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    New Orleans Port Expansion Shows Optimism on Future of Global Trade

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    NEW ORLEANS — The pandemic-era collapse of supply chains spurred speculation that globalization was on the decline, as companies vowed to become less reliant on foreign providers of goods and services. But if New Orleans is any example, the world is headed for less of a retreat from global trade and more of an overhaul to how it operates.A critical gateway between the Mississippi River and global oceans, New Orleans has been an entry and exit point for the United States since before the Louisiana Purchase. The city is now betting that position will continue — and even deepen — as the world enters a new era of global integration.The New Orleans port is one of the nation’s busiest for agricultural exports like soybeans and corn. But it has struggled to compete for the lucrative imports that are ferried on huge ships from Asia in part because those vessels cannot fit under a local bridge. As global supply chains rearrange in the pandemic’s wake, New Orleans’s proximity to Mexico and its position on the Mississippi River could help make it a crucial stop in what many expect to be a more resilient and supply chain of the future.Executives at the New Orleans port are wagering on that transformation: They recently unveiled a plan to spend $1.8 billion on expanding the port to a new site that can handle more trade and accommodate bigger boats.That optimism about the future of trade breaks with some of the worst fears of the past few years, as pandemic-related supply chain disruptions, Covid lockdowns in China and Russia’s war with Ukraine shook confidence in the global trading system. Policymakers and company executives vowed to become less reliant on China and to locate supply chains closer to home. That prompted predictions that the world was headed for a period of “de-globalization,” in which the trade and financial ties that have brought countries closer in recent decades would spin into reverse.So far, economic data show few signs of such a sharp retreat. Global trade volumes are growing more slowly, but they continue to reach new highs, with significantly more goods and currency crossing international borders than ever before.New Orleans has long been a key artery through which products made in the America’s South and Midwest flow to buyers overseas.Some firms are looking beyond China for manufacturing capacity, but that doesn’t necessarily mean that they are retreating from global integration: Many are turning to countries like Mexico, India and Vietnam. And even as pandemic supply chain issues have alerted companies to the risks inherent in the existing trading system, that seems to be encouraging them to diversify their global supply chains, not dismantle them.The trends, and the way institutions like the Port of New Orleans, are responding underscore that globalization is evolving rather than unraveling altogether. The changes to trade now underway seem likely to rework who partners with whom and could make international commerce less efficient and more expensive. But the profit motives that have encouraged companies to search out the globe for parts, workers and new markets are still going strong.“When I hear people say the word ‘globalization,’ what I hear is ‘cost minimization,’” Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said in an interview on Jan. 7. “The new globalization is not going to have that second part to it.”Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Britain’s Economic Health Is Withering With Sick Workers on the Sidelines

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    Many people who want to work can’t because of long-term health problems, a persistent issue that is causing Britain’s economy to go “into reverse.”Christina Barratt was used to the 12- to 14-hour days. For years, she would get into her car each morning and set out to department stores and other retailers all over northwest England, selling greeting cards for a large manufacturer.“It’s a very demanding, busy job,” she said, recalling how she had to make sales, manage client accounts and grow the business, while often traveling long distances.In March 2020, at the age of 50, Ms. Barratt got Covid. She hasn’t been able to work since.Ms. Barratt is among 3.5 million people — or about one in 12 working-age adults in Britain — who have long-term health conditions and are not working or looking for work. The number ballooned during the first two years of the pandemic when more than half a million more people reported they were long-term sick, with physical and mental health conditions, according to analysis by economists at the Bank of England. The sharp rise in ill health is a startling problem itself, but there has also been a growing awareness in Britain about the negative effects on the economy of having so many people unable to work.Sickness is adding to the growing sense of malaise in a country troubled by high inflation and the economic costs of Brexit, where the National Health Service is overwhelmed and workers across industries are striking in ever larger numbers, coming after a year of severe political upheaval.With the unemployment rate near its lowest point in half a century, businesses have loudly complained that they have been unable to hire enough workers, leaving the government grappling with how to expand the labor market. Before the pandemic, a growing labor market had been “the single cylinder of growth in the economic engine,” Andy Haldane, the former chief economist of the Bank of England, said in November during a lecture at the Health Foundation, a nonprofit organization. It “has now gone into reverse gear.”Britain is in “a situation where for the first time, probably since the Industrial Revolution, where health and well-being are in retreat” and acting as a brake on economic growth, said Mr. Haldane, who currently serves as the chief executive of the Royal Society of Arts, an organization in London that seeks practical solutions to social issues.The economy is probably already in a recession, according to forecasts by the Bank of England and others, and is expected to return to only meager growth in 2024. Some economists have warned that shortages of workers could deepen the cost-of-living crisis if it causes employers to raise wages to attract workers in a way that threatens to entrench high inflation into the economy. That could prompt the central bank to keep interest rates high, pushing up borrowing costs and restraining the economy.At the heart of the problem is a high economic inactivity rate that has barely budged despite the end of pandemic lockdowns, a boom in labor demand and a high cost of living. As of October, over half a million more people were counted as inactive than before the pandemic, according to the Office for National Statistics. In a separate study looking at data for the first two years of the pandemic, Jonathan Haskel and Josh Martin, economists at the Bank of England, found that nearly 90 percent of the increase in economic inactivity could be attributed to people who were long-term sick.The extent to which sickness is forcing people to leave the work force is still being debated among researchers in Britain because the reasons for not working can change over time. But there is little disagreement that the economy is being held back by having so many people who say ill health has kept them from working.A sign outside a pub in Hampshire, Britain, that takes a creative tack in advertising for workers.Chine Nouvelle, via ShutterstockBusinesses have loudly complained that they have been unable to hire enough employees.Paul Ellis/Agence France-Presse — Getty ImagesContributing to the rise in sickness are not only tens of thousands of cases of long Covid, which Ms. Barratt is suffering from, but also a vast backlog of people — about seven million — with a variety of health problems who are on waiting lists for N.H.S. care. The latest numbers add to a longer-term trend. In the 25 years before the pandemic, the tally of people reporting long-term sickness grew about half a percent a year. Since then, it accelerated to 4 percent a year, according to the study by Mr. Haskel and Mr. Martin.Britain’s aging population means there are more sick people, but “the prevalence of poor health has been growing” as well, said David Finch of the Health Foundation, which has studied links between illness and economic inactivity. In the past few years, the foundation found, there has been a large increase in the number of people with cardiovascular problems, mental illness, and a range of other ailments, which would include respiratory conditions and long Covid symptoms.Britain is one of just seven countries in the Organization for Economic Cooperation and Development that still has a higher rate of economic inactivity than it did before the pandemic, the Office for National Statistics reported. The United States is also in this group, but its missing workers are mostly explained by retirement and a decline in participation by middle-aged men without college degrees, rather than sickness. The increase in the rate of economic inactivity in Britain is more than twice as large as the increase in the United States. These missing workers face a number of barriers in returning to work. For some, the severity of their health condition prevents them from working, while others are unable to return to the job they used to do. . Ms. Barratt, the greeting card saleswoman, has no illusions about going back to a similar job.“There’s no way I could do that kind of role any more,” Ms. Barratt said. “I’m just not well enough to sustain any kind of level of energy.” Just getting up and down the stairs at home is a challenge, she said.She is feeling the strain of living on government benefits for more than two years and would like to return to work. “If I continue to have this condition, which can go up and down in severity, I’d have to find some kind of employment that was very flexible,” she added.Although there has been a worrying increase in the number of economically inactive people — sick or not — who don’t want to work, there are still 1.7 million who do but are unable to look for a job and start work soon, according to the Office for National Statistics.Kirsty Stanley said the transition back to work for people with long Covid can be difficult. “They basically expect people to go from potentially zero to 100” within four to six weeks, she said.Nicholas White for The New York Times“This has been a long-term issue in keeping people with disabilities in the workplace,” said Kirsty Stanley, an occupational therapist. There are a lot of challenges, including some employers not understanding legal requirements to make reasonable accommodations for employees with health problems, Ms. Stanley said. She is an associate for Long Covid Work, a group that works with unions and employment groups to improve access to work for people with long Covid. Mr. Haskel and Mr. Martin estimate that there are 96,000 people who are economically inactive because of long Covid.Ms. Stanley, who also suffers from long Covid, said one problem was that the gradual period for returning to work that employers offer to people after a long absence doesn’t work well for those with long Covid.“They basically expect people to go from potentially zero to 100” within four to six weeks, she said. “What happens is people crash.”A little over two years ago, Michael Borlase did a four-week phased return to work after being sick with Covid. But at the end of the period, after getting back to an eight-hour shift, he got sick again and could not go back to work.He was a newly qualified nurse working in a psychiatric ward for men with mental health issues who have committed a crime. He was there for just eight months before he got Covid in April 2020.Michael Borlase used to be a nurse in a psychiatric ward. Now he’s not sure he could go back to that work. Nicholas White for The New York Times“I’d been so poor for so long as a student nurse,” he said. “I was thrilled to be working, work for the N.H.S. and felt very proud of the work I was doing. And then Covid hit.”“I was very early on in my career,” he added. “And now I don’t know if I can ever go back again.”At age 36, he said he felt “stuck in a professional limbo,” where he could not do the job he spent years training for but was too unwell to train for something else. Until September, Mr. Borlase received full pay because of a provision for N.H.S. workers with Covid. Since then, Mr. Borlase has been receiving reduced wages from sick pay, which will expire in April.Delays in getting health treatment have made it difficult for Andrea Slivkova, 43, to return to work. A Czech native who came to Britain 10 years ago, she left her job cleaning offices in mid-2021 because of pain from a prolapsed pelvic organ. It was more than a year before she could have the surgery to address the problem. Since then, she said, she is still unwell but has not been able to have a follow-up appointment with a specialist. Last summer, she was told it would be a five-month wait.“They told me that the waiting list is long because other people are waiting, too,” Ms. Slivkova said, with her daughter, Kristyna Dudyova, translating from Czech.Ms. Slivkova still hasn’t returned to work. She described the strain of having a physical health condition but also the struggle to navigate the health care system and the financial stress of relying on government benefits.Ms. Dudyova recalled how her mother used to be a workaholic, who found time to bake, go to the gym, work multiple jobs if necessary, all while raising her and her younger brother.“But now everything is just gone,” she said. More

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    Fed Officials Ask How to Better Understand Inflation After Surprises

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    Federal Reserve officials, including Lisa Cook, a board member, are wrestling with how to think about price increases after 18 months of rapid change.NEW ORLEANS — Federal Reserve officials kicked off 2023 by addressing a thorny question that is poised to bedevil the central bank throughout the year: How should central bankers understand inflation after 18 months of repeatedly misjudging it?Lisa D. Cook, one of the Fed’s seven Washington-based governors, used a speech at the American Economic Association’s annual gathering in New Orleans to talk about how officials could do a better job of predicting price increases in the future. Her voice was part of a growing chorus at the conference, where economists spent time soul-searching about why they misjudged inflation and how they could do a better job next time.Fed officials must “continue to advance our understanding of inflation” and “our ability to forecast risks,” Ms. Cook said during her remarks, suggesting that central bankers could update their models to better incorporate unexpected shocks and to better predict moments at which inflation might take off.Her comments underscored the challenge confronting monetary policymakers this year. Officials have rapidly raised rates to try to cool the economy and bring inflation back under control, and they must now determine not only when to stop those moves but also how long they should hold borrowing costs high enough to substantially restrict economic activity.Those judgments will be difficult to make. Although inflation is now slowing, it is hard to know how quickly and how fully it will fade. The Fed wants to avoid retreating too soon, but keeping rates too high for too long would come at a cost — harming the economy and labor market more than is necessary. Adding to the challenge: Policymakers are making those decisions at a moment when they still don’t know what the economy will look like after the pandemic and are using data that is being skewed by its lasting effects.“The pandemic has triggered a lot of changes in terms of how our economy operates,” Raphael Bostic, the president of the Federal Reserve Bank of Atlanta, said during a panel on Friday. “We’re very much in flux, and it’s hard to know for sure how things are going to evolve on a week-to-week or month-to-month basis.”Understanding inflation is key to the thorny policy questions facing the Fed. But determining what causes and what perpetuates price increases is a complicated economic question, as recent experience has demonstrated.Officials have raised rates rapidly to try to slow the economy and bring inflation back under control.Jim Wilson/The New York TimesFed officials and economists more broadly have had a dismal track record of predicting inflation since the onset of the pandemic. In 2021, as prices first began to take off, officials predicted that they would be “transitory.” When they lasted longer than expected, both policymakers and many forecasters on Wall Street and in academia spent 2022 predicting that they would begin to fade faster than they actually did.Given those mistakes, policymakers have begun to suggest that the central bank needs to reassess how it looks at inflation.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Eurozone Inflation Eases on Lower Energy Prices

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    The rate of price increases in countries using the euro slowed to 9.2 percent in December, down from 10.1 percent a month earlier.Lower energy prices helped to push inflation in Europe lower last month, the European Commission reported on Friday, but many prices are still rising at a brisk pace and policymakers have given little indication that they plan to halt planned interest rate increases.Consumer prices in the countries that use the euro as their currency rose at an annual rate of 9.2 percent in December, down from the double-digit levels of 10.1 percent in November and 10.6 percent in October.Declines in inflation reported this week in France, Germany and Spain sparked hopes that the relentless rise across the continent may have finally peaked. But several influential voices urged caution, noting that while the so-called headline rate of inflation has eased, core inflation, which strips out volatile food and energy prices, has not shown the same drop. In fact, for December, the eurozone’s core rate of inflation rose to 5.2 percent, from 5 percent the month before.Europe has benefited from a streak of mild weather, which has lowered the demand for energy, particularly the natural gas used to power much of the continent’s heating infrastructure. Several governments have also offered subsidies to blunt the painfully high energy prices that consumers pay. The drop in Germany’s inflation rate, to 9.6 percent in December from 11.3 percent the month before, was partly due to one-time assistance to help households pay their energy bills, according to the government’s statistics office.The data showed that energy prices in the eurozone rose at an annual rate of 25.7 percent in December, down from as high as 41.5 percent in October. “Europe is very lucky at the moment with the weather,” said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics. He added that government energy relief had inserted a “wedge between reality and the data.”“It’s a price control,” he said, and “once you take out that, it’s not as clear that inflation is that benign.”Nearly all eurozone countries marked a decline in their main inflation rate in December, including France (6.7 percent, from 7.1 percent in November), Italy (12.3 percent, from 12.6 percent), Spain (5.6 percent, from 6.7 percent) and the Netherlands (11 percent, from 11.3 percent). The numbers bolstered the argument that the eurozone’s record-setting pace of inflation in the past year will slowly lose steam in 2023. “We are likely past the peak,” said Riccardo Marcelli Fabiani, an economist at Oxford Economics, in a note on Friday. But he added, “we expect inflation to cool only gradually, remaining high in the short term.”The European Central Bank, which has a target of 2 percent annual inflation, has already indicated that it is likely to raise interest rates half a point in February. Christine Lagarde, the bank’s president, said last month that she expected interest rates to rise “significantly further, because inflation remains far too high and is projected to stay above our target for too long.”The December data, showing easing overall inflation but persistent underlying price pressure, will probably stoke “tense negotiations among policymakers in the next few months” noted Mr. Vistesen after the numbers were released. The Federal Reserve, the U.S. central bank, is also expected to continue raising rates.This week, Gita Gopinath, first deputy managing director of the International Monetary Fund, told the Financial Times that the Fed should “stay the course” with its planned increases.“I think it’s clear that we haven’t turned the corner yet on inflation,” she said. At the same time, the fund has also projected that a third of the world economy will face recession this year. More

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    Japan’s Business Owners Can’t Find Successors. This Man Is Giving His Away.

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    Hidekazu Yokoyama has spent three decades building a thriving logistics business on Japan’s snowy northern island of Hokkaido, an area that provides much of the country’s milk.Last year, he decided to give it all away.It was a radical solution for a problem that has become increasingly common in Japan, the world’s grayest society. As the country’s birthrate has plummeted and its population has grown older, the average age of business owners has risen to around 62. Nearly 60 percent of the country’s businesses report that they have no plan for what comes next.While Mr. Yokoyama, 73, felt too old to carry on much longer, quitting wasn’t an option: Too many farmers had come to depend on his company. “I definitely couldn’t abandon the business,” he said. But his children weren’t interested in running it. Neither were his employees. And few potential owners wanted to move to the remote, frozen north.So he placed a notice with a service that helps small-business owners in far-flung locales find someone to take over. The advertised sale price: zero yen.Mr. Yokoyama’s struggle symbolizes one of the most potentially devastating economic impacts of Japan’s aging society. It is inevitable that many small- and medium-size companies will go out of business as the population shrinks, but policymakers fear that the country could be hit by a surge in closures as aging owners retire en masse.In an apocalyptic 2019 presentation, Japan’s trade ministry projected that by 2025, around 630,000 profitable businesses could close up shop, costing the economy $165 billion and as many as 6.5 million jobs.Economic growth is already anemic, and the Japanese authorities have sprung into action in hopes of averting a catastrophe. Government offices have embarked on public relations campaigns to educate aging owners about options for continuing their businesses beyond their retirements and have set up service centers to help them find buyers. To sweeten the pot, the authorities have introduced large subsidies and tax breaks for new owners.Still, the challenges remain formidable. One of the biggest obstacles to finding a successor has been tradition, said Tsuneo Watanabe, a director of Nihon M&A Center, a company that specializes in finding buyers for valuable small- and medium-size enterprises. The company, founded in 1991, has become enormously lucrative, recording $359 million in revenue last year.Mr. Yokoyama plans to give away his land and equipment to a successor he has chosen.Noriko Hayashi for The New York TimesOne of Mr. Yokoyama’s workers.Noriko Hayashi for The New York TimesBut building that business has been a long process. In years past, small-business owners, particularly those who ran the country’s many decades- or even centuries-old companies, assumed that their children or a trusted employee would take over. They had no interest in selling their life’s work to a stranger, much less a competitor.More on Social Security and RetirementEarning Income After Retiring: Collecting Social Security while working can get complicated. Here are some key things to remember.An Uptick in Elder Poverty: Older Americans didn’t fare as well through the pandemic. But longer-term trends aren’t moving in their favor, either.Medicare Costs: Low-income Americans on Medicare can get assistance paying their premiums and other expenses. This is how to apply.Claiming Social Security: Looking to make the most of this benefit? These online tools can help you figure out your income needs and when to file.Mergers and acquisitions “weren’t well regarded. A lot of people felt that it was better to shut the company down than sell it,” Mr. Watanabe said. Perceptions of the industry have improved over the years, but there are “still many businesspeople who aren’t even aware that M&A is an option,” he added.While the market has found buyers for the businesses most ripe for the picking, it can seem nearly impossible for many small but economically vital companies to find someone to take over.In 2021, government help centers and the top five merger-and-acquisitions services found buyers for only 2,413 businesses, according to Japan’s trade ministry. Another 44,000 were abandoned. Over 55 percent of those were still profitable when they closed.Many of those businesses were in small towns and cities, where the succession problem is a potentially existential threat. The collapse of a business, whether a major local employer or a village’s only grocery store, can make it even harder for those places to survive the constant attrition of aging populations and urban flight that is hollowing out the countryside.After a government-run matching program failed to find someone to take over for Mr. Yokoyama, a bank suggested that he turn to Relay, a company based in Kyushu, Japan’s southernmost main island.Hay stored in a warehouse on the Yokoyama land.Noriko Hayashi for The New York TimesAn abandoned cowshed.Noriko Hayashi for The New York TimesRelay has differentiated itself by appealing to potential buyers’ sense of community and purpose. Its listings, featuring beaming proprietors in front of sushi shops and bucolic fields, are engineered to appeal to harried urbanites dreaming of a different lifestyle.The company’s task in Mr. Yokoyama’s case wasn’t easy. For most Japanese, the town where his business is situated, Monbetsu, which has around 20,000 people and is shrinking, might as well be the North Pole. The only industries are fishing and farming, and they largely go into hibernation as the days grow short and snow piles up to roof eaves. In deep winter, some tourists come to eat salmon roe and scallops and see the ice floes that lock in the city’s modest port.A street full of 1980s-era cabarets and restaurants is a snapshot of a more prosperous time when young fishermen gathered to let off steam and spend big paychecks. Today, faded posters peel off abandoned storefronts. The town’s biggest building is a new hospital.In 2001, Monbetsu constructed a new elementary school building just around the corner from Mr. Yokoyama’s company. It closed after just 10 years.In times past, the classrooms would have been filled with the grandchildren of local dairy farmers. But their own children have now mostly moved to cities in search of higher-paying, less onerous work.With no obvious successors, the farms have folded one after another. Decades-high inflation brought on by the pandemic and Russia’s war in Ukraine has pushed dozens of holdouts into early retirement.Mr. Yokoyama’s employees are skeptical about his succession plan.Noriko Hayashi for The New York TimesThe workers are mostly in their 50s and 60s.Noriko Hayashi for The New York TimesAs local farmers have aged and their profits thinned, more of them have come to depend on Mr. Yokoyama for tasks like harvesting hay and clearing snow. His days start at 4 a.m. and end at 7 in the evening. He sleeps in a small room behind his office.It would be “extremely difficult” if his business folded, said Isao Ikeno, the manager of a nearby dairy cooperative that has turned heavily to automation as workers have become harder to find.On the cooperative’s farm, 17 employees tend to 3,000 head of cattle, and Mr. Yokoyama’s company fills in the gaps. No other area businesses can provide the services, Mr. Ikeno said.Mr. Yokoyama began contemplating retirement about six years ago. But it wasn’t clear what would happen to the business.While he had taken on a little over half a million dollars in debt, years of generous economic stimulus policies have kept interest rates at rock bottom, easing the burden, and the company’s annual profit margin was around 30 percent.The ad he placed on Relay acknowledged that the job was hard, but it said that no experience was needed. The best candidate would be “young and ready to work.”Whoever was chosen would take over the debts, but also inherit all of the business’s equipment and nearly 150 acres of prime farmland and forest. Mr. Yokoyama’s children will get nothing.“I told them that if you want to take it over, I’d leave it to you, but if you don’t want to do it, I’m giving it all to the next guy,” he said.Thirty inquiries poured in. Among those who expressed interest were a couple and a representative of a company that planned to expand. Mr. Yokoyama settled on a dark horse, 26-year-old Kai Fujisawa.A friend had showed Mr. Fujisawa the ad on Relay, and Mr. Fujisawa immediately jumped in a car and showed up on Mr. Yokoyama’s doorstep, impressing him with his youth and enthusiasm.Kai Fujisawa, Mr. Yokoyama’s potential successor.Noriko Hayashi for The New York TimesStill, the transition hasn’t been smooth. Mr. Yokoyama is not entirely convinced that Mr. Fujisawa is the right person for the job. The learning curve is steeper than either of them had imagined, and Mr. Yokoyama’s grizzled, chain-smoking employees are skeptical that Mr. Fujisawa will be able to live up to the boss’s reputation.Most of the company’s 17 employees are in their 50s and 60s, and it’s not clear where Mr. Fujisawa will find people to replace them as they retire.“There’s a lot of pressure,” Mr. Fujisawa said. But “when I came here, I was prepared to do this for the rest of my life.” More

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    Why Japan’s Sudden Shift on Bond Purchases Dealt a Global Jolt

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    The world has relied on ultralow interest rates in Japan. What will happen if they rise?Japan is the world’s largest creditor. At the end of 2021, it held roughly $3.2 trillion in foreign assets, 30 percent more than No. 2 Germany. As of October, it owned over a trillion dollars of U.S. government debt, more than China. Japanese banks are the world’s largest cross-border lenders, with nearly $4.8 trillion in claims in other countries.Late last month, the world got an unexpected reminder of how integral Japan is to the global economy, when the country’s central bank unexpectedly announced that it was adjusting its stance on bond purchases.To those unversed in the intricacies of monetary policy, the significance of Japan’s decision to raise the ceiling on its 10-year bond yields may not have been immediately clear. But for the finance industry, the surprising change raised expectations that the days of rock-bottom Japanese interest rates could be numbered — potentially further squeezing global credit markets that were already tightening as the world economy slows.Since this summer, the Bank of Japan has been an outlier, keeping its interest rates ultralow even as other central banks raced to keep up with the Federal Reserve, which has ratcheted up lending costs in an effort to tame high inflation.As global rates have diverged from those in Japan, the value of the yen has fallen as investors sought better returns elsewhere. That has put pressure on the Bank of Japan to shift the world’s third-largest economy away from its decade-long commitment to cheap money, a policy known as monetary easing.Japan’s deep integration into global financial networks means that there is a lot of money riding on the timing of any move away from that policy, and investors have spent years fruitlessly waiting for a sign.As of mid-December, the overwhelming expectation was that the bank would hold off on any changes until next spring, when Haruhiko Kuroda, the Bank of Japan’s governor and an architect of its current policies, is set to step down.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    Google Employees Brace for a Cost-Cutting Drive as Anxiety Mounts

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    The tech giant has so far taken steps to streamline without mass layoffs, but employees are girding for deeper cuts.Google workers in Switzerland sent a letter this month to the company’s vice president of human resources, outlining their worries that a new employee evaluation system could be used to cull the work force.“The number and spread of reports that reached us indicates that at least some managers were aggressively pressured to apply a quota” on a process that could lead to employees getting negative ratings and potentially losing their jobs, five workers and employee representatives wrote in the letter, which was obtained by The New York Times.The letter signaled how some Google employees are increasingly interpreting recent management decisions as warnings that the company may be angling to conduct broader layoffs. From the impending closure of a small office and the cancellation of a content-moderation project to various efforts to ease budgets during 2023 planning meetings, the Silicon Valley behemoth has become a tinderbox of anxiety, according to interviews with 14 current and former employees, who spoke on the condition of anonymity for fear of retribution.In some cases, Google employees have reacted to a program that the company began in July to simplify operations, cut red tape and make itself more productive. In other instances, they have had budget conversations, with some teams unable to hire more next year, the people said. And workers have also fretted over decisions made months ago that, to some, have taken on new meaning, they said.The worries have grown as Google’s tech industry peers have handed out pink slips amid a souring global economy. Last month, Meta, the owner of Facebook and Instagram, purged its ranks by 11,000, or about 13 percent of its work force. Amazon also began laying off about 10,000 people in corporate and technology jobs, or about 3 percent of its corporate employees.Even Google, which is on track to make tens of billions of dollars in profits this year, has had to come to terms with a slowdown. In October, as the digital advertising market slumped, Google’s parent company, Alphabet, reported that profit dropped 27 percent in the third quarter from a year earlier, to $13.9 billion.Google did not comment on employee anxiety in a response to a request from The Times. Sundar Pichai, the chief executive, said in October that the company would “focus on a clear set of product and business priorities.” He also said it would slow hiring and “moderate” the growth of its expenses.The State of Jobs in the United StatesEconomists have been surprised by recent strength in the labor market, as the Federal Reserve tries to engineer a slowdown and tame inflation.Delivery Workers: Food app services are warning that a proposed wage increase for delivery workers in New York City could mean higher delivery costs.A Self-Fulfilling Prophecy?: Employees seeking wage increases to cover their costs of living amid rising prices could set off a cycle in which fast inflation today begets fast inflation tomorrow.Disabled Workers: With Covid prompting more employers to consider remote arrangements, employment has soared among adults with disabilities.A Feast or Famine Career: America’s port truck drivers are a nearly-invisible yet crucial part of the global supply chain. And they are sinking into desperation.Unlike other big tech companies, Google has so far avoided large-scale job cuts. Still, investors have pushed the company to become more aggressive about “defending” its huge profits, said Mark Mahaney, an analyst at Evercore ISI.“One of the most obvious ways to do that is to cut costs and reduce your employee head count,” he said. He added that it was “kind of odd” that Google’s parent had hired 30,000 employees in the last three quarters, given the economic trends. At the end of September, Alphabet had 186,779 workers.In recent months, Google has appeared to pay more attention to costs. In July, it started the program to streamline operations. Soon after, it canceled some projects, including the Pixelbook laptop and Stadia, its streaming platform for video games. It has also reduced funding for Area 120, an in-house product incubator.At one recent meeting, a Google human resources representative told a worker that the company would revisit the possibility of broader layoffs in the new year, and that it was a decision for Mr. Pichai, according to an audio recording obtained by The Times.Google has told other employees that it would put a priority on trimming real estate expenditures, travel costs and perks before it pursued layoffs, said a person familiar with the conversations, who spoke on the condition of anonymity because the conversations were private. The company plans to close a small office in Farmington Hills, Mich., a suburb of Detroit, next month.Google said in October that it would slow hiring and “moderate” the growth of its expenses.Jason Henry for The New York TimesProject cancellations and reorganizations have stoked nervousness. In September, Google’s YouTube shut down a project based in the Farmington Hills office with nearly 80 workers, laying off some staff members who did not find new roles at the company, four people familiar with the decision said. YouTube had hired them as contract workers to moderate content on the video platform. Google said 14 workers had lost their jobs..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.Google said that through these types of reorganizations, it was not looking to reduce the size of its overall work force, but that some teams might eliminate roles as the company reassessed its priorities.Some teams that consistently grew in the past will be unable to hire more people next year, four people familiar with the situation said. There are also higher demands for 2023 planning, such as a manager’s being asked to draft plans on how to handle 10 different budget scenarios instead of three or four, one person said. In planning discussions, leaders have pressed managers to justify their expenses, asking if there are workarounds or team reorganizations that could save money, two people said.One of the biggest concerns for some employees has been whether Google could use its new performance-evaluation system to accelerate job cuts. In May, the company installed the new system, called Googler Reviews and Development.Under the system, managers expect the bottom 2 percent of employees to be categorized as having “not enough impact,” according to two people familiar with the matter. Another 4 percent should be judged as providing “moderate impact.”Concerns have intensified that the bottom 6 percent, or roughly 11,000 people, could be targeted for dismissal, according to four people, and as earlier reported by the tech news site The Information.The GRAD system means Google now has two categories for employees who are considered low performing, compared with one under the old program, potentially leading to a bigger pool of workers at the bottom. The system has also had a bumpy rollout, with managers and employees confused about how it should work, according to the letter and four employees.Google said it expected workers would become more comfortable with the system over time. It added that it had a no-surprises policy, meaning employees would know well in advance if their performance was falling short.Before handing out the two lowest ratings, managers are also supposed to notify employees in “support check-in” meetings. Google said not every such meeting would lead to a lower rating, with support check-ins also held for those who need extra help to meet their obligations.Employees would also have indications if their manager wanted to put them on a “performance improvement” plan, the company said, a process that compels workers to improve their work within 60 days to keep their jobs. Google has given workers the choice of staying on a performance-improvement plan or resigning with a buyout package.Google said that it had not made changes to increase the number of performance plans, and that it had offered these types of severance options for years.This month’s letter from some of Google’s workers in Switzerland to Fiona Cicconi, the vice president of human resources, was led by members of a 15-person employee representation committee, ER-CH.One of their primary concerns was that contrary to what some Google executives have said, the company may have a quota for the number of employees who were supposed to have support check-ins, and whose jobs might therefore be vulnerable.Google said it had not imposed a quota on support check-ins. But when almost no one used these meetings after the GRAD system was put in place, it said, it asked leaders to convey the importance of the meetings to managers.The memo signatories in Switzerland also said there was confusion, among managers and workers alike, about who qualified for a support check-in. They urged Ms. Cicconi to put guardrails in place so that the system did not lead to mass firings.“It’s normal that new processes don’t run smoothly in the beginning, but this should not happen at the expense of Googlers’ well-being, careers and compensation,” they wrote. More

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    U.K. Inflation Rate Slows to 10.7 Percent

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    The pace of price rises in November edged lower, from 11.1 percent, but households are still being squeezed as wages fail to keep up.Britain’s inflation rate eased away from a 41-year high on Wednesday, but the slowdown brings only limited relief to a nation gripped by a deep cost-of-living crisis.Consumer prices in Britain rose 10.7 percent in November from a year earlier, bringing the rate of inflation down slightly from 11.1 percent in October, which was the highest annual rate since 1981, the Office for National Statistics said.Despite this tentative sign that inflation might have peaked, British households are being squeezed by high energy bills, food costs and mortgage rates, while wage growth is failing to keep up with inflation. Britons are facing a sharpest decline in living standards over the next two years in records dating to the mid-1950s, which is prompting a growing wave of labor unrest. Railroad and postal workers are on strike on Wednesday over demands for higher pay, while nurses are set to walk off the job on Thursday.On a monthly basis, prices rose 0.4 percent in November, easing the torrid pace of October when they climbed 2 percent in a single month because of higher energy costs, despite billions spent by the government to cap household gas and electric bills.Core inflation, which excludes energy and food prices, slowed to an annual rate of 6.3 percent, from 6.5 percent in October. Economists had expected core inflation to hold steady, according to a survey by Bloomberg. A slowdown in transportation prices, particularly for fuel, as well as clothing and recreation services, all contributed to the lower overall inflation rate, while rising prices in restaurants and for groceries partially offset that. Food and drink prices climbed 16.4 percent in November from a year earlier.As a whole, Wednesday’s inflation data are “undoubtedly welcome,” Sandra Horsfield, an economist at Investec, wrote in a note. But “at 10.7 percent consumer price inflation is still running well ahead of average income growth, causing pain that households can readily attest to.”“There is still a long way to go before the all-clear on inflation can be sounded,” she added.The deceleration in the overall inflation rate will be encouraging for Bank of England policymakers who have sharply raised interest rates to try to tamp down inflation. Inflation also slowed more than expected in the United States, data released on Tuesday showed.But this isn’t enough for central bankers to declare victory, as they target a 2 percent inflation rate. Policymakers want to ward against the risk that high inflation lingers for years to come. They are alert to how much businesses pass on price increases to customers and how much wages rise in response to the higher cost of living and a tight labor market.Data published on Tuesday showed that average pay in Britain, excluding bonuses, rose an annual rate of 6.1 percent in the three months to October. Even though that’s slower than the rate of inflation, policymakers argue that this pickup in wages is still too high to be sure inflation can sustainably return to target. On Thursday, Bank of England policymakers are expected to raise interest rates for a ninth consecutive time, to 3.5 percent from 3 percent. The half-point increase is expected to match rate changes by the Federal Reserve on Wednesday and the European Central Bank on Thursday. All three central banks are expected to decelerate from previous increases in interest rates of three-quarters of a point.Policymakers are expected to slow the pace of rate increases as they assess the impact of months of tighter monetary policy in damping economic demand to squash inflationary pressures. In Britain, the central bank’s rising benchmark rate, which has climbed from 0.1 percent a year ago, has already led to a notable increase in mortgage rates, with millions of households facing sharp increases in payments next year, and house prices falling.While the inflation outlook is uncertain, the Bank of England predicts that the rate of price increases will slow sharply from the middle of next year as past jumps in energy prices drop out of the annual calculations.But the cost of high inflation won’t fall away so quickly. The British economy is likely already in a recession that the central bank predicts to last all through next year. Household finances will be under “significant pressure” from below-inflation wage gains, higher mortgage costs and an expected increase in unemployment, according to a financial stability report by the Bank of England published on Tuesday.The Joseph Rowntree Foundation, a nonprofit, said on Wednesday that more than seven million households were “going without essentials,” which meant they had reported going hungry or skipping meals or didn’t have adequate clothing, based on a survey. Just under five million households were said to be in arrears on at least one household bill.“I know it is tough for many right now, but it is vital that we take the tough decisions needed to tackle inflation — the No. 1 enemy that makes everyone poorer,” Jeremy Hunt, the chancellor of the Exchequer, said in a statement in response to the inflation data on Wednesday. “If we make the wrong choices now, high prices will persist and prolong the pain for millions.”This tough stance comes as government ministers have been embroiled in debates with unions over improving pay offers following a long history of below-inflation wages. Recently a large gulf has opened up between pay growth in the private and public sectors. Before accounting for inflation, private-sector pay rose at an annual rate of 6.9 percent in the three months to October, but just 2.7 percent for workers in the public sector, data published on Tuesday showed.Pat Cullen, the chief executive of the Royal College of Nurses, the union whose members will go on strike on Thursday and again next week, accused the government of “belligerence” as talks broke down. More