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    Biden Student Loan Plan Squarely Targets Middle Class

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    President Biden is offering what independent analysts suggest would be his most targeted assistance yet to middle-class workers — while trying to repair what he casts as a broken bridge to the middle class.WASHINGTON — The big winners from President Biden’s plan to forgive hundreds of billions of dollars in student loans are not rich graduates of Harvard and Yale, as many critics claim.In fact, the benefits of Mr. Biden’s proposals will largely go to the middle class. According to independent analyses, the people eligible for debt relief are disproportionately young and Black. And they are concentrated in the middle band of Americans by income, defined as households earning between $51,000 and $82,000 a year.The Education Department estimates that nearly 90 percent of affected borrowers earn $75,000 a year or less. Ivy League graduates make up less than 1 percent of federal student borrowers nationwide.Economists say the full scope of Mr. Biden’s plan, including significant changes meant to reduce the payments that millions of borrowers will make for years to come, will help middle-income earners from a wide range of schools and backgrounds.“You’ll have a lot more people who are making zero payments and will have significant loan forgiveness in the future,” said Constantine Yannelis, an economist at the University of Chicago’s Booth School of Business. “The relief to borrowers is going to be more targeted to the people who really need it.”Yet despite the appeal of such debt relief, the program still has set off a contentious debate as economists and political figures assess the full consequences of the plan. By some estimates, it will cost as much as a half-trillion dollars over the course of a decade, imposing a future burden on American taxpayers.The plan also could encourage colleges to raise tuition even faster than they already are. Schools could try to persuade borrowers to take on as much debt as possible to cover higher tuition, with the belief that the federal government would help pay it back.Some conservative and Democratic economists also say the program could add significantly to what is already the highest inflation rate in four decades. Evidence suggests those claims are overstated, however, and American shoppers are not likely to see prices spike because of the program.The announcements Mr. Biden made, including both debt forgiveness and a restart next year of loan payments for all borrowers after a nearly three-year pause, will most likely be a wash for consumer prices, a wide range of economists say.“Debt forgiveness that lowers monthly payments is slightly inflationary in isolation,” analysts from Goldman Sachs wrote in a research note on Thursday, “but the resumption of payments is likely to more than offset this.”What to Know About Student Loan Debt ReliefCard 1 of 5What to Know About Student Loan Debt ReliefMany will benefit. More

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    Pace of Climate Change Sends Economists Back to Drawing Board

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    Economists have been examining the impact of climate change for almost as long as it’s been known to science.In the 1970s, the Yale economist William Nordhaus began constructing a model meant to gauge the effect of warming on economic growth. The work, first published in 1992, gave rise to a field of scholarship assessing the cost to society of each ton of emitted carbon offset by the benefits of cheap power — and thus how much it was worth paying to avert it.Dr. Nordhaus became a leading voice for a nationwide carbon tax that would discourage the use of fossil fuels and propel a transition toward more sustainable forms of energy. It remained the preferred choice of economists and business interests for decades. And in 2018, Dr. Nordhaus was honored with the Nobel Memorial Prize in Economic Sciences.But as President Biden signed the Inflation Reduction Act with its $392 billion in climate-related subsidies, one thing became very clear: The nation’s biggest initiative to address climate change is built on a different foundation from the one Dr. Nordhaus proposed.Rather than imposing a tax, the legislation offers tax credits, loans and grants — technology-specific carrots that have historically been seen as less efficient than the stick of penalizing carbon emissions more broadly.The outcome reflects a larger trend in public policy, one that is prompting economists to ponder why the profession was so focused on a solution that ultimately went nowhere in Congress — and how economists could be more useful as the damage from extreme weather mounts.A central shift in thinking, many say, is that climate change has moved faster than foreseen, and in less predictable ways, raising the urgency of government intervention. In addition, technologies like solar panels and batteries are cheap and abundant enough to enable a fuller shift away from fossil fuels, rather than slightly decreasing their use.Robert Kopp, a climate scientist at Rutgers University, worked on developing carbon pricing methods at the Department of Energy. He thinks the relentless focus on prices, with little attention paid to direct investments, lasted too long.“There was an idealization and simplification of the problem that started in the economics literature,” Dr. Kopp said. “And things that start out in the economics literature have half-lives in the applied policy world that are longer than the time period during which they’re the frontier of the field.”Carbon taxes and emissions trading systems have been instituted in many places, such as Denmark and California. But a federal measure in the United States, setting a cap on carbon emissions and letting companies trade their allotments, failed in 2010.What’s in the Inflation Reduction ActCard 1 of 8What’s in the Inflation Reduction ActA substantive legislation. More

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    Economic Aid, Once Plentiful, Falls Off at a Painful Moment

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    Food insecurity is rising again as relief provided by President Biden’s $1.9 trillion stimulus package wanes.PORTLAND, Ore. — For the better part of last year, the pandemic eased its grip on Oregon’s economy. Awash in federal assistance, including direct checks to individuals and parents, many of the state’s most vulnerable found it easier to afford food, housing and other daily staples.Most of that aid, which was designed to be a temporary bridge, has run out at a particularly bad moment. Oregon, like states across the nation, has seen its economy improve, but prices for everything from eggs to gas to rent have spiked. Demand is growing at food banks like William Temple House in Northwest Portland, where the line for necessities like bread, vegetables and toilet paper stretched two dozen people deep on a recent day.“I’m very worried, like I was in the first month of the pandemic, that we will run out of food,” said Susannah Morgan, who runs the Oregon Food Bank, which helps supply William Temple House and 1,400 other meal assistance sites.In March 2021, President Biden signed into law a $1.9 trillion aid package aimed at helping people stay afloat when the economy was still reeling from the coronavirus. In addition to direct checks, the package included rental assistance and other measures meant to prevent evictions. It ensured free school lunches and offered expanded food assistance through several programs.Those programs helped the U.S. economy recover far more quickly than many economists had expected, but they have run their course as prices soar at the fastest pace in 40 years. The Federal Reserve, in an attempt to tame inflation, is rapidly raising borrowing costs, slowing the economy’s growth and stoking fears of a recession. While the labor market remains remarkably strong, the Fed’s interest rate increases risk slamming the brakes on the economy and pushing millions of people out of work, which would hurt lower-wage workers and risk adding to evictions and food insecurity.Several factors have driven prices higher in the last year, including a shift in spending toward goods like couches and cars and away from services. Supply chain snarls, a buying frenzy in the housing market and an oil price spike surrounding the Russian invasion of Ukraine have also contributed. While gas prices have fallen in recent months, rent continues to rise, and food and other staples remain elevated.Another factor fueling inflation, at least in small part, is the stimulus spending that helped speed the economy’s recovery and keep people out of poverty. More money in people’s bank accounts translated into more consumer spending.While the extent to which the rescue package fed inflation remains a matter of disagreement, almost no one, in Washington or on the front lines of helping vulnerable people across the country, expects another round of federal aid even if the economy tips into a recession. Lawmakers have grown increasingly concerned that more stimulus could exacerbate rising prices.In the meantime, the progress that the Biden administration hailed in fighting poverty last year has faded. The national child poverty rate and the food hardship rate for families with children, which dipped in 2021, have both rebounded to their highest levels since December 2020, according to researchers at Columbia University’s Center on Poverty and Social Policy. Two in five Americans surveyed by the Census Bureau at the end of July said they had difficulty paying a usual household expense in the previous week, the highest rate in two years of the survey.What is happening at the William Temple House is emblematic of the economic situation. Demand for food is swelling again, and officials here blame rising prices and lost federal aid. The people seeking help come from a wide variety of backgrounds: parents, retirees struggling to stretch Social Security benefits, immigrants who speak Mandarin, college graduates with jobs.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    Retailers Stumble Adjusting to More Selective Shoppers

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    In earnings reports this week, companies showed it has been a struggle to adapt to a consumer mind-set that is vastly different from what it was during much of the pandemic.This hasn’t been the year retailers planned for.After two years of navigating the pandemic — which brought record online sales and shoppers willing to buy all manners of items, to the point that the global supply chain became strained — executives knew a new normal would take shape.Sales might slow, the thinking went, but people would still want TVs, fashionable dresses and throw pillows. So, with supply chain issues in mind, companies stocked up. But this spring it became clear that those items weren’t selling quickly enough. As people watched the prices of food and gas rise, their spending became more selective, leaving retailers with shelves of inventory they couldn’t get rid of.The magnitude of the miscalculation was crystallized this week in a batch of quarterly earnings from major retailers like Walmart and Target, which showed a mix of declining sales of discretionary goods and lower profits. A number revised their guidance, lowering expectations for both sales and profits for the rest of the year. A glut of inventory weighed on companies’ balance sheets: Inventory at Walmart rose 25 percent from this time last year. At Target, it increased 36 percent. And Kohl’s said inventory was up 48 percent. “Since our last earnings call in May, a weakening environment, high inflation and dampened consumer spending are having broad implications across much of retail, especially in discretionary categories like apparel,” Michelle Gass, the chief executive of Kohl’s, said on a call with analysts. “Given our penetration in these categories, this is disproportionately impacting Kohl’s.”Taken together, the results show that the robust sales retailers grew accustomed to during the course of the pandemic have ceased — and the consumer landscape that awaits may be more austere than what they prepared for. (There were exceptions. Home Depot, for instance, said sales were still strong, driven by home improvement projects.) On earnings calls, executives said lower- to middle-income consumers were the most hesitant to spend. Stores are responding by pushing more discounts and highlighting private-label brand to shoppers, and, in some cases, canceling billions of dollars’ worth of orders with vendors. It remains to be seen which strategies will be most effective.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    As Soaring Prices Roil Britain, Its Leader Vacations and a Likely Successor Sidesteps the Issue

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    Britain is facing multiple economic shocks, from soaring energy prices to the hollowing out of the labor market by Brexit. But these issues seem disconnected from the fight to replace Boris Johnson.LONDON — The last time Britain suffered double-digit inflation, in 1982, Margaret Thatcher was prime minister, the nation was about to go to war with Argentina over the Falkland Islands, nurses and miners went on strike, and Prince William was born to Prince Charles and his wife, Princess Diana.This week, Britain is again in upheaval, with an inflation rate of 10.1 percent in July, a looming recession and a Conservative Party in the throes of a rancorous campaign to choose a new leader. If, as expected, Liz Truss is elected next month, she would take power during a period of economic stress comparable to what Thatcher confronted. And yet the multiple shocks Britain faces — from soaring energy prices because of the war in Ukraine, supply-chain disruptions after the coronavirus pandemic, and the hollowing out of the British labor market by Brexit — seem strangely disconnected from the contest to replace Prime Minister Boris Johnson.The untethered nature of the campaign is all the more striking because Britain is faring worse economically than its major European neighbors, not to mention the United States. Stagflation, another bleak relic of Thatcher’s early years, seems likely to haunt whoever succeeds Mr. Johnson.Ms. Truss, the foreign secretary, has stuck to an agenda focused on cutting taxes, which could aggravate rather than help solve those problems. Her goal is to appeal to the affluent, older Conservative Party members who choose the leader — a strategy that has helped her amass a so-far-unassailable lead over her opponent, Rishi Sunak, the former chancellor of the Exchequer. In polls of party members, Ms. Truss has an advantage over Mr. Sunak of between 22 and 38 percentage points.Liz Truss, the foreign secretary and a Conservative candidate for prime minister, campaigning last week in Cheltenham.Neil Hall/EPA, via Shutterstock“The whole campaign has been conducted in this bubble of unreality,” said Tim Bale, a professor of politics at Queen Mary, University of London. He blamed the problem in part on the news media, which he said had failed to pin down the candidates on how they would confront inflation.“There’s also a degree of fatalism about the crisis,” Mr. Bale added. “It’s put down to external events, and — by some — to the Bank of England’s tardy response.”The blinkered nature of the debate, analysts say, also reflects the peculiarities of the British political system. Only rank-and-file members of the Conservative Party can vote for the next leader, a constituency estimated at around 160,000 people. Older, whiter, and wealthier than most Britons, these voters are far less vulnerable to the ravages of a cost-of-living crisis than the broader population. To this rarefied slice of the electorate, Ms. Truss’ promise of tax cuts is more alluring than stark warnings that Britain needs to batten down the hatches before an approaching storm.Mr. Johnson, for his part, is on vacation in Greece, having skipped the chance to hold a crisis meeting with his would-be successors, as George W. Bush famously did during the presidential campaign in 2008, when he summoned Barack Obama and John McCain to the White House to discuss an emergency plan to confront the financial crisis.Pedestrians walked past shuttered retail stores on Oxford Street in central London on Tuesday.Andy Rain/EPA, via Shutterstock“It is pathetic that we have a government in which the leader is on a paid holiday, while the candidates to succeed him are just talking about pure nonsense,” said Jonathan Portes, a professor of economics and public policy at Kings College London. “The only person who seems to be thinking seriously about this is Gordon Brown.”Mr. Brown, a former Labour prime minister who led Britain’s response to the 2008 crisis, wrote recently that Mr. Johnson and the two candidates should agree on an emergency budget to cushion the blow of looming fuel price increases. Otherwise, he said, they would risk consigning “millions of vulnerable and blameless children and pensioners to a winter of dire poverty.”The inflation data, Mr. Portes said, showed that Britain was suffering from the “worst of both worlds.” It has been hit by the soaring fuel prices that have afflicted other European countries. The European Union said on Thursday that inflation in the 19 countries that use the euro rose to a record 8.9 percent in July. But it was lower in France, where the government has capped fuel prices.Britain also has the acute post-Covid labor market shortages that have plagued the United States, putting pressure on wages. In Britain’s case, those shortages have been aggravated by Brexit, which has reduced the influx of migrant workers from elsewhere in Europe.Ms. Truss has pledged aid to people who will be hard hit by the next planned increase in household fuel bills, in October, though she has refused to be drawn out on what such a package would look like. She has also raised the prospect of reviewing the anti-inflation mandate of the Bank of England, Britain’s central bank. It has come under fire in recent days for failing to act quickly enough to stem spiraling prices.Rishi Sunak, the other candidate to lead the Conservative Party, spoke during a campaign event last week in Cheltenham.Toby Melville/ReutersThe bank recently hiked interest rates sharply, and it is expected to double them again in the next six months. Yet the bank predicts that inflation will keep rising until it peaks at 13.2 percent in October, while it forecasts that a tighter money supply will plunge the economy into a recession that it says will last through 2023.Mr. Sunak also holds out the promise of lower taxes, though he argues that the government must tame inflation before it passes tax cuts. He has accused his opponent of fairy-tale economics. Ms. Truss counters that swift tax cuts will stimulate commercial activity and offer the surest path out of the economic wilderness.Economists, however, warn that cutting taxes would further strain Britain’s public services, most notably the National Health Service, which is already frayed after the pandemic.“It is hard to square the promises that both Ms. Truss and Mr. Sunak are making to cut taxes over the medium term with the absence of any specific measures to cut public spending and a presumed desire to manage the nation’s finances responsibly,” said Carl Emmerson, the deputy director of the Institute for Fiscal Studies, a research organization that just published a report on the government’s deteriorating finances.On Wednesday, as the new inflation numbers were announced, Ms. Truss was in Belfast, vowing to pass legislation on trade in Northern Ireland that is likely to ignite a new round of post-Brexit tensions with the European Union.Other than its effect on Northern Ireland, the role of Brexit in Britain’s woes is also largely absent from the campaign. Both candidates are appealing to the Brexiteer wing of the Conservative Party, especially Ms. Truss, who opposed the 2016 referendum to leave the European Union, but now displays the fervor of a convert.Prime Minister Boris Johnson, left, attempted to talk to a worker who spoke no English, as he helped to pack broccoli during a visit to a farm in southwest England in June. Brexit has caused a hollowing out of the British labor market.Justin Tallis/Agence France-Presse, via Pool/Afp Via Getty ImagesIn truth, there is lively debate among economists about how much Britain’s inflation can be blamed on Brexit. Mr. Portes said it was not a key driver but has “increased pressure on the margins” by worsening labor shortages, depressing the value of the pound, and raising the costs of imports, owing to customs paperwork.Adam Posen, an American economist who once served as an external member of the Bank of England’s Monetary Policy Committee, estimated in May that 80 percent of Britain’s inflation could be blamed on Brexit, mainly because of the loss of European migrant labor. This week, he stood by his aggressive claim.“Events have sadly played out about how I and others forecast,” Mr. Posen said. More

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    It Was the Housing Crisis Epicenter. Now the Sun Belt Is an Inflation Vanguard.

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    A.J. Frank watched the Phoenix real estate market and its entire economy implode as he was graduating from high school in 2009, a scarring experience that has made him a cautious saver. He is again living through a major economic upheaval as the cost of living climbs sharply.Phoenix — among the hardest-hit cities during the housing crisis — is now on the leading edge of another painful economic trend as the United States faces the most rapid inflation in 40 years. The city is experiencing some of the fastest price increases in the nation, something Mr. Frank has felt firsthand.His landlord tried to raise his rent nearly 30 percent this year, prompting him to move. Mr. Frank, a 31-year-old engineer, is still paying $250 a month more than he was previously, and rising grocery and gas bills have reduced his disposable income.“It’s always traditionally been a pretty affordable city to live in, but it’s getting more expensive,” Mr. Frank said of Phoenix.While inflation has been rising quickly across the country, it is especially intense in Sun Belt cities like Phoenix, Atlanta, Miami and Tampa, which have experienced price increases well above 10 percent this year, much higher than the national rate of 8.5 percent in July. Prices in the Southern United States have risen 9.4 percent over the past year, the fastest pace of any large region in the nation and more rapid than in the Northeast, where prices are up 7.3 percent.Inflation Is Fastest in the SouthPrices have been increasing rapidly in cities including Atlanta, Tampa and Miami, even as Northeastern inflation has been more moderate.

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    Price Increase from Year Earlier
    Source: Bureau of Labor StatisticsBy The New York TimesPart of the divide can be traced to fuel and electricity costs, which surged earlier this year. Because many Sun Belt cities depend on cars and air-conditioning, those purchases make up a larger percentage of consumer budgets in the region. And, just as it did in 2008, housing is playing a crucial role — this time, through the rental market, which is a major contributor to overall inflation. In Phoenix, rents are up 21 percent from a year ago, and in Miami, they are up about 14 percent. For urban dwellers nationally, rent is up only about half as much, 6.3 percent.The Sun Belt’s intense bout of inflation matters for several reasons. While inflation is painful everywhere, it is having a disproportionate impact on families in cities like Tampa Bay, where prices have shot up faster than in areas like New York City. Demand at food banks and for eviction counselors has jumped across the region, providers said, as signs of that distress manifest.And as in 2008, the Sun Belt could serve as a sort of bellwether. Inflation is showing early signs of moderating nationwide, with price increases slowing to 8.5 percent in the year through July, from 9.1 percent the previous month. Still, the same forces that are now causing prices to surge across the South could keep inflation elevated for a longer period.That’s because a less-intense version of the rent surge that is pushing inflation higher across cities in the American south is beginning to play out in bigger cities in the Northeast and on the West Coast. Real-time market rent trackers that reported prices shooting up in Sun Belt cities last year are now showing bigger increases in places like New York, San Jose and Seattle.Inflation F.A.Q.Card 1 of 5Inflation F.A.Q.What is inflation? More

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    Falling Oil Prices Defy Predictions. But What About the Next Chapter?

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    Oil is under $90 a barrel, and consumers are benefiting. Geopolitics, the economy and unforeseen events will determine whether the relief will last.When Russia invaded Ukraine last spring, energy experts were predicting that oil prices could reach $200 a barrel, a price that would send the costs of shipping and transportation into the stratosphere and bring the global economy to its knees.Now oil prices are lower than they were when the war began, having dropped more than 30 percent in barely two months. On Monday, news of a slowing Chinese economy and a cut in Chinese interest rates sent prices down further, to less than $90 a barrel for the American benchmark.Gasoline prices have fallen every day over the last nine weeks, to an average of less than $4 nationwide, and prices of jet fuel and diesel are easing as well. That should translate eventually to lower prices for things as diverse as food and airline tickets.But it would be premature to celebrate. Energy prices can spike as easily as they can plummet, unexpectedly and suddenly.China, where Covid-19 lockdowns remain widespread, will eventually reopen its cities to more commerce and traffic, increasing demand. Withdrawals of oil from the U.S. Strategic Petroleum Reserve will end in November, and it will need to be refilled. And a single unexpected event — say, a hurricane flooding the Houston Ship Channel and taking several Gulf of Mexico refineries out of commission for weeks or even months — could send fuel prices soaring.That sort of catastrophe could send tidal waves though the American and even global economy since energy prices are fundamental to the prices of everything that is shipped and produced, whether it be grain or building supplies.Down from recent peaks, oil prices remain highPrice of West Texas Intermediate crude oil

    Source: FactSetBy The New York Times“Oil prices always have the capacity to surprise,” said Daniel Yergin, the energy historian and author of “The New Map: Energy, Climate and the Clash of Nations.” Prices could ease further if Iran agrees to a new draft nuclear agreement after it backed off from its demand that the Islamic Revolutionary Guards be removed from the U.S. terrorism list, opening a potential spigot of at least one million more barrels a day of Iranian petroleum exports.In addition, the prospect of a continuing increase in interest rates has many investors and economists predicting a recession — and a reduction in demand — even though unemployment is low and profits remain resilient.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

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    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