Economy

Ford Motor said on Thursday that it was planning to invest $3.7 billion in facilities across the Midwest, much of it for the production of electric vehicles, which the company said would create more than 6,000 union jobs in the region.“We’re investing in American jobs and our employees to build a new generation of incredible Ford vehicles,” Jim Farley, the company’s president and chief executive, said in a statement. “Transforming our company for the next era of American manufacturing requires new ways of working.”The announcement, made jointly with the United Automobile Workers union, detailed investments in three states. Ford said it would invest $2 billion and create about 3,200 union jobs in Michigan, including many tied to production of the new F-150 Lightning pickup truck, the company’s highest-profile and most important bet on electric vehicles.In Ohio, Ford will spend over $1.5 billion and create nearly 2,000 union jobs, primarily to build commercial electric vehicles in the middle of this decade. The company also said it would add over 1,000 union jobs at an assembly plant in Kansas City, Mo., that will produce commercial vans, some gas-powered and some electric.The company had indicated that some of the investments would be coming, like the expansion of production capacity for the F-150 in Michigan, but had not detailed the magnitude.The moves follow Ford’s announcement last year that it would build four factories in Kentucky and Tennessee — three battery factories for electric vehicles and a truck assembly plant — irking union officials and elected leaders in Midwestern states, who worry about losing manufacturing jobs to the South.In addition to the new Midwestern jobs, Ford said it would convert nearly 3,000 temporary jobs into permanent full-time positions before the date that its contract with the U.A.W. calls for — which is after two years of employment.“We are always advocating to employers and legislators that union jobs are worth the investment,” the U.A.W. president, Ray Curry, said in a statement. “Ford stepped up to the plate by adding these jobs and converting 3,000 U.A.W. members to permanent, full-time status with benefits.”Assembling the F-150 Lightning at the Dearborn Truck Plant. Ford will add about 3,200 jobs in Michigan, many tied to the electric truck’s production.Brittany Greeson for The New York TimesSam Abuelsamid, an auto industry analyst at Guidehouse Insights, said the changes were important as a way to help Ford attract and retain labor in a tight job market, while potentially helping the company avoid costly labor unrest during negotiations over a contract that expires next year as it spends billions on the transition to electric vehicles. A six-week strike by workers at General Motors in 2019 cost that company billions of dollars.“I’m sure one thing Ford would absolutely love to avoid is the potential for a strike,” Mr. Abuelsamid said. “Keeping a positive relationship with the U.A.W. now is to their benefit.”But the investments appear unlikely to substantially diminish the broader threat that the shift toward electric vehicles poses to the autoworkers union and to employment in the U.S. vehicle manufacturing industry, which stands at around one million.“It’s about changing the perception of what’s happening,” Mr. Abuelsamid said. “It’s a balancing act between your work force and your investors,” who would prefer to see labor costs rise more slowly or decline at unionized automakers like Ford and General Motors.Because electric vehicles incorporate far fewer moving parts than gasoline-powered vehicles, they require significantly less labor — about 30 percent less, according to figures that Ford has generated.As a result, estimates suggest that the toll of electrification on auto industry jobs could be significant absent large new government subsidies. A report released in September by the liberal Economic Policy Institute, which has ties to organized labor, found that the auto industry could lose about 75,000 jobs by 2030 without substantial government investment.By contrast, the report found, if additional government subsidies encourage the domestic manufacturing of components and greater market share for vehicles assembled in the United States, the industry could add about 150,000 jobs over the same period.President Biden has backed substantial subsidies for electric vehicles, including vehicles made by unionized employees, but those measures have languished in the Senate and their prospects are uncertain.In the meantime, much of the job growth tied to electric vehicles has occurred at nonunion facilities owned by newer automakers like Tesla, Rivian and Lucid, or U.S.-based battery facilities owned wholly or in part by foreign companies like the South Korean manufacturers SK Innovation and LG Chem.In Thursday’s announcement, Ford noted that its new battery and vehicle production facilities in the South would create about 11,000 jobs. But those employees will not automatically become union members, and workers in those states tend to face an uphill battle in unionizing.For investors, however, Ford’s additional investments in electric vehicles appears to be welcome news as the company seeks to reinvent itself amid competition from the likes of Tesla and Rivian. Ford’s stock price, which had dropped substantially this year, rose more than 2 percent on Thursday.Ford also said Thursday that it sold 6,254 electric vehicles in May, a jump of more than 200 percent from a year earlier. That number included 201 F-150 Lightnings, which the company started producing in April.The company has about 200,000 reservations for the Lightning, which is central to its efforts to catch up to Tesla, and stopped accepting new ones because production will take months to meet demand.Ford indicated that sales of the truck would be much higher in the coming months as production increased and trucks in transit reached dealerships. Ford is aiming to produce 150,000 Lightning trucks a year by the end of 2023.Sales of electric vehicles — and conventional cars — have been limited by a shortage of computer chips. Ford’s overall sales of new vehicles in May fell 4.5 percent from a year earlier. Auto executives are also increasingly worried that the supply of lithium, nickel and other raw materials needed to make the batteries that power electric cars is not keeping up with the growing demand for those vehicles.Vikas Bajaj More

“Market pricing for 50 basis points potentially in June and July, from the data we have in hand today, seems like a reasonable path,” Fed Vice Chair Lael Brainard told CNBC. By September, she said, “if we don’t see the kind of deceleration in monthly inflation prints, if we don’t see some of that really hot demand starting to cool a little bit, then it might well be appropriate to have another meeting where we proceed at the same pace.” But even if price pressures are starting to abate, the Fed will still likely raise rates, just by a smaller amount, she signaled. “Right now it’s very hard to see the case for a pause,” she told CNBC, noting there is “a lot of work to do” to get inflation, running at a 40-year-high, down to the Fed’s 2% target.The U.S. central bank has raised interest rates by three quarters of a percentage point this year, and most Fed policymakers back raising interest rates another half of a percentage point at each of their next two meetings. Atlanta Fed President Raphael Bostic has suggested that by September the Fed ought to pause to assess the state of the economy before tightening policy further. Brainard’s remarks suggest that’s not the view of the core Fed leadership.Traders of interest rate futures are currently pricing in better than even odds of a year-end Fed’s policy rate in the range of 2.75%-3%, a full two percentage points higher than it is today. Speaking to the Philadelphia Council for Business Economics, Cleveland Fed President Loretta Mester called for Fed “fortitude” in the face of what could be volatile markets, slowing growth and even a rise in unemployment as the central bank ratchets rates higher to fight “unacceptably high” inflation.To Mester, the Fed needs to get rates to 2.5% as quickly as practical, she said Thursday, and then likely even higher. After two half-point rate hikes in June and July, the Fed’s policy rate will be in a range of 1.75% to 2%.”I will be reluctant to declare victory too soon,” she said, of high inflation. More

Global restrictions on sending advanced technology to Russia are hampering the country’s military capacity, U.S. officials say, though Russia has stockpiled American equipment for years.WASHINGTON — With magnifying glasses, screwdrivers and a delicate touch from a soldering gun, two men from an investigative group that tracks weapons pried open Russian munitions and equipment that had been captured across Ukraine.Over a week’s visit to Ukraine last month, the investigators pulled apart every piece of advanced Russian hardware they could get their hands on, such as small laser range finders and guidance sections of cruise missiles. The researchers, who were invited by the Ukrainian security service to independently analyze advanced Russian gear, found that almost all of it included parts from companies based in the United States and the European Union: microchips, circuit boards, engines, antenna and other equipment.“Advanced Russian weapons and communications systems have been built around Western chips,” said Damien Spleeters, one of the investigators with Conflict Armament Research, which identifies and tracks weapons and ammunition. He added that Russian companies had enjoyed access to an “unabated supply” of Western technology for decades.U.S. officials have long been proud of their country’s ability to supply technology and munitions to the rest of the world. But since Russia invaded Ukraine in late February, the United States has faced an unfortunate reality: The tools that Russian forces are using to wage war are often powered by American innovation.Still, while the technology made by American and European companies has been turned against Ukraine, the situation has also given the United States and its allies an important source of leverage against Russia. The United States and dozens of countries have used export bans to cut off shipments of advanced technology, hobbling Russia’s ability to produce weapons to replace those that have been destroyed in the war, according to American and European officials.On Thursday, the Biden administration announced further sanctions and restrictions on Russia and Belarus, adding 71 organizations to a government list that prevents them from buying advanced technology. The Treasury Department also announced sanctions against a yacht-management company that caters to Russian oligarchs.While some analysts have urged caution about drawing early conclusions, saying the measures will take time to have a full effect, the Biden administration has called them a success. Since Western allies announced extensive restrictions on exports of semiconductors, computers, lasers, telecommunications equipment and other goods in February, Russia has had difficulty obtaining microchips to replenish its supply of precision-guided munitions, according to one senior U.S. official, who, along with most other officials interviewed for this article, spoke on the condition of anonymity to discuss matters based on intelligence.On Tuesday, when asked if a chip shortage was crippling the Russian military, Commerce Secretary Gina Raimondo, who oversees export controls, said the answer was “an unqualified yes.”“U.S. exports to Russia in the categories where we have export controls, including semiconductors, are down by over 90 percent since Feb. 24,” she said. “So that is crippling.”The restrictions halt direct technological exports from the United States and dozens of partner nations to Russia. But they also go beyond traditional wartime sanctions issued by the U.S. government by placing limitations on certain high-tech goods that are manufactured anywhere in the world using American machinery, software or blueprints. That means countries that are not in the sanctions coalition with the United States and Europe must also follow the rules or potentially face their own sanctions.Russia has stopped publishing monthly trade data since the invasion, but customs data from its major trading partners show that shipments of essential parts and components have fallen sharply. According to data compiled by Matthew C. Klein, an economics researcher who tracks the effect of the export controls, Russian imports of manufactured goods from nine major economies for which data is available were down 51 percent in April compared with the average from September 2021 to February 2022.The restrictions have rendered the old-school bombing runs on tank factories and shipyards of past wars unnecessary, Mr. Klein wrote. “The democracies can replicate the effect of well-targeted bombing runs with the right set of sanctions precisely because the Russian military depends on imported equipment.”Russia is one of the world’s largest arms exporters, especially to India, but its industry relies heavily on imported inputs. In 2018, Russian sources satisfied only about half of the military-related equipment and services the country needed, such as transportation equipment, computers, optical equipment, machinery and fabricated metal, according to data from the Organization for Economic Cooperation and Development compiled by Mr. Klein.The remainder of equipment and services used by Russia were imported, with about a third coming from the United States, Europe, Japan, Taiwan, Australia and other partner governments that imposed sanctions together on Moscow.A printed circuit board from a cruise missile internal computer collected by Conflict Armament Research during its investigation.via Conflict Armament ResearchU.S. officials say that in concert with a wide variety of other sanctions that ban or discourage commercial relations, the export controls have been highly effective. They have pointed to Russian tank factories that have furloughed workers and struggled with shortages of parts. The U.S. government has also received reports that the Russian military is scrambling to find parts for satellites, avionics and night vision goggles, officials say.Technology restrictions have harmed other Russian industries as well, U.S. officials say. Equipment for the oil and gas industry has been degraded, maintenance for tractors and heavy equipment made by Caterpillar and John Deere has halted, and up to 70 percent of the commercial airplanes operated by Russian airlines, which no longer receive spare parts and maintenance from Airbus and Boeing, are grounded, officials say.But some experts have sounded notes of caution. Michael Kofman, the director of Russia studies at CNA, a research institute in Arlington, Va., voiced skepticism about some claims that the export controls were forcing some tank factories and other defense companies in Russia to shutter.“There’s not been much evidence to substantiate reports of problems in Russia’s defense sector,” he said. It was still too early in the war to expect meaningful supply chain problems in Russia’s defense industry, he said, and the sourcing for those early claims was unclear.Maria Snegovaya, a visiting scholar at George Washington University who has studied sanctions on Russia, said the lack of critical technologies and maintenance was likely to start being felt widely across Russian industry in the fall, as companies run out of parts and supplies or need upkeep on equipment. She and other analysts said even the production of daily goods such as printer paper would be affected; Russian companies had bought the dye to turn the paper white from Western companies.“We expect random disruptions in Russia’s production chains to manifest themselves more frequently,” Ms. Snegovaya said. “The question is: Are Russian companies able to find substitutes?”U.S. officials say the Russian government and companies there have been looking for ways to get around the controls but have so far been largely unsuccessful. The Biden administration has threatened to penalize any company that helps Russia evade sanctions by cutting it off from access to U.S. technology.The Russia-Ukraine War and the Global EconomyCard 1 of 7A far-reaching conflict. More

WASHINGTON (Reuters) – The Biden administration on Thursday issued a raft of new sanctions aimed at punishing Russia for its invasion of Ukraine, with targets including several yachts linked to Russian President Vladimir Putin, an oligarch who heads a major steel producer, and a cellist it says acts as a middleman for the Russian leader.The United States and other Western countries have imposed unprecedented sanctions on Russia’s economy since the Feb. 24 invasion, and Washington has pledged to take more measures as long as the war continues.In his State of the Union address in March, President Joe Biden said the United States would work to seize the yachts, luxury apartments and private jets of wealthy Russians with ties to Putin.The U.S. Treasury Department on Thursday identified two vessels, the Russian-flagged Graceful and the Cayman islands-flagged Olympia as property in which Putin has an interest. The Russian president, who was blacklisted the day after his Feb. 24 invasion of Ukraine, has taken numerous trips on the yachts, including one in the Black Sea with Belarusian President Aleksandr Lukashenko last year, the Treasury said. It also identified two other yachts, Shellest and Nega, it said were used by Putin and owned by a sanctioned Russian company.The Treasury also targeted Imperial Yachts, a brokerage based in Monaco that allows superyacht owners, including Russian oligarchs, to charter their boats when they are not using them, as well as an aviation company it said was involved in a scheme to transfer aircraft to an offshore company to avoid sanctions.PUTIN’S OFFSHORE WEALTHThe Biden administration also added Sergei Roldugin, a cellist and conductor already under European Union sanctions for his links to Putin, to its list of sanctioned individuals, saying Roldugin was “part of a system that manages President Putin’s offshore wealth.” The order froze Roldugin’s U.S. assets and barred U.S. people from dealing with them.Putin in 2016 defended Roldugin after he was named in the “Panama Papers” leaks, denying there was anything corrupt about his friend’s involvement in offshore companies.The State Department also imposed sanctions on five Russian oligarchs and members of the country’s elite, including Alexey Mordashov, one of Russia’s wealthiest people.The action blacklists Mordashov, members of his family and his companies including Severstal, a major steel producer, and gold miner Nord Gold. Severstal and representatives of Mordashov did not immediately reply to a Reuters request for comment. Nord Gold also did not reply to a request for comment.The State Department also sanctioned the spokesperson for the Russian Ministry Foreign Affairs, Maria Zakharova.”The United States will continue to support the people of Ukraine while promoting accountability for President Putin and those enabling Russian aggression,” Secretary of State Antony Blinken said in a statement.The Department of Commerce also added 71 parties in Russia and Belarus to its entity list, in a move meant to restrict the Russian military’s access to technology, the White House said in a fact sheet. A company placed on the entity list faces sweeping restrictions on shipments to Russia of both U.S. and foreign commodities, technology and software, if produced with U.S. equipment, technology or software.Putin sent his troops over the border on what he calls a special military operation on Feb. 24 to disarm and “denazify” Ukraine. Ukraine and its allies call this a baseless pretext for a war of aggression.(Refiling to fix typographical error in first paragraph to make it “at punishing” instead of “a punishing”) More

Though overall layoffs in the country reported by global outplacement firm Challenger, Gray & Christmas on Thursday fell 14.7% in May from April, thanks to strong demand in the labor market, the technology sector cut 4,044 jobs, up from the 459 between January and April.It is the highest monthly total since December 2020 when tech companies cut as many as 5,253 jobs.”Many technology startups that saw tremendous growth in 2020, particularly in the real estate, financial, and delivery sectors, are beginning to see a slowdown in users, and coupled with inflation and interest rate concerns, are restructuring their workforces to cut costs,” said Andrew Challenger, senior vice president of challenger, Gray & Christmas. U.S. tech layoffs and sector performance https://fingfx.thomsonreuters.com/gfx/mkt/gdpzyeeebvw/Pasted%20image%201654184823489.png The impact of the Ukraine crisis, a four-decade high inflation and rising interest rates has led to forecast cuts by companies such as Snap Inc (NYSE:SNAP) and Microsoft (NASDAQ:MSFT), while others like Meta Platforms Inc have slowed hiring to rein in costs.Fintech companies also announced 268% more job cuts in May than in the first four months of 2022, the report from Challenger, Gray & Christmas said.However, the number of Americans filing new claims for unemployment benefits unexpectedly fell last week. Initial claims for state unemployment benefits fell 11,000 to a seasonally adjusted 200,000 for the week ended May 28, the Labor Department said on Thursday. More

Lael Brainard, the Federal Reserve’s vice chair, suggested on Thursday that the central bank might make another large rate increase into September and threw cold water on the idea that policymakers might pause rate moves after the summer — signaling instead that they are intently focused on controlling too-high inflation.Ms. Brainard, in an interview on CNBC, said market expectations for half-percentage-point increases in June and July, increases that would be twice the size of the Fed’s typical ones, seemed “reasonable.” She does not know where the economy will be in September, she said, but explained that if inflation remained rapid, another big move “might well be appropriate.” If it slows, then a smaller pace of increase might make sense.She added, however, that it was “hard to see the case for a pause” at a time when the Fed had “a lot of work to do” to get inflation down to its goal, which is 2 percent on average over time. Prices picked up by 6.3 percent on a headline basis and 4.9 percent on a core basis over the year through April.Fed officials are fighting the fastest rate of inflation since the 1980s by lifting borrowing costs, which slows down consumer and business demand, helping to bring the economy back into balance. Central bankers began to shrink their balance sheet of bond holdings this week and have already lifted their main policy interest rate by 0.75 percentage points since March, efforts that are already making mortgages and other loans pricier.“We do expect to see some cooling of a very, very strong economy over time,” Ms. Brainard said, explaining that the Fed is looking for moderation and “better balance” in the labor market.Ms. Brainard said she was looking for “a string of decelerating inflation data” to feel more confident that inflation would get back no a more sustainable path.The Fed is operating against a fraught backdrop. Ms. Brainard said there was a “fair amount of uncertainty” about the economy, citing Russia’s war in Ukraine and lockdowns in China as factors clouding the outlook.Economists have warned that the Fed could struggle to slow down the economy without tipping it into an outright recession, especially as it withdraws support rapidly and in tandem with other central banks around the world. But Ms. Brainard said there was a path where demand could cool and inflation could come down while the labor market remained strong.“We are starting from a position of strength — the economy has a lot of momentum,” she said, also citing solid business and household balance sheets. More

Federal Reserve Vice Chair Lael Brainard told CNBC on Thursday that she doesn’t see the central bank taking a break anytime soon from its rate-hiking cycle.
“We’ve still got a lot of work to do to get inflation down to our 2% target,” she said.
Despite worries over inflation, Brainard expressed confidence otherwise in the economy.

Federal Reserve Vice Chair Lael Brainard said Thursday that it’s unlikely the central bank will be taking a break from its current rate-hiking cycle anytime soon.
Though she stressed that Fed policymakers will remain data-dependent, Brainard said the most likely path will be that the increases will continue until inflation is tamed.

“Right now, it’s very hard to see the case for a pause,” she told CNBC’s Sara Eisen during a live “Squawk on the Street” interview that was her first since being confirmed to the vice chair position. “We’ve still got a lot of work to do to get inflation down to our 2% target.”
The idea of implementing two more 50 basis point rate increases over the summer then taking a step back in September has been floated by a few officials, most notably Atlanta Fed President Raphael Bostic. Minutes from the May Federal Open Market Committee meeting indicated some support for the idea of evaluating where things stand in the fall, but there were no commitments.
In recent days, however, policymakers including San Francisco Fed President Mary Daly and Governor Christopher Waller have stressed the importance of using the central bank’s policy tools aggressively to bring down inflation running around its fastest pace since the early 1980s.
“We’re certainly going to do what is necessary to bring inflation back down,” Brainard said. “That’s our No. 1 challenge right now. We are starting from a position of strength. The economy has a lot of momentum.”
Economic data lately, though, has been mixed.

ADP reported Thursday that private payrolls increased by just 128,000 in May, the slowest month yet for a jobs recovery that started in May 2020. Labor productivity in the first quarter contracted at the fastest pace since 1947, and the Atlanta Fed is tracking an anemic 1.3% growth rate for second-quarter GDP, which contracted 1.5% in the first quarter.
Brainard said, however, that bringing inflation down remains the top priority and shouldn’t significantly harm an economy where household and corporate balance sheets are strong.
Markets already are pricing in two 50 basis point increases at the next meetings, which Brainard called “a reasonable kind of path.” Beyond that, though, “it’s a little hard to say,” she added, noting both upside and downside risks to growth.
In separate remarks, Cleveland Fed President Loretta Mester also said she sees consecutive 50 basis point moves ahead. While she noted that the Fed then can evaluate the progress made towards bringing down inflation, she said additional rate increases probably will be needed.
“In my view, with inflation as elevated as it is, the funds rate will probably need to go above its longer-run neutral level to rein in inflation,” Mester said in remarks to the Philadelphia Council for Business Economics. “But we cannot make that call today because it will depend on how much demand moderates and what happens on the supply side of the economy.”
In addition to the rate increases, the Fed in June has begun reducing the asset holdings on its nearly $9 trillion balance sheet. The process will entail allowing a capped level of proceeds from maturing bonds to roll off each month and reinvesting the rest.
By September, the balance sheet reduction will be as much as $95 billion a month, which Brainard said will equate to two or three more rate hikes by the time the process is finished.

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Pakistan and the IMF concluded negotiations last week on the resumption of the bailout programme, following which the lender stressed the need to end unfunded subsidies which were costing the cash-strapped country billions per month.Minister Miftah Ismail said petrol and diesel prices for consumers have been increased by 17% at the pumps starting on Friday, up 30 Pakistani rupees each per litre.The new price for petrol will be 209.86 Pakistani rupees ($1.06) per litre and diesel 204.15 per litre, he said. Last week, the country raised prices by around 20%.According to a Pakistani source directly involved in talks in Qatar, the IMF and Islamabad had reached a deal to release over $900 million in funds once Pakistan removed the fuel subsidies.Ismail said on Thursday there now remained a subsidy of about 9 Pakistani rupees per litre. The price hike has been the main issue between Pakistan and the IMF to reduce the fiscal deficit before the annual budget is presented later this month.Ousted Prime Minister Imran Khan had given the subsidy in his last days in power to cool down public sentiment in the face of double-digit inflation, a move the IMF said deviated from the terms of the 2019 deal.Consumer Price Index inflation rose to 13.8% in May, year-on-year, the highest in two-and-a-half years. The country’s central bank said earlier this week it expected inflation to remain elevated in the wake of removing the fuel and power subsidies. More