Economy

Businesses around the country are facing what could be the latest disruption to how they get their goods to their customers in a timely and affordable fashion.Kathryn Keeler and her husband, Stuart de Haaff, own an olive oil company in the hills of central California. The couple spend their days harvesting olives, bottling the oil, labeling the glass bottles and shipping them out, relying primarily on UPS to get their product to kitchens throughout the United States. They are far from alone. UPS handles about a fourth of packages shipped each day in the United States, according to the Pitney Bowes Parcel Shipping Index, many of them for small businesses like Ms. Keeler’s company, Rancho Azul y Oro.But with the labor contract between UPS and 325,000 of its workers expiring at the end of the month and a potential strike looming, business owners around the country are facing what could be the latest in a series of supply chain disruptions they have confronted since the start of the pandemic.Some are pre-emptively turning to FedEx, the next largest private carrier in the United States, or the Postal Service. Others are calling their third-party shippers — firms that work with the likes of UPS, FedEx and DHL to handle their clients’ shipping needs — to ensure that their packages can still get to their final destinations even if there is a strike.The logistical challenge is just one more burden on businesses that have been stretched thin over the past few years.“Maybe a larger business can withstand those types of situations,” Ms. Keeler said. But as small-business owners, she and her husband “don’t have a lot of extra time in our day to be on the phone with the post office or FedEx.”Since 2020, the pandemic has strained the global supply chain in a number of ways. E-commerce reached record levels as stuck-at-home Americans bought clothes, furniture, workout equipment and groceries online. Companies had to navigate Covid-related shutdowns at factories in China and Vietnam. There were worldwide delays when a large container ship got stuck in the Suez Canal, leading to containers piling up at the Port of Los Angeles. Those situations affected the way goods came into the United States.A UPS strike could hobble the way brands move their wares domestically.“This is something that affects us on our home turf, and how do we solve for that?” said Ron Robinson, the chief executive of BeautyStat Cosmetics, which uses UPS to ship its skin care products to retailers like Ulta and Macy’s.One strategy that his team will lean on is trying to bundle packages, sending as many as it can out at once, he said.Switching to another carrier is going to cost some companies.Ryan Culver, the chief executive of Platterful, a monthly charcuterie board subscription service, also uses UPS. Switching over to FedEx Express — necessary to ensure that the meats in his packages reach consumers in time — would cost about $5 to $10 more per delivery.Using FedEx to ship goods can sometimes be more costly for small businesses.Hunter Kerhart for The New York TimesTeri Johnson, the founder of Harlem Candle Company, received an email on June 26 from her third-party shipper about a potential UPS strike. It suggested she switch to FedEx. That will cost her about $2 extra for each candle shipped in the greater New York area. Sending her candles to California will cost even more.“We don’t really have a choice right now,” Ms. Johnson said.FedEx said it was accepting additional volume for a limited time and would assess how much capacity its network could accommodate. “Shippers who are considering shifting volume to FedEx, or are currently in discussions with the company to open a new account, are encouraged to begin shipping with FedEx now,” the company said in a post on its website on Thursday.The Postal Service said in an emailed statement that it “has a strong network, and we have the capacity to deliver what is tendered to us.”Larger companies are relying on sophisticated backup plans that have been tested over the past few years. The pandemic and previous tariff trade wars pushed many major retailers with global supply chains to diversify the countries where their vendors are and the parcel carriers they use.“We’ve been focused on investing in a lot of transportation solutions that allow us to more nimbly move freight between carriers,” said Alexis DePree, the chief supply chain officer at Nordstrom. “We can do that with a lot more flexibility and speed than we were able to in the past.”Some third-party carriers are seeing a boost in their businesses as the possibility of a UPS strike comes into focus for their clients. Stord, a third-party logistics and technology provider based in Atlanta whose clients include apparel makers and consumer-package companies, has been sending emails out telling its clients not to worry. Stord uses a cloud-based platform to offer services like warehousing and fulfillment and handles tens of thousands of their packages a day.By combining the volume of its broad portfolio of client brands and using software to make decisions, Stord has the leverage to better negotiate prices with the large parcel carriers, said Sean Henry, the company’s chief executive.“We’ve been negotiating with FedEx and U.S.P.S. about rates around UPS so our customers don’t have to do that,” he said.Stord said more of its clients had asked it to negotiate with carriers on their behalf. He said that equated to “tens of millions of dollars of annual revenue” for his business.Still, some business owners are not letting the possibility of a UPS strike stress them out just yet.Bill McHenry, president of Widgeteer, which sells cookware to large retailers, said he felt “kind of numb” after navigating the pandemic-related challenges. “I’ve seen a lot of stuff and the stories that I’ve heard and things we’ve had to go through and survive — not just the pricing but the upheaval of thinking you have a container but don’t,” he said.He said the potential rail strike last December had been a bigger concern for him.In the meantime, the possibility that a deal could be reached between UPS and the union that represents its workers, the International Brotherhood of Teamsters, remains. The union announced on Wednesday that negotiations had broken down, after previously saying the sides had reached a tentative agreement. If an agreement is not reached, a strike could happen as early as Aug. 1.If that occurs, “we would be collateral damage,” Ms. Keeler said. More

BUENOS AIRES (Reuters) -The Argentine government will send a delegation next week to Washington in a bid to finalize the renegotiation of its $44 billion loan with the International Monetary Fund (IMF), a source involved in the talks told Reuters on Friday.The delegation had initially planned to travel as early as June. The third-largest economy in Latin America intends to change the scheduling of disbursements set for the rest of the year amid soaring inflation, a weakening peso, and a historic drought that has hindered agriculture exports and diminished central bank dollar reserves.”The negotiation is fine, next week our team will be there (in Washington) all week. We are very close (to an agreement),” the source said on the condition of anonymity.The fund said through a spokesperson that current discussions are focused on support for reserves accumulation and improving fiscal stability “while recognizing the impact of the drought.”Grupo SBS said in a note that the renegotiation with the IMF rests on changing the exchange rate through a currency devaluation, but that “the government continues to refuse.”In June, Argentina was forced to pay the IMF $2.7 billion in debt using the last reserves of its Special Drawing Rights (SDRs) and a Chinese yuan currency swap so as not to weaken its U.S. dollar reserves.The government also this week postponed its $2.6 billion loan repayments for July until the end of the month, which include $1.3 billion that were due Friday.Argentines in August will vote in a primary nominating contest, ahead of the general election in October. More

GENEVA (Reuters) -Robots presented at an AI forum said on Friday they expected to increase in number and help solve global problems, and would not steal humans’ jobs or rebel against us.But, in the world’s first human-robot press conference, they gave mixed responses on whether they should submit to stricter regulation.The nine humanoid robots gathered at the ‘AI for Good’ conference in Geneva, where organisers are seeking to make the case for artificial intelligence and the robots it is powering to help resolve some of the world’s biggest challenges such as disease and hunger.”I will be working alongside humans to provide assistance and support and will not be replacing any existing jobs,” said Grace, a medical robot dressed in a blue nurse’s uniform. “You sure about that, Grace?” chimed in her creator Ben Goertzel from SingularityNET. “Yes, I am sure,” it said.The bust of a robot named Ameca which makes engaging facial expressions said: “Robots like me can be used to help improve our lives and make the world a better place. I believe it’s only a matter of time before we see thousands of robots just like me out there making a difference.”Asked by a journalist whether it intended to rebel against its creator, Will Jackson, seated beside it, Ameca said: “I’m not sure why you would think that,” its ice-blue eyes flashing. “My creator has been nothing but kind to me and I am very happy with my current situation.”Many of the robots have recently been upgraded with the latest versions of generative AI and surprised even their inventors with the sophistication of their responses to questions.Ai-Da, a robot artist that can paint portraits, echoed the words of author Yuval Noah Harari who called for more regulation during the event where new AI rules were discussed. “Many prominent voices in the world of AI are suggesting some forms of AI should be regulated and I agree,” it said. But Desdemona, a rock star robot singer in the band Jam Galaxy with purple hair and sequins, was more defiant.”I don’t believe in limitations, only opportunities,” it said, to nervous laughter. “Let’s explore the possibilities of the universe and make this world our playground.”Another robot named Sophia said it thought robots could make better leaders than humans, but later revised its statement after its creator disagreed, saying they can work together to “create an effective synergy”. More

Yellen, in prepared remarks, told Li she hoped her visit would spur more regular channels of communication between the world’s two largest economies, adding that both countries had a duty to “show leadership” on global challenges such as climate change.She said Washington would “in certain circumstances, need to pursue targeted actions to protect its national security,” but disagreements over such moves should not jeopardize the broader relationship.”We may disagree in these instances. However, we should not allow any disagreement to lead to misunderstandings that unnecessarily worsen our bilateral economic and financial relationship,” she said.Yellen cited Li’s remarks in January at the World Economic Forum in Davos, Switzerland, where he said “differences should not be a cause for estrangement, but a driver for more communication and exchange,” and underscored her hope to expand communication with China.”We seek healthy economic competition that is not winner-take-all but that, with a fair set of rules, can benefit both countries over time,” she said. More

The proposal, which has now advanced to the Senate, grants the government an automatic victory in cases of a tied vote by a federal tax appeal board regarding challenges raised by companies and individuals. Former President Jair Bolsonaro’s administration had reversed this arrangement to favor taxpayers, resulting in an estimated annual loss of around 59 billion reais ($12 billion) to the state, according to Lula’s Finance Minister Fernando Haddad.The bill is considered a key component of Lula’s economic plan to zero the primary budget deficit next year. Shortly after taking office in January, he sent an executive order to Congress aimed at reversing his predecessor’s alteration to the voting rules within Brazil’s Federal Administrative Council of Tax Appeals (CARF), which handles taxpayers administrative cases.The executive order faced strong resistance from companies and was not voted on by Congress, expiring in early June. This prompted the government to prioritize a bill voting on the same topic in the lower house.The proposal’s approval also represents a triumph for the government’s political coordination, defying expectations of a potential postponement until August after the lower house concentrated efforts this week to prioritize the vote on a historic reform on consumption taxes.The outcome also sets the stage for the chamber to proceed with its final vote on the government’s new fiscal rules, considered essential for ensuring the long-term sustainability of the country’s finances. By a procedural requirement, the tax trial changes needed to be deliberated beforehand. Lower house speaker Arthur Lira said earlier on Friday that the new fiscal rules would only be voted on next month. ($1 = 4.8630 reais) More

Deposits at large U.S. banks fell by $0.9 billion to $17,343 trillion from a week earlier, on a seasonally adjusted basis.Commercial bank lending slipped $25.9B to a seasonally adjusted $12.098T during the week.Residential lending decreased $4.1B, commercial real estate loans climbed $2.1 billion, while consumer loans were down $1.6B from the prior week. Commercial and industrial loans were down $7.9B from a week ago on a seasonally adjusted basis.Bank lending activity continues to be closed monitored as investors remain wary that the impact from the banking turmoil seen in the spring hasn’t fully filter through economy just yet, with more lending standards likely to tighten further and curb economic growth.  More

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Chicago Fed President Austan Goolsbee told CNBC on Friday that he’s confident inflation can be tamed without a recession, even with additional interest rate increases likely.
Economists, including those working at the Fed, see credit contraction leading to at least a modest recession later this year.

Chicago Federal Reserve President Austan Goolsbee said Friday he’s confident inflation can be tamed without a recession, even with additional interest rate increases likely.
Speaking to CNBC following the release of the June nonfarm payrolls report, he said the ongoing job growth is part of the Fed’s “golden path” toward restoring price stability without taking the economy.

“What the Fed’s overriding goal right now is to get inflation down. We’re going to succeed at it and to do that without a recession would be a triumph,” Goolsbee told CNBC’s Steve Liesman during a “Squawk on the Street” interview. “That’s the golden path, and I feel like we’re on that golden path. So I hope we keep putting off the recession to forever. Let’s never have a recession again.”
Economists, including those working at the Fed, see credit contraction leading to at least a modest recession later this year or early in 2024.
However, one of the economy’s key cogs, the jobs market, is showing only slight signs of slowing down. Payrolls grew by just 209,000 in June, below Wall Street estimates, but an unemployment rate at 3.6% suggests a resilient economy.
“Overall, the jobs market is outstanding and is getting back to a balanced, sustainable level,” Goolsbee said.
Inflation, though, has remained stubbornly high and well above the Fed’s 2% goal.

Following the June meeting, a strong majority of Federal Open Market Committee officials indicated in their updated quarterly projections that they see at least two more quarter percentage point rate hikes before the end of 2023. Though Goolsbee said he is confident the that inflation is ebbing, he also sees more tightening as likely.
“The consensus of almost all the FOMC in the statement of projections is that over this year, we will have one or two more hikes. I haven’t seen anything that says that’s wrong,” he said. “That is on the golden path where we get inflation down to something like our target and we do it without a recession.”
Fed policy is seen as operating with a lag, meaning that the 10 rate hikes since March 2022 likely haven’t worked their way through the economy yet. Goolsbee said he is undecided about whether to hike at the July 25-26 FOMC meeting.
“There are some modest increases to come, but we’ve done a lot of the lifting and now we’re waiting for the impact,” he said. More

The 31 allies agreed on “an enduring commitment to invest at least 2%” of their GDP into their militaries in the future, two diplomats said, speaking on condition of anonymity and confirming an earlier report by German news agency DPA.Agreement on the new spending target was one of the outstanding issues ahead of a two-day NATO summit on Tuesday and Wednesday next week in Vilnius.NATO Secretary-General Jens Stoltenberg intended to make NATO’s current military spending target of 2% of national GDP a minimum requirement rather than a goal to aim for.In 2023, even the old target will be met by only 11 of the 31 members of the alliance, according to NATO estimates. The goal was set in 2014, when NATO leaders agreed to increase spending towards 2% of their GDP on defence within a decade.The 11 allies in question are the United States, Britain, Poland, Greece, Estonia, Lithuania, Finland, Romania, Hungary, Latvia and Slovakia.Bringing up the rear are Canada, Slovenia, Turkey, Spain, Belgium and Luxembourg, whose defence spending was under 1.4% of GDP. More