Evelyn Reynolds

Susan Kirsch is a 78-year-old retired teacher who lives in a small cottage home in Mill Valley, Calif., on a quiet suburban street that looks toward a grassy knoll. A Sierra Club member with a pesticide-free garden, she has an Amnesty International sticker on her front window and a photograph on her refrigerator of herself and hundreds of other people spelling “TAX THE 1%” on a beach.The cause that takes up most of her time, however, is fighting new development and campaigning for the right of suburban cities to have near total control over what gets built in them. We met just before the pandemic, after Ms. Kirsch sent an email inviting me to coffee and in the note suggested that my reporting on the nation’s housing problems could benefit from her slow-growth perspective.We’ve become friendly in the two years since, and as I’ve absorbed her cheerful demeanor and come to appreciate her distrust of large institutions, I’ve tried not to reduce her philosophy to a single and oversimplified term. But just so we know what we’re talking about, Susan Kirsch is a NIMBY.NIMBY stands for “Not in my backyard,” an acronym that proliferated in the early 1980s to describe neighbors who fight nearby development, especially anything involving apartments. The word was initially descriptive (the Oxford English Dictionary added “NIMBY” in 1989 and has since tacked on “NIMBYism” and “NIMBYish”) but its connotation has harshened as rent and home prices have exploded. NIMBYs who used to be viewed as, at best, defenders of their community, and at worst just practical, are now painted as housing hoarders whose efforts have increased racial segregation, deepened wealth inequality and are robbing the next generation of the American dream.It seems like a lot to dump on what amount to hyperlocal disputes that largely consist of homeowners trekking down to city hall to complain about a new condominium building or proposed row of townhomes. But take a step back: What’s at stake in these disputes is the structure of American civilization. In a country with little national housing policy, the thicket of zoning, environmental and historic preservation laws that govern local land use are the primary regulators of a multi-trillion-dollar land market that is the source of most households’ wealth and form the map for how the nation’s economy and society are laid out.Around the country, cities and states that have struggled to tame rising housing costs are now trying to wrest control from neighborhood activists like Ms. Kirsch. Their logic is that too much of the power over whether new housing and infrastructure projects get built is left to a relatively small band of activists who pack late-night city meetings to tell their city councils that whatever is being proposed is “out of character” and should be built somewhere else — not in their backyard.To distinguish themselves from NIMBYs, the current generation of housing activists has adopted new “back yard” variants (YIMBY, “Yes in my backyard”; PHIMBY, “Public housing in my backyard”; YIGBY, “Yes in God’s backyard”) to declare how they are for things (everything, subsidized housing, building on church parking lots) that a NIMBY presumably is not. Politicians have piled on: In California, homeowners who are used to being catered to with a host of regulatory and tax policies recently woke up to discover that their governor, Gavin Newsom, told The San Francisco Chronicle, “NIMBYism is destroying the state.”Before we go any further, I am obligated to note that Susan Kirsch does not appreciate the word “NIMBY.” She describes herself as someone who helps communities “feel empowered and self-reliant.” She has, nevertheless, made peace with the term.After all, this is a person who once wrote an op-ed that said the removal of five trees in Mill Valley sent “existential messages to our fellow citizens of the world.” Who has fought for two decades to prevent a developer from putting 20 condominiums on a hill at the end of her street.Ms. Kirsch’s nonprofit, Catalysts for Local Control, opposes just about every law the California legislature puts forward to address the state’s housing and homelessness problem. In Zoom meetings with her members, she describes lawmakers’ intentions in dark terms and drives the message home with graphics that say things like, “Our homes and cities are under attack.”It might seem kitschy if it weren’t so effective. Susan Kirsch was 60 when she began her fight against the condos down the block. Eighteen years later, the hill remains dirt.The potential development site, which lies at the end of the road on which Ms. Kirch lives.Aaron Wojack for The New York TimesStories like that, one project fight after another, form a larger story about how the state and nation dug themselves into a growing housing shortage. The impulse behind NIMBYism is timeless: People who already live somewhere have always raised objections to newcomers. The feeling applies to renters as well as homeowners, crosses boundaries of race, class, and culture, and has been a part of urban life for centuries.But California has gone further than most in empowering it. And until fairly recently, this was seen as something to be proud of.That turnabout is what’s so baffling to activists like Ms. Kirsch. In the late 1970s, when she moved to Marin County, California was in the vanguard of an ideological backlash that created modern environmentalism and rejected the assumption that a growing economy and more people were always good — a cause that was championed by state and national politicians and celebrated everywhere from songs to magazine covers.California is now a different place with a different struggle, and a lack of housing is at its center. It’s not just that the $800,000 median home price is too expensive, or that the 100,000 people who sleep outside are a daily tragedy, or that the outflow of cost-of-living refugees has helped steer it into population decline. It’s that those statistics have raised hard questions about the state’s governance and sense of self.How does a place that prides itself on progressive politics have so many policies that exacerbate inequality? How do homeowners whose window signs say they welcome every oppressed group rationalize a housing system that has caused their own children to flee?Ms. Kirsch does not deny that California has a housing problem but has a different narrative about why. In her telling the state’s problems have little to do with the lack of housing — a diagnosis that unites basically every liberal and conservative economist along with the Obama, Trump and Biden administrations — but instead blames investors who buy single-family houses, big technology companies, and inequality generally.She wraps her opposition to development in a “small c” conservative philosophy that a smaller local government is better and more responsive to its citizens than a bigger one further away. Where many people see gridlock, she sees having her voice heard — and in the midst of a brutal housing crisis, fewer people want to listen.“It feels like huge forces conspiring to take away control from people at the lowest level at which they live,” she said.Yimbytown vs. NimbytownAlan Durning, the head of Sightline Institute, a Seattle think tank.Ruth Fremson/The New York Times“We are winning.”Alan Durning, founder of the Sightline Institute, a sustainability think tank that pushes for dense housing, was feeling triumphant. He was on a stage in Portland, Ore., addressing the 2022 Yimbytown conference, which bills itself as a gathering of pro-housing activists and draws heavily from the ranks of embittered millennials who feel locked out of the housing market and under the thumb of rising rents.Mr. Durning had just referenced a host of new state and local development laws — from California to Seattle, Minneapolis, Austin and Connecticut — that in the past two years have shifted the national conversation around housing. New rules that allow homeowners to build second homes in their yards. Sweeping legislation to discard single-family zoning restrictions that ban apartments in suburban neighborhoods. When he mentioned a more obscure set of rules that limit the amount of parking in new developments, someone in the crowd of 300 went “Woo!”A few weeks after the conference, the Biden administration released its own cheer in the form of a “Housing Supply Action Plan.” Among other measures, the plan aims to increase the nation’s supply of housing by using grant money to reward cities that reform land-use regulations in the manner Yimbytown celebrates. The administration pegged the nation’s housing shortage at 1.5 million units (other sources put it as high as 3.8 million).That deficit is the product of two main trends. The most recent one is the Great Recession, which left the home-building industry so hobbled that even now, 17 years after the housing bust began, new home construction has yet to eclipse the mid-2000s peak. The other built gradually over decades as cities installed a cat’s cradle of land use rules that empowered local NIMBYism and made housing scarcer and more expensive.In the hours before the Yimbytown gathering began, an unseasonable April snow fell on Portland’s streets. As attendees walked and Ubered to a Portland State auditorium for the conference, they passed sidewalk tents under a fresh layer of frost.“It puts a knot in our stomachs, a clutching feeling in our chests, we have feelings of fear about being excluded, about being pushed out, about being unwelcome, unable to keep up,” Mr. Durning said in his speech. “That’s what housing feels like in Nimbytown. But here in Yimbytown, we’re about the opposite of all that.”He added: “We want abundance of housing.”The word “abundance” was not incidental. It refers to an emerging framework that says many of America’s deepest problems stem from shortages — too few houses, not enough colleges, a lack of wind and solar projects — and the only way to solve them is to build.Encoded in YIMBY ideology is a belief that the best thing to do with NIMBYs is discard them. But since the successes of one generation become the burdens of another, they should first understand them.Small Is BeautifulAaron Wojack for The New York TimesForty-nine years earlier, Susan Kirsch was also young, idealistic and in Portland. She’d grown up on a farm in Minnesota, in a town with 1,400 people. After a series of urban teaching jobs broken up by trips from the Midwest to Washington, D.C., to protest the war in Vietnam, she took a yearlong road trip with a man she called “the adventure husband.” The final stop was Portland, and they rolled into town in a van.Back then, the idea that the activist circuit might include a stop at Yimbytown would have seemed preposterous. Instead of build baby build, the national feeling had swung from the post-World War II boom to a new posture that said three decades of mass suburbanization and urban redevelopment had created a crisis of too much.The pebbles to this backlash had been sprinkled through songs like the 1962 tract home satire “Little Boxes” (“And they’re all made out of ticky tacky/And they all look just the same”). Or the speech two years later in which President Lyndon Johnson warned of “an ugly America” beset by decaying cities and lifeless sprawl that a raft of social critics said were breaking community spirit and creating an epidemic of loneliness.Susan Kirsch was partial to “Small Is Beautiful,” which was published in 1973 by the economist E.F. Schumacher. The book cast doubt on a growth-at-all costs mentality and was but one entry in what the historian Kevin Starr called “this developing genre of population and land use apocalypse.”“Part of how it influences me is I think greater self-reliance and self-resiliency are qualities that keep a community or culture strong,” Ms. Kirsch said of the book. “And the trends we have now, with being able to have efficacy in your own life, is part of what I think is being diminished.”Instead of celebrating the arrival of new citizens, new power plants, new cloverleaf interchanges, California scholars started semi-seriously lamenting that they couldn’t require visas for people arriving from elsewhere in the United States. Environmental activists came to define themselves by what they could stop.“It became a politics of quality of life rather than a politics of prosperity,” said Jacob Anbinder, a Ph.D candidate at Harvard whose dissertation is on the emergence of anti-growth politics in the postwar period.Marin County, a woodsy enclave that sits across the Golden Gate Bridge from San Francisco, enacted some of the strictest growth control measures in the country — proudly. In the early 1970s, when a group of Marin homeowners mobilized to stop a nearby townhome development, the county commended them for distinguished public service.But housing fights could also be proxies for racial exclusion. Even though discriminatory practices such as redlining — banks refusing to offer mortgages in nonwhite neighborhoods — had been outlawed by federal civil rights legislation, economic segregation persisted. Today Marin County is the most segregated county in the Bay Area.Marin was Susan Kirsch’s next stop after Portland. She arrived in Mill Valley in 1979, where she remarried, had kids and stretched to buy a house for $112,500.Blithedale TerracePhil Richardson at his home, with plans for a housing development in Mill Valley, Calif.Aaron Wojack for The New York TimesPhil Richardson surveyed a tiny home on his dining room table. It was a model of a townhome he wants to build, and it lay atop a bath-towel-sized aerial photograph of Mill Valley.The model and the photo were one small piece of a growing archive of drawings, renderings and environmental reports that document Mr. Richardson’s failure to build two dozen condominiums on Kite Hill, a plot of trees and bushes that sits next to a small office building at the end of Ms. Kirsch’s block. Various proposals and millions of dollars in land, legal and consulting fees later, he has yet to placate neighbors.Mr. Richardson is a small-time developer who works from a home office decorated with models of World War II tanks and battleships. In a recent interview at his home, he recounted the time he met Ms. Kirsch to talk about his townhomes. She told him he should scrap it and build a park bench.He started the project in his late 60s and is now 86. He is determined to see it through. “My wife thinks I’m crazy,” he said. “I think the town could use the housing.”Later, he added: “I’d still like to know her motivation. Forget my project: What drives her bus?”Ms. Kirsch first heard about the proposal in 2004, after she got a public notice in the mail. The plan — then called Blithedale Terrace — was for 20 earth-toned townhomes with pitched roofs and wood shingles. She convened a group of neighbors in her living room to see if they had an opinion about it.“And we did,” she said.There ensued a decade of meetings, lots of legal back and forth, and a sign that said “Save Kite Hill.” The city also got a lot of letters. They said project was an “insane” idea that would create “unimaginable density” and lead Mill Valley toward an “LA like destruction.”Most of the letters raised questions about parking and traffic. Others voiced a more esoteric set of concerns, like “confusion for the post office.” One writer averred that anyone who lived in the new condos would be accepting a higher cancer risk, since their homes would be downwind from the wood-fired oven at a nearby restaurant.Mr. Richardson has been hoping to develop this site for 18 years.Aaron Wojack for The New York Times“From my backyard I see the hillside,” Ms. Kirsch wrote from her Hotmail account. “Explain how my property value is not deflated if open space is replace(d) with view-blocking, dense, unsightly buildings.”Mr. Richardson set Blithedale Terrace aside in 2013, nine years after proposing it, to focus on another development elsewhere. Ms. Kirsch used the dispute to launch a slow-growth platform.She’d fought the developer through a group called the Freeman Park Neighborhood Association. It morphed into a larger organization called Friends of Mill Valley, then a group called Citizen Marin. In 2016, having raised her profile through activism, Ms. Kirsch ran for the Marin County Board of Supervisors. She lost with 42 percent of the vote.“We’re all getting clobbered”In retrospect, 2016 was a turning point of a different sort. It marked the beginning of a blitz of state legislation that would force cities to accept higher density neighborhoods in the form of backyard units and duplexes that could no longer be prohibited by local governments, and even higher density in the future, after the state reformed a longstanding planning process to increase the amount of growth cities have to plan for. To make sure cities actually comply, Governor Gavin Newsom recently created an “accountability and enforcement unit,” a sort of NIMBY patrol that monitors whether or not localities are approving new housing.When you ask a planner or policy wonk how this happened, they point to a series of dull but important bills that were modest in isolation. Stacked together, however, they’ve shifted power over housing away from city councils to state bureaucrats and local planning and building departments — a move intended to prevent activists like Ms. Kirsch from having so much influence over whether new housing gets approved.They also got comparatively little press coverage or debate, because most of the attention was consumed by a more extreme series of bills proposed by Scott Wiener, a state senator from San Francisco, from 2018 to 2020. The bills had various forms — none passed — but would have forced California cities to allow four- to eight-story buildings within a mile of rail stations and bus stops, regardless of local rules.“I’m a former local elected official and former neighborhood association president — I am a huge believer in making decisions at a local level and people passionately tending to their community,” Mr. Wiener said in an interview. “But we’re going over the cliff, and whatever the benefits of local decision making, and there really are benefits, it has failed to produce the housing we need.”One afternoon in 2018, after traveling to San Francisco to hear Mr. Wiener talk about his plans at a police station, Ms. Kirsch and a group of furious attendees left the meeting for a nearby restaurant, where they founded a organization called Livable California. Its aim was to take the fight for local government to the statehouse.“The whole thing was, we’re all getting clobbered, we’ll have greater impact if we unify,” she said.Livable California is now the most recognized brand among a class of new groups protesting the state’s housing moves. The groups do things like organize neighborhood associations and produce research that paints the idea of a shortage as overblown. (This charge is discordant with the volumes of research on the topic, the state’s low per capita building rate, and its surfeit of illegal and overcrowded homes.)Many of the most active members are from wealthy enclaves like Marin, but the fight to maintain local control over housing attracts a more diverse group than the stereotype of a rich, suburban NIMBY would suggest. In California and around the country, activists who fight gentrification in cities frequently team up with suburban homeowners worried about development to oppose broad zoning reforms. Even if these groups don’t agree on housing policy, they often side with having those decisions made at the city or neighborhood level, where the political sphere is small enough that a group of volunteers can still be effective.“Community activists organize in person,” said Isaiah Madison, who is 26 and Black, a resident of Los Angeles’s historically Black Leimert Park neighborhood — and on the board of Livable California. “But when you take it to the state, you’re just a number. There are so many issues, and so much bureaucracy and politics and money, that community gets lost.”Over the course of several interviews, many of the most active homeowners expressed a feeling of upper middle-class regression. It seems unfair to them that people who did exactly what society told them to do — buy a house, get involved in their neighborhood — are now being asked to accept large changes in their surroundings.More than anything, they are furious how an epithet like “NIMBY” can reduce someone who cares about their neighborhood to a cartoon. Yes, they are the people who fight development. These are also the people who make and distribute lawn signs. Who attend late-night city meetings to ask probing questions about bids on the city’s dog-catching contract. Who organize the block party and help start library programs that everyone else takes for granted.“The state is crazy in trying to make all these cities their enemy,” said Maria Pavlou Kalban, who is on the board of directors of the Sherman Oaks Homeowners Association and recently founded a statewide homeowners’ and neighborhood group called United Neighbors. “These are people that are really seriously trying to answer the problem of ‘Where do our kids live?’”When the conversation shifts to solutions, however, the conundrum of local control resurfaces. In an interview, Ms. Kalban outlined a plan to build higher-density housing on high-traffic corridors, which sounds perfectly reasonable. It also sounds like the townhomes Mr. Richardson has been trying to build since 2004.The Homevoter HypothesisPlans for Mr. Richardson’s development.Aaron Wojack for The New York TimesHousing is a “bundled purchase,” or a big decision governed by a million little variables: The number of bedrooms, the size of the yard, the quality of local schools, proximity to work, family and transit. Hanging over all of this is, of course, the price.Housing politics is driven by emotion, specifically the fear of losing what you have. The economist William Fischel, a professor at Dartmouth, laid out the financial dimensions in a theory — “The Homevoter Hypothesis” — that holds NIMBYism is a form of insurance. Since you can’t buy a policy that will protect you from the neighborhood going to hell, the thinking goes, people compensate by packing planning meetings to fight anything (be it a dump, a freeway or a low-rent apartment complex) they perceive as a threat.People usually get involved in local politics for a distinct reason — they are angry at their school board, for instance, or worried about a condo complex at the end of their street — but they stay involved because they make friends and derive purpose from the work. It becomes something to do.Aaron Wojack for The New York TimesOver the past two decades, Susan Kirsch said she has spent almost as much time on her deck drinking wine and talking housing with fellow activists as she does with longtime friends.In our own conversations she dedicated as much energy to railing about how corporations are too big and billionaires too under-taxed, and inequality so troubling, as she did to the state housing policy. And so I asked the obvious question: With so many things to be angry about, why spend so much time fighting some condos?“I suppose it is just that feeling of home,” she said. “Just that feeling of home and the safety and security and groundedness that goes with having a safe place to go to at the end of the day, where you can believe you can have security, you don’t need to worry about how are you going to have money for both food and insurance and dental care for your kids and all of those things, that metaphor of home as a place of comfort.”The natural follow-up was what about the next generation, who say they are fighting for that too? She defaulted to neighborhood control.“Local communities would do a much better job of solving these problems,” she said. “Using the language of centralized power is what charges me to do this — I think small is beautiful.”Mr. Richardson recently put forth a new proposal for Kite Hill. This time it would consist of 25 condos that range from 800 square feet to 2,100 square feet, including six subsidized units for households making around or below the area median income. He’s feeling better about his chances thanks to changes in state law, but, at 86, is getting short on time.“I’m going to win or I’m going to die,” Mr. Richardson said. “It’s one or the other.”The city has yet to schedule a public hearing on the new proposal, but he is hopeful there will be one later this year. Whatever the date, Susan Kirsch plans on being there. She has some things to say. More

The Labor Department reported 390,000 new jobs in May, as policymakers try to ease inflation without inducing a recession.American employers extended an impressive run of hiring in May, even as policymakers took steps to cool the economy in an effort to ease high inflation.The Labor Department reported Friday that employers added 390,000 jobs, the 17th straight monthly gain. The unemployment rate was 3.6 percent for the third straight month, a touch away from a half-century low.At the same time, the labor force grew by 330,000 people, and the share of adults employed or looking for work continued to edge closer to prepandemic levels.The data signaled that the Federal Reserve’s initial moves to dial back its monetary support for the economy were — at least so far — not constraining business activity so much that hiring was feeling a pinch.After the strong rebound from the depths of the coronavirus lockdowns — all but 800,000 of the 22 million jobs that were lost have been recovered — the Fed has shifted its emphasis from maximum employment to its other mandate: price stability. The challenge is to apply its primary tool, a steady series of interest-rate increases, without inflicting a recession.“I think we’re on sort of what looks like a glide path right now, and that’s good — nothing’s broken,” said Guy Berger, the principal economist at the career-focused social network LinkedIn. “But keep fast-forwarding it a year and the question marks are still big.”The closely watched indicators include the impact on wages, which have been increasing at a pace not seen in decades, though not enough to keep up with inflation over the past year. The Fed is worried that rising labor costs will be passed along to consumers.Wages kept rising across industries.Percent change in average hourly earnings for nonmanagers since January 2019

Data is seasonally adjusted. Not adjusted for inflation.Source: Bureau of Labor StatisticsBy The New York TimesOn that score, the Labor Department report showed little change in trajectory. Average hourly earnings rose 0.3 percent from the previous month, the same pace as in April, and were 5.2 percent higher than a year earlier, compared with a 5.5 percent year-over-year increase in April.“It’s moderating, but it’s not moderating to a level, I think, where it’s consistent with the Fed’s inflation goals,” said Michael Feroli, chief U.S. economist at J.P. Morgan, said of wage growth. He said the Fed would probably want wages to cool toward an annualized 3.5 percent pace, at the higher end, a rate that officials view as aligned with 2 percent inflation.The State of Jobs in the United StatesJob gains continue to maintain their impressive run, even as government policymakers took steps to cool the economy and ease inflation.May Jobs Report: U.S. employers added 390,000 jobs and the unemployment rate remained steady at 3.6 percent ​​in the fifth month of 2022.Vacancies: Employers had 11.4 million vacancies in April down from a revised total of nearly 11.9 million the previous month, which was a record.Opportunities for Teenagers: Jobs for high school and college students are expected to be plentiful this summer, and a large market means better pay.Higher Interest Rates: Spurred by red-hot inflation, the Federal Reserve has begun raising interest rates. What does that mean for the job market?President Biden gave a nuanced celebration of the jobs data in remarks on Friday, emphasizing recent gains while arguing that a slowdown would be welcome, allowing inflation to ease.“The point is this: We’ve laid an economic foundation that’s historically strong,” Mr. Biden said. “Now we’re moving forward to a new moment, where we can build on that foundation, build a future of stable, steady growth so that we can bring down inflation without sacrificing all of the historic gains that we have made.”Stocks declined on Friday and bond yields rose as investors evidently read the report as reinforcing the Fed’s muscular efforts, which risk denting economic growth. “The better the data, the more difficult that a pause or reduced pace of tightening later this year becomes,” analysts at TD Securities wrote in a research report published after the jobs numbers were released.The continued job gains are among many indications of a vibrant economy. Reports from the nation’s largest banks show checking accounts are still above 2019 levels for nearly all income groups. New bankruptcies and debt-collection proceedings are both at their lowest levels since tracking began in 1999.Yet those encouraging trends have been at odds with the generally sour national mood, dominated by inflation concerns. U.S. consumer sentiment declined in early May to the lowest since 2011, according to the University of Michigan.The unemployment rate stayed flat in May.The share of people who have looked for work in the past four weeks or are temporarily laid off More

Cleveland Fed President Loretta Mester said Friday that she doesn’t see enough evidence that inflation has peaked and is on board with supporting multiple interest rate increases.
Mester also doesn’t expect the central bank to pause after the summer, though she said the magnitude of the moves could be reduced if inflation falls.
“I don’t want to declare victory on inflation before I see really compelling evidence that our actions are beginning to do the work,” Mester said in a live interview on CNBC’s “The Exchange.”

Cleveland Federal Reserve President Loretta Mester said Friday that she doesn’t see ample evidence that inflation has peaked and thus is on board with supporting a series of aggressive interest rate increases.
“I think the Fed has shown that we’re in the process of recalibrating our policy to get inflation back down to our 2% goal. That’s the job before us,” Mester said in a live interview on CNBC’s “The Exchange.”

“I don’t want to declare victory on inflation before I see really compelling evidence that our actions are beginning to do the work in bringing down demand in better balance with aggregate supply,” she added.
Mester spoke the same day the Bureau of Labor Statistics reported that nonfarm payrolls rose by 390,000 in May, and, importantly, that average hourly earnings had increased 0.3% from a month ago, a bit lower than the Dow Jones estimate.
While other recent data points have shown that at least the rate of inflation increases has diminished, the policymaker said she will need to see multiple months of that trend before she’ll feel comfortable.
“It’s too soon to say that that’s going to change our outlook or my outlook on policy,” Mester said. “The No. 1 problem in the economy remains very, very high inflation, well above acceptable levels, and that’s got to be our focus going forward.”
Recent statements from the rate-setting Federal Open Market Committee indicate that 50 basis point — or half-point — rate increases are likely at the June and July meetings. Officials are then likely to evaluate the progress that the policy tightening and other factors have had on the inflation picture. A basis point equals 0.01%.

But Mester said any type of pause in rate hikes is unlikely, though the magnitude of the increases could be reduced.
“I’m going to come into the September meeting, if I don’t see compelling evidence [that inflation is cooling], I could easily be at 50 basis points in that meeting as well,” she said. “There’s no reason we have to make the decision today. But my starting point will be do we need to do another 50 or not, have I seen compelling evidence that inflation is on the downward trajectory. Then maybe we can go 25. I’m not in that camp that we think we stop in September.”
Mester’s comments were similar to statements Thursday from Fed Vice Chair Lael Brainard, who told CNBC that “it’s very hard to see the case” for pausing rate hikes in September. She also stressed that quashing inflation, which is running near 40-year highs, is the Fed’s top priority.

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Nonfarm payrolls increased by 390,000 in May, above the 328,000 Dow Jones estimate.
The unemployment rate held at 3.6%, while a more encompassing jobless rate edged higher to 7.1%.
Average hourly earnings rose slightly less than expected but were still up 5.2% from a year ago.
Leisure and hospitality led gains, followed by professional and business services then warehousing and transportation.

The U.S. economy added 390,000 jobs in May, better than expected despite fears of an economic slowdown and with a roaring pace of inflation, the Bureau of Labor Statistics reported Friday.
At the same time, the unemployment rate held at 3.6%, just above the lowest level since December 1969.

Economists surveyed by Dow Jones had been looking for nonfarm payrolls to expand by 328,000 and the unemployment rate to edge lower to 3.5%. May’s total represented a pullback from the upwardly revised 436,000 in April and was the lowest monthly gain since April 2021.
“Despite the slight cooldown, the tight labor market is clearly sticking around and is shrugging off fears of a downturn,” said Daniel Zhao, Glassdoor’s senior economist. “We continue to see signs of a healthy and competitive job market, with no signs of stepping on the brakes yet.”
Average hourly earnings increased 0.3% from April, slightly lower than the 0.4% estimate. The year-over-year increase for wages of 5.2% was in line with expectations.
Stock market futures were volatile and pointed to a lower open on Wall Street following the report. Government bond yields moved higher.
Job gains were broad-based. Leisure and hospitality led, adding 84,000 positions. Professional and business services rose by 75,000, transportation and warehousing contributed 47,000, and construction jobs increased by 36,000.

Other areas that saw notable gains included state government education (36,000), private education (33,000), health care (28,000), manufacturing (18,000) and wholesale trade (14,000).
Retail trade took a hit on the month, however, losing 61,000 in May, though the BLS noted that the sector remains 159,000 above its February 2020 pre-pandemic level.
“That’s not really consistent with a consumer that’s itching to spend on goods,” Drew Matus, chief market strategist at MetLife Investment Management, said of the retail numbers. “The accommodation and food services story is telling you people have shifted from goods spending to services spending. The real question is how long will they sustain that.”
Despite the job gains, the BLS household survey showed that the labor market has yet to recover all the positions lost during the pandemic. Total employment remains 440,000 below the pre-Covid level.
Labor force participation edged higher, rising to 62.3% though still 1.1 percentage points below February 2020, as the labor force is smaller by 207,000 from that mark.
A more encompassing measure of unemployment that takes into account those not looking for jobs and those holding part-time positions for economic reasons moved higher to 7.1%, up one-tenth of a percentage point from April. Unemployment for Asians fell to 2.4%, the lowest in nearly three years, while the rate for Blacks was 6.2%, an increase of 0.3 percentage point.
Revisions to the March and April job estimates shaved 22,000 off the previously reported totals.
Matus said the market reaction probably indicates that investors are both anticipating more Federal Reserve interest rate hikes and a slowing jobs market. Fed officials have said they are looking to bring the jobs picture back into balance from the current high demand and low labor supply.
“I wouldn’t call it the calm before the storm, but it might be the last bit of sunlight before the clouds get a little deeper and darker,” Matus said.
The report comes amid fears that higher inflation along with geopolitical developments including the war in Ukraine and Covid restrictions in China could impact a U.S. economy that contracted at a 1.5% rate in the first quarter.
Though there have been recent signs that inflation could be slowing, the current pace is still around the fastest in 40 years. Prices at the pump specifically are at historical highs, with a gallon of regular unleaded at $4.76, up 13% from a month ago and more than 56% from a year ago, according to AAA.
That is coming with a slowing economy that is currently on track to grow just at a 1.3% rate in the second quarter, according to the Federal Reserve.
In an effort to control inflation, the Fed is trying to slow the economy with a series of interest rate hikes. Fed Governor Lael Brainard told CNBC on Thursday that she anticipates further increases in the months ahead until inflation comes down to the central bank’s 2% goal.
Businesses have been hampered in the current environment, not least by a shortage of workers that has left nearly two job openings for every available worker. A Fed report earlier this week said businesses are expressing increasing concerns about future prospects – eight of the central bank’s 12 districts reported slowing growth while four specifically cited recession fears.

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Economists and politicians are debating whether monopolistic companies are fueling inflation in ways that confound longstanding theory.There are few good things about living through a period with the highest inflation in four decades, but here’s one: It’s a chance to re-examine what happens in an economy that’s gone haywire.Since prices started to escalate a year ago, politicians and economists have seized on inflation to tell their preferred story about what went wrong, and what policies would bring it back into line. Some say it’s very straightforward: Supply and demand, Economics 101.“There’s simply a lot of cash out there,” said Joe Brusuelas, chief economist for the accounting firm RSM US, referring to the several trillion dollars in pandemic stimulus that’s filtered into the economy since early 2020. “The competition for those goods is up and that’s sending prices up, whether we’re talking about getting a Nissan Sentra or a seat on an American Airlines flight.”The White House and progressive organizations, however, say wait a minute: This time is different. In a time of extraordinary disruption, they contend, increasingly dominant corporations are taking the opportunity to jack up prices more than they otherwise could, which is squeezing consumers and supercharging inflation. Or “greedflation,” as the hypothesis has come to be known.The argument comports with the Biden administration’s focus on the ills of economic concentration. Congressional Democrats have run with the idea, introducing bills that would impose a temporary “excess profits tax” on companies that charge prices they deem unreasonably high, or simply ban those high prices altogether. Critics, including the nation’s largest business lobby, deride these efforts as based on a “conspiracy theory” and a “flimsy argument.”So what’s really going on?It’s hard to tease out. A pandemic, a trade war, a land war, huge government spending, and a global economy that’s become vastly more integrated might be too complex for traditional macroeconomic theory to explain. Josh Bivens, research director at the left-leaning Economic Policy Institute, thinks that’s a good reason to revisit what the discipline thought it had figured out.“When I hear stories about an overheating labor market, I don’t think about falling real wages, and yet we have falling real wages,” Dr. Bivens said. Nor is the rise in profits typical when unemployment is so low. “The idea that ‘there’s nothing to see here’ — there’s everything to see here! It’s totally different.”When thinking about greedflation, it’s helpful to break it down into three questions: Are companies charging more than necessary to cover their rising costs? If so, is that enough to meaningfully accelerate inflation? And is all this happening because large companies have market power they didn’t decades ago?Productive Profits, or Gouging?There is not much disagreement that many companies have marked up goods in excess of their own rising costs. This is especially evident in industries like shipping, which had record profits as soaring demand for goods filled up boats, driving up costs for all traded goods. Across the economy, profit margins surged during the pandemic and remained elevated.When all prices are rising, consumers lose track of how much is reasonable to pay. “In the inflationary environment, everybody knows that prices are increasing,” said Z. John Zhang, a professor of marketing at the Wharton School at the University of Pennsylvania who has studied pricing strategy. “Obviously that’s a great opportunity for every firm to realign their prices as much as they can. You’re not going to have an opportunity again like this for a long time.”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.Measuring Inflation: Over the years economists have tweaked one of the government’s standard measures of inflation, the Consumer Price Index. What is behind the changes?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.The real disagreement is over whether higher profits are natural and good.Basic economic theory teaches that charging what the market can bear will prompt companies to produce more, constraining prices and ensuring that more people have access to the good that’s in short supply. Say you make empanadas, and enough people want to buy them that you can charge $5 each even though they cost only $3 to produce. That might allow you to invest in another oven so you can make more empanadas — perhaps so many that you can lower the price to $4 and sell enough that your net income still goes up.Here’s the problem: What if there’s a waiting list for new ovens because of a strike at the oven factory, and you’re already running three shifts? You can’t make more empanadas, but their popularity has risen to the point where you would charge $6. People might buy calzones instead, but eventually the oven shortage makes all kinds of baked goods hard to find. In that situation, you make a tidy margin without doing much work, and your consumers lose out.This has happened in the real world. Consider the supply of fertilizer, which shrank when Russia’s invasion of Ukraine prompted sanctions on the chemicals needed to make it. Fertilizer companies reported their best profits in years, even as they struggle to expand supply. The same is true of oil. Drillers haven’t wanted to expand production because the last time they did so, they wound up in a glut. Ramping up production is expensive, and investors are demanding profitability, so supply has lagged while drivers pay dearly.Even if high prices aren’t able to increase supply and the shortage remains, an Economics 101 class might still teach that price is the best way to allocate scarce resources — or at least, that it’s better than the government price controls or rationing. As a consequence, less wealthy people may simply have no access to empanadas. Michael Faulkender, a finance professor at the University of Maryland, says that’s just how capitalism works.“With a price adjustment, people who have substitutes or maybe can do with less of it will choose to consume less of it, and you have the allocation of goods for which there is a shortage go to the highest-value usage,” Dr. Faulkender said. “Every good in our society is based on pricing. People who make more money are able to consume more.”Sorting Chickens and EggsThe question of whether profit margins are speeding inflation is harder to figure out.Economists have run some numbers on how much other variables might have contributed to inflation. The Federal Reserve Bank of San Francisco found that fiscal stimulus programs accounted for 3 percentage points, for example, while the St. Louis Fed estimated that manufacturing sector inflation would have been 20 percentage points lower without supply chain bottlenecks. Dr. Bivens, of the Economic Policy Institute, performed a simple calculation of the share of price increases attributable to labor costs, other inputs, and profits over time, and found that profit’s contribution had risen significantly since the beginning of 2020 as compared with the previous four decades.That’s an interesting fact, but it’s not proof that profits are driving inflation. It’s possible that causality runs the other way — inflation drives higher profits, as companies hide price increases amid broader rises in costs. The St. Louis Fed’s Ana Maria Santacreu, who did the manufacturing inflation analysis, said that it would be very hard to pin down.“It would be interesting to get data on profit margins by industry and correlate those with inflation by industry,” she said. “But I still think it is difficult to capture any causal relationship.”Concentration’s Double EdgeIf you think that’s complicated, try establishing whether market power is playing a role in any of this.It is well established that the American economy has grown more concentrated. On a fundamental level, domination by a few companies may have made supply chains more brittle. If there are two empanada factories and one of them has a Covid-19 outbreak, that in itself creates a more serious shortage than it would if there were 10 factories.“Concentration has affected prices during the pandemic, even setting aside any potentially nefarious actions on the part of leaders,” said Heather Boushey, a member of President Biden’s Council of Economic Advisers.But most of the public argument has been about whether companies with more market share have been affecting prices once goods are finished and delivered. And that’s where many economists become skeptical, noting that if these increasingly powerful corporations had so much leverage, they would have used it before the pandemic.Inflation F.A.Q.Card 1 of 5What is inflation? More

Ford Motor said on Thursday that it was planning to invest $3.7 billion in facilities across the Midwest, much of it for the production of electric vehicles, which the company said would create more than 6,000 union jobs in the region.“We’re investing in American jobs and our employees to build a new generation of incredible Ford vehicles,” Jim Farley, the company’s president and chief executive, said in a statement. “Transforming our company for the next era of American manufacturing requires new ways of working.”The announcement, made jointly with the United Automobile Workers union, detailed investments in three states. Ford said it would invest $2 billion and create about 3,200 union jobs in Michigan, including many tied to production of the new F-150 Lightning pickup truck, the company’s highest-profile and most important bet on electric vehicles.In Ohio, Ford will spend over $1.5 billion and create nearly 2,000 union jobs, primarily to build commercial electric vehicles in the middle of this decade. The company also said it would add over 1,000 union jobs at an assembly plant in Kansas City, Mo., that will produce commercial vans, some gas-powered and some electric.The company had indicated that some of the investments would be coming, like the expansion of production capacity for the F-150 in Michigan, but had not detailed the magnitude.The moves follow Ford’s announcement last year that it would build four factories in Kentucky and Tennessee — three battery factories for electric vehicles and a truck assembly plant — irking union officials and elected leaders in Midwestern states, who worry about losing manufacturing jobs to the South.In addition to the new Midwestern jobs, Ford said it would convert nearly 3,000 temporary jobs into permanent full-time positions before the date that its contract with the U.A.W. calls for — which is after two years of employment.“We are always advocating to employers and legislators that union jobs are worth the investment,” the U.A.W. president, Ray Curry, said in a statement. “Ford stepped up to the plate by adding these jobs and converting 3,000 U.A.W. members to permanent, full-time status with benefits.”Assembling the F-150 Lightning at the Dearborn Truck Plant. Ford will add about 3,200 jobs in Michigan, many tied to the electric truck’s production.Brittany Greeson for The New York TimesSam Abuelsamid, an auto industry analyst at Guidehouse Insights, said the changes were important as a way to help Ford attract and retain labor in a tight job market, while potentially helping the company avoid costly labor unrest during negotiations over a contract that expires next year as it spends billions on the transition to electric vehicles. A six-week strike by workers at General Motors in 2019 cost that company billions of dollars.“I’m sure one thing Ford would absolutely love to avoid is the potential for a strike,” Mr. Abuelsamid said. “Keeping a positive relationship with the U.A.W. now is to their benefit.”But the investments appear unlikely to substantially diminish the broader threat that the shift toward electric vehicles poses to the autoworkers union and to employment in the U.S. vehicle manufacturing industry, which stands at around one million.“It’s about changing the perception of what’s happening,” Mr. Abuelsamid said. “It’s a balancing act between your work force and your investors,” who would prefer to see labor costs rise more slowly or decline at unionized automakers like Ford and General Motors.Because electric vehicles incorporate far fewer moving parts than gasoline-powered vehicles, they require significantly less labor — about 30 percent less, according to figures that Ford has generated.As a result, estimates suggest that the toll of electrification on auto industry jobs could be significant absent large new government subsidies. A report released in September by the liberal Economic Policy Institute, which has ties to organized labor, found that the auto industry could lose about 75,000 jobs by 2030 without substantial government investment.By contrast, the report found, if additional government subsidies encourage the domestic manufacturing of components and greater market share for vehicles assembled in the United States, the industry could add about 150,000 jobs over the same period.President Biden has backed substantial subsidies for electric vehicles, including vehicles made by unionized employees, but those measures have languished in the Senate and their prospects are uncertain.In the meantime, much of the job growth tied to electric vehicles has occurred at nonunion facilities owned by newer automakers like Tesla, Rivian and Lucid, or U.S.-based battery facilities owned wholly or in part by foreign companies like the South Korean manufacturers SK Innovation and LG Chem.In Thursday’s announcement, Ford noted that its new battery and vehicle production facilities in the South would create about 11,000 jobs. But those employees will not automatically become union members, and workers in those states tend to face an uphill battle in unionizing.For investors, however, Ford’s additional investments in electric vehicles appears to be welcome news as the company seeks to reinvent itself amid competition from the likes of Tesla and Rivian. Ford’s stock price, which had dropped substantially this year, rose more than 2 percent on Thursday.Ford also said Thursday that it sold 6,254 electric vehicles in May, a jump of more than 200 percent from a year earlier. That number included 201 F-150 Lightnings, which the company started producing in April.The company has about 200,000 reservations for the Lightning, which is central to its efforts to catch up to Tesla, and stopped accepting new ones because production will take months to meet demand.Ford indicated that sales of the truck would be much higher in the coming months as production increased and trucks in transit reached dealerships. Ford is aiming to produce 150,000 Lightning trucks a year by the end of 2023.Sales of electric vehicles — and conventional cars — have been limited by a shortage of computer chips. Ford’s overall sales of new vehicles in May fell 4.5 percent from a year earlier. Auto executives are also increasingly worried that the supply of lithium, nickel and other raw materials needed to make the batteries that power electric cars is not keeping up with the growing demand for those vehicles.Vikas Bajaj More

Global restrictions on sending advanced technology to Russia are hampering the country’s military capacity, U.S. officials say, though Russia has stockpiled American equipment for years.WASHINGTON — With magnifying glasses, screwdrivers and a delicate touch from a soldering gun, two men from an investigative group that tracks weapons pried open Russian munitions and equipment that had been captured across Ukraine.Over a week’s visit to Ukraine last month, the investigators pulled apart every piece of advanced Russian hardware they could get their hands on, such as small laser range finders and guidance sections of cruise missiles. The researchers, who were invited by the Ukrainian security service to independently analyze advanced Russian gear, found that almost all of it included parts from companies based in the United States and the European Union: microchips, circuit boards, engines, antenna and other equipment.“Advanced Russian weapons and communications systems have been built around Western chips,” said Damien Spleeters, one of the investigators with Conflict Armament Research, which identifies and tracks weapons and ammunition. He added that Russian companies had enjoyed access to an “unabated supply” of Western technology for decades.U.S. officials have long been proud of their country’s ability to supply technology and munitions to the rest of the world. But since Russia invaded Ukraine in late February, the United States has faced an unfortunate reality: The tools that Russian forces are using to wage war are often powered by American innovation.Still, while the technology made by American and European companies has been turned against Ukraine, the situation has also given the United States and its allies an important source of leverage against Russia. The United States and dozens of countries have used export bans to cut off shipments of advanced technology, hobbling Russia’s ability to produce weapons to replace those that have been destroyed in the war, according to American and European officials.On Thursday, the Biden administration announced further sanctions and restrictions on Russia and Belarus, adding 71 organizations to a government list that prevents them from buying advanced technology. The Treasury Department also announced sanctions against a yacht-management company that caters to Russian oligarchs.While some analysts have urged caution about drawing early conclusions, saying the measures will take time to have a full effect, the Biden administration has called them a success. Since Western allies announced extensive restrictions on exports of semiconductors, computers, lasers, telecommunications equipment and other goods in February, Russia has had difficulty obtaining microchips to replenish its supply of precision-guided munitions, according to one senior U.S. official, who, along with most other officials interviewed for this article, spoke on the condition of anonymity to discuss matters based on intelligence.On Tuesday, when asked if a chip shortage was crippling the Russian military, Commerce Secretary Gina Raimondo, who oversees export controls, said the answer was “an unqualified yes.”“U.S. exports to Russia in the categories where we have export controls, including semiconductors, are down by over 90 percent since Feb. 24,” she said. “So that is crippling.”The restrictions halt direct technological exports from the United States and dozens of partner nations to Russia. But they also go beyond traditional wartime sanctions issued by the U.S. government by placing limitations on certain high-tech goods that are manufactured anywhere in the world using American machinery, software or blueprints. That means countries that are not in the sanctions coalition with the United States and Europe must also follow the rules or potentially face their own sanctions.Russia has stopped publishing monthly trade data since the invasion, but customs data from its major trading partners show that shipments of essential parts and components have fallen sharply. According to data compiled by Matthew C. Klein, an economics researcher who tracks the effect of the export controls, Russian imports of manufactured goods from nine major economies for which data is available were down 51 percent in April compared with the average from September 2021 to February 2022.The restrictions have rendered the old-school bombing runs on tank factories and shipyards of past wars unnecessary, Mr. Klein wrote. “The democracies can replicate the effect of well-targeted bombing runs with the right set of sanctions precisely because the Russian military depends on imported equipment.”Russia is one of the world’s largest arms exporters, especially to India, but its industry relies heavily on imported inputs. In 2018, Russian sources satisfied only about half of the military-related equipment and services the country needed, such as transportation equipment, computers, optical equipment, machinery and fabricated metal, according to data from the Organization for Economic Cooperation and Development compiled by Mr. Klein.The remainder of equipment and services used by Russia were imported, with about a third coming from the United States, Europe, Japan, Taiwan, Australia and other partner governments that imposed sanctions together on Moscow.A printed circuit board from a cruise missile internal computer collected by Conflict Armament Research during its investigation.via Conflict Armament ResearchU.S. officials say that in concert with a wide variety of other sanctions that ban or discourage commercial relations, the export controls have been highly effective. They have pointed to Russian tank factories that have furloughed workers and struggled with shortages of parts. The U.S. government has also received reports that the Russian military is scrambling to find parts for satellites, avionics and night vision goggles, officials say.Technology restrictions have harmed other Russian industries as well, U.S. officials say. Equipment for the oil and gas industry has been degraded, maintenance for tractors and heavy equipment made by Caterpillar and John Deere has halted, and up to 70 percent of the commercial airplanes operated by Russian airlines, which no longer receive spare parts and maintenance from Airbus and Boeing, are grounded, officials say.But some experts have sounded notes of caution. Michael Kofman, the director of Russia studies at CNA, a research institute in Arlington, Va., voiced skepticism about some claims that the export controls were forcing some tank factories and other defense companies in Russia to shutter.“There’s not been much evidence to substantiate reports of problems in Russia’s defense sector,” he said. It was still too early in the war to expect meaningful supply chain problems in Russia’s defense industry, he said, and the sourcing for those early claims was unclear.Maria Snegovaya, a visiting scholar at George Washington University who has studied sanctions on Russia, said the lack of critical technologies and maintenance was likely to start being felt widely across Russian industry in the fall, as companies run out of parts and supplies or need upkeep on equipment. She and other analysts said even the production of daily goods such as printer paper would be affected; Russian companies had bought the dye to turn the paper white from Western companies.“We expect random disruptions in Russia’s production chains to manifest themselves more frequently,” Ms. Snegovaya said. “The question is: Are Russian companies able to find substitutes?”U.S. officials say the Russian government and companies there have been looking for ways to get around the controls but have so far been largely unsuccessful. The Biden administration has threatened to penalize any company that helps Russia evade sanctions by cutting it off from access to U.S. technology.The Russia-Ukraine War and the Global EconomyCard 1 of 7A far-reaching conflict. More

Lael Brainard, the Federal Reserve’s vice chair, suggested on Thursday that the central bank might make another large rate increase into September and threw cold water on the idea that policymakers might pause rate moves after the summer — signaling instead that they are intently focused on controlling too-high inflation.Ms. Brainard, in an interview on CNBC, said market expectations for half-percentage-point increases in June and July, increases that would be twice the size of the Fed’s typical ones, seemed “reasonable.” She does not know where the economy will be in September, she said, but explained that if inflation remained rapid, another big move “might well be appropriate.” If it slows, then a smaller pace of increase might make sense.She added, however, that it was “hard to see the case for a pause” at a time when the Fed had “a lot of work to do” to get inflation down to its goal, which is 2 percent on average over time. Prices picked up by 6.3 percent on a headline basis and 4.9 percent on a core basis over the year through April.Fed officials are fighting the fastest rate of inflation since the 1980s by lifting borrowing costs, which slows down consumer and business demand, helping to bring the economy back into balance. Central bankers began to shrink their balance sheet of bond holdings this week and have already lifted their main policy interest rate by 0.75 percentage points since March, efforts that are already making mortgages and other loans pricier.“We do expect to see some cooling of a very, very strong economy over time,” Ms. Brainard said, explaining that the Fed is looking for moderation and “better balance” in the labor market.Ms. Brainard said she was looking for “a string of decelerating inflation data” to feel more confident that inflation would get back no a more sustainable path.The Fed is operating against a fraught backdrop. Ms. Brainard said there was a “fair amount of uncertainty” about the economy, citing Russia’s war in Ukraine and lockdowns in China as factors clouding the outlook.Economists have warned that the Fed could struggle to slow down the economy without tipping it into an outright recession, especially as it withdraws support rapidly and in tandem with other central banks around the world. But Ms. Brainard said there was a path where demand could cool and inflation could come down while the labor market remained strong.“We are starting from a position of strength — the economy has a lot of momentum,” she said, also citing solid business and household balance sheets. More