Economy

In California, legislators come out as tenants to form a renters’ caucus.When Matt Haney entered the California Legislature, he discovered he was part of a tiny minority: a legislator who rents.Mr. Haney has never owned property and, at 41 years old, has spent his adult life as a tenant. His primary residence is a one-bedroom apartment near downtown San Francisco. The rent is $3,258 a month. (He also paid a $300 deposit for Eddy and Ellis, two orange cats he adopted from a shelter during the pandemic.)“When I got there last year, it seemed that there were only three of us out of 120,” Mr. Haney said of the renters in the Legislature. “That’s a very small number.”Looking to highlight their renter status and the 17 million California households that are tenants — a little less than half the state — last year, Mr. Haney and two Assembly colleagues, Isaac Bryan and Alex Lee, founded the California Renters Caucus. A fourth Assembly member, Tasha Boerner, joined after the caucus was formed. The group added a state senator, Aisha Wahab, after she entered office this year.Mr. Haney said there was briefly a sixth, more politically conservative member who attended one meeting but never came back. It’s possible they have other colleagues who are renters and have yet to come out.“Being a renter is not necessarily something people project or put on their website,” Mr. Haney said.That much seems to be changing. From cities and statehouses to U.S. Congress, elected officials are increasingly playing up their status as tenants and forming groups to push for renter-friendly policies.Politics is about being relatable. Candidates pet dogs and hold babies and talk about their children. Given how many families are struggling with the cost of housing and have lost hope that they could ever buy, it makes sense that elected officials would now start talking about being tenants.London Breed, the mayor of San Francisco, talks frequently about her rent-controlled apartment in the city’s Haight-Ashbury district. Lindsey Horvath, a member of the Los Angeles County Board of Supervisors — the powerful body that oversees a $43 billion budget and more than 100,000 employees — predicates discussions of housing policy with her status as a renter.In June, federal legislators followed California with a renter caucus of their own, although that one has looser criteria. Representative Jimmy Gomez, who is chair of the Congressional Renters Caucus as well as a Democrat from Los Angeles, said instead of actual tenants his group targeted members from renter-heavy districts, even if they own a home, as he does.“Good elected officials are going to fight for their constituents, no matter what,” Mr. Gomez said.Besides, he added, the strictest definition of “renter” can obscure economic insecurity. His parents, for instance, were homeowners who never made more than $40,000 combined and lived in inland California without air conditioning. Other people own nothing but rent a $7,000-a-month penthouse.“Are they considered the same?” he said.When asked how many of his colleagues did not own a home, Mr. Gomez said, “My gut is that it’s less than 10.”The five members of the Renters Caucus: from left, Isaac Bryan, Tasha Boerner, Matt Haney, Aisha Wahab and Alex Lee, at the Capitol Building in Sacramento, Calif.Aaron Wojack for The New York TimesIn addition to advancing Democratic priorities like subsidized housing and tenant protections, these legislators are making a bet that being perceived as a pro-renter is politically advantageous in an era in which a growing number of Americans are renting for longer periods, and often for life. Mr. Haney and Mr. Gomez both describe their caucuses — subsets of legislators organized around a common purpose — as a first for their bodies. Which is easy to believe.Homeownership is synonymous with the American dream. It is supported by various federal and state tax breaks and so encoded in the American mythology and financial system that historians and anthropologists assert that it has come to symbolize a permanent participation in society. The underlying message is that renting is temporary, or should be.“There is a pretty foundational bias against renters in American sociological and political life,” said Jamila Michener, a professor of government and public policy at Cornell. “So when policymakers say, ‘Hey, this is an identity that’s relevant, and one we are willing to own and lean into,’ that’s significant.”About two-thirds of Americans own their dwellings, and survey after survey shows that the aspiration of owning a home is no less potent today than it was for previous generations. But the number of renters has grown steadily over the past decade to about 44 million households nationwide, while punishing housing costs have migrated from coastal enclaves to metropolitan areas around the nation.More salient to politicians, perhaps, is that renters are increasingly well-off — households that make more than $75,000 have accounted for a large majority of the growth in renters over the past decade, according to the Harvard Joint Center for Housing Studies. At the same time, the struggle to find something affordable has escalated from lower-income tenants to middle-income families that in past generations would very likely have owned their homes.In other words, renter households are now composed of families much more likely to vote. And after a pandemic in which homeowners gained trillions in home-equity wealth while renters had to be supported with eviction moratoriums and tens of billions in assistance, the fragility of their position has been made clearer.“As cost burdens show up in places where we don’t expect it, there seems to be more political momentum around addressing these problems,” said Whitney Airgood-Obrycki, senior research associate at the Harvard Joint Center for Housing Studies.By organizing around an economic condition, lawmakers are embracing a concept that renter advocates refer to as “tenants as a class.”The idea is that while renters are a large and politically diverse group — low-income families on the edge of eviction, high-earning professionals renting by choice, couples whose desire for suburban living but inability to afford a down payment has made single-family house rentals one of the hottest corners of the real estate business — they still have common interests. Those include the rising cost of housing and the instability of being on a lease.“It’s a lens that I don’t think has been captured in the same way as race, gender, age, ability, et cetera,” said Mr. Bryan, the California Assembly member and renters’ caucus member whose district is in Los Angeles. “I’m excited to be among the first five legislators in California history to develop what the political consciousness is around this status.”That the ranks of tenants also include legislators, albeit not many of them, is one of the points California lawmakers said they wanted to make by forming the renters’ caucus. It also plunged them into the surprisingly thorny question of who is and is not a tenant.Does the list include lawmakers who rent a dwelling in Sacramento but own a house or condominium in their district, a criterion that would qualify a good chunk of the Legislature? The group decided no. How about Mr. Lee, the Assembly member and renters’ caucus member, whose district residence is his childhood bedroom, in a home his mother owns? He doesn’t own property, so sure.Despite having only five members, the California Renters Caucus, like the state it represents, is racially diverse but dominated by Democrats (there are no Republicans in the caucus). Its members are white, Black and Asian. Mr. Lee is a member of the Legislature’s L.G.B.T.Q. caucus. Ms. Wahab is the first Muslim American elected to the California Senate.Politically speaking, the outlier is Tasha Boerner, who lives in the San Diego suburb Encinitas and is the caucus’s more conservative member (as California Democrats go). Despite being the group’s longest-serving member in the Legislature, Ms. Boerner, 50, was initially not identified as a tenant by her colleagues on the renters’ caucus.“No one ever called my office because I’m a white mom living in Encinitas,” she said. “They thought, ‘She must be a homeowner.’”Ms. Boerner frequently disagrees with her colleagues about the efficacy of policies like rent-control, she said, though she voted for a statewide rent cap several years ago. She is also more skeptical of the state’s efforts to speed construction by taking land-use control from cities, and she voted against a bill that effectively ended single-family zoning in the state.And yet Ms. Boerner is also a lifetime renter who has moved three times since assuming office. Her current home is a three-bedroom apartment that she shares with her two children and her ex-husband, in part because it’s cheaper than if the parents had separate places.“Families who rent come in all shapes and sizes, and what I hope to bring is a little diversity,” she said. “We have disagreements, as any caucus does, but coming together and saying, ‘Hey, this is a demographic who matters’ — that is the importance.” More

The Asian Infrastructure Investment Bank, Beijing’s answer to the World Bank, has approved one of its highest-profile international partnerships, just weeks after it was accused of being infiltrated by China’s Communist party.The AIIB’s board last week approved a proposal to issue $1bn in credit guarantees against sovereign-backed loans made by the World Bank’s lending arm, the International Bank for Reconstruction and Development.The partnership comes as multilateral development banks are trying to think more ambitiously about their role in mobilising finance. A G20 working group on capital adequacy last year recommended that development banks expand their use of financial innovation to provide additional lending capacity.The deal with the AIIB will allow the World Bank to overcome financing constraints and issue new lending while its Beijing-headquartered counterpart will be able to better deploy its surplus capital to a broader mix of borrowers.As a relatively young institution — it was set up in 2015 – the AIIB has only used about 43 per cent of its capital base, with committed financing of about $37bn, meaning it still has a lot of unused lending capacity. Danny Alexander, vice-president for policy and strategy at the AIIB, linked the partnership to a broader global effort to increase financing for climate challenges by “deepening co-operation and increasing the firepower” of multilateral development banks.“This transaction will strengthen the financing capacity of both institutions and is an example of how we can do more by working together,” he said.The proposal was first mooted by both institutions in June shortly after the AIIB’s Canadian former head of communications, Bob Pickard, abruptly left the bank, alleging that the Communist party was running it from the shadows “like an internal secret police”.The AIIB’s internal review this month concluded that it “follows the highest standards of multilateral governance” and there was no “undue influence” on decisions taken by the board of directors or management.The deal with the World Bank would enable the AIIB to diversify its portfolio and increase lending to low-income borrowers, said Oliver Burnage, head of the Beijing-based bank’s portfolio risk management department.For the World Bank, the plan would “provide relief against capital constraints” for the Washington-based institution, enabling it to extend fresh loans, according to a statement issued by the Washington-based institution in June. The World Bank has not announced its approval of the plan and did not respond to a request for comment.The AIIB, which was launched as a Chinese-led alternative to the World Bank and other western-led multilateral organisations, has 106 members including India, the UK, France, Australia, Canada and South Korea. The US and Japan have not joined.China has a 26.6 per cent voting stake in the bank, which gives it veto power over important decisions.Since its inauguration, the AIIB has signed co-operation agreements with the World Bank, with which it has co-financed a number of deals. It has a triple A rating, important for multilateral banks because it allows them to borrow cheaply and lend at lower rates to low-income countries.

Pickard’s allegations prompted Canada to halt all government-led activity at the bank while it launched a review. Pickard said at the time the Communist party was like an “invisible government” inside the bank. He did not provide specific examples of party interference in the AIIB’s high-level decision-making.The AIIB internal review said the bank had “a solid governance structure, comparable to and built on the lessons learned from other multilateral development banks”.“Half of AIIB’s financing has been co-financed with other [multilateral development banks],” the review said. “[The AIIB] also benefits from an AAA credit rating at all three of the principal agencies, which also assess the Bank’s governance positively.”Pickard’s accusations come amid an increasingly acrimonious geopolitical environment between China and the US and its allies. The allegations have also heightened tensions between Beijing and Canada, with Chinese state media last month attacking Ottawa’s statements on the controversy as a “politically motivated claim to discredit AIIB”. More

UK public sector borrowing fell unexpectedly in June while retail sales grew much more than anticipated, providing welcome news on the health of the economy and public finances. Net public sector borrowing hit £18.5bn last month, £0.4bn lower than in the same month in 2022 and below analyst expectations of £22bn, according to data published by the Office for National Statistics on Friday. The ONS put the fall down to higher tax receipts and a substantial drop in the interest payable on government debt.A separate ONS release showed that the volume of British retail sales grew by 0.7 per cent between May and June, far more than the 0.2 per cent forecast by economists polled by Reuters, and came after increased sales in the previous two months.In the three months to June, public sector borrowing was £54.4bn — £7.5bn less than forecast by the Office for Budget Responsibility, the fiscal watchdog. The undershoot was helped by large downward revisions to the April-to-May figures thanks to higher tax receipts. Martin Beck, chief economic adviser to consultancy EY Item Club, said substantial historical revisions and the surprise drop in borrowing in June “have left the public finances looking in a healthier position than previously thought”. The figures will bring “some cheer for the government on a day when it has lost two by-elections”, said Ruth Gregory, economist at Capital Economics. Despite the positive news, chancellor Jeremy Hunt said: “Now more than ever we need to maintain discipline with the public finances. We are at a crucial juncture and need to avoid reckless spending.”The chancellor ruled out big pre-election tax cuts in a recent interview with the Financial Times.Even with the fall in borrowing, government expenditure rose by £5.2bn to £96.7bn in June compared with the same month last year. This was £2.3bn higher than forecast by the OBR, and was fuelled by the cost of energy support schemes and increased benefit payments. However, tax receipts for the month rose to £57.3bn — £4.6bn more than in the same month last year, driven by increases in income tax, corporation tax and VAT receipts. The strong tax receipts reflected “brisk growth in nominal GDP and wages”, explained Samuel Tombs, economist at Pantheon Macroeconomics. The finances were also boosted by a drop in the interest payable on central government debt, which was £12.5bn in June, £7.5bn lower than the record £20bn in June 2022. This reflected slower increases in the retail price index to which a large proportion of gilts are linked.Despite the improvement, most economists warned that there was limited room for tax cuts ahead of the general election expected next year as public debt, or borrowing accumulated over time, was estimated to be 101 per cent of GDP — the highest since the early 1960s.

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With interest rates still rising and a recession on its way, “hopes that the chancellor will have room to fund a big package of net tax cuts in the Autumn Statement without breaking his fiscal rules will probably be disappointed”, said Gregory. Meanwhile, the strong uplift in retail sales was helped by the warm weather and the rebound in food spending after consumers shifted to takeaway and dining out for the extra bank holiday in May.

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ONS chief economist Grant Fitzner said: “Retail sales grew strongly, with food sales bouncing back from the effects of the extra bank holiday, partly helped by good weather and department stores and furniture shops also having a strong month.”The volume of sales at food retailers was up 0.7 per cent, bouncing back after a 0.4 per cent fall in May, with some supermarkets attributing the boost to good weather and promotions. Sales at department stores were up 1.9 per cent over the month. Retailers put the increase down to summer sales and higher footfall due to the weather.The impact of high inflation was still visible, however; consumers spent about 18 per cent more in June than in February 2020, before the pandemic, but bought 0.2 per cent less by volume.Separate data by the research company GfK reported a sharp fall in consumer confidence in July. However, Beck said that retailers’ better performance “increases the likelihood that the economy managed to grow in the quarter”. More

Headline inflation in Japan rose to 3.3 per cent in June, outpacing the US figure for the first time in eight years and underscoring how Asia’s most advanced economy is no longer an outlier in global inflation.Price pressures in Japan, which has battled deflation for most of the past three decades, have proven to be broader and stickier than expected. This increases the pressure on the Bank of Japan, which meets next week and faces calls from investors to unwind its ultra-loose monetary policy.Japan remains the world’s only central bank with negative interest rates, and any reversal of this strategy would have massive implications for global financial markets.Annual inflation of the consumer price index and core CPI, which excludes fresh food, rose from 3.2 per cent in May to 3.3 per cent in June, according to data released on Friday. The rise, mainly due to higher utility bills, was in line with market expectations.That compares with 3 per cent inflation in the US, where the Federal Reserve has raised its benchmark interest rate to between 5 and 5.25 per cent from close to zero at the start of 2022. Friday’s figures represent the first time Japan’s headline inflation has been higher than the US’s since October 2015.

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The BoJ has argued that easing measures are needed to support the economy since the country’s inflation is not driven by strong underlying consumer demand and will slow as the cost of imported commodities falls.In a sign of that scenario playing out, the so-called core-core CPI, which strips out energy and food prices and is the most similar to core CPI measures used in other countries, fell from 4.3 per cent to 4.2 per cent in the June data.But Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute, said there was uncertainty about the pace of the decline, with companies more willing to pass on higher costs to consumers and with big businesses raising wages.“If it’s a typical cost-push inflation, prices are likely to fall dramatically once time passes, but the price trend could last for much longer than expected,” Shinke said. “With levels of 3 or 4 per cent, inflation in Japan is clearly no longer low.”

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This week, BoJ governor Kazuo Ueda signalled that the central bank would maintain its easing measures at its policy meeting next week. “There is still a distance to sustainably and stably achieving our 2 per cent inflation target,” he said.The comments sent the yen falling against the dollar as markets lowered expectations that the central bank would adjust its yield curve controls, a policy it pioneered in 2016 to cap rates on the benchmark 10-year Japanese government bonds at about zero per cent.Still, UBS economist Masamichi Adachi said he expected the BoJ to widen the trading band on government bonds and raise its inflation outlook next week. He noted that underlying inflation had risen even if it had not hit the bank’s 2 per cent target on an ongoing basis.In December, the BoJ said it would allow 10-year bond yields to fluctuate by 0.5 percentage points above or below its target of zero, widening from the previous band of 0.25 percentage points. More

The shelves of Aldi in Germany are stocking locally-grown asparagus and strawberries after heat and drought in Spain pushed the buyers for the supermarket group to make a very deliberate change last year.The retail group founded by the Albrecht brothers in postwar Germany has introduced climate change-related factors to help its buyers choose the goods for its thousands of stores across Europe and in the US.Several extreme weather events in South and Latin America have also led to difficulties in sourcing fresh produce, and higher prices for coffee and nuts — among the big sellers at Aldi.In France, customers were shocked not to find Dijon mustard in stores last summer, after high temperatures in Burgundy and a “heat dome” in Canada, the second-largest mustard seed producer in the world, dried crops.

French customers were shocked not to find Dijon mustard in stores last summer after mustard seed crops dried up in the heat © Bloomberg

But the consequences of the business disruption induced by climate change are stronger than mustard. Extreme flooding in Germany last year not only destroyed crops, but also damaged stores. In parts of California, it is so hot that workers and machines cannot cope and harvesting for products destined for Aldi stores has to happen at night.In the longer term, the retailer expects falling crop yields to result in migration, particularly in the world’s most food-insecure regions. The ability to harvest and manufacture the products consumers want will become harder. Climate change is a “very clear and present danger”, says Anke Ehlers, managing director of international sustainability at Aldi Sud, which operates more than 7,000 stores across 11 countries. For the retailer, the change of tack in its sourcing policy was a case of “making our buying teams aware about resilience and supply chain resilience overall, as an element to be considered in every buying decision, and establishing scorecards, incentivising and creating awareness internally,” she told a recent FT event.Aldi is not isolated. Many companies have been forced to sharpen their focus on supply chains — first because of the disruptions brought by the Covid-19 pandemic, then because of the energy supply crisis that followed Russia’s invasion of Ukraine, and now, even more permanently, because of the ever increasing impact of climate change.Building business resilience means anticipating the risks, instead of being in “crisis response” mode, notes LSE Grantham Institute professor Swenja Surminski, who is also managing director of climate and sustainability at the world’s biggest insurance broker Marsh McLennan and a member of the UK Committee on Climate Change. An LSE study showed the companies surveyed spent 85 per cent in mitigation after a disaster, and only 15 per cent ahead of the event.The issue is very slowly but surely rising up the boardroom agenda, Surminski says, as the workforce and physical structures also come under threat.

A cashew warehouse in Bouake in the Ivory Coast. Now, cashews will remain in West Africa for processing, rather than being shipped to Vietnam and back across the world again © REUTERS

Regulation is another incentive. New carbon-related taxes in the EU, to be implemented over the next four years, will force companies to account for the entire carbon footprint of their businesses. For example, Aldi has assessed that 99 per cent of its emissions are generated by its suppliers. It is therefore working with strategic suppliers responsible for three quarters of its product-related emissions to help them cut back. Building a transport network that is powered by electricity or sustainable fuels is one of the simplest ways to help cut emissions, although availability of cleaner energy powered vehicles remains difficult in some countries.That means those best-selling packets of cashew nuts will no longer be shipped from West Africa to Vietnam for shelling and roasting, and then back to Europe for packaging, but will stay in West Africa for processing. It also means fewer climate costs. Expect the most global brands to take up the “be local, buy local” slogan.The writer is the FT’s Climate Editor More

TOKYO (Reuters) -Japan’s core consumer inflation re-accelerated in June and stayed above the central bank’s 2% target for the 15th straight month, data showed on Friday, adding to recent signs of broadening price pressures.The data heightens the chance the Bank of Japan (BOJ) will revise up this year’s inflation forecast in fresh projections due next week, when the board debates whether conditions are falling into place to begin phasing out its massive stimulus.The nationwide core consumer price index (CPI), which excludes fresh food costs, rose 3.3% in June from a year earlier, matching a median market forecast. It followed a 3.2% gain in May.A hike in utility bills added to a steady increase in food and daily necessity prices, adding to the burden of households.Services prices, closely watched by policymakers on whether inflation is becoming driven more by higher labour costs, rose 1.6% in June from a year earlier after a 1.7% gain in May.But so-called “core core” inflation, which strips away both fresh food and fuel costs, slowed 4.2% in June from a 4.3% rise in May, a sign the rapid pace of increase seen in the past few months was moderating.As inflation perks up, markets are simmering with speculation the BOJ could soon phase out its controversial yield curve control (YCC) policy that is criticised for distorting market pricing and narrowing margins for financial institution.BOJ Governor Kazuo Ueda’s remarks on Tuesday that Japan was still distant from sustainably achieving the bank’s 2% target have pushed down the yen and boosted Japanese shares, as investors scaled back bets of a near-term tweak to YCC.Under YCC, the BOJ guides short-term interest rates at -0.1% and buys huge amounts of government bonds to cap the 10-year bond yield around 0% as part of efforts to fire up inflation to its 2% target. More

BENGALURU (Reuters) – South Korea’s economic growth likely slowed a bit last quarter as languishing exports and high interest rates hurt private consumption that accounts for about half of the economy, a Reuters poll of economists found.While exports from Asia’s fourth-largest economy declined in June, imports also fell, indicating a lack of vitality in domestic and foreign demand, especially from China, the country’s largest trade partner.On a year-on-year basis, gross domestic product (GDP) was expected to have expanded 0.8% in the April-June period, according to the median forecast of 22 economists, slightly slower compared to a revised 0.9% growth in January-March.However, on a quarterly basis, the export-led economy grew a seasonally adjusted 0.5%, a tad higher than 0.3% growth in the preceding quarter, underscoring a lacklustre recovery after it narrowly avoided a technical recession in Q1.”GDP growth…is expected to be at a similar pace to the first quarter, due to sluggish exports and manufacturing sector, weak investment as well as smaller government spending,” said Park Sang-hyun, economist at HI Investment and Securities.”Economic growth is expected to rebound in the second half of this year…but it will depend on the pace of economic recovery in China.”Initial hopes for an economic boom in China, buoyed by the ending of COVID pandemic-led lockdowns, have been dashed as the world’s second-biggest economy is now projected to grow just 5.5% this year and 4.8% next. [ECILT/CN]Underwhelming growth figures have sent shockwaves through the global economy, impacting not only South Korea but also other Asian economies that heavily rely on Chinese demand, raising concerns about the broader economic outlook.South Korea’s economic growth was forecast to average 1.2% this year, a sharp fall from 2.6% seen last year, a separate Reuters poll showed.”The economy is set to struggle…as domestic demand remains suppressed by tight monetary policy while exports are likely to weaken as demand from advanced economies weakens and the boost from automotive production fades,” wrote Shivaan Tandon, emerging Asia economist at Capital Economics. More

“In a time of war like this the maximum amount of state attention and therefore state resources should go to defence,” Zelenskiy said in his nightly video address, referring to a conversation he had earlier with Prime Minister Denys Shmyhal.He told Shmyhal to find alternative funding for projects “that are really necessary. This applies to various areas, including culture. Museums, cultural centres, symbols, television series are important, but we have other priorities.”Zelenskiy, who was a television comedy star before entering politics, said he had appealed to local councils to show restraint so that “people feel that budget resources are used fairly and correctly…Cobblestones, city decorations, fountains will have to wait. Victory first.”And he asked Shmyhal to “consider replacing” Culture and Information Policy Minister Olexander Tkachenko.Within an hour, Tkachenko said he had tendered his resignation, while remaining unapologetic about his projects.”Culture in wartime is important as this war is not just about territory but also people – our memory, history, language and creativity despite the war,” Tkachenko, who headed a television channel before entering politics, wrote on Telegram.”Private and state funding for culture in wartime is no less important than for drones. Culture is the shield for our identity and our borders.”There was no word on whether his resignation had been accepted.A high-profile public figure, Tkachenko had earlier in the day defended the allocation of the equivalent of $13.5 million to complete a museum devoted to Ukraine’s man-made 1930s famine linked to Soviet dictator Josef Stalin’s collectivisation drive.He had also promoted a project, which he said was privately funded, to replace the Soviet-era coat of arms emblazoned on the shield of the 102-metre (335-foot) tall “Motherland” statue of a woman standing just outside the city’s World War Two museum.Tkachenko had also promoted films and television programmes linked to the war against Russia. More