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    Opportunity Zones, Lauded by Trump, Don’t Always Help Poor

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    A tax incentive, with bipartisan roots, aims to foster development in poor areas. It has fueled building, but it hasn’t always aided local residents.On an Alabama day so oppressive that the sweat pools on your face in the shade, Alex Flachsbart talks almost too rapidly to understand and drives around central Birmingham with similar velocity. Every few minutes, he pulls over to expound on a victory: neglected public housing, a long-empty factory, a crumbling department store, all being transformed into shiny apartments or airy office and retail space.“This was one of Birmingham’s white-whale buildings,” Mr. Flachsbart said of a former Red Cross office that had been renovated into 192 rental residences. The development happened with the help of a powerful tax break created in 2017 to lure investors toward poorer neighborhoods, an idea championed by Democrats and Republicans and cited by former President Donald J. Trump as among his proudest economic policy achievements. (“One of the greatest programs ever for Black workers and Black entrepreneurs,” he called the incentive in an appearance this week at a National Association of Black Journalists conference.)But the relatively low-income areas covered by the incentive, known as opportunity zones, didn’t benefit equally. On Mr. Flachsbart’s tour of new projects in downtown Birmingham, the stops dry up in the historically African American northwest quadrant. There, developable lots and vacant buildings haven’t received as much of the capital flowing toward the buzzier parts of downtown.“O.Z. was a nudge there because it was already at a tipping point,” said Mr. Flachsbart, who has put together several of those deals as chief executive of a nonprofit organization called Opportunity Alabama. “There is a wall at about 17th Street.”Alex Flachsbart, chief executive of Opportunity Alabama, in the Burger-Phillips Lofts in Birmingham, a building being renovated with opportunity zone financing.Charity Rachelle for The New York TimesBirmingham and the rest of Alabama are a window into how money has and hasn’t soaked into the ground designated as opportunity zones over the past six years. Congress is taking a closer look as it considers extending the incentive, which expires in 2026 along with most of the 2017 tax law. More

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    Productivity Surges 2.3%, Beating Forecasts

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    The NewsProductivity grew at a 2.3 percent annual rate in the second quarter, the U.S. Bureau of Labor Statistics reported on Thursday, surpassing economists’ expectations. The pickup was a major improvement upon the sluggish 0.4 percent rate in the first quarter. And on a yearly basis, productivity increased 2.7 percent. That far exceeds prepandemic averages.An assembly line at a car plant in Michigan in April.Bill Pugliano/Getty ImagesWhy It Matters: A key to prosperity.A highly productive economy generally means businesses and workers are operating efficiently, making more money in fewer hours. In the second quarter, production was up 3.3 percent, while hours worked rose 1 percent.On a less technical level, productivity is best explained by the old axiom of “doing more with less” or the folksy virtue of “getting the biggest bang for your buck.”Economists tend to sigh with relief when they see productivity gains because it offers a potential “win-win” for workers, customers and business owners: If businesses can make more money in fewer work hours, then — according to basic economic logic — they can presumably make more dollars per hour, while also reinvesting and giving workers raises, without sacrificing profits.Being able to make more with less (or with the same amount of labor and machinery) also means businesses may not feel as much pressure to set higher prices to push profits. That, too, is welcome news after a yearslong bout of inflation.Facts to Keep in Mind: A volatile indicator.Productivity, at a basic level, is calculated as a simple ratio: the total amount of output an economy produces per hour worked by its labor force. But the output side of the equation is adjusted for inflation on a quarterly basis. That can cause volatility, in both directions.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Trump Promises Lower Interest Rates, but the President Doesn’t Control Those

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    The Federal Reserve sets interest rates, and it operates independently of the White House. But rates could come down as inflation cools.Former President Donald J. Trump, the Republican candidate for the 2024 presidential race, promised lower interest rates — which a president does not actually control — if he is elected.Asked on Wednesday what he would do on “Day 1” of a new presidency during a panel at the National Association of Black Journalists convention in Chicago, Mr. Trump said one priority would be to “drill, baby, drill,” the shorthand tagline he has adopted for promoting oil and gas production in the United States.“I bring energy way down, I bring, interest rates are down, I bring inflation way down,” Mr. Trump expanded.The president exerts no direct control over interest rates. The Federal Reserve sets a key policy rate, which then trickles out to influence borrowing costs across the economy, and the Fed is independent from the White House.Mr. Trump has at times implied that the Fed will lower rates because inflation is likely to be lower on his watch, which could have been what he meant on Wednesday. Economists have suggested that some of his proposed policies may in fact speed up inflation.Still, the candidate’s comments underscore how politically salient both price increases and high interest rates remain as the Nov. 5 election nears, even after years in which inflation has been gradually cooling. And they make it clear that the coming months are likely to be politically fraught for the Fed as the technocratic institution tries to stay outside the political fray.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    What to Watch as the Fed Meets on Wednesday

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    The Federal Reserve is expected to leave interest rates unchanged but could set up for a cut later this year.Federal Reserve officials are widely expected to leave their key interest rate unchanged on Wednesday, keeping it at the two-decade high of 5.3 percent for a 12th straight month in a bid to slow economic growth and crush inflation.But investors will be most focused on what comes next for borrowing costs. Economists and traders widely expect Fed officials to cut their policy rate at their next meeting, in September. Wall Street will closely watch for any hints about the future in both the Fed’s statement at 2 p.m. and a subsequent news conference with Jerome H. Powell, the chair of the central bank.While few economists expect an explicit signal on when a rate reduction is coming — the Fed has been trying to keep its options open — many think that central bankers will at least leave the door open to a cut at the next meeting, which will wrap up on Sept. 18. And Mr. Powell is sure to face questions about how officials are thinking about the potential for moves after that. Here’s what to look out for.Watch the Fed’s statement for changes.The Fed’s statement, a slowly changing document that officials release after each two-day meeting, currently states that Fed policymakers expect to hold rates steady until they have “gained greater confidence that inflation is moving sustainably” down.Michael Feroli, chief U.S. economist at J.P. Morgan, wrote in his preview note that the statement could be headed for a small but meaningful tweak: Officials could adjust “greater confidence” to read “further confidence,” or some similar rewording. That would signal that policymakers were becoming more comfortable with the inflation backdrop.There would be a reason for that growing confidence. After proving surprisingly stubborn early in 2024, inflation is cooling again. The latest report showed that the Fed’s preferred index picked up just 2.5 percent over the year through June — still quicker than the central bank’s 2 percent target, but much slower than that measure’s recent peak in 2022, which was above 7 percent.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Is the Labor Market About to Crack? It’s the Key Question for the Fed.

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    Central bankers are paying more attention to the strength of the job market as inflation cools. But it’s a tough time to gauge its resilience.David Gurley Jr.’s bank account benefited from a hot pandemic labor market. Mr. Gurley, a video game programmer, switched jobs twice in quick succession, boosting his salary and nabbing a fully remote position.By late last year, he was worried that a pullback in the tech industry could make his job precarious. But when it comes to the outlook now, “it seems like things are more or less OK,” Mr. Gurley, 35, said. Opportunities for rapid wage gains are not as widespread and some layoffs have happened, but he feels he could find a job if he needed one.Mr. Gurley’s experience — a rip-roaring labor market, then a wobbly one and now some semblance of normality — is the kind of postpandemic roller-coaster ride that many Americans have encountered. After breakneck hiring and wage growth in 2022 and 2023, conditions have moderated. Now economic officials are trying to figure out whether the labor market is settling into a new holding pattern or is poised to take a turn for the worse.The answer will be pivotal for the future of Federal Reserve policy.Central bankers spent 2022 and 2023 focused mainly on wrestling rapid inflation under control. They have left interest rates unchanged at 5.3 percent for more than a year now and are likely to keep them there at their meeting this week, making money expensive to borrow in a bid to restrain consumer demand and weigh down the overall economy.But now that inflation is returning to normal, officials are again concentrating keenly on their second major goal: maintaining a strong job market. They are trying to strike a careful balance in which they fully stamp out inflation without causing unemployment to spike in the process.The labor market still looks solid. Joblessness is low by historical standards, and claims for unemployment insurance have stabilized after moving up earlier this year. A fresh jobs report set for release Friday is expected to show that employers continued to hire in July, albeit at a slower pace.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Fed’s Preferred Inflation Number Cooled Overall in June

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    The Personal Consumption Expenditures Index climbed 2.5 percent, still more than the Fed’s 2 percent target, as price increases take time to come down.The Federal Reserve’s preferred inflation measure continued to gradually cool overall in June even as a “core” inflation measure held steady, likely keeping the central bank on track for a rate cut later this year without stoking any urgency for a reduction at its meeting next week.The Personal Consumption Expenditures index was 2.5 percent higher in June than a year earlier, slower than May’s 2.6 percent and in line with economist expectations.A “core” price measure that strips out food and fuel costs for a better sense of the underlying inflation trend proved more stubborn. Yearly core inflation was 2.6 percent, matching its reading in May. And on a monthly basis, both measures of inflation climbed modestly.Overall, the report served as a reminder that inflation is substantially lower than it was at its 2022 peak, but is not yet entirely vanquished.This inflation measure peaked above 7 percent in 2022, so June’s reading is much cooler. But inflation has lingered above the Fed’s 2 percent goal for more than three years now. That long period of rapid increases has left price levels much higher than they were as recently as 2020, a reality that has caused dismay among consumers who continue to balk at heftier price tags. That in turn has been bad news for incumbent Democrats, who have struggled to take credit for a strong job market and a burst of infrastructure spending at a time when inflation is souring voters’ view of the economy.The long period of inflation has also made the Fed cautious. Policymakers have been holding interest rates at 5.3 percent for the past year, making it expensive to borrow money in a bid to weigh on consumer demand and cool the broader economy. Even though inflation is now coming down — suggesting that rates may no longer need to be so punishingly high — policymakers have not wanted to cut borrowing costs before they are sure that they have fully wrestled price increases under control.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Child Care Costs Challenge Women’s Gains in Work Force

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    Participation in the labor force has surged among women in their prime working years. But for those with children under 5, the gains may have peaked.Jessica Cuevas loved her job as a college counselor at a high school. But after giving birth to a son in January 2021, she switched to a remote corporate job at a grocery store chain because it gave her more flexibility and saved her commuting time. After her second son was born two years later, she quit that job, too.She had been relying on her mother for help, but her parents have been spending more time in Mexico, leaving her without an affordable and reliable child care option.Ms. Cuevas, who is 35 and lives in Chicago, works part time from home for an education nonprofit, though the work is sporadic and the pay is inconsistent. She wants a full-time job — in part so she and her husband can buy a bigger house — but she is concerned that the expense of child care would wipe out any financial upside.“I feel like right now, considering the economy, considering just the cost of living, we feel stuck,” she said.The share of women in their prime working years who are in the labor force has reached new highs coming out of the pandemic, hitting a record 78.1 percent in May.But there are signs that the labor force participation gains among women with children under 5 has plateaued since September, according to an analysis from the Hamilton Project, an economic policy research group at the Brookings Institution.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    U.S. Economy Grew Faster Than Expected in Second Quarter, at 2.8% Rate

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    Gross domestic product rose at a 2.8 percent annual rate in the second quarter, new evidence of the economy’s resilience despite high interest rates.Economic growth picked up more than expected in the spring, as cooling inflation and a strong labor market allowed consumers to keep spending even as high interest rates weighed on their finances.Gross domestic product, adjusted for inflation, increased at a 2.8 percent annual rate in the second quarter, the Commerce Department said on Thursday. That was faster than the 1.4 percent rate recorded in the first quarter, but shy of the unexpectedly strong growth in the second half of last year.Consumer spending, the backbone of the U.S. economy, rose at a 2.3 percent annual rate in the second quarter — a solid pace, albeit much slower than in 2021, when businesses were reopening after pandemic-induced closings. Business investment in equipment rose at its fastest pace in more than two years. Inflation, which picked up unexpectedly at the start of the year, eased in the quarter.The data is preliminary and will be revised at least twice.Taken together, the findings suggest that the economy remains on track for a rare “soft landing,” in which inflation eases without triggering a recession. That is something few forecasters considered likely when the Federal Reserve began raising interest rates two years ago to combat inflation.“It’s the perfect landing,” said Sam Coffin, an economist at Morgan Stanley.Recession fears re-emerged in recent months, first when inflation briefly surged and then when the previously rock-solid job market showed signs of cracking in the spring. But recent data, including the surprisingly strong second-quarter growth figures, indicate that the expansion is on firm footing.“The economy is in a transition, but it’s in a good place,” said Ryan Sweet, chief U.S. economist at Oxford Economics. “The economy is slowing from very strong growth in the second half of last year. We’re just settling down into something that’s a little more sustainable.” More