Inflation (Economics)

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    Harris and Trump Offer a Clear Contrast on the Economy

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    Both candidates embrace expansions of government power to steer economic outcomes — but in vastly different areas.Vice President Kamala Harris and former President Donald J. Trump flew to North Carolina this week to deliver what were billed as major speeches on the economy. Neither laid out a comprehensive policy plan — not Ms. Harris in her half-hour focus on housing, groceries and prescription drugs, nor Mr. Trump in 80 minutes of sprinkling various proposals among musings about dangerous immigrants.But in their own ways, both candidates sent voters clear and important messages about their economic visions. Each embraced a vision of a powerful federal government, using its muscle to intervene in markets in pursuit of a stronger and more prosperous economy.They just disagreed, almost entirely, on when and how that power should be used.In Raleigh on Friday, Ms. Harris began to put her own stamp on the brand of progressive economics that has come to dominate Democratic politics over the last decade. That economic thinking embraces the idea that the federal government must act aggressively to foster competition and correct distortions in private markets.The approach seeks large tax increases on corporations and high earners, to fund assistance for low-income and middle-class workers who are struggling to build wealth for themselves and their children. At the same time, it provides big tax breaks to companies engaged in what Ms. Harris and other progressives see as delivering great economic benefit — like manufacturing technologies needed to fight global warming, or building affordable housing.That philosophy animated the policy agenda that Ms. Harris unveiled on Friday. She pledged to send up to $25,000 in down-payment assistance to every first-time home buyer over four years, while directing $40 billion to construction companies that build starter homes. She said she would permanently reinstate an expanded child tax credit that President Biden temporarily established with his 2021 stimulus law, while offering even more assistance to parents of newborns.She called for a federal ban on corporate price gouging on groceries and for new federal enforcement tools to punish companies that unfairly push up food prices. “My plan will include new penalties for opportunistic companies that exploit crises and break the rules,” she said, adding: “We will help the food industry become more competitive, because I believe competition is the lifeblood of our economy.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Kamala Harris Blames ‘Price Gouging’ for Grocery Inflation. Here’s What Economists Say.

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    Price increases when demand exceeds supply are textbook economics. The question is whether, and how much, the pandemic yielded an excess take.In detailing her presidential campaign’s economic agenda, Vice President Kamala Harris will highlight an argument that blames corporate price gouging for high grocery prices.That message polls well with swing voters. It has been embraced by progressive groups, which regularly point to price gouging as a driver of rapid inflation, or at least something that contributes to rapid price increases. Those groups cheered the announcement late Wednesday that Ms. Harris will call for a federal ban on corporate price gouging on groceries in an economic policy speech on Friday.But the economic argument over the issue is complicated.Economists have cited a range of forces for pushing up prices in the recovery from the pandemic recession, including snarled supply chains, a sudden shift in consumer buying patterns, and the increased customer demand fueled by stimulus from the government and low rates from the Federal Reserve. Most economists say those forces are far more responsible than corporate behavior for the rise in prices in that period.Biden administration economists have found that corporate behavior has played a role in pushing up grocery costs in recent years — but that other factors have played a much larger one.The Harris campaign announcement cited meat industry consolidation as a driver of excessive grocery prices, but officials did not immediately respond on Thursday to questions about the evidence Ms. Harris would cite or how her proposal would work.There are examples of companies telling investors in recent years that they have been able to raise prices to increase profits. But even the term “price gouging” means different things to different people.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    How Food Prices Have Changed During the Biden Administration

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    Grocery prices are no longer rising as rapidly, but food inflation remains a top issue for voters, polls show.A central issue has plagued the Biden administration for most of its term: the steep rise in grocery prices.Polls have consistently found that inflation remains a top concern for voters, who have seen their budgets squeezed. A YouGov poll published last month found that 64 percent of Americans said inflation was a “very serious problem.” And when it comes to inflation, several surveys suggested that Americans were most concerned about grocery prices.Despite the gloom about grocery costs, food price increases have generally been cooling for months. On Wednesday, new data on inflation for July will show if the trend has continued.Economists in a Bloomberg survey think that inflation overall probably climbed by 3 percent from a year earlier, in line with a 3 percent rise in June. That sort of reading would probably keep officials at the Federal Reserve on track to cut interest rates in September. Investors, who were recently rattled by signs of an economic slowdown, have looked to rate cuts as a support for markets.Some voters have blamed President Biden for rising prices, pointing out that food costs have soared over the past four years. Former President Donald J. Trump, when accepting the Republican nomination last month, highlighted grocery costs and said that he would “make America affordable again.”In the year through June, grocery prices rose 1.1 percent, a significant slowdown from a recent peak of 13.5 percent in August 2022. Many consumers might not be feeling relief, though, because food prices overall have not fallen but have continued to increase, albeit at a slower rate. Compared with four years ago, grocery prices are up about 20 percent.

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    Annual change in grocery prices for U.S. consumers
    Year-over-year change in average for “food at home” index, not seasonally adjusted.Source: Bureau of Labor StatisticsBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Rate Cuts Are Expected Soon, as Inflation Cools. But Will They Be Early Enough to Avoid a Recession?

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    The Federal Reserve was about to cut interest rates, turning the corner after a long fight with inflation. But now, its soft landing is in question.The Federal Reserve’s fight against inflation was going almost unbelievably well. Price increases were coming down. Growth was holding up. Consumers continued to spend. The labor market was chugging along.Policymakers appeared poised to lower interest rates — just a little — at their meeting on Sept. 18. Officials did not need to keep hitting the brakes on growth so much, as the economy settled into a comfortable balance. It seemed like central bankers were about to pull off a rare economic soft landing, cooling inflation without tanking the economy.But just as that sunny outcome came into view, clouds gathered on the horizon.The unemployment rate has moved up meaningfully over the past year, and a weak employment report released last week has stoked concern that the job market may be on the brink of a serious cool-down. That’s concerning, because a weakening labor market is usually the first sign that the economy is careening toward a recession.The Fed could still get the soft landing it has been hoping for — weekly jobless claims fell more than expected in fresh data released on Thursday, a minor but positive development. Stocks rallied in the wake of that report, with the S&P 500 rising 2.3 percent by the end of the day.Given the possibility that everything will turn out fine, central bank officials are not yet ready to panic. During an event on Monday, Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, suggested that officials were closely watching the job market to try to figure out whether it was cooling too much or simply returning to normal after a few roller-coaster years.“We’re at the point of — is the labor market slowing a lot, or slowing a little?” Ms. Daly said, as she pointed to one-off factors that could have muddled the latest report, like Hurricane Beryl and a recent inflow of new immigrant workers that left more people searching for jobs.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Suggests that President Should Have a ‘Say’ in Interest Rates

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    Donald J. Trump suggested presidents should have input on interest rates, a comment likely to stoke fears that he could try to limit the Federal Reserve’s political independence.Donald J. Trump suggested on Thursday that the president should have a say in setting interest rates — a comment that could rekindle fears that the Republican nominee might try to influence the politically independent Federal Reserve if he is re-elected to the White House.“I feel that the president should have at least say in there, yeah, I feel that strongly,” Mr. Trump said at a news conference Thursday at his Mar-a-Lago club in Palm Beach, referring to the rate-setting process. “I think I have a better instinct than, in many cases, people that would be on the Federal Reserve, or the chairman.”Mr. Trump made a habit of loudly criticizing Fed policy while he was in office, often personally attacking Jerome H. Powell, the Fed chair.Mr. Trump elevated Mr. Powell to his leadership position, to which President Biden has since reappointed him. But Mr. Powell angered Mr. Trump by keeping interest rates higher than he would have preferred. Mr. Trump responded by calling the Fed chair and his colleagues “boneheads” and at another point asking in a social media post who was a bigger “enemy,” Mr. Powell or Xi Jinping, China’s president.Mr. Trump acknowledged that history of animosity on Thursday, saying that he “used to have it out with him.”While Mr. Trump flirted with the idea of firing Mr. Powell during his time in the Oval Office, it is not clear whether it would be legal to dismiss or demote a sitting Fed chair. In the end, Mr. Trump never tried it. Still, there have been big questions about what might await the Fed if Mr. Trump were to win re-election. Mr. Powell’s term as chair runs to mid-2026.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Stock Markets Signal Recession Fears. Here’s the Economic Outlook.

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    The economy has repeatedly defied predictions of a downturn since the pandemic recovery began. Now signs of strength contend with shakier readings.The U.S. economy has spent three years defying expectations. It emerged from the pandemic shock more quickly and more powerfully than many experts envisioned. It proved resilient in the face of both inflation and the higher interest rates the Federal Reserve used to combat it. The prospect many forecasters once considered imminent — a recession — looked increasingly like a false alarm.Until now.An unexpectedly weak jobs report on Friday — showing slower hiring in July, and a surprising jump in unemployment — triggered a sell-off in the stock market as investors worried that an economic downturn might be underway after all. By Monday, that decline had turned into a rout, with financial markets tumbling around the world.

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    The number of jobs added in July was the second smallest monthly gain in years.
    Note: Data is seasonally adjustedSource: Bureau of Labor StatisticsBy The New York Times

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    The unemployment rate in July rose to the highest level since October 2021.
    Note: Data is seasonally adjustedSource: Bureau of Labor StatisticsBy The New York TimesSome economists said investors were overreacting to one weak but hardly disastrous report, since many indicators show the economy on fundamentally firm footing.But they said there were also reasons to worry. Historically, increases in joblessness like the one in July — the unemployment rate rose to 4.3 percent, the highest since 2021 — have been a reliable indicator of a recession. And even without that precedent, there has been evidence that the labor market is weakening.

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    The Sahm Rule indicator suggests a recession might have already begun.
    Data is seasonally adjusted and shows the change in the U.S. unemployment rate compared with the low point in the previous 12 months. All calculations based on three-month moving average.Source: Federal Reserve Bank of St. LouisBy The New York TimesWe are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed Will Scour Jobs Report for Signs of Weakness

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    Federal Reserve officials held off on cutting interest rates this week because they want slightly more data to feel confident that inflation is truly coming under control. But while that approach is cautious when it comes to price increases, it could prove to be risky when it comes to the labor market.High Fed interest rates help to cool inflation by slowing demand in the economy. When it costs more to borrow to buy a house or expand a business, people make fewer big purchases and companies hire fewer workers. As economic activity pulls back, businesses struggle to raise prices as quickly, and inflation moderates.But that chain reaction can come at a serious cost to the job market. And as inflation comes down, Fed policymakers are increasingly attuned to the risk that they might overdo it, tipping the economy into a severe enough slowdown that it pushes unemployment higher and leaves Americans out of work.Those concerns were not enough to prod central bankers to cut interest rates at their meeting this week. For now, Fed officials think that the ongoing slowdown in hiring and a recent tick up in joblessness signal that labor market conditions are returning to normal after a few years of booming hiring. But policymakers are sure to carefully watch the July jobs report set for release on Friday for any sign that labor conditions are cracking — and have been clear that they will be quick to react if they see evidence that the job market is taking a sudden and unexpected turn for the worse.“A broad set of indicators suggests that conditions in the labor market have returned to about where they stood on the eve of the pandemic,” Jerome H. Powell, the Fed chair, said during a news conference this week. He later added that “I would not like to see material further cooling in the labor market.”Mr. Powell said the Fed stood prepared to react if the labor market weakened more than expected.While the central bank is already widely expected to lower rates in September, economists think that officials could move them down faster than they otherwise might if the job market is cooling notably. In fact, investors expect the central bank to cut rates by three-quarters of a point — equivalent to three normal sized rate cuts — by the end of the year.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Productivity Surges 2.3%, Beating Forecasts

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    The NewsProductivity grew at a 2.3 percent annual rate in the second quarter, the U.S. Bureau of Labor Statistics reported on Thursday, surpassing economists’ expectations. The pickup was a major improvement upon the sluggish 0.4 percent rate in the first quarter. And on a yearly basis, productivity increased 2.7 percent. That far exceeds prepandemic averages.An assembly line at a car plant in Michigan in April.Bill Pugliano/Getty ImagesWhy It Matters: A key to prosperity.A highly productive economy generally means businesses and workers are operating efficiently, making more money in fewer hours. In the second quarter, production was up 3.3 percent, while hours worked rose 1 percent.On a less technical level, productivity is best explained by the old axiom of “doing more with less” or the folksy virtue of “getting the biggest bang for your buck.”Economists tend to sigh with relief when they see productivity gains because it offers a potential “win-win” for workers, customers and business owners: If businesses can make more money in fewer work hours, then — according to basic economic logic — they can presumably make more dollars per hour, while also reinvesting and giving workers raises, without sacrificing profits.Being able to make more with less (or with the same amount of labor and machinery) also means businesses may not feel as much pressure to set higher prices to push profits. That, too, is welcome news after a yearslong bout of inflation.Facts to Keep in Mind: A volatile indicator.Productivity, at a basic level, is calculated as a simple ratio: the total amount of output an economy produces per hour worked by its labor force. But the output side of the equation is adjusted for inflation on a quarterly basis. That can cause volatility, in both directions.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More