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    How Finnair’s Huge Bet on Faster Flights to Asia Suddenly Came Undone

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    Nestled near Europe’s rooftop, Finland spent decades leveraging its location to become a popular gateway for Asian travelers. Its flagship airline, Finnair, offered flights from Tokyo, Seoul and Shanghai to Helsinki that, by crossing over Russia, were hours shorter than flights to any other European capital. Airport chiefs invested nearly $1 billion in a new terminal with streamlined transfers. There were signs in Japanese, Korean and Chinese, and hot water dispensers for the instant noodle packets favored by Chinese tourists.Then Russia sent troops across Ukraine’s border on Feb. 24, and overnight the carefully constructed game table was overturned.Russia closed its airspace to most European carriers in response to bans on Russian planes. What was once a nine-hour flight to Helsinki when routed over Russia’s 3,000-mile expanse would now take 13 hours and as much as 40 percent more fuel because it had to swoop around borders.Finnair’s competitive advantage as the fastest connection from Asia and a travel hub for Europe vanished in a wisp.The sudden disintegration of Finnair’s business model is part of the wide-ranging economic upheaval that the war in Ukraine is causing for businesses around the globe.Companies that invested or traded heavily with Russia were immediately affected, and more than 1,000 have withdrawn operations from Russia, according to a database compiled by the Yale School of Management.Juho Kuva for The New York TimesNearly $1 billion was spent to build a terminal in the Helsinki, Finland, airport to streamline transfers for passengers from outside Europe.When Russia closed its airspace, Finnair could no longer pitch itself as the fastest connection from Asia.“The Asia strategy had been 20 years in the making,” Topi Manner, Finnair’s chief executive, said.High energy prices have blitzed a wider range. The Hungarian Opera House’s Erkel Theater will temporarily close because it cannot pay its energy bill. Hakle, one of the largest manufacturers of toilet paper in Germany, declared insolvency because of soaring energy costs, while ceramic, glass, chemical, fertilizer and other factories across Europe have been forced to scale back or shut down.The snack food industry, unable to get sufficient supplies of sunflower oil from Ukraine, has had to scramble for substitutes like palm oil, forcing manufacturers to rejigger supply chains, production and labeling, since they could no longer boast that their products were “nonallergenic” and “non-G.M.O.”The closed airspace caused Japan Airlines and ANA to cancel flights to Europe. And this month Virgin Atlantic said it was ceasing all traffic to and from Hong Kong because of Russia’s ban. For Finnair, though, the fallout has been extreme.“The Asia strategy had been 20 years in the making,” Topi Manner, Finnair’s chief executive, said from the company’s headquarters, next to the Helsinki terminal in Vantaa. Services were tailored to meet the tastes of its Asian customers. Half of its in-flight movies are dubbed or subtitled in Japanese, Korean and Chinese. Meal offerings include crispy chicken in Chinese garlic and oyster sauce and Korean-style stir-fried pork in spicy sauce with bok choy and steamed rice. The airline’s ground staff in Helsinki are fluent in the region’s native languages.Market Square in central Helsinki.Before the coronavirus pandemic, half of the airline’s revenue was generated by travelers from Asia. Passengers that used Helsinki as a hub to transfer to other destinations accounted for 60 percent of the revenue.But with “no end in sight” to the war, Mr. Manner said, the airline’s management quickly concluded “that Russian airspace will remain closed to European carriers for a long time and we need to adapt to that reality.”This summer, Finnair operated 76 flights between Helsinki and Asia, compared to 198 in the summer of 2019. Overall, the airline is going at 68 percent of its capacity. Operating losses in the first half of this year amounted to 217 million euros.“We really have to regroup,” Mr. Manner said.In some respects, Finnair has been regrouping ever since the pandemic hit in early 2020 and virtually halted world travel. China’s “zero Covid” policy, which continued to lock down Shanghai and other major cities this year, sharply reduced East-West traffic, hampering Finnair’s recovery compared with airlines that have large domestic markets or operate in other regions. Finnair, half of which is owned by the government, fought to survive by furloughing employees, cutting costs and raising 3 billion euros in new financing.Juho Kuva for The New York TimesThe new terminal was expected to draw 30 million passengers by 2030, a projection that has been thrown out by the uncertainty now facing Finnair’s Asia strategy.The project aimed to improve services for the connecting passengers from Asia who would never leave the airport.A 2017 publicity campaign by the state-owned company that runs Finland’s terminals primarily targeted customers from China.“We created a path through the pandemic,” Mr. Manner said, but it always was intended to lead “back to the Asia strategy.”No longer. Last month, the company officially announced an about-face.“We started to pivot our network toward the West,” Mr. Manner said, expanding its partnership with American Airlines, British Airways and other carriers. In the spring, it launched four new weekly flights from Dallas-Fort Worth and three from Seattle. New routes from Helsinki to Stockholm, Copenhagen, Mumbai, India, and Doha, Qatar, have also been unveiled. As jet fuel prices skyrocket, the airline is also renting out planes and crews to other airlines, and it plans to shrink the size of its fleet and staff, and to slash costs.Finnair, which has lost 1.3 billion euros over the past three years, said it hoped to return to profitability in 2024.“It will take some time before the company gets to see if this is the right decision,” said Jaakko Tyrväinen, an airline analyst with SEB, a Nordic financial services group.For the new Helsinki terminal — which opened in June — a strategy shift was also needed.Central Helsinki.An estimated 30 million passengers were expected by 2030, up from the nearly 22 million that the existing terminals handled in 2019. Those projections are now irrelevant, and airport officials say the situation is too uncertain to make any meaningful update to that figure. Next year, 15 million travelers are expected to pass through.Perhaps more pointedly, the project, begun nearly a decade ago, was designed to improve services for transfer passengers from Asia — a majority of whom would never leave the airport.A multimedia publicity campaign that Finavia, the state-owned company that runs the country’s airline terminals, rolled out in 2017 for Helsinki airport — code letters HEL — primarily targeted customers from China. With a nod to the 2004 film “The Terminal,” the campaign, “Life in HEL,” featured Ryan Jhu, a popular Chinese actor and social media influencer, living for a month in the terminal.Now, Helsinki has an expansive new terminal dedicated to non-European transfer traffic but very few travelers.Juho Kuva for The New York TimesThe project to build the new terminal was begun nearly a decade ago.The spacious aukio, or meeting plaza, includes a wraparound video installation depicting Finnish landscapes.The upshot to the changes forced upon Finnair is vastly fewer connecting passengers in a terminal designed for them.On a recent weekday afternoon, the long, snaking lanes created to handle crowds at passport control were deserted. The spacious aukio, or meeting plaza, where passengers could sit and watch a wraparound video installation depicting Finnish landscapes, hosted a lone woman with a backpack. Moomin Shop, which sells merchandise related to the Finnish cartoon characters — particularly popular with Japanese visitors — had no customers. The Moomin cafe, farther down the main hallway, was mostly deserted.“Mornings are normally slow,” said Liccely Del Carpio, who works at the Moomin store, adding that business often picks up later in the afternoon. “All in all, it’s been OK.”The European terminal was bustling, but most of the shops and cafes that stretched along this terminal’s long hall were empty. Several other spaces were unleased or shuttered.Sami Kiiskinen, the vice president of airport development at Finavia, said that the hundreds of millions of euros in loans used to construct the airport would ultimately be repaid, but that “the schedule of paybacks must be reconsidered.” Negotiations are happening, he said.Yet, despite the likelihood that the war in Ukraine will drag on and Russian airspace will remain closed to European traffic, Mr. Kiiskinen is optimistic.“We still believe in our strategy,” he said. Major infrastructure developments like airports are designed on a 50-year horizon, he said. “Putin is not going to be there forever.”Juho Kuva for The New York TimesOn a recent weekday afternoon, a cafe branded for Moomin merchandise, cartoon characters popular with Japanese visitors, was mostly deserted.Sami Kiiskinen of Finavia, which runs the terminal, acknowledged the problems facing the project’s finances but remained optimistic over the long run: “Putin is not going to be there forever.”The new terminal at the Helsinki airport is just one of numerous commercial ventures across Europe that have been affected by Russia’s invasion of Ukraine. More

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    Airfares Tumbled as Jet Fuel Prices Fell

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    Airline ticket prices fell sharply in July after peaking in recent months, fueled by high costs, high demand and a limited number of flights.Fares fell 7.8 percent in July compared to June, helping to ease overall inflation. Aviation experts said they expect prices to continue to drop into the fall as jet fuel prices and demand ease.Fares peaked in May when many travelers began confirming summer travel plans. After more than two years of exercising caution, many people took longer trips this summer, which is typically the busiest season for air travel. At the same time, many airlines cut the number of flights on their summer schedules to reduce the risk of mass delays and cancellations because of weather and staffing problems especially around holidays and other peak travel days. Fares were also driven up by high labor and fuel costs.The drop in fares last month coincided with a decline in U.S. jet fuel prices, which were down about 25 percent at the end of last month, from their peak at the end of April, according to the Energy Information Administration.Flight prices typically drop from late August through mid-fall as summer travel eases, according to Hopper, a travel booking and price-tracking app. Fares are expected to average $286 this month, down as much as 25 percent from May, Hopper said. Fares are expected to stay below $300 through September, before rising again, to a peak of $373 in November, up 24 percent from the same month in 2019, Hopper said.Despite broader economic concerns, airline executives have said in recent weeks that they haven’t seen a substantial decline in bookings beyond usual seasonal trends. More

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    Gas Prices Force Many to Rethink Driving, and Spending

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    As summer trips beckon, some are traveling less, at least by car. And those candy bars at the convenience store may find fewer takers.KATY, Texas — Most Americans would gladly pay the $4.29 for a gallon of regular gas Buc-ee’s was charging this week on Interstate 10 between Houston and San Antonio, more than 50 cents below the national average.But with prices more than $1.50 a gallon higher than they were a year ago, even Texans are complaining, and changing their buying habits to make do.“It makes me so stressed out just thinking about buying gas,” said Nancy Oncken, a retired kindergarten teacher, as she filled up her station wagon on her way to join five cousins at a water park outside San Antonio for the long weekend. “It’s now always in the back of my mind to be conservative about what I buy.”When Ms. Oncken drives through Buc-ee’s, the well-known Texas-scale convenience store with enough gasoline pumps to fuel an army, she often buys a souvenir bumper sticker, tumbler or key chain adorned with the cartoonish bucktoothed beaver wearing a baseball cap. But this year, she said, she will keep a grip on her wallet.Drivers will get a bit of a break this Fourth of July weekend now that gasoline prices have eased about 15 cents a gallon over the last two weeks. But with the Russian invasion of Ukraine settling into a grinding war of attrition, constraining global energy supplies, gas prices are not likely to decline much more this summer.At $4.86 a gallon on Thursday, the national average price for regular gas was $1.67 above a year ago, according to the AAA motor club. The fuel prices are altering buying patterns, and there are early signs that people may be rethinking their driving.Economists report that travel spending remains strong this year because of pent-up demand after two years of the Covid-19 pandemic. But interviews with drivers at Buc-ee’s in Katy, Texas, suggest that consumer confidence is beginning to erode under the pressure of high prices for fuel, food and housing. Ms. Oncken and several others said the holiday weekend might be the only vacation they would take this summer, a sharp break from the past.A recent report by Mastercard SpendingPulse, which monitors national retail sales, showed that despite a roughly 60 percent increase in gasoline prices from last year, total spending at gas station convenience stores was up only 29 percent, suggesting that many like Ms. Oncken are compensating for gas prices by saving on little, whimsical indulgences.“Opting for a lower fuel grade, driving a bit less or skipping that slushy or candy bar in the store are part of a bigger picture of choices consumers are making every day in the face of higher prices,” said Michelle Meyer, U.S. chief economist at the Mastercard Economics Institute.The shock is particularly acute given that people grew accustomed to low gasoline prices during the pandemic, when oil prices collapsed from the decline in commuting and other economic activity.Understand Inflation and How It Impacts YouInflation 101: What’s driving inflation in the United States? What can slow the rapid price gains? Here’s what to know.Inflation Calculator: How you experience inflation can vary greatly depending on your spending habits. Answer these seven questions to estimate your personal inflation rate.Greedflation: Some experts say that big corporations are supercharging inflation by jacking up prices. We take a closer look at the issue. Changing Behaviors: From driving fewer miles to downgrading vacations, Americans are making changes to their spending because of inflation. Here’s how five households are coping.It will take several months, at least, to sort out all the effects of higher prices on consumer behavior. People are spending more at restaurants than a year ago, and sales of luxury goods remain high, according to Mastercard. But hotel industry executives say many who drive on vacation are choosing destinations closer to home to save on gas.That may be one reason for the modest drop in gasoline prices in recent weeks. Recent Energy Department data suggested that the volume of gasoline sold nationwide had dropped 2 percent or more from a year earlier. And auto dealers in Houston said customer interest in more fuel-efficient cars, as well as electric and hybrid vehicles, was growing, although shortages of parts have limited the supplies of new models.Some transportation and energy experts say the demand for gas has declined partly because more people are flying rather than driving on vacations this year than last, although rising ticket prices and airport delays may reverse that trend as the summer progresses. In some cities, more people are returning to mass transit as concerns over Covid ease.Inflation and a slowing in some areas of the economy may mean some businesses are cutting back on shipping or shortening their supply chains when possible to save fuel.Energy Department data suggested that gasoline sales had dropped 2 percent over the last year.Scott McIntyre for The New York TimesGiovanni Circella, a transportation expert at the University of California, Davis, said that over the years, short periods of high gas prices had not fundamentally changed driving habits since people still needed to commute to work and carry on daily chores like shopping and driving their children to school and activities.“But what will change is if the gas prices stay high for an extended period of time, Americans will start changing the type of cars they drive,” he said.A report released this week by RBC Capital Markets found that over the last 30 years, retail gasoline prices in the United States increased more than 30 percent year over year during 39 individual months. Of those months, demand fell 2 percent or more from the previous year only 12 times. “In short, protracted demand destruction events have historically been rare,” the RBC report concluded.Inflation F.A.Q.Card 1 of 5What is inflation? More

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    North of Atlanta, a Trove of Wineries

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    Georgia actually has a long history with vineyards. About 90 miles from Atlanta, in the shadow of the Blue Ridge Mountains, there are more than 40 wineries and tasting rooms.La Tanya Eiland is from Compton, Calif. and has a passion for wine. So when she moved to Atlanta in 2013, she asked locals the question she always asks when she travels anywhere new: “Where is wine country?”In Atlanta, the most common answer was “north.”About 90 miles north of Atlanta, nestled in the foothills of the Blue Ridge Mountains, the city of Dahlonega has a dozen wine tasting rooms and eight wineries. Nearby communities, including Helen, Cleveland and Sautee Nacoochee, are also home to several establishments that offer local, regional and international wines. In total, North Georgia has more than 40 wineries and tasting rooms in a region that is becoming an increasingly popular destination for day trips and weekends away. More

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    Fuel Prices Send Airfares Higher, but Travelers Seem Ready to Pay

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    Supplies are not keeping up with demand, and costs may go higher, experts say.A stunning rise in the cost of jet fuel has sent airfares soaring, and industry experts say they are likely to go higher. For now, though, travel-starved consumers seem more than willing to pay up.Jet fuel prices have settled somewhat since Russia’s invasion of Ukraine sent them skyrocketing last month, but the market remains extremely volatile. The problem is particularly severe in New York, where the cost of the fuel rose about fourfold to just over $7.50 a gallon before dipping back to $5.30 in recent days.Supply is broadly constrained and prices have spiked across the country. The Energy Department this week said that the inventory level for East Coast jet fuel stood at 6.5 million barrels, the lowest since the agency began keeping track in 1990.“Jet fuel has made the most parabolic move I’ve ever seen for any transportation fuel,” said Tom Kloza, global head of energy analysis at Oil Price Information Service. “It’s just insane.”The surge in prices has implications not only for airfares but also for the already high costs of global shipping. On Wednesday, for example, Amazon announced plans to impose its first “fuel and inflation surcharge” for sellers whose goods it stores and delivers.Airlines have been able to pass on some of their added fuel expense to consumers, many of whom are more than eager to travel after being denied the opportunity for two years.At the start of this year, the average cost of a round-trip domestic flight was $235, according to Hopper, an airfare-tracking app. Since then, ticket prices have risen 40 percent, to $330. Adit Damodaran, an economist at Hopper, which tracks prices for flights and hotels, said the company expects another 10 percent rise, to $360, by the end of May, before prices drop again in the summer.“Not only are the current prices that travelers are paying extremely high compared to historic price data, but the rate of increase has also been particularly steep since January,” he said.In addition to the rising cost of jet fuel, Mr. Damodaran said, the surge in airfares can also be attributed to typical seasonal patterns and the fact that demand was suppressed at the start of the year as the Omicron coronavirus variant spread.Some airlines have also cut flights in response to persistent staff shortages, creating greater competition and driving up fares for the flights that remain.Carriers typically pass on to consumers as much as 60 percent of a volatile rise in the price of fuel, experts said, a process that usually takes months. This time, however, the industry has been able to pass along costs more quickly, in large part because of high demand and a shift in consumer behavior during the pandemic toward buying tickets closer to the date of travel.“We are successfully recapturing a significant portion of the run-up in fuel,” Ed Bastian, the chief executive of Delta Air Lines, told investment analysts and reporters on a call on Wednesday. “This is occurring almost in real time, given the strong demand environment.”Mr. Bastian said that Delta, the first major carrier to report financial results for the first three months of this year, had seen a strong rebound so far and that it was preparing for a robust spring and summer.Delta paid an average price of $2.79 per gallon of jet fuel in the quarter, up 33 percent from the last quarter of last year. The price included a saving of 7 cents per gallon from the airline’s oil refinery outside Philadelphia. Delta said it expected the price of fuel to rise another 15 to 20 percent over the next three months, to between $3.20 and $3.35 per gallon, a range that includes an approximately 20-cent savings attributable to the refinery.Prices for jet fuel, like gasoline and diesel, generally go up and down with crude oil.In February, American Airlines reported that the price it paid per gallon of jet fuel had risen more than a third over the past year, from $1.48 in 2020 to $2.04 in 2021. At the time, it said that each sustained one-cent rise in the per-gallon price would increase its fuel expense for 2022 by about $40 million. This week, American estimated that it had paid $2.80 to $2.85 per gallon in the first quarter of the year.Rising fuel costs and fares seem to be doing little to dissuade consumers. Mr. Bastian said Wednesday that March was Delta’s best sales month ever, beating a record set in 2019, despite having 10 percent fewer seats available. That comes as fares for domestic flights were up about 20 percent across the board between March 2019 and March 2022, according to an analysis by the Adobe Digital Economy Index, which draws on online sales from six of the top 10 U.S. airlines.Refueling at San Francisco International Airport. Some jet fuel shipments were diverted from the East Coast to the West as California prices began to climb.Justin Sullivan/Getty Images“We’ve all been stuck at home for two years, and I think now that we have the opportunity to get out, there’s going to be a lot of willingness to pay,” said Joe Rohlena, lead airline analyst for Fitch Ratings. “If it remains expensive to travel further out, then you may see that kind of willingness to pay higher ticket prices back off.”The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

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    The Best Time to Use Your Airline Points and Miles

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    If you’re thinking of traveling and you’ve got points or miles sitting in airline and credit card accounts, the time to cash in may have arrived. Here’s what you need to know.Frances Meredith of Raleigh, N.C. used a branded American Airlines credit card for everything from groceries to medical expenses during the pandemic, piling up points with nowhere to spend them. That meant she had plenty to redeem when her family of four decided it was time for a winter getaway to Miami. Although the seats were pricey at 50,000 points each, Dr. Meredith, an internist, was excited to save money by using her rewards balance. “It was easy. There were lots of seats,” she said.As travelers return to the skies, many, like Dr. Meredith, have amassed larger than usual totals in airline and credit card rewards programs. And they are starting to spend them. United Airlines’ Mileage Plus program has had multiple record-breaking days over the past few weeks as customers have flocked to redeem miles, said Michael Covey, the managing director of the United program. “The demand is hitting the books in ways we’ve never seen before,” he said.Several factors make now the time to cash in points.More flexibilityFlights booked with points on the major U.S. carriers are fully refundable. That means if you need to cancel the trip, all your points and any associated fees will be returned without any penalties. Tickets bought for cash, in contrast, typically offer a credit for a future flight rather than a refund and may charge fees, so your money is tied up with the airline. Refundable tickets can be purchased, but they are more expensive.This difference, between ending up with a credit or a refund, can loom large for expensive trips like a family vacation overseas. Some travelers are “still uncomfortable with international travel,” while conditions remain in flux because of the pandemic, so using points to book a flight to a foreign country can offer more peace of mind, said Jamie Larounis, who writes about loyalty programs on his travel website, the Forward Cabin. He is now also seeing some worry about flights near Eastern Europe because of the Russian invasion of Ukraine.Better now than laterMany travelers are sitting on larger than ever point balances, both because they haven’t been redeeming their points and because they’ve been adding to the pile over the last two years with credit card purchases tied to airline loyalty accounts. According to a study by ValuePenguin and OnPoint Loyalty, the five largest airline loyalty programs — Delta Air Lines’ SkyMiles, American Airlines’ AAdvantage, United Airlines’ MileagePlus, Southwest Airlines’ Rapid Rewards and JetBlue’s TrueBlue — ended 2020 with $27.5 billion in liabilities, up $2.9 billion from 2019. Customers earned about half as many points in 2020 as they did the previous year, and redeemed just 10 percent of their available points compared to 30 percent the previous year.The most important reason to use points now is that they may have less buying power over the coming years, Mr. Larounis said. Airline and hotel points are like currencies owned by companies, and those companies can value their currencies however they like by changing the cost of redemption. Helane Becker, an airline analyst at the investment bank, Cowen, said airlines have devalued points multiple times over the past few years and she expects that practice to continue.This is already evident in both the airline and hotel sectors. Alaska Airlines recently upped the cost to book some of its first class tickets. Hyatt Hotels recently increased the points necessary for some hotel stays when it implemented a new peak and off-peak pricing program.Companies know that “people are sitting on big piles of miles and have a lot of pent-up demand for travel,” said Mr. Larounis of the Forward Cabin website. “There is no downside to them raising the cost of award travel.” That is especially true of airplane seats in the premiere cabin, he said. Some leisure travelers, who may have been content in economy class seats, are now purchasing seats in the front of the plane where passengers are a little more spread out. “They see it as safer in regards to Covid,” Mr. Larounis said.Still, the airlines are mindful of those with fewer miles. “We have more seats available for less than 10,000 miles than ever,” said United’s Mr. Covey.Nudges from the airlinesAirlines are encouraging customers to use their points. Rewards tickets booked on Delta airlines through the end of this year will count toward elevating the customer’s loyalty program status. Previously, only flights paid with cash counted toward program status. United Airlines recently joined the list of airlines that allow customers to combine “money plus miles” to buy tickets, so “members can redeem miles sooner and not wait until they have a large total,” Mr. Covey said. United also had flash sales in February for tickets to London and Australia purchased with points, and now allows members to use points to buy food and beverages on flights.More places to goTravel itself is less daunting now with more countries eliminating Covid testing for vaccinated passengers. London, one of the most popular destinations for U.S. travelers, dropped its testing requirement on Feb. 11. Thailand, Vietnam, Australia, and other countries are opening up to tourists.Alison Carpentier, the director of guest loyalty at Alaska Airlines, which is part of the Oneworld alliance of 14 global airlines including Cathay Pacific and Qantas, said the availability of tickets purchased with points “has been good as international travel starts to open back up.”More seats availableAirlines want to fill as many seats as possible so many now make almost all of their seats available for purchase with points, instead of just a subset. The prices set by most airlines fluctuate, so it pays to check back periodically before the flight to see if the number of points needed has come down.Travel Trends That Will Define 2022Card 1 of 7Looking ahead. More

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    Corporations Raise Prices as Consumers Spend ‘With a Vengeance’

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    Corporate America is lifting prices and bragging about bigger profits as consumers open their wallets and spend heartily.Doughnut sellers, milkshake purveyors, tire manufacturers and rental car agencies are all discovering that something is different about America’s pandemic-weathered economy: People are willing to pay more for the goods and services they want to buy.Companies are taking advantage of a moment of hot and seemingly unshakable demand — one in which consumers are spending “with a vengeance,” to borrow the words of one executive — to cover rising costs and to expand their profit margins to prepandemic or even record levels. Corporate executives have spent recent earnings calls bragging about their newfound power to raise prices, often predicting that it will last.If it pans out, that trend that could have big economic implications.Planned corporate price adjustments could continue to boost inflation, which is running at its fastest pace in 40 years. The Federal Reserve is trying to assess whether businesses and households are changing their expectations in a way that might make rapid price gains a more permanent feature of the economic landscape.A selection of comments from recent earnings calls show just how companies are thinking about this moment..Rental Car CostsEverything related to automobiles seems to be increasing in cost, and rental cars are the vanguard of that trend. Company leaders are trying to make the profitable moment last.“The overall rent-a-car industry still has more demand than supply,” Joe Ferraro, the president and chief executive officer at Avis Budget Group, the rental car company, said on a Feb. 15 earnings call. “Given the current trends, we are cautiously optimistic about what a rebound in demand could mean once Covid is behind us,” he added.The year “2021 showed us what’s possible,” he said, noting also that he expects the first quarter of 2022 to be the most profitable in the country’s history.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: We asked readers to send questions about inflation. Top experts and economists weighed in.What’s to Blame: Did the stimulus cause prices to rise? Or did pandemic lockdowns and shortages lead to inflation? A debate is heating up in Washington.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.The company has realized, “especially given what we’ve been through in the last two years,” that targeting the most possible rentals — effectively competing by offering lower prices — is “not how you maximize profit,” Brian Choi, its chief financial officer, said on the call.“We choose instead to compete based on the quality of our product and our service,” he said.Tire DemandDemand for cars has also bolstered the market for tires.“It’s a really very, very good constructive pricing environment that we’ve seen right now, probably the best in recent memory,” Richard J. Kramer, the chief executive at Goodyear, said on a Feb. 11 earnings call.The company does look to its competitors as it makes its price increases — but they, too, are charging more.“There are nine competitors that we tend to track, and seven out of the nine have announced price increases in the first quarter, and one of the ones who hadn’t raised prices right at the end of last year,” Darren Wells, its chief financial officer, said on the call. Goodyear saw profit margins expand last year, driven in part by price increases.Sizing Up Beef CostsThe restaurant family that includes Outback Steakhouse, Bloomin’ Brands, is planning to raise prices about 5 percent across its brands to cover rising labor and food costs — and, by pairing that with efficiency improvements, it is managing to increase its profits.“It became clear that the 3 percent pricing we previously discussed was not be enough to offset the increased inflationary pressures our industry is facing,” said Christopher Meyer, the chief financial officer at Bloomin’ Brands, speaking of the last quarter. “Given that we had not taken a material menu price increase since 2019, we are confident that 5 percent is appropriate.”Mr. Meyer noted that operating inflation was 4.9 percent and labor inflation was 8.9 percent in the final quarter of 2021, but that the company had managed to increase its profits through improving efficiency by simplifying its menu and by cutting food waste.In 2022, he said, the company expects beef inflation “in the mid-to-high teens” and wage inflation “in the high single-digit range.”Recovering Profits in FoodShake Shack is among the companies hoping to benefit as consumers spend.Amy Lombard for The New York TimesAs beef and other food costs have increased, so have Shake Shack’s menu prices. But officials think consumers will be able to spend through the burger and ice cream inflation as virus risks fade and foot traffic picks up in the cities where its stores are located.Inflation F.A.Q.Card 1 of 6What is inflation? 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