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    Who Are America’s Missing Workers?

    The labor market appears hot, but the share of people who are either working or actively looking for a job still hasn’t quite recovered.As the United States emerges from the pandemic, employers have been desperate to hire. But while demand for goods and services has rebounded, the supply of labor has fallen short, holding back the economy.More than two years after the Covid-19 recession officially ended, some sectors haven’t found the workers they need to operate at capacity. Only in August did the work force return to its prepandemic size, which is millions short of where it would have been had it continued to grow at its prepandemic rate.In simple numbers, some of that gap is due to Covid’s death toll: more than a million people, about 260,000 of them short of retirement age. In addition, a sharp slowdown in legal immigration has pared the potential work force by 3.2 million, relative to its trajectory before 2017, according to calculations by economists at J.P. Morgan.But the problem isn’t just that population growth has stalled. Even with an uptick in August, the share of Americans working or actively looking for work is 62.4 percent, compared with 63.4 percent in February 2020.“It’s my sense that the most important reason that the labor market feels so hot right now is that we have so many fewer people in it,” said Wendy Edelberg, director of the Hamilton Project, an economic policy center at the Brookings Institution. “Demand largely recovered, and we didn’t have the supply.”Unraveling the causes of that lingering reluctance is difficult, but it’s possible to identify a few major groups who are on the sidelines.People at retirement age, who had been staying in the work force longer as longevity increased before the pandemic, dropped out at disproportionate rates and haven’t returned. More puzzlingly, men in their prime working years, from 25 to 54, have retreated from the work force relative to February 2020, while women have bounced back. Magnifying those disparities are two crosscutting factors: the long-term health complications from Covid-19, and a lagging return for workers without college degrees.Older workers are lagging behind in returning to the work forcePercent change in labor force participation rate for each age group since before the pandemic More

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    Shock Waves Hit the Global Economy, Posing Grave Risk to Europe

    The threat to Europe’s industrial might and living standards is particularly acute as policymakers race to decouple the continent from Russia’s power sources.Russia’s invasion of Ukraine and the continuing effects of the pandemic have hobbled countries around the globe, but the relentless series of crises has hit Europe the hardest, causing the steepest jump in energy prices, some of the highest inflation rates and the biggest risk of recession.The fallout from the war is menacing the continent with what some fear could become its most challenging economic and financial crisis in decades.While growth is slowing worldwide, “in Europe it’s altogether more serious because it’s driven by a more fundamental deterioration,” said Neil Shearing, group chief economist at Capital Economics. Real incomes and living standards are falling, he added. “Europe and Britain are just worse off.”Several countries, including Germany, the region’s largest economy, built up a decades-long dependence on Russian energy. The eightfold increase in natural gas prices since the war began presents a historic threat to Europe’s industrial might, living standards, and social peace and cohesion. Plans for factory closings, rolling blackouts and rationing are being drawn up in case of severe shortages this winter.The risk of sinking incomes, growing inequality and rising social tensions could lead “not only to a fractured society but a fractured world,” said Ian Goldin, a professor of globalization and development at Oxford University. “We haven’t faced anything like this since the 1970s, and it’s not ending soon.”Other regions of the world are also being squeezed, although some of the causes — and prospects — differ.Gazprom, Russia’s state-owned energy company, said this week that it would not resume the flow of natural gas through its Nord Stream 1 pipeline until Europe lifted Ukraine-related sanctions.Hannibal Hanschke/EPA, via ShutterstockHigher interest rates, which are being deployed aggressively to quell inflation, are trimming consumer spending and growth in the United States. Still, the American labor market remains strong, and the economy is moving forward.China, a powerful engine of global growth and a major market for European exports like cars, machinery and food, is facing its own set of problems. Beijing’s policy of continuing to freeze all activity during Covid-19 outbreaks has repeatedly paralyzed large swaths of the economy and added to worldwide supply chain disruptions. In the last few weeks alone, dozens of cities and more than 300 million people have been under full or partial lockdowns. Extreme heat and drought have hamstrung hydropower generation, forcing additional factory closings and rolling blackouts.A troubled real estate market has added to the economic instability in China. Hundreds of thousands of people are refusing to pay their mortgages because they have lost confidence that developers will ever deliver their unfinished housing units. Trade with the rest of the world took a hit in August, and overall economic growth, although likely to outrun rates in the United States and Europe, looks as if it will slip to its slowest pace in a decade this year. The prospect has prompted China’s central bank to cut interest rates in hopes of stimulating the economy.Understand the Decline in U.S. Gas PricesCard 1 of 5Understand the Decline in U.S. Gas PricesGas prices are falling. More

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    Japan Bounces Back to Economic Growth as Coronavirus Fears Recede

    A public weary of virus precautions pushed up consumption of goods and services, but the longer-term picture is uncertain as the global economy weakens.TOKYO — Restaurants are full. Malls are teeming. People are traveling. And Japan’s economy has begun to grow again as consumers, fatigued from more than two years of the pandemic, moved away from precautions that have kept coronavirus infections at among the lowest levels of any wealthy country.Lockdowns in China, soaring inflation and brutally high energy prices could not suppress Japan’s economic expansion as domestic consumption of goods and services shot up in the second three months of the year. The country’s economy, the third largest after the United States and China, grew at an annualized rate of 2.2 percent during that period, government data showed on Monday.The second-quarter result followed growth of 0 percent — revised from an initial reading of a 1 percent decline — during the first three months of the year, when consumers retreated to their homes in the face of the rapid spread of the Omicron variant.After that initial Omicron wave burned out, shoppers and domestic travelers poured back onto the streets. Case numbers then quickly galloped back to record highs for Japan, but this time the public — highly vaccinated and tired of self-restraint — has reacted less fearfully, said Izumi Devalier, head of Japan economics at Bank of America.“After the Omicron wave ended, we had a very nice jump in mobility, lots of catch-up spending in categories like restaurant and travel,” she said.The new growth report indicates that Japan’s economy may finally be back on track after more than two years of yo-yoing between growth and contraction. Still, the country remains an economic “laggard” compared with other wealthy nations, Ms. Devalier said, adding that consumers, especially older people, “are still sensitive to Covid risks.”As that sensitivity has slowly declined over time, she said, “we have had this very gradual recovery and normalization from Covid.”The second-quarter growth came despite stiff headwinds, particularly for Japan’s small- and medium-size enterprises. China’s Covid lockdowns have made it hard for retailers to stock in-demand products like air-conditioners, and for manufacturers to procure some critical components for their goods.A weak yen and higher inflation have also weighed on companies. Over the last year, the Japanese currency has lost more than 20 percent of its value against the dollar. While that has been good for exporters — whose products have grown cheaper for foreign customers — it has driven up prices of imports, which have already become more expensive because of shortages and supply chain disruptions caused by the pandemic and Russia’s war in Ukraine.While inflation in Japan — at around 2 percent in June — is still much lower than in many other countries, it has forced some companies to substantially raise prices for the first time in years, potentially dampening demand from consumers accustomed to paying the same amounts year after year.Japan faces other challenges both at home and abroad. Small- and medium-size enterprises in particular are likely to struggle as pandemic subsidies come to an end and foot traffic to their businesses remains below prepandemic levels.Additionally, geopolitical tensions are creating greater uncertainty for Japan’s key industries. Frictions between the United States and China over Speaker Nancy Pelosi’s visit to Taiwan this month have raised concerns among Japanese policymakers about possible disruptions to trade. Taiwan is Japan’s fourth-largest trade partner and a critical producer of semiconductors — essential components for Japan’s large automobile and electronics industries.As for Japan’s overall economic outlook, “short term, momentum is pretty good, but beyond that, we are actually quite cautious,” Ms. Devalier said.At home, she expects consumption to slow as people adjust to the new normal of living with the pandemic and their enthusiasm for spending dims. Wage growth, which has been stagnant for years, is falling behind inflation, which is likely to affect spending. And, she said, “for manufacturing and exports we expect a slowdown in momentum reflecting the fact that we expect global growth to be weaker.”Even under ideal conditions, Japan’s domestic consumption is at least a year away from returning to prepandemic levels, said Shinichiro Kobayashi, a senior economist at Mitsubishi UFJ Research and Consulting.“Next year, we should be in a situation where it’s not necessary to worry about Covid infections and there are no restrictions whatsoever on economic activity,” he said.By then, he said, Japan will have most likely relaxed restrictions on tourism and business travel from abroad, which have been an additional drag on its economic performance.But with Omicron cases still climbing, fully returning to normal life this year is “impossible,” he said. More

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    In an Unequal Economy, the Poor Face Inflation Now and Job Loss Later

    For Theresa Clarke, a retiree in New Canaan, Conn., the rising cost of living means not buying Goldfish crackers for her disabled daughter because a carton costs $11.99 at her local Stop & Shop. It means showering at the YMCA to save on her hot water bill. And it means watching her bank account dwindle to $50 because, as someone on a fixed income who never made much money to start with, there aren’t many other places she can trim her spending as prices rise.“There is nothing to cut back on,” she said.Jordan Trevino, 28, who recently took a better paying job in advertising in Los Angeles with a $100,000 salary, is economizing in little ways — ordering a cheaper entree when out to dinner, for example. But he is still planning a wedding next year and a honeymoon in Italy.And David Schoenfeld, who made about $250,000 in retirement income and consulting fees last year and has about $5 million in savings, hasn’t pared back his spending. He has just returned from a vacation in Greece, with his daughter and two of his grandchildren.“People in our group are not seeing this as a period of sacrifice,” said Mr. Schoenfeld, who lives in Sharon, Mass., and is a member of a group called Responsible Wealth, a network of rich people focused on inequality that pushes for higher taxes, among other stances. “We notice it’s expensive, but it’s kind of like: I don’t really care.”Higher-income households built up savings and wealth during the early stages of the pandemic as they stayed at home and their stocks, houses and other assets rose in value. Between those stockpiles and solid wage growth, many have been able to keep spending even as costs climb. But data and anecdotes suggest that lower-income households, despite the resilient job market, are struggling more profoundly with inflation.That divergence poses a challenge for the Federal Reserve, which is hoping that higher interest rates will slow consumer spending and ease pressure on prices across the economy. Already, there are signs that poorer families are cutting back. If richer families don’t pull back as much — if they keep going on vacations, dining out and buying new cars and second homes — many prices could keep rising. The Fed might need to raise interest rates even more to bring inflation under control, and that could cause a sharper slowdown.In that case, poorer families will almost certainly bear the brunt again, because low-wage workers are often the first to lose hours and jobs. The bifurcated economy, and the policy decisions that stem from it, could become a double whammy for them, inflicting higher costs today and unemployment tomorrow.“That’s the perfect storm, if unemployment increases,” said Mark Brown, chief executive of West Houston Assistance Ministries, which provides food, rental assistance and other forms of aid to people in need. “So many folks are so very close to the edge.”America’s poor have spent part of the savings they amassed during coronavirus lockdowns, and their wages are increasingly struggling to keep up with — or falling behind — price increases. Because such a big chunk of their budgets is devoted to food and housing, lower-income families have less room to cut back before they have to stop buying necessities. Some are taking on credit card debt, cutting back on shopping and restaurant meals, putting off replacing their cars or even buying fewer groceries.But while lower-income families spend more of each dollar they earn, the rich and middle classes have so much more money that they account for a much bigger share of spending in the overall economy: The top two-fifths of the income distribution account for about 60 percent of spending in the economy, the bottom two-fifths about 22 percent. That means the rich can continue to fuel the economy even as the poor pull back, a potential difficulty for policymakers.The Federal Reserve has been lifting interest rates rapidly since March to try to slow consumer spending and raise the cost of borrowing for companies, which will in turn lead to fewer business expansions, less hiring and slower wage growth. The goal is to slow the economy enough to lower inflation but not so much that it causes a painful recession.Officials at West Houston Assistance Ministries said its food bank served 200 households on Friday.Meridith Kohut for The New York TimesBut job growth accelerated unexpectedly in July, with wages climbing rapidly. Consumer spending, adjusted for inflation, has cooled, but Americans continue to open their wallets for vacations, restaurant meals and other services. If solid demand and tight labor market conditions continue, they could help to keep inflation rapid and make it more difficult for the Fed to cool the economy without continuing its string of quick rate increases. That could make widespread layoffs more likely.“The one, singular worry is the jobs market — if demand is constrained to the point that companies have to start laying off workers, that’s what hits Main Street,” said Nela Richardson, chief economist at the job market data provider ADP. “That’s what hits low-income workers.”8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More

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    How This Economic Moment Rewrites the Rules

    Jobs aplenty. Sizzling demand. If the United States is headed into a recession, it is taking an unusual route, with many markers of a boom.To understand the strange, conflicting signals being sent by the U.S. economy right now, it helps to look at Williston, N.D., in about 2010.North Dakota was in the midst of an oil boom. Scores of rigs were drilling hundreds of wells, filling up train cars with crude because there hadn’t been time to build a pipeline. Pretty much anyone who wanted a job could find one, even the teenagers who dropped out of high school to work in the oil fields. Wages soared. Fast-food restaurants offered signing bonuses. State coffers filled up with tax revenue.Yet as good as the economy was, it also felt unstable. Restaurants couldn’t hire enough workers. Housing was in short supply, and costly. Local infrastructure couldn’t withstand the sudden surge in demand. Prices for practically everything soared.“It was chaotic,” said David Flynn, an economist at the University of North Dakota who lived through the boom and has studied it. “The economy was doing well, revenues for the local areas were up across the board, but you were still short of workers and businesses were having trouble.”“That sounds a lot like the stories you’ve been hearing at the national level for the past couple years,” he added.Economists and politicians have spent weeks arguing about whether the United States is in a recession. If it is, the recession is unlike any previous one. Employers added more than half a million jobs in July, and the unemployment rate is at a half-century low.Typically, in recessions, the problem is that businesses don’t want to hire and consumers don’t want to spend. Right now, businesses want to hire, but can’t find the workers to fill open jobs. Consumers want to spend, but can’t find cars to buy or flights to book.Recessions, in other words, are about too much supply and too little demand. What the U.S. economy is facing is the opposite. Just like North Dakota in 2010.The underlying causes are different, of course. Williston was hit by a surge in demand as companies and workers flooded into what had been a small city in the Northern Plains. The United States was hit by a pandemic, which caused a shift in demand and disrupted supply chains around the world. And the comparison goes only so far: Williston’s population roughly doubled from 2010 to 2020. No one expects that to happen to the country as a whole.Still, whether local or national, the most obvious consequence is the same: inflation. When demand outstrips supply — whether for steel-toe boots in an oil boomtown or for restaurant seats in the aftermath of a pandemic — prices rise. Mr. Flynn recalled going out to eat during the boom and discovering that hamburgers cost $20, a feeling of sticker shock familiar to practically any American these days.There is also a subtler consequence: uncertainty. No one knows how long the boom will last, or what the economy will look like on the other side of it, which makes it hard for workers, businesses and governments to adapt. In Williston, companies and governments were reluctant to invest in the apartment buildings, elementary schools and sewage-treatment plants that the community suddenly needed — but might not need by the time they were complete.A family at a Williston campground in 2010. The local infrastructure couldn’t withstand the sudden surge in demand.Todd Heisler/The New York TimesThe full parking lot of the El Rancho Motel in Williston in 2010.Todd Heisler/The New York Times“Think of it as a situation of every day, seemingly, was a new shock, so you couldn’t even adjust before a new one was hitting,” Mr. Flynn said. “It’s that constant adjustment. Completely unpredictable.”Businesses have now spent two and a half years in a state of constant adjustment. In early 2020, practically overnight, Americans traded restaurant meals for home-baked bread, and gym memberships for socially distanced bike rides. Those shifts caused huge disruptions, in part because businesses were reluctant to make long-term investments to address short-term spikes in demand.“That was always going to cause its own problems on prices and shortages,” said Adam Ozimek, chief economist for the Economic Innovation Group, a Washington research organization. “Businesses were never going to be like, ‘I’m going to build 10 new bicycle factories right now because we’re in a long-term bicycling boom.’”Some other shifts caused by the pandemic are likely to prove longer lasting. But it is hard for businesses to know which.“I think businesses are correct that the current state of the economy can’t really hold — something has to give,” Mr. Ozimek said.To most people, of course, this doesn’t feel like a boom. Measures of consumer confidence are at record lows, and Americans overwhelmingly say they are dissatisfied with the economy. That perception is grounded in reality: High inflation is eroding — and in some cases erasing — the benefits of a strong job market for many workers. Hourly earnings, adjusted for inflation, are falling at their fastest pace in decades.“I know people will hear today’s extraordinary jobs report and say they don’t see it, they don’t feel it in their own lives,” President Biden said Friday. “I know how hard it is. I know it’s hard to feel good about job creation when you already have a job and you’re dealing with rising prices — food and gas and so much more. I get it.”Tara Sinclair, an economist at George Washington University, said the United States wasn’t experiencing a true boom. That would imply a virtuous circle, in which prosperity begets investment, which begets more prosperity and makes the economy more productive in the long term — a rising tide that lifts all boats.The State of Jobs in the United StatesEmployment gains in July, which far surpassed expectations, show that the labor market is not slowing despite efforts by the Federal Reserve to cool the economy.July Jobs Report: U.S. employers added 528,000 jobs in the seventh month of the year. The unemployment rate was 3.5 percent, down from 3.6 percent in June.Care Worker Shortages: A lack of child care and elder care options is forcing some women to limit their hours or has sidelined them altogether, hurting their career prospects.Downsides of a Hot Market: Students are forgoing degrees in favor of the attractive positions offered by employers desperate to hire. That could come back to haunt them.Slowing Down: Economists and policymakers are beginning to argue that what the economy needs right now is less hiring and less wage growth. Here’s why.Instead, the lingering disruptions of the pandemic, uncertainty over what the post-Covid economy will look like and fears of a recession have made businesses reluctant to make bets on the future. Business investment fell in the most recent quarter. Employers are hiring, but they are leaning heavily on one-time bonuses rather than permanent pay increases.“It’s not an economic boom in the sense of wanting to invest long term,” Ms. Sinclair said. “It’s a boomtown situation where everyone’s just waiting for it to get cut off.”The current economic climate doesn’t feel like a boom to many, with measures of consumer confidence at record lows.Hiroko Masuike/The New York TimesIndeed, the Federal Reserve is trying to cut it off. Jerome H. Powell, the Fed chair, has described the labor market, with twice as many open jobs as unemployed workers, as “unsustainably hot,” and is trying to cool it through aggressive interest rate increases. He and his colleagues have argued repeatedly that a more normal economy — less like a boomtown, with lower inflation — will be better for workers in the long term.“We all want to get back to the kind of labor market we had before the pandemic, where differences between racial and gender differences and that kind of thing were at historic minimums, where participation was high, where inflation was low,” Mr. Powell said last month. “We want to get back to that. But that’s not happening. That’s not going to happen without restoring price stability.”Mr. Biden and his advisers, too, have argued that a cooling economy is inevitable and even necessary as the country resets from its reopening-fueled surge. In an opinion article in The Wall Street Journal in May, Mr. Biden warned that monthly job growth was likely to slow, to around 150,000 a month from more than 500,000, in “a sign that we are successfully moving into the next phase of the recovery.”So far, that transition has been elusive. Forecasters had expected hiring to slow in July, to a gain of about 250,000 jobs. Instead, the figure was above 500,000, the highest in five months, the Labor Department reported on Friday. But the labor force — the number of people who are either working or actively looking for work — shrank and remains stubbornly below its prepandemic level, a sign that the supply constraints that have contributed to high inflation won’t abate quickly.Ms. Sinclair said it shouldn’t be surprising that it was taking time to readjust after the coronavirus disrupted nearly every aspect of life and work. As of July, the U.S. economy, in the aggregate, had recovered all the jobs lost during the early weeks of the pandemic. But beneath the surface, the situation looks drastically different from what it was in February 2020. There are nearly half a million more warehouse workers today, and nearly 90,000 fewer child care workers. Millions of people are still working remotely. Others have changed careers, started businesses or stopped working.“We have to remember that we are still sorting that out,” Ms. Sinclair said. “It was a big economic shock, and the fact that we came out of it as quickly as we did is still incredibly impressive. These residual pains are us just still adjusting to it.”Jim Tankersley More

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    They Flocked to China for Boom Times. Now They’re Thinking Twice.

    A.H. Beard, a 123-year-old luxury mattress manufacturer based in Australia, started eyeing China around 2010. At the time, the family-owned company faced looming competition from low-cost, foreign-made mattresses in its home market. China, with its 1.4 billion consumers and a growing middle class with a taste for premium brands, seemed like a good place to expand.The choice paid off.A.H. Beard opened its first store there in 2013. Before the coronavirus pandemic, sales in the country were growing more than 30 percent a year. There are now 50 A.H. Beard stores across China, with plans to open 50 more. But like most foreign companies operating in China nowadays, A.H. Beard has started to think more carefully about its strategy.Beijing’s strict Covid-19 policy has exacted a heavy toll on business. The company’s exports into China are no longer on the rise.This month, Chinese officials announced that the economy grew at its slowest pace since the early days of the pandemic. Unemployment is high, the housing market is in crisis and nervous consumers — living under the constant threat of lockdowns and mass testing — are not spending.Now, the once resilient Chinese economy is looking shaky, and the companies that flocked to the country to partake in boom times are being confronted by a sobering reality: flat growth in what was once seen as a reliable economic opportunity.“I certainly don’t see China returning to the rates of growth that we had seen previously,” said Tony Pearson, chief executive of A.H. Beard.“I certainly don’t see China returning to the rates of growth that we had seen previously,” said Tony Pearson, chief executive of A.H. Beard.Matthew Abbott for The New York TimesA.H. Beard opened a flagship store in Shanghai in 2013.Matthew Abbott for The New York TimesThe cost of mattress materials and components, such as latex and natural fibers, has increased significantly.Matthew Abbott for The New York TimesSo far, most companies are staying the course, but there is a steady whiff of caution that did not exist just a few years ago.Geopolitical tensions and a U.S.-China trade war have unleashed punishing tariffs for some industries. Covid-19 has snarled the flow of goods, lifting the prices of almost everything and delaying shipments by months. China’s pandemic response of quarantines and lockdowns has kept customers at home and out of stores.A.H. Beard opened its flagship store with a local partner in Shanghai almost 10 years ago. And like any high-end brand, it rolled out products with prices that defy belief. China became the best-selling market for its top-of-the-line $75,000 mattress.Since then, the cost of shipping a container has jumped sixfold. The cost of mattress materials and components, such as latex and natural fibers, have increased significantly. Other worrying signs have emerged, including a housing slump. (New homes often mean new mattresses.)Mr. Pearson said he is hoping that the Chinese Communist Party congress later this year will clarify “the trajectory for China” and imbue consumers with more confidence. “The economy still has growth potential,” he said. “But there’s always a degree of risk.”After the 2008 financial crisis when the rest of the world retrenched, China emerged as an outlier and international businesses rushed in.European luxury brands erected gleaming stores in China’s biggest cities, while U.S. food and consumer goods companies jostled for supermarket shelf space. German car manufacturers opened dealerships, and South Korean and Japanese chip firms courted Chinese electronics makers. A booming construction market fueled demand for iron ore from Australia and Brazil.Chinese consumers rewarded those investments by opening their wallets. But the pandemic has rattled the confidence of many shoppers who now see rainy days ahead.Fang Wei, 34, said she has scaled back her spending since she left a job in 2020. In the past, she spent most of her salary on brands like Michael Kors, Coach and Valentino during frequent shopping trips.Even though she is employed again, working in advertising in Beijing, she now allocates a quarter of her salary on food, transportation and other living costs. She hands the rest to her mother, who puts the money in the bank.“Because I’m worried about being laid off, I transfer everything to my mother every month,” Ms. Fang said. “It’s very depressing to go from enjoying life to subsistence.”A more frugal Chinese consumer is a worry for foreign businesses, many of which offer products that are not the low-cost option but a premium alternative. An Jun-Min, chief executive of Ginseng by Pharm, a South Korean producer of ginseng products, said he, too, has noticed Chinese “wallets have gotten thinner.”Mr. An said sales for the company’s main product, a 2 ounce bottle of a ginseng drink that sells for $18, peaked before the pandemic. The company shipped 600,000 bottles into China and Hong Kong in 2019.There are 12,000 Adidas stores in China, up from 9,000 in 2015, but the company said it expects China revenue to “decline significantly” this year.Giulia Marchi for The New York TimesSales plunged in 2020 because it was hard to get products into the country during Covid lockdowns. Business has mostly bounced back, although it is still down 10 to 20 percent from the peak.While Mr. An said he is concerned about the economic slowdown, he remains optimistic that the market for health products in China, and a familiarity with ginseng — an aromatic root said to have health benefits — will continue to benefit sales. To hedge his bets, though, he is also seeking regulatory approval to sell in Europe.That is a far cry from the unbridled optimism of the past.In 2016, when China was its fastest growing and most profitable market, Kasper Rorsted, the chief executive at Adidas, declared that the country was “the star of the company.” Adidas invested aggressively to expand its foothold. It went from 9,000 stores in China in 2015 to its current 12,000, though only 500 are operated by Adidas. Then the music stopped.After initially projecting that sales in China would accelerate this year, Adidas ratcheted down expectations in May as Covid lockdowns continued to spread. The company said it now expects China revenue to “decline significantly” and that a sudden rebound is unlikely.For now, Adidas remains undeterred. Mr. Rorsted said on a call with analysts that the company is not planning to slash costs or pull back from the country. Instead, it will “do whatever we can to double down and accelerate the growth.”Many foreign companies had bet on the rise of a Chinese middle class as a dependable source of that growth. Bain & Company, a consulting firm, said it expects China to be the world’s largest luxury market by 2025, fueled in part by what Federica Levato, a senior partner, said is still “a big wave” of a rising middle class.Kamps Hardwoods, a Michigan-based manufacturer of lumber used in homes and furniture, said China provided an opportunity to expand — at first.Sarah Rice for The New York TimesRob Kukowski, the general manager of Kamps, said China is such a big buyer of U.S. lumber that the pain is felt by the entire industry when it stops spending.Sarah Rice for The New York TimesBy 2016, China accounted for 80 percent of Kamps’s sales.Sarah Rice for The New York TimesBut those kinds of predictions look less enticing for some foreign companies that once relied heavily on the Chinese market.Kamps Hardwoods, a Michigan-based manufacturer of kiln-treated lumber used for homes and furniture, seized on the opportunity to expand in China — at first. At a Chinese trade show in 2015, Rob Kukowski, the company’s general manager, said a Chinese buyer stunned him with a huge offer to buy enough stock to fill 99 shipping containers. The $2 million order of lumber accounted for four months’ worth of business for Kamps.Chinese buyers were so desperate for lumber back then that they would visit the company’s booth and refuse to leave until Mr. Kukowski accepted a million-dollar deal on the spot. By 2016, China accounted for 80 percent of the company’s sales.Kamps soon realized that it was hard to make a profit from the large Chinese orders because many buyers were not interested in quality and only wanted the cheapest possible price. The company started to focus its effort on finding customers in the United States and other overseas markets who were willing to pay more for a better product.It was fortuitous timing. When China raised tariffs on U.S. lumber in 2018 as part of a trade war, Kamps was better positioned to weather the downturn. Today, China accounts for only 10 percent of Kamps’s sales, but it still has a large indirect impact on the company. Mr. Kukowski said China is such a big buyer of U.S. lumber that a downward price war ensues throughout the industry when it stops spending.“With their purchasing power being so strong and so much of our product going into that market,” Mr. Kukowski said. “Our industry is going to run into significant problems if their economy slows.”Jin Yu Young More

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    Ice Cream Trucks Are the Latest Target of Inflation

    Inflation and its rising fuel prices have pushed some ice cream truck owners to the brink.On a steamy evening at Flushing Meadows Corona Park in Queens, Jaime Cabal had a line of customers at his Mister Softee ice cream truck. He blended milkshakes, topped bowls of vanilla soft-serve with strawberries and dipped cones into cherry and blue-raspberry shell. One boy no sooner finished his treat than he begged his parents for more, pointing at the menu’s pops shaped like SpongeBob SquarePants, Sonic the Hedgehog and Tweety.Crowds like these are becoming rarer for ice cream vendors across the country as high fuel prices feed inflation, leaving some owners of soft-serve trucks questioning their future in the business.Owning an ice cream truck used to be a lucrative proposition, but for some, the expenses have become untenable: The diesel that powers the trucks has topped $7 a gallon, vanilla ice cream costs $13 a gallon and a 25-pound box of sprinkles now goes for about $60, double what it cost a year ago.Many vendors say the end of the ice-cream-truck era has been years in the making. Even the garages that house these trucks are evolving, renting parking spaces to other types of food vendors as the ranks of ice cream trucks dwindle.For much of the day at Flushing Meadows Corona Park in Queens, Mr. Cabal sits in his truck waiting for customers.Jose A. Alvarado Jr. for The New York TimesParks, pools and residential streets used to be prime territory for the ice cream man. But now, more often than not, a soft-serve truck’s jingle plays to a crowd of no one as prices for some cones with add-ons like swirly ice cream and chocolate sauce reach $8 on some trucks.Though no organization appears to have hard figures on just how many ice-cream trucks are currently working the streets of New York City, some owners said they would likely leave the business in the next few years. It’s a sentiment that is felt nationwide, where mobile ice-cream vendors face higher costs for city permits and registration, and hefty competition from other ice cream businesses, said Steve Christensen, the executive director of the North American Ice Cream Association.The ice cream truck, he said, is “unfortunately becoming a thing of the past.”New delivery methods, through third-party apps or ghost kitchens, are proliferating. Brick-and-mortar scoop shops are focusing on offering a fun experience, he said, and serve dozens more flavors than a traditional ice cream truck can, driving lines away from these vehicles.“It’s horrible,” said Mr. Cabal, the ice cream vendor in Queens, who has worked on ice cream trucks for the last nine years. Inflation has even raised the cost of mechanical parts for the truck. Last year, when his slushy machine broke down, a part he needed cost $1,600. He decided to wait a few more months to fix it, but part nearly doubled in cost, to $3,000. Now, the slushy is off the menu and the machine is sitting in his garage.In 2018, Mr. Cabal thought business in the Flushing Meadows Corona Park would be good enough to support his own truck, so he sold his house in New Jersey for $380,000, moved to Hicksville, N.Y., and bought a Mister Softee franchise. He won a contract with the city to operate in the park.Despite the tens of thousands of dollars he pays each year for that permit and others, Mr. Cabal has contended with unlicensed vendors who sell fruit, empanadas and Duro wheels from baby strollers, and even ice cream from pushcarts strategically placed around his truck. He said they undercut him on price so much that it’s impossible for him to compete. Ramon Pacheco said many of his 27 years in the ice cream truck business were profitable, but the pandemic has drastically cut into customer traffic.Jose A. Alvarado Jr. for The New York TimesIn Lower Manhattan, Ramon Pacheco is struggling with his recent decision to raise his prices by 50 cents to account for some of his increased daily expenses, like $80 in gasoline ($15 before the pandemic) and $40 in diesel, ($18 earlier). He now pays about $41 for the three gallons of vanilla ice cream that used to cost him $27.He has sold ice cream for 27 years, and since the pandemic, he said he’s noticed a drop-off in demand. He now takes in as little as $200, before expenses, selling ice cream for nine hours. Sometimes, if a regular customer comes to him with $2 for ice cream, he’ll just sell it at a loss.“I’m 66, and I’m tired,” Mr. Pacheco said in Spanish, adding that he is thinking of selling his truck next year.Carlos Cutz decided to leave his job at a deli two years ago to work on an ice cream truck to support himself, his wife and their three children. He took out a loan and bought his own truck in May.The ice cream man he bought it from had a route in Williamsburg, Brooklyn, and Mr. Cutz has resisted raising the prices to avoid alienating his customer base, even though his expenses have doubled for products like a package of 250 cake cones.“These have been the worst years for ice cream trucks,” he said in Spanish, adding “I’m going to try to do the best that I can to continue with this business. I’m feeding my family, and I can’t leave a business I haven’t tried.”Carlos Cutz decided to leave his job at a deli and buy an ice cream truck.Jose A. Alvarado Jr. for The New York TimesThe price of gasoline has been the most shocking expense in recent months for Andrew Miscioscia, the owner of Andy’s Italian Ices NYC which operates three trucks for private catering events. He spent $6,800 in June on gas alone. Mr. Miscioscia pivoted to catering during the pandemic when sales slipped on the Upper West Side.“People are not getting out like they used to,” he said. “And there’s a lot of competition out there.”Still, the appearance of an ice cream truck on a hot summer day remains a thrill for many. At Flushing Meadows Corona Park, Domenica Chumbi, of Hillside, N.J., held a vanilla cone dipped in cherry shell for her quinceañera photos. The pink-hued ice cream not only matched her dress and her party’s theme of cherry blossoms, but it also summoned memories of childhood visits to the park.“It’s something that reminds me of New York,” she said.Follow New York Times Cooking on Instagram, Facebook, YouTube, TikTok and Pinterest. Get regular updates from New York Times Cooking, with recipe suggestions, cooking tips and shopping advice. More

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    After Enduring a Pandemic, Small Businesses Face New Worries

    It has been a tough few years for companies without the scale to cruise through disruption. Making money isn’t getting any easier.America’s small businesses can’t catch a break.After two years of shutdowns and restrictions due to the Covid-19 pandemic, they’re straining to keep up with price increases without losing customers to larger competitors. They are struggling to keep positions filled as competition for workers remains at a fever pitch. And just at the moment that many business owners begin to recover and shore up their depleted savings, they’re worried that the Federal Reserve’s medicine for inflation will bring fresh hardship: higher borrowing costs and timid consumers.Surveys show that small-business sentiment has taken a markedly pessimistic turn in recent months — even more so than that of professional forecasters and of corporate executives.In June, the National Federation of Independent Business measured its lowest reading ever for economic expectations. The nonprofit Small Business Majority, in a survey in mid-July, found that nearly one in three small businesses couldn’t survive for more than three months without additional capital or a change in business conditions. The U.S. Chamber of Commerce’s Small Business Index for the second quarter showed that inflation had skyrocketed to the top of owners’ concerns. Seventy-five percent of participants in Goldman Sachs’s small-business coaching program reported that higher costs had impaired their finances.The sector — which the federal government typically defines as businesses below a certain size, ranging from 500 to 1,500 employees depending on the industry — is responsible for two of every three jobs created over the past 25 years, according to the Labor Department. So a weakening of that engine bodes ill for American growth and prosperity.Corinne Hodges runs the Association of Women’s Business Centers, a national network offering training, mentoring and financing to entrepreneurs. The organization’s funding from the Small Business Administration was augmented to help thousands of businesses navigate the pandemic, but, with the extra money now exhausted, the centers are laying off advisers, just as clients are asking for more help.“We saw pivoting in Covid,” Ms. Hodges said. “Well, what is it now? What’s the new pivot? It’s just been a vise grip of pressure emerging from the pandemic. Is a pivot going to be enough, or does it need to be something more?”Kymme Williams-Davis was one of those who survived pivot after pivot, and she isn’t sure she can make it much longer.Seven years ago, she started a coffee shop in Brooklyn called Bushwick Grind, specializing in fair-trade beans that are locally roasted. She spent $200,000 building out the space with a kitchen, and developed a brisk business selling healthier fare than that of the fast food outlets around her.When the pandemic hit, the shop had to close for nine months. Ms. Williams-Davis made rent by subletting the space to other small vendors. When she reopened in 2021, she got a boost from a contract to deliver 400 meals a day to the city’s vaccine sites. That cash flow allowed her to qualify for a loan to buy her own space.But she hasn’t been able to find anything in Brooklyn, in part because large investors keep outbidding her. Foot traffic hasn’t recovered. The cost of coffee, kale and other provisions — if she can even get them — is skyrocketing. Farmers from upstate are saving on gas by taking fewer trips into the city, so she has begun to swap in lower-grade ingredients.8 Signs That the Economy Is Losing SteamCard 1 of 9Worrying outlook. More