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    Supply Chain Woes Could Worsen as China Imposes Covid Lockdowns

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    American manufacturers are worried that China’s zero-tolerance coronavirus policy could throw a wrench in the global conveyor belt for goods this year.WASHINGTON — Companies are bracing for another round of potentially debilitating supply chain disruptions as China, home to about a third of global manufacturing, imposes sweeping lockdowns in an attempt to keep the Omicron variant at bay.The measures have already confined tens of millions of people to their homes in several Chinese cities and contributed to a suspension of connecting flights through Hong Kong from much of the world for the next month. At least 20 million people, or about 1.5 percent of China’s population, are in lockdown, mostly in the city of Xi’an in western China and in Henan Province in north-central China.The country’s zero-tolerance policy has manufacturers — already on edge from spending the past two years dealing with crippling supply chain woes — worried about another round of shutdowns at Chinese factories and ports. Additional disruptions to the global supply chain would come at a particularly fraught moment for companies, which are struggling with rising prices for raw materials and shipping along with extended delivery times and worker shortages.China used lockdowns, contact tracing and quarantines to halt the spread of the coronavirus nearly two years ago after its initial emergence in Wuhan. These tactics have been highly effective, but the extreme transmissibility of the Omicron variant poses the biggest test yet of China’s system.So far, the effects of the lockdowns on Chinese factory production and deliveries have been limited. Four of China’s largest port cities — Shanghai, Dalian, Tianjin and Shenzhen — have imposed narrowly targeted lockdowns to try to control small outbreaks of the Omicron variant. As of this weekend, these cities had not locked down their docks. Still, Volkswagen and Toyota announced last week that they would temporarily suspend operations in Tianjin because of lockdowns.Analysts warn that many industries could face disruptions in the flow of goods as China tries to stamp out any coronavirus infections ahead of the Winter Olympics, which will be held in Beijing next month. On Saturday, Beijing officials reported the city’s first case of the Omicron variant, prompting the authorities to lock down the infected person’s residential compound and workplace.If extensive lockdowns become more widespread in China, their effects on supply chains could be felt across the United States. Major new disruptions could depress consumer confidence and exacerbate inflation, which is already at a 40-year high, posing challenges for the Biden administration and the Federal Reserve.“Will the Chinese be able to control it or not I think is a really important question,” said Craig Allen, the president of the U.S.-China Business Council. “If they’re going to have to begin closing down port cities, you’re going to have additional supply chain disruptions.”The potential for setbacks comes just as many companies had hoped they were about to see some easing of the bottlenecks that have clogged global supply chains since the pandemic began.The Yantian port in Shenzhen, China. Four of the country’s largest port cities, including Shenzhen, have imposed targeted lockdowns to try to control small outbreaks of the Omicron variant.Martin Pollard/ReutersThe combination of intermittent shutdowns at factories, ports and warehouses around the world and American consumers’ surging demand for foreign goods has thrown the global delivery system out of whack. Transportation costs have skyrocketed, and ports and warehouses have experienced pileups of products waiting to be shipped or driven elsewhere while other parts of the supply chain are stymied by shortages.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.Lockdowns Loom: Companies are bracing for more delays, worried that China’s zero-tolerance Covid policy will shutter factories and ports.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.For the 2021 holiday season, customers largely circumvented those challenges by ordering early. High shipping prices began to ease after the holiday rush, and some analysts speculated that next month’s Lunar New Year, when many Chinese factories will idle, might be a moment for ports, warehouses and trucking companies to catch up on moving backlogged orders and allow global supply chains to return to normal.But the spread of the Omicron variant is foiling hopes for a fast recovery, highlighting not only how much America depends on Chinese goods, but also how fragile the supply chain remains within the United States.American trucking companies and warehouses, already short of workers, are losing more of their employees to sickness and quarantines. Weather disruptions are leading to empty shelves in American supermarkets. Delivery times for products shipped from Chinese factories to the West Coast of the United States are as long as ever — stretching to a record high of 113 days in early January, according to Flexport, a logistics firm. That was up from fewer than 50 days at the beginning of 2019.The Biden administration has undertaken a series of moves to try to alleviate bottlenecks both in the United States and abroad, including devoting $17 billion to improving American ports as part of the new infrastructure law. Major U.S. ports are handling more cargo than ever before and working through their backlog of containers — in part because ports have threatened additional fees for containers that sit too long in their yards.Yet those greater efficiencies have been undercut by continuing problems at other stages of the supply chain, including a shortage of truckers and warehouse workers to move the goods to their final destination. A push to make the Port of Los Angeles operate 24/7, which was the centerpiece of the Biden administration’s efforts to address supply chain issues this fall, has still seen few trucks showing up for overnight pickups, according to port officials, and cargo ships are still waiting for weeks outside West Coast ports for their turn for a berth to dock in.West Coast ports could see further disruptions this year as they renegotiate a labor contract for more than 22,000 dockworkers that expires on July 1. Previous negotiations led to work slowdowns and shipping delays.“If you have four closed doors to get through and one of them opens up, that doesn’t necessarily mean quick passage,” said Phil Levy, the chief economist at Flexport. “We should not delude ourselves that if our ports become 10 percent more efficient, we’ve solved the whole problem.”Chris Netram, the managing vice president for tax and domestic economic policy at the National Association of Manufacturers, which represents 14,000 companies, said that American businesses had seen a succession of supply chain problems since the beginning of the pandemic.“Right now, we are at the tail end of one flavor of those challenges, the port snarls,” he said, adding that Chinese lockdowns could be “the next flavor of this.”Manufacturers are watching carefully to see whether more factories and ports in China might be forced to shutter if Omicron spreads in the coming weeks.Neither Xi’an nor Henan Province, the site of China’s most expansive lockdowns, has an economy heavily reliant on exports, although Xi’an does produce some semiconductors, including for Samsung and Micron Technology, as well as commercial aircraft components.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. 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    Retail Sales Fell in December, a Slowdown in a Robust Holiday Shopping Season

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    Retail sales fell 1.9 percent in December, the Commerce Department reported on Friday, reflecting a slowdown during an otherwise robust holiday shopping season that started earlier in the year for many consumers.It was the first drop after four straight months of sales increases, though the gain in November slowed from October because of the lengthened holiday shopping season brought on by fears of product shortages and price increases. Total sales for October through December were up 17.1 percent from a year earlier, according to the report. December sales rose 16.9 percent from 2020.Beth Ann Bovino, chief U.S. economist at S&P Global, said that although there was bound to be “headline shock” over a weaker number, the broader picture for retail sales had been strong over the past few months.“This is not a sign of consumer weakness,” said Ms. Bovino, who had forecast a decline. “Given that households have relatively strong balance sheets with high savings levels and a strong job market with wages climbing higher, it seems that consumers are not necessarily closing their pocketbooks. They’re taking a brief pause.”

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    Monthly retail sales
    Note: Advance monthly sales estimates for retail and food services, seasonally adjustedSource: Commerce DepartmentThe New York TimesThe retail sales report provides a data point on the mind-set of consumers after a report this week showed that inflation at the end of 2021 climbed to its highest level in 40 years. Prices have increased as new variants of the coronavirus have exacerbated supply chain issues and robust consumer demand for goods. At the same time, the Omicron wave has caused widespread staffing shortages and may have played a role in diverting some consumers from stores and holiday gatherings.Ms. Bovino said that she did not believe inflation played a role in the overall sales decline but that concerns around higher prices were likely to show up in the first quarter of this year.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.Gifts Arrive on Time: Fears that a disrupted supply chain could wreak havoc on the holidays turned out to be wrong. Here’s why.Car Shortages: The limited supply of vehicles is forcing some to go to great lengths to find them, including traveling hundreds of miles.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.Economists at Morgan Stanley had forecast retail sales to rise 0.4 percent in December. Even though inflation topped the coronavirus as the No. 1 concern for consumers whom Morgan Stanley surveyed in November, that “came with no dent to spending plans,” the economists said in a note last week.Instead, the holiday shopping season appeared to break records and lower-income consumers seemed to be operating with relatively better buying power, the economists wrote. At the same time, they anticipated that the Omicron wave drove more spending to goods rather than services.The pandemic has continued to shape consumer habits in the United States.Fewer people shopped in stores this holiday season, even though the Omicron variant did not become a prominent threat until December. Retail foot traffic in the United States between Nov. 21 and Jan. 1 was down 19.5 percent compared with 2019, according to Sensormatic Solutions. That was a slight improvement from the depths of the pandemic in 2020, when foot traffic in the same period was down 33.1 percent from 2019, but still a significant change.Fewer people shopped in stores this holiday season, with more consumers relying on e-commerce.Justin Sullivan/Getty ImagesAs retailers grapple with inflation and supply chain issues, it has given an additional advantage to the biggest U.S. retailers. They had already benefited during the pandemic by being able to remain open while others closed, from the variety of goods that they carry and through initiatives like curbside delivery.“We’re talking about the Walmarts and Targets and Costcos, the big players,” said Mickey Chadha, a retail analyst at Moody’s Investors Service. “They’ve leased their own ships, and they’re bringing in product. They have a lot more power with vendors to get priority. And they actually planned ahead as well.”At the same time, Mr. Chadha said, they have not had to raise their prices as much as smaller retailers, and are likely to benefit as lower-income consumers search for value to stretch their dollars.“They are taking market share because they have the ability to price lower and absorb that hit to the margin a lot better than some of the smaller, weaker retailers,” he said.Costco, for example, said on a December earnings call that it believed it was successfully managing the effects of inflation through its relative purchasing power and its relationships with vendors. That often meant that Costco and its suppliers were each taking less in the way of price markups, Richard Galanti, the company’s chief financial officer, said on the call.“We’ve always said we want to be the last to raise the price and the first to lower the price, recognizing there’s a limit to what you can do based on these cost increases,” Mr. Galanti said.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    CPI Report Is Expected to Show Inflation Popped Again

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    Inflation closed out 2021 on a high note, bad news for the Biden White House and for economic policymakers, as rapid price gains erode consumer confidence and cast a shadow of uncertainty over the economy’s future.The Consumer Price Index most likely climbed 7 percent in the year through December, and 5.4 percent after volatile prices such as food and fuel are stripped out, economists in a Bloomberg survey estimated. The last time the main inflation index eclipsed 7 percent was 1982.What to Know About Inflation in the U.S.Inflation, Explained: What is inflation, why is it up and whom does it hurt? We answered some common questions.The Fed’s Pivot: Jerome Powell’s abrupt change of course moved the central bank into inflation-fighting mode.Fastest Inflation in Decades: The Consumer Price Index rose 6.8 percent in November from a year earlier, its sharpest increase since 1982.Why Washington Is Worried: Policymakers are acknowledging that price increases have been proving more persistent than expected.The Psychology of Inflation: Americans are flush with cash and jobs, but they also think the economy is awful.Policymakers have spent months waiting for inflation to fade, hoping that supply chains would catch up with booming consumer demand. Instead, continued waves of coronavirus infections have locked down factories, and shipping routes have struggled to work through extended backlogs as consumers continue to buy goods from overseas at a rapid clip. What happens next may be the biggest economic policy question of 2022.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Supply Chain Woes Prompt a New Push to Revive U.S. Factories

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    Companies are testing whether the United States can regain some of the manufacturing output it ceded in recent decades to China and other countries.When visitors arrive at the office of America Knits in tiny Swainsboro, Ga., the first thing they see on the wall is a black-and-white photo that a company co-founder, Steve Hawkins, discovered in a local antiques store.It depicts one of a score of textile mills that once dotted the area, along with the workers that toiled on its machines and powered the local economy. The scene reflects the heyday — and to Mr. Hawkins, the potential — of making clothes in the rural South.Companies like America Knits will test whether the United States can regain some of the manufacturing output it ceded in recent decades to China and other countries. That question has been contentious among workers whose jobs were lost to globalization. But with the supply-chain snarls resulting from the coronavirus pandemic, it has become intensely tangible from the consumer viewpoint as well.Mr. Hawkins’s company, founded in 2019, has 65 workers producing premium T-shirts from locally grown cotton. He expects the work force to increase to 100 in the coming months. If the area is to have an industrial renaissance, it is so far a lonely one. “I’m the only one, the only crazy one,” Mr. Hawkins said.But as he sees it, bringing manufacturing back from overseas — a move often called onshoring or reshoring — has found its moment. “America Knits shows it can be done and has been done,” he said.Some corporate giants are keen on testing that premise, if not for finished goods then certainly for essential parts.General Motors disclosed in December that it was considering spending upward of $4 billion to expand electric vehicle and battery production in Michigan. Just days later, Toyota announced plans for a $1.3 billion battery plant in North Carolina that will employ 1,750 people.At America Knits in Swainsboro, Ga., workers earn up to twice as much per hour as they would in a service job.Lynsey Weatherspoon for The New York TimesIn October, Micron Technology said it planned to invest more than $150 billion in memory chip manufacturing and research and development over the next decade, with a portion of that to be spent in the United States. And in November, the South Korean giant Samsung said that it would build a $17 billion semiconductor plant in Texas, its largest U.S. investment to date.Bringing manufacturing back to the United States was a major theme of former President Donald J. Trump, who imposed tariffs on imports from allies and rivals, started a trade war with China and blocked or reworked trade agreements. Still, there was little change in the balance of trade or the inclination of companies operating in China to redirect investment to the United States..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-1g3vlj0{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-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.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;}Since the pandemic began, however, efforts to relocate manufacturing have accelerated, said Claudio Knizek, global leader for advanced manufacturing and mobility at EY-Parthenon, a strategy consulting firm. “It may have reached a tipping point,” he added.Decades of dependence on Asian factories, especially in China, has been upended by delays and surging freight rates — when shipping capacity can be found at all.Backups at overwhelmed ports and the challenges of obtaining components as well as finished products in a timely way have convinced companies to think about locating production capacity closer to buyers.“It’s absolutely about being close to customers,” said Tim Ingle, group vice president for enterprise strategy at Toyota Motor North America. “It’s a big endeavor, but it’s the future.”New corporate commitments to sustainability are also playing a role, with the opportunity to reduce pollution and fossil fuel consumption in transportation across oceans emerging as a selling point.Repositioning the supply chain isn’t just an American phenomenon, however. Experts say the trend is also encouraging manufacturing in northern Mexico, a short hop to the United States by truck.Called near-shoring, the move to Mexico is paralleled in Europe with factories opening in Eastern Europe to serve Western European markets like France and Germany.“We’re starting to see it in Mexico as well as in the U.S.,” said Theresa Wagler, chief financial officer of Steel Dynamics, a steel maker based in Fort Wayne, Ind. “Many companies now prefer security of supply over cost.”Mr. Knizek of EY-Parthenon expects industries with complex and more expensive products to lead the resurgence, including automobiles, semiconductors, defense and aviation and pharmaceuticals. Anything that requires large amounts of manual labor, or that is difficult to automate, is much less likely to return.For items like shoes or furniture or holiday lights, for example, “the economics are daunting,” said Willy C. Shih, a professor at Harvard Business School. “It’s hard to beat wages of $2.50 an hour.”Although trade tensions and shipping delays are making headlines, Professor Shih added, China retains huge advantages, like a mammoth work force, easy access to raw materials and low-cost factories. “For a lot of what American consumers buy, there aren’t a lot of good alternatives,” he added.But as the moves by auto and tech companies show, the United States can attract more sophisticated manufacturing. That has been a goal shared by Republican and Democratic administrations, including President Biden’s, which supports $52 billion in subsidies for domestic chip manufacturing.“Incentives to help level the playing field are a key piece,” said David Moore, chief strategy officer and senior vice president at Micron. “Building a leading-edge memory fabrication facility is a sizable investment; it’s not just a billion or two here and there. These are major decisions.”In the aftermath of the coronavirus and restrictions on exports of goods like masks, moving manufacturing closer to home is also being viewed as a national security priority, said Rick Burke, a managing director with the consulting firm Deloitte.“As the pandemic continues, there’s a realization that this may be the new normal,” Mr. Burke said. “The pandemic has sent a shock wave through organizations. It’s no longer a discussion about cost, but about supply-chain resiliency.”Despite the big announcements and the billions being spent, it could take until the late 2020s before the investments yield a meaningful number of manufacturing jobs, Mr. Burke said — and even then, raw materials and some components will probably come from overseas.Still, if the experts are correct, these moves could reverse decades of dwindling employment in American factories. A quarter of a century ago, U.S. factories employed more than 17 million people, but that number dropped to 11.5 million by 2010.Since then, the gains have been modest, with the total manufacturing work force now at 12.5 million.But the sector remains one of the few where the two-thirds of Americans who lack a college degree can earn a middle-class wage. In bigger cities and parts of the country where workers are unionized, factories frequently pay $20 to $25 an hour compared with $15 or less for jobs at warehouses or in restaurants and bars.Even in the rural South, long resistant to unions, manufacturing jobs can come with a healthy salary premium. At America Knits, a private-label manufacturer that sells to retailers including J. Crew and Buck Mason, workers earn $12 to $15 an hour, compared with $7.50 to $11 in service jobs.The hiring is being driven by strong demand for the company’s T-shirts, Mr. Hawkins said, as well as by a recognition among retailers of the effect of supply-chain problems on foreign sources of goods.“Retailers have opened their eyes more and are bringing manufacturing back,” he said. “And with premium T-shirts selling for $30 or more, they can afford to.”A few years ago, Julie Land said she would naturally have looked to Asia to expand production of outerwear and other goods for her Canadian company, Winnipeg Stitch Factory, and its clothing brand, Pine Falls.Instead, the 12-year-old business is opening a plant in Port Gibson, Miss., in 2022. Fabric will be cut in Winnipeg and then shipped to Port Gibson to be sewn into garments like jackets and sweaters. The factory will be heavily automated, Ms. Land said, enabling her company to keep costs manageable and compete with overseas workshops.“Reshoring is not going to happen overnight, but it is happening, and it’s exciting,” she said. “If you place an order offshore, there is so much uncertainty with a longer lead time. All of that adds up.” More

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    What Social Trends Told Us About the American Economy in 2021

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    If 2020 was the year that made Zoom a verb and imbued the phrase “online dating” with new meaning, 2021 was its annoying younger sibling. Things were not quite as novel and scary as the darkest early days of the pandemic and initial state and local lockdowns, but the year found new and creative ways to be bad.Shutdowns weren’t nearly as widespread, but continued waves of coronavirus infection caused factories to shutter and people to retrench from economic life. This was a year in which the Duke of Hastings replaced the Tiger King as a national obsession, vaccine cards became a passport to semi-normal life, and the internet lost its hive mind over America’s cream cheese shortage.Social trends like those can tell us a lot about the economy we’re living in. To wrap up 2021, we ran down what some of the big cultural moments and movements taught us about the labor market, economic growth and the outlook for 2022.The Everything ShortageSadly, it wasn’t just the schmear that ran out this year. Many, many things came up short in 2021. For a while, people tried to blame the fact that they couldn’t get hold of a couch or a used car on a ship stuck in the Suez Canal, but society eventually came around to the reality that we’ve all been buying so much stuff that we have collectively broken the supply chain.Government stimulus checks and savings amassed over long months at home have been fueling strong consumer spending, and the virus has shifted spending patterns away from services like restaurant meals and plane tickets and toward goods. Container ships, ports and factories couldn’t keep up with the unusual boom, especially as new virus waves spurred occasional shutdowns.Product shortages have raised prices, helping to push inflation up to the fastest pace in nearly 40 years. The big question is whether high inflation will continue in 2022. As the Omicron variant threatens to throw more kinks into global supply lines, economic policymakers worry that it will persist.An Anti-Work Era?About 1.5 million “idlers” and counting have joined a community on the site Reddit dedicated to “those who want to end work, are curious about ending work, want to get the most out of a work-free life.” If you were looking for a perfect expression of pandemic populist angst, that might be it: It’s replete with stories of bad bosses, workday abuses and both planned and spontaneous quits.Redditors weren’t alone in getting excited about leaving jobs this year. Americans quit their jobs at record rates, in what was labeled “The Great Resignation” or the “Big Quit.” Myriad essays and articles have tried to assess why people are throwing in the towel, but most agree that it has something to do with burnout after long months of exposure to public health risk or endless online hours during the pandemic.Some have suggested that a collective life-or-death experience has caused people to reassess their options, while others have suggested that the same government-padded savings that are allowing people to spend so much are giving them the wherewithal to be pickier about where they work and how much they are paid.Burned-Out BoomersThis may also have been the year that “OK, Boomer” ceded the floor to “You OK, Boomer?”A recent Federal Reserve survey of business contacts found that several “noted that baby boomers were leaving jobs and selling businesses to retire early — a trend that was due (1957 marked the peak year for births among baby boomers; those babies turn 65 next year) but has accelerated because of pandemic burnout.”That shows up in the data. People over the age of 45 have been slower to return to the job market since the start of the pandemic. That group includes members of Generation X, which ranges in age from 41 to 56, and baby boomers, who are roughly 57 to 75. It’s not clear if the apparent rush toward early retirement is going to stick: People may go back once the health scare of the pandemic is behind us, or if stocks return to less buoyant valuations, reducing the value of retirement portfolios.What happens next with the middle-age-and-up work force will be pivotal to the future of the labor market. If older workers stay out, America’s labor force participation rate — and the pool of workers available to employers — may remain depressed compared with levels that prevailed before the pandemic. That will be bad news for employers, who are increasingly desperate to hire.Generational Warfare, Skinny Jean EditionDon’t shed all of your tears for the baby boomers, because millennials also had a tough time in 2021. They divided the year between reminding the internet that they are graying, keeping Botox boutiques in business, and feeling aghast as Generation Z, their successors, accused them of being old. A generation that made the poorly informed decision to recycle the low-rise trend also had the gall to claim that side parts make people look aged and skinny jeans are out.Whether their elders are ready for it or not, the reality is that Gen Z, the group born from 1997 to 2012, began to enter adulthood and the labor market in full force during the pandemic. It is a comparatively small generation, but its members could shake things up. They are fully digital natives and have different attitudes toward, and expectations of, work life from those of their older counterparts.If office workers ever actually meet their new colleagues, things could get interesting.Everyone Hates ‘Hard Pants’Speaking of the office, this year put the initials “R.T.O.” firmly into the professional lexicon. Return-to-office planning was repeatedly upended by rolling waves of infection, but that didn’t stop cries of outrage. Many professionals began to question the utility of high heels and slacks — known derisively as “hard pants” — as opposed to their far more beloved and couch-friendly “soft pant” alternative.Whether the future of work-wear will involve more elastic waistbands remains an open question, but it is increasingly clear that America is unlikely to return to many of its old workday habits. Surveys of workers suggest that many did not miss the office, and employers are increasingly turning to hybrid work models and location flexibility, in part to avoid fueling further resignations.Travel Remained DepressedBorders closed, and opened, and closed again or included restrictions as waves of coronavirus tore across the world map this year. The same uncertainties facing national governments kept many travelers at or near home — international travel remains sharply depressed. Global tourism remained 76 percent below prepandemic levels through the third quarter, based on data from the World Tourism Organization.Aside from Emily, it seems that relatively few of us are making it to Paris these days. That’s bad news for travel-dependent industries, and one of the reasons that spending patterns are struggling to shift back toward services and away from furniture, exercise equipment and toys. That has kept inflation high across much of the world.Q.R. Codes Are on the MenuEven when we did shift our consumption dollars back to experiences, those were often much changed by the pandemic.A case in point: Many restaurants have moved to Q.R. codes instead of physical menus. Some of this is for sanitation, but companies are also turning to small doses of automation as a way to cut down on labor as employees are scarce. That has the potential to improve productivity. (The data so far on whether it’s working are mixed.) If companies do become more efficient, it could lay the groundwork for sustainably higher wages: The server who is now juggling twice as many tables as diners order from their phones can take home a fatter paycheck without chipping away at the restaurant’s profits.But it remains to be seen whether workers will win out as companies streamline their operations to meet the moment. So far, corporate profits have been soaring to record highs, but wage gains are not quite keeping up with inflation. Things are changing fast, so how that story develops will be a trend to watch in 2022. More

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    U.S. Effort to Combat Forced Labor Targets Corporate China Ties

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    The Biden administration is expected to face scrutiny as it decides how to enforce a new ban on products made with forced labor in the Xinjiang region of China.A far-reaching bill aimed at barring products made with forced labor in China became law after President Biden signed the bill on Thursday.But the next four months — during which the Biden administration will convene hearings to investigate how pervasive forced labor is and what to do about it — will be crucial in determining how far the legislation goes in altering the behavior of companies that source products from China.While it is against U.S. law to knowingly import goods made with slave labor, the Uyghur Forced Labor Prevention Act shifts the burden of proof to companies from customs officials. Firms will have to proactively prove that their factories, and those of all their suppliers, do not use slavery or coercion.The law, which passed the House and Senate nearly unanimously, is Washington’s first comprehensive effort to police supply chains that the United States says exploit persecuted minorities, and its impact could be sweeping. A wide range of products and raw materials — such as petroleum, cotton, minerals and sugar — flow from the Xinjiang region of China, where accusations of forced labor proliferate. Those materials are often used in Chinese factories that manufacture products for global companies.“I anticipate that there will be many companies — even entire industries — that will be taken by surprise when they realize that their supply chains can also be traced back to the Uyghur region,” said Laura Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain.If the law is enforced as written, it could force many companies to rework how they do business or risk having products blocked at the U.S. border. Those high stakes are expected to set off a crush of lobbying by companies trying to ease the burden on their industries as the government writes the guidelines that importers must follow.“Genuine, effective enforcement will most likely mean there will be pushback by corporations and an attempt to create loopholes,” said Cathy Feingold, the international director of the A.F.L.-C.I.O. “So the implementation will be key.”Behind-the-scenes negotiations before the bill’s passage provided an early indication of how consequential the legislation could be for some of America’s biggest companies, as business groups like the U.S. Chamber of Commerce and brand names like Nike and Coca-Cola worked to limit the bill’s scope.The Biden administration has labeled the Chinese government’s actions in Xinjiang — including the detention of more than a million Uyghurs and other predominantly Muslim minorities, as well as forced conversions, sterilization and arbitrary or unlawful killings — as genocide.Human rights experts say that Beijing’s policies of moving Uyghurs into farms and factories that feed the global supply chain are an integral part of its repression in Xinjiang, an attempt to assimilate minorities and strip them of their culture and religion..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-1g3vlj0{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-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.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;}In a statement last week, Jen Psaki, the White House press secretary, said that Mr. Biden welcomed the bill’s passage and agreed with Congress “that action can and must be taken to hold the People’s Republic of China accountable for genocide and human rights abuses and to address forced labor in Xinjiang.” She added that the administration would “work closely with Congress to implement this bill to ensure global supply chains are free of forced labor.”Yet some members of the administration argued behind closed doors that the bill’s scope could overwhelm U.S. regulators and lead to further supply chain disruptions at a time when inflation is accelerating at a nearly 40-year high, according to interviews with more than two dozen government officials, members of Congress and their staff. Some officials also expressed concerns that an aggressive ban on Chinese imports could put the administration’s goals for fighting climate change at risk, given China’s dominance of solar panels and components to make them, people familiar with the discussions said.John Kerry, Mr. Biden’s special envoy for climate change, and Wendy R. Sherman, the deputy secretary of state, separately conveyed some of those concerns in calls to Democratic members of Congress in recent months, according to four people familiar with the discussions.Senator Marco Rubio, Republican of Florida and one of the bill’s lead authors, criticized those looking to limit its impact, saying that companies that want to continue to import products and officials who are reluctant to rock the boat with China “are not just going to give up.” He added, “They’re all going to try to weigh in on how it’s implemented.”A solar farm near Wenquan, China. The Xinjiang region’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration.Gilles Sabrié for The New York TimesOne reason the stakes are so high is because of the critical role that Xinjiang may play in many supply chains. The region, twice the size of Texas, is rich in raw materials like coal and oil and crops like tomatoes, lavender and hops; it is also a significant producer of electronics, sneakers and clothing. By some estimates, it provides one-fifth of the world’s cotton and 45 percent of the world’s polysilicon, a key ingredient for solar panels.Xinjiang’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration, which is counting on solar power to help the United States reach its goal of significantly cutting carbon emissions by the end of the decade.In meetings this year, Biden administration officials weighed how difficult it would be for importers to bypass Xinjiang and relocate supply chains for solar goods and other products, according to three government officials. Officials from the Labor Department and the United States Trade Representative were more sympathetic to a far-reaching ban on Xinjiang goods, according to three people familiar with the discussions. Some officials in charge of climate, energy and the economy argued against a sweeping ban, saying it would wreak havoc on supply chains or compromise the fight against climate change, those people said.Ana Hinojosa, who was the executive director of Customs and Border Protection and led the government’s enforcement of forced labor provisions until she left the post in October, said that agencies responsible for “competing priorities” like climate change had voiced concerns about the legislation’s impact. Companies and various government agencies became nervous that the law’s broad authorities could prove “devastating to the U.S. economy,” she said.“The need to improve our clean energy is real and important, but not something that the government or the U.S. should do on the backs of people who are working under conditions of modern-day slavery,” Ms. Hinojosa added.In a call with Speaker Nancy Pelosi of California this year, Mr. Kerry conveyed concerns about disrupting solar supply chains while Ms. Sherman shared her concerns with Senator Jeff Merkley, Democrat of Oregon, according to people familiar with the conversations.Mr. Merkley, one of the lead sponsors of the bill, said in an interview that Ms. Sherman told him she was concerned the legislation was not duly “targeted and deliberative.” The conversation was first reported by The Washington Post.“I think this is a targeted and deliberative approach,” Mr. Merkley said. “And I think the administration is starting to see how strongly Republicans and Democrats in both chambers feel about this.”A State Department official said that Ms. Sherman did not initiate the call and did not express opposition to the bill. Whitney Smith, a spokeswoman for Mr. Kerry, said any accusations he lobbied against the Uyghur Forced Labor Prevention Act were “false.” Ms. Pelosi declined to discuss private conversations.Nury Turkel, a Uyghur-American lawyer who is the vice chairman of the U.S. Commission on International Religious Freedom, said the United States must “tackle both genocide and ecocide.”“Policymakers and climate activists are making it a choice between saving the world and turning a blind eye to the enslavement of Uyghurs,” he said. “It is false, and we cannot allow ourselves to be forced into it.”Administration officials have also argued that the United States can take a strong stance against forced labor while developing a robust solar supply chain. Emily Horne, a spokeswoman for the National Security Council, said that Mr. Biden “believes what is going on in Xinjiang is genocide” and that the administration had taken a range of actions to combat human rights abuses in the region, including financial sanctions, visa restrictions, export controls, import restrictions and a diplomatic boycott of the 2022 Beijing Olympics in February.“We have taken action to hold the P.R.C. accountable for its human rights abuses and to address forced labor in Xinjiang,” Ms. Horne said, using the abbreviation for the People’s Republic of China. “And we will continue to do so.”Farm workers picking cotton near Qapqal, China, in 2015. By some estimates, Xinjiang produces one-fifth of the world’s cotton.Adam Dean for The New York TimesThe law highlights the delicate U.S.-China relationship, in which policymakers must figure out how to confront anti-Democratic practices while the United States is economically dependent on Chinese factories. China remains the largest supplier of goods to the United States.One of the biggest hurdles for U.S. businesses is determining whether their products touched Xinjiang at any point in the supply chain. Many companies complain that beyond their direct suppliers, they lack the leverage to demand information from the Chinese firms that manufacture raw materials and parts.Government restrictions that bar foreigners from unfettered access to sites in Xinjiang have made it difficult for many businesses to investigate their supply chains. New Chinese antisanctions rules, which threaten penalties against companies that comply with U.S. restrictions, have made vetting even more difficult.The Chinese government denies forced labor is used in Xinjiang. Zhao Lijian, a government spokesman, said U.S. politicians were “seeking to contain China and hold back China’s development through political manipulation and economic bullying in the name of ‘human rights.’” He promised a “resolute response” if the bill became law.Lawmakers struggled over the past year to reconcile a more aggressive House version of the legislation with one in the Senate, which gave companies longer timelines to make changes and stripped out the S.E.C. reporting requirement, among other differences.The final bill included a mechanism to create lists of entities and products that use forced labor or aid in the transfer of persecuted workers to factories around China. Businesses like Apple had lobbied for the creation of such lists, believing they would provide more certainty for businesses seeking to avoid entities of concern.Lisa Friedman More

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    Why Christmas Gifts Are Arriving on Time This Year

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    Fears that a disrupted supply chain could wreak havoc on the logistics industry over the holiday turned out to be wrong as many Americans ordered early and shopped in stores.The warnings started to stream in early this fall: Shop early or you may not get your gifts on time.Global supply chain problems that have led to long delays in manufacturing and shipping could ripple outward, slowing package deliveries to millions of Americans in the weeks and days before Christmas, experts warned. The prospect even became a talking point in conservative attacks on President Biden’s policies.Despite early fears, however, holiday shoppers have received their gifts mostly on time. Many consumers helped themselves by shopping early and in person. Retailers ordered merchandise ahead of time and acted to head off other bottlenecks. And delivery companies planned well, hired enough people and built enough warehouses to avoid being crushed by a deluge of packages at the last minute, as the Postal Service was last year.The vast majority of packages delivered by UPS, FedEx and the Postal Service this holiday season are gifts destined for residential addresses, according to ShipMatrix, a software company that services the logistics industry. And nearly all have arrived on time or with minimal delays, defined as a few hours late for express packages and no more than a day late for ground shipments. The UPS and the Postal Service delivered about 99 percent of their packages on time by that measure between Nov. 14 and Dec. 11, and FedEx was close behind at 97 percent, according to ShipMatrix.“The carriers have done their part. Consumers have done their part,” said Satish Jindel, president of ShipMatrix. “When they work together, you get good results.”That’s not to say the supply chain turmoil is over. About a hundred container ships are waiting off the West Coast to unload their cargo. Big-ticket items, such as new cars, are still hard to find because of a shortage of some critical parts like computer chips. And prices are up for all kinds of goods.But at least when it comes to items that are in stock, delivery companies have given consumers little to complain about. By some measures, in fact, they have done a better job this holiday season than even before the pandemic. In the two full weeks after Thanksgiving, it took about four days from the moment a package was ordered online for it to be delivered by FedEx, according to data from NielsenIQ, which tracks online transactions from millions of online shoppers in the United States. That compares with about 4.6 days for UPS and more than five days for the Postal Service.For UPS and FedEx, those figures are an improvement of about 40 percent from a similar post-Thanksgiving period in 2019, according to NielsenIQ. For the Postal Service, it was a 26 percent improvement.“There’s all these different moving parts that have collaborated to help us get through what might have been a perfect storm to cause problems,” Bill Seward, president of worldwide sales and solutions for UPS, said in an interview. “We feel really good about where we’re at right now.”The achievement is all the more notable given that Americans are on track to spend more this holiday season than the one before — up to 11.5 percent over 2020, according to the National Retail Federation, a trade group.But this year has been different in a critical way: Many people started shopping earlier.The vast majority of packages delivered by UPS, FedEx and the Postal Service this holiday season are gifts destined for residential addresses.Desiree Rios for The New York TimesConsumer surveys, including those commissioned by UPS and NPD Group, a market research firm, found that Americans accelerated their holiday shopping this year, motivated by shortages, shipping delays or earlier sales from retailers.Jennifer Grisham, who lives in Southern California with her husband and three young children, was among them. Concerned by news of supply chain disruptions, Ms. Grisham asked her children to draw up their Christmas wish lists before Halloween, weeks earlier than usual. She had finished shopping by the day after Thanksgiving, which is usually when she starts buying gifts.“I have three kids who still believe in Santa Claus,” she said. “I was not going to bookend these two really dramatic years for us with them suddenly not getting what they wanted.”Ms. Grisham said she had little trouble finding the big-ticket items she pursued: a Barbie Dreamhouse for one daughter, Lego sets for her son and a cat condo for her other daughter, who plans to use it as a home for her stuffed animals.“I’m happy that I got it done early, because I didn’t have to worry about the risk,” she said.Retailers enticed consumers to shop early. Amazon and Target, for example, began holiday deals in October. According to Mr. Seward at UPS, 26 of the company’s 30 largest retail customers started offering substantial deals before Black Friday.Many Americans also eased pressure on UPS and other delivery companies by doing more shopping in stores. After consumers switched to online shopping in droves when the pandemic took hold last year, in-store shopping bounced back strongly this year, according to retail and logistics experts. In September, in-store sales accounted for about 64 percent of retail revenue, up 12 points from its low point during the pandemic, but still somewhat below 2019 levels, according to NPD Group.“We miss people,” Katie Thomas, a top consumer analyst at Kearney, a consulting firm, said about the compulsion to visit stores rather than buy online. “There’s a pent-up demand. We’re seeing people want to dress up again.”Retailers and delivery companies also worked behind the scenes to make sure the supply chain disruptions did not wreak havoc on holiday packages. Retailers worked harder to forecast sales and moved inventory to areas where UPS, FedEx and others had more capacity to pick up packages. Companies that previously relied mostly or exclusively on a single delivery service started doing business with several companies.The delivery companies have spent the past two years building out capacity, too, in response to surging demand. UPS, which in the past did not make deliveries on Saturday in much of the country, has been expanding its weekend service for years. It now offers Saturday deliveries to about 90 percent of the U.S. population. FedEx has added nearly 15 million square feet of sorting capacity to its network since June. And, starting in the spring, the Postal Service, which processes more mail and packages than the other delivery businesses, started leasing additional space and installing faster package-sorting machines around the country.A post office distribution center in Los Angeles last month was already in the holiday swing.Mario Tama/Getty ImagesThe companies have also responded by raising rates, imposing surcharges for larger packages that could slow down their networks, limiting the number of packages they will accept at busy times and penalizing retailers that ship many more or many fewer packages than they had forecast.“We used to think that every package was the same,” Carol Tomé, UPS’s chief executive, told financial analysts in October, explaining her strategy of focusing on quality over quantity. “We don’t think that anymore. So for some shippers, we’re no longer delivering their packages, and that’s OK with us.”The Postal Service doesn’t have the luxury of easily turning away business, but even it has done a better job of managing expectations for holiday package deliveries. Despite the introduction of its first-ever holiday surcharge last year, its delivery performance suffered. This year, however, it has fared much better, thanks to 13 million square feet of new processing space, 112 new high-speed processing machines and the decision to hire peak-season workers earlier.“U.S.P.S. is maybe the most exciting story of all,” said Josh Taylor, senior director of professional services at Shipware, a consulting firm. “The fact that they’re not overwhelmed, that their network can continue to deliver on time, it’s a great development for consumers.”But the holiday crunch does not end on Christmas. Online returns will keep delivery companies busy for weeks.And the pandemic is not yet over. Fear over the spread of the Omicron variant of the coronavirus could drive consumers back to online shopping in the months to come, which would impose new pressures on delivery companies and retailers. More