made a surprise appearance in the White House briefing room to celebrate the jobs report and the end of the port strike, which the president and his aides helped broker.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    A Strong Jobs Report Suggests the Economy Is More Resilient Than We Thought

    For months, the economy has been like a jigsaw with one mismatched piece: Consumer spending has been holding up and overall growth has been solid, but the job market has looked treacherously wobbly.As of Friday, the last piece of that puzzle is finally clicking into place.Fresh employment data for September showed that hiring picked up strongly, the unemployment rate dipped and wage growth came in strong — adding to a string of recent data pointing to economic resilience.And the incoming evidence points to a clear conclusion: The economy is robust.Data revisions released last week showed that growth has been stronger and incomes have been more solid than previously understood. Retail sales data are holding up. And now, employers appear to be meeting resilient consumer demand by continuing to expand their work forces.In fact, the report reinforced that by many measures, the job market is as healthy as it has ever been.The fresh data is good news for the Federal Reserve, for the White House and for Kamala Harris’s campaign as the vice president and Democratic nominee tries to make an economic case to voters ahead of the presidential election in November.It supports the idea that the economy either is headed for or has possibly already achieved a soft landing, in which inflation comes down without spurring economic pain in the process.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More