Economy

From changing their work hours to driving farther in search of cheaper deals, people have been making crafty calculations to grapple with expensive gasoline.“I SOLD MY GIRLFRIENDS CAR CAUSE GAS PRICES ARE HIGH 😳” reads the caption on the video Justice Alexander posted online this spring. In the clip, Mr. Alexander, a content creator in Los Angeles, sits atop a horse and declares that he will now travel on horseback.The video, which has been viewed nearly 10 million times so far on TikTok, struck a nerve. While Mr. Alexander later said in an interview that it was a stunt — an Instagram follower lent him the horse, and his household still drives — the sight of him in stirrups, staring defiantly off into the distance captured a once-in-a-generation moment of angst. Gas prices are at record highs. Even when adjusting for inflation, they are on average at levels rarely seen in the last half century.Beyond posting absurd public displays of frustration, many Americans are now grasping for ways to save money by changing work hours or by weighing the algebraic trade-offs of driving farther to find a cheaper pump.Some recognize they have little option to avoid paying more, especially when commuting is a matter of keeping a job or not, but others have been learning to make new trade-offs and crafty calculations. “It’s all about doing the math,” said Ava Patterson, a 25-year-old waitress at a seafood restaurant in East Peoria, Ill.When she notices her tank running low, Ms. Patterson gets out her phone and starts strategizing. Before she leaves her home about 30 minutes away from work, she checks GasBuddy, an app that shows prices at nearby stations. She then calculates what the total price at a given station will be to fill her tank when she stacks one of her three gas rewards accounts on top of the listed price. Ms. Patterson also stops at pumps in small farming towns on her route, where gas tends to be a bit cheaper, she said, and reports rates to GasBuddy to earn points to be entered in a raffle for free fuel.All told, these workarounds can save her up to $2.30 per tank. These days, it generally costs her about $80 to completely fill her 2017 Hyundai Sonata.Ms. Patterson has recently been trying hard to cut down on driving. She does not attend practices for her recreational softball league about an hour away. She has also been rethinking her work schedule. “I started doing more doubles because I want to make sure that it’s worthwhile to drive the distance to work,” Ms. Patterson said. “I’m a waitress, so the money that I make fluctuates,” she added. “It’s made me hesitate on when I want to leave the house.”According to a survey from AAA conducted earlier this year, 75 percent of American adults said they would start changing their lifestyles and habits when gas hit $5 a gallon.Eddie Perez, who owns Scottsdale Party Bus and Limo in Arizona, has been forced to raise rates, and he advises his drivers to stop idling whenever possible.Caitlin O’Hara for The New York TimesAndy Gross, a spokesman for AAA, said demand for gas dipped the week of June 18 for the first time in three weeks, possibly because of increased prices. Those who didn’t drive much before, for environmental or lifestyle reasons, are cutting back further.But for the most part, people are still driving as much as they had been before. For some, that has meant, paradoxically, driving more to find cheaper places to fill up — even if it’s a matter of only saving a few dollars.Tawaine Hall, 36, a network engineer in Fort Worth, said he has driven 45 minutes from his home to take advantage of gas prices that were around a dollar less than those near where he lives. He said he also buys Walmart gift cards, which provide a discount at Walmart gas stations.Jordan Rowe, 27, has driven 25 minutes out of his way to go to a station that accepts the Exxon Mobil rewards app so he can earn points toward future purchases. An assistant general manager at a McDonald’s near Richmond, Va., he commutes about 45 minutes each day to get to work. He has started giving friends rides to work, as well.In some cases, the high costs have given rise to car-pooling and other shared commuting options around the country.Jennifer Gebhard, the executive director of Central Indiana Regional Transportation Authority, said that during the pandemic, her team operated a fleet of 10 vans. Now, there are 30.“Especially in the Midwest, we’re a very drive-by-yourself community,” she said. But many local employers have reached out to her office about setting up van pools for their staffs in recent months. Passengers split the cost.“A hack I would love to have is car-pooling,” said Alexa Lopez. But she has not found a viable options near where she lives in Kissimmee, Fla. She has a long commute: 51 miles each day from her home to her job at a plumbing supply company in Melbourne. So to save money on gas, she has cut down on extracurricular driving, as well as some more essential activities.Ms. Lopez, 30, used to make trips to the grocery store without thinking twice. Now, because of inflation and the high prices of getting herself to the store, she goes only every two weeks. Previously, she said, she would buy “anything and everything,” including snacks like chips for her son. But, she said, “I can’t really buy too much of those any more.”She added, “I’m feeling like pretty much the average American right now: struggling.”For the first time in years, some who had been doing relatively well are facing hard trade-offs. As the war in Ukraine and the pandemic continue to roil the economy, concerns are growing that the U.S. economy may be on the brink of a recession. People are moving to ease their commutes. Family visits are being minimized. Future savings are being funneled toward ballooning grocery prices. It has been a hard jolt.Elizabeth Hjelvik, 26, a graduate student in materials science at the University of Colorado at Boulder, watches her budget closely. She recently started riding her bike to campus. She has also started working from home more often, using her parents’ Kroger fuel points to fill up the tank of her 2005 Honda and cutting back on spontaneous weekend trips.Ms. Hjelvik recalled saying, as she and her partner were recently driving back from a trip to Fort Collins, Colo., about 50 miles away, “This drive is so beautiful, but it might be something we can’t do in the future.” Her family lives in New Mexico, within driving distance of Boulder. “Ideally we would be able to go see them more often, but it’s a lot of gas,” she said.Kaitlyn Thomas, 25, a medical resident living in Horseheads, N.Y., said she sometimes Googles gas prices in nearby Pennsylvania. She also has a running note on her phone where she tracks what’s advertised at the stations she passes on her commute. Next week, she is moving to Sayre, Penn., in order to live within walking distance of work.Laura Romine, 22, took the balancing act one step further: She moved into her van two years ago in order to save money and travel. “Now it’s really not saving that much money,” she said. She keeps her van parked more and avoids traveling around.Gas prices have started to inch down across the United States in the last week, AAA data shows. As of Friday, the average was $4.93 a gallon, compared with $5 a week ago. But economists and industry analysts predict that prices will stay high in the near term, especially as the summer travel season continues and the global energy market remains uncertain. High prices are reaching every corner of the American consumer economy, and fuel costs are having a similar effect.Diesel, which fuels many commercial buses, vans and trucks, has risen similarly this year. That has forced companies to rethink how they conduct their businesses.Near Scottsdale, Ariz., where Eddie Perez owns a party bus company, it’s common to have vehicles idling while customers are at bars or dinner, partly to keep them cool during blazing hot months. He has told his drivers to turn off the buses when possible, and he has raised his prices.George Jacobs, the chief executive of Windy City Limousine and Bus Worldwide in Chicago, said that rising diesel price have “just decimated us.” To try to save fuel, his team has closely monitored software that shows if any of his buses are idling and that flags whether the buses are traveling at the most efficient speeds.He is exploring the idea of adding electric buses to his fleet, as well as other ways to make his operation more efficient. In the meantime, he said that his drivers try to purchase gas out of state, like in Indiana, when they are on the road.“Any time we can fuel up outside of Cook County we do that,” he said. “It’s very serious money.” More

Just six months in office, Olaf Scholz hosts Sunday’s G7 summit at a time of peril for the west, as soaring inflation, an energy crisis and the threat of recession test the wealthiest economies’ ability to deploy a co-ordinated response.The meeting — also attended by the leaders of the US, UK, France, Italy, Japan and Canada — comes as economists across the world downgrade their growth forecasts and revise up their inflation projections. Energy and food prices have spiralled higher since Russia’s invasion of Ukraine in February, and this month central banks have raised rates by bigger margins than markets expected.“It would have been impossible to imagine at the last G7 summit that we’d be facing a situation like this,” said Holger Schmieding, chief economist at Berenberg Bank. “Things are pretty bad and could get even worse.”The dire outlook was underlined last week when Germany took a step closer to rationing gas after a sharp drop in Russian deliveries through the Nord Stream 1 pipeline.Scholz said the main aim of the summit, held at the luxury resort of Schloss Elmau in the Bavarian Alps, was to project unity. Leading democracies must show they are as “united as never before”, not only in the “struggle against [Russian president Vladimir] Putin’s imperialism, but also in the fight against hunger and poverty, health crises and climate change”, the chancellor told the Bundestag on Wednesday.Scholz will notably push for a “Marshall Plan” for Ukraine, modelled on the American scheme that bankrolled Europe’s postwar reconstruction. Ukrainian president Volodymyr Zelenskyy will take part in the summit by video link.Leaders will also discuss the disruptions to global food supplies caused by Russia’s blockade of Ukraine’s Black Sea ports. It was incumbent on the G7 to “prevent a catastrophic famine”, said Scholz, who has also invited Indonesia, India, South Africa and Senegal to the summit.But a common policy response might be harder to reach on the looming macroeconomic threats to the G7 states themselves — discussion of which will dominate the first day of the summit. An AS 332 Super Puma helicopter of Germany’s federal police Bundespolizei flies over Schloss Elmau © Wolfgang Rattay/ReutersSome of the recent developments are seen as outside the leaders’ control: China’s zero-Covid policy playing havoc with global supply chains, and the Kremlin’s reduction of gas flows to Europe, which has rattled gas markets and increased the odds of winter energy crunch.“It’s not the G7 leaders who have caused these problems — it’s [Chinese president] Xi Jinping and Vladimir Putin,” said Schmieding. That contrasts with the Covid-19 pandemic, when governments embraced massive fiscal support and monetary stimulus to shield businesses during lockdowns. Then there was, said a senior German official, a “simple consensus” on how to respond — a “textbook macroeconomic answer, namely an expansive monetary and fiscal policy”. “The situation we’re in now is a lot more complex, a lot more difficult,” he added. “This completely clear, almost instinctive idea that you just pursue expansionary policies is no longer so obvious.”This time, said Paschal Donohoe, president of the eurogroup of finance ministers, policymakers will have to strike a balance between supporting households most exposed to surging energy prices and taking care not to stoke inflationary pressures — a task he described as “demanding”.“This is a very difficult challenge for central banks and for governments,” he said in Brussels on Friday. “History shows us that if inflation becomes a multiyear phenomenon at very high rates, the challenges we face in the cost of living only grow.”The US has been holding talks with European leaders on how to ease the pressure on energy prices. The focus, officials said, is on ways to prevent G7 restrictions on Russian oil from pushing crude prices higher and bolstering Putin’s export revenues.

One answer that has long been pushed by the US, and will be discussed at Schloss Elmau, is a cap on oil prices paid to Russia. It would require changes to Europe’s ban on insuring Russian oil shipments: a compromise might allow countries to obtain insurance if they observe the price cap.But Scholz is lukewarm on the idea. On Friday he said that it was “no good” if just a few countries complied with the oil price cap — it would only work if everyone did. “[Oil] demand is global,” he said. “And unless we can get everyone on board, or nearly everyone, then it won’t be so effective.” More

“What we can’t have is a situation in which increases in pay are just wiped out by further increases in prices, and so that’s why you’ve got to be responsible,” Johnson told Sky News.Johnson also said that “overall” the Bank of England had done an outstanding job managing inflation over the past 25 years and he said the recent surge in price growth was due to global inflation problems. More

The board said Ecuadorian authorities planned to use the funds for budget support. The announcement comes after nearly two weeks of sometimes-violent mass protests led by indigenous groups demanding lower fuel and food prices.Deputy Managing Director Antoinette Sayeh said in a statement that Ecuador’s 4.2% GDP growth in 2021 had been supported by good macroeconomic management and a successful vaccination campaign, and that macroeconomic and financial stability had been preserved.”While the ongoing war in Ukraine is adversely affecting some export sectors, higher oil prices are improving Ecuador’s external and fiscal balances,” she said.The IMF approved a 27-month EFF arrangement for Ecuador worth about $6.5 billion on September 30, 2020. More

Air travel chaos and cost of living worries have spurred a surge in bookings by Britons for domestic summer holidays, offering hope to a sector struggling with financial pressures and a worsening economic outlook. UK domestic holiday businesses had feared 2022 would spell an end to the summer staycation boom of the pandemic’s first two years, when onerous travel restrictions and fears of catching Covid-19 deterred holidaymakers from international travel. But inquiries and late bookings for domestic summer holidays have jumped since early June, after flight cancellations caused major travel disruption during the school half-term holiday and balmy weather swept across the country. Last-minute bookings for summer holiday accommodation from Sykes Holiday Cottages, one of the UK’s leading holiday rental agencies, were up 22 per cent at the start of June, compared with the same period last year. Just under 40 per cent of Britons said they were more likely to choose a domestic holiday instead of an overseas break than before the pandemic, according to polling conducted in mid-June and published on Friday by VisitBritain, the UK’s tourist board.Of those choosing a staycation, 65 per cent told VisitBritain it was because UK breaks were easier to plan, 54 per cent said they wanted to avoid long queues at airports and the risk of cancelled flights, and 47 per cent said it was because UK holidays were more affordable. “Whether families think they can’t afford a summer getaway abroad, or they’ve had their flights cancelled, or the potential of sitting with four kids for 12 hours in the airport has just scared them off, many are opting to stay at home,” said Sir David Michels, president of the Tourism Alliance, a lobby group. “That’s a net-positive for the UK tourism industry.”Michels said he did not expect demand for domestic holidays this summer to surpass the heights of summer 2021, but it was possible levels of demand could mirror last year. He added that sterling’s depreciation this year “certainly wouldn’t hurt” the domestic market as it would “put some people off” travelling overseas. The currency is down 9.3 per cent against the dollar and 2.2 per cent against the euro since the start of 2022.Cottage bookings on Awaze, a vacation rental company, for June were flat compared with 2021 and up 21 per cent on 2019, while bookings for August this year were 6 per cent higher than the same month last year and 46 per cent up on 2019. July was slightly down on 2021 levels. Graham Donoghue, chief executive of Sykes Holiday Cottages, said the UK was “continuing to ride the staycation wave despite the return of foreign travel”.“Uncertainty around Covid restrictions has seemingly been replaced with another worry — overseas travel disruption — while an increased pressure on household budgets is leading to many turning to staycations as the better value option,” explained Donoghue. On Thursday, British Airways check-in staff voted to strike later in the summer over pay, setting the stage for yet more air travel disruption. Lengthy delays at airport have increased the appeal of UK staycations © Frank Augstein/APHenrik Kjellberg, Awaze chief executive, said the travel chaos had “benefited” the domestic tourism market as holidaymakers looked to “avoid the stress and hassle” of overcrowded airports. He said people had been “introduced to the charms of staycations” during the pandemic and they were “here to stay”, adding that pandemic travel restrictions had combined with a “gradual trend of people thinking more and more about their CO₂ footprint” to encourage more families to consider holidaying locally. Meanwhile, members of the trade body UKHospitality reported a 20-30 per cent uplift in inquiries over the platinum jubilee weekend in early June from customers searching for holidays in late summer or over the school half-term holiday in October, according to Kate Nicholls, chief executive. Nicholls said the extension of the staycation boom would provide a lifeline for independent businesses, which have been hit hardest by cost pressures resulting from supply chain issues and the war in Ukraine.

“British holidaymakers will tend to go for the less obvious options,” said Nicholls. “There’s a proportion of customers who will always go branded, but there is also a proportion of domestic visitors who are much more confident about going off the beaten track and looking for independents, looking for boutique options.”The success of domestic tourism has become more significant because inbound tourism is not expected to rebound to pre-pandemic levels until 2025. The task for the industry now is to convince British holidaymakers to keep returning in future summers. “If the sun keeps shining, I think it’s going to be a much fuller UK with UK residents than summers before the pandemic,” said Michels. “We’ve now had three years of lots of people holidaying at home. I don’t think this is going away.”“The longer this trend lasts, the stickier those habits become and the more beneficial it will be for communities across the country,” said Nicholls. More

“Right now that looks like what we’ll need,” Daly told reporters after a speech at Chapman University, saying she now expects to need to get rates up to 3.1%, her view of “neutral,” by year-end because the data suggests inflation has not peaked and households still have plenty of savings to spend.”If we get more tightening or a broader slowdown in the economy than I currently expect, then anything between 50 and 75 seems like a reasonable thing to consider,” she said. More

The European Central Bank will host a forum in Portugal, while a Chinese business activity survey and a closely followed U.S. inflation indicator will be among the data highlights. And Russia could be confirmed in default on external sovereign bonds for the first time in a century.Here’s your look at the week ahead in markets from Karin Strohecker, Sujata Rao and Dhara Ranasinghe in London, Ira Iosebashvili in New York and Tom Westbrook in Singapore. 1/ HALF THE PICTURESix months studded with rate rises, market turmoil and a war that fuelled runaway inflation are giving way to another half-year featuring … more of the same.Still, H2 may contain turning points, above all, peak inflation, which may be nearer than thought as economic growth slows and oil prices fall.Could recession signals temper central bank hawkishness? Markets expect U.S. rates doubling by year-end to 3.25% to 3.5%, and see euro zone rates rising to 0.75% from -0.5%.Still, stock markets, firmly in bear territory, may get a respite. History shows equities usually fall in the run-up to inflation peaking, then rally, Goldman Sachs (NYSE:GS) notes. But that also hinges on company profits. Double digit U.S. and European earnings growth is still projected for 2022.Finally, watch Japan and Turkey, central bank doves in a forest of hawks. The latter is at risk of triggering a serious crisis.GRAPHIC: Central bank rate hikes in developed economies (https://fingfx.thomsonreuters.com/gfx/mkt/zdvxoeqgqpx/THEME2306.PNG)2/ HEAD FOR THE MOUNTAINSThe Fed has Jackson Hole, but the ECB has Sintra, its very own central bank forum in the foothills of Portugal’s Sintra Mountains.The three-day shindig, starting Monday, will be especially interesting, given the biggest inflation surge in decades and worries of an imminent global economic recession.So, listen even more closely than usual to what ECB chief Christine Lagarde, Fed Chair Jerome Powell and Bank of England Governor Andrew Bailey say at the forum. ECB comments will also be scoured for any insight on a planned anti-fragmentation tool.Separately, Friday, July 1, will bring latest euro area inflation readings, which in turn could determine whether the ECB will deliver bigger interest rate hikes after a quarter-point move flagged for July.GRAPHIC: UK US EZ CPI (https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwboqlvo/UK%20US%20Euro%20CPI.PNG)3/ FLARING TENSIONSFour months into the war, tensions between Moscow and the West are ratcheting up again. EU leaders formally accepted Ukraine as a candidate to join the bloc, a bold geopolitical move triggered by Russia’s invasion of Ukraine.Meanwhile, Russian gas flows to Europe via Ukraine and the Nord Stream 1 pipeline have fallen, after the invasion and Europe’s moves to impose sanctions on Moscow. A dozen EU countries are affected and Germany has triggered the “alarm stage” of its emergency gas plan.Adding to concerns is a standoff over the Russian enclave of Kaliningrad, sparking fresh warnings from Moscow towards Baltic EU member states.And Russia could slip into sovereign default territory as the grace period for an interest payment on its international bonds runs out, possibly heralding the country’s biggest external default in more than a century.GRAPHIC: Timeline of key Western sanctions on Russian bond markets (https://fingfx.thomsonreuters.com/gfx/mkt/zdpxoeqwnvx/Pasted%20image%201655988897028.png)4/ DATA, THERE’S PLENTYFed chief Powell says the central bank is not trying to engineer a recession but is committed to containing price pressures even at the risk of a downturn.A raft of upcoming data should show how the U.S. economy is responding to an aggressive Fed, which has delivered 150 basis points worth of tightening this year, including this month’s 75 bps move.Highlights include Tuesday’s June consumer confidence index, which analysts polled by Reuters expect to fall to 100 from 106.4 in May.Monday’s pending home sales and Tuesday’s Case-Shiller home price index should show how much rising mortgage rates are biting, while the May personal consumption expenditures price index – an inflation indicator watched by the Fed – is due on Thursday.GRAPHIC: Consumer confidence (https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgebwbpb/Pasted%20image%201655938810148.png)5/ FLASH IN THE PANChina’s June factory activity figures on Thursday could offer a glimmer of hope to downbeat financial markets.Zero COVID lockdowns and a slowing global economy are knocking the wind out of commodities, pushing the growth-bellwether copper price almost 10% lower in two weeks in Shanghai. Iron ore too is on the skids and the red-dust miners in Australia have given up the year’s gains, dragging on the benchmark stock index there. That gloom might take some piercing. But lockdowns have eased and if the data shows economic momentum carrying output into growth territory, it would be a welcome signal for the economy and for those who see Chinese stocks as a haven from the stagflation fears gripping the West. GRAPHIC: Commodities tumble as China’s recovery path lengthens (https://fingfx.thomsonreuters.com/gfx/mkt/gkplgebqdvb/Pasted%20image%201655971895821.png) More

(Reuters) -A pair of U.S. central bankers said on Friday they supported further sharp interest rate hikes to stem rapid price rises, even as investors cheered economic data showing inflation expectations to be less worrisome than initially feared.Last week, the Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point – its biggest hike since 1994 – to a range of 1.50% to 1.75%, and signaled its policy rate would rise to 3.4% by the end of this year.Markets quickly priced in even more aggressive rate hikes, with interest-rate futures reflecting expectations for a policy rate of 3.5%-4% by year end. A stream of analysts and at least one former Fed policymaker raised the alarm on recession risks.But on Friday, fresh data from the University of Michigan showed longer-term inflation expectations had not broken above their recent range, as a preliminary reading out just before the Fed’s June policy-setting meeting had suggested.Fed Chair Jerome Powell had cited the initial read of 3.3% — a possible early warning that months of 8%-plus consumer price inflation were beginning to undermine public faith in the Fed’s ability to contain price pressures — as one reason policymakers supported the big rate increase in June.San Francisco Fed President Mary Daly on Friday said she would still have supported a 75 basis point hike in June even had she known the revised 3.1% figure. And she believes another 75 basis point interest rate hike will be needed next month, with further increases to follow to deal with prices pressures that in her view probably have not peaked.Daly’s remarks are particularly striking because she is not known as an especially hawkish policymaker. She said that by year end rates should get to 3.1%, her view of a neutral level, though if inflation worsens the Fed may need to do more.Speaking earlier in the day, St. Louis Fed President James Bullard said the Fed must “act forthrightly and aggressively to get inflation to turn around and get it under control,” repeating his call to frontload hikes to bring inflation down to the Fed’s 2% target. Bullard since last summer has been one of the Fed’s most vocal hawks.Both Daly and Bullard expressed confidence the Fed will be able to avoid recession, citing the strength of the labor market and economy’s momentum, helped by excess household savings that Daly said had not been spent down as quickly as she forecast. Interest rate futures traders pared their expectations for Fed rate hikes and though they continue to price in a 75-basis point hike in July, ended the day reflecting expectations for a year-end Fed policy rate of 3.4%, exactly what Fed policymakers’ own forecasts suggest.U.S. stocks ended the week up, with the S&P 500 Index marking its biggest one-day jump since May 2020. More