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    Microsoft Pledges Neutrality in Union Campaigns at Activision

    The accord could ease the path for thousands of workers to unionize at the game company, which Microsoft is acquiring, and addresses an antitrust objection.Microsoft and the Communications Workers of America union announced an agreement on Monday that would make it easier for employees to unionize at the video game maker Activision Blizzard, which Microsoft is acquiring for $70 billion.Under the deal, which appears to be the first of its kind in the technology industry, Microsoft agreed to remain neutral if any of Activision’s eligible U.S. employees want to unionize, and employees would no longer have to petition the National Labor Relations Board for an election. The company has almost 7,000 employees in the United States, most of whom will be eligible to unionize under the arrangement.A group of nearly 30 employees at one of Activision’s studios voted to unionize through an N.L.R.B. election in May despite Activision’s opposition to holding the election. But completing such a process can be time consuming, with unions and employers sometimes spending months or even years litigating the results.Through the agreement, workers will have access to an expedited process for unionizing, overseen by a neutral third party, in which they will indicate their support for a union either by signing cards or confidentially through an electronic platform.“This process does gives us and Microsoft a way to do this quote unquote election without spending the time, the effort and the controversy that goes along with an N.L.R.B. election,” Chris Shelton, the president of the Communications Workers union, said in an interview.The union said that the neutrality agreement resolved the antitrust concerns it had with the acquisition, and that it now supported the deal, which Microsoft has said will close by the end of next June.Mr. Shelton and Brad Smith, Microsoft’s president, suggested that the deal could pave the way to wider unionization across the company and the industry. “This is a great opportunity for us to work with Chris and the C.W.A. and to learn and innovate,” Mr. Smith said in an interview. Microsoft said it was prepared to “build on” the deal in the future, but did not specifically comment on whether it planned to extend the terms to other gaming workers at the company.Microsoft indicated that under the agreement, it would refrain from an aggressive anti-union campaign if other Activision employees sought to unionize. “In practical terms, it means that we’re not going to try to jump in and put a thumb on the scale,” Mr. Smith said in the interview. “We will respect the fact that our employees are capable of making decisions for themselves and they have a right to do that.”Brad Smith of Microsoft said he was committed to engaging with unions “when employees wish to exercise their rights and Microsoft is presented with a specific unionization proposal.”Markus Schreiber/Associated PressFacing their own union campaigns, companies like Amazon and Starbucks have held frequent mandatory meetings with employees to argue that a union could leave them worse off.The labor board has issued complaints against Amazon that include accusations of threatening workers with a loss of benefits if they unionize, and against Starbucks over accusations that it fired workers who sought to form a union and effectively promised benefits to workers if they chose not to unionize. Both companies have denied the accusations. In a recent case brought by the N.L.R.B. in Arizona, a federal judge denied a request for an injunction to reinstate pro-union workers whom the labor board said Starbucks had forced out illegally.The agreement between Microsoft and the union would also protect workers’ right to communicate among themselves and with union officials about a union campaign — something many employers seek to discourage — and stipulates that disagreements between the company and the union will be resolved through an “expedited arbitration process.” N.L.R.B. complaints can take months or years to resolve.When Microsoft and Activision announced their blockbuster deal in January, the game maker was under stress as it faced accusations that senior executives had ignored sexual harassment and discrimination. Those concerns spurred organizing among Activision employees, including workers at its Raven Software studio in Wisconsin, which has developed games in popular franchises like Call of Duty.After a group of roughly 30 quality assurance, or Q.A., workers announced that they were seeking to unionize, Activision sought to convince the federal labor board that their election should not go forward. The game workers accused Activision of union-busting tactics, like increasing the pay of non-Raven Q.A. workers and splitting Q.A. workers up by embedding them across the Raven studio.Activision maintained that while some changes in this vein had come after the union campaign went public, the broader shift in approach had already been underway — for example, its move to change the status of hundreds of temporary and contingent workers to permanent full-time employees in the fall.The company argued that the entire Raven studio, comprising hundreds of workers, should have been allowed to vote on forming a union, rather than just a few dozen Q.A. workers. Q.A. employees, often on temporary contracts, are commonly considered the most overworked and underpaid members of game studios.In early March, the union signed a letter asking federal regulators to scrutinize the acquisition. “The potential takeover by Microsoft threatens to further undermine workers’ rights and suppress wages,” the letter said.Microsoft has since tried to strike a conciliatory tone. It said it would not stop Activision from voluntarily recognizing the union before a formal election, which Activision did not do. After the Raven Q.A. workers voted in late May to form the first union at a major North American game publisher, Phil Spencer, the head of gaming at Microsoft, told employees that he would recognize the Raven union once the deal between the two companies closed, the gaming news site Kotaku reported, citing a video of an employee town hall.Activision said on Friday that it was starting contract negotiations with the newly unionized Raven workers. “We decided to take this important step forward with our 27 represented employees and C.W.A. to explore their ideas and insights for how we might better serve our employees, players and other stakeholders,” Bobby Kotick, the company’s chief executive, said in a statement.In a blog post this month that appeared to foreshadow the deal, Mr. Smith announced a set of principles to guide Microsoft’s response to labor organizing, an indication that it was taking a more open approach across the company’s businesses.He wrote that he had observed Microsoft’s successful “collaborative experiences with works councils and unions” while working in Europe and said that in the United States the company would pursue “collaborative approaches that will make it simpler, rather than more difficult, for our employees to make informed decisions and to exercise their legal right to choose whether to form or join a union.”In the interview, Mr. Smith called the neutrality agreement “our first opportunity to put those principles into practice.”The Communications Workers of America, which represents employees at companies like AT&T Mobility, Verizon and The New York Times, has sought to organize tech industry workers in recent years. It has begun organizing retail workers at Apple Stores and helped workers at Google form a so-called minority union, which allows them to act together on workplace issues without having to win a union election.About a dozen retail employees at Google Fiber stores in Kansas City, Mo., who are formally employed by a Google contractor, recently voted to join the union.Kellen Browning More

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    Expectations for inflation and spending hit record levels in May, New York Fed survey shows

    Consumer expectations for inflation and spending both hit record levels in May, the New York Fed reported Monday.
    Expectations for the stock market also hit a new record low, and job insecurity levels rose despite otherwise robust hiring.

    People shop in a supermarket as inflation affected consumer prices in Manhattan, New York City, U.S., June 10, 2022.
    Andrew Kelly | Reuters

    Consumer expectations for inflation and spending in the year ahead both hit record levels in May, the same month prices rose at their fastest pace since late 1981, the New York Federal Reserve reported Monday.
    The outlook for price gains in the coming year increased to 6.6% for the month, up 0.3 percentage points from April and tied with March for the highest rate on record for a survey that goes back to June 2013. That came even though three-year inflation expectations remained essentially unchanged at 3.9%.

    At the same time, median household expectations for spending increases over the next 12 months soared to 9%, up a full percentage point from the previous month. That’s up sharply from the 5.5% rate to start the year and nearly double the 5% expectation from a year ago.
    Both increases came the same month that the consumer price index rose 1% from April and 8.6% from May 2021, the biggest gain since December 1981. Major increases in food, energy and shelter costs drove the gain and put added pressure on the Fed to raise interest rates.
    Sentiment also dimmed about the stock market, which has been getting thrashed amid worries about rising inflation and a potential recession on the horizon.
    Just 36.2% of respondents expect the market to be higher a year from now, a dip from the 37.9% reading in April and also a new series low.
    In addition to the rising prices, consumers said it was harder to get credit.

    The level of consumers saying it was more difficult to obtain financing jumped to 11.4%, up from about 9% the previous month, to the highest level since October 2020.
    Job insecurity also grew, despite an increase of 390,000 in nonfarm payrolls for the month and about a 2 to 1 ratio of employment openings to available workers.
    Those saying they feared losing their job rose to 11.1%, still well below the long-term average but the highest level since January. Expectations for the unemployment rate to be higher in a year increased to 38.6%, the highest level since February 2021.

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    India’s Economy Is Growing Quickly. Why Can’t It Produce Enough Jobs?

    The disconnect is a result of India’s uneven growth, powered and enjoyed by the country’s upper strata.NEW DELHI — On paper, India’s economy has had a banner year. Exports are at record highs. Profits of publicly traded companies have doubled. A vibrant middle class, built over the past few decades, is now shelling out so much on movie tickets, cars, real estate and vacations that economists call it post-pandemic “revenge spending.”Yet even as India is projected to have the fastest growth of any major economy this year, the rosy headline figures do not reflect reality for hundreds of millions of Indians. The growth is still not translating into enough jobs for the waves of educated young people who enter the labor force each year. A far larger number of Indians eke out a living in the informal sector, and they have been battered in recent months by high inflation, especially in food prices.The disconnect is a result of India’s uneven growth, which is powered by the voracious consumption of the country’s upper strata but whose benefits often do not extend beyond the urban middle class. The pandemic has magnified the divide, throwing tens of millions of Indians into extreme poverty while the number of Indian billionaires has surged, according to Oxfam.The concentration of wealth is in part a product of the growth-at-all-costs ambitions of Prime Minister Narendra Modi, who promised when he was re-elected in 2019 to double the size of India’s economy by 2024, lifting the country into the $5 trillion-or-more club alongside the United States, China and Japan.The government reported late last month that the economy had expanded 8.7 percent in the last year, to $3.3 trillion. But with domestic investment lackluster, and government hiring slowing, India has turned to subsidized fuel, food and housing for the poorest to address the widespread joblessness. Free grains now reach two-thirds of the country’s more than 1.3 billion people.Those handouts, by some calculations, have pushed inequality in India to its lowest level in decades. Still, critics of the Indian government say that subsidies cannot be used forever to paper over inadequate job creation. This is especially true as tens of millions of Indians — new college graduates, farmers looking to leave the fields and women taking on work — are expected to seek to flood the nonfarm work force in the coming years.A job fair in Chennai last month.Idrees Mohammed/EPA, via Shutterstock“There is a historical disconnect in the Indian growth story, where growth essentially happens without a corresponding increase in employment,” said Mahesh Vyas, the chief executive of the Center for Monitoring Indian Economy, a data research firm.Among the job seekers despairing over the lack of opportunities is Sweety Sinha, who lives in Haryana, a northern state where unemployment was a staggering 34.5 percent in April.As a child, Ms. Sinha liked to pretend to be a teacher, standing in front of her village classroom with fake eyeglasses and a wooden baton, to fellow students’ great amusement.Her ambition came true years later when she got a job teaching math at a private school. But the coronavirus upended her dreams, as the Indian economy contracted 7.3 percent in the 2020-21 fiscal year. Within months of starting, she and several other teachers were laid off because so many students had dropped out.Ms. Sinha, 30, is again in the market for a job. In November, she joined thousands of applicants vying for much-coveted work in the government. She has also traveled across Haryana seeking jobs, but turned them down because of the meager pay — less than $400 a month.“Sometimes, during nights, I really get scared: What if I am not able to get anything?” she said. “All of my friends are suffering because of unemployment.”But for Indian politicians, a high unemployment rate “is not a showstopper,” said Mr. Vyas, the economist, adding that they were far more concerned with inflation, which affects all voters.India’s reserve bank and finance ministry have tried to tackle inflation, which is battering many countries because of pandemic-related supply chain problems and the war in Ukraine, by restricting exports of wheat and sugar, raising interest rates and cutting taxes on fuel.The bank, after raising borrowing rates in May for the first time in two years, increased them again on Wednesday, to 4.9 percent. As it did so, it forecast that inflation would reach 6.7 percent over the next three quarters.Reserve bank officials have also employed an array of fiscal and monetary tactics to continue supporting growth, which cooled in the first quarter of 2022, falling to 4.1 percent. Household consumption, a major driver of India’s economy, has dropped in the last few months.“We are committed to containing inflation,” said the bank’s governor, Shaktikanta Das. “At the same time, we have to keep in mind the requirements of growth. It can’t be a situation where the operation is successful and the patient is dead.”While the Bank of England and the Federal Reserve in the United States have said their countries need to accept lower growth rates because of high commodity prices, India’s reserve bank is not in that camp, said Priyanka Kishore, an analyst at Oxford Economics. “Growth matters a lot for India,” she said. “There’s a political agenda.”Working at a brick factory in Bangalore.Manjunath Kiran/Agence France-Presse — Getty ImagesThe ban on food exports is a sharp turnabout for Mr. Modi. In response to Russia’s blockade on Ukrainian ports, which has led to a global shortage of grains, he had said in April that Indian farmers could help feed the world. Instead, with the global wheat shortfalls driving up prices, the Indian government imposed an export ban to keep domestic prices low.Temporary interventions like these are easier than addressing the fundamental problem of large-scale unemployment.“You have wheat in your godowns and you can ship it out to households and get instant gratification,” Mr. Vyas said, referring to storage facilities, “whereas trying certain policies for employment is far more protracted and intangible.”Those policies, analysts say, could include greater efforts to build up India’s underdeveloped manufacturing sector. They also say that India should ease regulations that often make it difficult to do business, as well as reducing tariffs so manufacturers have an easier time securing components not made in India.Exports have been a source of strength for the Indian economy, and the rupee has depreciated by about 4 percent against the U.S. dollar since the beginning of the year, which would normally boost exports.But inflation in the United States and war in Europe have started to affect sales for Indian-made clothes, said Raja M. Shanmugam, the president of a trade association in Tiruppur, a textile hub in the state of Tamil Nadu.“All the input cost is increasing. Even earlier this industry worked on wafer-thin margins, but now we are working on loss,” he said. “So a situation which is normally a happy situation for the exporters is not so anymore.”The struggles of working-class Indians, and the millions of unemployed, may eventually cause a drag on growth, economists say.Zia Ullah, who drives an auto-rickshaw in Tumakuru, an industrial city in the southern Indian state of Karnataka, said his income was still only about a quarter of what it was before the pandemic.The $20 he used to earn daily was enough to cover household expenses for his family of five, and school fees for his three children.“Customers are preferring to walk,” he said. “No one seems to have money these days to take an auto.”Mr. Ullah, 55, said the cost of food had climbed so much that he had to cut down on meals and take two of his children out of school.“Only one, the elder daughter, goes to school now,” Mr. Ullah said. “The rest look around for work in the area.”Hari Kumar contributed reporting. 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    Inflation in the United States: What You Need to Know

    Inflation is a tricky problem, but it has a few clear causes and consequences, and policymakers are working to bring it to heel.The government reported on Friday that consumer prices climbed 8.6 percent over the year through May, the fastest rate of increase in four decades.Americans are confronting more expensive food, fuel and housing, and some are grasping for answers about what is causing the price burst, how long it might last and what can be done to resolve it.There are few easy answers or painless solutions when it comes to inflation, which has jumped around the world as supply shortages collide with hot consumer demand. It is difficult to predict how long today’s price surge will drag on, and the main tool for fighting it is interest rate increases, which cool inflation by slowing the economy — potentially sharply.Here’s a guide to understanding what’s happening with inflation and how to think about price gains when navigating this complicated moment in the U.S. and world economy.What’s Driving InflationIt can be helpful to think of the causes of today’s inflation as falling into three related buckets.Strong demand. Consumers are spending big. Early in the pandemic, households amassed savings as they were stuck at home, and government support that continued into 2021 helped them put away even more money. Now people are taking jobs and winning wage increases. All of those factors have padded household bank accounts, enabling families to spend on everything from backyard grills and beach vacations to cars and kitchen tables.Too few goods. As families have taken pandemic savings and tried to buy pickup trucks and computer screens, they have run into a problem: There have been too few goods to go around. Factory shutdowns tied to the pandemic, global shipping backlogs and reduced production have snowballed into a parts-and-products shortage. Because demand has outstripped the supply of goods, companies have been able to charge more without losing customers.Now, China’s latest lockdowns are exacerbating supply chain snarls. At the same time, the war in Ukraine is cutting into the world’s supply of food and fuel, pushing overall inflation higher and feeding into the cost of other products and services. Gas prices are averaging around $5 a gallon nationally, up from just over $3 a year ago.Service-sector pressures. More recently, people have been shifting their spending away from things and back toward experiences as they adjust to life with the coronavirus — and inflation has been bubbling up in service industries. Rents are climbing swiftly as Americans compete for a limited supply of apartments, restaurant bills are heading higher as food and labor costs rise, and airline tickets and hotel rooms cost more because people are eager to travel and because fuel and labor are more expensive.You might be wondering: What role does corporate greed play in all this? It is true that companies have been raking in unusually big profits as they raise prices by more than is needed to cover rising costs. But they are able to do that partly because demand is so strong — consumers are spending right through price increases. It is unclear how long that pricing power will last. Some companies, like Target, have already signaled that they will begin to reduce prices on some products as they try to clear out inventory and keep customers coming.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Greedflation: Some experts contend that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Interest Rates: As it seeks to curb inflation, the Federal Reserve began raising interest rates for the first time since 2018. Here is what that means for inflation.How Is Inflation Measured?Economists and policymakers are closely watching America’s two primary inflation gauges: The Consumer Price Index, which was released on Friday, and the Personal Consumption Expenditures index.The C.P.I. captures how much consumers pay for things they buy, and it comes out earlier, making it the nation’s first clear glimpse at what inflation did the month before. Data from the index is also used to come up with the P.C.E. figures.The P.C.E. index, which will be released next on June 30, tracks how much things actually cost. For instance, it counts the price of health care procedures even when the government and insurance help pay for them. It tends to be less volatile, and it is the index the Federal Reserve looks to when it tries to achieve 2 percent inflation on average over time. As of April, the P.C.E. index was climbing 6.3 percent compared with the prior year — more than three times the central bank target.Fed officials are paying close attention to changes in month-to-month inflation to get a sense of its momentum.Policymakers are also particularly attuned to the so-called core inflation measure, which strips out food and fuel prices. While groceries and gas make up a big part of household budgets, they also jump around in price in response to changes in global supply. As a result, they don’t give as clear a read on the underlying inflationary pressures in the economy — the ones the Fed believes it can do something about.“I’m going to be looking to see a consistent string of decelerating monthly prints on core inflation before I’m going to feel more confident that we’re getting to the kind of inflation trajectory that’s going to get us back to our 2 percent goal,” Lael Brainard, the vice chair of the Fed and one of its key public messengers, said during a CNBC interview last week.What Can Slow the Rapid Price Gains?How long prices will continue to climb rapidly is anyone’s guess: Inflation has confounded experts repeatedly since the pandemic took hold in 2020. But based on the drivers behind today’s hot prices, a few outcomes appear likely.For one, quick inflation seems unlikely to go away entirely on its own. Wages are climbing much more rapidly than normal. That means unless companies suddenly get more efficient, they will probably try to continue to increase prices to cover their labor costs.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Strong inflation, anxious consumers add up to more worries that recession has already arrived

    Reports Friday showing blistering inflation and historic lows in consumer sentiment painted an increasingly dark economic picture.
    A strong labor market has been the principal firewall against a downturn, but even that has shown some chinks lately.
    “We’re in technical recession but just don’t realize it,” said Bank of America chief investment strategist Michael Hartnett.

    Trays of beef are for sale in the meat section of a supermarket in McLean, Virginia, June 10, 2022.
    Saul Loeb | AFP | Getty Images

    The case that a recession is looming over the U.S. got stronger Friday, as blistering inflation and historic lows in consumer sentiment painted an increasingly dark economic picture.
    As if the consumer price index increase of 8.6% wasn’t bad enough news, that release was followed later in the morning by the University of Michigan Index of Consumer Sentiment.

    That widely followed gauge of optimism registered a paltry 50.2, the lowest in survey data going back to 1978. That’s lower than the depths of the Covid outbreak, lower than the financial crisis, lower even than the last inflation peak back in 1981.
    Taken together, the data add up to an outlook that is not good for those hoping the U.S. could skirt its first recession since the brief pandemic downturn of 2020.
    “I wouldn’t be surprised if it started in the third quarter of this year,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “You can say that we’re in the midst of it right now, in the beginning phase. Only in retrospect will we know for sure, but it should not surprise us at this point.”
    How long it will take to get to that official recession is a matter of debate that only time will resolve. But the recent data suggest the moment of reckoning may be closer than many economists are willing to concede.

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    While consumer spending remains resilient, it’s come at the expense of a savings rate that has dipped to its lowest level since September 2008, the month Lehman Brothers crashed to set off the worst of the financial crisis.

    Household net worth in the first quarter fell slightly, the first decline in two years, according to Federal Reserve data released earlier this week. That came as household debt rose 8.3%, the biggest annualized gain since 2006.
    The Atlanta Fed is tracking second-quarter GDP growth of just 0.9%. Coming after Q1’s decline of 1.5%, a further deterioration in the current period would trigger a common rule-of-thumb for a recession — two consecutive quarters of contraction.
    A strong labor market has been the principal firewall against a downturn, but even that has shown some chinks lately: Last week’s May nonfarm payrolls tally, though better than expected, represented the smallest gain since April 2021. And Thursday’s weekly jobless claims report for last week showed the highest level since mid-January.

    Teetering on the edge

    Still, the prevailing sentiment on Wall Street is that the economy still can manage to avoid an actual recession.
    “If you look at these numbers, there’s pretty much nothing that the Fed would say, `This is good news,'” said Michael Kushma, chief investment officer for global fixed income at Morgan Stanley. “I’m still optimistic that with the downshift in the economy, we might flirt with recession, but we’re not likely to get there yet.”
    Even still, Kushma acknowledges that the “investing landscape is negative on almost every front.”
    Indeed, Wall Street is closing the week amid a torrent of selling that encompasses stocks and bonds, indicating both a likely path of higher interest rates ahead and a reckoning that the relatively rosy outlook for corporate earnings is unlikely to hold up.

    Target has been serving as a canary in Wall Street’s coal mine, offering up two recent readjustments on its outlook to reflect a weakening shopper, burgeoning inventories and thus declining pricing power. Should those trends escalate, the pillar of consumer spending that holds up nearly 70% of the $24 trillion U.S. economy is unlikely to hold.
    “More and more corporate announcements and earnings releases (or warnings) are reflecting a consumer that is now in a terrible mood given the decline in net disposable income, and consequently, these consumers are dramatically slowing spending on the backside of it,” wrote Rick Rieder, BlackRock’s CIO of global fixed income.
    Rieder worries that the biggest risk to consumer spending and job creation is that the current spate of high inflation will push central banks such as the Fed to tighten policy too much “and essentially fall into a damaging policy mistake.”

    ‘We’re in technical recession’

    However, there’s a feeling elsewhere that the damage has already been done.
    “We’re in technical recession but just don’t realize it,” Bank of America chief investment strategist Michael Hartnett wrote before the inflation and sentiment reports hit. Noting the Atlanta Fed GDP estimate, he said the U.S. is just “a couple of bad data points away from ‘recession.'”
    Fed officials have expressed confidence they can keep raising rates without tipping over the increasingly fragile economy.
    Following the inflation report, markets priced in at least three consecutive half-percentage-point rate hikes — in June, July and September — and a pretty good chance of one more in November. However, central bankers likely won’t commit that far out, hoping that the work it does over the summer will be enough to reduce the pace of price increases and the necessity for more draconian policy tightening.
    “The consumer at the margin is not going to be able or willing to continue to pay those prices. Therefore, we think it introduces greater stagflationary risk,” said Phil Orlando, chief equity market strategist for Federated Hermes, referring to the term for stagnant growth coupled with high inflation. “From a timing standpoint, we do not have a recession call on the table for this year. Our models are suggesting that 2024 is the more likely recession timetable.”
    Still, Orlando said investing in the current environment is going to be tough. Federated expects more damage to be done before a possible turnaround in the late summer or early fall.

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    Inflation rose 8.6% in May, highest since 1981

    The consumer price index rose 8.6% in May from a year ago, the highest increase since December 1981. Core inflation excluding food and energy rose 6%. Both were higher than expected.
    Surging food, gas and energy prices all contributed to the gain, with fuel oil up 106.7% over the past year.
    Shelter costs, which comprise about one-third of the CPI, rose at the fastest 12-month pace in 31 years.
    The rise in inflation meant workers lost more ground in May, with real wages declining 0.6% from April and 3% on a 12-month basis.

    Inflation accelerated further in May, with prices rising 8.6% from a year ago for the fastest increase since December 1981, the Bureau of Labor Statistics reported Friday.
    The consumer price index, a wide-ranging measure of goods and services prices, increased even more than the 8.3% Dow Jones estimate. Excluding volatile food and energy prices, so-called core CPI was up 6%, slightly higher than the 5.9% estimate.

    On a monthly basis, headline CPI was up 1% while core rose 0.6%, compared with respective estimates of 0.7% and 0.5%.
    Surging shelter, gasoline and food prices all contributed to the increase.
    Energy prices broadly rose 3.9% from a month ago, bringing the annual gain to 34.6%. Within the category, fuel oil posted a 16.9% monthly gain, pushing the 12-month surge to 106.7%.
    Shelter costs, which account for about a one-third weighting in the CPI, rose 0.6% for the month, the fastest one-month gain since March 2004. The 5.5% 12-month gain is the most since February 1991.

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    Finally, food costs climbed another 1.2% in May, bringing the year-over-year gain to 10.1%.

    Those escalating prices meant workers took another pay cut during the month. Real wages when accounting for inflation fell 0.6% in April, even though average hourly earnings rose 0.3%, according to a separate BLS release. On a 12-month basis, real average hourly earnings were down 3%.
    Markets reacted negatively to the report, with stock futures indicating a sharply lower open on Wall Street and government bond yields rising.
    “It’s hard to look at May’s inflation data and not be disappointed,” said Morning Consult’s chief economist, John Leer. “We’re just not yet seeing any signs that we’re in the clear.”
    Some of the biggest increases came in airfares (up 12.6% on the month), used cars and trucks (1.8%), and dairy products (2.9%). The vehicle costs had been considered a bellwether of the inflation surge and had been falling for the past three months, so the increase is a potentially ominous sign, as used vehicle prices are now up 16.1% over the past year. New vehicle prices rose 1% in May.
    Friday’s numbers dented hopes that inflation may have peaked and adds to fears that the U.S. economy is nearing a recession.
    The inflation report comes with the Federal Reserve in the early stages of a rate-hiking campaign to slow growth and bring down prices. May’s report likely solidifies the likelihood of multiple 50 basis point interest rate increases ahead.
    “Obviously, nothing is good in this report,” said Julian Brigden, president of MI2 Partners, a global macroeconomic research firm. “There is nothing in there that’s going to give the Fed any cheer. … I struggle to see how the Fed can back off.”
    With 75 basis points of interest rate rises already under its belt, markets widely expect the Fed to continue tightening policy through the year and possibly into 2023. The central bank’s benchmark short-term borrowing rate is currently anchored around 0.75% -1% and is expected to rise to 2.75%-3% by the end of the year, according to CME Group estimates.
    Inflation has been a political headache for the White House and President Joe Biden.
    Administration officials pin most of the blame for the surge on supply chain issues related to the Covid pandemic, imbalances created by outsized demand for goods over services and the Russian attack on Ukraine.
    In a recent Wall Street Journal op-ed, Biden said he will push for further improvements to supply chains and continue efforts to bring down the budget deficit.
    However, he and Treasury Secretary Janet Yellen both have emphasized that much of the responsibility for lowering inflation belongs to the Fed. The administration has largely denied that the trillions of dollars directed toward Covid aid played a major role.
    How much the central bank will have to raise rates remains to be seen. Former Treasury Secretary Larry Summers recently released a white paper with a team of other economists that suggests the Fed will need to go further than many are anticipating. The paper asserts that the current inflation predicament is closer to the 1980s situation than it appears because of differences in the ways that CPI is computed then and now.
    Correction: Julian Brigden is president of MI2 Partners. An earlier version misspelled his name.

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    Inflation Sped Up Again in May, Dashing Hopes for Relief

    The Consumer Price Index picked up by 8.6 percent, as price increases climbed at the fastest pace in more than 40 years.A surge in prices in May delivered a blow to President Biden and underscored the immense challenge facing the Federal Reserve as inflation, which many economists had expected to show signs of cooling, instead reaccelerated to climb at its fastest pace since late 1981.Consumer prices rose 8.6 percent from a year earlier and 1 percent from April — a monthly increase that was more rapid than economists had predicted and about triple the previous pace. The pickup partly reflected surging gas costs, but even with volatile food and fuel prices stripped out the climb was 0.6 percent, a brisk monthly rate that matched April’s reading.Friday’s Consumer Price Index report offered more reason for worry than comfort for Fed officials, who are watching for signs that inflation is cooling on a monthly basis as they try to guide price increases back down to their goal. A broad array of products and services, including rents, gas, used cars and food, are becoming sharply more expensive, making this bout of inflation painful for consumers and suggesting that it might have staying power. Policymakers aim for 2 percent inflation over time using a different but related index, which is also elevated.The quick pace of inflation increases the odds that the Fed, which is already trying to cool the economy by raising borrowing costs, will have to move more aggressively and inflict some pain to temper consumer and business demand. The central bank is widely expected to raise rates half a percentage point at its meeting next week and again in July. But Friday’s data prompted a number of economists to pencil in another big rate increase in September. A more active Fed would increase the chances of a marked pullback in growth or even a recession. More

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    Biden Casts Inflation as a Global Problem During a Visit to the Port of Los Angeles

    The visit to the nation’s busiest entry point for goods comes as President Biden struggles to show progress on resolving supply chain issues that are fueling inflation.LOS ANGELES — President Biden on Friday defended his administration’s efforts to deal with inflation, just hours after a new report showed a surprise spike in prices that puts new pressure on the White House to ease the burden on consumers.Mr. Biden used the Port of Los Angeles as a backdrop to highlight his fight against inflation, delivering a speech about how his team has tried to speed up the delivery of goods disrupted by the coronavirus pandemic.“The job market is the strongest it’s been since World War II, notwithstanding inflation,” Mr. Biden said, standing on the battleship Iowa, a decommissioned warship that has been turned into a museum.With shipping containers piled up behind him, Mr. Biden emphasized that his administration had taken action last year to reduce congestion at ports, allowing 97 percent of all packages to be delivered on time during the holiday shopping season.But six months later, serious problems remain and persistent inflation has become a major political liability for Mr. Biden.The war in Ukraine has disrupted flows of food, fuel and minerals, adding to pandemic-related shortages and pushing inflation to multidecade highs. Data released on Friday morning showed inflation picking up again, rising 1 percent from the previous month. Compared with one year ago, consumer prices rose 8.6 percent, the largest annual increase since 1981.While some clogs in the supply chain look to be clearing, analysts say that trend may yet stall — or even reverse — in the months to come, as retailers enter a busier fall season and dockworkers on the West Coast renegotiate a labor contract that could lead to work slowdowns or a strike.Understand Inflation and How It Impacts YouInflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Greedflation: Some experts contend that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.For Investors: At last, interest rates for money market funds have started to rise. But inflation means that in real terms, you’re still losing money.Mr. Biden said he understands that Americans are anxious.“They are anxious for good reason,” he said. But he stressed that inflation is largely the result of increases in the price of gasoline and food, and he blamed the price hikes in those goods on Russia’s invasion of Ukraine.Mr. Biden argued that large price increases in the United States were part of a global problem with inflation and that Americans were in better shape than their counterparts elsewhere because of a strong jobs market and a declining budget deficit.He also lashed out at nine shipping companies that he said had used the global economic situation to increase prices by 1,000 percent, artificially adding to the cost of goods around the world. He did not name the companies.But he said they “have raised their prices by as much as 1,000 percent.”He called on Congress to crack down on shipping companies that raise prices.“The rip-off is over,” he said.Mr. Biden is correct that soaring inflation is a global problem. In a note to clients on Friday, Deutsche Bank Research said the United States ranked 48th for its inflation rate on a list of 111 countries, just above the middle of the pack.But that is little comfort to U.S. households struggling with rising costs.Analysts say the U.S. logistics industry is heading into its busier fall season, when retailers bring in products for back-to-school shopping and the holidays. Chinese exports are also on the rise as an extended coronavirus lockdown lifts in Shanghai.And, most crucially, dockworkers on the West Coast are renegotiating a labor contract with port terminal operators that expires at the end of this month. If they fail to reach an agreement, West Coast ports may see slowdowns or shutdowns that would delay deliveries and add to supply chain gridlock.Over the past two decades, labor negotiations led to at least three such slowdowns or stoppages that resulted in delays. In recent weeks, some companies that typically ship into the West Coast have begun routing some goods to the East or Gulf Coasts to try to avoid any logjams.Gene Seroka, the executive director of the Port of Los Angeles, said he expected labor talks to go beyond the July 1 contract expiry date, but downplayed the risks to trade.“It’s important to know, with all this cargo on the way, the rank-and-file dockworkers will be out on the job every day,” he said.“And the employers know they’ve got to get these products to market,” he added. “So we’re going to give these people some room. Let them negotiate in their space, and the rest of us are going to work on keeping the cargo and the economy moving.”Dockworkers on the West Coast, including at the Port of Los Angeles, are renegotiating a labor contract with port terminal operators that expires at the end of this month. Failure to reach an agreement could further delay deliveries.Stella Kalinina for The New York TimesMr. Biden has kept close relationships with labor unions and may hesitate to put pressure on dockworkers to conclude any talks. But a work slowdown or strike would be bad news for the administration, which has frequently come under attack about rising prices.By some metrics, supply chain pressures have been easing in recent weeks. The average global price to ship a 40-foot container of goods fell to $7,370 as of June 3, down from a peak of more than $11,000 in September, though that was still five times higher than before the pandemic began, according to the Freightos Baltic Index.Inflation F.A.Q.Card 1 of 5What is inflation? More