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    Biden Faces Economic Challenges as Cost-of-Living Despair Floods TikTok

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    Economic despair dominates social media as young people fret about the cost of living. It offers a snapshot of the challenges facing Democrats ahead of the 2024 election.Look at economic data, and you’d think that young voters would be riding high right now. Unemployment remains low. Job opportunities are plentiful. Inequality is down, wage growth is finally beating inflation, and the economy has expanded rapidly this year.Look at TikTok, and you get a very different impression — one that seems more in line with both consumer confidence data and President Biden’s performance in political polls.Several of the economy-related trends getting traction on TikTok are downright dire. The term “Silent Depression” recently spawned a spate of viral videos. Clips critical of capitalism are common. On Instagram, jokes about poor housing affordability are a genre unto themselves.Social media reflects — and is potentially fueling — a deep-seated angst about the economy that is showing up in surveys of younger consumers and political polls alike. It suggests that even as the job market booms, people are focusing on long-running issues like housing affordability as they assess the economy.The economic conversation taking place virtually may offer insight into the stark disconnect between optimistic economic data and pessimistic feelings, one that has puzzled political strategists and economists.Never before was consumer sentiment this consistently depressed when joblessness was so consistently low. And voters rate Mr. Biden badly on economic matters despite rapid growth and a strong job market. Young people are especially glum: A recent poll by The New York Times and Siena College found that 59 percent of voters under 30 rated the economy as “poor.”President Biden’s campaign is working with content creators on TikTok to “amplify a positive, affirmative message” on the economy, a deputy campaign manager said.Desiree Rios for The New York TimesThat’s where social media could offer insight. Popular interest drives what content plays well — especially on TikTok, where going viral is often the goal. The platforms are also an important disseminator of information and sentiment.“A lot of people get their information from TikTok, but even if you don’t, your friends do, so you still get looped into the echo chamber,” said Kyla Scanlon, a content creator focused on economic issues who posts carefully researched explainers across TikTok, Instagram and X.Ms. Scanlon rose to prominence in the traditional news media in part for coining and popularizing the term “vibecession” for how bad consumers felt in 2022 — but she thinks 2023 has seen further souring.“I think people have gotten angrier,” she said. “I think we’re actually in a worse vibecession now.”Surveys suggest that people in Generation Z, born after 1996, heavily get their news from social media and messaging apps. And the share of U.S. adults who turn to TikTok in particular for information has been steadily climbing. Facebook is still a bigger news source because it has more users, but about 43 percent of adults who use TikTok get news from it regularly, according to a new survey by the Pew Research Center.It is difficult to say for certain whether negative news on social media is driving bad feelings about the economy, or about the Biden administration. Data and surveys struggle to capture exactly what effect specific news delivery channels — particularly newer ones — have on people’s perceptions, said Katerina Eva Matsa, director of news and information research at the Pew Research Center.“Is the news — the way it has evolved — making people view things negatively?” she asked. It’s hard to tell, she explained, but “how you’re being bombarded, entangled in all of this information might have contributed.”More Americans on TikTok Are Going There for NewsShare of each social media site’s users who regularly get news there, 2020 vs. 2023

    Source: Pew Research Center surveys of U.S. adultsBy The New York TimesMr. Biden’s re-election campaign team is cognizant that TikTok has supplanted X, formerly known as Twitter, for many young voters as a crucial information source this election cycle — and conscious of how negative it tends to be. White House officials say that some of those messages accurately reflect the messengers’ economic experiences, but that others border on misinformation that social media platforms should be policing.Rob Flaherty, a deputy campaign manager for Mr. Biden, said the campaign was working with content creators on TikTok in an effort to “amplify a positive, affirmative message” about the economy.A few political campaign posts promoting Mr. Biden’s jobs record have managed to rack up thousands of likes. But the “Silent Depression” posts have garnered hundreds of thousands — a sign of how much negativity is winning out.In those videos, influencers compare how easy it was to get by economically in 1930 versus 2023. The videos are misleading, skimming over the crucial fact that roughly one in four adults was unemployed in 1933, compared with four in 100 today. And the data they cite are often pulled from unreliable sources.But the housing affordability trend that the videos spotlight is grounded in reality. It has gotten tougher for young people to afford a property over time. The cost of a typical house was 2.4 times the typical household income around 1940, when government data start. Today, it’s 5.8 times.Nor is it just housing that’s making young people feel they’re falling behind, if you ask Freddie Smith, a 35-year-old real estate agent in Orlando, Fla., who created one especially popular “Silent Depression” video. Recently, it is also the costs of gas, groceries, cars and rent.“I think it’s the perfect storm,” Mr. Smith said. “It’s this tug of war that millennials and Gen Z are facing right now.”Inflation has cooled notably since peaking in the summer of 2022, which the Biden administration has greeted as a victory. Still, that just means that prices are no longer climbing as rapidly. Key costs remain noticeably higher than they were just a few years ago. Groceries are far more expensive than in 2019. Gas was hovering around $2.60 a gallon at the start of 2020, for instance, but is around $3.40 now.Young Americans Are Spending More and Earning MoreIncome after taxes and expenditures for householders under 25

    Source: Bureau of Labor Statistics Consumer Expenditure Survey By The New York TimesThose higher prices do not necessarily mean people are worse off: Household incomes have also gone up, so people have more money to cover the higher costs. Consumer expenditure data suggests that people under 25 — and even 35 — have been spending a roughly equivalent or smaller share of their annual budgets on groceries and gas compared with before the pandemic, at least on average.“I think things just feel harder,” said Betsey Stevenson, a professor of public policy and economics at the University of Michigan, explaining that people have what economists call a “money illusion” and think of the value of a dollar in fixed terms.And housing has genuinely been taking up a bigger chunk of the young consumer’s budget than in the years before the pandemic, as rents, home prices and mortgage costs have all increased.Housing Is Eating Up Young People’s BudgetsShare of spending devoted to each category for people under 25

    Source: Bureau of Labor Statistics Consumer Expenditure SurveyBy The New York TimesIn addition to prices, content about student loans has taken off in TikTok conversations (#studentloans has 1.3 billion views), and many of the posts are unhappy.Mr. Biden’s student-loan initiatives have been a roller coaster for millions of young Americans. He proposed last year to cancel as much as $20,000 in debt for borrowers who earn less than $125,000 a year, a plan that was estimated to cost $400 billion over several decades, only to see the Supreme Court strike down the initiative this summer.Mr. Biden has continued to push more tailored efforts, including $127 billion in total loan forgiveness for 3.6 million borrowers. But last month, his administration also ended a pandemic freeze on loan payments that applied to all borrowers — some 40 million people.The administration has tried to inject more positive programming into the social media discussion. Mr. Biden met with about 60 TikTok creators to explain his initial student loan forgiveness plan shortly after announcing it. The campaign team also sent videos to key creators, for possible sharing, of young people crying when they learned their loans had been forgiven.The Biden campaign does not pay those creators or try to dictate what they are saying, though it does advertise on digital platforms aggressively, Mr. Flaherty said.“It needs to sound authentic,” he said. More

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    Caen las tarifas aéreas en EE. UU., para alivio de los pasajeros

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    Las aerolíneas están comenzando a ofrecer precios de rebaja, una señal de que tienen problemas para llenar los aviones.En fechas recientes en Estados Unidos, las tarifas aéreas a muchos destinos populares han caído a su nivel más bajo en meses; incluso los viajes durante la temporada festiva son mucho más baratos que el año pasado. Esto les ha dado un respiro a los consumidores, tras meses de frustración por los elevados precios de todo tipo de bienes y servicios.La abundancia de buenas ofertas hace pensar que quizá la vigorosa recuperación de la industria aérea tras la pandemia por fin va bajando el ritmo, ya que la oferta de boletos se empareja con la demanda, que parece relativamente firme, e incluso la supera en algunas rutas.Tengamos en cuenta las tarifas que consiguió hace poco Denise Diorio, maestra jubilada de Tampa, Florida. Gastó menos de 40 dólares en un boleto de ida y vuelta a Chicago y solo pagó 230 dólares por un viaje redondo de Nueva York a París, el cual planea hacer este mes.“Les he venido diciendo a todos mis amigos que si quieren ir a alguna parte, deben comprar sus boletos ahora”, comentó.Las gangas que encontró quizá sean excepcionales, pero Diorio está en lo correcto cuando asegura que hay muchas ofertas.Este mismo mes, el precio promedio de un vuelo nacional cerca del Día de Acción de Gracias estaba casi un 9 por ciento por debajo del nivel del año pasado. En cuanto a los vuelos cerca de la Navidad, eran aproximadamente un 18 por ciento más baratos, según la aplicación de reservaciones y rastreo de precios Hopper. Kayak, el motor de búsqueda de viajes, analizó un rango más amplio de fechas cerca de las fiestas y descubrió que los precios de los vuelos nacionales eran alrededor de un 18 por ciento más bajos por la fecha del Día de Acción de Gracias y un 23 por ciento por Navidad.“En muchos casos, observamos algunas de las tarifas más bajas desde que se reanudaron los viajes tras los recortes de 2020, en realidad”, afirmó Kyle Potter, editor ejecutivo del blog de viajes y servicio de alerta de ofertas Thrifty Traveler.El precio de los boletos para vuelos dentro de Estados Unidos bajó durante el verano, aseveró Potter, y en épocas recientes es más común encontrar ofertas para viajes internacionales, en particular a Europa.Las aerolíneas bajan sus tarifas cuando quieren tentar a más personas a reservar boletos porque la demanda es baja o la competencia es más fuerte. Sin duda, la competencia se ha intensificado en algunas rutas, pero los expertos en viajes indican que no hay certeza de que la demanda vaya en declive.Se espera que el Día de Acción de Gracias de este año establezca una cifra récord para los viajes aéreos, con predicciones de casi 30 millones de pasajeros, según Airlines for America, un grupo de la industria. Esta cifra sería un 9 por ciento más alta que la del año pasado y estaría un 6 por ciento por encima de la de 2019, antes de la pandemia.Pero algunas aerolíneas afirman que la demanda va en descenso en los periodos que no son de festividades o temporada alta. Además, algunos aeropuertos han manejado tal número de vuelos que las compañías de transporte se han visto obligadas a reducir las tarifas para llenar los aviones.Ese no había sido un problema durante la mayor parte del periodo de recuperación tras la pandemia. El clima y otras perturbaciones limitaron la oferta de vuelos el año pasado y en 2021, al igual que la escasez de pilotos capacitados, repuestos y aviones, entre otros factores. Esas condiciones provocaron un alza en el precio de los boletos, mantuvieron llenos los aviones y ayudaron a las aerolíneas a obtener excelentes ganancias.“La industria de la aviación nunca había registrado el tipo de márgenes de ganancias y rendimiento sobre capital visto en los últimos 2 años y medio”, señaló John Grant, principal analista de la empresa consultora y de datos de aviación OAG. “Casi estamos de nuevo en una industria más normal”.Para las principales aerolíneas estadounidenses continúan los buenos tiempos, impulsados en particular por una gran demanda de vuelos internacionales. Pero las compañías más pequeñas y de bajo costo han comenzado a sufrir. Varias revelaron resultados financieros decepcionantes para el trimestre concluido en septiembre. Los ejecutivos de esas aerolíneas han dicho que la demanda va en descenso, las tarifas han caído y los costos se han mantenido elevados. También señalan que el mal clima y la escasez de controladores de tráfico aéreo les han complicado la operación aérea.Por ejemplo, JetBlue Airways perdió 153 millones de dólares en el tercer trimestre, en contraste con las ganancias de 57 millones de dólares registradas en el mismo periodo el año pasado. La empresa indicó hace poco que planea cambiar algunos vuelos de mercados abarrotados, como Nueva York, a otros en los que espera un mejor desempeño, como el Caribe. Las compañías de transporte económicas Spirit Airlines y Frontier Airlines les informaron hace poco a los inversionistas que buscaban recortar decenas de millones de dólares en costos.La competencia ha sido aguerrida en algunos mercados importantes, lo que ha impulsado a la baja las tarifas y las utilidades.En Denver, donde se encuentran las oficinas generales de Frontier, este verano hubo un 14 por ciento más asientos disponibles que en el verano de 2019, según la proveedora de datos de aviación Cirium. Miami y Orlando, Florida, dos destinos populares a los que vuelan muchas empresas, experimentaron aumentos en capacidad todavía mayores.No obstante, mientras que las aerolíneas añadieron vuelos en mercados populares en busca de captar pasajeros, en aeropuertos de otras ciudades, como Los Ángeles, un centro de actividades de muchas aerolíneas importantes, se observaron reducciones considerables en la capacidad con respecto al verano de 2019.“Es evidente que existe una enorme correlación entre las aerolíneas que funcionan bien y aquellas que tienen dificultades, en términos de sus márgenes, cuando comparamos dónde están sus concentraciones”, señaló el mes pasado Barry Biffle, director ejecutivo de Frontier, durante una teleconferencia para presentar los resultados de la aerolínea correspondientes al tercer trimestre.En cuanto a las rutas internacionales, los analistas no saben con tanta certeza por qué las tarifas van a la baja ni si se mantendrán así. Gangas como las que consiguió Diorio para su viaje a París podrían ser señal de que las aerolíneas más grandes pronto enfrentarán presiones financieras o sencillamente que la industria va regresando a una normalidad prepandémica.“Por lo regular, la demanda de viajes a Europa baja durante el invierno”, explicó Steve Hafner, director ejecutivo de Kayak. “Así que me parece que eso refleja las tendencias normales”.Pero la demanda de viajes internacionales podría enfrentar obstáculos, en parte debido a las guerras de Medio Oriente y Ucrania. Los analistas también advierten que muchos consumidores quizá estén menos dispuestos a derrochar dinero en viajes o tengan menos posibilidades de hacerlo ahora que en los dos años pasados, cuando contaban con el dinero que habían ahorrado durante la pandemia. Incluso si la demanda se mantiene firme, las aerolíneas corren el riesgo de ofrecer demasiados asientos en rutas populares al extranjero.Cualquiera que sea la causa de la reciente caída de las tarifas, las ofertas son un bienvenido alivio para los viajeros después de sufrir años de precios altos, dijo Potter.“En cualquier caso, la receta para vuelos baratos está ahí”, afirmó. “Si se trata solo de un pequeño exceso de capacidad, es una victoria para los consumidores. Si la demanda de viajes está cayendo, en cierto modo es una ganancia aún mayor para las personas que nunca van a renunciar a viajar”.Niraj Chokshi escribe sobre la aviación, los ferrocarriles y otras industrias del transporte. Más de Niraj Chokshi More

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    Sharp Drop in Airfares Cheers Inflation-Weary Travelers

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    Airfares to many popular destinations have recently fallen to their lowest levels in months, and even holiday travel is far cheaper than it was last year, providing some welcome relief to consumers who have been frustrated for months by high prices for all manner of goods and services.The glut of deals suggests that the airline industry’s supercharged pandemic recovery may finally be slowing as the supply of tickets catches up and, on some routes, overtakes demand, which appears relatively robust.Consider the fares that Denise Diorio, a retired teacher in Tampa, Fla., recently scored. She spent less than $40 on flights to and from Chicago and paid just $230 for a round-trip ticket from New York to Paris and back, a trip she plans to take this month.“I’ve been telling all my friends, ‘If you want to go somewhere, get your tickets now,’” she said.The bargains she found may be exceptional, but Ms. Diorio is right that deals abound.Early this month, the average price for a domestic flight around Thanksgiving was down about 9 percent from a year ago. And flights around Christmas were about 18 percent cheaper, according to Hopper, a booking and price-tracking app. Kayak, the travel search engine, looked at a wider range of dates around the holidays and found that domestic flight prices were down about 18 percent around Thanksgiving and 23 percent around Christmas.“In a lot of cases, we’re seeing some of the lowest fares that we’ve seen really since travel started coming back after the drop-off in 2020,” said Kyle Potter, executive editor of Thrifty Traveler, a travel blog and deal-watching service.Domestic ticket prices fell over the summer, Mr. Potter said, and deals on international travel, particularly to Europe, have become more common recently.Airlines lower their fares when they are trying to get more people to book tickets as demand is slowing or they are facing stiffer competition. There’s little question that competition has intensified on some routes, but travel experts say it’s not clear whether demand is waning.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers forecast, according to Airlines for America, an industry group. That would be about 9 percent more than last year and 6 percent more than in 2019, before the pandemic.But some airlines say demand is slowing outside of holiday and other peak travel periods. In addition, some airports have been so flooded with flights that carriers have been forced to cut fares to fill planes.That hadn’t been much of a problem for most of the recovery from the pandemic. Weather and other disruptions limited the supply of flights last year and in 2021, as did shortages of trained pilots, parts and planes, among other factors. That drove up ticket prices, kept planes full and helped airlines take in strong profits.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers anticipated.Stefani Reynolds for The New York Times“The airline industry has never delivered the types of profit margins and return on capital that it has done over the last 2.5 years,” said John Grant, chief analyst with OAG, an aviation advisory and data firm. “We’re getting back to a more normal industry.”For the largest U.S. airlines, the good times have continued, fueled in particular by thriving demand for international travel. But smaller and low-fare carriers have started to suffer. Several reported disappointing financial results for the three months that ended in September. Executives at those airlines have said demand is weakening, fares are falling and costs remain high. They also say bad weather and a shortage of air traffic controllers have made flying more difficult.JetBlue Airways, for example, lost $153 million in the third quarter, compared with a $57 million profit in the same period last year. The company said recently that it was moving flights away from crowded markets, such as New York, to those where it expected stronger performance, such as the Caribbean. The budget carriers Spirit Airlines and Frontier Airlines recently told investors that they were looking to cut costs by tens of millions of dollars.Competition has been fierce in some important markets, driving down fares and profits.In Denver, where Frontier is based, about 14 percent more seats were available on flights this summer than in the summer of 2019, according to Cirium, an aviation data provider. Miami and Orlando, Fla., two popular destinations served by many budget carriers, saw even larger increases in capacity.But while airlines added flights in popular markets as they chased passengers, airports in other cities, including Los Angeles, a hub for several major airlines, had large declines in capacity from the summer of 2019.“You’ll find that there’s a large correlation between the airlines that are doing well and the ones that are struggling, margin-wise, when you compare where their concentrations are,” Barry Biffle, Frontier’s chief executive, said last month on a conference call to discuss the airline’s third-quarter results.When it comes to international routes, analysts are less certain of why fares are falling and whether they will remain low. The kinds of deals that Ms. Diorio got for her Paris trip could mean that larger airlines soon find themselves facing a financial squeeze or merely that the industry is returning to a prepandemic normal.“Historically, demand to Europe softens in the winter,” said Steve Hafner, Kayak’s chief executive. “So I think that reflects normal trends.”But demand for international travel could face challenges, partly because of the wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to splurge on travel than they were in the last couple of years, when they had pandemic savings to draw from. Even if demand remains strong, airlines risk offering too many seats on popular overseas routes.Whatever the cause of the recent drop in fares, the deals are a welcome break to travelers from years of high prices, Mr. Potter said.“Either way the recipe is there for cheap flights,” he said. “If it’s just a little bit of overcapacity, that’s a win for consumers. If travel demand is dropping, in some ways that’s an even bigger win for people who are never going to give up on travel.” More

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    Fed Chair Recalls Inflation ‘Head Fakes’ and Pledges to Do More if Needed

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    Jerome H. Powell, the Federal Reserve chair, said officials would proceed carefully. But if more policy action is needed, he pledged to take it.Jerome H. Powell, the chair of the Federal Reserve, on Thursday expressed little urgency to make another interest rate increase imminently — but he reiterated that officials would adjust policy further if doing so proved necessary to cool the economy and fully restrain inflation.Mr. Powell and his Fed colleagues left interest rates unchanged in a range of 5.25 to 5.5 percent this month, up from near zero as recently as March 2022. The Fed has raised borrowing costs over the past year and a half to wrangle rapid inflation by slowing demand across the economy.Because inflation has faded notably from its peak in the summer of 2022, and because the Fed has already adjusted policy so much, officials are debating whether they might be done. Once they think rates are at a sufficiently elevated level, they plan to leave them there for a time, essentially putting steady pressure on the economy.Mr. Powell, speaking at a research conference in Washington hosted by the International Monetary Fund, reiterated on Thursday that policymakers wanted to make sure that rates were sufficiently restrictive. He said Fed officials were “not confident that we have achieved such a stance” yet.“We’re trying to make a judgment, at this point, about whether we need to do more,” Mr. Powell said in response to a question at the event. “We don’t want to go too far, but at the same time, we know that the biggest mistake we could make would be, really, to fail to get inflation under control.”He made clear that the Fed did not want to take a continued steady slowdown in inflation for granted. While the Fed’s preferred inflation measure has cooled to 3.4 percent from above 7 percent last year, squeezing price increases back to the central bank’s 2 percent goal could still prove to be a bumpy process. Much of the added inflation that remains is coming from stubborn service prices.“We know that ongoing progress toward our 2 percent goal is not assured: Inflation has given us a few head fakes,” Mr. Powell said. “If it becomes appropriate to tighten policy further, we will not hesitate to do so.”But the Fed does not want to raise interest rates blindly. It takes time for monetary policy changes to have their full effect on the economy, so the Fed could crimp the economy more painfully than it wants to if it raises rates quickly and without trying to calibrate the moves.While central bankers want to cool the economy to bring down inflation, they would like to avoid causing a recession in the process.“We will continue to move carefully,” Mr. Powell said. He said that would allow officials “to address both the risk of being misled by a few good months of data and the risk of over-tightening.”The risk of overdoing it is why central bankers are contemplating whether they need to make another move, or whether inflation is on a steady path back to normal.As of their September economic projections, officials thought that one final rate increase might be necessary, investors doubt that they will raise rates again in the coming months. In fact, market pricing suggests that the Fed could start cutting interest rates as soon as the middle of next year.Markets are betting there is only a sliver of a chance that the Fed will adjust policy at its final meeting of 2023, which will conclude on Dec. 13, and Mr. Powell did little to signal that a rate increase is imminent.Still, his remarks pushed back on the growing conviction among investors that the central bank is decisively finished.“We still believe the Fed is done hiking for this cycle, but today’s speech should serve as notice that their rhetoric must stay hawkish until they’ve seen further improvement in inflation,” Michael Feroli, chief U.S. economist at J.P. Morgan, wrote in a research note.Some economists have been anticipating that a recent jump in longer-term interest rates might persuade the Fed to hold off on raising borrowing costs again. While the Fed sets shorter-term interest rates, longer-term ones are based on market movements and can take time to adjust — but when they do, mortgages, business loans and other types of borrowing become more expensive.Fed officials are watching market moves, including whether they last and what is causing them, Mr. Powell acknowledged. He said officials would watch how the moves shaped up.“We’re moving carefully now, we’ve moved very fast, and rates are now restrictive,” Mr. Powell said. “It’s not something we’re trying to make a decision on right now.”He also used his speech to discuss some longer-term issues in monetary policy, including whether interest rates, which had lingered near rock-bottom levels for much of the decade preceding the pandemic, will eventually return to a much lower setting.Some economists have speculated that borrowing costs might remain permanently higher than they were in the years after the deep 2007-9 recession. But Mr. Powell said that it was too early to know, and that Fed researchers would ponder the question as part of their next long-run policy review.“We will begin our next five-year review in the latter half of 2024 and announce the results about a year later,” Mr. Powell explained.The last review concluded in 2020 and was focused on how to set policy in a low-interest rate world, a backdrop that quickly changed with the advent of rapid inflation in 2021. More

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    Why Are Oil Prices Falling While War Rages in the Middle East?

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    Energy markets have shrugged off the fighting between Israel and Hamas so far, focusing instead on forecasts of subdued demand.Intense fighting is underway in a region that holds much of the world’s petroleum resources. Yet, after a few days of anxiety following the bloody Oct. 7 raids by Hamas militants in Israel, energy markets have been slumping. Brent crude, the international oil benchmark, is selling for about $80 a barrel, cheaper than when the fighting started.Why aren’t prices higher? A main reason, analysts say, is that the fighting, no matter how vicious, has produced little disruption to petroleum supplies, leading traders to conclude that there is no immediate threat.“While traders realize there is an increased risk, that hasn’t led to a lot of precautionary buying,” said Richard Bronze, head of geopolitics at Energy Aspects, a London-based market research firm.With respect to the Middle East, the markets are “effectively dismissing that anything could go wrong,” said Raad Alkadiri, managing director for energy and climate at Eurasia Group, a political risk firm.Mr. Alkadiri said that traders are unlikely to bid up prices unless they see “actual barrels removed” from the market.Waning Demand in FocusThe market appears to have blocked the war out, and has returned to a mood of pessimism about future demand for petroleum, dominated by economic concerns about China, the largest oil importer, and other large consumers. Saudi Arabia and other producers have been trying to support prices by reducing their oil output.Forecasters are warning that 2024 could be a difficult year in the oil markets. The U.S. Energy Information Administration predicted this week that gasoline consumption in the United States would decline next year because of more efficient vehicle engines, growing numbers of electric cars, and reduced commuting as more people work hybrid schedules.The bearish sentiment drove down prices sharply before the Israel-Hamas conflict and it appears to be weighing on the market again, despite the risks of a broader war.Robust oil production in the United States has also reassured markets, with supplies from the world’s largest producer recently setting a monthly record, at just over 13 million barrels a day. “Strong oil market fundamentals are prevailing over any fears at the moment, “ said Jim Burkhard, vice president and head of research for oil markets, energy and mobility at S&P Global Commodity Insights.Haves and Have-NotsAs the fighting continues, traders have figured out that when it comes to oil there are haves and have-nots in the Middle East. Gaza produces no oil and Israel little. For there to be a material disruption in supply, the war’s effects would need to spread to the gigantic oil fields of Saudi Arabia, Iraq or Iran.Early in the conflict, Iran’s foreign minister called for an oil embargo against Israel, stirring memories of the oil embargo of 50 years ago. But times have changed: Given concerns about the role that fossil fuels play in climate change and their dependence on oil for revenues, any such move would risk backfiring on countries that imposed such a ban. Iran would risk alienating China, the Islamic Republic’s key customer.“The risk to supply is very unlikely to come from an independent decision to curtail oil sales by Iran or OPEC,” Eurasia Group said in a recent note. “Any such move would inflict as much — if not more — damage on producers as on consumers.”The Remaining RisksA disruption is not inconceivable. Four years ago, a missile attack on a key Saudi facility — for which American officials blamed Iran — temporarily knocked out about half of the kingdom’s oil production.In an extreme case, Iran, the key backer of Hamas, could try to block the Strait of Hormuz, through which huge volumes of oil flow to the rest of the world. “I still think that there is considerable risk that this spreads,” said Helima Croft, head of commodities at RBC Capital Markets, an investment bank.Ms. Croft said seeming complacency about the war’s impact could stem in part from traders’ having lost money when prices surged above $120 a barrel after Russia’s invasion of Ukraine, but then quickly fell.“The market just has no attention span for these kinds of issues anymore,” she said.Ms. Croft, a former analyst at the Central Intelligence Agency, said the apparent success of the early days the 2003 invasion of Iraq by U.S. forces eventually led to a conflict that dragged on for years. “We could still be caught by a nasty surprise in the Middle East,” she said.The Biden administration is trying to prevent a widening of the war. Regional oil powers, including Iran, would also prefer to keep tanker traffic moving through the Persian Gulf. Any halts would crimp their own export earnings, while price spikes would risk hurting and alienating their most valued customers.“It’s likely the conflict remains contained and doesn’t spill over into the big oil producers in the region or the key shipping lanes,” said Mr. Bronze of Energy Aspects. “The risks are more from miscalculation and misjudgment,” he added. More

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    Fed Holds Interest Rates Steady and Pledges to Proceed Carefully

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    The Federal Reserve left interest rates at 5.25 to 5.5 percent, but its chair, Jerome Powell, said policymakers could still raise rates again.The Federal Reserve left interest rates unchanged on Wednesday while keeping alive the possibility of a future increase, striking a cautious stance as rapid inflation retreats but is not yet vanquished.Rates have been on hold in a range of 5.25 to 5.5 percent since July, up from near-zero as recently as March 2022. Policymakers think that borrowing costs are high enough to achieve their goal of curbing economic growth if they are kept at this level over time.By cooling demand, the Fed is hoping to prod companies to raise prices less quickly. While the economy has held up so far — growth was unusually strong over the summer — inflation has come down since 2022. Overall price increases decelerated to 3.4 percent as of September, from more than 7 percent at their peak.Fed policymakers are now trying to wrestle inflation the rest of the way back to 2 percent. The combination of economic resilience and moderating inflation has given officials hope that they might be able to slow growth gradually and relatively painlessly in a rare “soft landing.” At the same time, the economy’s surprising endurance is forcing the Fed to question whether it has done enough to tamp down demand and price increases.The major question facing Fed officials is whether they will need to make one final rate increase in the coming months, a possibility they left open on Wednesday.“The full effects of our tightening have yet to be felt,” Jerome H. Powell, the Fed chair, said at a news conference after the decision. “Given how far we have come, along with the uncertainties and risks we face, the committee is proceeding carefully.”Jerome H. Powell, the Fed chair, said Wednesday that policymakers had not determined whether further interest rate increases would be needed to get inflation down to 2 percent.Haiyun Jiang for The New York TimesMr. Powell said officials would base decisions about the possibility and extent of additional policy firming — and how long rates will need to stay high — on economic data and how various risks to the outlook shaped up.Stock prices in the S&P 500 index rose as Mr. Powell spoke, and odds of further rate increases declined, suggesting that investors took his comments as a sign that interest rates were probably at their peak. But Diane Swonk, chief economist at KPMG, said she thought markets were getting ahead of themselves.“They are not declaring victory,” she said, explaining that while she did not expect the Fed to move rates in December, an early-2024 move seemed possible. “They are hesitant to say, ‘We’re done.’”Other analysts suggested that by not pushing back on the market’s expectation that the Fed was done raising interest rates, Mr. Powell was essentially endorsing that view, barring an unexpected surprise.At the Fed’s previous meeting, in September, policymakers had forecast that one more quarter-point increase in rates would probably be appropriate before the end of 2023. But officials did not release updated economic projections on Wednesday — they are scheduled to do so after the Fed’s Dec. 12-13 meeting — and conditions have changed since their last assessment.That is because longer-term interest rates in markets have jumped higher. While the Fed sets short-term borrowing costs, longer-term rates adjust at more of a delay and for a variety of reasons.The recent rise has made everything from mortgages to business loans more expensive, which might help cool the economy. The change may make it less necessary for Fed officials to raise rates further.“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the Fed said in its statement Wednesday, newly pointing to financial conditions as a restraint on growth.“It’s their way of saying that higher interest rates matter,” Gennadiy Goldberg, a rates strategist at TD Securities, said of the line. “Interest rates are doing some of the Fed’s work for them.”Mr. Powell made it clear that the Fed was closely watching higher market interest rates — particularly to see whether the jump was sustained, and to what extent it squeezed consumers and businesses.But Mr. Powell said the Fed’s staff economists were not predicting an imminent recession, which suggests that they do not see the higher borrowing costs hurting the economy too severely.And he said policymakers were still focused on whether interest rates were high enough to ensure that inflation would cool fully, given recent evidence of continued economic strength.“We are not confident yet that we have achieved such a stance,” Mr. Powell said.While the Fed’s moves have held back some parts of the economy, including sales of existing homes, the labor market continues to chug along. Hiring is still quicker than before the pandemic. Wage gains have cooled, but are also faster than pre-2020.As Americans win jobs and raises, they have continued to open their wallets. Spending climbed faster than economists expected in September, and growth overall has been much faster than what most forecasters would have expected a year and half into the Fed’s campaign to cool it.That strength could become a problem for central bankers, should it persist. If consumers remain ravenous for goods and services, companies may continue raising prices, making it more difficult to eliminate what is left of rapid inflation.At the same time, Fed officials do not want to brake too hard, which could unnecessarily cause a recession. Policy changes often act with a lag, and it can take months for the cumulative effects of interest rate increases to fully bite.“Everyone has been very gratified to see that we’ve been able to achieve pretty significant progress on inflation without seeing the kind of increase in unemployment that is very typical” with interest rate increases, Mr. Powell said. “The same is true of growth.”But he also made it clear that the Fed still thought a slowdown in the job market and overall growth were likely to prove necessary. Healing supply chains and a fresh supply of workers have helped to bring the economy into balance so far, but those forces may not be enough to bring inflation fully back to normal, he said.“What we do with demand is still going to be important,” he said, later adding that “slowing down is giving us, I think, a better sense of how much more we need to do, if we need to do more.” More

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    What to Watch for as the Federal Reserve Meets This Week

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    Central bankers are expected to leave interest rates steady at a 22-year high of 5.25 to 5.5 percent. Investors are looking for hints at what’s next.Federal Reserve officials are widely expected to leave interest rates steady at the conclusion of their two-day meeting on Wednesday. But investors and economists will watch for any hint about whether rates are likely to stay that way — or whether central bankers still think they might need to increase them again in the coming months.Officials will release a statement announcing their policy decision at 2 p.m., followed by a news conference with Jerome H. Powell, the Fed chair, at 2:30 p.m. Both will offer policymakers a chance to signal what they think might come next for interest rates and the economy.Central bankers have already raised interest rates to a range of 5.25 to 5.5 percent in a push to tame inflation. That rate setting is up from near-zero as recently as early 2022, and is the highest level in 22 years.Higher borrowing costs are meant to make it more expensive to buy a home, purchase a car or expand a business using a loan. By tapping the brakes on demand and hiring, that slows the broader economy, which can help to put a lid on price increases.Fed officials have widely signaled that they are close to the point where they no longer need to raise interest rates — simply leaving them around this level will cool the economy and help drive inflation back down to their 2 percent goal over time. The question now is twofold: Will policymakers feel it necessary to make one more quarter-point interest-rate move later this year or early next? And once they decide that rates are high enough, how long will they leave them elevated?Here’s what to watch for on Wednesday.Jerome Powell, the Federal Reserve chair, said in that “at the margin” the recent tightening in financial conditions could reduce the need for further tightening, “though that remains to be seen.”Michelle V. Agins/The New York TimesThe Fed’s language will be in focus.Central bankers will first release their standard monetary policy statement, and markets will carefully watch to see if officials make any changes that suggest they are done raising interest rates.Last time, officials said that “in determining the extent of additional policy firming that may be appropriate,” they would contemplate incoming economic data. If they softened that language to make further policy moves sound less likely, it would be notable.But investors may not find much else to parse in this release. Fed officials will not release fresh quarterly economic projections again until December. Given that, traders will have to watch Mr. Powell’s news conference for more details about what comes next.Recent market moves could be critical.As of the Fed’s latest economic forecasts in September, officials still thought that one more rate increase in 2023 might be appropriate.But something critical has changed in the intervening weeks.Long-term interest rates have climbed notably in markets since the Fed gathered on Sept. 19-20. While central bankers directly set short-term interest rates, longer-term borrowing costs often adjust only at a delay — and the recent jump is making everything from mortgages to business loans much more expensive.That could help slow the economy, doing some of the Fed’s work for it. And some economists think in light of that, central bankers will no longer see a need for another rate increase.Mr. Powell, during a question-and-answer session on Oct. 19, said that “at the margin” the recent tightening in financial conditions could reduce the need for further tightening, “though that remains to be seen.”“I took it to mean that perhaps there isn’t as much urgency to raise interest rates further,” said Blerina Uruci, chief U.S. economist at T. Rowe Price. She said that she didn’t expect officials to rule out another move, but “they need to manage a broad range of risks right now.”If consumer spending remains so strong that companies feel they can raise prices without scaring away customers, it could make it tough to fully wrestle inflation back down to 2 percent.Amir Hamja/The New York TimesStrong consumer spending may keep officials alert.While the Fed is dealing with the possibility that higher market-based interest rates will weigh on the economy, they are also confronting another potential challenge: Economic data have remained surprisingly strong in recent months.On one level, this is good news. Consumers are shopping and companies are hiring at a rapid clip in spite of higher interest rates, and that resilience has come at a time when inflation has moderated substantially. The Fed’s favorite inflation gauge has slowed to 3.4 percent, down from 7.1 percent at its peak in summer 2022.But if consumer spending remains so strong that companies feel they can raise prices without scaring away customers, that could make it tough to fully wrestle inflation back down to 2 percent.That’s why policymakers at the Fed are watching the continued strength closely — and trying to decide whether it suggests that further interest rate increases are needed.Timing is a big question.Officials may decide that they simply need more time to watch economic trends play out.Holding off on further rate moves in November — and possibly beyond — could give officials a chance to see if growth and consumer spending slow in the way companies have been warning they could.Plus, keeping rates on pause will give officials more time to see how looming geopolitical risks shape up. The war between Israel and Hamas could affect the economy in hard-to-predict ways. If it escalates into a regional war, it could shake consumer confidence. But a wider conflict could also cause oil prices to pop, pushing up inflation.At the same time, officials won’t want to fully rule out a future move at a time when market rates could fall, risks could fade and growth could remain quick.“Maintaining optionality makes a lot of sense in the current context,” said Matthew Luzzetti, chief U.S. economist at Deutsche Bank.Wall Street is divided over what will come next. Investors see about a one-in-four chance of a rate move at the Fed’s final 2023 meeting, which takes place on Dec. 13. They see a slightly higher — but far from guaranteed — chance of a move in early 2024.“Nobody is feeling a high degree of confidence about the economic outlook right now,” Ms. Uruci said. More

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    Middle East War Could Cause Oil Price Shock, World Bank Warns

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    A major escalation of the war between Israel and Hamas — one that spilled over into a broader Middle East conflict — could send oil prices surging as much as 75 percent, the World Bank warned on Monday.The potential for a global energy shock in the wake of Hamas’s brutal attack on Israel has been a pressing question for economists and policymakers, who have spent the past year trying to combat inflation.Energy prices have remained largely contained since Hamas invaded Israel on Oct. 7. But economists and policymakers have been closely monitoring the trajectory of the war and studying previous conflicts in the region as they try to determine the potential scale of economic repercussions if the current conflict intensifies and broadens across the Middle East.The World Bank’s new study suggests that such a crisis could overlap with energy market disruptions already caused by Russia’s war in Ukraine, exacerbating the economic consequences.“The latest conflict in the Middle East comes on the heels of the biggest shock to commodity markets since the 1970s — Russia’s war with Ukraine,” Indermit Gill, the World Bank’s chief economist and senior vice president for development economics, said in a statement that accompanied the report. “If the conflict were to escalate, the global economy would face a dual energy shock for the first time in decades — not just from the war in Ukraine but also from the Middle East.”The World Bank projects that global oil prices, which are currently hovering around $85 per barrel, will average $90 per barrel this quarter. The organization had been projecting them to decline next year, but disruptions to oil supplies could drastically change those forecasts.The bank’s worst-case scenario is pegged to the 1973 Arab oil embargo that took place during the Arab-Israeli war. A disruption of that severity could remove as much as eight millions barrels of oil per day off the market and send prices as high as $157 per barrel.A less severe, but still disruptive, outcome would be if the war plays out as the 2003 war in Iraq, with oil supply being reduced by five million barrels per day and prices rising as much as 35 percent, to $121 a barrel.A more modest outcome would be if the conflict parallels the 2011 civil war in Libya, with two million barrels per day of oil lost from global markets and prices rising as much as 13 percent, to $102 per barrel.World Bank officials cautioned that the effects on inflation and the global economy would depend on the duration of the conflict and how long oil prices remained elevated. They said that if higher oil prices are sustained, however, that would lead to higher prices for food, industrial metals and gold.The United States and Europe have been trying to keep global oil prices from spiking in the wake of Russia’s invasion of Ukraine. Western nations introduced a price cap on Russia’s energy exports, a move aimed at limiting Moscow’s oil revenues while ensuring oil supply continued to flow.The Biden administration also tapped its Strategic Petroleum Reserve to ease oil price pressures. A senior administration official told The New York Times last week that President Biden could authorize a new round of releases from the nation’s Strategic Petroleum Reserve, an emergency stockpile of crude oil that is stored in underground salt caverns near the Gulf of Mexico.Biden administration officials have publicly downplayed their concerns about the economic impact of the conflict, saying it was too soon to predict the fallout. Treasury Secretary Janet L. Yellen noted at a Bloomberg News event last week that oil prices had so far been generally flat and that she had not yet seen signs that the war was having global economic consequences.“What could happen if the war expands?” Ms. Yellen said. “Of course there could be more meaningful consequences.” More