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    Fed’s Williams hints that bond-buying taper could start even if job gains slow.

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    John C. Williams, the president of the Federal Reserve Bank of New York and a powerful monetary policy official, hinted on Wednesday that it might be possible for the central bank to begin removing support for the economy before the end of the year even if the job market grows at a lackluster pace in coming months.The Fed has been buying $120 billion in government-backed bonds each month to help the economy by keeping interest rates low and money flowing. Policymakers have been debating when to begin slowing that program. They said in December that they would do so only once they had made “substantial further progress” toward maximum employment and inflation that averages 2 percent over time.Key policymakers have made it clear that the inflation side of that goal has been satisfied, with prices up markedly this year, but they have been waiting for more progress on employment. Assessing the job market has been complicated by surging coronavirus infections tied to the Delta variant, and payroll gains slowed in August.Mr. Williams, who holds a constant vote on monetary policy and is foremost among the central bank’s 12 regional policymakers, told reporters on Wednesday that he had been looking at the cumulative level of employment progress rather than month-to-month changes — suggesting that weakening jobs growth would not necessarily make impossible a start to the so-called taper. “It’s not a speed condition,” Mr. Williams said. “It’s really about, where are we, relative, on this path back toward maximum employment?”He added that he was looking not just at job gains but also at measures like labor force participation for a “full picture” of how much progress the job market has made.“Some months come in stronger, some not so strong,” Mr. Williams said. “It’s really about accumulation.”He added, “We’ll have to wait and see the data as it comes in.”Mr. Williams said during a speech earlier in the day that if the economy continued to improve as he expected, “it could be appropriate to start reducing the pace of asset purchases this year.” Pulling back on bond buying will be just a first step in removing support, and the Fed’s policy interest rate is expected to remain at near zero for some time.His comments came just as the Fed released its latest anecdotal survey of business contacts across its regional districts, commonly called the “Beige Book.” “Delta” was referenced 32 times as employers reported that “growth downshifted slightly to a moderate pace in early July through August.” More

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    Unemployment Benefits Expire for Millions Without Pushback From Biden

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    The president has encouraged some states to continue helping the long-term unemployed, but administration officials said it was time for enhanced federal aid to end.WASHINGTON — Expanded unemployment benefits that have kept millions of Americans afloat during the pandemic expired on Monday, setting up an abrupt cutoff of assistance to 7.5 million people as the Delta variant rattles the pandemic recovery.The end of the aid came without objection from President Biden and his top economic advisers, who have become caught in a political fight over the benefits and are now banking on other federal help and an autumn pickup in hiring to keep vulnerable families from foreclosure and food lines.The $1.9 trillion economic aid package Mr. Biden signed in March included extended and expanded benefits for unemployed workers, like a $300-per-week federal supplement to state jobless payments, additional weeks of assistance for the long-term unemployed and the extension of a special program to provide benefits to so-called gig workers who traditionally do not qualify for unemployment benefits. The expiration date reached on Monday means that 7.5 million people will lose their benefits entirely and another three million will lose the $300 weekly supplement.Republicans and small business owners have assailed efforts to extend the aid, contending that it has held back the economic recovery and fueled a labor shortage by discouraging people from looking for work. Liberal Democrats and progressive groups have pushed for another round of aid, saying millions of Americans remain vulnerable and in need of help.Mr. Biden and his advisers have pointedly refused to call on Congress to extend the benefits further, a decision that reflects the prevailing view of the state of the recovery inside the administration and the president’s desire to focus on winning support for his broader economic agenda.The president’s most senior economic advisers say the economy is in the process of completing a hand off between federal assistance and the labor market. As support from the March stimulus law wanes, they say, more and more Americans are set to return to work, drawing paychecks that will power consumer spending in the place of government aid.And Mr. Biden is pushing Congress this month to pass two measures that constitute a multi-trillion-dollar agenda focused on longer-run economic growth: a bipartisan infrastructure bill and a larger, partisan spending bill with investments in child care, education, carbon reduction and more. That push leaves no political oxygen for an additional short-term aid bill, which White House officials insist the economy does not need.President Biden and his advisers have pointedly refused to call on Congress to extend the benefits further.Oliver Contreras for The New York TimesAdministration officials say money that continues to flow to Americans from the March law, including new monthly payments to parents, will continue to sustain the social safety net even as the expanded federal jobless aid expires. Mr. Biden has called on certain states — those with high unemployment rates and a willingness to continue aid to jobless workers — to use state relief funds from the March law to help the long-term unemployed. So far, no state has said it plans to do so.On Sunday, Mr. Biden’s chief of staff, Ron Klain, told CNN’s “State of the Union” that the March law was also allowing states to help those out of work by offering employment bonuses and job training and counseling..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-w739ur{margin:0 auto 5px;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-w739ur{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-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.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;}“We think the jobs are there,” Mr. Klain said, “and we think the states have the resources they need to move people from unemployment to employment.”Mr. Biden has faced criticism from the left and the right on the issue, and he has responded with a balancing act, supporting the benefits as approved by Congress but declining to push to extend them — or to defend them against attacks by leaders in some states.Throughout the summer, business lobbyists and Republican lawmakers called on the president to cut off the benefits early, blaming them for the difficulties some businesses were facing in hiring workers, particularly in lower-paying industries like hospitality. Soon after the backlash began, Mr. Biden defended the benefits but called on the Labor Department to ensure that unemployed workers who declined job offers would lose their aid.But roughly half of the states, nearly all of them led by Republican governors, moved to cut off benefits early on their own. Mr. Biden and his administration did not fight them, angering progressives. The administration is essentially extending that policy into the fall, by calling on only willing states to fill in for expired assistance.“I don’t think we necessarily need a blanket policy for unemployment benefits at this point around the country,” Labor Secretary Martin J. Walsh said in an interview on Friday, “because states are in different places.”Privately, some administration officials have expressed openness to the idea that economic research will eventually show that the benefits had some sort of chilling effect on workers’ decision to take jobs. Critics of the extra unemployment benefits have argued that they are discouraging people from returning to work at a time when there are a record number of job openings and many businesses are struggling to hire.Evidence so far suggests the programs are playing at most a limited role in keeping people out of the work force. States that ended the benefits early, for example, have seen little if any pickup in hiring relative to the rest of the country.Even in the industries that have had the hardest time finding workers, many people don’t expect a sudden surge in job applications once the benefits expire. Other factors — child care challenges, fear of the virus, accumulated savings from previous waves of federal assistance and a broader rethinking of work preferences in the wake of the pandemic — are also playing a role in keeping people out of work.“I think it’s a piece of the puzzle but I don’t think it’s the big piece,” said Ben Fileccia, the director of operations and strategy for the Pennsylvania Restaurant & Lodging Association. “It’s easy to point to, but I don’t think it’s the true reason.”Progressives in and outside of Congress have grown frustrated with the administration’s approach to the benefits, warning it could backfire economically. Job growth slowed in August as the Delta variant spread across the country.“Millions of jobless workers are going to suffer when benefits expire on Monday, and it didn’t need to be this way,” Senator Ron Wyden, Democrat of Oregon and the chairman of the Finance Committee, said in a news release last week. “It’s clear from the economic and health conditions on the ground that we shouldn’t be cutting off benefits now.”Elizabeth Ananat, a Barnard College economist who has been studying the impact of the pandemic on low-wage workers, said that cutting off benefits now, when the Delta variant has threatened to set back the recovery, was a threat to both workers and the broader economy.“We’ve got this fragile economic recovery and now we’re going to cut income from people who need it, and we are pulling back dollars out of an economy that is still pretty unsteady,” she said.Even in the industries that have had the hardest time finding workers, many people don’t expect a sudden surge in job applications once the benefits expire.Spencer Platt/Getty ImagesMs. Ananat has been tracking a group of about 1,000 low-income parents in Philadelphia, all of whom were working before the pandemic. More than half lost their jobs early in the pandemic last year. By this summer, 72 percent were working, reflecting the strong rebound in the economy as a whole. But that still left 28 percent of the group who were unemployed, either because they could not find work or because of child care or other responsibilities.“We’re going into a new school year where there’s going to be a lot more uncertainty than there was this spring for parents,” Ms. Ananat said. “Employers are again going to be dealing with a situation where they have people who want to work, but what the heck are they supposed to do when their kid gets sent home to quarantine?”Measures of hunger and other hardship have fallen this year, as the job market has improved and federal aid, including the expanded child tax credit, has reached more low-income families. But the cutoff in benefits could change that, Ms. Ananat said. “In the absence of some kind of solution, this cliff comes and that number is going to go back up,” she said. “This is a significant group of people who are going to be in a lot worse shape.” More

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    The Economy Is Booming but Far From Normal, Posing a Challenge for Biden

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    High inflation, ghostly downtowns and a resurgent virus have rattled consumers and created new obstacles as the president tries to push his broader economic agenda.The American economy is growing at its fastest clip in a quarter-century, yet it remains far from normal, with some workers and small-business owners facing increasingly tough times while others thrive. That divergence poses a challenge to President Biden, who has promoted the nation’s economic recovery as a selling point in his quest to win support for a multitrillion-dollar spending agenda that could cement his legacy. A summer that many business owners and consumers had hoped would bring a return to prepandemic activity has delivered waves of disappointment in key areas. Restaurants are short on staff and long on wait times. Prices have spiked for food, gasoline and many services. Shoppers are struggling to find used cars. Retailers are struggling to hire. Beach towns are jammed with tourists, but office towers in major cities remain ghost towns on weekdays, with the promised return of workers delayed by a resurgent coronavirus.The University of Michigan’s Consumer Sentiment Index suffered one of its largest monthly losses in 40 years in August, driven by the rapidly spreading Delta variant and high inflation. The survey’s chief economist, Richard Curtin, said the drop also reflected “an emotional response, from dashed hopes that the pandemic would soon end and lives could return to normal.”Mr. Biden and his advisers are confident that many of those issues will improve in the fall. They expect hiring to continue at a strong pace or even accelerate, fattening worker paychecks and powering consumer spending. They remain hopeful that a reinvigorated labor market will take the place of the fading stimulus from the president’s $1.9 trillion economic aid bill signed in the spring, and that the latest wave of the virus will not dampen growth significantly.On Friday, they released new projections forecasting that growth will hit 7.1 percent this year after adjusting for inflation, its highest rate since 1983.“Our perspective is one of looking at an economy that is growing at historic rates,” Brian Deese, the director of Mr. Biden’s National Economic Council, said in an interview.But there is mounting evidence that the coming months of the recovery could be more halting and chaotic than administration officials predict, potentially imperiling millions of left-behind workers as their federal support runs dry.Private forecasters have pared back growth expectations for the end of the year, citing drags on spending from the spread of the Delta variant and from the nationwide expiration of enhanced unemployment benefits next Monday. Emerging research suggests the end of those benefits might not immediately drive Americans back to the work force to fill the record level of open jobs nationwide.“People will be surprised at how much the economy decelerates over the next year as the stimulus boost fades,” said Jim O’Sullivan, the chief U.S. macrostrategist for TD Securities.Administration officials do acknowledge some potential hurdles. Some big-city downtowns may never return to their prepandemic realities, and the economy will not be fully “normal” until the virus is fully under control. They stress that increasing the nation’s vaccination rate is the most important economic policy the administration can pursue to accelerate growth and lift consumer confidence, which has slumped this summer..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-w739ur{margin:0 auto 5px;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-w739ur{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-w739ur{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-w739ur{font-size:1.25rem;line-height:1.4375rem;}}.css-9s9ecg{margin-bottom:15px;}.css-uf1ume{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-box-pack:justify;-webkit-justify-content:space-between;-ms-flex-pack:justify;justify-content:space-between;}.css-wxi1cx{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:column;-ms-flex-direction:column;flex-direction:column;-webkit-align-self:flex-end;-ms-flex-item-align:end;align-self:flex-end;}.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;}“I don’t want to put a timeline on this,” said Cecilia Rouse, the chair of the White House Council of Economic Advisers. “We won’t feel totally completely normal until we have, whether we want to call it herd immunity or a greater fraction or percentage of the American population is vaccinated.”“As we conquer the virus,” she said, “we will regain normalcy.”The hospitality sector still employs millions fewer people than it did in February 2020.Gabriela Bhaskar/The New York TimesThe construction sector has regained most of the jobs lost early in the pandemic. Alyssa Schukar for The New York TimesThe economy’s rebound this year has been stronger than almost anyone predicted last winter, a result of the initial wave of vaccinations and the boost from Mr. Biden’s stimulus bill. Gross domestic product returned to its prepandemic level last spring, and retail sales have soared far beyond their pre-Covid path. Yet the recovery remains uneven and rattled by a rare set of economic crosswinds. In some sectors, consumer demand remains depressed. In others, spending is high but supply constraints — whether for materials or workers or both — are pushing up prices.For instance, the construction sector has regained most of the jobs lost early in the pandemic, and other industries, such as warehousing, have actually grown. But restaurants and hotels still employ millions fewer people than they did in February 2020. The result: There are more college graduates working in the United States today than when the pandemic began, but five million fewer workers without a college degree.Compounding the problem, employment in the biggest cities fell further than in smaller cities and rural areas, and it has rebounded more slowly. Employment among workers without a college degree living in the biggest cities is down more than 5 percent since February 2020, compared with about 2 percent for workers without a college degree in other parts of the country.Even as millions of people remain out of work, businesses across the country are struggling to fill a record number of job openings. Many businesses have blamed expanded unemployment benefits for the labor shortage. If they are right, a flood of workers should be returning to the job market when the benefits end after Labor Day. But recent research has suggested that the benefits are playing at most a small role in keeping people out of the work force. That suggests that other factors are holding potential workers back, such as health concerns and child care issues, which might not ease quickly.The Michigan sentiment data and the fade-out of stimulus benefits suggest consumers may be set to pull back spending further. But other data shows Americans increased their savings during the pandemic, in part by banking previous rounds of government support, and could draw on those funds to maintain spending for months to come.Administration officials hope to buck up consumers and workers by pushing Congress to pass the two halves of Mr. Biden’s longer-term economic agenda: a bipartisan infrastructure bill and a larger spending bill that could extend expanded tax credits for parents, subsidize child care and reduce prescription drug costs, among other initiatives.“Our hope is that the new normal coming out of this crisis is not simply a return to the status quo and the economy, which was one that was not working for most working families,” Mr. Deese said.The virus remains the biggest wild card for the outlook. There is little evidence in government data that the spread of the Delta variant has suppressed spending in retail stores. But air travel, as measured by the number of people screened at airport security checkpoints, has tailed off in recent days after returning to about 80 percent of where it was during the same week in 2019.Restaurant bookings on OpenTable, which had nearly returned to normal in June and July, are back down to 10 percent below their prepandemic level. Data from Homebase, which provides time-management software to small businesses, shows a sharp decline in the number of hours worked at restaurants and entertainment venues.Restaurant bookings on OpenTable, which had nearly returned to normal in June and July, are back down to 10 percent below their prepandemic level.Karsten Moran for The New York TimesAir travel has tailed off in recent days after returning to about 80 percent of its prepandemic level this summer.Stefani Reynolds for The New York TimesThe variant is already casting a shadow over the new school year, with some schools, including a middle school in Fredericksburg, Va., temporarily returning to virtual learning amid new outbreaks.Urban downtowns, once hopeful for a fall rebound in activity, are bracing for prolonged delays in white-collar workers returning to their offices.“Our No. 1 job is to get office workers back — that’s the driver of the downtown,” said Paul Levy, the president and chief executive of the Center City District, a local business-development group in Philadelphia.Mr. Levy’s group estimates that 30 percent of downtown office workers have returned so far to Philadelphia. It had been expecting that number to hit 75 to 80 percent after Labor Day, and had built an advertising campaign around the idea that the fall would mark a milestone in the return to normalcy. But now major employers such as Comcast have delayed their return dates, worrying business owners.Yehuda Sichel signed a lease for Huda, his gourmet sandwich shop in Philadelphia, on Feb. 29, 2020 — two weeks before the pandemic sent virtually his entire prospective customer base home indefinitely.He made it through the pandemic winter with takeout orders, holiday meal kits and some creativity. A short-rib special on a snow day when many other restaurants were closed helped him make payroll during a particularly grim period. Last spring, business began to improve, and Mr. Sichel invested in new equipment and a new kitchen floor in hopes of a surge in business once office workers returned. Now he doubts he will see one.“September was supposed to be this huge boom,” he said. “Now, September is going to be fine. I’m sure we’ll see a little bump, but not the doubling in business that I was hoping for.” More

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    Biden, Needing a Win, Enters a Sprint for His Economic Agenda

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    As his poll numbers slide, the president and his aides have mounted an aggressive pitch in Congress and around the country for his spending plans on infrastructure and more.WASHINGTON — President Biden, his aides and his allies in Congress face a September sprint to secure a legislative victory that could define his early presidency.Democrats are racing the clock after party leaders in the House struck a deal this week to advance the two-track approach that Mr. Biden hopes will deliver a $4 trillion overhaul of the federal government’s role in the economy. That agreement sets up a potentially perilous vote on one part of the agenda by Sept. 27: a bipartisan deal on roads, broadband, water pipes and other physical infrastructure. It also spurred House and Senate leaders to intensify efforts to complete a larger, Democrats-only bill to fight climate change, expand educational access and invest heavily in workers and families, inside that same window.If the party’s factions can bridge their differences in time, they could deliver a signature legislative achievement for Mr. Biden, on par with the New Deal or Great Society, and fund dozens of programs for Democratic candidates and the president to campaign on in the months to come.If they fail, Mr. Biden could find both halves of his economic agenda dashed, at a time when his popularity is slumping and few if any of his other top priorities have a chance to pass Congress.The president finds himself at a perilous moment seven months into his term. His withdrawal of American troops from Afghanistan has devolved into a chaotic race to evacuate tens of thousands of people from the country by the month’s end. After throwing a July 4 party at the White House to “declare independence” from the coronavirus pandemic, he has seen the Delta variant rampage through unvaccinated populations and send hospitalizations and death rates from the virus soaring in states like Florida.Mr. Biden’s approval ratings have dipped in recent months, even on an issue that has been an early strength of his tenure: the economy, where some recent polls show more voters disapproving of his performance than approving it.The country is enjoying what will most likely be its strongest year of economic growth in a quarter century. But consumer confidence has slumped in the face of rapidly rising prices for food, gasoline and used cars, along with shortages of home appliances, medical devices and other products stemming from pandemic-fueled disruptions in the global supply chain.While unemployment has fallen to 5.4 percent, workers have not flocked back to open jobs as quickly as many economists had hoped, creating long waits in restaurants and elsewhere. Private forecasters have marked down their expectations for growth in the back half of the year, citing supply constraints and the threat from the Delta variant.White House economists still expect strong job gains through the rest of the year and a headline growth rate that far exceeds what any forecasters expected at the start of 2021, before Mr. Biden steered a $1.9 trillion stimulus plan through Congress. But the White House economic team has lowered informal internal forecasts for growth this year, citing supply constraints and possible consumer response to the renewed spread of the virus, a senior administration official said this week.Mindful of that markdown, and of what White House economists estimate will be a hefty drag on economic growth next year as stimulus spending dries up, administration officials have mounted a multiweek blitz to pressure congressional moderates and progressives to pass the spending bills that officials say could help reinvigorate the recovery — and possibly change the narrative of the president’s difficult late summer.The importance of the package to Mr. Biden was clear on Tuesday, when he pre-empted a speech on evacuation efforts in Afghanistan to laud House passage of a measure that paves the way for a series of votes on his broader agenda.For the infrastructure bill to pass, Congress must balance the desires of progressives who see a generational chance to expand government to address inequality and curb climate change and moderates who have pushed for a smaller package.Stefani Reynolds for The New York Times“We’re a step closer to truly investing in the American people, positioning our economy for long-term growth, and building an America that outcompetes the rest of the world,” the president said.Many steps remain before Mr. Biden can sign both bills into law — but his party has given itself only a few weeks to complete them. The infrastructure bill is written. But the House and Senate must agree on the spending programs, revenue increases and overall cost of the larger bill, balancing the desires of progressives who see a generational chance to expand government to address inequality and curb climate change and moderates who have pushed for a smaller package and resisted some of the tax proposals to pay for it.It is a timeline reminiscent of what Republicans set for themselves in the fall of 2017, when they rushed a nearly $2 trillion package of tax cuts to President Donald J. Trump’s desk without a single Democratic vote.Sticking to it will require sustained support from administration officials both in and out of Washington. In the first three weeks of August, Mr. Biden dispatched cabinet members to 31 states to barnstorm for the infrastructure bill and his broader economic agenda, with events in the districts of moderate and progressive members of Congress, according to internal documents obtained by The New York Times. His secretaries of transportation, labor, interior, energy, commerce and agriculture sat for dozens of local television and radio interviews to promote the bills.Even with those efforts, the initial clash over advancing the budget this week was resolved with a flurry of calls from Mr. Biden, top White House officials and senior Democrats to the competing factions in the House.Congressional leaders say they have spent months laying the groundwork so that their party can move quickly toward consensus. Speaker Nancy Pelosi of California told colleagues in a letter on Wednesday that “we have long had an eye to having the infrastructure bill on the president’s desk by the Oct. 1,” the date when many provisions in the bipartisan package are slated to go into effect.Committee leaders have been instructed to finish their work by Sept. 15, and rank-and-file lawmakers have been told to make their concerns and priorities known quickly as they maneuver through substantive policy disagreements, including whether it should be as much as $3.5 trillion and the scope of Mr. Biden’s proposed tax increases.“I’m sure everybody’s going to try their best,” said Representative John Yarmuth of Kentucky, the House Budget Committee chairman. “Some committees will have it rougher than others.”Senator Ron Wyden of Oregon, the chairman of the Senate Finance Committee, has been releasing discussion drafts of proposals to fund the $3.5 trillion budget reconciliation spending — the larger bill that Democrats plan to move without any Republican support — including raising taxes on high earners and businesses. On Wednesday, he provided granular details of a plan to increase taxes on the profits that multinational companies earn and book overseas.“I’m encouraged by where we are,” Mr. Wyden said in an interview.Democratic leaders and the White House have pushed analyses of their proposals that speak to core liberal priorities; on Wednesday, Senator Chuck Schumer of New York, the majority leader, released a report suggesting the two bills combined would “put our country on the path to meet President Biden’s climate change goals of 80 percent clean electricity and 50 percent economywide carbon emission reduction by 2030.”White House economists released a detailed report this week claiming the spending Mr. Biden supports, like universal prekindergarten and subsidized child care, would expand the productive capacity of the economy and help reduce price pressures in the future.While Republicans are not expected to get on board with the larger spending bill, they are still making their concerns known, labeling the bill socialist and a spending spree and claiming it will stoke inflation and drive jobs overseas.Mr. Biden can pass the entire agenda now with only Democratic votes, but the party’s thin majorities — including no room for even a single defection in the Senate — complicates the task. Ms. Pelosi said on Wednesday that the House would “write a bill with the Senate, because there’s no use our doing a bill that is not going to pass the Senate, in the interest of getting things done.”As part of an agreement to secure the votes needed to approve the $3.5 trillion budget blueprint on Tuesday, Ms. Pelosi gave centrist and conservative Democrats a commitment that she would only take up a reconciliation package that had the support of all 50 Senate Democrats and cleared the strict Senate rules that govern the fast-track process.“I’m not here to pass messaging bills — I’m here to pass bills that will actually become law and help the American people,” said Representative Stephanie Murphy of Florida, one of the Democrats who initially announced that she would not support advancing the budget, but ultimately joined every Democrat in advancing it.For moderates, Ms. Pelosi’s commitment served to shield them from potentially tough votes on provisions that the Senate may reject. It also signaled the political realities that could shape the final legislation. No Democrat will want to vote on a large spending bill doomed for failure. It will be Mr. Biden’s job to lead his coalition to a bill that can pass muster with moderates and progressives alike — and to convince every holdout that failure is not an option. More

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    The Pandemic Is Testing the Federal Reserve’s New Policy Plan

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    Year 1 of the Fed’s framework, unveiled at its Jackson Hole conference in 2020, has included high inflation and job market healing. Now comes the hard part.When Jerome H. Powell speaks at the Federal Reserve’s biggest annual conference on Friday, he will do so at a tense economic moment, as prices rise rapidly while millions of jobs remain missing from the labor market. That combination promises to test the meaning of a quiet revolution the central bank chair ushered in one year ago.Mr. Powell used his remarks at last year’s conference, known as the Jackson Hole economic symposium and held by the Federal Reserve Bank of Kansas City, to announce that Fed officials would no longer raise interest rates to cool off the economy just because joblessness was falling and inflation was expected to heat up. They first wanted proof that prices were climbing sustainably, and they would welcome gains slightly above their 2 percent goal.He was laying groundwork for a far more patient Fed approach, acknowledging the grim reality that across advanced economies, interest rates, growth and inflation had spent the 21st century slipping lower in a strength-sapping downward spiral. The goal was to stop the decline.But a year later, that backdrop has shifted, at least superficially. Big government spending in response to the pandemic has pushed consumption and growth higher in the United States, and inflation has rocketed to levels not seen in more than a decade. The labor market is swiftly healing, though it has yet to fully recover. Now it falls to Mr. Powell to explain why full-blast support from the Fed remains necessary.Investors initially expected Mr. Powell to use Friday’s remarks at the Jackson Hole conference to lay out the Fed’s plan for “tapering” — or slowing down — a large-scale bond buying program it has been using to support the economy. Fed officials are debating the timing of such a move, which will mark their first step toward a more normal policy setting. But after minutes from the central bank’s July meeting suggested that the discussion remained far from resolved, and as the Delta variant pushes coronavirus infections higher and threatens the economic outlook, few now anticipate a clear announcement.“Two to three months ago, people were expecting the whole taper plan at Jackson Hole,” said Priya Misra, head of global rates strategy at TD Securities. “Now, it’s more the economic outlook that people are struggling with.”While Mr. Powell expects price increases to fade, he has been clear that the Fed will act to choke off inflationary pressures if they don’t abate.An Rong Xu for The New York TimesMr. Powell’s speech, which will be virtual, could instead give him a chance to explain how the Fed is thinking about Delta variant risks, recent rapid inflation and labor market progress — and how all three square with the central bank’s policy approach.The Fed is buying $120 billion in government-backed bonds each month, and it has kept its main interest rate near zero since March 2020. Both policies make borrowing cheap, fueling spending by businesses and households and bolstering the labor market.Officials have clearly linked their interest rate plans to their new framework: They said in September that they would not lift rates until the job market reached full employment. Bond buying ties back less directly, but it serves as a signal of the Fed’s continued patience.Critics of the Fed’s wait-and-see stance have questioned whether it is wise for the Fed to buy mortgage-backed and Treasury debt at a rapid clip when home prices have soared and inflation has been taking off. Republican lawmakers and some prominent Democrats alike have worried that the Fed is being insufficiently nimble as economic conditions change.“They chose a framework that was designed to provide a commitment to a highly dovish policy,” said Lawrence H. Summers, a Treasury secretary in the Clinton administration and an economist at Harvard University. “The problem morphed into overheating being the big concern, rather than underheating.”Inflation jumped to 4 percent in June, based on the Fed’s preferred measure. Most economists expect rapid price gains to fade as pandemic-related supply bottlenecks clear up, but it is unclear how quickly and fully that will happen.And while there are still nearly seven million fewer jobs than there were before the pandemic, unfilled positions have jumped, wages for lower earners are taking off, and employers widely complain about being unable to hire enough workers. If labor costs remain higher, that, too, could cause longer-lasting inflation pressures.Some Fed officials would prefer to slow bond purchases soon, and fast, so that the central bank is in a position to raise interest rates next year if price pressures do become pernicious.Other policymakers see today’s rising prices and job openings as trends that are destined to abate. Companies will work through supply-chain disruptions, and consumers will spend away savings they amassed from government stimulus checks and months stuck at home. Workers will settle into jobs. When things return to normal, they reason, the tepid inflation of years past will probably return.Given that view, and the fact that the labor market is still missing so many positions, they argue that the Fed’s new policy paradigm calls for patience.At the central bank’s meeting in late July, minutes showed, a few officials fretted that the Fed “would need to be mindful of the risk that a tapering announcement that was perceived to be premature could bring into question the committee’s commitment to its new monetary policy framework.”Mr. Powell typically tries to balance both concerns in his public remarks, acknowledging that inflation could remain elevated and pledging that the Fed will react if it does. But he has also emphasized that recent price pops are more likely to fade and that the central bank would prefer to remain helpful as the labor market healed.But in the months ahead, the Fed will need to make actual decisions, putting the meaning of its new framework to a very public test. Economists generally expect the central bank to announce a plan to slow its bond purchases in November or December.Once that taper is underway, attention will turn to interest rates, most likely with inflation still above 2 percent and the labor market recovery still at risk. When the Fed lifts rates will determine just how transformative the new policy framework has been.As of the Fed’s June economic forecasts, most officials did not expect to raise borrowing costs from rock bottom until 2023. If that transpires, it will be a notable shift from years past, one that allows the labor market to heal much more completely before significantly removing monetary help.In 2015, when the Fed last lifted interest rates from near zero, the joblessness rate was 5 percent and 77 percent of people between the ages of 25 and 54 worked. Already, joblessness is 5.4 percent and 78 percent of prime-age adults work.In fact, Fed officials projected that rates would remain on hold even as joblessness fell to 3.8 percent by the end of next year — below their estimate of the rate consistent with full employment in the longer run, which is about 4 percent.“That’s the most exciting part of what’s changed: They’re shooting for an ambitious prepandemic labor market,” said Skanda Amarnath, executive director of Employ America, a group that tries to persuade economic policymakers to focus on jobs. “Some fig leaf of progress is not enough.”But risks loom in both directions.If inflation remains high and an overly sanguine Fed has to rapidly reverse course to try to contain it, that could precipitate a painful recession.But if the Fed withdraws support unnecessarily, the labor market could take longer to heal, and investors might see the changes that Mr. Powell announced last year as a minor tweak rather than a meaningful commitment to raising inflation and fostering a more inclusive labor market.In that case, the economy might plunge back into a cycle of long-run stagnation, much like the one that has confronted Japan and much of Europe.“This is going to be an episode that will test the patience and credibility of the Federal Reserve,” said David Wilcox, a former Fed staff official who is now director of U.S. economics research at Bloomberg Economics. 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    When Will Unemployment End? Biden Urges Some States to Extend Benefits

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    President Biden is encouraging states with stubbornly high jobless rates to use federal aid dollars to extend benefits for unemployed workers after they are set to expire in early September, administration officials said on Thursday, in an effort to cushion a potential shock to some local economies as the Delta variant of the coronavirus rattles the country.Enhanced benefits for unemployed workers will run through Sept. 6 under the $1.9 trillion economic aid bill enacted in March. Those benefits include a $300 weekly supplement for traditional benefits paid by states, additional weeks of benefits for the long-term unemployed and a special pandemic program meant to help so-called gig-economy workers who do not qualify for normal unemployment benefits. Those benefits are administered by states but paid for by the federal government. The bill also included $350 billion in relief funds for state, local and tribal governments.Mr. Biden still believes it is appropriate for the $300 benefit to expire on schedule, as it was “always intended to be temporary,” the secretaries of the Treasury and labor said in a letter to Democratic committee chairmen in the House and Senate on Thursday. But they also reiterated that the stimulus bill allows states to use their relief funds to prolong other parts of the expanded benefits, like the additional weeks for the long-term unemployed, and they called on states to do so if their economies still need the help.That group could include California, New York and Nevada, where unemployment rates remain well above the national average and governors have not moved to pare back benefits in response to concerns that they may be making it more difficult for businesses to hire.“Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” wrote Janet L. Yellen, the Treasury secretary, and Martin J. Walsh, the labor secretary. “The Delta variant may also pose short-term challenges to local economies and labor markets.”The additional unemployment benefits have helped boost consumer spending in the recovery from recession, even as the labor market remains millions of jobs short of its prepandemic levels. But business owners and Republican lawmakers have blamed the $300 supplement, in particular, for the difficulties that retailers, restaurants and other employers have faced in filling jobs this spring and summer.Two dozen states, mostly led by Republicans, have moved to end at least some of the benefits before their expiration date.In their letter to Congress, the administration officials said the Labor Department was announcing $47 million in new grants meant to help displaced workers connect with good jobs. They also reiterated Mr. Biden’s call for Congress to include a long-term fix for problems with the unemployment system in a large spending bill that Democrats are trying to move as part of their multipart economic agenda. More

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    This Is a Terrible Time for Savers

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    In an upside-down world of financial markets, expected returns after inflation are at record lows.The Bank of England in London earlier this year. Worldwide demographic trends tied to the aging of the baby boom generation have contributed to a glut in savings.Matt Dunham/Associated PressIf you are saving money for the future, one way or another you had best be prepared to lose some of it.That is the implication of today’s upside-down world in the financial markets. The combination of high inflation, strong economic growth and very low interest rates has meant that “real” interest rates — what you can earn on your money after accounting for inflation — are lower than they have been in modern times.This outcome is a result of a glut of global savings and the Federal Reserve’s extraordinary efforts to bring the economy back to health. And it means the choice for a saver is stark. You can invest in safe assets and accept a high likelihood that you will get back less, in terms of purchasing power, than you put in. Or you can invest in risky assets in which you have a shot at positive returns but also a substantial risk of losing money should market sentiment turn negative.“For people who are risk averse, they have to get used to the worst of all possible worlds, which is watching their little pool of capital go down in real terms year after year after year,” said Sonal Desai, the chief investment officer of Franklin Templeton Fixed Income.Inflation outpacing interest rates is good news in certain circumstances: if you are able to borrow money at a fixed rate, for example, and use it to make an investment that will provide something of value over time, whether a house, farmland or equipment for a business.But consider the options if you are not in that position, and instead are saving money that you expect to need five years down the road — for the down payment on a house, or a child’s college expenses.You could keep the money in cash, such as through a bank deposit or money market mutual fund. Short-term interest rates are at zero or very close to it, depending on the specific place the money is parked, and Federal Reserve officials expect to keep rates there for perhaps another couple of years. Inflation has been at 4 percent to 5 percent over the last year, and many forecasters expect it to come down slowly.Or, you could buy a safe Treasury bond that matures in five years. The annual yield on that bond, as of Friday, was 0.77 percent. That means that if annual inflation is above that, the buying power of your savings will diminish over time. The highest-yielding federally insured bank certificates of deposit over that span offer only a little bit more, just over 1 percent.If you’re particularly nervous about rising prices, you could buy a Treasury Inflation Protected Security, a government-issued bond that is indexed to inflation. The five-year yield on TIPS? A negative 1.83 percent. That means that if inflation were 3 percent annually, your holding would return only 3 percent minus 1.83 percent, or 1.17 percent. In exchange for protection against the risk of high inflation, you must tolerate losing nearly 2 percent in purchasing power each year.Then again, you could take on a little more risk and buy, say, corporate bonds. But that adds the risk that the companies that issued the bonds will default — and it’s still only enough to roughly keep up with anticipated inflation. (An index of BBB-rated corporate bonds yielded only 2.19 percent late last week.)The stock market and other risky assets offer potentially higher returns, with some degree of protection from inflation. The corporate profits that are the basis for stock valuations are soaring, one reason major indexes hit record highs in recent days. But this comes with the omnipresent risk of a sell-off — tolerable for people investing for the long run but potentially problematic for those with shorter horizons.This extreme negative real interest rate environment leaves people whose job is to analyze and recommend bond investing strategies with few good options to advise.“It’s hard to even make an argument for fixed income at these levels,” said Rob Daly, the director of fixed income for Glenmede Investment Management. “It’s the old ‘pennies in front of a steamroller trade.’”That is to say: Someone who buys bonds with ultralow yields is collecting puny interest in exchange for taking the substantial risk that higher inflation or a surge in rates could more than wipe out gains (when interest rates rise, existing bonds fall in value).For those reasons, Mr. Daly recommends investors allocate more of their portfolios to cash. Yes, it will pay almost no interest, and so the saver will lose money in inflation-adjusted terms. But that money will be ready to invest in riskier, longer-term investments whenever conditions become more favorable.Similarly, Rick Rieder, the chief investment officer of global fixed income at BlackRock, the huge asset manager, recommends that investors focused on the medium term build a portfolio that combines stocks, which offer upside from rising corporate earnings, with cash, which offers safety even at the cost of negative real returns.“It’s surreal,” Mr. Rieder said. “This is one of those periods of time when the fundamentals are completely detached from reality. Where real rates are today makes no sense relative to the reality we live in.”The Fed, besides keeping its short-term interest rate target near zero, is buying $120 billion in securities every month through its quantitative easing program, and is only now starting to talk about plans to taper those purchases. That has the effect of putting an enormous buyer in the market that is bidding up the price of bonds, and thus pushing rates down.Fed officials believe the strategy of keeping easy monetary policy in place even as the economy is well into its recovery will help bring the American job market back to full health quickly. The aim is also to establish credibility that its 2 percent inflation target is symmetric, meaning that it will not panic when prices temporarily overshoot that target.Many of the people involved in market strategy are less than thrilled with this approach, and the consequences for would-be investors.“Nominal yields are low because of how much the Fed is buying,” said Ms. Desai of Franklin Templeton. “It’s ludicrous given where we are” with growth and inflation.At the same time, Americans have accumulated trillions in extra savings during the pandemic, money they are parking in all sorts of investments, which has been pushing asset prices upward and expected returns down. Arguably, the flip side of low expected returns on safe assets is stratospheric prices for real estate, meme stocks and cryptocurrencies.Globally, demographic trends tied to the aging of the enormous baby boom generation are causing a surge in savings. Gertjan Vlieghe, a top official with the Bank of England, has shown that the pattern of retirement savings evident in Britain and across advanced nations points to continued low interest rates.“We are only about two-thirds of the way through a multidecade demographic transition that is affecting interest rates,” Mr. Vlieghe said in a speech last month. “The key mechanism is not that older people have lower savings rates, but rather that, as people age, they hold higher levels of assets, in particular safe assets,” then spend those savings down slowly when they hit retirement years.That helps explain why interest rates have been persistently low across major economies — in Europe, the United States and Japan in particular — for years, even at times when those economies have been performing relatively well.In other words, Fed policy and the unique economics of the pandemic are major factors in the extremely low rates of summer 2021. But it doesn’t help that these come in an era when so much of the world is eager to save — and that part won’t change anytime soon. More

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    Big Economic Challenges Await Biden and the Fed This Fall

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    Expiring unemployment benefits and the Delta variant add uncertainty to a recovery that has brought strong growth but an unusual labor market.WASHINGTON — The U.S. economy is heading toward an increasingly uncertain autumn as a surge in the Delta variant of the coronavirus coincides with the expiration of expanded unemployment benefits for millions of people, complicating what was supposed to be a return to normal as a wave of workers re-entered the labor market.That dynamic is creating an unexpected challenge for the Biden administration and the Federal Reserve in managing what has been a fairly swift recovery from a recession. For months, officials at the White House and the central bank have pointed toward the fall as a potential turning point for an economy that is struggling to fully shake off the effects of the pandemic — particularly in the job market, which remains millions of positions below prepandemic levels.The widespread availability of Covid-19 vaccines, the reopening of schools and the expiration of enhanced jobless benefits have been seen as a potent cocktail that should prod workers off the sidelines and into the millions of jobs that employers say they are having trouble filling.But that optimistic outlook might be imperiled by the resurgent virus and policymakers’ response to it. Big companies are already delaying return-to-office plans, an early and visible sign that life may not return to normal as rapidly as expected. At the same time, long-running federal supports for people hurt by the pandemic are going away, including a moratorium on evictions, which ended on Saturday, and an extra $300 per week for unemployed workers. That benefit expires on Sept. 6, and some states have moved to end it sooner.Federal lawmakers are also planning to repurpose more than $200 billion worth of Covid relief to help pay for a $1 trillion infrastructure plan. An infrastructure bill moving through the Senate would rescind previously allocated virus funds for colleges and universities along with unused unemployment benefits and airline aid. It would also claw back unspent funds from some expired small-business programs to help offset the plan’s $550 billion in new spending. Democratic leaders have been adamant that the Senate will vote on the infrastructure bill before leaving Washington for a scheduled August recess.White House economists have said they see no need yet to consider major new measures to bolster the recovery. After months of blockbuster economic growth, falling unemployment numbers, and complaints from business leaders and Republicans that government support is preventing workers from taking jobs, administration officials remain locked into their current policy stance despite renewed risks.Administration officials have said President Biden is not pushing to extend the extra $300 per week for jobless people. It’s unclear whether the administration will try to extend a program that expanded unemployment benefits to workers who would not typically qualify for them, including the self-employed, gig workers and part-timers.Officials say the $1.9 trillion economic aid package that Mr. Biden signed in March, and that caused forecasters to lift their estimates for growth this year, has given the economy enough cushion to endure another surge from the virus. Mr. Biden has also vowed that the virus will not lead to new “lockdowns, shutdowns, school closures and disruptions” like last year’s.“We are not going back to that,” he said last week.White House advisers say the most important thing the president can do for the economy is continue to make the case for more people to get vaccinated. On Thursday, Mr. Biden asked states to use money from the March stimulus package to pay $100 to every newly vaccinated person and said the government would reimburse employers who gave workers time off to be vaccinated or take others to get shots.“We have held the view from the beginning that addressing the pandemic and recovering the economy were inextricably linked. That continues to be true,” Brian Deese, who heads Mr. Biden’s National Economic Council, said in an interview. “But because of the progress that we have made in addressing the pandemic and in putting in place both historic and durable economic policy supports, we have a set of tools right now to address both of these challenges.”The Fed is taking an optimistic but wait-and-see approach. Central bankers voted at their July meeting to leave emergency support in place for now. They gave no precise date for when they may begin to reduce their help for the economy, though they are beginning to draw up a plan for paring back support.Much like their counterparts at the White House, officials at the Fed are counting on solid economic data this autumn. Jerome H. Powell, the Fed chair, said last week that he expected strong labor market progress in the months ahead, partly because virus fears and child care issues should subside.“There’s also been very generous unemployment benefits, which are now rolling off. They’ll be fully rolled off in a couple of months,” Mr. Powell said during a news conference after the Fed’s July meeting. “All of those factors should wane, and because of that we should see strong job creation moving forward.”Administration and Federal Reserve officials have expressed hope that children’s return to schools and fading fears of the virus will encourage more people to begin looking for work again.Whitney Curtis for The New York TimesMr. Biden told a CNN forum in Ohio on July 21 that he still sees no evidence that the supplemental benefits have had a “serious impact” on hiring. But even if they had, he said, they would soon run their course.“We’re ending all those things that are the things keeping people back from going back to work,” he said.That stance carries some risk. While the economy grew faster in the first half of this year than it had in decades, the job market is still missing 6.8 million positions from its February 2020 level, and while policymakers are optimistic, it is not clear how quickly those jobs will come back. The economy has never reopened from a pandemic before, and nobody knows to what degree unemployment insurance is dissuading workers.“Seven to nine million Americans should be working right now if the pandemic had never happened, so that’s a lot of Americans that we need to put back to work,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said on CBS’s “Face the Nation” on Sunday. “But is it six months, or is it two years? I’m not sure.”If it takes workers more time to go back into jobs, it could make for a much slower economic recovery than either the Fed or the White House is banking on. Workers stuck on the sidelines without enhanced benefits might pull back on spending, hurting demand and slowing the rapid rebound that has been underway in recent months.So far, administration economists remain heartened by the economic data. Officials said last week that they saw no evidence yet of the Delta variant’s hurting economic activity, and that they were hopeful that the more than 160 million Americans who were vaccinated would not pull back spending even if the variant continued to spread — making this wave of the virus less economically damaging than past ones.And as government spending support for the economy slows down, the Fed is still keeping money cheap to borrow, which should continue to pad economic growth.Shoppers in Los Angeles, where masks are required indoors. New public health guidelines could again chill some economic activity.Alex Welsh for The New York TimesFed officials have said they want to see more proof of the labor market’s healing before they slow their monthly bond purchases, which will be their first step toward a more normal policy setting.Mr. Powell said at his news conference last week that “we’re some way away from having had substantial further progress toward the maximum employment goal.”“I would want to see some strong job numbers,” he added.In the text of a speech on Friday, Lael Brainard, an influential Fed governor, said she wanted to see September economic data to assess whether the labor market was strong enough for the Fed to begin dialing back support, which suggests she would not favor signaling a start to the slowdown until later this fall. But her colleague Christopher J. Waller said in a CNBC interview on Monday that he would probably prefer to begin pulling back bond purchases quickly, if jobs data hold up, perhaps as soon as October.Increases in interest rates — the Fed’s more traditional, and more potent, tool — remain farther away. Most Fed officials in June projected that they would not lift their federal funds rate until 2023 at earliest, because they would like the labor market to return to full strength first.How rapidly the economy can achieve that goal is an open question. Employers regularly complain about the enhanced benefits, but even they have sent mixed messages on whether those are the main driver keeping labor at bay.“Many contacts were optimistic that labor availability would improve in the fall as schools restart and enhanced unemployment benefits end,” the Atlanta Fed’s qualitative report on business conditions found in June. “However, there were several who do not expect labor supply to improve for six to nine months.”Peter Ganong, an economist at the University of Chicago, said that if the pattern that he and his fellow researchers had seen in employment data held, he would not expect a wave of workers to jump back into jobs just because supplemental benefits expired.“So far, we see small employment differences even when vaccines are becoming available,” he said. Mr. Ganong and his co-authors compared the job-finding rates of people whose wages were more fully replaced by supplemental benefits and people whose wages were less fully replaced. They found small and relatively steady differences, even as the economy reopened.But Mr. Ganong cautioned that his research tracked the supplemental insurance. For many workers, unemployment benefits could come to an end altogether as extensions lapse, which may have a bigger effect.There is plenty of room for labor market progress. People in their prime working years are participating in the labor market by working or searching for jobs at much lower rates than before the pandemic — and that metric has made little progress in recent months.“Generally speaking, Americans want to work, and they’ll find their way into the jobs that they want,” Mr. Powell said last week. “It may take some time, though.”Alan Rappeport More