Showing posts with label US Economy. Show all posts
Showing posts with label US Economy. Show all posts

Nov 11, 2020

News | US Economy | US Unemployment Programs: Millions Face Loss of Jobless Aid: ‘Without It, I’m Dead in the Water’

By Ben Casselman

10-13 minutes - Source: NYT

Emergency federal programs to assist the unemployed in the pandemic will expire at year’s end if there is no congressional action.

Credit...John Moore/Getty Images

Two critical unemployment programs are set to expire at the end of the year, potentially leaving millions of Americans vulnerable to eviction and hunger and threatening to short-circuit an economic recovery that has already lost momentum.

As many as 13 million people are receiving payments under the programs, which Congress created last spring to expand and extend the regular unemployment system during the coronavirus pandemic. Leaders of both major parties have expressed support for renewing the programs in some form, but Congress has been unable to reach a deal to do so. It remains unclear how the results of Tuesday’s election will affect prospects for an agreement.

That means that for now at least, people like Randy Williams must prepare for the possibility that they are weeks away from losing their only income.

Mr. Williams, 56, lost his job as a manager at a Memphis-area Cracker Barrel in the first weeks of the pandemic. His state jobless benefits ran out last month, leaving him to rely on a 13-week extension under the federal Pandemic Emergency Unemployment Compensation program, which ends in late December.

Already, Mr. Williams is struggling to get by on his $275 weekly benefit check, the maximum allowed in Tennessee. He has fallen behind on rent, racked up thousands of dollars in credit card debt and turned to a food pantry run by a church.

Even with the benefits, “I may have got behind on this or that, robbing Peter to pay Paul this month,” he said. “But without it, I’m dead in the water.”

The expanded unemployment programs are some of the last vestiges of the trillions of dollars in aid that Congress provided through a series of emergency measures in the spring. That spending — which included direct checks to most U.S. households, $600 a week in supplemental unemployment benefits and hundreds of billions of dollars in support for small businesses — offset the pandemic’s financial toll for many families, and helped fuel an economic recovery that was initially stronger than many forecasters expected.

Much of that assistance expired over the summer, however. Economic gains have slowed significantly since then, and studies have found that millions of Americans fell into poverty as aid dried up. Employment data released Friday showed that the number of people out of work for more than six months, the standard threshold for long-term unemployment, rose 1.2 million in October, to 3.6 million.


Credit...Andrea Morales for The New York Times

The year-end benefits cliff could be even more damaging. Many families have depleted any savings they built when the $600 supplement was available. A partial federal eviction moratorium is scheduled to expire at the end of the year, although it could be extended. And benefits checks won’t just shrink, as they did over the summer — they will disappear.

“The safety net still has kind of held up until now, and I think we have been maybe lulled into a sense of complacency,” said Andrew Stettner, an expert on unemployment benefits at the Century Foundation, a progressive policy research group. “We’re just putting people in this really precarious financial position where the damage of unemployment can just hit really hard.”

Nearly four million Americans are receiving benefits under the pandemic compensation program. That number has doubled in the past month and is expected to keep rising as more people reach the end of their state benefits, which last 26 weeks in most of the country.

If the program ends at the end of the year, some workers will be able to continue to receive benefits under a federal program not tied to the pandemic. But those benefits aren’t available in some states, including Tennessee, and don’t cover some types of workers, like freelancers.

Congress last spring created a separate emergency program, Pandemic Unemployment Assistance, to cover people left out of the normal unemployment system, such as freelancers and self-employed workers, as well as those unable to work because of pandemic-related child care issues and similar obstacles. There were 9.3 million people in that program in mid-October, according to federal data, although some experts on the unemployment system believe that figure overstates the total.

By any measure, millions are in danger of losing their benefits. Many economists warn that the harm would extend not just to individual workers but to the broader economy.

“Those households then have to dramatically cut back on their spending, they then fall further behind on their rent, and that means that their landlords suffer and the businesses that they would have been buying from will suffer,” said Jesse Rothstein, an economist at the University of California, Berkeley.

Conservative economists have long argued that unemployment benefits can be counterproductive because they discourage recipients from seeking or accepting jobs. That argument has been persuasive with many Republican lawmakers, who fought to end extended benefits during the last recession a decade ago and who have been skeptical of offering more generous benefits during the current crisis.


Credit...Gabriela Bhaskar/Reuters


Credit...Michael Loccisano/Getty Images

Progressives, including Mr. Rothstein, have countered that the disincentive effects of benefits are small, especially when jobs are scarce, and that giving workers a lifeline lets them seek out better jobs. In recent years, researchers have also used new data sources to study what happens when benefits run out, and have found clearer evidence that losing benefits creates significant hardship for families.

Bruce Meyer, a University of Chicago economist and longtime critic of unemployment benefits, said he remained unconvinced by many of the traditional progressive arguments for unemployment insurance. But he said he found the new data compelling.

“Unemployment insurance does not help you get a better job — it keeps you out of work and lets your skills deteriorate,” he said. “But it keeps you from starving.”

The threat of losing benefits is amplified during a pandemic. Matt Weis, chief program officer at the National Able Network, a Chicago-based nonprofit organization, said he had long counseled job seekers to look for a “survival job” — one that will pay the bills while they look for more permanent work. But that is a harder argument to make when many sources of stopgap work, like seasonal retail and fast food, could carry health risks.

“It’s just putting people in a really, really tricky situation,” Mr. Weis said. “Do I preserve my health and the health of my family by staying home and not working? OK, fine, how do I do that? I’ve got bills to pay.”


Credit...Lyndon French for The New York Times

Gail Kulwicki, a home health aide in Muskegon, Mich., has a history of health problems, so when the coronavirus began spreading in the United States, her employer told her to stop coming into work. She has been unemployed ever since.

The $1,200 stimulus check and $600 a week in extra unemployment benefits were a help early on. Ms. Kulwicki, who is 71 and lives with her adult son, was able to pay off some bills and pad her savings. But with that money gone, she is getting by on her remaining unemployment benefits, plus Social Security and a small pension. It is enough to pay her bills, but barely.

“With the unemployment gone, we would have to find other ways to bring income in or we wouldn’t be able to pay the bills,” she said. “It would be pay the rent, pay the electric and, OK, I guess we’re eating ramen noodles for the month.”

With her health concerns, going back to work in home health care is off the table for the time being. So are many other types of work. So she and her son are driving for the food-delivery app DoorDash on alternating evenings, trying to cushion the loss of her benefits next month.

A registered Democrat, Ms. Kulwicki voted for former Vice President Joseph R. Biden Jr. in the presidential election, but is angry at both parties for failing to reach an agreement to help people like her.

“I don’t appreciate Washington playing politics with my life,” she said.

Congress may still extend the programs before they expire. Senator Mitch McConnell, the majority leader, said Wednesday that a new aid package would be the Senate’s top priority now that the election was over, although he has provided few details on what would be included.


Credit...Alyssa Schukar for The New York Times


Credit...Saul Martinez for The New York Times

“Hopefully the partisan passions that prevented us from doing another rescue package will subside with the election,” he said. “And I think we need to do it, and I think we need to do it before the end of the year.”

But negotiations have repeatedly failed, and it remains far from certain that this attempt will succeed. The aftermath of the election — including President Trump’s refusal so far to accept the result, and runoff elections in Georgia that will decide control of the Senate — is likely to capture Washington’s attention for weeks, and Mr. Trump may see little incentive to push for a stimulus deal that would primarily help his successor.

Aneta Markowska, chief financial economist for the investment bank Jefferies, said that while she expected another aid package eventually, any delay could be costly, as businesses fail and workers leave the labor force, in some cases permanently.

“Timing does matter,” Ms. Markowska said. “There is the potential for permanent scarring during that time that is then that much harder to reverse. It’s not simply a matter of turning the lights back on.”

Victoria Passmore is trying to avoid letting short-term unemployment turn into a long-term setback.

When she lost her job at a health information company in June, Ms. Passmore, a 33-year-old single mother in Chicago, decided to take the opportunity to change careers. She has been working toward her certification as an information technology specialist, and has started a business with her sister selling healthy juices. She is counting on those to support her once her unemployment benefits run out.

“I hate to say it, I don’t really have too much faith in the government we have right now, so I am not expecting any extension,” Ms. Passmore said. “We have to figure it out for ourselves. There’s not much help coming from higher up.”

Oct 15, 2020

News | US Economy | Unemployment: Jobless claims jump, hitting highest level since mid-August


Jeff Cox

American workers continued to hit the unemployment line in large numbers last week, with 898,000 new claims filed for jobless benefits.

Economists surveyed by Dow Jones had been looking for 830,000.

The total for the week ended Oct. 10 was the highest number since Aug. 22 and another sign that the labor market continues to struggle to get back to its pre-coronavirus pandemic mark as cases rise and worries increase over a renewed wave in the fall and winter. The number represented a gain of 53,000 from the previous week’s upwardly revised total of 845,000.

Despite the higher-than-expected total, the level of continuing claims continues to fall at a brisk pace, declining by 1.165 million to just over 10 million. Continuing claims data runs a week behind the headline claims number.

The economy has recaptured some 11.4 million positions, or about half those who were sidelined. The unemployment rate has come down to 7.9% but is still more than double its pre-pandemic level.

The four-week moving average of continuing claims fell by 682,250 to 11.48 million.

The insured unemployment rate, a simple measure that compares those receiving benefits against the total labor force, slid 0.9 percentage point to 6.8%.

Those receiving first-time benefits under the Pandemic Unemployment Assistance program continued to decline, sliding by more than 91,000 to 372,981. That program provides compensation to those who normally wouldn’t be eligible for benefits, such as freelancers and independent contractors.

However, recipients under the program accounted for more than half of those getting unemployment benefits as of Sept. 26. Those receiving benefits under the emergency claims portion of the pandemic program increased by more than 800,000, though that data also is two weeks old.

“Although the absolute level of claims remains well above the pre-pandemic level, the declining trend of continuing claims is more important to watch,” Citigroup economist Andrew Hollenhorst said in a note. “The decline in claims over the past few weeks, even after netting out those who transferred to federal PEUC, is encouraging, pointing to still-robust rehiring in late September, and should continue into Q4.”

Total benefit recipients also declined, to 25.3 million from 25.5 million, also as of the week ended Sept. 26.

Reporting of claims continues to be impacted by California, which has halted processing of its claims as it cleans up backlogs and looks to implement technology aimed at preventing fraud. The Labor Department has been using the 225,000 figure reported the week before the effort began.

Mar 11, 2020

Economy: Coronavirus Spurs U.S. Efforts to End China’s Chokehold on Drugs

By Ana Swanson

The Trump administration says the U.S. is too dependent on China for vital drugs. But it’s unclear how much Washington can do to alter global supply chains
Credit...Qilai Shen/Bloomberg
Ana Swanson

  • WASHINGTON — The global spread of the coronavirus is reigniting efforts by the Trump administration to encourage more American manufacturing of pharmaceuticals and reduce dependence on China for the drugs and medical products that fuel the federal health care system.
The effort includes a push by the White House trade adviser Peter Navarro to tighten “Buy American” laws so federal agencies are required to purchase American-made pharmaceuticals and medical equipment, according to people with knowledge of the plans.
The administration has been preparing an executive order, which could be released in the coming days, that would close loopholes allowing the government to purchase pharmaceuticals, face masks, ventilators and other medical products from foreign countries. The hope is that increasing government demand for American-made drugs and medical products will provide an incentive for companies to make their products in the United States, rather than China.
To help facilitate such production, the White House is also pushing for streamlined regulatory approvals for American-made products and more detailed labeling of the origin of products made offshore, these people said.
“China has managed to dominate all aspects of the supply chain using the same unfair trade practices that it has used to dominate other sectors — cheap sweatshop labor, lax environmental regulations and massive government subsidies,” Mr. Navarro said in an interview. “As President Trump has said, what we need to do is bring those jobs home so that we can protect the public health and the economic and national security of the country.”
China is known as the world’s factory for car parts, toys and electronics, but it also churns out much of the penicillin, antibiotics and pain medicines used across the globe, as well as surgical masks and medical devices.
While the United States remains a global leader in drug discovery, much of the manufacturing has moved offshore. The last American plant to make key ingredients for penicillin announced it would close its doors in 2004.
Chinese pharmaceutical companies have supplied more than 90 percent of U.S. antibiotics, vitamin C, ibuprofen and hydrocortisone, as well as 70 percent of acetaminophen and 40 to 45 percent of heparin in recent years, according to Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations.
Supporters of reducing reliance on China have used the coronavirus epidemic to highlight what they say is a longstanding vulnerability that could leave Americans dangerously short of medicines in the event of a war, trade conflict or pandemic.
“If China shut the door on exports of core components to make our medicines, within months our pharmacy shelves would become bare and our health care system would cease to function,” said Rosemary Gibson, a senior adviser with the Hastings Center and an author of “China Rx: Exposing the Risks of America’s Dependence on China for Medicine.”
“In the event of a natural disaster or global pandemic, then the United States will wait in line with every other country for essential medicines,” she said.
Some in China have also noted these vulnerabilities. An article posted last week by the state news agency Xinhua argued that the world should thank China, rather than blame it for spreading the virus, saying that if China banned the export of drugs, “the United States would sink into the hell of a novel coronavirus epidemic.”
China does not appear to be explicitly blocking the export of pharmaceuticals, though it has cut off exports of face masks by requiring manufacturers to sell masks straight to the government for distribution, leaving none to send overseas.
Factory closings and transportation restrictions in China have disrupted supply chains for drugs as well. Public health officials are watching to see whether the coronavirus epidemic will lead to more shortages of essential drugs in the United States in the coming weeks.
On Feb. 28, the Food and Drug Administration warned that one drug was already in short supply in the United States because of manufacturing issues, and said it was monitoring about 20 others that rely on China.
Last week, the Indian government ordered its pharmaceutical companies to stop exporting 26 drug and drug ingredients, most of them antibiotics. And South Korea, Germany, India, Taiwan and others have clamped down on exports of masks and other protective gear over worries that their own supplies will fall short.
“The coronavirus shows the importance of bringing all of that manufacturing back to America, and we will have that started,” President Trump said in a meeting last week at the White House with the chiefs of major pharmaceutical and biotechnology companies. “It’s already started, frankly. It started about a year ago.”
In Mr. Trump’s lunch meeting with Senate Republicans on Tuesday, Senator Marco Rubio of Florida urged lawmakers to move quickly to leverage government programs, like Small Business Administration loans, to ramp up American production. Mr. Trump agreed with the plan, according to a representative for Mr. Rubio.
“The coronavirus outbreak has made clear we must combat America’s supply chain vulnerabilities and dependence on China in critical sectors of our economy,” Mr. Rubio said in a statement.
He called the administration’s coming executive order “a very strong first step in incentivizing domestic production.”
But there are big questions about how much the government can influence the behavior of private companies and reconfigure a global supply chain that is heavily invested in Chinese manufacturing.
If we want to reduce that dependence, there is no easy fix to the problem,” said Mr. Huang of the Council on Foreign Relations. “Technically I think it’s possible, but unlikely from a cost effectiveness perspective.”
The Trump administration has urged companies making electronics, steel, toys and many other products to move their supply chains out of China, with mixed success.
Some companies have left China in response to tariffs Mr. Trump placed on more than $360 billion of Chinese goods. But many have moved to other low-cost countries like Vietnam, India and Mexico, rather than returning to the United States. And many products that are made in the United States still contain Chinese components.
Critics of China’s dominance of global pharmaceuticals say Beijing has used the same strategies to gain a foothold in drug making that it has in other industries — including generous government subsidies and lax environmental rules.
China is also a key producer of the chemicals that go into making drugs, and home to a vast supply of well-educated but low-paid scientists. And pharmaceutical companies say they are drawn to China as a large and rapidly growing health care market in its own right.
David Gaugh, a senior vice president at the Association for Accessible Medicines, which represents the generics industry, said that the globalization of the supply chain was “a market reality” for all kinds of drug makers, and that the United States had one of the world’s safest drug supply chains.
The Food and Drug Administration does not gather precise figures on the volume of drugs made overseas — only the number of facilities making them. According to that data, 72 percent of manufacturing facilities making active pharmaceutical ingredients for American drugs were overseas, with 13 percent in China.
But Michael R. Wessel of the U.S.-China Economic and Security Review Commission said that those figures understated the American reliance on China, which has some of the world’s largest factories. And when the United States imports finished drugs from Europe and India, they often contain Chinese components as well.
“The coronavirus crisis puts into sharp focus the unacceptable dependence of the U.S. on China for critical medicines and their ingredients,” Mr. Wessel said.
The federal government maintains a strategic stockpile of drugs and medical supplies, but those could fall short in a pandemic. In the private sector, as in many other industries, pharmaceutical companies have shifted from stockpiling goods in warehouses to a “just in time” logistics model that ships products as need arises — reducing costs but also increasing the likelihood of shortages.
The question is whether the government has enough levers to encourage more private companies to rework their supply chains, or encourage new manufacturing start-ups in the United States.
Administration officials say Buy American laws, which require the federal government to purchase American-made products where it can, offer one powerful lever.
The government buys vast amounts of drugs and medical equipment through the Departments of Defense, Health and Human Services, and Veterans Affairs. A series of waivers and trade agreements allow those agencies to purchase products from foreign countries, with the decisions often based on price.
Mr. Navarro is examining agreements struck by the Defense Department, as well as the World Trade Organization’s government procurement agreement, which allow the government to purchase drugs from dozens of countries around the world, according to people with knowledge of the initiative.
Where American-made drugs are not available, the government will still be able to buy foreign drugs. But over time, the administration expects the policy will encourage manufacturers to invest more in the United States.
“If we have strong Buy American procurement, that will establish a robust base level of demand that provides the appropriate incentives for our pharmaceutical manufacturers to invest and locate domestically,” Mr. Navarro said. He added that the United States also needed to invest in “advanced manufacturing technologies” to aid drug production.
The government has funded research in recent years into new types of manufacturing systems that are smaller-scale and more flexible than operations run in China.
The F.D.A. has said these types of operations, which can potentially be reconfigured to produce different types of pharmaceuticals in times of need, could enable American-based manufacturing to regain competitiveness with China and potentially ensure a stable supply of drugs.
But expanding beyond a few trial manufacturing projects in the United States could be hard: Supporters say these projects need more funding and a specialized approval process with the agency.
The issue has attracted the attention of some lawmakers. Mr. Rubio has introduced a bill that would require drugmakers to report to the F.D.A. the source of the active ingredients in their pharmaceuticals, as well as tighten Buy American laws for the Veterans Affairs Department.
Senator Josh Hawley, Republican of Missouri, has introduced separate legislation to give the F.D.A. expanded authority to request sourcing information from drug and device manufacturers. And Representative Anna G. Eshoo, Democrat of California, has set up a bipartisan working group to examine funding and incentives for domestic drug production and introduced legislation to strengthen reporting requirements around drug shortages.
Keith Bradsher contributed reporting from Shanghai, Katie Thomas from Chicago and Emily Cochrane from Washington.
  • Updated March 10, 2020
    • What is a coronavirus?
      It is a novel virus named for the crownlike spikes that protrude from its surface. The coronavirus can infect both animals and people and can cause a range of respiratory illnesses from the common cold to lung lesions and pneumonia.
    • How contagious is the virus?
      It seems to spread very easily from person to person, especially in homes, hospitals and other confined spaces. The pathogen can travel through the air, enveloped in tiny respiratory droplets that are produced when a sick person breathes, talks, coughs or sneezes.
    • Where has the virus spread?
      The virus, which originated in Wuhan, China, has sickened more than 121,000 in at least 108 countries and more than 4,300 have died. The spread has slowed in China but is gaining speed in Europe and the United States.
    • What symptoms should I look out for?
      Symptoms, which can take between two to 14 days to appear, include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Milder cases may resemble the flu or a bad cold, but people may be able to pass on the virus even before they develop symptoms.
    • What if I’m traveling?
      The C.D.C. has advised against all non-essential travel to South Korea, China, Italy and Iran. And the agency has warned older and at-risk travelers to avoid Japan.The State Department has advised Americans against traveling on cruise ships.
    • How long will it take to develop a treatment or vaccine?
      Several drugs are being tested, and some initial findings are expected soon. A vaccine to stop the spread is still at least a year away.

Jan 29, 2020

US Economy: Ordinary or ‘Enemy’? How Jay Powell Is Positioning the Fed in a Fraught Era

9-11 minutes - Source: NYT

WASHINGTON — Jerome H. Powell has spent much of his life toiling quietly behind the scenes, first as an investment banker and later as a governor at the Federal Reserve. Even as the central bank’s chair, and arguably the global economy’s most important figure, he has maintained a low-key image.
He’s an avid cyclist who eats well (Greek yogurt with granola and blueberries for breakfast), wakes up early (5:15 a.m.), and unwinds with spy novels (John le Carré is one favorite). He was a prop in his dog, Pippa’s, Mick Jagger Halloween costume. He has been known to fret over the national debt. Everything about him, from the simple language he uses at news conferences to his demeanor on Capitol Hill, conveys that he is relatable, ordinary and decidedly undramatic.
Yet he plays a leading role in the soap opera that is President Trump’s Washington. A scroll through Mr. Trump’s Twitter feed paints Mr. Powell as an out-of-touch policymaker bent on single-handedly tanking America’s economy by keeping interest rates too high.
The president blatantly cast him as a villain last August — just moments after the Fed chair delivered a keynote speech at the central bank’s annual meeting in Jackson, Wyo. — comparing Mr. Powell to Chinese leader Xi Jinping.
“We have a very strong dollar and a very weak Fed,” Mr. Trump wrote in a tweet. “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”
The broadside stunned attendees, several later said. But Mr. Powell, Mr. Trump’s own pick for the job, responded to the affront as he has throughout 18 months of nonstop White House criticism: The Fed chair said nothing.
That quiet approach is part of a deeper strategy by Mr. Powell, who is trying to convince America that the Fed is a collection of nonpartisan public servants focused on serving the American people — not a temple of elites wielding unchecked power.
It has been tough to get that message across. Central bankers raised rates four times in 2018, Mr. Powell’s first year in charge, to the dismay of the White House and some liberal commentators, who declared that the Fed was more concerned with offsetting inflation than with fostering stronger growth and higher wages. When officials pivoted to cut rates three times in 2019 amid wavering price pressures and slowing global growth, critics said they had capitulated to markets and Mr. Trump.
In his quest to explain the Fed’s often-complex actions, Mr. Powell has made a habit of speaking in plain English. To underline the Fed’s independence, he ignores presidential heckling, even when it’s personal: Mr. Trump has referred to Fed policymakers as “boneheads,” and has likened Mr. Powell himself to “a golfer who can’t putt.” (Mr. Powell does golf, though the Fed would not provide his handicap.)
And to shore up support, Mr. Powell visits Capitol Hill frequently, holding more than 260 meetings with members of Congress since taking over as chair in February 2018. Mr. Powell listens carefully to lawmaker concerns and explains clearly what the Fed is doing, said Senator Patrick J. Toomey, a Pennsylvania Republican, adding that he has a “healthy humility” about the Fed and its powers.
That approach could help insulate the Fed. While board members are nominated by the White House, the central bank ultimately answers to Congress.
“He can talk about technical things, and bring them down to be simple,” said Senator Richard Shelby, an Alabama Republican who sits on the Banking Committee. Mr. Shelby said Mr. Powell’s outreach to Congress was “smart,” noting that “Alan Greenspan, when he was chairman, he did that.”
Mr. Powell, who is not an economist, is hardly seen as a master conductor. Market participants often critique the Fed chair’s approach as overly lax.
He casually declared in late 2018 that the Fed was “a long way” from the interest rate setting above which monetary policy reins in the economy. Investors panicked, taking it as a sign that the central bank would raise rates too much. Stocks plummeted.
It was one of several missteps that have caused some Wall Street investors to paint the chair as inexpert and even unprepared. Commentators have called his communication style everything from “pathetic” to “not cutting it.” Others have joked that Richard Clarida, the Fed’s vice chair, is often scheduled to speak shortly after Mr. Powell in a pre-emptive effort to clean up the boss’s mess.
People who have worked with him say Mr. Powell’s unscripted approach is intentional, the product of thorough research and extensive planning.
For post-meeting news conferences, he prepares much as his predecessor Janet L. Yellen did. Mr. Powell and a dozen or more Fed staffers huddle in a conference room to review dozens of possible questions and suggested answers. He painstakingly puts each response into his own words.
Like Ms. Yellen, he carries a thick black binder full of prepared answers to the events.
But where Ms. Yellen, an economist, offered dissertation-like explanations that analysts loved to parse, Mr. Powell delivers clipped, conversational replies meant to get his message across to Main Street, not just Wall Street.
“Because monetary policy affects everyone, I want to start with a plain-English summary of how the economy is doing, what my colleagues and I at the Federal Reserve are trying to do, and why,” he said at the start of one of his early news conferences, in June 2018.
There are limits to that approach. Even if Mr. Powell does not see investors as his sole constituency, market gyrations can make credit harder to come by, slowing the economy. Mr. Powell’s answers have become increasingly scripted and repetitive in concession to that reality.
Sometimes, “it behooves you to be more precise, a little more rigid in your language,” said Julia Coronado, founder of the research firm MacroPolicy Perspectives.
Yet Mr. Powell is also under pressure to make it clear that the Fed is focused on working Americans.
On Tuesday, Mr. Trump suggested yet again that the central bank was putting America at a competitive disadvantage. Those ongoing attacks threaten to chip away at the Fed’s public image at a particularly bad moment, as the central bank sits on the brink of a few hard-to-explain decisions.
Interest rates have fallen to historic lows, leaving policymakers with limited room to control the economy by cutting borrowing costs. The problem demands pre-emptive solutions, which officials are expected to announce in mid-2020. For example, the Fed could formally embrace periods of slightly higher inflation.
But inflation remains a dirty word in much of America, making that tweak a tough sell.
In a move that could help improve the optics of any change, Mr. Powell and his colleagues have involved ordinary people in the conversation.
As central bankers and academic economists have gathered to consider the future, they have also met with job placement professionals, community organizers and single parents in board rooms, food pantries and classrooms to talk about how monetary policy affects their lives.
In November, Mr. Powell spent time in East Hartford, Conn., where factories still buzz but sagging houses and defunct stores dot the side streets. Mr. Powell spoke with local leaders gathered in an elementary school gymnasium, took a bus tour of the area and scribbled notes as community members talked about a labor market development initiative.
“I felt like he was genuinely interested,” said Amy Peltier, who directs the program.
Not everyone buys the message. Like Mr. Trump, Senator Bernie Sanders, who is seeking the Democratic nomination for president, has questioned the Fed’s decision to raise interest rates nine times between 2015 and 2018.
Officials made those moves, all of which Mr. Powell voted for, because they expected low unemployment to begin to spur higher inflation. It hasn’t, even after they cut rates three times in 2019 in response to trade uncertainty and a weakening outlook.
Mr. Powell has never said the Fed made a mistake. But he led on last year's pivot — hinting that the Fed might consider rates cuts in a June speech. He worked to build consensus around the three cuts, even as some voting members dissented against reducing rates at a time when unemployment hovered near a 50-year low.
“He’s not wedded to some model he was taught 40 years ago in graduate school,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said in an interview last month. “I think he’s probably aided by the fact that he doesn’t have a Ph.D. I think that has helped him to make the shift he has made over the past year.”
Mr. Powell has said he does not think the central bank should consider raising rates again unless inflation moves substantially higher and for a sustained period, a message he is expected to reiterate at the Fed’s policy meeting Wednesday. He is not expected to signal any imminent rate cuts, either, as the economy chugs along.
While that could draw the White House’s ire, current and former Fed officials have commended Mr. Powell’s performance.
“He has not allowed himself to be dragged into a tiff with the president,” Ms. Yellen said. “He’s doing extremely well.”

Jan 7, 2020

U.S. trade deficit sinks 8% to 3-year low of $43.1 billion in November amid China trade war

Jeffry Bartash

A container area at the port in Shanghai, China. Imports from China have tumbled in 2019 during a trade war with the U.S.
The numbers: The trade deficit fell sharply in November for the second month in a row and sank to the lowest level in three years, reflecting a decline in Chinese imports and the reemergence of the U.S. as an energy superpower.
The trade gap dropped 8.2% to $43.1 billion in November, the government said Tuesday. That’s the smallest deficit since October 2016.
Most of the decline recently has been tied to a shrinking deficit with China, whose imports have fallen in the face off stiff U.S. tariffs. Surging U.S. oil exports were another contributor.
Economists polled by MarketWatch had forecast a $43.6 billion gap.
What happened: Exports rose 0.7% to $208.6 billion in November. The U.S. exported more aircraft engines, autos and equipment for oil drilling and exploration.
Imports slipped 1% to $251.7 billion. The U.S. imported fewer computers, cell phones, drugs and aircraft, offsetting a big increase in auto imports.
The deficit in goods with China fell another $2.2 billion in November to $25.6 billion.
What’s unclear is whether the recent downward trend will persist. Most of the recent decline may reflect short-term disruptions caused by the trade war as companies seek to time orders around new tariffs.
Still, a sharp decline in the U.S. trade deficit with China suddenly has the U.S. on the verge of posting its first annual decline since 2013.
The U.S. trade deficit added up to $563 billion in the first nine months of this year, compared to $566.9 billion in the same span in 2018.
What’s also helped tug the deficit lower are growing U.S. exports of oil and natural gas. The U.S. petroleum surplus in November rose to $800 million and was the highest on record.
Imports of crude oil, meanwhile, fell to the lowest level in almost 28 years.
The big picture: The U.S. and China next week are expected to sign the first phase of what they hope will be a broader trade deal, but experts warn that the most contentious disputes will be harder to resolve. They say the trade impasse could drag on for months if not years.
Yet leaders of the world’s two largest economies seem intent of putting the dispute on the backburner after a broad slowdown in global growth. A flareup in tensions las summer damaged the economies of both countries and contributed to a worldwide slump in manufacturing.
In any case, large U.S. trade deficits have persisted for years and are unlikely to go away.
Market reaction:The Dow Jones Industrial Average DJIA, +0.24% and S&P 500 SPX, +0.35% were set to open flat in Tuesday trades.
The 10-year Treasury yield TMUBMUSD10Y, -0.14% slipped 1.81%.

Dec 4, 2019

US Economy: U.S. economy’s huge service sector slows again in November, ISM finds

Jeffry Bartash

Getty Images
Medicare-care providers and segments of the service side of the U.S. economy grew in November at the slowest pace in four months.
The numbers: The huge service side of the U.S. economy expanded in November at the slowest pace in four months, adding to a slew of evidence pointing to weaker growth toward year end.
The Institute for Supply Management’s survey of service-oriented companies such as hospitals, retailers and restaurants fell to 53.9% in November from 54.7%. It was the softest reading since July.
Numbers over 50% are viewed as positive for the economy, but the index has come down sharply from a 13-year high of 60.8% just a little over a year ago.
What’s more, ISM’s manufacturing gauge stayed below the key 50% cutoff line in November for the fourth straight month.
Read: ISM U.S. manufacturing sector slumps further in November
What happened: The index for business production in the service sector slumped 5.4 points to 51.6%, dropping to the lowest level since 2010. That accounted for most of the decline in the overall survey.
Yet new orders actually rose, as did employment and exports. The index for employment rose to 55.5% from 53.7%, suggesting an increase in hiring for the holiday season.
Altogether, 12 of the 17 industries tracked by ISM said their businesses were expanding. A year ago all but one were growing.
A similar survey of the service side of the U.S. economy produced by IHS Markit edged up to 51.6% in November from 50.6%.
Big picture: The U.S. economy has slowed along with the rest of the globe in no small part because of the ongoing trade dispute with China.
The spat between the world’s two largest economies has disrupted supply chains and caused businesses to spend and invest more conservatively. Farmers and manufacturers have been particularly hard hit.
Market reaction: The Dow Jones Industrial Average DJIA, +0.67% and S&P 500 SPX, +0.75% rose in Wednesday trades for the first time in four days.
The 10-year Treasury yield TMUBMUSD10Y, +3.15% edged up to 1.74%. One year ago the yield was above 3%.

Nov 26, 2019

News | US Economy | Trade: U.S. Pork Industry Sees $25 Billion China Market Without Tariffs

By Mike Dorning

A pork vendor stands behind the counter at a market stall in Beijing.
A pork vendor stands behind the counter at a market stall in Beijing.
Photographer: Gilles Sabrie/Bloomberg

U.S. pork producers see a potential $24.5 billion market in China within 10 years if the Trump administration can gain unrestricted trade access after the Asian country’s hog herd has been devastated by disease.
The National Pork Producers Council released the forecast on Tuesday as they pressed the Trump administration to emphasize access for pork products in ongoing talks with Beijing for a partial trade agreement.
The spread of African swine fever has ravaged China’s hog herd and by September had driven up the price of pork more than 69% from a year earlier. The meat is a staple in the Chinese diet. While American exports have climbed amid the Chinese protein gap, meat suppliers in Brazil have seen even stronger demand.
“The U.S. pork industry is missing out on an unprecedented sales opportunity in China when it most needs an affordable, safe and reliable supply of its favored protein,” David Herring, president of the producer association and a hog farmer from Lillington, North Carolina, said in a statement.
Dermot Hayes, an Iowa State University economics professor who performed the analysis, said the projection was based on a “best-case scenario” in which China drops all tariffs and barriers to pork imports, including speeding up customs processing to allow for imports of chilled pork.
The Asian country had a 12% duty on frozen pork before the trade war and has now added a 60% punitive tariff. Currently, China’s customs processing is restricting imports of non-frozen U.S. pork, Hayes said.
Hayes said the analysis assumes that Chinese consumption of pork would rebound to its level prior to the swine fever epidemic. He concluded that the nation’s domestic industry wouldn’t return to prior production levels if tariffs are dropped now on U.S. pork since the American product is significantly less expensive than the cost to produce in China.
Hayes projected that without tariffs, China would import 35% of its pork -- a level similar to Mexico and Australia after they concluded free-trade agreements -- and U.S. producers would capture half that market. The gains in U.S. pork exports would add 184,000 new jobs in the next decade, Hayes forecast.

The pork group launched a digital media campaign to promote opening the Chinese market as a priority for the trade talks.

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