Economy

Lane’s comments imply the ECB, which is now mopping up cashfrom the banking system as part of its fight against inflation, is likely to go back to pumping it in at some point in coming years to ensure lending to the economy doesn’t dry up.The ECB promised to devise by the spring a new framework for steering short term interest rates after a decade of massive money printing, which flooded the banking system with some 3.6 trillion euros ($3.85 trillion) worth of excess cash via bond purchases and loans. The key questions now are just how big the ECB’s balance sheet should be under the new framework and what kind of assets should be on it.”The appropriate level of central bank reserves can be expected to remain much higher and be more volatile in this new steady state compared to the relatively-low levels that prevailed before the global financial crisis,” Lane told a conference.”Even if much lower than the current level, the appropriate level of central bank reserves in the ‘new normal’ steady state should avoid the risks associated with excessively-scarce or excessively-abundant reserves,” he added. Total assets owned by the ECB have already fallen by nearly two trillion euros from their peak but at seven trillion euros, they are still well above the one to two trillion euro range seen in the early years of the central bank. Lane said the ECB needed to stick to a ‘middle path to underpin the willingness of commercial banks to extend credit in spite of the risks associated with illiquid assets in a world much more prone to macro-financial shocks. He added such reserves should be provided through “structural” bond purchases and longer-term loans to banks on top of standard short-term refinancing operations.In addition, Lane said the ECB should remain open to sustained surges in its balance sheet in case interest rates fall back to their effective lowest level, a problem that dominated the decade before the pandemic.($1 = 0.9361 euros) More

Jeremy Hunt has signalled his intent to overhaul tax-free savings and investment accounts at the Autumn Statement on November 22, and speculation continues to build about what form this might take. Granted, there are plenty of competing priorities for the chancellor’s limited fiscal firepower, but individual savings accounts (Isas) are a mass-market tax break enjoyed by 13mn people. Ironing out kinks in the current system wouldn’t necessarily cost that much, but it would encourage people to save and invest more for the future — plus deliver some much-needed help for first-time buyers. Here are five ways I think he could put fuel in the Isa tank. 1. Raise the £20,000 annual Isa limit I appreciate this request is unlikely to be granted, but it would solve a looming savings tax problem that most people are blissfully unaware of.You may be overjoyed at being able to earn 5 or 6 per cent interest on cash savings — but an estimated 2.7mn people will have to hand some of this back to HM Revenue & Customs in the current tax year.£8,330The amount higher-rate taxpayers can save before hitting the tax-free limit, based on a 6% interest rateTwo years ago, broker AJ Bell calculated higher rate taxpayers could have stashed away £77,000 in the top-paying savings account before exceeding their £500 personal savings allowance. Today, they’d only need savings of £8,000 to hit it, and will have to pay 40 per cent tax on any further interest. Basic-rate taxpayers have a more generous £1,000 savings allowance, but additional-rate taxpayers get nothing at all. What’s more, the lower additional-rate threshold of £125,150 (cut from £150,000 in Hunt’s first Budget) means even more will be snared by a 45 per cent tax charge on any savings interest. “If I’m saving but half of my interest is taken away, then maybe I won’t save,” says Victor Trokoudes, co-founder of Plum, the smart money app.The obvious answer is saving into a cash Isa — but this could mean fewer people investing in stocks and shares Isas when the financial regulator is keen for more to do so. Increasing the Isa limit would achieve the chancellor’s goal of making tax-free accounts more popular, and make it easier for people to transfer in their other savings accounts in one go. Avoiding the savings tax would reduce the hassle factor for individuals and HM Revenue & Customs, which will otherwise have to collect it via self- assessment or by tweaking millions of individual PAYE tax codes. Given its current difficulties answering the phone, this could be a wise move.2. Kill off the Lifetime IsaMartin Lewis, founder of the MoneySavingExpert consumer advice site, has branded the Lifetime Isa a “dead duck” unless the chancellor fixes the property price cap penalty. In 2017, I warned first-time buyers hoping to turbocharge their deposit savings that there was no promise the £450,000 price cap would rise in line with house price inflation. Had it done so, it would be around £560,000 today.Worse, the rising number of homebuyers, who have been priced out, lose the bonus and a chunk of their own savings if they withdraw cash before age 60. HMRC statistics show just over £47mn was forfeited by young savers last year. The complicated rules mean that none of the major banks offer the Lisa to their customers. Plus, it’s ageist — the cut-off for opening an account is age 39, only a few years older than the average first-time buyer. As an alternative retirement savings vehicle, the Lisa appeals to young self-employed people, but the “free money” of employer workplace pension contributions and tax relief will be a better deal for most. Should the dead duck quack its last, account holders should be given the option to transfer their money and any bonuses earned penalty free to another Isa product. 3. Bring back the Help to Buy IsaThe need to help first-time buyers is a huge election issue, and I will be flabbergasted if there is nothing in the Autumn Statement to address this.“Most first-time buyers will have seen their borrowing power reduce by around 25 per cent since the start of 2022 due to higher stress tests on mortgage interest rates,” says Graham Sellar, head of business development at Santander Mortgages. “At the same time, average house prices are still up over the past two years. So it’s harder to borrow enough, and harder to save enough.”Helping more of them save towards a deposit would be less inflationary than bringing back government-backed equity loans on new build homes, for example.The Help to Buy Isa was designed solely with this purpose in mind, so it fits the Treasury’s simplification brief. All the major banks and building societies offered it; indeed, most have legacy customers who can keep saving into them until 2029, so it would be easy to relaunch. Deposit savers get a 25 per cent government bonus when they buy a home. If plans change, they can withdraw their savings (plus interest) without penalty. Hunt would need to increase the property price cap of £450,000 in London and £250,000 elsewhere, and should double the monthly savings limit from £200 to £400 so the maximum bonus is comparable with the Lisa.4. Let people pay into more than one IsaYou can pay into more than one pension in a given tax year — so why not Isas? The current rules only allow you to pay into one cash Isa, one stocks and shares Isa and one Lifetime Isa.Around 2mn savers still have a Help to Buy Isa account, but if they’re saving into that, they can’t fund another cash Isa unless it’s with the same provider — even though it may not offer the best rate of interest. This also limits consumer choice in the investment world. You might want to split your allowance between, say, a Vanguard stocks and shares Isa to get low prices on its range of tracker funds, and have a riskier share trading account with an app-based Isa provider. But you can’t have both. 5. Resolve the fractional shares rowFinally, tens of thousands of young UK investors will hope Hunt will do the right thing and clarify that fractional shares are permitted to be held within an Isa.Fractionals enable investors to buy stakes in expensive US stocks such as Apple, Amazon and Tesla from just £1, rather than saving up hundreds of pounds to purchase a single share. As I’ve argued here before, owning a stake in these mighty global brands is a powerful attraction for the next generation of investors. If they can learn about the power of tax-free investing as they do so, it’s a valuable lesson.Whatever shape Hunt’s reforms may take, the more people who can be switched on to the benefits of tax-free saving and investing, the better. Claer Barrett is the FT’s consumer editor and the author of ‘What They Don’t Teach You About Money’. [email protected] Instagram @Claerb More

Goolsbee emphasized the importance of vigilant monitoring by the central bank to prevent an unexpected economic downturn in 2024. This comes as the rise in longer-term borrowing costs becomes increasingly significant due to the central bank’s evolving focus.Goolsbee further accentuated the central bank’s critical role in controlling the rise of long-term bond yields. During this additional interview, he underlined the “very substantial effect” these yields have on the economy, more than short rates. He pointed out that they recently exceeded 5% before declining, cautioning about potential economic overtightening. This statement marks an important shift in understanding and managing the implications of longer-term borrowing costs within the current economic climate.The Federal Reserve Bank of Chicago’s attention has moved from setting interest rate hike levels to determining how long these elevated rates should be maintained. These changes come amidst a backdrop of rising longer-term bond yields, which are now gaining more significance.The head of the Chicago Fed stressed that careful monitoring by the central bank is crucial in avoiding unforeseen economic difficulties in the coming year. This warning underscores the growing importance of understanding and managing longer-term borrowing costs and their potential effects on economic stability.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

CARACAS (Reuters) – The Venezuelan government will be in a strong position to increase social spending to woo voters in 2024 as relief from some U.S. sanctions allows more oil income to flow into government coffers, analysts say. The United States in October temporarily rolled back some oil industry sanctions and lifted a ban on bond trading sanctions in exchange for an electoral deal between the government of President Nicolas Maduro and Venezuela’s opposition.Washington has conditioned an extension of the relief on the release of political prisoners and what it says are “wrongfully detained” Americans, as well as the lifting of public office bans on people including the winner of the opposition’s primary nominating contest.The relaxed sanctions could lead to $1.4 billion in additional income for Venezuela over the next six months, analyst firm Sintesis Financiera said in a report.The additional oil income is expected to arrive gradually, partly though the redirection of exports. One oil industry source told Reuters they expect export income to grow by 40% per month.Under the previous sanctions, state-run oil company PDVSA had to sell to Asian markets via intermediaries, a strategy that cut into government profits. “The increase in income will be gradual,” said Jose Vielma, a ruling party lawmaker and member of the finance committee for the government-allied national assembly. “The contribution will go to social spending and services.”The communications ministry and ruling party PSUV did not respond to requests for further comment on spending plans.The increased income will almost certainly lead to greater financial laxity “given the need to improve popular support for the government ahead of elections in the second half of 2024,” said Sintesis Financiera. The government has traditionally increased social spending, public sector salaries, food distribution and housing construction projects ahead of elections, though national income has been limited over the last five years because of the sanctions and problems at PDVSA.SALARY INCREASES?If the sanctions relaxations continue next year and oil production goes up, the additional income could reach $7 billion in 2024, consulting firm Ecoanalitica said.”In electoral periods clientelist spending increases, and it’s possible we’ll see workers getting bonuses or improvements in the distribution of food,” said Venezuelan political consultant and analyst Oswaldo Ramirez. “The challenge for the government is to convert that into votes… The ruling party has lost votes in part because of delays in salary increases and pensions,” he said.The government has already this year launched new social programs – which it calls “missions” – for young people and women, the first since 2017.Such social programs distribute food, houses and even goods like motorcycle parts, cellphones and computer tablets.Opposition figures have criticized the missions for more than a decade, saying they are a poor response to the destruction of Venezuela’s economy by the ruling party, amount to “extortion by hunger,” and that public funds could be better employed raising public sector salaries and pensions.Economist Jose Guerra, a former opposition lawmaker and head of the non-governmental Venezuelan Finance Observatory, said public sector raises may still be too costly a prospect.”The government will spend but not at the levels it did before,” he said.More income may also allow Maduro to revisit orthodox but insufficient inflation-fighting policies that have led to lower spending and less availability of credit, even as annual inflation reaches more than 300%. Public spending has fallen to 15% of gross domestic product from 40% a decade ago, according to economic analysts. That has led teachers, nurses and other public workers to march for higher salaries as their wages shrink.Some 2 million public workers earn between $45 and $60 per month, while private sector salaries are often more than $200, according to the Venezuelan Finance Observatory.The central bank should mint fewer bolivares if there is higher oil income, several analysts said, estimating prices could fall in what remains of the year and take inflation down to 250% year-on-year. More

This article is an on-site version of Martin Sandbu’s Free Lunch newsletter. Sign up here to get the newsletter sent straight to your inbox every ThursdayWe have an artificial intelligence summit behind us, which produced some celebrity photoshoots at Bletchley Park but also some useful outcomes. One was simply having many of the world’s main policymakers and business leaders in the same room focusing on the challenges and opportunities of AI. Having them spend limited political bandwidth on the next technological upheaval at all, let alone doing so together, amounts to a degree of foresight that is all too rare in our politics. If it becomes the first of a regular series of meetings, and it matters that Chinese representatives participated, so much the better.Another result is that it may have prompted the White House to get its own first stab at regulating AI over the line, with a US executive order published before the Bletchley gathering. For all this, UK prime minister Rishi Sunak deserves thanks; we are even ready to forgive him for the tech bro talk with Elon Musk.The Bletchley Park summit suggests that the policy conversation has shifted in a constructive direction since the release of ChatGPT led to a wave of panic about humanity’s end. Last time I wrote about AI, I argued that warnings of existential risks were identical to those triggered by previous technological breakthroughs — from books (the supposedly suicide-inducing The Sorrows of Young Werther) to the nuclear bomb (see Dr Strangelove). As I said then:I have found myself unable to get caught up in much of the excitement . . . I struggle to see how even the worst-case scenarios the experts warn us against are qualitatively different from the big problems humanity has already managed to cause and had to try to solve all by ourselves . . . [L]ying and manipulation, especially in our democratic processes, are problems we humans have been perfectly capable of causing without the need for AI . . . So I think that the whiff of existential terror the latest AI breakthroughs have whipped up is a distraction. We should instead be thinking on a much more mundane level.And as far as I can tell, the thinking has taken a good turn for the mundane. The risks of wiping out humanity (the “terminator” challenge) are no longer centre stage. Nor are those of one great power wiping out another (the “robot army” challenge). Instead, we are thinking about just what we should: how AI could cause harm to humanity today and how state power can be used to address that. Tim Wu puts it nicely in a New York Times op-ed: “Actual harm, not imagined risk, is a far better guide to how and when the state should intervene.” I also agree with him that the US executive order mostly, and rightly, focuses on actual harms.And the fact is that these more mundane problems are much the same as the actual harms we already face. The difference made by AI is that it will be easier to cause them at greater scale and perhaps with less scrutiny. But the problems are qualitatively the same and we can do well by applying solutions that are qualitatively the same as the ones we know, albeit perhaps with greater technological sophistication and speed (no doubt regulators will have to fight AI with AI, at least in part). One type of problem has to do with fraud and impersonation, as highlighted by both Wu and the White House. Nothing new about this: such abuses go back as early as humans gathered in big enough groups not to know everyone personally. Of course, AI provides new methods, such as voice impersonation or deep fake video, particularly suited to a society where much interaction is remote and digital. The solutions are partly legal — defining accountability for communication and requirements for honest dealing — and partly technological — such as the “watermarking” the EU and US are now regulating for. But there is nothing profoundly different from how we have dealt with fraud and counterfeits in the past.My colleague Rana Foroohar has highlighted another challenge: the manipulative monetisation of personal data and online behaviour. This is the core “production model” of the digital business idea known as surveillance capitalism and Rana is, of course, right to warn that AI will turbo-charge the kind of abuses already being committed. Stopping this does not require a whole lot of new tools but that we use the ones we have in earnest. While we have let the Facebooks of this world target us based on our personal data for many years, all it really takes is for governments to ban the practice. This has just happened, on a narrow scale: Norway prohibited Meta from using behavioural advertising in the country a few months ago, and has now persuaded the collective of EU privacy regulators to follow suit.Now, that wasn’t so hard, was it? Admittedly, this is a limited prohibition: only for one company, only for one country or perhaps region, and only for behavioural advertising rather than using private data more broadly or even collecting it. And it is, of course, being contested. But the point is clear: if a practice is harmful or unfair, you can actually ban it. And — to today’s point — you can ban it when carried out by an AI as well.Then there are risks related not to intentional harm but significant unforeseen effects. US Securities and Exchange Commission chair Gary Gensler has warned that the use of AI by financial companies could lead to financial instability if many market participants unwittingly rely on the same model. I am sure analogous risks can emerge in other sectors. Here, I think, the Wu remark I quote above falls short: in cases such as the ones Gensler worries about, we absolutely have to imagine risks. The reason is that we know from experience that there are sectors and activities where previously unsuspected risks have a way of creeping up on us. In all these cases, in other words, there is work to be done but no need to reinvent the wheel. Update legislation, empower rule-setters, strengthen enforcement — and, above all, give strong political backing to all this work. There is really no excuse for letting AI lead to a flowering of old abuses, like some vampire given access to new blood.But there is one area that still seems to be missing in these laudably technocratic debates: AI’s effect on incomes, wealth and inequality. There is some concern about the displacement of jobs, another challenge we have a lot of (poor) experience of — and I should know because I have written an entire book about how we mishandled the last big job disruption. But apart from labour markets, the impact of AI on the distribution of prosperity could be massive.Successful AI innovation will no doubt create new fortunes. (The FT has reported forecasts that the market for generative AI will grow from $6bn today to $59bn in five years’ time, and that is surely lowballing it. OpenAI has announced it will open a ChatGPT app store — I suppose the plan is to eat Apple’s bacon by usurping its gatekeeping platform.) But how big these fortunes are, who gets them and how fairly they are distributed depends not on the AI itself but on the economic and regulatory structure they emerge in — in particular the regulation of rights of ownership. By far the most thought-provoking discussion of this I have seen since last week’s summit comes courtesy of Björn Ulvaeus of Abba. Please don’t miss the pop superstar’s op-ed for the FT (kudos to my colleagues on the opinion desk who came up with the headline “Take a chance on AI”), where he sets out a case for balanced rights between creators using AI and those whose work the AI has been trained on. The key insight is that using AI to create new music is not so different from how he and Benny Andersson took inspiration from The Beatles’ White Album, which they listened to over and over.The economic point, however, is that property rights — including intellectual property rights — have to be defined. That goes for the “products” of AI, which in large part will be intangible ideas and their application, so we are talking about use rights, royalties, the ability to license and on what terms, and, of course, how AI builders are allowed to use data generated by others in the first place. But it must also go for the ownership of AIs themselves and the rights to control and profit from them. This, I think, could be the most consequential aspect of how to govern AI — at least in economic terms. How concentrated the control of AI is allowed to get, and how tilted towards profits the economic gains (and how concentrated those profits) are, could change our societies more profoundly than the potential applications of the technology that have us riveted. And so could the neglect of these questions. Other readablesBehind the legal arguments, it is mostly fear of the economic consequences that has kept western governments from seizing Russia’s $300bn-plus foreign exchange reserves to help Ukraine. But this fear is misguided, as I explain in my FT column this week.Michael Pettis sets out the merciless arithmetic of how China can only sustain high growth rates with “a major restructuring of its economy in which a much greater role for domestic consumption replaces its over-reliance on investment and manufacturing”.Colby Smith interviews Claudia Sahm, one of the smartest thinkers on US macroeconomic policy.“Death has few virtues except, perhaps, for clarifying the important things in life.” My colleague Emma Jacobs is on top form.Numbers newsTorsten Slok of Apollo Global Management highlights in an email that foreigners’ share of outstanding US government debt has fallen from a peak of 33 per cent a decade ago to 23 per cent today. The shift from foreign to domestic holders is just as big even if you remove the Treasuries bought by the Federal Reserve.A poll that puts Donald Trump ahead of Joe Biden in most US battleground states has made Democrats tear their hair out in panic. In the same week, however, state election results in places such as Kentucky, Virginia and Ohio look much more favourable for Democrats. Something to confirm everyone’s prior beliefs! Recommended newsletters for youChris Giles on Central Banks — Your essential guide to money, interest rates, inflation and what central banks are thinking. Sign up hereUnhedged — Robert Armstrong dissects the most important market trends and discusses how Wall Street’s best minds respond to them. Sign up here More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.If trade and economics really are all about politics these days, the horrific Hamas attacks and Israel’s deadly bombing of Gaza will surely open up a new global fissure between rich and poor nations. The US has dutifully supported Israel, its long-term client, and low and middle-income countries have generally sided with the Palestinians. Could the Gaza conflict be the moment when the soi-disant “global south” finally asserts itself as a geoeconomic force?Answer: probably not. On a superficial reading, America’s isolation will damage its global standing, both among the misnamed “western” alliance of rich democracies it leads and the emerging markets it wants to join its China-sceptic geoeconomic gang. Closer examination suggests that’s heavily overstating it. The episode doesn’t show the “west” or the “global south” (the east and the north apparently don’t get their own grouping, sorry) coalescing into firm blocs. In any case, a foreign policy issue without a big global economic impact is unlikely to do much to change patterns of trade.In the UN general assembly vote on October 26 calling for a ceasefire in Gaza, the US was in a small minority joining Israel to oppose it. Only 14 countries voted against, compared with 45 abstaining and 120 in favour. But the EU, far from slavishly following the US lead, was all over the place. Four EU member states opposed the motion, 15 abstained and the rest — including Nato members France and Spain — supported it. Most developing countries were in favour, but India, self-styled leader of the “global south”, has been tacking closer to Israel in recent years and abstained.The US also retains foreign policy heft in some quarters that might be expected to sympathise with the Palestinian side. The United Arab Emirates, which signed a trade deal with Israel last year after normalising diplomatic relations in 2020, voted at the UN in favour of a ceasefire but may in fact move closer to the US, its traditional security guarantor, in case the conflict spreads through the Middle East.At any rate, history suggests that even when the US is more squarely blamed for mass deaths through its foreign policy adventurism, it doesn’t affect its ability to trade or negotiate. Global opinion of the US took a huge dive after George W Bush’s Iraq war in 2003, dropping by 30 or 40 percentage points in some European countries and falling sharply in middle-income Muslim nations. But that didn’t make the US a trade pariah. Exports as a share of US gross domestic product rode a recovery in global trade to rise from 9 per cent of GDP in 2003 to more than 12 per cent in 2008, Bush’s last year in office.And the US managed to launch talks for the Trans-Pacific Partnership trade deal of 11 nations in 2008, including those such as Singapore that tilt economically towards China. Similarly, this week the US is leading negotiations with 13 Asia-Pacific countries in its Indo-Pacific Economic Framework programme. There’s not much substance in the initiative, but it is a political signal for countries wanting to remain on good trade terms with the US, and there’s no sign of IPEF countries walking off in protest against US support for Israel.Rhetorical support for the Palestinians is an easy way for emerging markets (and some Europeans) to pose as sceptics of a US-dominated political order, but in economic terms their reaction to events in Gaza is likely to be pragmatic. Although the conflict is causing damage to Middle Eastern economies, it’s unlikely to be noticeable much outside the region unless a wider conflagration drives up oil prices.After Russia’s invasion of Ukraine, the rich democracies formed a pretty solid geopolitical bloc to oppose Moscow, but developing countries have mainly remained determinedly (and sensibly) opportunistic on trade and economics rather than taking sides. Sometimes explicitly emphasising their non-aligned status, emerging markets have pursued trade relations with both the US and China, playing one off against another.True, if the Gaza conflict weakens Joe Biden domestically to the point that Donald Trump is elected US president next November, or if China is emboldened to invade Taiwan, the catalytic impact on the global economy will be severe. But short of that, although trade is certainly more politicised than 20 years ago, most governments probably won’t let conflict in a faraway territory affect their pursuit of economic self-interest. The Gaza conflict may be a turning point for US activity in the Middle East, especially given the domestic resistance Biden is encountering to his pro-Israel line. But absent a rapid escalation or knock-on effects in the US and China, it’s failing so far to provoke a widespread realignment in geoeconomic relations. The “global south” and the “west” are no more coherent blocs now than they were before the conflict began. [email protected] More

Philip Lane, a member of the ECB, stated at a conference that central bank reserves should be higher and more volatile compared to levels before the global financial crisis. Lane underscored the importance of maintaining a balance of reserves that minimizes risks associated with either scarcity or abundance.Lane suggested a ‘middle path’ strategy to encourage commercial banks to lend despite risks associated with illiquid assets in an environment increasingly susceptible to macro-financial shocks. He proposed that these reserves be supplied through a structural bond portfolio and longer-term refinancing operations, in addition to standard short-term ones.This strategy is designed to provide extended liquidity to the banking system and create a flexible supply, thereby reducing the need for banks to accumulate precautionary reserves. The new framework aims to ensure stability in the financial sector while encouraging lending activities from commercial banks.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

Before autoworkers went on strike in September, Dave and Bailey Hodge were struggling to juggle the demands of working at a Ford Motor plant in Michigan and raising their young family.Both were working 12-hour shifts, seven days a week, to earn enough to cover monthly bills, car payments and the mortgage on a home they had recently bought. They were also saving for the things they hoped life would eventually bring — vacations, college for their two children and retirement.They were holding their own financially, but their shifts left them little time away from the assembly line, where both worked from 6 p.m. to 6 a.m.“You just sleep all the time you’re not at work,” Ms. Hodge, 25, said. Some days, she’d see her 8-year-old son off to school in the morning. She’d fall asleep with her 14-month-old daughter lying between her and Dave.“I’d wake up in the afternoon, get dinner for the kids and go back to the plant,” she said. “Life revolved around work.”“Dave paid the bills with the strike money, and if I needed anything, I used the money I got from tips,” Ms. Hodge said.During the strike, Ms. Hodge worked at a local beauty spa.But the couple said they expected all that to change now. Last month, Ford and the United Automobile Workers, the union that Mr. and Ms. Hodge are members of, struck a tentative agreement containing some of the biggest gains that autoworkers had won in a new contract in decades.If the agreement is ratified, Mr. Hodge, who has been at the plant longer than Ms. Hodge, will make almost $39 an hour, up from $32. Ms. Hodge’s hourly wage will increase to more than $35 from $20. By the end of the four-and-a-half-year contract, both will be making more than $40 an hour. The agreement also provides for more time off.Mr. Hodge, 36, said he had teared up when he heard the details. “I was super happy,” he said. “It makes me feel like our family can have a future now.”About 145,000 workers at Ford, General Motors and Stellantis, the parent company of Chrysler, Jeep and Ram, are voting on separate but similar contracts the U.A.W. negotiated with the companies. Many labor and auto experts said a large majority of workers would most likely have the same reaction to the agreements that Mr. Hodge had and would vote in favor of the deals.The Hodges were required to walk the picket line at the plant one day a week. The United Automobile Workers provided $500 a week for each striking worker.Mr. Hodge’s first day back after the strike. “I was super happy,” he said of the new contract. “It makes me feel like our family can have a future now.”Just over 80 percent of the union members at the plant the Hodges work at, in Wayne, Mich., have already voted in favor of the deal. Voting at Ford plants is expected to end on Nov. 17.The tentative agreement also means the Hodges are going back to work after being on strike for 41 days. Their plant, which is a 30-minute drive from downtown Detroit, was one of the first three auto factories to go on strike in September. It makes the Ford Bronco sport utility vehicle and the Ranger pickup truck.On the evening of Sept. 14, Ms. Hodge was on a break when a union representative came by telling workers to leave. She and Mr. Hodge knew a strike was possible and had set aside enough money to cover their expenses for two to three months, but they were still surprised they were called on to strike first.The Hodges were required to walk the picket line at the plant one day a week, leaving them lots of time for the family activities they had been missing. The U.A.W. provided $500 a week for each striking worker. The $1,000 a week the Hodges collected helped, but Ms. Hodge also went to work at a beauty spa.The Hodges’ son arriving home from school.“At first, you were happy to have some time off and have dinner as a family, put the kids to bed, but then it keeps going on, and you’re like, ‘Whoa, this doesn’t seem to be ending,’” Ms. Hodge said.“Dave paid the bills with the strike money, and if I needed anything, I used the money I got from tips,” Ms. Hodge said.But as the strike wore on, the Hodges found they had to keep close track of their grocery shopping and stopped eating out.“At first, you were happy to have some time off and have dinner as a family, put the kids to bed, but then it keeps going on, and you’re like, ‘Whoa, this doesn’t seem to be ending,’” Ms. Hodge said. “As it goes along, it gets scary.”On Oct. 25, Ms. Hodge began getting texts from friends at the plant that the U.A.W. and Ford had reached a tentative agreement. That evening, she and Mr. Hodge watched an announcement by the union’s president, Shawn Fain, on Facebook.By the end of the four-and-a-half-year contract, both will be making more than $40 an hour.As the strike wore on, the Hodges found that they had to keep close track of their grocery shopping and stopped eating out.For Mr. Hodge, the news of the union’s gains — including a 25 percent general wage increase, cost-of-living adjustments and increased retirement contributions — was hard to fathom given the slower progress workers had made in recent years.He had started at Ford in 2007 as a temporary worker and over five years climbed to the top temporary worker wage of $27 an hour. In 2012, when he became a permanent employee, he had to start at the entry-level wage of $15 an hour.“It took me a good 11 years to get to where I am now,” he said. “So this feels like I’m getting back what I would’ve had.”The Hodges plan to continue working 12-hour, seven-day schedules for a short while to rebuild their savings account, and to take care of expenses they had put off, like fixing the dented bumper and cracked windshield in Ms. Hodge’s Ford Explorer.But eventually, they want to cut back to working Monday through Friday, and perhaps one weekend a month.“It will be great just doing some overtime, not overtime all the time,” Ms. Hodge said. “And we’ll start doing things with the kids. Maybe take them to a hotel that has a swimming pool. That would be nice.”A 25 percent general wage increase was hard to fathom given the slower progress workers had made in recent years.“It will be great just doing some overtime, not overtime all the time,” Ms. Hodge said. More