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    The Latest on Food Prices

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    The Latest on Food PricesNelson D. SchwartzReporting on economicsPrices of meat, poultry, fish and eggs in U.S. cities are up 15 percent since the start of 2020, according to the Bureau of Labor Statistics. Steak, ground beef for hamburger, and turkey are especially costly. The increases are due to supply chain shortages and higher labor costs and there is little relief in sight. In fact, some economists think prices could rise even more, given the increase in energy prices. More

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    Higher Food Prices Hit the Poor and Those Who Help Them

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    Many households are being forced to adjust their shopping lists or seek assistance. But food banks, too, are feeling the pinch.With food prices surging, many Americans have found their household budgets upended, forcing difficult choices at the supermarket and putting new demands on programs intended to help.Food banks and pantries, too, are struggling with the increase in costs, substituting or pulling the most expensive products, like beef, from offerings. What’s more, donations of food are down, even as the number of people seeking help remains elevated.Even well-off Americans have noticed that many items are commanding higher prices, but they can still manage. It’s different for people with limited means.“Any time someone is low income, that means they’re spending a higher percentage on needs like food and housing,” said Diane Whitmore Schanzenbach, director of the Institute for Policy Research at Northwestern University. “When prices go up, they have less slack in their budgets to offset and they are quick to fall into hardship.”Before the run-up in prices — driven by supply-chain knots and rising labor costs — Robin Mueller would buy ground beef for meatloaf or hamburgers to serve once or twice a week for her family in Indianapolis. Now she can afford to cook it only once or twice a month.“You have to pick and choose,” said Ms. Mueller, who is 52 and disabled and lives with her daughter and her husband. “Before, you didn’t have to do that. You could just go in and buy a week or two’s worth of food. Now I can barely buy a week’s worth.”She has turned to food banks in Indianapolis for help, but they, too, are feeling the pinch.A case of peanut butter that was $13 to $14 before the pandemic now costs $16 to $19, according to Alexandra McMahon, director of food strategy for the Gleaners Food Bank of Indianapolis. Green beans that used to retail for $9 a case now sell for $14.“It has a big impact,” said Joseph Slater, chief operating officer of Gleaners. “It’s on our minds and it’s on the minds of our hungry neighbors as well.”In New York, Tynicole Lewis and her daughter, Lanese, depend on food stamps, but Ms. Lewis said that the aid runs out well before the end of the month now. Lanese is diabetic and Ms. Lewis serves as much protein and vegetables as possible — foodstuffs that have become especially pricey.“Food is expensive, and when the food stamps are gone, they’re gone,” said Ms. Lewis, who lives on the Lower East Side of Manhattan and earns $12,000 a year as a grocery store worker. “I have to wait.”She, too, depends on food pantries and has given up buying meat for the most part. “I eat a lot from the pantry, whatever they get,” Ms. Lewis said. “I like fish and I’ll treat myself when I get the food stamps.”While overall consumer prices in September were up 5.4 percent from a year ago, the cost of meat is up slightly more than that. Prices of staples like dairy products, fruits, grains and oils are also rising.Prices of meat, poultry, fish and eggs in U.S. cities are up 15 percent since the start of 2020, according to the Bureau of Labor Statistics.The run-up in costs at the supermarket comes even as gasoline prices have risen and natural gas and heating oil prices are predicted to be higher this winter, putting further pressure on those with low incomes.In addition, the mammoth assistance programs rolled out by the federal government in response to the pandemic in 2020 have largely lapsed. While some households built up savings from government payments, others have little room for extra expenses.The forces behind higher food prices have been building for some time and aren’t going away anytime soon, said Michael Swanson, chief agricultural economist at Wells Fargo.“People are shocked, but this is a slow-motion train wreck,” he said. “The scary thing is that food companies haven’t passed along all of their costs yet.”The warehouse at the Gleaners Food Bank.Kaiti Sullivan for The New York TimesHigher transportation and warehousing expenses lead the list of causes, along with rising labor costs at meat processing centers and other nodes in the food supply chain.To be sure, there are some winners as a result of the cost squeeze. While meat prices are up sharply for consumers, prices for cattle and other livestock haven’t moved as much. The result is buoyant profits for beef processors, Mr. Swanson said.“This is not going to go backwards anytime soon,” he added. “As soon as producers and retailers get these price increases, they are very sticky.”Behind the scenes, logistics expenses have jumped even more sharply than prices for foodstuffs, along with the costs of unglamorous items that few gave much thought to a few years ago.Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

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    Persistent Inflation Threatens Biden's Agenda

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    Supply chain disruptions, a worker shortage and pain at the gasoline pump have made inflation an economic and political problem for the White House.WASHINGTON — At least once a week, a team of President Biden’s top advisers meet on Zoom to address the nation’s supply chain crisis. They discuss ways to relieve backlogs at America’s ports, ramp up semiconductor production for struggling automakers and swell the ranks of America’s truck drivers.The conversations are aimed at one goal: taming accelerating price increases that are hurting the economic recovery, unsettling American consumers and denting Mr. Biden’s popularity.An inflation surge is presenting a fresh challenge for Mr. Biden, who for months insisted that rising prices were a temporary hangover from the pandemic recession and would quickly recede. Instead, the president and his aides are now bracing for high inflation to persist into next year, with Americans continuing to see faster — and sustained — increases in prices for food, gasoline and other consumer goods than at any point this century.That reality has complicated Mr. Biden’s push for sweeping legislation to boost workers, expand access to education and fight poverty and climate change. And it is dragging on the president’s approval ratings, which could threaten Democrats’ already tenuous hold on Congress in the 2022 midterm elections.Recent polls shows Americans’ concerns over inflation are eroding their economic confidence and dimming their view of Mr. Biden’s performance. National surveys by CNBC and Fox News show a sharp decline in voter ratings of Mr. Biden’s overall performance and his handling of the economy, even though unemployment has fallen quickly on his watch and economic output has strengthened to its fastest rate since Ronald Reagan was president. Voter worry over price increases has jumped in the last month.Administration officials have responded by framing Mr. Biden’s push for what would be his signature spending bill as an effort to reduce costs that American families face, citing provisions to cap child care costs and expand subsidies for higher education, among other plans. And they have mobilized staff to scour options for unclogging supply chains, bringing more people back into the work force, and reducing food and gasoline costs by promoting more competition in the economy via executive actions.“There are distinct challenges from turning the economy back on after the pandemic that we are bringing together state and local officials, the private sector and labor to address — so that prices decrease,” Kate Berner, the White House deputy communications director, said in an interview.Mr. Biden’s top officials stress that the administration’s policies have helped accelerate America’s economic rebound. Workers are commanding their largest wage gains in two decades. Growth roared back in the first half of the year, fueled by the $1.9 trillion economic aid bill the president signed in March. America’s expansion continues to outpace other wealthy nations around the world.Inflation and shortages are the downside of that equation. Car prices are elevated as a result of strong demand and a lack of semiconductors. Gasoline has hit its highest cost per gallon in seven years. A shift in consumer preferences and a pandemic crimp in supply chains have delayed shipments of furniture, household appliances and other consumer goods. Millions of Americans, having saved up money from government support through the pandemic, are waiting to return to jobs, driving up labor costs for companies and food prices in many restaurants.Much of that is beyond Mr. Biden’s control. Inflation has risen in wealthy nations across the globe, as the pandemic has hobbled the movement of goods and component parts between countries. Virus-wary consumers have shifted their spending toward goods rather than services, travel and tourism remain depressed, and energy prices have risen as demand for fuel and electricity has surged amid the resumption of business activity and some weather shocks linked to climate change.But some economists, including veterans of previous Democratic administrations, say much of Mr. Biden’s inflation struggle is self-inflicted. Lawrence H. Summers is one of those who say the stimulus bill the president signed in March gave too much of a boost to consumer spending, at a time when the supply-chain disruptions have made it hard for Americans to get their hands on the things they want to buy. Mr. Summers, who served in the Obama and Clinton administrations, says inflation now risks spiraling out of control and other Democratic economists agree there are risks.“The original sin was an oversized American Rescue Plan. It contributed to both higher output but also higher prices,” said Jason Furman, a Harvard economist who chaired the White House Council of Economic Advisers under President Barack Obama.That has some important Democrats worried about price-related drawbacks from the president’s ambitious spending package, complicating Mr. Biden’s approach.President Biden has struggled to tell voters what he can do right away to counter several high-profile price spikes, like gasoline.An Rong Xu for The New York TimesSenator Joe Manchin III of West Virginia, a centrist, has repeatedly cited surging inflation in insisting that Mr. Biden scale back what had been a $3.5 trillion effort to expand the social safety net.Mr. Biden has tried to make the case that the investments in his spending bill will moderate price increases over time. But he has struggled to identify things he can do right away to ease the pain of high-profile price spikes, like gasoline. Some in his administration have pushed for mobilizing the National Guard to help unclog ports that are stacked with imports waiting to be delivered to consumers around the country. Mr. Biden has raised the possibility of tapping the strategic petroleum reserve to modestly boost oil supplies, or of negotiating with oil producers in the Middle East to ramp up.During a CNN town hall last week, Mr. Biden conceded the limits of his power, saying, “I don’t have a near-term answer” for bringing down gas prices, which he does not expect to begin dropping until next year.“I don’t see anything that’s going to happen in the meantime that’s going to significantly reduce gas prices,” he said.Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

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    Biden's Stimulus Is Stoking Inflation, Fed Analysis Suggests

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    Inflation is likely getting a temporary boost from the $1.9 trillion coronavirus relief package that the Biden administration ushered in early this year, new Federal Reserve Bank of San Francisco research released on Monday suggested.The analysis may add fuel to a hot debate in Washington over whether the administration’s policies are contributing to a spike in prices. Critics of the government spending package that was signed into law in March, including former Treasury Secretary Lawrence H. Summers, have said it was poorly targeted and risked overheating the economy. Supporters of the relief program have said it provided critical aid to workers and businesses still struggling through the pandemic.The new paper comes down somewhere in the middle, finding that the spending had some effect on inflation but suggesting that it is most likely to be temporary. The economists estimated that it would add 0.3 percentage points to the core Personal Consumption Expenditures inflation index in 2021 and “a bit more” than 0.2 percentage points in 2022. Core inflation strips out volatile items like food and fuel.While those numbers are significant, they are not what most people would consider “overheating” — the Fed aims for 2 percent inflation on average over time, and a few tenths of a percent here or there are not a reason for much alarm.But the result is only a rough estimate, one the researchers came up with to help inform an continuing political and economic debate.Both the Trump and Biden administrations signed trillions of dollars in virus relief spending into law. The packages included two bipartisan bills in 2020 that pumped more than $3 trillion into the economy, including direct checks to individuals and generous unemployment benefits. Another $1.9 trillion — called the American Rescue Plan — was passed this year by Democrats after they took control of both Congress and the White House.“The later timing and large size of the A.R.P. stirred debate about whether it is causing an overheating of the economy and fueling a sustained increase in inflation,” the San Francisco Fed researchers noted.The economists tried to answer that question by looking at how much spare capacity is in the economy using a labor market measure — the ratio of job openings to unemployment. The logic is that inflation tends to pick up when there is very little labor market slack, because businesses raise wages to attract workers and then raise prices to cover their climbing labor costs.Government stimulus can push up the number of job openings in the economy as it fuels demand while constraining the number of available workers because it gives would-be employees a financial cushion, allowing them to take their time as they search for a new job.Based on the package’s size and using historical evidence on how fiscal spending affects the labor market, the researchers found that the American Rescue Plan might raise the vacancy-to-unemployment ratio close to its historical peak in 1968, fueling some inflation — but that the price impact would be small and short-lived.U.S. Inflation & Supply Chain ProblemsCard 1 of 6Covid’s impact on supply continues. More

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    As Western Oil Giants Cut Production, State-Owned Companies Step Up

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    In the Middle East, Africa and Latin America, government-owned energy companies are increasing oil and natural gas production as U.S. and European companies pare supply because of climate concerns.HOUSTON — After years of pumping more oil and gas, Western energy giants like BP, Royal Dutch Shell, Exxon Mobil and Chevron are slowing down production as they switch to renewable energy or cut costs after being bruised by the pandemic.But that doesn’t mean the world will have less oil. That’s because state-owned oil companies in the Middle East, North Africa and Latin America are taking advantage of the cutbacks by investor-owned oil companies by cranking up their production.This massive shift could reverse a decade-long trend of rising domestic oil and gas production that turned the United States into a net exporter of oil, gasoline, natural gas and other petroleum products, and make America more dependent on the Organization of the Petroleum Exporting Countries, authoritarian leaders and politically unstable countries.The push by governments to increase oil and gas production means it could take decades for global fossil fuel supplies to decline unless there is a sharp drop in demand for such fuels. President Biden has effectively accepted the idea that the United States will rely more on foreign oil, at least for the next few years. His administration has been calling on OPEC and its allies to boost production to help bring down rising oil and gasoline prices, even as it seeks to limit the growth of oil and gas production on federal lands and waters.The administration’s approach is a function of two conflicting priorities: Mr. Biden wants to get the world to move away from fossil fuels while protecting Americans from a spike in energy prices. In the short run, it is hard to achieve both goals because most people cannot easily replace internal-combustion engine cars, gas furnaces and other fossil fuel-based products with versions that run on electricity generated from wind turbines, solar panels and other renewable sources of energy.Western oil companies are also under pressure from investors and environmental activists who are demanding a rapid transition to clean energy. Some U.S. producers have said they are reluctant to invest more because they fear oil prices will fall again or because banks and investors are less willing to finance their operations. As a result, some are selling off parts of their fossil fuel empires or are simply spending less on new oil and gas fields.That has created a big opportunity for state-owned oil companies that are not under as much pressure to reduce emissions, though some are also investing in renewable energy. In fact, their political masters often want these oil companies to increase production to help pay down debt, finance government programs and create jobs.Saudi Aramco, the world’s leading oil producer, has announced that it plans to increase oil production capacity by at least a million barrels a day, to 13 million, by the 2030s. Aramco increased its exploration and production investments by $8 billion this year, to $35 billion.“We are capitalizing on the opportunity,” Aramco’s chief executive, Amin H. Nasser, recently told financial analysts. “Of course we are trying to benefit from the lack of investments by major players in the market.”Aramco not only has vast reserves but it can also produce oil much more cheaply than Western companies because its crude is relatively easy to pump out of the ground. So even if demand declines because of a rapid shift to electric cars and trucks, Aramco will most likely be able to pump oil for years or decades longer than many Western energy companies.“The state companies are going their own way,” said René Ortiz, a former OPEC secretary general and a former energy minister in Ecuador. “They don’t care about the political pressure worldwide to control emissions.”State-owned oil companies in Kuwait, the United Arab Emirates, Iraq, Libya, Argentina, Colombia and Brazil are also planning to increase production. Should oil and natural gas prices stay high or rise further, energy experts say, more oil-producing nations will be tempted to crank up supply.The global oil market share of the 23 nations that belong to OPEC Plus, a group dominated by state oil companies in OPEC and allied countries like Russia and Mexico, will grow to 75 percent from 55 percent in 2040, according to Michael C. Lynch, president of Strategic Energy and Economic Research in Amherst, Mass., who is an occasional adviser to OPEC.If that forecast comes to pass, the United States and Europe could become more vulnerable to the political turmoil in those countries and to the whims of their rulers. Some European leaders and analysts have long argued that President Vladimir V. Putin of Russia uses his country’s vast natural gas reserves as a cudgel — a complaint that has been voiced again recently as European gas prices have surged to record highs.A pump jack in Stanton, Texas. American companies have been cautiously holding back exploration and production.Brandon Thibodeaux for The New York TimesOther oil and gas producers like Iraq, Libya and Nigeria are unstable, and their production can rise or fall rapidly depending on who is in power and who is trying to seize power.“By adopting a strategy of producing less oil, Western oil companies will be turning control of supply over to national oil companies in countries that could be less reliable trading partners and have weaker environmental regulations,” Mr. Lynch said.An overreliance on foreign oil can be problematic because it can limit the options American policymakers have when energy prices spike, forcing presidents to effectively beg OPEC to produce more oil. And it gives oil-producing countries greater leverage over the United States.“Today when U.S. shale companies are not going to respond to higher prices with investment for financial reasons, we are depending on OPEC, whether it is willing to release spare production or not,” said David Goldwyn, a senior energy official in the State Department in the Obama administration. He compared the current moment to one in 2000 when the energy secretary, Bill Richardson, “went around the world asking OPEC countries to release spare capacity to relieve price pressure.”This time, state-owned energy companies are not merely looking to produce more oil in their home countries. Many are expanding overseas.In recent months, Qatar Energy invested in several African offshore fields while the Romanian national gas company bought an offshore production block from Exxon Mobil. As Western companies divest polluting reserves such as Canadian oil sands, energy experts say state companies can be expected to step in.“There is a lot of low-hanging fruit state companies can pick up,” said Raoul LeBlanc, an oil analyst at IHS Markit, a consulting and research firm. “It is a huge opportunity for them to become international players.”Kuwait announced last month that it planned to invest more than $6 billion in exploration over the next five years to increase production to four million barrels a day, from 2.4 million now.This month, the United Arab Emirates, a major OPEC member that produces four million barrels of oil a day, became the first Persian Gulf state to pledge to a net zero carbon emissions target by 2050. But just last year ADNOC, the U.A.E.’s national oil company, announced it was investing $122 billion in new oil and gas projects.Iraq, OPEC’s second-largest producer after Saudi Arabia, has invested heavily in recent years to boost oil output, aiming to raise production to eight million barrels a day by 2027, from five million now. The country is suffering from political turmoil, power shortages and inadequate ports, but the government has made several major deals with foreign oil companies to help the state-owned energy company develop new fields and improve production from old ones.Even in Libya, where warring factions have hamstrung the oil industry for years, production is rising. In recent months, it has been churning out 1.3 million barrels a day, a nine-year high. The government aims to increase that total to 2.5 million within six years.National oil companies in Brazil, Colombia and Argentina are also working to produce more oil and gas to raise revenue for their governments before demand for oil falls as richer countries cut fossil fuel use.After years of frustrating disappointments, production in the Vaca Muerta, or Dead Cow, oil and gas field in Argentina has jumped this year. The field had never supplied more than 120,000 barrels of oil in a day but is now expected to end the year at 200,000 a day, according to Rystad Energy, a research and consulting firm. The government, which is considered a climate leader in Latin America, has proposed legislation that would encourage even more production.“Argentina is concerned about climate change, but they don’t see it primarily as their responsibility,” said Lisa Viscidi, an energy expert at the Inter-American Dialogue, a Washington research organization. Describing the Argentine view, she added, “The rest of the world globally needs to reduce oil production, but that doesn’t mean that we in particular need to change our behavior.” More

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    September Consumer Price Index: Inflation Rises

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    A key reading of consumer prices jumped more than expected last month, data released on Wednesday showed, raising the stakes for the White House and Federal Reserve as they continue to wager that rapid inflation will cool as the economy returns to normal.The Consumer Price Index climbed 5.4 percent in September when compared with the prior year, more than expected in a Bloomberg survey of economists and faster than its 5.3 percent increase through August. From August to September, the index rose 0.4 percent, also above expectations.The gains came as housing prices firmed, and as food — especially meat and eggs — cost consumers more. Stripping out volatile food and fuel, inflation is still rapid, at 4 percent in the year through last month.Monthly gains have slowed from their breakneck pace earlier this year — they popped as much as 0.9 percent this summer — but they remain abnormally rapid. And price pressures have not been fading as rapidly as policymakers had hoped.

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    Change in monthly Consumer Price Index from a year ago
    Source: Bureau of Labor StatisticsBy The New York TimesInflation jumped early in 2021 as prices for airfares, restaurant meals and apparel recovered after slumping as the economy locked down during the depths of the pandemic. That was expected. But more recently, prices have continued to climb as supply shortages mean businesses can’t keep up with fast-rising demand. Factory shutdowns, clogged shipping routes and labor shortages at ports and along trucking lines have combined to make goods difficult to produce and transport.The snarls show no obvious signs of easing, and while Fed officials still think inflation will fade, they are increasingly concerned that supply disruptions could last long enough to prompt consumers and businesses to expect higher prices. If people believe that their lifestyles will cost more, they may demand higher compensation — and as employers lift pay, they may charge more for their goods to cover the costs, setting off an upward spiral.Already, companies are raising wages to lure back employees who left the job market during the pandemic and have yet to return, and landlords are raising rents rapidly. Both factors could feed into inflation in the months ahead — and unlike pandemic-tied quirks that should eventually resolve themselves, higher wages and housing costs could become a more persistent source of price pressures.Fed officials have signaled that they would use the central bank’s policies to control inflation if it proves persistent — but they would prefer to leave borrowing costs at low levels until the job market is more fully healed. Those potentially conflicting goals could set the stage for a tense 2022.Wall Street is watching every fresh inflation data print closely, because higher rates from the Fed could dent growth and stock prices.And the White House is under pressure to come up with whatever fixes it can. Later on Wednesday, President Biden is expected to address the supply-chain problems — which are weighing on his approval ratings as they push prices higher. More

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    Biden to Announce Expansion of Port of Los Angeles's Hours

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    The expansion of the Port of Los Angeles’s hours comes as the administration has struggled to untangle kinks in global supply chains and curb the resulting inflation.WASHINGTON — President Biden will announce on Wednesday that the Port of Los Angeles will begin operating around the clock as his administration struggles to relieve growing backlogs in the global supply chains that deliver critical goods to the United States.Product shortages have frustrated American consumers and businesses and contributed to rising prices that are hurting the president politically. And the problems appear poised to worsen, enduring into late next year or beyond and disrupting shipments of necessities like medications, as well as holiday purchases.Mr. Biden is set to give a speech on Wednesday addressing the problems in ports, factories and shipping lanes that have helped produce shortages, long delivery times and rapid price increases for food, televisions, automobiles and much more. The resulting inflation has chilled consumer confidence and weighed on Mr. Biden’s approval ratings. The Labor Department is set to release a new reading of monthly inflation on Wednesday morning.Administration officials say that they have brokered a deal to move the Port of Los Angeles toward 24/7 operations, joining Long Beach, which is already operating around the clock, and that they are encouraging states to accelerate the licensing of more truck drivers. UPS, Walmart and FedEx will also announce they are moving to work more off-peak hours.Mr. Biden’s team, including a supply chain task force he established earlier this year, is working to make tangible progress toward unblocking the flow of goods and helping the retail industry return to a prepandemic normal. On Wednesday, the White House will host leaders from the Port of Los Angeles, the Port of Long Beach, and the International Longshore and Warehouse Union to discuss the difficulties at ports, as well as hold a round table with executives from Walmart, UPS and Home Depot.But it is unclear how much the White House’s efforts can realistically help. The blockages stretch up and down supply chains, from foreign harbors to American rail yards and warehouses. Companies are exacerbating the situation by rushing to obtain products and bidding up their own prices. Analysts say some of these issues may last into late next year or even 2023.Administration officials acknowledged on Tuesday in a call with reporters that the $1.9 trillion economic aid package Mr. Biden signed into law in March had contributed to supply chain issues by boosting demand for goods, but said the law was the reason the U.S. recovery has outpaced those of other nations this year.Consumer demand for exercise bikes, laptops, toys, patio furniture and other goods is booming, fueled by big savings amassed over the course of the pandemic.Imports for the fourth quarter are on pace to be 4.7 percent higher than in the same period last year, which was also a record-breaking holiday season, according to Panjiva, the supply chain research unit of S&P Global Market Intelligence.Meanwhile, the pandemic has shut down factories and slowed production around the world. Port closures, shortages of shipping containers and truck drivers, and pileups in rail and ship yards have led to long transit times and unpredictable deliveries for a wide range of products — problems that have only worsened as the holiday season approaches.Home Depot, Costco and Walmart have taken to chartering their own ships to move products across the Pacific Ocean. On Tuesday, 27 container ships were anchored in the Port of Los Angeles waiting to unload their containers, and the average anchorage time had stretched to more than 11 days.Jennifer McKeown, the head of the Global Economics Service at Capital Economics, said that worsening supplier delivery times and conditions at ports suggested that product shortages would persist into mid- to late next year.“Unfortunately, it does look like things are likely to get worse before they get better,” she said.Ms. McKeown said governments around the world could help to smooth some shortages and dampen some price increases, for example by encouraging workers to move into industries with labor shortages, like trucking.President Biden is set to give a speech on Wednesday addressing the problems in ports, factories and shipping lanes that have helped create shortages.Stefani Reynolds for The New York Times“But to some extent, they need to let markets do their work,” she said.Phil Levy, the chief economist at the logistics firm Flexport and a former official in the George W. Bush administration, said a Transportation Department official gathering information on what the administration could do to address the supply chain shortages had contacted his company. Flexport offered the administration suggestions on changing certain regulations and procedures to ease the blockages, but warned that the problem was a series of choke points “stacked one on top of the other.”“Are there things that can be done at the margin? Yes, and the administration has at least been asking about this,” Mr. Levy said. However, he cautioned, “from the whole big picture, the supply capacity is really hard to change in a noteworthy way.”The shortages have come as a shock for many American shoppers, who are used to buying a wide range of global goods with a single click, and seeing that same product on their doorstep within hours or days.The political risk for the administration is that shortfalls, mostly a nuisance so far, turn into something more existential. Diapers are already in short supply. As aluminum shortages develop, packaging pharmaceuticals could become a problem, said Robert B. Handfield, a professor of supply chain management at North Carolina State University.And even if critical shortages can be averted, slow deliveries could make for slim pickings this Christmas and Hanukkah.“I think Johnny is going to get a back-order slip in his stocking this year,” Dr. Handfield said. Discontent is only fueled by the higher prices the shortages are causing. Consumer price inflation probably climbed by 5.3 percent in the year through September, data from the Bureau of Labor Statistics is expected to show on Wednesday. Before the pandemic, that inflation gauge had been oscillating around 2 percent.Officials at the White House and the Federal Reserve, which has primary responsibility for price stability, have repeatedly said that they expect the rapid price increases to fade. They often point out that much of the surge has been spurred by a jump in car prices, caused by a lack of computer chips that delayed vehicle production.But with supply chains in disarray, it is possible that some new one-off could materialize. Companies that had been trying to avoid passing on higher costs to customers may find that they need to as higher costs become longer lived.Others have been raising prices already. Tesla, for instance, had been hoping to reduce the cost of its electric vehicles and has struggled to do that amid the bottlenecks.“We are seeing significant cost pressure in our supply chain,” Elon Musk, the company’s chief executive, said during an annual shareholder meeting Oct. 7. “So we’ve had to increase vehicle prices, at least temporarily, but we do hope to actually reduce the prices over time and make them more affordable.”For policymakers at the White House and the Fed, the concern is that today’s climbing prices could prompt consumers to expect rapid inflation to last. If people believe that their lifestyles will cost more, they may demand higher wages — and as employers lift pay, they may charge more to cover the cost.What happens next could hinge on when — and how — supply chain disruptions are resolved. If demand slumps as households spend away government stimulus checks and other savings they stockpiled during the pandemic downturn, that could leave purveyors of couches and lawn furniture with fewer production backlogs and less pricing power down the road.If buying stays strong, and shipping remains problematic, inflation could become more entrenched.Some of the factors leading to supply chain disruptions are temporary, including shutdowns in Asian factories and severe weather that has led to energy shortages. Consumer habits, including spending on travel and entertainment, are expected to slowly return to normal as the pandemic subsides.But most companies have enormous backlogs of orders to work through. And company inventories, which provide a kind of insulation from future shocks to the supply chain, are extremely low.To get their own orders fulfilled, companies have placed bigger orders and offered to pay higher prices. The prospect of inflation has further encouraged companies to lock in large purchases of products or machinery in advance.“The customers that are willing to pay the most are most likely to get those orders filled,” said Eric Oak, an analyst at Panjiva. “It’s a vicious cycle.”Emily Cochrane More

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    World’s Growth Cools and the Rich-Poor Divide Widens

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    The International Monetary Fund says the persistence of the coronavirus and global supply chain crisis weighs on economies.As the world economy struggles to find its footing, the resurgence of the coronavirus and supply chain chokeholds threaten to hold back the global recovery’s momentum, a closely watched report warned on Tuesday.The overall growth rate will remain near 6 percent this year, a historically high level after a recession, but the expansion reflects a vast divergence in the fortunes of rich and poor countries, the International Monetary Fund said in its latest World Economic Outlook report.Worldwide poverty, hunger and unmanageable debt are all on the upswing. Employment has fallen, especially for women, reversing many of the gains they made in recent years.Uneven access to vaccines and health care is at the heart of the economic disparities. While booster shots are becoming available in some wealthier nations, a staggering 96 percent of people in low-income countries are still unvaccinated.“Recent developments have made it abundantly clear that we are all in this together and the pandemic is not over anywhere until it is over everywhere,” Gita Gopinath, the I.M.F.’s chief economist, wrote in the report.The outlook for the United States, Europe and other advanced economies has also darkened. Factories hobbled by pandemic-related restrictions and bottlenecks at key ports around the world have caused crippling supply shortages. A lack of workers in many industries is contributing to the clogs. The U.S. Labor Department reported Tuesday that a record 4.3 million workers quit their jobs in August — to take or seek new jobs, or to leave the work force.A street in São Paulo, Brazil, in July. Poverty in many nations is on the upswing.Mauricio Lima for The New York TimesIn the United States, weakening consumption and large declines in inventory caused the I.M.F. to pare back its growth projections to 6 percent from the 7 percent estimated in July. In Germany, manufacturing output has taken a hit because key commodities are hard to find. And lockdown measures over the summer have dampened growth in Japan.Fear of rising inflation — even if likely to be temporary — is growing. Prices are climbing for food, medicine and oil as well as for cars and trucks. Inflation worries could also limit governments’ ability to stimulate the economy if a slowdown worsens. As it is, the unusual infusion of public support in the United States and Europe is winding down.“Overall, risks to economic prospects have increased, and policy trade-offs have become more complex,” Ms. Gopinath said. The I.M.F. lowered its 2021 global growth forecast to 5.9 percent, down from the 6 percent projected in July. For 2022, the estimate is 4.9 percent.The key to understanding the global economy is that recoveries in different countries are out of sync, said Gregory Daco, chief U.S. economist at Oxford Economics. “Each and every economy is suffering or benefiting from its own idiosyncratic factors,” he said.For countries like China, Vietnam and South Korea, whose economies have large manufacturing sectors, “inflation hits them where it hurts the most,” Mr. Daco said, raising costs of raw materials that reverberate through the production process.The pandemic has underscored how economic success or failure in one country can ripple throughout the world. Floods in Shanxi, China’s mining region, and monsoons in India’s coal-producing states contribute to rising energy prices. A Covid outbreak in Ho Chi Minh City that shuts factories means shop owners in Hoboken won’t have shoes and sweaters to sell.South Africa has sent a train with vaccines into one of its poorest provinces to get doses to areas where health care facilities are stretched.Jerome Delay/Associated PressThe I.M.F. warned that if the coronavirus — or its variants — continued to hopscotch across the globe, it could reduce the world’s estimated output by $5.3 trillion over the next five years.The worldwide surge in energy prices threatens to impose more hardship as it hampers the recovery. This week, oil prices hit a seven-year high in the United States. With winter approaching, Europeans are worried that heating costs will soar when temperatures drop. In other spots, the shortages have cut even deeper, causing blackouts in some places that paralyzed transport, closed factories and threatened food supplies.In China, electricity is being rationed in many provinces and many companies are operating at less than half of their capacity, contributing to an already significant slowdown in growth. India’s coal reserves have dropped to dangerously low levels.And over the weekend, Lebanon’s six million residents were left without any power for more than 24 hours after fuel shortages shut down the nation’s power plants. The outage is just the latest in a series of disasters there. Its economic and financial crisis has been one of the world’s worst in 150 years.Oil producers in the Middle East and elsewhere are lately benefiting from the jump in prices. But many nations in the region and North Africa are still trying to resuscitate their pandemic-battered economies. According to newly updated reports from the World Bank, 13 of the 16 countries in that region will have lower standards of living this year than they did before the pandemic, in large part because of “underfinanced, imbalanced and ill-prepared health systems.”Other countries were so overburdened by debt even before the pandemic that governments were forced to limit spending on health care to repay foreign lenders.A power outage on Monday in Beirut. Lebanon’s economic and financial crisis has been one of the world’s worst in 150 years.Agence France-Presse — Getty ImagesIn Latin America and the Caribbean, there are fears of a second lost decade of growth like the one experienced after 2010. In South Africa, over one-third of the population is out of work.And in East Asia and the Pacific, a World Bank update warned that “Covid-19 threatens to create a combination of slow growth and increasing inequality for the first time this century.” Businesses in Indonesia, Mongolia and the Philippines lost on average 40 percent or more of their typical monthly sales. Thailand and many Pacific island economies are expected to have less output in 2023 than they did before the pandemic.Overall, though, some developing economies are doing better than last year, partly because of the increase in the prices of commodities like oil and metals that they produce. Growth projections ticked up slightly to 6.4 percent in 2021 compared with 6.3 percent estimated in July.“The recovery has been incredibly uneven,” and that’s a problem for everyone, said Carl Tannenbaum, chief economist at Northern Trust. “Developing countries are essential to global economic function.”The outlook is clouded by uncertainty. Erratic policy decisions — like Congress’s delay in lifting the debt ceiling — can further set back the recovery, the I.M.F. warned.But the biggest risk is the emergence of a more infectious and deadlier coronavirus variant.Ms. Gopinath at the I.M.F. urged vaccine manufacturers to support the expansion of vaccine production in developing countries.Earlier this year, the I.M.F. approved $650 billion worth of emergency currency reserves that have been distributed to countries around the world. In this latest report, it again called on wealthy countries to help ensure that these funds are used to benefit poor countries that have been struggling the most with the fallout of the virus.“We’re witnessing what I call tragic reversals in development across many dimensions,” said David Malpass, the president of the World Bank. “Progress in reducing extreme poverty has been set back by years — for some, by a decade.”Ben Casselman More