Evelyn Reynolds

WASHINGTON — Facing more than $50,000 in student debt, Michael Gary dropped out of college and took a truck driving job in 2012. It paid the bills, he said, and he could reduce his expenses if he lived mostly out of a truck.But over the years, the job strained his relationships. He was away from home for weeks at a time and could not prioritize his health: It took more than three years to schedule an optometry appointment, which he kept canceling because of his irregular work hours. He quit on Oct. 6.“I had no personal life outside of driving a truck,” said Mr. Gary, 58, a resident of Vancouver, Wash. “I finally had enough.”Truck drivers have been in short supply for years, but a wave of retirements combined with those simply quitting for less stressful jobs is exacerbating the supply chain crisis in the United States, leading to empty store shelves, panicked holiday shoppers and congestion at ports. Warehouses around the country are overflowing with products, and delivery times have stretched to months from days or weeks for many goods.A report released last month by the American Trucking Associations estimated that the industry is short 80,000 drivers, a record number, and one the association said could double by 2030 as more retire.Supply-chain problems stem from a number of factors, including an extraordinary surge in demand for goods and factory shutdowns abroad. But the situation has been compounded by a shortage of truckers and deteriorating conditions across the transportation sector, which have made it even harder for consumers to get the things they want when they want them.The phenomenon is rippling across the economy, weighing on growth, pushing up prices for consumers and depressing President Biden’s approval rating. But the White House has struggled with how to respond.On Tuesday, it announced a series of steps aimed at alleviating supply-chain problems, such as allowing ports to redirect other federal funds to efforts to ease backlogs. As part of the plan, the Port of Savannah could reallocate more than $8 million to convert existing inland facilities into five pop-up container yards in Georgia and North Carolina to help ships offload cargo more quickly.That followed an announcement by Mr. Biden last month that major ports and private companies would begin moving toward 24-hour operation in an effort to ease the gridlock. But early results suggest that trucking remains a major bottleneck in that effort, compounding congestion at the ports.The directors of the ports of Los Angeles and Long Beach said that, at least initially, few additional truckers were showing up to take advantage of the extended hours.Gene Seroka, the executive director of the Port of Los Angeles, said his port had told the White House in July that about 30 percent of the port’s appointments for truckers went unused every day, largely because of shortages of drivers, the chassis they use to pull the loads and warehouse workers to unload items from trucks.“Here in the port complex, with all this cargo, we need more drivers,” Mr. Seroka said.The $1 trillion infrastructure bill that the House passed last week could help mitigate the shortage. The legislation includes a three-year pilot apprenticeship program that would allow commercial truck drivers as young as 18 to drive across state lines. In most states, people under 21 can receive a commercial driver’s license, but federal regulations restrict them from driving interstate routes.But industry experts said the program was unlikely to fix the immediate problem, given that it could take months to get underway and the fact that many people simply do not want to drive trucks.Mr. Biden said last month that he would consider deploying the National Guard to alleviate the trucker shortage, although a White House official said the administration was not actively pursuing the move.Meera Joshi, the deputy administrator of the Federal Motor Carrier Safety Administration, said the agency had focused on easing the process of obtaining a commercial driver’s license after states cut back licensing operations during the coronavirus pandemic. The agency has also extended the hours that certain drivers can work. “They are the absolute backbone of a big part of our supply chain,” Pete Buttigieg, the transportation secretary, said about truckers at a White House briefing on Monday. “We need to respect and, in my view, compensate them better than we have.”The shortage has alarmed trucking companies, which say there are not enough young people to replace those aging out of the work force. The stereotypes attached with the job, the isolating lifestyle and younger generations’ focus on pursuing four-year college degrees have made it difficult to entice drivers. Trucking companies have also struggled to retain workers: Turnover rates have reached as high as 90 percent for large carriers.In response, the companies have raised their wages. The average weekly earnings for long-distance drivers have increased about 21 percent since the start of 2019, according to the Bureau of Labor Statistics. Last year, commercial truck drivers had a median wage of $47,130.On any given day this summer, dozens of container ships waited outside the ports of Los Angeles and Long Beach to unload their cargo.Stella Kalinina for The New York TimesThe Port of Los Angeles. Trucking remains a major bottleneck in the effort to reduce congestion at U.S. ports.Stella Kalinina for The New York TimesTo pay for those increases, trucking companies are raising their rates. Jon Gold, the vice president of supply chain and customs policy at the National Retail Federation, said the driver shortage has contributed to steeper costs for retailers, which are trickling down to consumers and pushing up some of the prices at stores.“We are seeing cost increases at every step of the way in the transportation supply chain,” Mr. Gold said. “From ocean to truck to rail, costs are increasing.”Derek J. Leathers, the president and chief executive of Werner Enterprises in Omaha, which employs about 9,500 drivers, said its services cost about 15 percent more than prepandemic levels as driver salaries and equipment costs have climbed.The company is trying to hire about 700 truck drivers — up from about 300 before the pandemic — after demand swelled and retirements left the company short on workers. It has increased driver compensation by about 20 percent since the start of 2020 and expanded the number of driving academies it operates.“I’ve been in the business for over 30 years,” Mr. Leathers said. “I definitely think this is the tightest driver market I’ve seen in my career.”Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

One day before ballots were scheduled to go out to workers at three Buffalo-area Starbucks in a vote on unionization, workers at three other stores in the area filed petitions with federal regulators on Tuesday requesting elections as well.The coming vote is significant because none of the nearly 9,000 corporate-owned Starbucks stores in the United States are unionized.On Monday, Starbucks filed a motion to stay the mailing of ballots while it appeals a ruling by a regional official of the National Labor Relations Board setting up separate votes at the three locations where workers initially filed for elections. The company wants all of the roughly 20 Buffalo-area stores to vote in a single election, an approach that typically favors employers.The first three stores filed for union elections in late August, and Starbucks dispatched managers and more senior company officials to the area from out of state in the weeks that followed in what it said was an effort to fix operational issues.The union has complained that the out-of-town officials are unlawfully intimidating and surveilling workers and filed an unfair labor practice charge making this accusation last week. The union also contends that Starbucks transferred in or hired a number of additional employees at two of the three stores to dilute union support.The so-called packing of a workplace before a union election is unlawful if bringing in new workers serves no legitimate business purpose and if the employer has reason to believe that the new workers will oppose a union. Starbucks has said the additional workers are needed to deal with staffing shortages.The Starbucks workers who support unionizing are seeking to join Workers United, an affiliate of the Service Employees International Union. The union says there are 31 to 41 eligible employees at each of the three locations filing the new petitions. It is seeking elections at each of them on Nov. 30.Starbucks has maintained that individual stores should not hold separate elections because its employees can work at multiple locations and because it largely manages stores in a single area as a group rather than at a store level.“We believe all of our partners in this Buffalo market deserve the right to vote,” Reggie Borges, a company spokesman, said Tuesday. “Today’s announcement that partners in three additional Buffalo stores are filing to vote underscores our position that partners throughout the market should have a voice in this important decision.” More

Household debt totaled $15.24 trillion in the third quarter, a 1.9% increase from the previous period.
Rising prices pushed up balances for mortgages and auto loans.
Student loans increased slightly while credit card balances nudged higher to reverse a pandemic-era trend.

U.S. dollar banknotes are seen in this photo illustration.
Jose Luis Gonzalez | Illustration | Reuters

Household debt passed $15 trillion for the first time in the third quarter, as rising prices pushed up balances for homes and autos, the New York Federal Reserve reported Tuesday.
Mortgages rose 2.2% to nearly $10.7 trillion, and autos increased $28 billion as part of an overall $286 billion increase in debt that brought the total household burden to $15.24 trillion. That’s up 1.9%, or $286 billion, from the second quarter.

The household debt growth represented a 6.2% gain from the same period a year ago.
The report covered the July to September period, part of a time when U.S. economic growth slowed to a 2% annualized pace amid worries over surging inflation and a pandemic-induced slowdown.
Housing debt accelerated with $1.11 trillion in newly originated mortgages, more than two-thirds of which came from those with credit scores above 760 and just 2% to subprime borrowers, the Fed report said. The trend comes with median housing prices up 19.9% for the quarter to more than $404,700, according to the Census Bureau.
Education loan debt crept higher by $14 billion to $1.58 trillion as students went back to college, according to the report. Just 5.3% of the loans were in serious delinquent or default status as a government forbearance program extends through Jan. 31.
Despite worries over growth, credit card balances increased by $17 billion to around $800 billion for the quarter, reversing a trend that began with the pandemic as consumers paid down revolving debt.

“As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances,” New York Fed research officer Donghoon Lee said. “At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels.”
Officials stressed that even with the rising debt loads, delinquency rates remain low and are declining, due in large part to an influx of government payments that have led to elevated levels of saving and personal income.
Credit scores for mortgage originations “remain very high,” the report said, even though they have declined slightly since the early days of the pandemic.
Newly originated auto loans totaled $199 billion, a slight decline from the previous quarter’s pace and reflective of higher loan amounts rather than a greater volume. New auto prices rose 8.7% in September from a year ago, while used car and truck prices climbed 24.4%, according to Labor Department data.
Consumers see escalating inflation ahead.
A separate report Monday from the New York Fed showed that while inflation expectations over the three-month horizon were unchanged at 4.2%, the one-year outlook sees prices rising 5.7%, the highest in a data series that goes back to 2013.

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The Labor Department’s producer price index, which measures wholesale prices, rose 0.6% in October, translating into an 8.6% increase year over year.
Surging prices for gasoline and autos helped push the increase which was tilted far more to goods than services.
The reading is one of two important inflation measures coming this week, with the consumer price index on tap for Wednesday.

Wholesale prices rose 8.6% from a year ago in October, their highest annual pace in records going back nearly 11 years, the Labor Department said Tuesday.
The government’s producer price index, which serves as a gauge of final demand prices from goods producers, rose 0.6% for the month, in line with Dow Jones estimates and an indicator that inflation pressures are continuing to burden the U.S. economy. The monthly pace was faster than the 0.5% increase in September.

Stripping out food, trade and energy prices, the index increased 0.4% month over month, slightly below the 0.5% estimate but an elevated pace from September’s 0.1% gain. On a year-over-year basis, core producer prices increased 6.2%. The year-over-year records go back to November 2010.
Elevated demand for goods over services again led the inflation story, with the price rises for final demand goods accounting for more than 60% of the index’s increase. Goods prices rose 1.2% compared with just a 0.2% increase for services, while construction prices jumped 6.6%.
One-third of the increase in goods prices came from soaring gasoline, with prices rising 6.7%. Beef and veal prices represented the other side of the ledger, posting a collective decline of 10.3%. The index for light motor trucks, a key driver of inflation this year, moved lower as did residential electric power.
On the services side, more than 80% of the increase in final demand services price increases came from autos and auto parts, which increased 8.9%.
Final demand prices are a gauge of what goods producers receive in sales for personal consumption, capital investment and to government, as well as for exporting.

The PPI report is one of two key inflation readings this week. The Labor Department on Wednesday will release the October consumer price index, which is expected to show a 0.6% monthly increase for all goods, translating into a 5.9% annual gain.
Federal Reserve officials are watching the inflation data closely. Policymakers generally believe price increases are driven primarily by factors such as supply chain shocks tied to the coronavirus pandemic, and will ease some next year and eventually drift back toward the central bank’s 2% annual target.
However, the Fed has conceded that inflation pressures are lasting longer than thought, and last week voted to begin reducing the pace of its monthly bond purchases.
Goldman Sachs economists over the weekend noted the “inflation overshoot will likely get worse before it gets better.”
Markets have been pricing in more aggressive interest rate hikes than the Fed is currently indicating. Citigroup economists project that the central bank will have to step up its planned $15 billion a month pace of bond purchase reductions, with an acceleration to $22.5 billion a month, meaning the quantitative easing program would wind down completely by April 2022.
That would then allow the Fed to start increasing rates should inflation continue to be a problem.

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“Stresses in China’s real estate sector could strain the Chinese financial system, with possible spillovers to the United States,” the Federal Reserve said Monday in its financial stability report, released twice a year.
“The nexus of the Fed’s concern is that China’s real estate activity is slowing, but the developers have large debts [and] some of them (like Evergrande) are diversified into other areas of the economy,” said Paul Christopher, U.S.-based head of global market strategy at Wells Fargo Investment Institute.
The bulk of the report discussed domestic U.S. financial conditions, and analysts downplayed the significance of the Fed’s comments on China real estate.

Ornamental statues at China Evergrande Group’s Life in Venice real estate and tourism development in Qidong, Jiangsu province, China, on Tuesday, Sept. 21, 2021.
Qilai Shen | Bloomberg | Getty Images

BEIJING — The U.S. Federal Reserve warned Monday of potential spillover from China’s real estate troubles to the U.S. financial system.
Since this summer, highly indebted developer China Evergrande has rattled global investors as the company has attempted to avoid official default. Other Chinese developers have also struggled to repay debt, adding to concerns of wider fallout in the world’s second-largest economy — roughly a quarter of which is driven by real estate.

“Stresses in China’s real estate sector could strain the Chinese financial system, with possible spillovers to the United States,” the Federal Reserve said in its latest financial stability report, released twice a year.
The report pointed to the size of China’s economy and financial system, and global trade links.
The bulk of the document discussed domestic U.S. financial conditions, from historically high stock market prices to risks from rapid growth in stablecoins — digital currency tied to a fixed value such as the U.S. dollar. Analysts downplayed the significance of the Fed’s comments on Chinese real estate.
“The nexus of the Fed’s concern is that China’s real estate activity is slowing, but the developers have large debts [and] some of them (like Evergrande) are diversified into other areas of the economy,” Paul Christopher, U.S.-based head of global market strategy at Wells Fargo Investment Institute, said in an email.

These wide-reaching links mean a slowdown in China’s housing market could ultimately lead to unemployment, a drop in Chinese stocks and deflation — which could spread through global trade channels as China cuts its purchases of goods from other countries, Christopher said.

However, he said such fallout is unlikely. “China’s government has been wrestling with high corporate debt for years, is alert and has resources to deal with the real estate sector,” Christopher said, noting authorities can still spend more to address a deflationary shock, as they have in the past.
The Fed’s latest report also analyzed the role of retail investors and social media in stock market volatility earlier this year, as well as the role of foreign investors in a sell-off of Treasurys in March 2020.

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Previous financial stability reports from the Fed have mentioned China, its high debt levels and “stretched real estate prices” as risks that could spill over to the U.S.
Ilya Feygin, senior strategist at New York-based brokerage WallachBeth Capital, said the latest Fed report likely included China’s real estate difficulties “for completeness.”
“The Fed has been criticised for not seeing the vulnerability of US housing and US banks prior to 2008,” he said in an email, referring to the financial crisis at that time. “Therefore anything related to real estate and banking system risk anywhere will be scrutinised excessively.”
He did not expect the Fed’s comments to have much significance for investing in emerging markets.

Growing worries about China

However, one difference in the Fed’s latest financial stability report from prior ones was its finding that China figured prominently among concerns about risks to U.S. financial stability, according to a Fed survey of “26 market contacts” from August to October.
While persistent inflation, monetary policy tightening and vaccine-resistant coronavirus variants were of top concern for survey respondents, they were followed by worries about Chinese regulatory and property risks.
Concerns about U.S.-China tensions came next, according to the survey. A slowdown in the Chinese economy ranked last, in 13th place.

Those results differed from the Fed’s previous survey, conducted from February to April, in which the only China-related concern was tensions with the U.S. The top worry then was vaccine-resistant variants of the coronavirus.
The survey covered representatives of broker-dealers, investment funds, political advisory firms and universities, the Fed report said.
Arthur Kroeber, who helped found China-focused research firm Gavekal Dragonomics in 2002, said in an email that the Fed’s comments on China were “pretty vague and generic,” and focused on the potential impact to the U.S. primarily based on China’s large size.
“I think the risks to the US are small since the closed nature of China’s financial system means contagion is not likely to be a big problem,” Kroeber said, noting he would be more concerned about additional inflationary pressure from supply chain problems and rising export prices out of China.

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Stocks that experience major volatility as a result of social media attention — often called meme stocks — have not threatened broader financial stability so far but could open the door to vulnerabilities, the Federal Reserve said in a report on Monday.The Fed’s twice-yearly update on America’s financial system included a special section on the meme stock phenomenon. It attributed the trend, in which attention on Twitter, Reddit and other platforms encourages rapid inflows into or out of buzzy stocks, to new trading technologies including mobile apps and to changing demographics, as younger people enter the retail trading market.“Along with the rise in risk appetite and the growing share of younger retail investors, access to retail equity trading opportunities has expanded over the past decade,” the report said.Social media can pump up interest in stocks, and it can also create an echo chamber, one in which “investors find themselves communicating most frequently with others with similar interests and views, thereby reinforcing their views, even if these views are speculative or biased.”Still, internet-inspired pile-ons do not necessarily create conditions that will spur a broad market crash, the Fed’s report suggested.“To date, the broad financial stability implications of changes in retail equity investor characteristics and behaviors have been limited,” the Fed said. The central bank specifically assessed what happened to shares of AMC Entertainment and GameStop in January, noting that activity and volatility in those stocks came alongside high activity on Twitter.While the report concluded that “recent episodes of meme stock volatility did not leave a lasting imprint on broader markets,” the Fed said a few trends “should be monitored.”The report pointed out that young and debt-laden investors may be more vulnerable to stock price swings, especially since they are now using “options,” which allow traders to place bets on whether prices will rise or fall and which can magnify leverage and potential losses.The Fed also warned that “episodes of heightened risk appetite may continue to evolve with the interaction between social media and retail investors and may be difficult to predict,” and that financial firms may not have calibrated their risk-management systems to reflect the volatility and losses that meme stock episodes might trigger.“More frequent episodes of higher volatility may require further steps to ensure the resilience of the financial system,” it said.Looking across a broader range of asset classes and recent trading activity, the Fed’s financial stability analysis generally suggested that the vulnerabilities have moderated compared with earlier in the pandemic — but it did flag high asset prices and a number of lingering risks.Stock prices have increased “notably,” the report said, and prices relative to forecast earnings remain near historical highs. Home prices have climbed, it noted, though mortgage lending standards have not deteriorated too badly. When lenders start to lower their standards, that can make the market more vulnerable.The Fed noted that “corporate bond issuance remained robust, supported by low interest rates,” also pointing out that “across the ratings spectrum, the composition of newly issued corporate bonds has become riskier.”And while many markets show signs of investor optimism, some financial strains from the pandemic shock persist.Some commercial real estate sectors continue to face challenges because “office vacancies are elevated and hotel occupancy rates remain depressed,” the report noted. Plus, “structural vulnerabilities persist in some types of money market funds,” which could amplify a future shock to the system.Money market mutual funds melted down during the pandemic and required a Fed rescue for the second time in a dozen years, and regulators are now looking at how to make them more resilient.The report also warned that life insurers might struggle to raise cash in a pinch.And it delved into climate risks. The central bank is among regulators now trying to understand what risks climate change might pose to banks, insurers and the broader financial system.“The Federal Reserve is developing a program of climate-related scenario analysis,” the report noted. “The Federal Reserve considers an effective scenario analysis program, which is designed to be forward looking over a period of years or decades, to be separate from its existing regulatory stress-testing regime.” More

Randal Quarles, who served a dual role as Federal Reserve governor and vice chairman for bank supervision, said Monday he is resigning effective in December.
With Quarles’ departure, at least one other vacancy and the expiring term of Chairman Jerome Powell, President Joe Biden will have the chance to remake the Fed.

Randal K. Quarles, vice chairman of the Federal Reserve Board of Governors, testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on “Oversight of Financial Regulators” on Capitol Hill in Washington, December 5, 2019.
Erin Scott | Reuters

Federal Reserve Governor Randal Quarles said he is stepping down from his post around the end of the year, an announcement that comes a little over a month after ending his run as the Fed’s supervisor of the banking system.
The move was not unexpected but became official Monday and will be effective “during or around the last week of December,” Quarles said in a letter to President Joe Biden.

Though his actual term on the board of governors does not expire for another 11 years, Quarles announced he is walking away from his position as governor. He also had held the special supervisory role that was established to address some of the conditions that led to the 2008-09 financial crisis.
“It has been a great privilege to work with my colleagues on the Board, throughout the Federal Reserve System, and among the global central banking and regulatory community,” Quarles wrote.
Quarles was named to the board in October 2017 to fill a term that expired the following year. He subsequently was reappointed to a term that would have ran out in 2032.
In recent weeks, he has become a lightning rod for criticism from some of the more progressive congressional leaders. Sen. Elizabeth Warren, D-Mass., has been one of the more vocal critics, faulting Quarles and Fed Chairman Jerome Powell for loosening the regulations that were put in place following the financial crisis.
Quarles was the first vice chair for supervision since the Dodd-Frank reforms went into effect. That term ended in October.

With Quarles’ resignation and the expiration of Federal Open Market Committee Vice Chairman Richard Clarida’s term on Jan. 31, 2022, Biden will have the opportunity to remake the Fed.
Governor Lael Brainard has been mentioned frequently as a potential successor to Quarles as head of supervision.
In addition to the Quarles vacancy, there is still one other opening on the seven-member board of governors, and Powell’s term as chairman expires in February.
Regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston resigned after being embroiled in a controversy over Fed officials trading stocks and bonds while implementing policies that influenced financial markets.

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With consumers already dealing with the fastest price increases in decades, another unwelcome uptick is on the horizon: a widely expected increase in winter heating bills.After plunging during the pandemic as the global economy slowed, energy prices have roared upward. Natural gas, used to heat almost half of U.S. households, has almost doubled in price since this time last year. The price of crude oil — which deeply affects the 10 percent of households that rely on heating oil and propane during the winter — has soared by similarly eye-popping levels.And those costs are being quickly passed through to consumers, who have become accustomed to cheaper energy prices in recent years and now find themselves with growing concerns about inflation this year. More