Evelyn Reynolds

Stocks bounced when October’s U.S. consumer price index came in below expectations earlier this month, as investors began to bet on an easing of the Federal Reserve’s aggressive interest rate hikes.
While most economists expect a significant general decline in headline inflation rates in 2023, many are doubtful that this will herald a fundamental disinflationary trend.

Prices of fruit and vegetables are on display in a store in Brooklyn, New York City, March 29, 2022.
Andrew Kelly | Reuters

Global markets have taken heart in recent weeks from data indicating that inflation may have peaked, but economists warn against the return of the “transitory” inflation narrative.
Stocks bounced when October’s U.S. consumer price index came in below expectations earlier this month, as investors began to bet on an easing of the Federal Reserve’s aggressive interest rate hikes.

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While most economists expect a significant general decline in headline inflation rates in 2023, many are doubtful that this will herald a fundamental disinflationary trend.
Paul Hollingsworth, chief European economist at BNP Paribas, warned investors on Monday to beware the return of “Team Transitory,” a reference to the school of thought that projected rising inflation rates at the start of the year would be fleeting.
The Fed itself was a proponent of this view, and Chairman Jerome Powell eventually issued a mea culpa accepting that the central bank had misread the situation.
“Reviving the ‘transitory’ inflation narrative might seem tempting, but underlying inflation is likely to remain elevated by past standards,” Hollingsworth said in a research note, adding that upside risks to the headline rate next year are still present, including a potential recovery in China.

“Big swings in inflation highlight one of the key features of the global regime shift that we believe is underway: greater volatility of inflation,” he added.

The French bank expects a “historically large” fall in headline inflation rates next year, with almost all regions seeing lower inflation than in 2022, reflecting a combination of base effects — the negative contribution to annual inflation rate occurring as month-on-month changes shrink — and dynamics between supply and demand shift.
Hollingsworth noted that this could revive the “transitory” narrative” next year, or at least a risk that investors “extrapolate the inflationary trends that emerge next year as a sign that inflation is rapidly returning to the ‘old’ normal.”
These narratives could translate into official predictions from governments and central banks, he suggested, with the U.K.’s Office for Budget Responsibility (OBR) projecting outright deflation in 2025-26 in “striking contrast to the current market RPI fixings,” and the Bank of England forecasting significantly below-target medium-term inflation.

The skepticism about a return to normal inflation levels was echoed by Deutsche Bank. Chief Investment Officer Christian Nolting told CNBC last week that the market’s pricing for central bank cuts in the second half of 2023 were premature.
“Looking through our models, we think yes, there is a mild recession, but from an inflation point of view,” we think there are second-round effects,” Nolting said.
He pointed to the seventies as a comparable period when the Western world was rocked by an energy crisis, suggesting that second-round effects of inflation arose and central banks “cut too early.”
“So from our perspective, we think inflation is going to be lower next year, but also higher than compared to previous years, so we will stay at higher levels, and from that perspective, I think central banks will stay put and not cut very fast,” Nolting added.
Reasons to be cautious
Some significant price increases during the Covid-19 pandemic were widely considered not to actually be “inflation,” but a result of relative shifts reflecting specific supply and demand imbalances, and BNP Paribas believes the same is true in reverse.
As such, disinflation or outright deflation in some areas of the economy should not be taken as indicators of a return to the old inflation regime, Hollingsworth urged.
What’s more, he suggested that companies may be slower to adjust prices downward than they were to increase them, given the effect of surging costs on margins over the past 18 months.
Although goods inflation will likely slow, BNP Paribas sees services inflation as stickier in part due to underlying wage pressures.
“Labour markets are historically tight and – to the extent that there has likely been a structural element to this, particularly in the U.K. and U.S. (e.g. the increase in inactivity due to long-term sickness in the UK) – we expect wage growth to stay relatively elevated by past standards,” Hollingsworth said.

China’s Covid policy has recaptured headlines in recent days, and stocks in Hong Kong and the mainland bounced on Tuesday after Chinese health authorities reported a recent uptick in senior vaccination rates, which is regarded by experts as crucial to reopening the economy.
BNP Paribas projects that a gradual relaxation of China’s zero-Covid policy could be inflationary for the rest of the world, as China has been contributing little to global supply constraints in recent months and an easing of restrictions is “unlikely to materially boost supply.”
“By contrast, a stronger recovery in Chinese demand is likely to put upward pressure on global demand (for commodities in particular) and thus, all else equal, fuel inflationary pressures,” Hollingsworth said.
A further contributor is the acceleration and accentuation of the trends of decarbonization and deglobalization brought about by the war in Ukraine, he added, since both are likely to heighten medium-term inflationary pressures.
BNP maintains that the shift in the inflation regime is not just about where price increases settle, but the volatility of inflation that will be emphasized by big swings over the next one to two years.
“Admittedly, we think inflation volatility is still likely to fall from its current extremely high levels. However, we do not expect it to return to the sorts of levels that characterised the ‘great moderation’,” Hollingsworth said.

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Democratic and Republican leaders prepared to intercede as President Biden warned the prospect of a December strike put the U.S. economy “at risk.”After a meeting with President Biden, Democratic and Republican leaders pledged to pass legislation that would avert a planned nationwide rail strike in December.Doug Mills/The New York TimesWASHINGTON — Democratic and Republican leaders in Congress vowed on Tuesday to pass legislation averting a nationwide rail strike, saying they agreed with President Biden that a work stoppage during the holidays next month would disrupt shipping and deal a devastating blow to the nation’s economy.The rare bipartisan promise to act came as some of the nation’s largest business groups warned of dire consequences from a rail shutdown. Mr. Biden, who had promised to be the most pro-union president in the country’s history, said the federal government must short-circuit collective bargaining in this case for the good of the country as a whole.“It’s not an easy call, but I think we have to do it,” he told the top four lawmakers from both parties during a meeting at the White House on Tuesday morning, as the Dec. 9 strike deadline loomed. “The economy is at risk.”Speaker Nancy Pelosi said the House would vote Wednesday on a tentative agreement that Mr. Biden’s administration had helped negotiate between rail companies and the unions earlier this year. The agreement raised wages but lacked provisions for paid medical or family leave.Late Tuesday, facing substantial frustration among progressives who demanded that the offer include paid leave, Ms. Pelosi said she would also bring up a separate proposal to add seven days of paid sick leave to the agreement. It is unclear whether Republicans in the Senate would agree to such an addition, but the plan to hold a vote illustrated the degree of discontent among pro-union liberals about the agreement Mr. Biden had struck.“They demand the basic dignity of paid sick days. I stand with them,” Representative Alexandria Ocasio-Cortez, Democrat of New York, said on Twitter. “If Congress intervenes, it should be to have workers’ backs and secure their demands in legislation.”Senate leaders said they would work to pass legislation to avert the strike quickly after it passes the House, as expected. Senator Mitch McConnell of Kentucky, the minority leader, told reporters that “we’re going to need to pass a bill,” suggesting that Republicans did not intend to try to block such a move. Representative Kevin McCarthy of California, the House minority leader, said, “I think it will pass.”If it does, it will be bittersweet for Mr. Biden, who has built a decades-long political career by stressing his support for unions in their battles against management. Aides said the president had been reluctant to override the will of union workers, but ultimately changed his mind when three of his cabinet secretaries told him that negotiations had broken down and a strike seemed inevitable.Officials said Mr. Biden concluded that the effects of a strike, including hundreds of thousands of lost jobs, would be too damaging. Frozen train lines would snap supply chains for commodities like lumber, coal and chemicals, and delay deliveries of automobiles and other consumer goods, driving up prices even further.The American Trucking Associations, an industry group, recently estimated that relying on trucks to work around a rail stoppage would require more than 450,000 additional vehicles — a practical impossibility given the shortage of equipment and drivers.Understand the Railroad Labor TalksCard 1 of 5Averting a shutdown. More

As an obscure but muscular congressional staffer and chairman of the Federal Trade Commission, he helped usher into law a raft of consumer protections.Few people outside Washington had ever heard of the consumer advocate Michael Pertschuk by the mid-1970s, but he was considered so influential in Congress that friends and foes alike anointed him “the 101st senator,” and the cigarette maker Philip Morris proclaimed him the company’s “number one enemy.”While he never held elective public office, Mr. Pertschuk occupied, as The Washington Post wrote in 1977, “the top stratum of an invisible network of staff power and influence in the Senate, with impact on the life of every citizen of the United States.”Probably more than any other individual, he was responsible for the government’s placing warning labels on cigarettes, banning tobacco advertising from television and radio, requiring seatbelts in cars and putting in place other consumer protections — all by helping to draft those measures into law as the chief counsel and staff director of the Senate Commerce Committee and later as the chairman of the Federal Trade Commission under President Jimmy Carter.“I spent a good part of my life making life miserable for the tobacco companies,” Mr. Pertschuk had said, “and I’m not sorry about that.”He died on Nov. 16 at his home in Santa Fe, N.M. He was 89. His wife, Anna Sofaer, said the cause was complications of pneumonia.Mr. Pertschuk, second from right in the foreground, and other appointees take the oath of office in a White House ceremony in April 1977. He was named F.T.C. chairman. His wife, Anna Sofaer, is at right. Justice William J. Brennan of the Supreme Court administered the oath, with President Jimmy Carter flanking him. Associated PressFor ordinary consumers who were vexed by the government’s lax oversight of the tobacco and auto industries beginning in the mid-1960s, Mr. Pertschuk was their unseen legal guardian.He helped draft the Natural Gas Pipeline Safety Act, the Recreational Boat Safety Act, the Federal Railroad Safety Act, the Consumer Product Safety Act, the Toxic Substances Act and the Safe Drinking Water Act. Decades later, he lifted the veil on government sausage-making in his book “When the Senate Worked for Us: The Invisible Role of Staffers in Countering Corporate Lobbies” (2017).“Few have done more to reduce tobacco use in the United States and to galvanize and empower the tobacco control movement than Mike Pertschuk,” Matthew L. Myers, the president of the Campaign for Tobacco-Free Kids, said in a statement.He added, “He arguably became the most aggressive Federal Trade Commission chair in history and pursued powerful preventive health measures, including a proposed ban on advertising targeted at children.”The consumer advocate Ralph Nader, with whom Mr. Pertschuk collaborated closely on auto safety and other issues, described him as “a brilliant strategist, organizer and human relations genius while he was reshaping the Commerce Committee into the ‘Grand Central Station’ of consumer protection.”“He also ignited the anti-tobacco industry movement on Capitol Hill and later traveled the world motivating other countries to do the same,” Mr. Nader said in a statement.Mr. Pertschuck in 1984. He remained an F.T.C. commissioner after Ronald Reagan became president. Stepping down, he said the administration’s “ideological blindness led to a new era of regulatory nihilism and just plain nuttiness.” George Tames/The New York TimesMichael Pertschuk was born on Jan. 12, 1933, in London to a Jewish family who had sold furs in Europe for generations but who fled in 1937 as Nazi Germany codified anti-Semitism and girded for war. His father, David, opened a fur store in Manhattan. His mother, Sarah (Baumgarten) Pertschuk, was a homemaker.He graduated from Woodmere Academy on Long Island, where he grew up, earned a bachelor’s degree in literature from Yale in 1954, served in an Army artillery unit from 1954 to 1956 and was discharged as a first lieutenant. He received his law degree from Yale Law School in 1959.After clerking for Chief Judge Gus J. Solomon of the U.S. District Court in Oregon, he was hired in Washington in 1964 as a legislative assistant to Senator Maurine B. Neuberger, an Oregon Democrat. About the same time, the United States surgeon general released his groundbreaking report linking smoking to cancer and probably heart disease, and a year later Mr. Nader published his book “Unsafe at Any Speed,” which labeled the compact Chevrolet Corvair, with its engine mounted in the rear, as a “One-Car Accident.” Emerging as the Senate’s leading staff expert on tobacco control legislation, Mr. Pertschuk was recruited by Senator Warren G. Magnuson, the Oregon Democrat who was chairman of the Commerce Committee. Mr. Pertschuk served as a counsel to the committee from 1964 to 1968 and as chief counsel and staff director from 1968 to 1977, when he was named chairman of the Federal Trade Commission.He relinquished the chairmanship after Ronald Reagan was elected president in 1980 but remained a commissioner until 1984. During his tenure he forced the funeral industry to itemize its charges, but as the climate for regulation cooled, he failed in his effort to ban TV commercials aimed at marketing sugary foods to children.On leaving office, Mr. Pertschuk blamed the Republican administration for fostering de-regulaton, he said, whose “extremism and ideological blindness led to a new era of regulatory nihilism and just plain nuttiness.”Mr. Pertschuk’s first marriage, in 1954, to Carleen Joyce Dooley, ended in divorce in 1976. He married Anna Phillips Sofaer in 1977.In addition to his wife, he is survived by two children from his first marriage, Amy and Mark Pertschuk; a stepson, Daniel Sofaer; and three grandchildren.He and his wife moved from Washington to Santa Fe in 2003.Asked what motivated Mr. Pertschuk to embark on his consumer crusade, Joan Claybrook, who headed another of his progenies, the National Highway Traffic Safety Administration, during the Carter administration, said in a phone interview: “The facts. The more he learned, the more adamant he became. The more he learned about tobacco, the more outraged he became and the more determined he was to do something about it. And he was in a position of enormous power to do something about it.”After leaving government, Mr. Pertschuk founded, with David Cohen, a former president of Common Cause, the Advocacy Institute, which trained social justice adherents in the United States and emerging democracies.Mr. Pertschuk explained why he hadn’t capitalized on his enormous congressional and commission experience by going to work for a law firm, or for corporate clients or for foreign governments.“There is a career to be made out of the craft of lobbying for things you believe in,” he told The New York Times in 1987. “You may lag behind your contemporaries in BMW’s, if not Cuisinarts, but it really is worth it.”“This is more fun,” he said. More

Growing protests in the world’s biggest manufacturing nation add a new element of uncertainty atop the Ukraine war, an energy crisis and inflation.The swelling protests against severe pandemic restrictions in China — the world’s second-largest economy — are injecting a new element of uncertainty and instability into the global economy when nations are already struggling to manage the fallout from a war in Ukraine, an energy crisis and painful inflation.For years, China has served as the world’s factory and a vital engine of global growth, and turmoil there cannot help but ripple elsewhere. Analysts warn that more unrest could further slow the production and distribution of integrated circuits, machine parts, household appliances and more. It may also encourage companies in the United States and Europe to disengage from China and more quickly diversify their supply chains.Millions of China’s citizens have chafed under a tight lockdown for months as the Communist Party seeks to overcome the spread of the Covid-19 virus, three years after its emergence. Anger turned to widespread protest after an apartment fire last week killed 10 people and comments on social media questioned whether the lockdown had prevented their escape.It is unclear whether the demonstrations flaring across the country will be quickly snuffed out or erupt into broader resistance to the iron rule of its top leader, Xi Jinping, but so far the most significant economic damage stems from the lockdown.“The biggest economic hit is coming from the zero-Covid policies,” said Carl Weinberg, chief economist at High Frequency Economics, a research firm. “I don’t see the protests themselves being a game changer.”“The world will still turn to China for what it makes best and cheapest,” he added.Police officers during a protest in Beijing on Sunday.Kevin Frayer/Getty ImagesAsked how the Biden administration assessed the economic fallout from the latest unrest, John Kirby, coordinator for strategic communications at the National Security Council, said Monday, “We don’t see any particular impact right now to the supply chain.”Concerns about the economic impact of the spreading unrest in China, nonetheless, appeared to be partly responsible for a decline in world markets. The S&P 500 index closed 1.5 percent lower, while the dollar, often a haven in turbulent times, moved higher. Oil prices began the day with a sharp drop before rebounding.The sheer magnitude of China’s economy and resources makes it a critical player in world commerce. “It’s extremely central to the global economy,” said Kerry Brown, an associate fellow in the Asia-Pacific program at Chatham House, an international affairs institute in London. That uncertainty “will have a massive impact on the rest on the world.”China now surpasses all countries as the biggest importer of petroleum. It manufactured nearly 30 percent of the world’s goods in 2021. “There is simply no alternative to what China offers in terms of scale and capacities,” Mr. Brown said.Delays and shortages related to the pandemic prompted many industries to re-evaluate the resilience of their supply chains and consider additional sources of raw materials and workers. Apple, which recently announced that it expected sales to decline because of stoppages at its Chinese plants, is one of several tech companies that have shifted a small portion of their production to other countries, like Vietnam or India.The tilt by some companies away from China predates the pandemic, reaching back to former President Donald J. Trump’s determination to start a trade war with China, a move that resulted in a spiral of punishing tariffs.Yet even if business and political leaders want to be less reliant on China, Mr. Brown said, “the brute reality is that’s not going to happen soon, if at all.”“We shouldn’t kid ourselves that we can quickly decouple,” he added.China’s size is a lure for American, European and other companies looking not only to make products quickly and cheaply, but also to sell them in great numbers. There is simply no other market as big.Tesla, John Deere and Volkswagen are among the companies that have bet on China for future growth, but they are likely to suffer some setbacks at least in the short run. Volkswagen announced last week that its sales in China had stagnated this year, running 14 percent below expectations.A Volkswagen stand at the Auto Shanghai trade show last year. Volkswagen is one of the companies counting on the Chinese market for sales growth.Alex Plavevski/EPA, via ShutterstockThe protests highlight the political risks associated with investing in China, but analysts say the recent wave doesn’t reveal anything that investors didn’t already know.“Many investors will be looking ahead and positioning their portfolios now for the reopening,” said Nigel Green, chief executive of deVere Group, a financial advisory firm. They will be “seeking to take advantage of the country’s transition from an export economy to a consumption one,” he added.Luxury brands continue to stake their future on growth in China.As interconnected as the global economy is, one way in which China’s slowdown may be helping other nations is by keeping down the price of energy. Over the last 20 years, the growth of the Chinese economy has been a primary driver of global demand for oil and hydrocarbons in general.Energy experts say rising numbers of Covid infections and growing doubts that China will ease restrictions in major cities are a major reason that oil prices have dropped over the last three weeks to levels last seen before the Russian invasion of Ukraine in late February.“Chinese demand is the largest single factor in world oil demand,” said David Goldwyn, a senior energy diplomat in the Obama administration. “China is the swing demander.”As the Chinese economy has softened in the grip of the Covid lockdown, fewer oil tankers have sailed into Chinese ports in recent weeks, forcing the major Middle Eastern and Russian oil producers to lower their prices. Now spreading protests create another uncertainty about future demand.Chinese oil demand is expected to average 15.1 million barrels a day this quarter, down from 15.8 million a year ago, according to Kpler, an analytics firm.Barriers at a security checkpoint in Guangzhou, a southern Chinese manufacturing hub, this month.Associated PressAs for supply chain disruptions, Neil Shearing, chief economist at Capital Economics, a research firm, said he thought excessive blame had been heaped on China. “Everything has been framed around supply shortages,” he said, but in China, industrial production increased during the pandemic. The problem was that global demand surged more.For now, the biggest economic impact will be within China, rather than on the global economy. Sectors that depend on face-to-face contact — retail, hospitality, entertainment — will take the biggest hit. Over the past three days, measures of people’s movements have drastically fallen, Mr. Shearing said.He added that more people were quarantined now than at the height of the Omicron epidemic last winter. The wave of infections and the government’s response to it — not the protests — are what’s having “the biggest impact on China’s economy,” he said.Clifford Krauss More

Atlanta is a U.S. economic bright spot that’s experiencing rapid population growth.
The population has sprawled into environmentally taxing suburbs, said Dan Immergluck, a professor of urban studies at Georgia State University.
Public-private partnerships, such as the BeltLine, that aim to build with density have contributed to rising housing costs for typical earners.
Community organizations are working to preserve housing affordability.

Metro Atlanta is on a hot streak.More than 6 million people now live in the region, according to recent Census Bureau estimates. Experts say that’s about a 50% increase from 20 years ago.”It’s a huge increase in population,” said Dan Immergluck, a professor of urban studies at Georgia State University. “That has taxed the region environmentally.”
Financial and tech firms continue to flock toward metro Atlanta. This builds on the city’s strong logistics, entertainment and film, and health services industries.Demand for quality housing in the region has become fierce, particularly in the city center.”Atlanta is becoming a wider city,” said Nathaniel Smith, founder and chief equity officer at the Partnership for Southern Equity. “Now, whether we’ll be able to kind of balance that out and ensure that, you know, black folks don’t get pushed out … I’m not sure.”

In September 2022, the median home in the city of Atlanta was valued at about $400,000, according to Zillow’s Home Values Index. That price would be out of reach for the typical household in the city of Atlanta, which made about $64,179 annually in recent years. Rents also have ticked above the national median.
Some Atlanta locals believe ambitious urban redevelopment projects, such as the BeltLine, have contributed to fast-rising prices in the area.
The BeltLine is a 22-mile loop of walking and cycling trails built largely on abandoned rail lines and developed as a public-private partnership.
It was intended to connect different neighborhoods in the city with each other and to create, along the path, walkable communities where residents could access a variety of services without needing a car.
“We’ve put about $700 million into the BeltLine to date,” said Atlanta BeltLine Inc. CEO Clyde Higgs. “What we’ve seen is roughly an $8 billion private investment that has followed the BeltLine. That has caused a number of good things and also a number of pressures within the city of Atlanta.”

While the region evolves, a raft of community organizers are launching efforts to preserve housing affordability.
“It would have been great if we had an opportunity to secure more land earlier in the life of the BeltLine,” said Amanda Rhein, executive director of the Atlanta Land Trust, “because property values continue to increase in close proximity to the project.”Watch the video to see how Atlanta plans to preserve housing affordability amid rapid growth.

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With an economic slowdown a distinct possibility, stores hope customers’ willingness to open their wallets will last through the season.Amazon held what amounted to an extra Prime Day in October, blanketing its site with deals. Best Buy rolled out Black Friday-level sales last month. And on Friday, Kohl’s entered the first 200 people to walk into each of its stores into a sweepstakes, with prizes including gift cards to Sephora and a family trip to a Legoland resort.With the arrival of the all-important holiday shopping season, retailers are not just competing with one another to attract customers. They are also competing against the clock.For now, Americans are spending, buoyed by pandemic-era savings and a red-hot labor market. But at the same time, prices are climbing at the fastest pace in decades and the Federal Reserve is attempting to rein them in by raising interest rates. That effort to curb demand by making borrowing more expensive is, in turn, making consumers pessimistic about the economy. And a recession is a distinct possibility.Retailers, some of them sitting on a glut of inventory, want to sell as much as they can while consumers are still pulling out their wallets. So they are barraging customers with discounts, hoping to entice them to buy before an economic slowdown causes a change in behavior once more.Whether retailers succeed will have profound implications. Billions of dollars are at stake, and companies will be watching the outcome closely as they make hiring and investment decisions for the new year.“We’re going to spend a lot of time right now focused on executing our plan, getting through the holiday season and then assessing the consumer and the overall retail landscape as we look to 2023,” Brian Cornell, the chief executive of Target, said on a call with analysts this month.More broadly, retail sales during the holiday shopping period could provide clues about the trajectory of the economy in the weeks and months to come.“For the overall economy, I think that it’s going to be very important to look at what the consumer is doing because really that’s going to be your key indicator,” said Lydia Boussour, an economist at EY-Parthenon. “It’s the key engine of growth.”An Express store at the Tanger Outlet in North Charleston, S.C. To entice bargain-hungry shoppers and move unwanted inventory, many companies are promoting “value.”Gavin McIntyre for The New York TimesForecasters generally believe that consumer spending, which accounts for about 70 percent of total economic growth, will remain strong in the fourth quarter, in large part because of household savings. Collectively, Americans by the middle of this year were still sitting on about $1.7 trillion in extra savings accumulated during the pandemic, based on Fed estimates, thanks in part to government aid.But in September, the most recent month for which calculations were available, Americans saved only 3.1 percent of their after-tax income, less than half the share before the pandemic. And poorer Americans are seeing their savings dwindle even faster than wealthier ones.Meanwhile, credit card balances in the third quarter swelled 15 percent compared with a year earlier, according to the Federal Reserve Bank of New York. That was the largest increase in more than two decades, as consumers increasingly rely on credit even as borrowing costs are rising.And a University of Michigan survey this month showed a sharp decline in “consumer sentiment” — a measurement of how people feel about the economy and their financial situation. Even as consumers continue to make purchases, Ms. Boussour said, “they’re feeling depressed about the overall economic situation, and they are going to grow increasingly reluctant to spend.”An employee at Bath & Body Works at Tanger Outlet greeted Black Friday shoppers. Forecasters generally expect that consumer spending will remain strong in the fourth quarter, largely because of household savings.Gavin McIntyre for The New York TimesRetail sales grew 1.3 percent in October, more than expected, as shoppers snapped up earlier-than-usual holiday deals. Some major retailers including Walmart and Home Depot reported strong third-quarter earnings, bolstered by sales for less discretionary goods like groceries or items related to home renovation and do-it-yourself projects. “Households are still spending money because they can,” said Aneta Markowska, chief financial economist at the investment bank Jefferies. “I still think there’s a lot of uncertainty about next year because the Fed obviously has raised rates very aggressively this year and we haven’t really felt the effects yet.”But several retailers said they saw demand for their products slow during the month, and when shoppers did buy, they seemed motivated by sales. Some companies have lowered their financial outlook or declined outright to provide forecasts for next year to avoid being caught flat-footed.This was not how the end of this year was supposed to be. For two holiday shopping seasons, retailers strained against pandemic disruptions. Now that the virus restrictions and supply chain snarls that defined those periods have largely abated, retailers had been expecting something of a return to normal.Instead, retailers find themselves trying to outrun a likely economic slowdown.To entice bargain-hungry shoppers and move unwanted inventory, many companies are promoting “value,” offering steep discounts and low prices more so than last year even as labor costs remain high. Many started their holiday blitzes early in the hopes of jump starting sales. Target held Deal Days in October and Old Navy rolled out a “Sorry, Not Sorry” holiday campaign. “Value clearly matters to everyone,” Corie Barry, the chief executive of Best Buy, said on an earnings call last week.J.C. Penney brought back doorbuster sales on Black Friday aimed at getting shoppers back into the store.Justin Hamel for The New York TimesAt J.C. Penney, stores returned to 5 a.m. doorbusters on Black Friday, promoting the “pre-inflation pricing” for items like Instant Pots, hair flat irons and coats.Jeff Gennette, the chief executive of Macy’s, said that a feature on its website that allows users to peruse gifts priced from $15 to $100 seemed to be particularly tempting to shoppers.“If you’ve got an item that’s competing with the competitor, and you’re a higher price, you’ve got to make those adjustments,” he said.Retailers are trying to eliminate any obstacles between a shopper and a potential purchase. Jill Timm, the chief financial officer for Kohl’s, said the chain was providing more personalized offers to shoppers, as well as clearly laying out the discount amounts on certain items to prevent customers from being confused “because they had to do math.”Kohl’s is “really making sure that the offers that we’re putting in are meaningful to the customer to drive their behavior,” Ms. Timm said.Signaling value is part of the overall strategy for Primark, an international clothing retailer, as it looks to grow its presence in the United States.In a recently opened store at a mall in Garden City, N.Y., Primark executives pointed out large signs that advertised $11 hoodies, $4 biker shorts and $20 for a baby-blue bag featuring Stitch from the Disney movie “Lilo and Stitch” — and noted that a candle, at 90 cents without any holiday discount, cost less than at Walmart.“It needs to be a very clear moment when you walk in of that perception that there is amazing value throughout the whole store,” said Kevin Tulip, Primark’s U.S. president.Shoppers seemed price conscious on Black Friday and throughout the weekend.Retailers dropped online prices for merchandise like toys, electronics and computers, according to data released on Friday from Adobe Analytics. Discounts for sporting goods and TVs were far steeper this year than last year, according to Adobe data, and clothing prices were slightly lower this year. The average discount for Black Friday deals in the United States was 30 percent, according to Salesforce. In 2019, Salesforce said, the average discount rate for Black Friday was 33 percent.In-store sales on Friday rose 12 percent from last year, and e-commerce sales increased 14 percent compared with 2021, according to Mastercard SpendingPulse data released on Saturday. Those sales included spending not just in retail stores but also at restaurants.Still, not everyone was satisfied. On social media, people complained that Black Friday deals weren’t as sizable as they expected.In San Francisco, Riz Gordon, 24, woke up at 6 a.m. on Friday to shop with her parents and younger sister. Going to the stores that day is “a long family tradition,” she said, and they had already picked out stocking stuffers and smaller presents. But inflation was on their minds.“The prices are very much different than 10 years ago,” Ms. Gordon said.On Sunday, at a Target in Springfield, Ill., D.J. Baggerly, 69, made a quick trip for one final Christmas gift: a white knitted throw blanket. She had spent the weekend mostly shopping online, working through her grandchildren’s wish list.Ms. Baggerly lives on a fixed income, and the higher prices for gas and groceries, she said, have been “ridiculous.” Asked if she planned to cut back on spending in the coming weeks, she said, “Oh yeah. I’m done.”Ben Casselman More

WEST LAFAYETTE, Ind. — Gina Raimondo, the commerce secretary, was meeting with students at Purdue University in September when she spotted a familiar face. Ms. Raimondo beamed as she greeted the chief executive of SkyWater Technology, a chip company that had announced plans to build a $1.8 billion manufacturing facility next to the Purdue campus.“We’re super excited about the Indiana announcement,” she said. “Call me if you need anything.”These days, Ms. Raimondo, a former Rhode Island governor, is the most important phone call in Washington that many chief executives can make. As the United States embarks on its biggest foray into industrial policy since World War II, Ms. Raimondo has the responsibility of doling out a stunning amount of money to states, research institutions and companies like SkyWater.She is also at the epicenter of a growing Cold War with China as the Biden administration uses her agency’s expansive powers to try to make America’s semiconductor industry more competitive. At the same time, the administration is choking off Beijing’s access to advanced chips and other technology critical to China’s military and economic ambitions.China has responded angrily, with its leader, Xi Jinping, criticizing what he called “politicizing and weaponizing economic and trade ties” during a meeting with President Biden this month, according to the official Chinese summary of his comments.The Commerce Department, under Ms. Raimondo’s leadership, is now poised to begin distributing nearly $100 billion — roughly 10 times the department’s annual budget — to build up the U.S. chip industry and expand broadband access throughout the country.How Ms. Raimondo handles that task will have big implications for the United States economy going forward. Many view the effort as the best — and only — bet for the United States to position itself in industries of the future, like artificial intelligence and supercomputing, and ensure that the country has a secure supply of the chips necessary for national security.But the risks are similarly huge. Critics of the Biden administration’s plans have noted that the federal government may not be the best judge of which technologies to back. They have warned that if the administration gets it wrong, the United States may surrender its leadership in key technologies for good.“The essence of industrial policy is you’re gambling,” said William Reinsch, a trade expert at the Center for Strategic and International Studies, a think tank. “She’s going to be in a tough spot because there probably will be failures or disappointments along the way,” he said.The outcome could also have ramifications for Ms. Raimondo’s political ambitions. In less than two years in Washington, Ms. Raimondo, 51, has emerged as one of President Biden’s most trusted cabinet officials. Company executives describe her as a skillful and charismatic politician who is both engaged and accessible in an administration often known for its skepticism of big business.Ms. Raimondo’s work has earned her praise from Republicans and Democrats, along with labor unions and corporations. Her supporters say she could ascend to another cabinet position, run for the Senate or perhaps mount a presidential bid.Inflation F.A.Q.Card 1 of 5What is inflation? More

Black Friday deals returned, drawing shoppers back into stores, but inflation worries left many companies unsure what the holiday shopping season would look like.After two years of pandemic improvisation and in-store restrictions, this year’s Black Friday felt like a return to normalcy.Shoppers who ventured out on Friday, and even those who didn’t, saw a deluge of deals that had been missing the past couple of years. Many retailers pushed lower prices both in stores and online in response to Americans having recently shown they were more than willing to wait for a discount before making a purchase.“I think we’re going back to what we had before the pandemic with what we’re offering on Black Friday,” said Stephen Lebovitz, the chief executive officer of CBL Properties, which owns about 95 properties, including shopping centers and malls across the United States. “There are changes, but it’s going to feel a lot more like 2019 Black Friday than anything in the interim years.”Still, near-record inflation and dwindling savings kept some shoppers home and left retailers unsure what the season would ultimately bring.Many well-off consumers remain stable financially and appear ready to spend, but others face far more economic uncertainty. That isn’t expected to change anytime soon. Analysts, economists and retail executives are monitoring a potential economic slowdown in the first few months of 2023 that could worsen consumers’ wariness.That makes the holiday season — always the most important time for retailers — even more crucial this year.As the day began at Macy’s Herald Square, the department store’s flagship location in Manhattan, there was a steady flow of customers, and store employees clapped as people entered. Some said they were excited to shop but had concerns over prices.Shoppers who entered the flagship Macy’s location in Manhattan were greeted with applause from store employees.Mathias Wasik for The New York TimesTammy Freeman, 59, from New York, stood at the front of the line near the store’s main entrance, ready for her annual Black Friday excursion. She said that she was eager to buy various items, including a case for her daughter’s laptop, but noted that inflation was changing her general approach to spending.“I have to budget more,” she said. “I have to catch the sales more.”Eighty percent of holiday shoppers are likely to make a purchase from Black Friday through Cyber Monday, according to a survey from Bankrate. People shopping online pulled out their wallets on Thanksgiving Day as well, with sales up 2.9 percent compared with a year earlier, according to Adobe Analytics, which tracks online sales. Adobe estimated that online spending for the holiday season would increase 2.5 percent from last year. It said it had calculated that online prices were down 0.7 percent in October compared with last year, largely because of early holiday deals, though they rose 0.3 percent from September.On Friday, bargain-hunting shoppers definitely seemed to have the power. Stores posted signs advertising 50 to 60 percent off items. At a Target in Springfield, Ill., shoppers walked around with 65-inch televisions in shopping carts, and some wore matching T-shirts that said “Gather, gobble and shop.”In San Francisco’s Union Square, it was relatively quiet. By 7 a.m., when the line outside Macy’s had dissipated, it felt “more or less like a normal day,” said Clifford Cheng, a retail associate at the store.At a nearby Neiman Marcus, only about a dozen shoppers waited outside ahead of the store’s 9 a.m. opening. Natali Carrasco, 20, and Batechaa Steele, 20, were first-time Black Friday shoppers at the luxury department store.“We always come and shop here, but we always buy full price, so we wanted to see the sales,” Ms. Carrasco said.Shoppers have already cut back on some discretionary purchases, leaving many retailers with excess inventory.Nic Antaya for The New York TimesEven before the start of the season, some shoppers were already cutting back on discretionary purchases, leaving retailers with an unusually high level of inventory. They want to unload as much of that as possible before the start of the new year. “The more sales merchandise that they move through now the better,” said Kristen Gall, president of the online platform Rakuten, which offers cash-back deals. “Because if you get caught holding a lot of inventory in January and February and consumers pull back because things feel significantly more recessionary, that’s where the worry comes in for retailers.”Despite the economic unease shoppers have expressed, retailers said they were optimistic.“Even in really tough years Black Friday is a very strong day for us,” Jeff Gennette, Macy’s chief executive, said in an interview.And there were promising signs. Forty percent of consumers said they planned to shop in malls this holiday season, higher than the 35 percent of consumers who did during the 2019 Christmas season, before pandemic lockdowns, according to a survey from the consultancy KPMG. Last year, the number of shoppers who said they planned to venture inside a mall was 31 percent.Americans were also still purchasing gifts online. Adobe said online sales for Black Friday were expected to total $9 billion, up 1 percent year-over-year..Retailers took different approaches to entice shoppers to spend. Macy’s did not bring back the opening doorbuster deals — which went away during the pandemic amid social distancing guidelines — and instead offered sales throughout the day. It also continued the pandemic-era tradition of having Santa take photos with children while seated behind a desk, a sign that Covid concerns remain.J.C. Penney leaned back into doorbusters for the first time since 2019 because it said it wanted to motivate discount-focused shoppers to get out to stores. For its 5 a.m. doorbusters, the department store chain deliberately kept “pre-inflation pricing” on key items like Instant Pots, bath towels and boots. Signs in stores trumpeted 65 percent off discounts. Shoppers lined up outside the J.C. Penney in El Paso, Texas, before it opened at 5 a.m, on Friday.Justin Hamel for The New York Times“We think we’ll have a big volume of customers at the store, and to bring them in we know that value is very important to the consumer right now,” said Marc Rosen, J.C. Penney’s chief executive.On its website, the mall owner CBL highlighted the discounts that stores like H&M and the children’s apparel retailer Carter’s were offering. Other retailers employed a similar strategy in the days leading up to Black Friday. J. Crew on Monday advertised 50 percent off purchases. On Gap’s website, a large black banner scrolled atop the page saying “HPY BLK FRI” and highlighting 50 percent off deals with an additional 10 percent markdown.There are risks for retailers, however, in relying more heavily on deals. The practice erodes profit margins that buoyed them during the pandemic, when many Americans spent plenty on all sorts of goods and retailers did not feel the need to entice them with too many deals. There are also worries that shoppers will become so accustomed to sales that they will only buy when promised a lower price.“Consumers understanding that they can wait out discounts, coupled with retailers’ drive to move goods, likely means that this Black Friday will be more important than Black Friday has been in a long time,” Simeon Siegel, a managing director at BMO Capital Markets, said. “Whether that’s good for the brands, whether that’s good for the consumer — that’s a separate conversation.”Retailers are also competing more with entertainment options, like concerts and dining out at restaurants, than they have in the past couple of years. Consumers are expected to allocate a larger share of their holiday spending on experiences this year compared with last. The average amount that middle-income Americans, who make between $50,000 to $99,000 annually, spend on experiences is expected to increase 15 percent this year, according to a survey released in October from Deloitte.Of course, not every retailer places so much importance on Black Friday.The outdoor equipment retailer REI has remained closed on the day since 2015. This year, the company said it had decided to permanently give its workers a paid day off on Black Friday, encouraging them to spend time outside instead.But that was the exception. Even while the total sales for Black Friday were still being tallied, many retailers were already looking to further entice shoppers by rolling out advertisements for more discounts on Monday.“We believe that the consumer is quite aware of the fact that there’s plenty of inventory out there,” Richard Hayne, the chief executive of Urban Outfitters, said on a call with analysts this month. “And what they’re doing is waiting for big promotional events that normally occur on Black Friday and Cyber Monday in order to make their purchases.”Retailers may need to offer more deals, he said, but “I don’t believe it will be a total blood bath.”Isabella Simonetti More