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    High Inflation Could Persist as Wages Continue to Rise

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    Economists have been waiting for Americans to shift from buying goods, like furniture and appliances, and toward spending on vacations, restaurant meals and other services as the pandemic fades, betting the transition would take pressure off supply chains and help inflation to moderate.Rapid wage growth could make that story more complicated. Demand for services is rising just as many employers are struggling to find workers, which could force them to continue raising wages. While positive for workers, that could keep overall inflation brisk as companies try to cover their labor costs, speeding up price increases for services even as they begin to moderate for goods.Heavy spending on goods during the pandemic has been a driver of the recent inflation burst. Consumers began snapping up items a few months after pandemic lockdowns began and have kept on buying. Spending on services also has recovered, but much more slowly. That shift in what people are purchasing has roiled supply chains, which were not built to produce, ship and deliver so many cars, treadmills and washing machines.Policymakers spent months betting that as the virus waned and consumers resumed more normal shopping patterns, prices of goods would slow their ascent or even fall. That would pull down inflation, which has been running at its fastest pace in 40 years.But that transition — assuming it happens — may do less to cool inflation than many had hoped. A big chunk of what the government defines as “services” inflation comes from rental housing costs, which often move up alongside wage growth, as households can afford more and bid up the cost of a limited supply of housing units. And when it comes to discretionary services, like salons and gyms, labor is a major cost of production. Rising pay likely means higher prices.Jason Furman, a Harvard economist who served as a top adviser to President Barack Obama, said the shortage of workers in many service industries means that if demand for services goes up, prices will too. That means a shift in spending back to services won’t necessarily result in an overall slowdown in the pace of price increases.“An awful lot of services are incredibly constrained,” he said. “As we shift back to services, we’ll get more services inflation and less goods inflation, and I don’t think it’s at all obvious that the result of that is less inflation.”While America has gotten used to thinking about shortages in products — couches are out of stock, shoes are back-ordered — labor shortfalls could mean that services will also end up oversubscribed, allowing providers to charge more.MaidPro, a home-cleaning firm, has seen a surge in demand from professionals who are spending more time at home. But it is having trouble finding workers to keep up, said Tom Manchester, the company’s president.“Our demand right now outstrips our supply of being able to service that demand,” he said. “Demand has just continued to be strong — like double-digit strong. And if we could find qualified pros to meet the demand, we’d be even more ahead than we are today.”An Amazon employee delivering packages in Manhattan. Americans have continued to buy goods even as services have rebounded.Gabby Jones for The New York TimesMr. Manchester said hourly wages were up $1 to $3, adding to costs at a time when cleaning products have gotten pricier and higher gas prices have made travel reimbursements more expensive. MaidPro franchisees have been able to pass those costs on to their customers, both via fuel surcharges and outright price increases that have more or less kept up with inflation.So far, they have lost few customers — in part because few competitors have capacity to take on new customers.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.“If someone has someone that they really like coming in to clean their home, they don’t want to lose them,” he said. “They don’t want to risk saying, ‘I want to move away from MaidPro and try to find someone else,’ because in nine out of 10 instances, that someone else isn’t available.”Some economists argue that if goods inflation slows, that could still help price gains overall to moderate, even amid rising wages. Prices for products that last a long time rose 11.6 percent in the year through January, and prices for shorter-lived products like cosmetics and clothing were up 7.2 percent, still much stronger than services inflation.“We have in mind a big decline in goods prices,” said Roberto Perli, the head of global policy research at the investment bank Piper Sandler. “It would take a lot of increase in service prices to actually offset that.”Outright declines in goods prices are not guaranteed. Take cars: Rapid price growth in new and used autos was a big driver of inflation last year, and many economists expect those prices to dip in 2022. But Jonathan Smoke, the chief economist at Cox Automotive, said continued shortages mean prices for new cars are likely to continue rising, and issues with new car supply could spill over to blunt the expected decline in used car costs.And services inflation is now also coming in fast. It ran at 4.6 percent in the year through January, the quickest pace since 1989, and it has been posting large monthly gains since autumn. That is enough to keep inflation above the Federal Reserve’s 2 percent goal even if product prices stop accelerating.While goods have taken up a bigger chunk of household budgets in recent months than they did before the pandemic, Americans still spend nearly twice as much on services as on goods overall.“You don’t need a lot of extra services inflation to make up for your lost goods inflation,” Mr. Furman said.Restaurants, hotels and other discretionary services aren’t the only places where persistent demand could run up against limited supply, Mr. Furman argued. Many nonurgent health care services saw a decline in demand during the pandemic and are now experiencing a rebound amid a shortage of nurses and other skilled workers.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Workers Are Still in High Demand, Department of Labor Reports

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    Job openings last month remained near record levels, and the number of workers voluntarily leaving their positions increased, the Labor Department said on Tuesday.The data, released as part of the agency’s monthly report on job openings, layoffs and quitting, serve as indicators of how much demand there is for workers in the U.S. economy and the extent to which employers are still struggling with labor shortages months after the economy began recovering from the pandemic’s worst damage.There were about 11.3 million job openings in February, essentially the same as the month before and down a little from a record in December, though the number of hires overall edged up by 263,000 last month, to about 6.7 million.After falling during the peak of Covid-19 lockdowns in 2020, the rates at which so-called prime-age workers — those aged 25 to 54 — are working or seeking work has rallied back to prepandemic levels. Yet with the economy growing faster than in decades, demand for labor has outpaced the availability of workers — at least at the wages and benefits employers are offering.There are still roughly three million or so people who have not returned to the work force, according to the government data.“Looking at how poorly our labor force has grown so far this year, if companies want to win the war for talent they need to engage the people who may not be actively seeking work right now, or be the first option people see when they do return,” Ron Hetrick, a senior economist at Emsi Burning Glass, a data and research company, wrote in a note.That echoes the sentiment of many unions and labor activists, who have been saying that even though wage growth has picked up, people aren’t feeling valued enough by employers. It’s led to fresh questions about how bosses might get to know the “love language” of their hires and find sometimes unconventional ways to show them that they care. There are also more straightforward requests: Several progressive economists have noted that employers could, for instance, take some jobs generally expected to be low-wage — such as fast food service and cashiers — and entice workers by offering higher pay and better benefits.Large public companies and small businesses alike often say that they have already substantially raised pay from before the pandemic and that with inflation raging at highs unseen since the early 1980s, raw material and other costs have made business more difficult. An expensive surge in commodity markets suggests that price increases for food and energy could worsen, especially if firms raise prices further.Still, despite widespread frustration with inflation and shortages of some products and materials, some surveys suggest businesses are becoming more optimistic about the future. The MetLife and U.S. Chamber of Commerce Small Business Index recently reached a pandemic-era high, with about three in five of the small business owners surveyed saying their business is in good health. More

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    Powell Says Fed Could Raise Rates More Quickly to Tame Inflation

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    Jerome H. Powell, the Federal Reserve chair, said on Monday that the central bank was prepared to more quickly withdraw support from the economy if doing so proved necessary to bring rapid inflation under control.Mr. Powell signaled that the Fed could make big interest rate increases and push rates to relatively high levels in its quest to cool off demand and temper inflation, which is running at its fastest pace in 40 years. His comments were the clearest statement yet that the central bank was ready to forcefully attack rapid price increases to make sure that they do not become a permanent feature of the American economy.“There is an obvious need to move expeditiously to return the stance of monetary policy to a more neutral level, and then to move to more restrictive levels if that is what is required to restore price stability,” Mr. Powell said during remarks to a conference of business economists.Policymakers raised interest rates by a quarter point last week and forecast six more similarly sized increases this year. On Monday, Mr. Powell foreshadowed a potentially more aggressive path. A restrictive rate setting would squeeze the economy, slowing consumer spending and the labor market — a move akin to the Fed’s hitting the brakes rather than just taking its foot off the accelerator.“If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” Mr. Powell said. “And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”Asked what would keep the Fed from raising interest rates by half a percentage point at its next meeting in May, Mr. Powell replied, “Nothing.” He said the Fed had not yet made a decision on its next rate increase but noted that officials would make a supersized move if they thought one was appropriate.“The expectation going into this year was that we would basically see inflation peaking in the first quarter, then maybe leveling out,” Mr. Powell said. “That story has already fallen apart. To the extent that it continues to fall apart, my colleagues and I may well reach the conclusion that we’ll need to move more quickly.”Stocks fell in response to Mr. Powell’s comments and were down 0.6 percent by the time he finished speaking in the early afternoon; the S&P 500 index closed the day down 0.4 percent. Higher interest rates can push down stock prices as they pull money away from riskier assets — like shares in companies — and toward safer havens, like bonds, and as they make money more expensive to borrow for businesses. The yield on the benchmark 10-year Treasury note rose as high as 2.3 percent as Mr. Powell was speaking, and the yield on two-year Treasurys rose above 2 percent for the first time since 2019.Rising rates can especially hurt share prices if they tank economic growth or cause the economy to contract.While the Fed has often caused recessions by raising interest rates in a bid to slow down demand and cool off price increases, Mr. Powell voiced optimism that the central bank could avoid such an outcome this time, in part because the economy is starting from a strong place. Even so, he acknowledged that guiding inflation down without severely hurting the economy would be a challenge.“No one expects that bringing about a soft landing will be straightforward in the current context,” Mr. Powell said.But getting price gains under control is the Fed’s priority, and while the central bank had been hoping for inflation to fade as pandemic disruptions abate, Mr. Powell was adamant that it could no longer watch and wait for that to happen.In addition to raising rates, the Fed plans to reduce its large bond holdings by allowing securities to expire, which would push up longer-term borrowing costs, including mortgage rates, helping to take steam out of the economy. Mr. Powell emphasized that the balance sheet shrinking could begin imminently.Action on the balance sheet “could come as soon as our next meeting in May, though that is not a decision that we have made,” Mr. Powell said.The Fed is preparing to pull back support even as Russia’s invasion of Ukraine stokes economic uncertainty. The conflict has pushed energy prices higher, something that the Fed would typically discount, since it is likely to fade eventually. But Mr. Powell said it could not ignore the increase when inflation was already high.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

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    How the War in Ukraine Could Slow the Sales of Electric Cars

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    The price of nickel, an essential ingredient in most batteries, has soared because of fear that Russian supplies could be cut off.Russia’s invasion of Ukraine has shaken the global market for nickel just as the metal gains importance as an ingredient in electric car batteries, raising fears that high prices could slow the transition away from fossil fuels.The price of nickel doubled in one day last week, prompting the London Metal Exchange to freeze trading and effectively bring the global nickel market to a standstill. After two years of supply chain chaos caused by the pandemic, the episode provided more evidence of how geopolitical tensions are destroying trading relationships that companies once took for granted, forcing them to rethink where they get the parts and metals they use to make cars and many other products.Automakers and other companies that need nickel, as well as other battery raw materials like lithium or cobalt, have begun looking for ways to shield themselves against future shocks.Volkswagen, for example, has begun to explore buying nickel directly from mining companies, Markus Duesmann, chief executive of the carmaker’s Audi division, said in an interview on Thursday. “Raw materials are going to be an issue for years to come,” he said.The prospect of prolonged geopolitical tensions is likely to accelerate attempts by the United States and Europe to develop domestic supplies of commodities that often come from Russia. There are nickel deposits, for example, in Canada, Greenland and even Minnesota.“Nickel, cobalt, platinum, palladium, even copper — we already realized we need those metals for the green transition, for mitigating climate change,” said Bo Stensgaard, chief executive of Bluejay Mining, which is working on extracting nickel from a site in western Greenland in a venture with KoBold Metals, whose backers include Jeff Bezos and Bill Gates. “When you see the geopolitical developments with Ukraine and Russia, it’s even more obvious that there are supply risks with these metals.”But establishing new mining operations is likely to take years, even decades, because of the time needed to acquire permits and financing. In the meantime, companies using nickel — a group that also includes steel makers — will need to contend with higher prices, which will eventually be felt by consumers.An average electric-car battery contains about 80 pounds of nickel. The surge in prices in March would more than double the cost of that nickel to $1,750 a car, according to estimates by the trading firm Cantor Fitzgerald.Russia accounts for a relatively small proportion of world nickel production, and most of it is used to make stainless steel, not car batteries. But Russia plays an outsize role in nickel markets. Norilsk Nickel, also known as Nornickel, is the world’s largest nickel producer, with vast operations in Siberia. Its owner, Vladimir Potanin, is one of Russia’s wealthiest people. Norilsk is among a limited number of companies authorized to sell a specialized form of nickel on the London Metal Exchange, which handles all nickel trading.Unlike other oligarchs, Mr. Potanin has not been a target of sanctions, and the United States and Europe have not tried to block nickel exports, a step that would hurt their economies as well as Russia’s. The prospect that Russian nickel could be cut off from world markets was enough to cause panic.Analysts expect prices to come down from their recent peaks but remain much higher than they were a year ago. “The trend would be to come down to a level close to where we last left off,” around $25,000 a metric ton compared to the peak of $100,000 a ton, said Adrian Gardner, a principal analyst specializing in nickel at Wood Mackenzie, a research firm.A plant owned by Nornickel, the world’s leading producer of nickel and palladium, in Norilsk, Russia.Tatyana Makeyeva/ReutersNickel was on a tear even before the Russian invasion as hedge funds and other investors bet on rising demand for electric vehicles. The price topped $20,000 a ton this year after hovering between $10,000 and $15,000 a ton for much of the past five years. At the same time, less nickel was being produced because of the pandemic.After Russia invaded Ukraine in late February, the price rose above $30,000 in a little over a week. Then came March 8. Word spread on the trading desks of brokerage firms and hedge funds in London that a company, which turned out to be the Tsingshan Holding Group of China, had made a huge bet that the price of nickel would drop. When the price rose, Tsingshan owed billions of dollars, a situation known on Wall Street as a short squeeze.The price shot up to a little over $100,000 a ton, threatening the existence of many other companies that had bet wrong and prompting the London Metal Exchange to halt trading.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

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    Ukrainian Invasion Adds to Chaos for Global Supply Chains

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    Russia’s military incursion is severing key supply chains and setting off a scramble among global companies to comply with new sanctions.WASHINGTON — The Russian invasion of Ukraine has rattled global supply chains that are still in disarray from the pandemic, adding to surging costs, prolonged deliveries and other challenges for companies trying to move goods around the world.The clash in Ukraine, a large country at the nexus of Europe and Asia, has caused some flights to be canceled or rerouted, putting pressure on cargo capacity and raising concerns about further supply chain disruptions. It is putting at risk global supplies of products like platinum, aluminum, sunflower oil and steel, and shuttering factories in Europe, Ukraine and Russia. And it has sent energy prices soaring, further raising shipping costs.The conflict is also setting off a scramble among global companies as they cut off trade with Russia to comply with the most far-reaching sanctions imposed on a major economic power since the end of the Cold War.The new challenges follow more than two years of disruptions, delays and higher prices for beleaguered companies that use global supply chains to move products around the world. And while the economic implications of the war and sweeping sanctions on Russia are not yet clear, many industries are bracing for a bad situation to get worse.“Global supply chains are already hurting and stressed because of the pandemic,” said Laura Rabinowitz, a trade lawyer at Greenberg Traurig. She said the effects would vary for specific industries and depend on the length of the invasion, but the impacts would be magnified because of an already-vulnerable supply chain.“There’s still tremendous port congestion in the United States. Freight costs are very high. Factory closures in Asia are still an issue,” she said.Companies with complex global supply chains, like automakers, are already feeling the effects. Volkswagen, which had already announced it was suspending production at its main factory for electric cars, said Tuesday that it would also be forced to shut down production at several other factories, including its main factory in Wolfsburg, Germany, in coming weeks because of parts shortages.Automakers could see shortages of other key materials. Ukraine and Russia are both substantial sources for palladium and platinum, used in catalytic converters, as well as aluminum, steel and chrome.Semiconductor manufacturers are warily eyeing global stocks of neon, xenon and palladium, necessary to manufacture their products. Makers of potato chips and cosmetics could face shortages of sunflower oil, the bulk of which is produced in Russia and Ukraine.And if the conflict is prolonged, it could threaten the summer wheat harvest, which flows into bread, pasta and packaged food for vast numbers of people, especially in Europe, North Africa and the Middle East. Food prices have already skyrocketed because of disruptions in the global supply chain, increasing the risk of social unrest in poorer countries.On Tuesday, the global shipping giant Maersk announced that it would temporarily suspend all shipments to and from Russia by ocean, air and rail, with the exception of food and medicine. Ocean Network Express, Hapag-Lloyd and MSC, the world’s other major ocean carriers, have announced similar suspensions.“The war just makes the worldwide situation for commodities more dire,” said Christopher F. Graham, a partner at White and Williams.Jennifer McKeown, the head of global economics service at Capital Economics, said the global economy appeared relatively insulated from the conflict. But she said shortages of materials like palladium and xenon, used in semiconductor and auto production, could add to current difficulties for those industries. Semiconductor shortages have halted production at car plants and other facilities, fueling price increases and weighing on sales.“That could add to the shortages that we’re already seeing, exacerbate those shortages, and end up causing further damage to global growth,” she said.International companies are also trying to comply with sweeping financial sanctions and export controls imposed by Europe, the United States and a number of other countries that have clamped down on flows of goods and money in and out of Russia.In just a few days, Western governments moved to exclude certain Russian banks from using the SWIFT messaging system, limit the Russian central bank’s ability to prop up the ruble, cut off shipments of high-tech goods and freeze the global assets of Russian oligarchs.The Biden administration said the technology restrictions alone would stop about a fifth of Russian imports. But the impact on trade from the financial curbs is likely to be even larger, cutting off Russia’s imports from and exports to nearly all of its major trading partners, said Eswar Prasad, a professor of trade policy at Cornell University.“Even when trade flows may take place directly between Russia and its trading partners, the reality is that payments often have to go through a Western-dominated financial system, and usually have to go through a Western currency,” he said.In a statement on Saturday, the president of the European Commission, Ursula von der Leyen, said that Europe and its allies were “resolved to continue imposing massive costs on Russia” and that disconnecting Russian banks from SWIFT would also halt Russian trade.“Cutting banks off will stop them from conducting most of their financial transactions worldwide and effectively block Russian exports and imports,” she said.The economic consequences of these moves are not yet entirely clear. Russia accounts for less than 2 percent of global domestic product, so the implications for other countries may be somewhat limited.The departures board displayed flight cancellations at Sheremetyevo Airport in Moscow on Monday.Sergey Ponomarev for The New York TimesBut for the Russian government and the economy, both of which are heavily dependent on trade to generate revenue, the impact could be catastrophic. Capitol Economics has estimated Russian gross domestic product could contract by 5 percent this year, a change that in isolation would knock just 0.2 percentage points off global growth.Caroline Bain, chief commodities economist at Capitol Economics, said financial sanctions were halting the trade of metals and agricultural commodities, likely exacerbating strains in global supply chains.Credit Suisse and Société Generale have suspended financing for commodity trading with Russia, as has the Industrial and Commercial Bank of China, she said.Russia’s Attack on Ukraine and the Global EconomyCard 1 of 6A rising concern. More

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    Patrick Gelsinger is Intel's True Believer

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    Patrick Gelsinger was 18 years old and four months into an entry-level job at Intel when he heard a pivotal sermon at a Silicon Valley church in February 1980. There, a minister quoted Jesus from the Book of Revelation.“I know your deeds, that you are neither cold nor hot. I wish you were either one or the other!” the minister said. “So, because you are lukewarm — neither hot nor cold — I am about to spit you out of my mouth.”The words jolted Mr. Gelsinger, reshaping his philosophy. He realized he had been a lukewarm believer, one who practiced his faith just once a week. He vowed never to be neither hot nor cold again.Now, at age 60, Mr. Gelsinger is hot about one thing in particular: Revitalizing Intel, a Silicon Valley icon that lost its leading position in chip manufacturing.The 120,000-person company was a household name in the 1990s, celebrated as a fount of innovation as its microprocessors became the electronic brains in the vast majority of computers. But Intel failed to place its chips into smartphones, which became the device of choice for most people. Apple and Google instead grew into the trillion-dollar emblems of Silicon Valley.Rejuvenating Intel is partly about Mr. Gelsinger’s own ambitions. As a young engineer, he once wrote down a goal of leading Intel one day. But in 2009, after spending his entire career at the company, he was forced out. A year ago, he was wooed back for a surprise second chance.His mission is also about America’s place in the world. Mr. Gelsinger wants to return the United States to a leading role in semiconductor production, reducing the country’s dependence on manufacturers in Asia and easing a global chip shortage. Intel, he believes, can spearhead the charge. If he succeeds, the impact could extend far beyond computers to just about every device with an on-off switch.The quest faces many obstacles. Steering a $200 billion company while chasing a goal of raising U.S. chip production to 30 percent globally from about 12 percent today requires tens of billions of dollars, political maneuvering with governments and years of patience.“You’re going to have to spend a lot of money and you’re going to have to spend it for a long period of time,” said Simon Segars, who recently stepped down as chief executive of Arm, a British company whose chip designs power most smartphones. “Whether governments have the stomach for that over the long term remains to be seen.”In four interviews, Mr. Gelsinger acknowledged the difficulties. But the father of four and grandfather of eight has pursued the goals with intensity.In March, he unveiled a $20 billion project to add two chip factories to Intel’s complex near Phoenix. Last month, he joined President Biden to showcase a $20 billion investment in a new chip manufacturing site near Columbus, Ohio. On Tuesday, he announced a $5.4 billion deal to buy Tower Semiconductor, which operates chip production services from factories in four countries.To drum up government support for his investments, Mr. Gelsinger has attended three virtual White House gatherings, spoken with two dozen members of Congress and four governors. He became a key ally to President Biden over a $52 billion package that would provide grants to companies willing to set up new U.S. chip factories. And in Europe, Mr. Gelsinger met with President Emmanuel Macron of France, President Mario Draghi of Italy, their counterparts in other countries, and the pope.Mr. Gelsinger with President Emmanuel Macron of France last June.Pool photo by Stephane De SakutinIt has been a tough slog. Intel’s stock has dropped as Mr. Gelsinger committed huge sums to chip manufacturing. The $52 billion funding package stalled for months in the House of Representatives, finally passing this month as part of broader legislation that must now be reconciled with a Senate version. Criticism of the chief executive from Wall Street analysts has ramped up.“Every day the job is way bigger than me,” Mr. Gelsinger said. But “it’s OK,” he added, because he believes he has help. “God, I need you showing up with me today because this job is way more than I could possibly do myself.”Faith and WorkIf his father had managed to buy a farm, Mr. Gelsinger would almost certainly have inherited it and become a farmer. That was expected in Robesonia, a borough in Pennsylvania Dutch country where he was raised and worked on his uncles’ farms.But there was no farm to inherit. So at age 16, Mr. Gelsinger passed a scholarship exam that took him to the Lincoln Technical Institute, a for-profit vocational school, where he earned an associate degree.Mr. Gelsinger tells this and other stories self-deprecatingly in a 2003 book of advice that he wrote for Christians titled “Balancing Your Family, Faith & Work,” which was expanded in 2008 and titled, “The Juggling Act: Bringing Balance to Your Faith, Family, and Work.”In 1979, he was interviewed at the technical institute by a manager from Intel. Unlike most of the other students there, Mr. Gelsinger had heard of the company. He breezed through questions related to his studies and predicted he could earn bachelor’s, master’s and Ph.D. degrees while holding down a full-time job, said Ronald Smith, the former Intel executive who conducted the interview.“He is very smart, very ambitious and arrogant,” Mr. Smith said he wrote in a summary of the conversation. “He’ll fit right in.”Mr. Gelsinger took his first plane ride to interview at Intel in California, where he started in October 1979 as a technician. He worked on improving the reliability of microprocessors while studying for a bachelor’s degree at Santa Clara University.He soon started hanging out with the engineers who designed the chips, coming up with ideas to test the chips more efficiently. In 1982, he became the fourth engineer on the team that introduced the groundbreaking 80386 microprocessor.During a 1985 presentation near the completion of the chip, Mr. Gelsinger chided Intel’s leaders Robert Noyce, Gordon Moore and Andy Grove about balky company computers that were slowing the process.A few days later, he got a surprise call from Mr. Grove. The Hungarian-born executive, then Intel’s president who later wrote the management book “Only the Paranoid Survive,” had built a culture where lower-level employees were encouraged to challenge superiors if they could back up their positions. Mr. Grove began mentoring Mr. Gelsinger, a relationship that lasted three decades.By 1986, Mr. Grove had convinced Mr. Gelsinger not to pursue a doctorate at Stanford University and instead made him, at age 24, the leader of a 100-person team designing Intel’s 80486 microprocessor. Mr. Gelsinger eventually earned eight patents, became Intel’s youngest vice president in 1992 and the first person with the title of chief technology officer in 2001.His climb up Intel’s ladder was shaped by another priority: his faith.Though raised in the mainstream United Church of Christ, Mr. Gelsinger said he didn’t really become a Christian until he attended the nondenominational church in Silicon Valley where he met Linda Fortune, who later became his wife. It was at that church in 1980 that he heard the minister quote Revelations.After Mr. Gelsinger became a born-again Christian, he wrestled privately with whether to join the clergy. In a 2019 oral history conducted by the Computer History Museum in Mountain View, Calif., he said he eventually decided to become a “workplace minister,” where “you really view yourself as working for God as your C.E.O., even though you’re working for Intel.”Intel SlipsIn the mid-2000s, Mr. Gelsinger’s footing within Intel shifted. Mr. Grove retired as board chairman in 2004. Another executive, Paul Otellini, was appointed chief executive in 2005. Mr. Gelsinger said he was a “dissonant voice” on Intel’s senior executive team.Mr. Otellini pushed him to leave, Mr. Gelsinger said. (Mr. Otellini died in 2017.) In 2009, Mr. Gelsinger accepted an offer to become president and chief operating officer of EMC, a maker of data storage gear.Departing Intel after 30 years as a company man hurt badly. “I was just so angry and emotional about the departure,” Mr. Gelsinger said.In 2012, he became chief executive of VMware, a software company that EMC controlled. He weathered challenges there, including an aborted effort to compete in cloud computing services with Amazon, but broadened the company’s business and nearly tripled revenues.During those years, Intel slipped. For decades, the company had led the industry in delivering regular factory advances that pack more processing power into chips. But delays in perfecting new production processes allowed rivals such as Taiwan Semiconductor Manufacturing Company and Samsung Electronics to grab the lead in manufacturing technology between 2015 and 2019.Mr. Gelsinger in 2006, when he was senior vice president of Intel’s digital enterprise group, with the company’s dual core next generation chip.Justin Sullivan/Getty ImagesToday, T.S.M.C. makes chips designed by hundreds of other companies. It supplies the world with more than 90 percent of the chips made with the most advanced production technology. Because it is headquartered in Taiwan, which China has laid territorial claim to, its location has made it a political and supply chain chokepoint should conflict erupt over the island nation.Intel was also suffering from its missteps in the mobile market, which consumes billions of processors compared with the hundreds of millions sold for computers.After convincing Apple to use its chips in Macintosh computers in 2005, Intel had a chance to win a place in the iPhone, which debuted in 2007. But Mr. Otellini said in a 2013 interview in The Atlantic that he turned down the opportunity because the price that Apple was willing to pay for chips was too low to make a profit.The decision, which Mr. Otellini said he regretted, led Apple to use rival Arm technology for smartphones and, later, tablets. So did Samsung and other companies that make devices using Google’s Android software. More recently, Apple started using Arm chips in many new Macs.Mr. Otellini and his successors prioritized Intel’s profit margins while failing to take risks to move into new markets and outflank rivals, former company insiders now acknowledge. If boiled down to a book, “it could be called ‘the insufficiently paranoid don’t survive,’” said Reed Hundt, a former Federal Communications Commission chairman who served on Intel’s board from 2001 to 2020, in a nod to Mr. Grove’s “Only the Paranoid Survive.”As questions swirled about Intel’s future, Mr. Gelsinger was viewed as a possible savior. But he insisted he was committed to VMware, a point he seemed to underscore by adding a temporary tattoo with the company’s name on his arm during a 2018 conference in Las Vegas.Then, just before Thanksgiving 2020, an Intel director asked Mr. Gelsinger to join the company’s board. Mr. Gelsinger asked for permission from Michael Dell, the founder of Dell Technologies, which then controlled VMware.“I knew Intel needed some help and Pat was somebody who could help a lot, so I said ‘sure,’” Mr. Dell said.Understand the Global Chip ShortageCard 1 of 7In short supply. More

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    Food Prices Approach Record Highs, Threatening the World’s Poorest

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    The prices have climbed to their highest level since 2011, according to a U.N. index. It could cause social unrest “on a widespread scale,” one expert said.WASHINGTON — Food prices have skyrocketed globally because of disruptions in the global supply chain, adverse weather and rising energy prices, increases that are imposing a heavy burden on poorer people around the world and threatening to stoke social unrest.The increases have affected items as varied as grains, vegetable oils, butter, pasta, beef and coffee. They come as farmers around the globe face an array of challenges, including drought and ice storms that have ruined crops, rising prices for fertilizer and fuel, and pandemic-related labor shortages and supply chain disruptions that make it difficult to get products to market.A global index released on Thursday by the United Nations Food and Agriculture Organization showed food prices in January climbed to their highest level since 2011, when skyrocketing costs contributed to political uprisings in Egypt and Libya. The price of meat, dairy and cereals trended upward from December, while the price of oils reached the highest level since the index’s tracking began in 1990.Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics who was formerly chief economist at the International Monetary Fund, said that food price increases would strain incomes in poorer countries, especially in some parts of Latin America and Africa, where some people may spend up to 50 or 60 percent of their income on food.He said that it wasn’t “much of an exaggeration” to say the world was approaching a global food crisis, and that slower growth, high unemployment and stressed budgets from governments that have spent heavily to combat the pandemic had created “a perfect storm of adverse circumstances.”“There’s a lot of cause for worry about social unrest on a widespread scale,” he added.Even before the pandemic, global food prices had been trending upward as disease wiped out much of China’s pig herd and the U.S.-China trade war resulted in Chinese tariffs on American agricultural goods.But as the pandemic began in early 2020, the world experienced seismic shifts in demand for food. Restaurants, cafeterias and slaughterhouses shuttered, and more people switched to cooking and eating at home. Some American farmers who could not get their products into the hands of consumers were forced to dump milk in their fields and cull their herds.Two years later, global demand for food remains strong, but higher fuel prices and shipping costs, along with other supply chain bottlenecks like a shortage of truck drivers and shipping containers, continue to push up prices, said Christian Bogmans, an economist at the International Monetary Fund.Drought and bad weather in major agricultural producing countries like Brazil, Argentina, the United States, Russia and Ukraine have worsened the situation.The I.M.F.’s data shows that average food inflation across the world reached 6.85 percent on an annualized basis in December, the highest level since their series started in 2014. Between April 2020 and December 2021, the price of soybeans soared 52 percent, and corn and wheat both grew 80 percent, the fund’s data showed, while the price of coffee rose 70 percent, due largely to droughts and frost in Brazil.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.While food prices appear set to stabilize, events like a conflict in Ukraine, a major producer of wheat and corn, or further adverse weather could change that calculation, Mr. Bogmans said.The effects of rising food prices have been felt unevenly around the world. Asia has been largely spared because of a plentiful rice crop. But parts of Africa, the Middle East and Latin America that are more dependent on imported food are struggling.Countries like Russia, Brazil, Turkey and Argentina have also suffered as their currencies lost value against the dollar, which is used internationally to pay for most food commodities, Mr. Bogmans said.In Africa, bad weather, pandemic restrictions and conflicts in the Democratic Republic of Congo, Ethiopia, Nigeria, South Sudan and Sudan have disrupted transportation routes and driven up food prices.Joseph Siegle, the director of research at National Defense University’s Africa Center for Strategic Studies, estimated that 106 million people on the continent are facing food insecurity, double the number since 2018.“Africa is facing record levels of insecurity,” he said.While shopping at a market in Mexico City’s Juarez neighborhood on Thursday, Gabriela Ramírez Ramírez, a 43-year-old domestic worker, said the increase in prices had strained her monthly budget, about half of which goes to food. Inflation in Mexico reached its highest rate in more than 20 years in November, before easing slightly in December.“It affects me a lot because you don’t earn enough, and the raises they give you are very small,” she said. “Sometimes we barely have enough to eat.”The impact has been less severe in the United States, where food accounts for less than one-seventh of household spending on average, and inflation has become broad-based, spilling into energy, used cars, dishwashers, services and rents as price increases reach a 40-year high.Yet American food prices have still risen sharply, putting a burden on the poorest households who spend more of their overall budget on food. Food prices rose 6.3 percent in December compared with a year ago, while the price of meat, poultry, fish and eggs jumped 12.5 percent, according to the Bureau of Labor Statistics.The Biden administration has tried to restrain some of these increases, including with an effort to combat consolidation in the meat packing business, which it says is a source of higher prices.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Commerce Dept. Survey Uncovers ‘Alarming’ Chip Shortages

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    Increased demand for the semiconductors that power cars, electronics and electrical grids have stoked inflation and could cause more factory shutdowns in the United States.WASHINGTON — The United States is facing an “alarming” shortage of semiconductors, a government survey of more than 150 companies that make and buy chips found; the situation is threatening American factory production and helping to fuel inflation, Gina M. Raimondo, the commerce secretary, said in an interview on Monday.She said the findings showed a critical need to support domestic manufacturing and called on Congress to pass legislation aimed at bolstering U.S. competitiveness with China by enabling more American production.“It’s alarming, really, the situation we’re in as a country, and how urgently we need to move to increase our domestic capacity,” Ms. Raimondo said.The findings show demand for the chips that power cars, electronics, medical devices and other products far outstripping supply, even as global chip makers approach their maximum production capacity.While demand for semiconductors increased 17 percent from 2019 to 2021, there was no commensurate increase in supply. A vast majority of semiconductor fabrication plants are using about 90 percent of their capacity to manufacture chips, meaning they have little immediate ability to increase their output, according to the data that the Commerce Department compiled.The need for chips is expected to increase, as technologies that use vast amounts of semiconductors, like 5G and electric vehicles, become more widespread.The combination of surging demand for consumer products that contain chips and pandemic-related disruptions in production has led to shortages and skyrocketing prices for semiconductors over the past two years.Chip shortages have forced some factories that rely on the components to make their products, like those of American carmakers, to slow or suspend production. That has dented U.S. economic growth and led to higher car prices, a big factor in the soaring inflation in the United States. The price of a used car grew 37 percent last year, helping to push inflation to a 40-year high in December.The Commerce Department sent out a request for information in September to global chip makers and consumers to gather information about inventories, production capacity and backlogs in an effort to understand where bottlenecks exist in the industry and how to alleviate them.The results of that survey, which the Commerce Department published Tuesday morning, reveal how scarce global supplies of chips have become.The median inventory among buyers had fallen to fewer than five days from 40 days before the pandemic, meaning that any hiccup in chip production — because of a winter storm, for example, or another coronavirus outbreak — could cause shortages that would shut down U.S. factories and again destabilize supply chains, Ms. Raimondo said.“We have no room for error,” she added.To help address the issue, Biden administration officials have coalesced behind a bill that the Senate passed in June as an answer to some of the nation’s supply chain woes.The bill, known in the Senate as the U.S. Innovation and Competition Act, would pour nearly a quarter-trillion dollars into scientific research and development to bolster competitiveness against China and prop up semiconductor makers by providing $52 billion in emergency subsidies.Momentum on the legislation stalled amid ideological disputes between the House and Senate over how to direct the funding. In June, House lawmakers passed a narrower bill, eschewing the Senate’s focus on technology development in favor of financing fundamental research.But administration officials, led by Ms. Raimondo, have begun prodding lawmakers behind the scenes in an effort to help bridge their differences to swiftly pass the bill, emphasizing the urgency of quickly signing solutions into law.“There’s no getting around this. There is no other solution,” Ms. Raimondo said. “We need more facilities.”On Tuesday evening, House Democrats unveiled a sweeping, 2,900-page bill that lawmakers said they hoped would be a starting point for negotiations with the Senate, in an effort to ultimately pass a manufacturing and supply chain bill into law. In a statement minutes after the bill text was made public, President Biden hailed both proposals and encouraged “quick action to get this to my desk as soon as possible.”Understand the Global Chip ShortageCard 1 of 7In short supply. More