Economy

The president used his State of the Union speech to pitch tax increases for the rich, along with plans to cut costs and protect consumers.President Biden used his State of the Union speech on Thursday to remind Americans of his efforts to steer the nation’s economy out of a pandemic recession, and to lay the groundwork for a second term focused on making the economy more equitable by raising taxes on companies and the wealthy while taking steps to reduce costs for the middle class.Mr. Biden offered a blitz of policies squarely targeting the middle class, including efforts to make housing more affordable for first-time home buyers. The president used his speech to try and differentiate his economic proposals with those supported by Republicans, including former President Donald J. Trump. Those proposals have largely centered on cutting taxes, rolling back the Biden administration’s investments in clean energy and gutting the Internal Revenue Service.Many of Mr. Biden’s policy proposals would require acts of Congress and hinge on Democrats winning control of the House and the Senate. However, the president also unveiled plans to direct federal agencies to use their powers to reduce costs for big-ticket items like housing at a time when the lingering effects of inflation continue to weigh on economic sentiment.From taxes and housing to inflation and consumer protection, Mr. Biden had his eye on pocketbook issues.Raising Taxes on the RichMany of the tax cuts that Mr. Trump signed into law in 2017 are set to expire next year, making tax policy among the most critical issues on the ballot this year.On Thursday night, Mr. Biden built upon many of the tax proposals that he has been promoting for the last three years, calling for big corporations and the wealthiest Americans to pay more. He proposed raising a new corporate minimum tax to 21 percent from 15 percent and proposed a new 25 percent minimum tax rate for billionaires, which he said would raise $500 billion over a decade.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

The American workplace’s experiment with remote work happened, effectively, overnight: With the onset of the pandemic in March 2020, more than half of workers began working from home at least part of the time, according to Gallup. But the shift to a permanent hybrid-work reality has been gradual, with periods of tension as workers across […] More

The Federal Reserve is considering when and how much to cut interest rates, and the employment report on Friday will give policymakers an up-to-date hint at how the economy is evolving ahead of their next policy meeting.Fed officials meet on March 19-20, and they are widely expected to leave interest rates unchanged at that gathering. But investors think that they could begin to lower interest rates as early as June, a view that Jerome H. Powell, the Fed chair, did little to either strongly confirm or upend during his congressional testimony this week.“We’re waiting to become more confident that inflation is moving sustainably to 2 percent,” Mr. Powell told lawmakers on Thursday. “When we do get that confidence, and we’re not far from it, it will be appropriate to dial back the level of restriction.”The Fed is primarily watching progress on inflation as it contemplates its next steps, but it is also keeping an eye on the labor market. If job growth is strong and the labor market is so robust that wages rise quickly, that could keep price increases higher for longer as companies try to cover their costs. On the other hand, if the job market begins to slow sharply, that could nudge Fed officials toward earlier interest rate cuts.For now, unemployment has remained low and wage growth has been solid — but not as strong as the peaks it reached in 2022. That has given Fed officials comfort that the supply of workers and the demand for new employees is coming back into balance, even without a painful economic slowdown.“Although the jobs-to-workers gap has narrowed, labor demand still exceeds the supply of available workers,” Mr. Powell said this week.If the recent progress in restoring balance continues, it could allow the Fed to pull off what is often called a “soft landing”: a situation in which the economy cools and inflation moderates so the Fed can back away from aggressive interest rate policy without a recession. More

Stay informed with free updatesSimply sign up to the More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The EU intends to delay strict policing of imports from areas prone to deforestation after several governments in Asia, Africa and Latin America complained that the rules would be burdensome, unfair and scare off investors. Brussels will put off classification of countries into low, standard or high risk, which was due to be implemented by December, instead designating every country as standard risk to give them more time to adapt to the anti-deforestation regulation, three EU officials told the Financial Times. “We will simply not classify which means everywhere will be medium risk — we need more time to get the system in place,” said one official. “We have had a lot of complaints from partners. [The delay] means no country will have an advantage over another.”The law, part of the EU’s flagship Green Deal, was passed last year and aims to reduce EU consumers’ role in cutting down woodland by barring imports including coffee, cocoa, palm oil and rubber that have been grown in deforested areas from being sold in the bloc.But the regulation prompted ire from several developing nations that accused the EU of forcing its green standards on to others. Major palm oil producing countries including Indonesia and Malaysia raised “multiple concerns” over the rules in a letter to the European Commission in September.“The legislation disregards local circumstances and capabilities, national legislation and certification mechanisms of developing producer countries, [as well as] their efforts to fight deforestation and multilateral commitments, including the principle of common but differentiated responsibilities,” it said.Companies said they could pull out of “high-risk” areas because the burden of proving their products did not come from deforested land was too high, while several have started to favour supply deals with bigger producers that can afford to deploy sophisticated geolocation technology.The law, which is a crucial part of Brussels’ plans to reach net zero emissions in the bloc by 2050, requires that importers provide geolocation data to prove their goods have not been sourced from areas affected by deforestation. It was originally conceived as operating through a traffic light system that would classify countries as having a high, medium or low risk of deforestation. The system will use metrics such as the rate of land degradation and the expansion of agricultural activity as well as evidence from indigenous communities and NGOs.The level of checks on imports will depend on the area of origin’s classification, with EU customs authorities tasked with checking 3 per cent of goods from medium-risk nations and 9 per cent from high-risk countries.Products covered by the legislation include cattle, soyabeans and wood. Unchecked, EU demand for these imports would contribute about 248,000 hectares a year of deforestation by 2030, according to commission research.In a further effort to placate developing countries, officials confirmed that Brussels would take a regional rather than a national approach, so the plains of southern Brazil would eventually be classified as lower risk than the Amazon region, where vast tracts of rainforest have been cleared. Brazil is a leading exporter of soyabeans and other agricultural commodities. One EU official said slowing the classification process would not involve any legislative changes but was a “signal that we’re not planning to rush it”.Developing countries are particularly incensed that the law was passed in June last year without clear guidance on how to comply. They highlighted issues such as the risk that hundreds of thousands of tonnes of coffee and cocoa beans could be destroyed. Malaysia’s trade minister Zafrul Aziz said his country and others needed time and assistance to put in place control systems. “You need time because it is costly to meet those standards, all those transparency or disclosure requirements,” he told the FT, adding that it would be “no issue” for big companies but many “smallholders” would struggle to comply.He added that Kuala Lumpur was collaborating with Brussels on how to implement the law. The commission declined to comment. Climate CapitalWhere climate change meets business, markets and politics. Explore the FT’s coverage here.Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here More

WASHINGTON (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva is interested in a second five-year term heading up the global lender and is poised to secure sufficient support among member countries, sources familiar with the plans said.Georgieva’s term ends on Sept. 30. The Bulgarian economist last week won the backing of French Finance Minister Bruno Le Maire, who told reporters during the Group of 20 finance meetings in Sao Paulo that Georgieva had done a “great job” leading the institution and that France would support her for a second term.Le Maire’s support was critical, given that European countries traditionally nominate a candidate to lead the IMF, although all European Union members must agree. The final decision is made by the institution’s board of directors.Georgieva last week told Reuters that she was focused on the job at hand and not on whether to seek a new term. At a press briefing on Thursday, IMF spokesperson Julie Kozack referred questions about a second term to Georgieva herself.Bloomberg first reported that Georgieva was interested in a second term with likely sufficient support. Georgieva is the second woman to head the IMF and the first person from an emerging market economy.Keeping Georgieva on for a second term would help answer longstanding concerns raised by emerging market and developing countries over the U.S.-European duopoly at the two global financial institutions, the IMF and World Bank.A self-described “eternal optimist,” Georgieva has weathered huge shocks to the global economy ranging from the COVID-19 pandemic outbreak just months after she took office to the February 2022 Russian invasion of Ukraine. She is focused on bolstering prospects for medium-term growth, which is lagging historical levels, managing ongoing sovereign debt challenges, and guiding the IMF through a complicated quota revamp.WEATHERING CRITICISMGeorgieva drew criticism inside and outside the IMF early on for her push to include climate change as a factor in surveillance reports on member countries’ economies and her great interest in emerging market and developing economies.She’s been instrumental in securing large loans for Ukraine, helping to catalyze additional funds to help its economy weather the strains of the two-year war against Russia’s invasion, overseen a revamp of Argentina’s massive loan program, and worked steadily to help China embrace sovereign debt restructurings.Georgieva also survived a big personal challenge in 2021 when the IMF’s executive board expressed its full confidence in her after reviewing allegations that while working at the World Bank, where she was CEO prior to taking the top job at the IMF, she pressured staff to alter data to favor China.Sources familiar with the IMF’s process on naming a head said the selection would be settled quickly once Europe unites around a candidate. While Georgieva’s term won’t end for months, some people familiar with the matter said it makes sense to make decisions before the April 15-20 Spring Meetings of the IMF and the World Bank so that the leadership issue does not overshadow the already full agenda for the meetings. More

SINGAPORE (Reuters) – The dollar headed for its sharpest weekly drop of the year on Friday as Federal Reserve Chair Jerome Powell sounded more confident about cutting interest rates in coming months, while the yen gained on mounting speculation of a rate rise in Japan.Traders were on edge and early Asia moves small while waiting for U.S. employment data later in the day that could confirm or confound market expectations for a U.S. cut by June.Powell said the Fed was “not far” from the confidence it needed to cut rates. Overnight the European Central Bank left its benchmark rate steady at 4% and laid groundwork for a cut in June. The euro rose, however, because the Fed funds rate is at 5.25-5.5% and investors see the United States as having more room to cut. The common currency hit an almost two-month high of $1.0954 in the Asia session – putting it back in the middle of a range it has kept for a year. It is up 1% on the dollar for the week.The yen is up 1.6% on the week, its strongest percentage rise since December as policymakers have noted signs of positive wage-price cycle sustaining inflation – setting the stage for Japan’s first interest rate increase in 17 years.The yen was above its 50-day moving average and at its strongest in a month at 147.54 in early Asia trade on Friday.”There has been a pull forward of rate hike expectations for Japan,” HSBC analysts said in a note to clients. “Considering that short yen speculative positions are now at extreme levels, then the yen can probably avoid a ‘buy the rumour, sell the fact’ situation when the BOJ does hike, and dollar/yen can still fall further.”The dollar’s weakness this week also set the Australian and New Zealand dollars 1.5% and 1.2% higher on the week respectively. Sterling is up 1.3% this week to a 2024-high of $1.2820.The Aussie is at its highest since mid January at $0.6629 and the kiwi at a week high of $0.6183.Cleveland Fed President Loretta Mester added to cut expectations after saying on CNBC that a couple more inflation reports could give confidence on inflation. They will have two before May and three by the June Fed meeting.”The dollar now looks more vulnerable into Friday’s (non-farm payrolls data),” said Westpac strategist Imre Speizer. “Unless the U.S. employment report can pull a large dollar supportive rabbit from the hat, dollar weakness could continue next week.”Economists expect the U.S. added a solid 200,000 jobs after January’s blowout 353,000. More

WASHINGTON (Reuters) -As the U.S. Congress struggles to pass legislation to fund the government through the fiscal year that began in October, House Republicans on Thursday sought to jump the gun on Democratic President Joe Biden by unveiling a plan for the next year.The plan aims to balance the federal budget within a decade, cutting $14 trillion in federal spending in such areas as green energy subsides and student loan forgiveness while reducing taxes. It was approved in committee hours before Biden was to give the State of the Union Address and days before he was to unveil his own budget proposal on Monday.”House Republicans have been long sounding the alarm on the fiscal challenges facing our nation and this budget plan takes steps to put the nation on the track to fiscal sanity,” House Speaker Mike Johnson said in a statement after the House Budget Committee adopted the blueprint in a 19-15 party line vote.The White House bashed the plan.”The day President Biden delivers his State of the Union address – where he’ll discuss how he’s fighting to lower costs for middle class families and make the wealthy pay their fair share – congressional Republicans released a budget that sells out those hardworking Americans to rich special interests,” a White House spokesperson said.Johnson has struggled to pass legislation with his narrow House Republican majority and the Democratic-led Senate has repeatedly rejected demands of hardline Republicans. The House had to suspend its normal rules on Wednesday to pass a stopgap funding bill to avert a government shutdown, with substantial Democratic support.Budget committee chairman Jodey Arrington said the budget plan would reduce the federal debt, which stands at over $34 trillion, create a $44 billion budget surplus in fiscal 2034 and stir economic growth by lowering taxes. Democrats poured scorn on the blueprint, warning that it would punish American families and pointing to Biden’s budget, which is due to be released on Monday, as the true path to sanity. “Today, we saw just how backward and extreme House Republicans’ vision for the future really is,” said Representative Brendan Boyle, the panel’s top Democrat.The new Republican 2025 budget contains the same $1.6 trillion in base discretionary spending laid out in the Fiscal Responsibility Act, which Biden agreed to last year with former House Speaker Kevin McCarthy. Spending for fiscal 2024 totals $1.66 trillion. The budget postpones severe spending cuts until fiscal 2026, after the November election that will determine control of the White House and Congress. Committee documents show 2026 basic discretionary spending falling by more than $100 billion to $1.5 trillion. Arrington said the budget would cut just over $14 trillion in spending over the next decade. It would eliminate programs long targeted by Republicans: Biden’s student loan bailout, green energy subsidies and expanded funding for the Internal Revenue Service. More