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    Jobless for a Year? Employment Gaps Might Be Less of a Problem Now.

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    People who were out of work for a while have typically found it much harder to get a job. The pandemic may have changed how employers view people who have been unemployed for months or years.Jamie Baxter used to be skeptical of job applicants who had not worked for long stretches of time, assuming that other employers had passed them over.“My mind would jump to the negative stigma of ‘Wow, why could this person not get a job for this long?’” said Mr. Baxter, who is chief executive of Qwick, a temporary staffing company for the hospitality industry.Yet recently, he has hired at least half a dozen people who had been out of work for several months or longer. The pandemic, he said, “made me open my eyes.”Mr. Baxter’s change of heart reflects an apparent willingness among employers in the pandemic era to hire applicants who have been jobless for long periods. That’s a break from the last recession, when long-term unemployment became self-perpetuating for millions of Americans. People who had gone without a job for months or years found it very difficult to find a new one, in part because employers avoided them.The importance of what are often referred to as “résumé gaps” is fading, experts say, because of labor shortages and more bosses seeming to realize that long absences from the job market shouldn’t taint candidates. This is good news for the 2.2 million people who have been out of work for more than six months, and are considered long-term unemployed, according to the Labor Department, double the number before the pandemic.But that change may not last if more people decide to return to the job market or if the economy cools because of another wave of coronavirus cases, experts say.Mr. Baxter, whose company is based in Phoenix, said he has learned from his own experience. Forced to lay off roughly 70 percent of his 54 employees when the pandemic hit, he realized he was responsible for creating the very employment gaps he had once used to screen out job applicants.“I knew I was creating employment gaps,” he said. “Maybe other people would have employment gaps for very justifiable reasons. It doesn’t mean that they are not a good employee.”Even in normal times, the long-term unemployed face steep odds. The longer applicants are out of work, the more they may become discouraged and the less time they may spend searching for jobs. Their skills may deteriorate or their professional networks may erode.Some employers regard applicants with long periods of unemployment unfavorably, research shows — even if many are reluctant to admit it.“Employers don’t often articulate why but the idea, they believe, is that people who are out of work are damaged in some way, which is why they are out of work” said Peter Cappelli, the director of the Center for Human Resources at the Wharton School of the University of Pennsylvania.Some economists believe the pandemic’s unique effects on the economy may have changed things. Notably, the pandemic destroyed millions of jobs seemingly all at once, especially in the travel, leisure and hospitality industries. Many people could not, or chose not to, work because of health concerns or family responsibilities.“For people who were just laid off because of Covid, will there be a stigma? I don’t really think so,” Mr. Cappelli said. Although monthly job-finding rates plummeted for both the short- and long-term unemployed during the early part of the pandemic, the rate for the long-term jobless has since rebounded to roughly the same level as before the pandemic, according to government data. While that does not imply the employment-gap stigma has disappeared, it suggests it is no worse than it has been.That was what Rachel Love, 35, found when she applied for a job at Qwick.After Ms. Love was furloughed, and then laid off from her sales job at a hotel in Dallas last year, she kept hoping that her former company would hire her back. She had been unemployed for about a year when she came to terms with the idea of getting a new job and became aware of a business development position at Qwick.Interviewers did not press her about why she had been out of work for so long. “I hope now, just with everything going on, I think people can look at the résumé and look at the time frame and maybe just infer,” said Ms. Love, who began working remotely for Qwick in June.The tight labor market is almost certainly a factor. In October, there were 11 million job openings for 7.4 million unemployed workers.“The fact of the matter is, there are far more jobs in the U.S. than there are people to fill them right now,” said Jeramy Kaiman, who leads professional recruitment for the western United States at the Adecco Group, a staffing agency, working primarily with accounting, finance and legal businesses. As a result, he added, employers have had to become more willing to consider applicants who had been out of work for a while.Even when the worker shortage eases, labor experts express optimism that employers will care less about employment gaps than before, partly because the pandemic has made hiring managers more sympathetic.Zoë Harte, the chief people officer at Upwork, a company that matches freelancers with jobs, said there had been a “societal shift” in how companies understand employment gaps.“It’s become more and more evident that opportunity isn’t equally distributed, and so it’s important for us as people who are creating jobs and interviewing people to really look at ‘What can this person contribute?’ as opposed to ‘What does this piece of paper say they have done in the past?’” she said.That aligns with Burton Amos’s experience. After he was laid off from his job as a program support specialist with a federal contractor at the start of the pandemic, Mr. Amos, 60, started an online wireless accessories business and began studying for a career in information technology but was unable to land other work.On his résumé and LinkedIn profile, he was open about his lack of full-time employment, an approach that seemed to appeal to interviewers.“Every job did ask about ‘What am I doing right now?’” he said. “They didn’t specifically say anything specific about the pandemic.” He recently received multiple job offers and has accepted a position as a public aid eligibility assistant with the State of Illinois.Many companies have also redoubled their efforts on diversity and are more willing to employ people with a range of backgrounds and experiences, including applicants with long employment gaps.Scott Bonneau, vice president of global talent attraction at the hiring site Indeed, said employment gaps are “not a part of our consideration.” His company instead tries to evaluate a candidate’s skills and capabilities. That practice began before the pandemic, as part of the company’s diversity and inclusion efforts, and it is a shift that he said he expected to see at other businesses.“I think there is the beginnings of a movement to stop focusing on employment gaps entirely at least in certain parts of the employment world,” said Mr. Bonneau, whose responsibilities include hiring people for jobs at Indeed.But other labor experts worry that the employment-gap stigma will return once the economy stabilizes.Employers may not be as forgiving of gaps on résumés that stretch into next year now that jobs, and vaccines, are more available, said Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley. The stigma may be more evident for lower-wage workers in industries where current job openings are especially high.“I would expect that to whatever extent that it exists, it will come back,” Mr. Rothstein said.History also suggests that the empathy that hiring managers may feel now will not last, said Maria Heidkamp, the director of program development at the Heldrich Center for Workforce Development at Rutgers University.In a study released in 2013 by the Heldrich Center, a quarter of American workers said they were directly affected through a job loss and nearly 80 percent said they knew at least someone who had lost a job in the previous four years. Those levels would seem to make hiring managers more understanding of those who had lost their jobs because the experience was so common, Ms. Heidkamp said. “But that’s not what we saw,” she said.“The equation may play out differently” now, she added. “That said, I’m still worried.”Ben Casselman More

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    New York Food Banks Expand to Meet Demand for Aid in the Pandemic

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    Once a month, Dominga Espino, 59, heads from her job as a home health aide in Harlem to a nearby food pantry to pick up groceries for her family in the Bronx. She has come to the pantry for years, but she said pandemic-related job losses among the members of her household had contributed to making the assistance more urgent.“One used to work in the supermarket, and the supermarket closed,” she said. “And one used to work in a restaurant, and the restaurant closed.”Ms. Espino is one of 1.6 million New Yorkers who receive food assistance from the Food Bank for New York City. In the second winter of the pandemic, demand at city food banks, kitchens and pantries has remained high. The need for hot meals has dropped from pandemic highs, but demand for groceries has continued to grow.At the same time, supply chain disruptions and labor shortages have complicated the systems used to distribute food to needy families. In response, food aid organizations have scaled up their operations citywide.From a 90,000-square-foot warehouse in the Bronx, staff members at the Food Bank for New York City, sort, package and ship food to more than 800 soup kitchens and pantries across the five boroughs. The amount of food they distribute has more than doubled since the start of the pandemic, said Dennis Garvey, who manages logistics for the organization’s warehouse.“We really haven’t seen a drop off,” he said. “This winter, this current quarter, we’re actually moving more food out of the warehouse than we ever have before.”To handle the growing volume, the Food Bank of New York added a second shift at night in its warehouse. It also set up an in-house trucking operation to get around nationwide truck shortages.But twenty-five trucks originally expected to be delivered in June have still not arrived, Mr. Garvey said. And then there’s the challenge of finding drivers amid a shrinking work force and increased competition.Those logistics and shipping delays have had a significant impact on food aid in New York. The Masbia Soup Kitchen Network, which operates three locations in Brooklyn and Queens, has found creative solutions, like ordering prepackaged produce to avoid having to manually sort produce in bulk, said Alexander Rapaport, the organization’s executive director. But he added that the transportation issue had been more difficult to navigate.“What if the trucker just doesn’t show up? Which means the vendor doesn’t show up and we have people in line? Which kind of happened yesterday.” Mr. Rapaport said Thursday. “We had truckloads of fresh produce, but there were not enough truckers at the vendor’s place to send out all the deliveries.”At Community Kitchen and Pantry in Harlem, the pandemic has meant distributing more food with fewer volunteers. But organizers are still managing to provide 800 to 850 meals to needy families every Monday through Friday from their kitchen, which gives the culinary manager and head chef, Sheri Jefferson, optimism.“I’m fortunate that we have a staff that are as passionate as I am about what we’re doing,” she said. “We still get it done.” More

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    Here's Why Inflation Is Worrying Washington

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    Price gains have moved up sharply for months, but the fact that the trend is lasting and broadening has newly put policymakers on red alert.Aquan Brunson, 45 and from Brooklyn, used to buy three slices of cheese pizza from 99 Cents Pizza of Utica for lunch each day. But about three months ago, inflation ate away that third slice. The shop has pasted over its old sign to alert customers that it is now “$1.50 Hot Pizza.”“The dollar doesn’t take us far,” said Mr. Brunson, patting his greasy lunch down with paper napkins on a gray December afternoon. “The cost of everything is going up.”Consumers across the country can tell you that inflation has been high this year, evidenced by more expensive used cars, pricier furniture and the ongoing demise of New York City’s famous dollar slice. But until recently, policymakers in Washington responded to it with a common refrain: Rapid price increases were likely to be transitory.Last week, policymakers said it was time to retire the label “transitory,” and acknowledged that the price increases have been proving more persistent than expected.Jerome H. Powell, the Fed chair, said that while his basic expectation is that price gains will cool off, there’s a growing threat that they won’t do so soon or sufficiently.“I think the risk of higher inflation has increased,” he said.A fresh report set for release on Friday is expected to reinforce that concern. The Consumer Price Index could show that inflation picked up by 6.8 percent over the past year, the fastest pace in nearly 40 years. More worrisome for the Fed is that inflation is broadening to many products and services, not just those directly affected by the supply chain woes that have driven up prices for cars and electronics.Here is a rundown about what to know about the price pops sweeping America and the world — and what to expect when new U.S. consumer price inflation figures are released on Friday.Inflation measures price increases.When economists and policymakers talk about “inflation,” they typically mean the increase in prices for the things that people buy out of pocket — tracked by the Consumer Price Index, or C.P.I. — or the change in the cost of things that people consume either out of pocket or through government payments and insurance, which is tracked by the less-timely Personal Consumption Expenditures index.Both measures are way up this year, and C.P.I. data set for release on Friday is expected to show that inflation picked up by the most since 1982. Back then, Paul Volcker was the Fed chair, and he was waging a war on years of rapid price gains by pushing interest rates to double digits to cripple business and consumer demand and cool off the economy. Today, interest rates are set at near-zero after policymakers slashed borrowing costs at the beginning of the pandemic.Price gains are becoming broader.There are plenty of differences between 1982 and today. Inflation had been low for years leading up to 2021, and pandemic-era lockdowns and the subsequent reopening are behind much of the current price pop.Consumer demand surged just as rolling factory shutdowns and a reshuffle in spending to goods from services caused manufacturing backlogs and overwhelmed ports. That’s why policymakers were comfortable dismissing high inflation for a while: It came from kinks that seemed likely to eventually work themselves out.But price gains are increasingly coming from sectors with a less clear-cut, obviously temporary pandemic tieback. Rents, which make up a big chunk of inflation, are rising at a solid clip.“Housing — that is the key broadening,” said Laura Rosner, an economist at MacroPolicy Perspectives.The potential for wider and more lasting price pressures have put Fed officials on edge. Policymakers at the central bank, who had been slowly tiptoeing away from supporting the economy, broadcast clearly last week that they are preparing to speed up the retreat.“They know this report is coming,” Ms. Rosner said of Friday’s anticipated number. “It’s going to confirm and explain why we’ve seen such a sharp shift.”Supply chain snarls are lasting.Abdul Batin, owner of 99 Cents Pizza of Utica, plans to rebrand his Brooklyn pizza store as “$1.50 Pizza of Utica.”Jeanna Smialek/The New York TimesDisruptions to the global flow of goods are not fading as quickly as policymakers had hoped. Additional virus waves have kept factories from running at full speed in Asia and elsewhere. Shipping routes are clogged, and consumers are still buying goods at a robust pace, adding to backlogs and making it hard for the situation to normalize.Households have some $2.5 trillion in excess savings, thanks in part to pandemic-era stimulus, which could help to keep them buying home gym equipment and new coffee tables well into next year.“The earliest we see things normalizing is really the end of 2022,” said Phil Levy, chief economist at the logistics firm FlexPort. When it comes to misunderstanding inflation, he said, “part of the problem is that we treated the supply chain like it was a special category, like food or energy.”But as 2021 has made inescapably clear, the global economy is a delicately balanced system. Take the car industry: Virus-spurred semiconductor factory shutdowns in Taiwan delayed new car production. Given the dearth of new autos, rental car companies had to compete with consumers for previously owned vehicles, leaving shortages on used car lots. The chain reaction pushed prices higher at every link along the way.Global snarls have also helped to push up food prices, as Abdul Batin, owner of 99 Cents Pizza of Utica, can attest. He plans to rebrand it as “$1.50 Pizza of Utica,” and explains that while some customers balked at the cost increase, he couldn’t help it.“Everything is going up right now — cheese, flour, even the soda price,” he said.Wages are also rising.A grocery store in Queens, N.Y. Global snarls have also helped to push up food prices.George Etheredge for The New York TimesAnother thing that could keep inflation high? Wages are climbing swiftly, and some companies have begun to talk about passing those rising expenses onto customers, who seem willing and able to pay more. The Employment Cost Index, a measure the Fed watches closely, picked up notably in the three-month period that ended in September.The risk is that this is an early, and still dim, echo of the kind of wage-and-price dynamic that helped to fuel higher prices in the 1970s and 1980s. Back then, unions were a much more powerful force, and they helped to make sure pay kept up with rising prices. Inflation and wage gains pushed each other into an upward spiral, to the point that price increases leapt out of control and demanded a Fed response.In the years since, workers have typically had less formalized bargaining power. But employers are contending with labor shortages as the virus keeps many would-be employees on the sidelines and as demand booms. That is giving workers the ability to command higher pay as they face climbing costs themselves, and it is prompting many employers to lift wages to compete for scarce talent. That could keep demand solid by bolstering peoples’ wherewithal to spend.“Looking ahead, businesses across all major sectors foresee continued widespread wage hikes,” the New York Fed reported in its section of the Fed’s Beige Book, an anecdotal survey of business and labor contacts carried out by regional Fed banks.In Atlanta’s region, the Beige Book noted, “several contacts mentioned that labor costs were already being passed along to consumers with little resistance, while others said plans were underway to do so.”Mr. Brunson — the pizza aficionado — works at a grocery store. They’ve raised his pay, he said, but it is not enough to keep up with climbing cost of food and other expenses.“They gave us an extra dollar, but that’s just to offset the inflation,” he said. He and his family, three adult children who live with him, are coping by cutting back. “No eating out, less food, less meat.” More

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    Why the November Jobs Report Is Better Than It Looks

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    The number of jobs added was below expectations, but otherwise the report shows an economy on the right track.Everything in the November jobs numbers Friday was good except for the number that usually gets the most attention.The 210,000 jobs that U.S. employers added last month was far below analyst expectations. But most of the other evidence in the report points to a job market that is humming. An open question a few months ago — is this a tight labor market or a loose one? — is quickly being settled in favor of “tight.”Most notably, the jobless rate fell to 4.2 percent from 4.6 percent, a remarkable swing in a single month. The speed with which unemployment has gone from a grave crisis to a benign situation is astounding. Unemployment was 6.7 percent last December. In one year, we’ve experienced an improvement that took three and a half years in the last economic cycle (March 2014 to September 2017).Sometimes a falling unemployment rate is driven by a pernicious trend: People drop out of the labor force. The opposite was true in November. The survey of American households on which the data is based showed uniformly positive signs. The number of people working was up by 1.1 million while the number of adults not in the labor force — neither working nor looking for work — fell by 473,000.Among people in their prime working years, those 25 to 54, the share of people employed rose by a whopping half a percentage point. It was 78.8 percent in November, rapidly approaching its pre-Covid level of 80.4 percent. By early in 2022, it’s easy to imagine that people in that age bracket will be employed at prepandemic rates.Even the disappointing number on job creation, derived from a separate survey of employers, has some silver linings. For one, it was accompanied by positive revisions to September and October job growth numbers, amounting to a combined 82,000, which takes some of the sting away. Revisions have been uncommonly large, and mostly in a positive direction, in recent months, reflecting challenges collecting data in a pandemic economy.For another, soft job creation numbers may also be evidence of a tight labor market. Employers may want to add jobs in larger numbers, but are constrained by the number of workers they’re able to find. That story is certainly consistent with many business surveys and anecdotes about labor shortage issues.A tight job market — one in which workers are scarce and employers have to compete to attract workers — is generally the goal of economic policy. Compensation tends to rise, and workers are confident in their ability to find a new job. The new numbers are just the latest evidence that this is the world American workers are living in right now. (Among the other evidence: The rate of people voluntarily quitting their jobs is at record levels.)That’s not to say everything is perfect. The share of adults in the labor force remains significantly below prepandemic levels — 61.8 percent in November, compared with 63.3 percent in February 2020. That reflects in part the decisions of people to retire early. And it remains unclear how many of those people might return to work as the economy and public health conditions improve.But in terms of policy, this increasingly looks like an economy on the right track. The work of macroeconomic stabilization appears to be pretty much complete. At its coming policy meeting, the Federal Reserve will seriously consider winding down its program of bond-buying faster than planned, Chair Jerome Powell said this week.Despite the soft job creation numbers, the overall November employment report appears to support those plans. Fed officials would like to see a stronger rebound in labor force participation, but that measure was at least heading in the right direction in November. And ultimately it isn’t Fed policy that will decide whether, for example, a 62-year-old who left his job during the pandemic decides to start working again.If anything, the new numbers support the idea that the Fed has found itself out of position, with a monetary policy that is looser than it should be at a time when the labor market is quite healthy and with inflation far above its target.Consider this: In the last economic cycle, the Fed began tapering its bond purchases in December 2013, when the unemployment rate was 6.7 percent and inflation was coming in below the Fed’s 2 percent goal. This time, it began when the jobless rate was 4.2 percent and inflation was in the ballpark of 6 percent (November inflation numbers have not yet been released).Even if you believe the Fed was too quick to tighten monetary policy in 2013 — and the sluggish recovery of the 2010s is evidence that it was — the contrast is striking. In that sense, a more aggressive tapering plan from the Fed will be an effort to adjust its policy stance with the facts on the ground without causing too much disruption to markets or the economy.If the Fed succeeds, the economy will keep growing steadily and the labor market will continue its gradual improvement. But it’s worth noting just how rapid the improvement has already been. In February, the Congressional Budget Office was forecasting the unemployment rate would be 5.3 percent in the current quarter. It has ended up a full percentage point below that level.Ultimately, this has been a speedy labor market recovery, and one that appears to have more room to run. Policymakers have every reason to take the win and continue adjusting to that reality. More

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    A Top Official Says the Fed Will ‘Grapple’ With a Faster Bond-Buying Taper

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    The president of the New York Federal Reserve said Omicron could prolong supply and demand mismatches, causing some inflation pressures to last.John C. Williams, president of the Federal Reserve Bank of New York, said the latest variant of the coronavirus could prolong the bottlenecks and shortages that have caused inflation to run hotter than expected, and is a risk Fed officials will assess as they “grapple” with how quickly to remove economic support.It is still too soon to know how the Omicron variant, which public health officials in southern Africa identified just last week, will affect the economy, Mr. Williams said Tuesday in an interview with The New York Times. But if the new version of the virus leads to another wave of infections, it could exacerbate the disruptions that have caused prices to rise at their fastest pace in three decades.“Clearly, it adds a lot of uncertainty to the outlook,” Mr. Williams said of the new variant. He later added that a risk with the new variant is that it “will continue that excess demand in the areas that don’t have capacity, and will stall the recovery in the areas where we actually have the capacity.”That, he said, would “mean a somewhat slower rebound overall” and “also does increase those inflationary pressures, in those areas that are in high demand.”Mr. Williams’s comments are the latest indication that policymakers are growing more concerned about inflation and are weighing how to respond. Jerome H. Powell, the Fed chair, signaled on Tuesday that the central bank could move to withdraw economic support more quickly than it initially expected and suggested that such a decision could come as soon as the Fed’s December meeting.The Fed had been buying $120 billion in government-backed securities each month throughout much of the pandemic to bolster the economy by keeping money flowing in financial markets. In November, officials announced plans to wind down that program gradually through the end of the year and the first half of 2022, a process known as “tapering.” But Mr. Powell indicated on Tuesday that the central bank could wrap up its bond-buying more quickly.Mr. Williams, who is vice chair of the Fed’s policymaking Open Market Committee and is a top adviser to Mr. Powell, did not explicitly endorse a faster tapering process, saying that “there’s a lot to learn and digest and think about coming up to the next meeting.”.css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}But he emphasized that the economy had rebounded more strongly this year than he and other officials had been expecting, and said the unemployment rate had fallen quickly. That economic strengthening at a moment of high inflation may warrant less Fed support, he said.“The question is: Would it make sense to end those purchases somewhat earlier, by maybe a few months, given how strong the economy is?” he said. “That’s a decision, discussion, I expect we’ll have to grapple with.”Inflation has proved a thornier problem than the Fed and most private-sector economists predicted earlier this year. In March, Fed officials said they expected their preferred inflation measure to show consumer prices rising at 2.4 percent at the end of 2021; by September, they had revised that forecast to 4.2 percent.That’s likely to increase further. The central bank’s preferred inflation gauge climbed 5 percent in its most recent reading. Policymakers are closely watching to see what happens in a Consumer Price Index report set for release on Dec. 10, just before the Fed’s meeting on Dec. 14 and 15.Mr. Williams acknowledged that inflation had proved stronger and more lasting than he initially expected. But he said the error wasn’t the result of a misunderstanding of how the economy works; rather, it was his failure to anticipate the resurgence of the pandemic itself. Mr. Powell made similar comments in his testimony before the Senate on Tuesday.The spread of the Delta variant over the summer delayed the return of workers to the labor force by disrupting child care and making some people nervous to return to in-person work. It also contributed to supply-chain issues by causing a new round of factory shutdowns in some parts of the world and by extending the pandemic-era shift in consumer spending away from services and toward goods.Empty office space in New York this summer when the Delta variant wave delayed the return of workers. A new wave of cases could lead to more and longer-lasting inflation.Gabriela Bhaskar/The New York Times“These are all things that are driven — I think in large part, not totally, but in large part — to Covid, and the ability so far for us to get control of that,” he said. “This is just lasting a lot longer than expected.”The new variant, Mr. Williams added, “has that potential to just extend this process we’ve been going through.”If the Omicron variant further delays the return of workers and the easing of supply shortages, that could lead to more and longer-lasting inflation. But a new wave of virus cases could also hurt the demand side of the economy, leading people to spend less at restaurants and movie theaters and provoking a new wave of layoffs.Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

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    Supply Chain Problems Have Small Retailers Gambling on Hoarding

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    Megan Searfoss has been hoarding sneakers in Connecticut.Ms. Searfoss, the owner of two running stores in Darien and Ridgefield, Conn., would normally have about 3,000 pairs of shoes in stock ahead of the holiday season. But as she watched supply chain concerns in Vietnam mount this summer and into the fall, she secured a new storage facility and is now carrying around 4,100 pairs.It’s a costly gamble for Ms. Searfoss, who said she is extended about $165,000 more than she would typically be in November because of worries about potential shortages.“It’s placing a big bet and anticipating that what all the analysts are saying is correct,” Ms. Searfoss said. “Usually, we get through the New York City Marathon and then we stop buying shoes — we sell off what we have and go into January super, super lean. But we’re being told not to do that because there’s just not going to be any shoes.”The buildup of running shoes in Connecticut is just one example of how supply chain woes and pandemic-related shortages are affecting thousands of small businesses around the United States this holiday season. While the widespread availability of vaccines is translating into a busier shopping season than last year, businesses of all sizes are grappling with the impact from factory shutdowns overseas, backups at ports, and trucking and other labor shortages.For many small businesses, the unpredictability this year has forced them to make buying decisions months or weeks earlier than they normally would and to tie up more of their cash in inventory, which can be risky.“The big thing is you really have to order in advance,” said Dan Quinn, an owner of What We Make, a furniture business in Algonquin, Ill., which sells tables and other wares through Etsy. “I’ve got 14 weeks of projects. I need to get most of that material in house as fast as possible and keep buying it until you have a stockpile basically.”Angela Arnold owns Playmatters Toys in Ohio with her husband.Angelo Merendino for The New York TimesThey ordered some toys in mid-May but still haven’t been able to stay ahead of the supply chain issues.Angelo Merendino for The New York TimesWhile many small businesses are affected by manufacturing issues overseas, some have used this moment to their advantage. Etsy, which powers online stores for millions of sellers, said that more than half of its U.S. vendors source materials from within their own states, allowing them to bypass many of the supply chain problems that are impacting the global economy. Etsy stores “don’t have the complex supply chains that are vulnerable to single points of failure,” Josh Silverman, Etsy’s chief executive, said in an interview.Still, the range of shortages can manifest themselves in unusual ways.Isabel Amigon, owner of the online store Sololi, is still waiting on an order of Christmas tree ornaments she placed in April. The manufacturer alerted her that the order would be delayed because of a shortage in strings to tie on top of the decorated orbs.Ms. Amigon, who is based in Westchester County, N.Y., said that she was worried that if she didn’t get them in time for the holiday season, she would have to wait until next year to make use of the inventory. The string shortage has also led her to remove specific home goods items from her website, such as table runners and washcloths.“Even if I get them by the end of November, I won’t be able to sell all of them because most people have already bought their ornaments,” Ms. Amigon said. “I placed the orders early and I still have to face this situation.”Other missing items are more traditional than string.“Some things we ordered in June and July are still coming in,” Sean Arnold, an owner of Playmatters Toys, said.Angelo Merendino for The New York TimesEarlier this year, Angela and Sean Arnold were planning to order another set of Disney princess dolls to fill some shelves in their toy store, Playmatters Toys, in Pepper Pike, Ohio. But they got a notification in September from the distributor alerting them and other toy store owners that the items were “indefinitely out of stock” because the factory in Vietnam where the dolls are manufactured was shut down because of a Covid-19 outbreak.Even though they anticipated shipping delays and ordered some toys in mid-May instead of August, they could not get ahead of the global disruption.And it’s not only dolls. The couple has been missing out on other toys and electronics because of shipping delays or disruptions in manufacturing plants in Vietnam. The couple has also been forced to raise prices on some products as they face higher transportation and wholesale costs from toy vendors.“Some things we ordered in June and July are still coming in,” Mr. Arnold said.Because of these kind of delays, Etsy has viewed this moment as one in which small businesses can provide gift options that are not reliant on overseas factories and shipping. Extra consumer interest in small businesses, whether online or offline, would likely be welcome after the pandemic dealt a crippling blow to so many last year.Etsy said it had seen searches for living room furniture soar by 1,572 percent and less dramatic but significant jumps for dining tables, checkers or chess boards, suggesting that some shoppers are coming to the site rather than going to chain stores.The bookstore owner Jeannine Cook said customers have canceled orders because publishers have had trouble delivering books.Mark Makela for The New York TimesEtsy learned how to better handle large surges in demand after face masks exploded as a category on the site during the onset of the pandemic and it has made improvements designed to mitigate shipping issues it experienced then. Mr. Silverman said that now, virtually all items from sellers in the U.S. have an expected delivery date, which was not the case a year ago, and shoppers can filter products by geography to shop from vendors in their area, which can help accelerate shipping.The company also said it checks in with sellers to ensure they have enough raw materials and supplies when its technology observes jumps in demand for specific items.Mr. Quinn, the owner of the furniture seller What We Make, has seen his business boom as Americans grapple with long wait times and lack of availability for furniture from chains. Customers have been willing to wait 10 weeks for a dining table from him, particularly after seeing 20-week waits at chains like West Elm.“The big box stores don’t have a lot of things they normally have so the positive for us is that people are sort of forced to look at other options whereas before they’d settle for the simplest option,” he said.Still, he has seen his business disrupted in other ways, including a sharp increase in material prices and a scramble for reclaimed wood, which typically comes from old barns.“The people who take down the barns for the material we use, a lot of them ended up getting laid off or going on unemployment,” Mr. Quinn said. “So we have had to try to stockpile material and order well in advance of what we used to do.”“It makes me nervous because I don’t want folks to feel like they can’t get what they need or want,” Ms. Cook said.Mark Makela for The New York TimesWhile Mr. Quinn has been thriving in spite of competition from major furniture sellers, the country’s biggest retailers are often better equipped to handle supply chain issues than small businesses. Companies like Walmart and Amazon are massive enough that they can charter airplanes to obtain certain goods.Jeannine Cook doesn’t have that luxury. Ms. Cook, the owner of Harriett’s Bookshop in Philadelphia, noticed during the summer that publishers were having trouble delivering her book orders, with some unable to even provide a timeline for when orders would arrive. The problem became more widespread in late August.Ms. Cook, who opened a second location in Collingswood, N.J., in July, said that more customers were canceling their orders from the bookshop.“It makes me nervous because I don’t want folks to feel like they can’t get what they need or want,” Ms. Cook said. “It’s hard because we’re already up against the big-box companies that have so much more infrastructure than we do.”Ms. Searfoss said she sometimes got nervous thinking, “look at all that I’ve bought.”Christopher Capozziello for The New York TimesA recent study by Adobe showed that out-of-stock messages in October more than quadrupled compared with October 2019. That’s one reason that the retail industry, including small businesses, have urged the public to shop early this year to secure gifts for the holiday season.“I hate that we have now gone right from Halloween to Christmas,” said Ms. Searfoss, the proprietor of the running stores, who said that she began holiday marketing on Nov. 1 for the first time. “I don’t want people to feel frantic but I do think it’s pretty serious that they’re not going to get what they want this year.”She anticipated that shipping delays and out-of-stock issues at bigger chains might drive business to her stores. “People, those days before Christmas, will be buying whatever they can from whatever local store they can,” she said.“It’s just a little bit stressful for me, thinking, ‘OK, look at all that I’ve bought,’” Ms. Searfoss said. “If I buy it, will they come?” More

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    Supply Chain Shortages Help a North Carolina Furniture Town

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    The furniture capital of the state is ground zero for inflation, labor shortages, hot demand and limited supply. It’s debating how to cope.HICKORY, N.C. — Six months into the coronavirus pandemic, as millions of workers lost their jobs and companies fretted about their economic future, something unexpected happened at Hancock & Moore, a purveyor of custom-upholstered leather couches and chairs in this small North Carolina town.Orders began pouring in.Families stuck at home had decided to upgrade their sectionals. Singles tired of looking at their sad futons wanted new and nicer living room furniture. And they were willing to pay up — which turned out to be good, because the cost of every part of producing furniture, from fabric to wood to shipping, was beginning to swiftly increase.More than a year later, the furniture companies that dot Hickory, N.C., in the foothills of the Blue Ridge Mountains, have been presented with an unforeseen opportunity: The pandemic and its ensuing supply chain disruptions have dealt a setback to the factories in China and Southeast Asia that decimated American manufacturing in the 1980s and 1990s with cheaper imports. At the same time, demand for furniture is very strong.In theory, that means they have a shot at building back some of the business that they lost to globalization. Local furniture companies had shed jobs and reinvented themselves in the wake of offshoring, shifting to custom upholstery and handcrafted wood furniture to survive. Now, firms like Hancock & Moore have a backlog of orders. The company is scrambling to hire workers.“Not to sound trite, but it’s unprecedented,” said Amy Guyer, vice president for human resources and benefits for the parent company that includes Rock House Farm furniture brands such as Hancock & Moore and Century Furniture.Yet the same forces that are making it difficult for overseas manufacturers to sell their goods in the United States — and giving American workers a chance to command higher wages — are also throwing up obstacles.Many of the companies are dependent on parts from overseas, which have been harder — and more expensive — to obtain. Too few skilled workers are seeking jobs in the industry to fill open positions, and businesses are unsure how long the demand will last, making some reluctant to invest in new factories or to expand to towns with bigger potential labor pools.“We would love to expand capacity,” Ms. Guyer said, “but we’re the furniture mecca of North Carolina — every other furniture company is in the same boat we are.”Even if there were enough workers, said Alex Shuford, the chief executive of the company that owns Rock House Farm furniture brands, “the surge isn’t going to last as long as it would take to go to a completely trained work force and get them up to speed.”The current moment, he added, “is abnormal in every way, and not sustainable in any way.”For now, companies in Hickory are seeing a huge upswing thanks to strong demand and limited supply. Prices for couches, beds, kitchen tables and bedding have shot up this year, climbing by 12 percent nationally through October. Furniture and bedding make up a small slice of the basket of goods and services that the inflation measure tracks — right around 1 percent — so that increase has not been enough to drive overall prices to uncomfortable levels on its own. But the rise has come alongside a bump in car, fuel, food and rent costs that have driven inflation to 6.2 percent, the highest level in 31 years..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}The question for policymakers and consumers alike is how long the surge in demand and the limitations in supply will last. A key part of the answer lies in how quickly shipping routes can clear up and whether producers like the craftsmen in Hickory can ramp up output to meet booming demand. But at least domestically, that is proving to be a more challenging task than one might imagine.The production floor at Century Furniture’s case goods factory in Hickory.Travis Dove for The New York TimesA Century Furniture upholstery plant in Hickory. Demand for furniture is booming, and domestic producers are raising prices.Travis Dove for The New York TimesOn a wet morning in late October, the sound of electrical sanders whirring and the steady thunks of a craftsman planing a chair leg echoed through one of Century Furniture’s cavernous warehouses. The factory once housed 600 workers tending assembly lines. Now about 250 busily construct tables, chairs and desks.The plant typically has 2,000 orders in the pipeline, but these days that is more like 4,000, said Brandon Mallard, its manager. Deliveries of ordered furniture used to happen within six to eight weeks; now they can take six months.The same supply chain problems afflicting nearly every industry are also hitting Century. Dresser drawer handles are trapped on container ships somewhere between Vietnam and North Carolina. For some products, imported wood has faced delays.Component delivery dates “just keep moving out,” Mr. Mallard said.Labor has also been a challenge. Employees at Century have been working overtime to catch up with the backlog, but workers burn out, and furniture margins are so thin that paying overtime labor rates can eat into profits. Several of Mr. Shuford’s brands have been raising prices, but because pieces are preordered weeks or months in advance, they have sometimes failed to increase them quickly enough to keep up. The experience in Hickory is a microcosm of what is playing out on a larger scale across the global economy.Jonathan Smith is studying upholstering at the Catawba Valley Furniture Academy. Too few young people are entering the furniture industry to replace those who are retiring. Travis Dove for The New York TimesDemand has bounced back after falling early in the pandemic, fueled by government stimulus checks and savings amassed during the pandemic. Spending has lurched away from services and toward goods, and that mix is only slowly normalizing.The sudden change has thrown a finely balanced global supply chain out of whack: Shipping containers have struggled to get to stockyards where they are needed, container ships cannot clear ports quickly enough, and when imported goods get to dry land, there are not enough trucks around to deliver everything. All of that is compounded by foreign factory shutdowns tied to the virus.With foreign-made parts failing to reach domestic producers and warehouses, prices for finished goods, parts and raw materials have shot higher. American factories and retailers are raising their own prices. And workers have come into short supply, prompting companies to lift their wages and further fueling inflation as they increase prices to cover those costs.Chad Ballard, 31, has gone from making $15 per hour building furniture in Hickory at the start of the pandemic to $20 as he moved into a more specialized role.Mr. Ballard said he came to town four years ago after working construction jobs and at tree services in Florida. He was ready for something more stable and less weather-exposed, and he found it in furniture making. The job has provided stability and enough financial security that he was able to pay off his Jeep and make plans to buy a house with his wife, who also works in the industry.But there is a flip side to some of the factors that are helping to buoy workers like Mr. Ballard: If inflation continues to rise in the hot-demand economy, it will mean rising costs for them and other consumers that eat into paychecks and make it harder to afford everyday necessities like food and shelter. Already, the heating economy means that Mr. Ballard’s goal of buying a house will be slightly tougher. The typical price for a house in Hickory has shot up 21 percent over the past year to $199,187, according to data from Zillow.Fabric and leather templates for furniture designs at a Hancock & Moore factory in Taylorsville, N.C.Travis Dove for The New York TimesBeverly Houston organized pieces of leather as they came off the cutting machine at the Hancock & Moore factory.Travis Dove for The New York TimesAs price increases drag on, economic policymakers worry that consumers and businesses might come to expect sustained inflation and demand steadily higher pay, resulting in a spiral where wages and prices push each other up.There is reason to believe that such a dire outcome can be avoided. Many economists, including those in the Biden administration, believe that demand will eventually moderate as life shifts back toward more normal patterns and consumers spend down their savings, allowing supply to catch up — possibly by the end of next year.Understand the Supply Chain CrisisCard 1 of 5Covid’s impact on the supply chain continues. More

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    Inflation Drives Sharp Downturn in Consumer Sentiment

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    Americans have turned decidedly gloomy about their financial outlook, and inflation is the main cause of the anxiety, according to a survey released Friday.The University of Michigan reported that its survey of consumer sentiment fell to its lowest level in a decade in early November. It attributed the decline to “the growing belief among consumers that no effective policies have yet been developed to reduce the damage from surging inflation.”Hampered by supply chain disruptions and labor shortages in some industries, the economy has been straining under rising prices. The government this week reported the steepest inflation in 31 years, with a 6.2 percent increase in prices in October from a year earlier.In the Michigan survey, “rising prices for homes, vehicles and durables were reported more frequently than any other time in more than half a century.” But inflation is hardly limited to big-ticket purchases — food items like meat are getting more expensive, driving up the cost of preparing Thanksgiving meals.Many policymakers have assumed that higher inflation would be transitory, a result of the uneven reopening of the economy after widespread shutdowns because of the coronavirus pandemic.Investors, too, have shrugged off the threat of inflation, even though it can erode the value of financial assets. Bond yields, which move higher in times of inflation, remain low by historical standards. And the stock market is near record highs, despite the uptick in prices lately.But the Michigan survey is a sign that consumers are beginning to feel pinched. The survey reflected a downturn in assessments of both current conditions and economic prospects.“Consumers are angry about inflation,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago.“Inflation will get worse before it gets better,” Ms. Swonk said. “It could moderate by the spring of 2022, and it does affect how people feel about the economy.”But consumers in the United States continue to spend at robust levels, she said, and the odds look good for a robust holiday shopping season. More