ReportWire

Tag: Recessions and depressions

  • Europe’s economic outlook worsens as high prices plague consumer spending

    Europe’s economic outlook worsens as high prices plague consumer spending

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    FRANKFURT, Germany — The European Union has lowered its forecast for economic growth this year and next, saying inflation is taking a heavy toll on people’s willingness to spend in shops — while higher interest rates are sharply restricting the credit needed for investment and purchases.

    The revised forecast Monday from the European Commission, the EU’s executive arm, comes as fears of recession grow and as the European Central Bank faces a key decision this week on whether to keep raising rates, which are aimed at getting inflation under control.

    The 20 countries that use the euro currency are expected to see growth of 0.8% this year instead of 1.1% projected in the spring forecast, the commission said. For next year, growth expectations were lowered to 1.3% from 1.6%.

    For the broader 27-country EU, the forecast also was lowered to 0.8% from 1% this year and to 1.4% from 1.7% next year.

    “Weakness in domestic demand, in particular consumption, shows that high and still increasing consumer prices for most goods and services are taking a heavier toll than expected,” a commission statement said.

    EU Economy Commissioner Paolo Gentiloni said at a news conference that “further weakening in the coming months” was foreseen as the economy faces “multiple headwinds.”

    One source of uncertainty is how far the ECB will go on interest rates — more expensive credit restrains economic growth in some areas such as real estate, but if higher rates succeed in lowering inflation, that would boost consumer spending power.

    Recession fears have grown even after the eurozone scraped through the winter without one, recording stagnant growth of 0.1% in the first two quarters of this year.

    Surveys of purchasing managers show that economic activity is contracting in all major eurozone economies, according to Alexander Valentin, senior economist at Oxford Economics, data that “add to mounting recession risks.”

    A key source of weakness has been Germany, whose manufacturing- and export-oriented economy has been hit by higher energy prices and slowing demand in China, a key trade partner.

    The commission cut its forecast for Europe’s largest economy this year to minus 0.4%. Germany is the only major economy expected to shrink this year, according to the International Monetary Fund, which foresees a decline of 0.3%.

    It will take time for Germany to address its issues with energy costs, Gentiloni said: “You don’t solve this in a couple of weeks.” But he added that “this is a strong economy with the tools and the possibility to recover.”

    Despite near-zero growth, the state of the larger eurozone economy doesn’t resemble a typical recession, because unemployment is at record lows and wages are gradually catching up to the purchasing power lost to inflation as workers demand and get more.

    Energy prices have declined since their brutal spike tied to Russia’s war in Ukraine, while food inflation keeps declining. Annual inflation was 5.3% in July, down from the peak of 10.6% in October.

    The eurozone suffered twin shocks from the invasion of Ukraine and the COVID-19 pandemic. Russia cut off most of its natural gas to Europe, sending prices skyrocketing and starting a scramble to line up more expensive alternative supplies.

    The economic rebound from the pandemic sent consumer prices higher as demand for goods created bottlenecks in supplies of raw materials and parts, which have now mostly eased. Higher prices spread to food and then services, a broad category ranging from haircuts and hotel stays to medical treaments and car repairs.

    Prospects of weakening economic growth have led some economists to predict the European Central Bank may avoid raising interest rates Thursday following nine straight hikes.

    ECB President Christine Lagarde has said the decision is open and will be made based on available data. In just over a year, the central bank has raised its benchmark deposit rate from minus 0.5% to 3.75%, the fastest pace since the euro currency launched in 1999.

    The downgrade in the EU forecast comes as the euro trades lower against the U.S. dollar — at $1.07, down from about $1.12 in late July.

    One reason is an ongoing rally in the dollar, which has recorded gains against other major currencies for eight straight weeks as the market increasingly sees economic weakness in China and Europe instead of in the U.S.

    A weaker euro can complicate life for the ECB by increasing the price of imported goods — such as energy — that are priced in dollars. On the other hand, it makes European exports more competitive in price.

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  • West Virginia University crisis looms as GOP leaders focus on economic development, jobs

    West Virginia University crisis looms as GOP leaders focus on economic development, jobs

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    MORGANTOWN, W.Va. — On the same day that dejected students pleaded with the board of West Virginia’s flagship university not to eliminate its entire foreign languages department and dozens of other programs, Gov. Jim Justice said he was feeling hopeful about the future of education in the state.

    “We’ve had tough times — there will be more tough times — but absolutely we are rising from the ashes,” Justice said Aug. 22, while signing a bill allocating $45 million for another state school, Marshall University, to open a new cybersecurity center 200 miles from West Virginia University.

    Lawmakers approved the Marshall project, heralded as the nation’s “new East Coast hub” for cybersecurity, in a hastily called special session last month but rejected calls to send WVU funds to address its budget deficit, currently about $45 million.

    The Legislature’s lack of interest in bailing out the state’s largest university comes as WVU struggles with the financial toll of dwindling enrollment, revenue lost during the COVID-19 pandemic and an increasing debt load for new building projects. Administrators have pushed to take drastic action that raises questions about the responsibilities of states to offer diverse academic offerings — particularly at land-grant institutions in rural areas that traditionally lack access — and could be an early indicator of shifting priorities nationwide.

    With a budget shortfall projected to grow as high as $75 million in five years, West Virginia University is proposing cutting 32 programs — 9% of the majors offered on its Morgantown campus — including its entire department of world languages, literatures and linguistics, along with graduate and doctoral degrees in math, music, English and more. Other U.S. universities and colleges have faced similar decisions, but this is one of the most extreme examples of a flagship university turning to such dramatic cuts — particularly when it comes to foreign languages.

    After an appeals process last week, school officials pivoted to recommending that WVU’s board of governors retain five out of 24 full-time world languages faculty to teach some in-person Chinese and Spanish. They also moved to save the school’s graduate creative writing program, which had been slated for elimination. But the English department would still lose a little over a fourth of its instructors under the current plan, which WVU’s board will vote on Sept. 15.

    WVU has labeled the shift an “academic transformation” amid an “existential crisis” in higher education. Speaking to faculty this year, WVU President Gordon Gee said higher education has “lost the support and trust of the American public.”

    “I want to be very blunt: We have been isolated, we have been arrogant, we have told the American public what they should think,” he said, adding that institutions like WVU have to “turn that around almost immediately, otherwise we have a very bleak future.”

    But critics see a different a set of circumstances, accusing the administration of financial mismanagement, poor strategic planning and lack of transparency in a state with the lowest rate of college graduates and highest rate of population exodus.

    After being named WVU’s president in 2014, Gee promised to increase enrollment to 40,000 students by 2020, which never materialized. Instead, the student population at West Virginia University has dropped 10% since 2015, while on-campus expansion continued.

    WVU has spent millions of dollars on construction projects in recent years, including a $100 million new home for the university’s business school, a $35 million renovation of a 70-year-old classroom building and $41 million for two phases of upgrades to the football team’s building.

    The crisis, which the American Federation of Teachers called “draconian and catastrophic,” has drawn outrage at WVU, where hundreds of students staged a protest against the cuts.

    Freshman math and English major Joey Demes already had several college credits when he was looking at colleges. Demes was in the foster care system until he was 18 and chose WVU based on the strength of its math program and financial support the institution offered that “other colleges would not have.”

    Now, he said he feels like both majors are being attacked.

    “This is where I’ve grown up and lived and it is upsetting for me,” he told the university’s board Aug. 22, adding that he plans to continue his math education after undergrad and become a researcher. “What I’m being told with the grad program for math being cut, is that you guys don’t want me here, that you want me to go to another state and get an education elsewhere.”

    Leaders agree that education is a key tool to attracting young people and improving quality of life in West Virginia, but WVU’s predicament has raised serious questions about what kinds of education add the most “value.”

    For the GOP officeholders, value is in economic development and promoting innovative programs — like cybersecurity — that can’t be found almost anywhere else. Many at WVU, however, say the school’s diverse offerings give students opportunities they might not be able to access — or afford — elsewhere that are just as valuable.

    “We all know what’s going on at WVU, and they will work out their problems,” Republican Senate President Craig Blair said during the signing ceremony at Marshall. “Our No. 1 export has been our youth. That must change.”

    As the flagship, WVU has always received a larger share of higher education funding, state leaders say. The school received $50 million from the state just two months ago for its cancer institute. But some insist money hasn’t always been spent wisely.

    Lawmakers recently approved a higher education funding formula rewarding schools for degree attainment, workforce outcomes and graduate wages.

    Republican Senate Finance Chair Eric Tarr said the way to benefit from the formula is to “provide degrees that lead to jobs.”

    “WVU is now making changes that will permit that to occur,” he wrote in an opinion piece, raising concern about what he called “unbridled spending by liberal ‘educators’” across the country.

    Professor Lisa Di Bartolomeo, who coordinates the university’s Russian studies and Slavic and East European studies programs, said the long-term effect of the program cuts will be profound. Di Bartolomeo said the blow to WVU’s language arts alone is the most extreme “that anybody has seen anywhere in the country.”

    “I hope this is not a sign of things to come, but I do worry that it may be, and that other places will see what WVU is doing and say, ‘Oh, well we can get away with this, too,’” she said.

    Mary Manspeaker, an English Ph.D. student, said she left her home state at 18 because she didn’t see opportunity in West Virginia. She came back to the university where her parents went because her research is focused on Appalachia.

    “To come back and be told that the English department doesn’t matter, that I was right, that there might not be a place for me in West Virginia is heartbreaking,” she said.

    Peter Lake, who directs the Center for Excellence in Higher Education Law and Policy at Florida’s Stetson University said that in recent decades, institutions have increasingly taken a more business-focused approach centering on “return on investment.”

    The concern for a flagship like WVU, Lake said, is whether these cuts eliminate a pathway for liberal arts studies for most students, preserving them only for “elite institutions that fairly wealthy or very fortunate people can attend.”

    He said the conflict reflects the fundamental question in higher education right now: How do we assess value?

    “Where is the real wealth and where does it lie?” he said. “And it might be in cash, endowment and buildings, but it could arguably be in other things.”

    ___

    Raby reported from Charleston, West Virginia.

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  • West Virginia University crisis looms as GOP leaders focus on economic development, jobs

    West Virginia University crisis looms as GOP leaders focus on economic development, jobs

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    MORGANTOWN, W.Va. — On the same day that dejected students pleaded with the board of West Virginia’s flagship university not to eliminate its entire foreign languages department and dozens of other programs, Gov. Jim Justice said he was feeling hopeful about the future of education in the state.

    “We’ve had tough times — there will be more tough times — but absolutely we are rising from the ashes,” Justice said Aug. 22, while signing a bill allocating $45 million for another state school, Marshall University, to open a new cybersecurity center 200 miles from West Virginia University.

    Lawmakers approved the Marshall project, heralded as the nation’s “new East Coast hub” for cybersecurity, in a hastily called special session last month but rejected calls to send WVU funds to address its budget deficit, currently about $45 million.

    The Legislature’s lack of interest in bailing out the state’s largest university comes as WVU struggles with the financial toll of dwindling enrollment, revenue lost during the COVID-19 pandemic and an increasing debt load for new building projects. Administrators have pushed to take drastic action that raises questions about the responsibilities of states to offer diverse academic offerings — particularly at land-grant institutions in rural areas that traditionally lack access — and could be an early indicator of shifting priorities nationwide.

    With a budget shortfall projected to grow as high as $75 million in five years, West Virginia University is proposing cutting 32 programs — 9% of the majors offered on its Morgantown campus — including its entire department of world languages, literatures and linguistics, along with graduate and doctoral degrees in math, music, English and more. Other U.S. universities and colleges have faced similar decisions, but this is one of the most extreme examples of a flagship university turning to such dramatic cuts — particularly when it comes to foreign languages.

    After an appeals process last week, school officials pivoted to recommending that WVU’s board of governors retain five out of 24 full-time world languages faculty to teach some in-person Chinese and Spanish. They also moved to save the school’s graduate creative writing program, which had been slated for elimination. But the English department would still lose a little over a fourth of its instructors under the current plan, which WVU’s board will vote on Sept. 15.

    WVU has labeled the shift an “academic transformation” amid an “existential crisis” in higher education. Speaking to faculty this year, WVU President Gordon Gee said higher education has “lost the support and trust of the American public.”

    “I want to be very blunt: We have been isolated, we have been arrogant, we have told the American public what they should think,” he said, adding that institutions like WVU have to “turn that around almost immediately, otherwise we have a very bleak future.”

    But critics see a different a set of circumstances, accusing the administration of financial mismanagement, poor strategic planning and lack of transparency in a state with the lowest rate of college graduates and highest rate of population exodus.

    After being named WVU’s president in 2014, Gee promised to increase enrollment to 40,000 students by 2020, which never materialized. Instead, the student population at West Virginia University has dropped 10% since 2015, while on-campus expansion continued.

    WVU has spent millions of dollars on construction projects in recent years, including a $100 million new home for the university’s business school, a $35 million renovation of a 70-year-old classroom building and $41 million for two phases of upgrades to the football team’s building.

    The crisis, which the American Federation of Teachers called “draconian and catastrophic,” has drawn outrage at WVU, where hundreds of students staged a protest against the cuts.

    Freshman math and English major Joey Demes already had several college credits when he was looking at colleges. Demes was in the foster care system until he was 18 and chose WVU based on the strength of its math program and financial support the institution offered that “other colleges would not have.”

    Now, he said he feels like both majors are being attacked.

    “This is where I’ve grown up and lived and it is upsetting for me,” he told the university’s board Aug. 22, adding that he plans to continue his math education after undergrad and become a researcher. “What I’m being told with the grad program for math being cut, is that you guys don’t want me here, that you want me to go to another state and get an education elsewhere.”

    Leaders agree that education is a key tool to attracting young people and improving quality of life in West Virginia, but WVU’s predicament has raised serious questions about what kinds of education add the most “value.”

    For the GOP officeholders, value is in economic development and promoting innovative programs — like cybersecurity — that can’t be found almost anywhere else. Many at WVU, however, say the school’s diverse offerings give students opportunities they might not be able to access — or afford — elsewhere that are just as valuable.

    “We all know what’s going on at WVU, and they will work out their problems,” Republican Senate President Craig Blair said during the signing ceremony at Marshall. “Our No. 1 export has been our youth. That must change.”

    As the flagship, WVU has always received a larger share of higher education funding, state leaders say. The school received $50 million from the state just two months ago for its cancer institute. But some insist money hasn’t always been spent wisely.

    Lawmakers recently approved a higher education funding formula rewarding schools for degree attainment, workforce outcomes and graduate wages.

    Republican Senate Finance Chair Eric Tarr said the way to benefit from the formula is to “provide degrees that lead to jobs.”

    “WVU is now making changes that will permit that to occur,” he wrote in an opinion piece, raising concern about what he called “unbridled spending by liberal ‘educators’” across the country.

    Professor Lisa Di Bartolomeo, who coordinates the university’s Russian studies and Slavic and East European studies programs, said the long-term effect of the program cuts will be profound. Di Bartolomeo said the blow to WVU’s language arts alone is the most extreme “that anybody has seen anywhere in the country.”

    “I hope this is not a sign of things to come, but I do worry that it may be, and that other places will see what WVU is doing and say, ‘Oh, well we can get away with this, too,’” she said.

    Mary Manspeaker, an English Ph.D. student, said she left her home state at 18 because she didn’t see opportunity in West Virginia. She came back to the university where her parents went because her research is focused on Appalachia.

    “To come back and be told that the English department doesn’t matter, that I was right, that there might not be a place for me in West Virginia is heartbreaking,” she said.

    Peter Lake, who directs the Center for Excellence in Higher Education Law and Policy at Florida’s Stetson University said that in recent decades, institutions have increasingly taken a more business-focused approach centering on “return on investment.”

    The concern for a flagship like WVU, Lake said, is whether these cuts eliminate a pathway for liberal arts studies for most students, preserving them only for “elite institutions that fairly wealthy or very fortunate people can attend.”

    He said the conflict reflects the fundamental question in higher education right now: How do we assess value?

    “Where is the real wealth and where does it lie?” he said. “And it might be in cash, endowment and buildings, but it could arguably be in other things.”

    ___

    Raby reported from Charleston, West Virginia.

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  • Global food security is at crossroads as rice shortages and surging prices hit the most vulnerable

    Global food security is at crossroads as rice shortages and surging prices hit the most vulnerable

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    Francis Ndege isn’t sure if his customers in Africa’s largest slum can afford to keep buying rice from him.

    Prices for rice grown in Kenya soared a while ago because of higher fertilizer prices and a yearslong drought in the Horn of Africa that has reduced production. Cheap rice imported from India had filled the gap, feeding many of the hundreds of thousands of residents in Nairobi’s Kibera slum who survive on less than $2 a day.

    But that is changing. The price of a 25-kilogram (55-pound) bag of rice has risen by a fifth since June. Wholesalers are yet to receive new stocks since India, the world’s largest exporter of rice by far, said last month that it would ban some rice shipments.

    It’s an effort by the world’s most populous nation to control domestic prices ahead of a key election year — but it’s left a yawning gap of around 9.5 million metric tons (10.4 tons) of rice that people around the world need, roughly a fifth of global exports.

    “I’m really hoping the imports keep coming,” said Ndege, 51, who’s sold rice for 30 years.

    He isn’t the only one. Global food security is already under threat since Russia halted an agreement allowing Ukraine to export wheat and the El Nino weather phenomenon hampers rice production. Now, rice prices are soaring — Vietnam’s rice export prices, for instance, have reached a 15-year high — putting the most vulnerable people in some of the poorest nations at risk.

    The world is at an “inflection point,” said Beau Damen, a natural resources officer with the U.N. Food and Agriculture Organization based in Bangkok.

    Even before India’s restrictions, countries already were frantically buying rice in anticipation of scarcity later when the El Nino hit, creating a supply crunch and spiking prices.

    What could make the situation worse is if India’s ban on non-basmati rice creates a domino effect, with other countries following suit. Already, the United Arab Emirates has suspended rice exports to maintain its domestic stocks. Another threat is if extreme weather damages rice crops in other countries.

    An El Nino is a natural, temporary and occasional warming of part of the Pacific Ocean that shifts global weather patterns, and climate change is making them stronger. Scientists expect the one underway to expand to supersized levels, and, in the past, they have resulted in extreme weather ranging from drought to flooding.

    The impact would be felt worldwide. Rice consumption in Africa has been growing steadily, and most countries are heavily dependent on imports. While nations with growing populations like Senegal have been trying to grow more of their own rice — many are struggling.

    Amadou Khan, a 52-year-old unemployed father of five in Dakar, says his children eat rice with every meal except breakfast, which they often have to skip when he’s out of work.

    “I am just getting by — sometimes, I’ve trouble taking care of my kids,” he said.

    Imported rice — 70% of which comes from India — has become prohibitively expensive in Senegal, so he’s eating homegrown rice that costs two-thirds as much.

    Senegal will turn to other trading partners like Thailand or Cambodia for imports, though the West African country is not “far from being self-sufficient” on rice, with over half of its demand grown locally, Agriculture Ministry spokesperson Mamadou Aïcha Ndiaye said.

    Asian countries, where 90% of the world’s rice is grown and eaten, are struggling with production. The Philippines was carefully managing water in anticipation of less rain amid the El Nino when Typhoon Doksuri battered its northern rice-producing region, damaging $32 million worth of rice crops — an estimated 22% of its annual production.

    The archipelago nation is the second-largest importer of rice after China, and President Ferdinand Marcos Jr. has underscored the need to ensure adequate buffers.

    India’s rice restrictions also were motivated by erratic weather: An uneven monsoon along with a looming El Nino meant that the partial ban was needed to stop food prices from rising, Indian food policy expert Devinder Sharma said.

    The restrictions will take offline nearly half the country’s usual rice exports this year, said Ashok Gulati of the Indian Council for Research on International Economic Relation. Repeated restrictions make India an unreliable exporter, he added.

    “That’s not good for the export business because it takes years to develop these markets,” Gulati said.

    Vietnam, another major rice exporter, is hoping to capitalize. With rice export prices at a 15-year high and expectations that annual production to be marginally higher than last year, the Southeast Asian nation is trying to keep domestic prices stable while boosting exports.

    The Agriculture Ministry says it’s working to increase how much land in the Mekong Delta is dedicated to growing rice by around 500 square kilometers — an area larger than 90,000 football fields.

    Already the Philippines is in talks with Vietnam to try to get the grain at lower prices, while Vietnam also looks to target the United Kingdom, which receives much of its rice from India.

    But exporters like Charoen Laothamatas in neighboring Thailand are wary. The Thai government expects to ship more rice than it did last year, with its exports in the first six months of the year 15% higher than the same period of 2022.

    But the lack of clarity about what India will do next and concerns about the El Nino means Thai exporters are reluctant to take orders, mill operators are unwilling to sell and farmers have increased the prices of unmilled rice, said Laothamatas, president of the Thai Rice Exporters Association.

    With prices fluctuating, exporters don’t know what prices to quote — because prices may spike again the next day.

    “And no one wants to take the risk,” Laothamatas said.

    ___

    Ghosal reported from Hanoi, Vietnam, and Musambi from Nairobi, Kenya. AP reporters Krutika Pathi in New Delhi; Zane Irwin in Dakar, Senegal; Jintamas Saksornchai in Bangkok; and Jim Gomez in Manila, Philippines, contributed.

    ___

    Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.

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  • As recession fears fade, we may be experiencing a ‘richcession’ instead — here’s what that means for you

    As recession fears fade, we may be experiencing a ‘richcession’ instead — here’s what that means for you

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    A ‘richcession’ may be underway

    “In most recessions, unemployment rises more for lower-income groups,” said Tomas Philipson, a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers.

    “Although we are not in an overall recession yet, the demand for and wages of lower-income groups are outpacing higher-income groups.”

    Maskot | Digitalvision | Getty Images

    The start of the year was plagued by waves of layoffs: Employers announced plans to cut 481,906 jobs in the first seven months, up 203% from the 159,021 cuts for the year-earlier period, according to Challenger, Gray & Christmas, a global outplacement and business and executive coaching firm.

    Some sectors, such as banking and tech, have been particularly hard hit, and a series of Wall Street layoffs earlier this summer fueled fears that a recession still looms driven by those professional job losses.

    But there still aren’t enough workers to fill open positions in the service industry and the unemployment rate remains near a 50-year low at just 3.5%. 

    What a ‘richcession’ means for consumers

    “Recession is a loaded term,” said Jacob Channel, senior economist at LendingTree. “White-collar jobs might not be as plentiful as they were last year, but they’re still around.”

    And “at the end of the day, even if white-collar hiring does appear to be on the decline, that doesn’t mean that the entire economy as a whole is struggling,” Channel said.

    “On the contrary, most current data indicates that despite numerous headwinds, the broader economy is doing remarkably well, all things considered,” he added.

    But regardless of the country’s economic standing, many Americans are feeling the pain of higher prices and most have exhausted their savings and are now leaning on credit cards to make ends meet.

    Several reports show financial well-being is deteriorating. Rather than a “richcession,” this more closely resembles a so-called K-shaped recovery, said Greg McBride, Bankrate.com’s chief financial analyst.

    Wealthy Americans aren’t exactly suffering, but credit card debt is at an all-time high and 61% of adults are living paycheck to paycheck. “Those are signs of financial strain,” he said.

    However this economic period is ultimately defined, it will only be in hindsight, McBride said. “Typically, by the time a recession is declared, the recovery is underway.”

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  • Biden is pitching his economic policies as a key to a manufacturing jobs revival

    Biden is pitching his economic policies as a key to a manufacturing jobs revival

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    ALBUQUERQUE, N.M. — Bringing back factory jobs is one of the most popular of White House promises — regardless of who happens to be the president.

    Donald Trump said he’d do it with tariffs. Barack Obama said companies would start “insourcing.” George W. Bush said tax cuts would do the trick. But factory jobs seemed to struggle to fully return after each recession.

    On Wednesday, President Joe Biden will make the case in a New Mexico speech that his policies of financial and tax incentives have revived U.S. manufacturing. His claim is supported by a rise in construction spending on new factories. But factory hiring has begun to slow in recent months, a sign that the promised boom has yet to fully materialize.

    That hasn’t stopped the White House from telling voters ahead of the 2024 election that the Democratic president’s agenda has triggered a “renaissance” in factory work.

    “Hundreds of actions coordinated through his entire government are sparking a manufacturing renaissance across the United States,” White House climate adviser Ali Zaidi told reporters ahead of Biden’s New Mexico speech, asking them to picture in their minds a crowded jobs fair in Belen, New Mexico, for the 250 workers that Arcosa plans to hire at a factory that makes wind towers.

    The president will speak as construction starts on Arcosa’s plant, which formerly made Solo cups and later plastics. The White House said that Arcosa had to lay off workers in Illinois and Iowa before the Inflation Reduction Act became law last year, but customers placed $1.1 billion in wind tower orders with the company afterward. The stock has risen more than 20% in the past 12 months.

    Biden’s message on jobs is one he’s been repeating frequently.

    At a Philadelphia shipyard last month, Biden offered his policies to fight climate change by shifting away from fossil fuels as a way to create jobs. It’s a sign that he wants voters to process his social and environmental programs as being good for economic growth.

    “A lot of my friends in organized labor know: When I think climate, I think jobs,” Biden said. “I think union jobs. Not a joke.”

    Biden’s trip to the Southwest is shaded by his reelection campaign and the challenge posed by a majority U.S. adults saying that they believe the economy is in poor shape. The president is trying to break through a deep pessimism that intensified last year as inflation spiked. His trip included a Tuesday speech in Arizona and will end with remarks Thursday in Utah. In 2020, Biden won both Arizona and New Mexico, key states that he likely needs to hold next year to secure another term.

    The president does have a case to make to the public on employment. As the U.S. economy healed from the coronavirus pandemic, hiring has surged at factories. Manufacturing jobs have climbed to their highest totals in nearly 15 years. This is the first time since the 1970s that manufacturing employment has fully recovered from a recession.

    But the pace of job growth at manufacturers has slowed over the past year. Factories were adding roughly 500,000 workers annually last summer, a figure that in the government’s most recent jobs report fell to 125,000 gains over the past 12 months.

    Biden administration officials have said there are more factory jobs coming because of its infrastructure spending, investments in computer chip plants and the various incentives in the Inflation Reduction Act.

    Their argument is that the incentives encouraged the private sector to invest, leading to $500 billion worth of commitments to make computer chips, electric vehicles, advanced batteries, clean energy technologies and medical goods. They say that more factories are coming because, after adjusting for inflation, spending on factory construction has climbed almost 100% since the end of 2021.

    In April, the Economic Innovation Group, a public policy organization, issued a report that called construction spending for factories a “nationwide boom.” The report notes there are signs that manufacturing gains are most prominent outside the Midwest, which has historically identified with the sector, as more plants open in southern and western states. But EIG is less sure that a full-fledged restoration of manufacturing is in the works as the sector has been in decline for decades.

    Labor Department figures show that total factory employment peaked in 1979 at nearly 19.6 million jobs. With just under 13 million manufacturing jobs now, the U.S. is unlikely to return to that level because of automation and trade.

    Adam Ozimek, chief economist at EIG, said jobs can be a flawed way to measure a manufacturing revival. He said better metrics include an increase in factory output, whether the U.S. can shift to renewable energy to blunt climate change and whether the government can achieve its national security goals of having a stronger supply chain.

    “It’s way too early to declare anything like a manufacturing renaissance,” Ozimek said. “We are decades into structurally declining manufacturing employment. And it’s not at all clear yet whether the positive trends are going to outweigh that continuing headwind.”

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  • Biden pitching his economic policies as a key to manufacturing jobs revival

    Biden pitching his economic policies as a key to manufacturing jobs revival

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    ALBUQUERQUE, N.M. — Bringing back factory jobs is one of the most popular of White House promises — regardless of who happens to be the president.

    Donald Trump said he’d do it with tariffs. Barack Obama said companies would start “insourcing.” George W. Bush said tax cuts would do the trick. But factory jobs seemed to struggle to fully return after each recession.

    On Wednesday, President Joe Biden will make the case in a New Mexico speech that his policies of financial and tax incentives have revived U.S. manufacturing. His claim is supported by a rise in construction spending on new factories. But factory hiring has begun to slow in recent months, a sign that the promised boom has yet to fully materialize.

    That hasn’t stopped the White House from telling voters ahead of the 2024 election that Biden’s agenda has triggered a “renaissance” in factory work.

    “Hundreds of actions coordinated through his entire government are sparking a manufacturing renaissance across the United States,” White House climate adviser Ali Zaidi told reporters ahead of the president’s New Mexico speech, asking them to picture in their minds a crowded jobs fair in Belen, New Mexico for the 250 workers that Arcosa plans to hire at a factory that makes wind towers.

    The president will speak as construction starts on Arcosa’s plant, which formerly made Solo cups and later plastics. The White House said that Arcosa had to layoff workers in Illinois and Iowa before the Inflation Reduction Act became law last year, but customers placed $1.1 billion in wind tower orders with the company afterward. The stock has risen more than 20% in the past 12 months.

    Biden’s message on jobs is one he’s been repeating frequently.

    At a Philadelphia shipyard last month, Biden offered his policies to fight climate change by shifting away from fossil fuels as a way to create jobs. It’s a sign that he wants voters to process his social and environmental programs as being good for economic growth.

    “A lot of my friends in organized labor know: When I think climate, I think jobs,” Biden said. “I think union jobs. Not a joke.”

    Biden’s trip to the Southwest is shaded by his reelection campaign and the challenge posed by a majority U.S. adults saying that they believe the economy is in poor shape. The president is trying to break through a deep pessimism that intensified last year as inflation spiked. His trip included a Tuesday speech in Arizona and will end with remarks Thursday in Utah. In 2020, Biden won both Arizona and New Mexico, key states that he likely needs to hold next year in order to secure another term.

    The president does have a case to make to the public on employment. As the U.S. economy healed from the pandemic, hiring has surged at factories. Manufacturing jobs have climbed to their highest totals in nearly 15 years. This is the first time since the 1970s that manufacturing employment has fully recovered from a recession.

    But the pace of job growth at manufacturers has slowed over the past year. Factories were adding roughly 500,000 workers annually last summer, a figure that in the government’s most recent jobs report fell to 125,000 gains over the past 12 months.

    Administration officials have said there are more factory jobs coming because of its infrastructure spending, investments in computer chip plants and the various incentives in last year’s Inflation Reduction Act.

    Their argument is that the incentives encouraged the private sector to invest, leading to $500 billion worth of commitments to make computer chips, electric vehicles, advanced batteries, clean energy technologies and medical goods. They say that more factories are coming because, after adjusting for inflation, spending on factory construction has climbed almost 100% since the end of 2021.

    In April, the Economic Innovation Group, a public policy organization, issued a report that called construction spending for factories a “nationwide boom.” The report notes there are signs that manufacturing gains are most prominent outside the Midwest, which has historically identified with the sector, as more plants open in southern and western states. But EIG is less sure that a full-fledged restoration of manufacturing is in the works as the sector has been in decline for decades.

    Labor Department figures show that total factory employment peaked in 1979 at nearly 19.6 million jobs. With just under 13 million manufacturing jobs now, the U.S. is unlikely to return to that level because of automation and trade.

    Adam Ozimek, chief economist at EIG, said jobs can be a flawed way to measure a manufacturing revival. He said better metrics include an increase in factory output, whether the U.S. can shift to renewable energy to blunt climate change and whether the government can achieve its national security goals of having a stronger supply chain.

    “It’s way too early to declare anything like a manufacturing renaissance,” Ozimek said. “We are decades into structurally declining manufacturing employment. And it’s not at all clear yet whether the positive trends are going to outweigh that continuing headwind.”

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  • Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

    Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

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    NEW YORK — Trucking company Yellow Corp. has declared bankruptcy after years of financial struggles and growing debt, marking a significant shift for the U.S. transportation industry and shippers nationwide.

    The Chapter 11 bankruptcy, which was filed Sunday, comes just three years after Yellow received $700 million in pandemic-era loans from the federal government. While a Chapter 11 filing is used to restructure debt while operations continue, Yellow, like other trucking companies in recent years, will liquidate and the U.S. will join other creditors unlikely to recover funds extended to the company.

    Yellow fell into severe financial stress after a long stretch of poor management and strategic decisions dating back decades.

    In 2019 two trucking companies, Celadon and New England Motor Freight, file for bankruptcy protection and liquidated.

    Former Yellow customers and shippers may face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting Yellow historically offered the cheapest price points in the industry.

    “It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” CEO Darren Hawkins said in a news release late Sunday. “For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

    Yellow, formerly known as YRC Worldwide Inc., is one of the nation’s largest less-than-truckload carriers. The Nashville, Tennessee-based company had 30,000 employees across the country.

    The Teamsters, which represented Yellow’s 22,000 unionized workers, said last week that the company shut down operations in late July following layoffs of hundreds of nonunion employees.

    The Wall Street Journal and FreightWaves reported in late July that the bankruptcy was coming — noting that customers had already started to leave the carrier in large numbers and that the company had stopped freight pickups.

    Those reports arrived just days after Yellow averted a strike from the Teamsters amid heated contract negotiations. A pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout — and giving Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.

    Yellow blamed the nine-month talks for the demise of the company, saying it was unable to institute a new business plan to modernize operations and make it more competitive during that time.

    The company said it has asked the U.S. Bankruptcy Court in Delaware for permission to make payments, including for employee wages and benefits, taxes and certain vendors essential to its businesses.

    Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

    In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds.

    A congressional probe recently concluded that the Treasury and Defense departments “made missteps” in the decision and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”

    The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.

    The financial chaos at Yellow “is probably two decades in the making,” said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. “At this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.”

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  • Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

    Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

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    NEW YORK — Trucking company Yellow Corp. has declared bankruptcy after years of financial struggles and growing debt, marking a significant shift for the U.S. transportation industry and shippers nationwide.

    The Chapter 11 bankruptcy, which was filed Sunday, comes just three years after Yellow received $700 million in pandemic-era loans from the federal government. But the company was in financial trouble long before that — with industry analysts pointing to poor management and strategic decisions dating back decades.

    Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting Yellow historically offered the cheapest price points in the industry.

    “It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” CEO Darren Hawkins said in a news release late Sunday. “For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

    Yellow, formerly known as YRC Worldwide Inc., is one of the nation’s largest less-than-truckload carriers. The Nashville, Tennessee-based company had 30,000 employees across the country.

    The Teamsters, which represented Yellow’s 22,000 unionized workers, said last week that the company shut down operations in late July following layoffs of hundreds of nonunion employees.

    The Wall Street Journal and FreightWaves reported in late July that the bankruptcy was coming — noting that customers had already started to leave the carrier in large numbers and that the company had stopped freight pickups.

    Those reports arrived just days after Yellow averted a strike from the Teamsters amid heated contract negotiations. A pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout — and giving Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.

    Yellow blamed the nine-month talks for the demise of the company, saying it was unable to institute a new business plan to modernize operations and make it more competitive during that time.

    The company said it has asked the U.S. Bankruptcy Court in Delaware for permission to make payments, including for employee wages and benefits, taxes and certain vendors essential to its businesses.

    Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

    In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds.

    A congressional probe recently concluded that the Treasury and Defense departments “made missteps” in the decision and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”

    The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.

    The financial chaos at Yellow “is probably two decades in the making,” said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. “At this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.”

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  • Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

    Trucking giant Yellow Corp. declares bankruptcy after years of financial struggles

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    NEW YORK — Trucking company Yellow Corp. has declared bankruptcy after years of financial struggles and growing debt, marking a significant shift for the U.S. transportation industry and shippers nationwide.

    The Chapter 11 bankruptcy, which was filed Sunday, comes just three years after Yellow received $700 million in pandemic-era loans from the federal government. But the company was in financial trouble long before that — with industry analysts pointing to poor management and strategic decisions dating back decades.

    Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting Yellow historically offered the cheapest price points in the industry.

    “It is with profound disappointment that Yellow announces that it is closing after nearly 100 years in business,” CEO Darren Hawkins said in a news release late Sunday. “For generations, Yellow provided hundreds of thousands of Americans with solid, good-paying jobs and fulfilling careers.”

    Yellow, formerly known as YRC Worldwide Inc., is one of the nation’s largest less-than-truckload carriers. The Nashville, Tennessee-based company had 30,000 employees across the country.

    The Teamsters, which represented Yellow’s 22,000 unionized workers, said last week that the company shut down operations in late July following layoffs of hundreds of nonunion employees.

    The Wall Street Journal and FreightWaves reported in late July that the bankruptcy was coming — noting that customers had already started to leave the carrier in large numbers and that the company had stopped freight pickups.

    Those reports arrived just days after Yellow averted a strike from the Teamsters amid heated contract negotiations. A pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout — and giving Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.

    Yellow blamed the nine-month talks for the demise of the company, saying it was unable to institute a new business plan to modernize operations and make it more competitive during that time.

    The company said it has asked the U.S. Bankruptcy Court in Delaware for permission to make payments, including for employee wages and benefits, taxes and certain vendors essential to its businesses.

    Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

    In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds.

    A congressional probe recently concluded that the Treasury and Defense departments “made missteps” in the decision and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”

    The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.

    The financial chaos at Yellow “is probably two decades in the making,” said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. “At this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.”

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  • JPMorgan backs off recession call even with ‘very elevated’ risks

    JPMorgan backs off recession call even with ‘very elevated’ risks

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    JPMorgan Chase economists on Friday bailed on their recession call, joining a growing Wall Street chorus that now thinks a contraction is no longer inevitable.

    While noting that risks are still high and growth ahead is likely to be slow, the bank’s forecasters think the data flow indicates a soft landing is possible. That comes despite a series of interest rate hikes enacted with the express intent of slowing the economy, and several other substantial headwinds.

    related investing news

    Inflation takes center stage in the week ahead as Wall Street looks for more clues on Fed rate hikes

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    Michael Feroli, chief economist at the nation’s largest bank, told clients that recent metrics are indicating growth of about 2.5% in the third quarter, compared to JPMorgan’s previous forecast for just a 0.5% expansion.

    “Given this growth, we doubt the economy will quickly lose enough momentum to slip into a mild contraction as early as next quarter, as we had previously projected,” Feroli wrote.

    Along with positive data, he pointed to the resolution of the debt ceiling impasse in Congress as well as the containment of a banking crisis in March as potential headwinds that have since been removed.

    Also, he noted productivity gains, due in part to the broader implementation of artificial intelligence, and improved labor supply even as hiring has softened in recent months.

    Rate risk

    However, he said risk is not completely off the table. Specifically, Feroli cited the danger of Fed policy that has seen 11 interest rate hikes implemented since March 2022. Those increases have totaled 5.25 percentage points, yet inflation is still holding well above the central bank’s 2% target.

    “While a recession is no longer our modal scenario, risk of a downturn is still very elevated. One way this risk could materialize is if the Fed is not done hiking rates,” Feroli said. “Another way in which recession risks could materialize is if the normal lagged effects of the tightening already delivered kick in.”

    Feroli said he doesn’t expect the Fed to start cutting rates until the third quarter of 2024. Current market pricing is indicating the first cut could come as soon as March 2024, according to CME Group data.

    Market pricing also points strongly toward a recession.

    A New York Fed indicator that tracks the difference between 3-month and 10-year Treasury yields is pointing to a 66% chance of a contraction in the next 12 months, according to an update Friday. The so-called inverted yield curve has been a reliable recession predictor in data going all the way back to 1959.

    Changing mood

    However, the mood on Wall Street has changed about the economy.

    Earlier this week, Bank of America also threw in the towel on its recession call, telling clients that “recent incoming data has made us reassess” the forecast. The firm now sees growth this year of 2%, followed by 0.7% in 2024 and 1.8% in 2025.

    Goldman Sachs also recently lowered its probability for a recession to 20%, down from 25%.

    Federal Reserve GDP projections in June pointed to respective annual growth levels ahead of 1%, 1.1% and 1.8%. Chairman Jerome Powell said last week that the Fed’s economists no longer think a credit contraction will lead to a mild recession this year.

    —CNBC’s Michael Bloom contributed.

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  • Beijing has invested $25.4B in Pakistan over the last decade, Chinese vice premier says

    Beijing has invested $25.4B in Pakistan over the last decade, Chinese vice premier says

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    ISLAMABAD — China has invested $25.4 billion in Pakistan over the past decade for projects ranging from roads to power plants, China‘s vice premier said Monday, as the two countries celebrated the 10th anniversary of the so-called Belt and Road Initiative.

    The initiative, also called the China-Pakistan Economic Corridor program, is China’s global endeavor to reconstitute the ancient Silk Road trade routes and link China to all corners of Asia.

    In Pakistan, the CPEC has been billed as an opportunity to bring new prosperity to the South Asian nation. Since 2013, thousands of Chinese construction workers and engineers have been working in this impoverished Islamic nation as part of Chinese President Xi Jinping’s initiative.

    However, work on some projects has since slowed down or been briefly suspended for multiple reasons, including a 2021 militant attack in which 13 Chinese workers were killed by a suicide bomber targeting a bus carrying them in the northwest.

    In his televised remarks, Chinese Vice Premier He Lefing said Pakistan’s southwestern town of Gwadar was once just a fishing town but because of the construction of a deep-water port there by China it has become a city and hub for regional connections.

    He said because of the completion of several CPEC-related projects, Pakistanis were now facing fewer power outages and hoped that Pakistanis “will create a better future with their own hands” in the years to come.

    His comments came days after China rolled over a $2.4 billion loan for Pakistan in a move aimed at helping the country overcome a serious economic crisis. China recently played a key role in helping Pakistan avoid a default on a debt payment.

    Loans from Beijing to Pakistan have continued pouring in since December, when the International Monetary Fund delayed the revival of a bailout for Islamabad until June, when a breakthrough came following talks between the International Monetary Fund and Pakistan Prime Minister Shehbaz Sharif.

    The IMF deposited the first installment of $1.2 billion in Pakistan’s central bank earlier this month.

    On Monday, Sharif, in the presence of the Chinese vice premier at a gathering, said he wouldn’t forget the recent Chinese financial help, which came at a very crucial time. Since coming to power in April 2022, Sharif has blamed alleged corruption under former Prime Minister Imran Khan for Pakistan’s economic downturn.

    He said Pakistan will “emulate the Chinese model” of hard work to overcome one of the worst economic crises his country has faced in recent months. Sharif also said he wanted to see an end to relying on foreign loans.

    “We have to move away from these borrowed loans and handouts, and have to stand on our feet to show to the world that our people are great, energetic, and capable of facing difficult challenges,” he said.

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  • Teamsters say Yellow Corp. is ceasing operations, filing for bankruptcy

    Teamsters say Yellow Corp. is ceasing operations, filing for bankruptcy

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    NEW YORK — Troubled trucking company Yellow Corp. is shutting down and filing for bankruptcy, the Teamsters said Monday.

    An official bankruptcy filing is expected any day for Yellow, after years of financial struggles and growing debt. Its expected liquidation would mark a significant shift for the U.S. transportation industry and shippers nationwide.

    “Today’s news is unfortunate but not surprising. Yellow has historically proven that it could not manage itself despite billions of dollars in worker concessions and hundreds of millions in bailout funding from the federal government. This is a sad day for workers and the American freight industry,” said Teamsters General President Sean M. O’Brien.

    The Associated Press reached out to Yellow for comment on Monday. No bankruptcy filings were found as of the early morning.

    The company’s collapse arrives just three years after Yellow, formerly known as YRC Worldwide, Inc., received $700 million in pandemic-era loans from the federal government. But the company was in financial trouble long before that — with industry analysts pointing to poor management and strategic decisions dating back decades.

    Former Yellow customers and shippers will face higher prices as they take their business to competitors, including FedEx or ABF Freight, experts say — noting that Yellow historically offered the cheapest price points in the industry.

    Yellow is one of the nation’s largest less-than-truckload carriers. The 99-year-old Nashville, Tennessee-based company had 30,000 employees across the country as of earlier this year.

    On Wednesday, The Wall Street Journal and FreightWaves reported that Yellow was preparing for bankruptcy — with some noting that customers had already started to leave the carrier in large numbers. And the company reportedly stopped freight pickups earlier in the week.

    Yellow shut down operations on Sunday, according to The Wall Street Journal, following the layoffs of hundreds of nonunion employees on Friday.

    The bankruptcy preparation reports arrived just days after Yellow averted a strike from the Teamsters, which represents Yellow’s 22,000 unionized workers, amid heated contract negotiations. On July 23, a pension fund agreed to extend health benefits for workers at two Yellow Corp. operating companies, avoiding a planned walkout — and giving Yellow “30 days to pay its bills,” notably $50 million that Yellow failed to pay the Central States Health and Welfare Fund on July 15.

    Yellow has racked up hefty bills over the years. As of late March, Yellow had an outstanding debt of about $1.5 billion. Of that, $729.2 million was owed to the federal government.

    In 2020, under the Trump administration, the Treasury Department granted the company a $700 million pandemic-era loan on national security grounds. Last month, a congressional probe concluded that the Treasury and Defense departments “made missteps” in this decision — and noted that Yellow’s “precarious financial position at the time of the loan, and continued struggles, expose taxpayers to a significant risk of loss.”

    The government loan is due in September 2024. As of March, Yellow had made $54.8 million in interest payments and repaid just $230 million of the principal owed, according to government documents.

    The current financial chaos at Yellow “is probably two decades in the making,” said Stifel research director Bruce Chan, pointing to poor management and strategic decisions dating back to the early 2000s. “At this point, after each party has bailed them out so many times, there is a limited appetite to do that anymore.”

    A Wednesday investors note from financial service firm Stephens estimated that Yellow was burning daily amount of $9 million to $10 million in recent days.

    According to Satish Jindel, president of transportation and logistics firm SJ Consulting, Yellow handled an average of 49,000 shipments per day in 2022. On Friday, he estimated that number was down to between 10,000 and 15,000 daily shipments.

    Yellow’s prices have historically been the cheapest compared to other carriers, Jindel said. “That’s why they obviously were not making money,” he added. “And while there is capacity with the other LTL carriers to handle the diversions from Yellow, it will come at a high price for (current shippers and customers) of Yellow.”

    —-

    AP Business Writer Matt Ott contributed to this report.

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  • Lebanon’s central bank governor ends 30-year tenure under investigation during dire economic crisis

    Lebanon’s central bank governor ends 30-year tenure under investigation during dire economic crisis

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    BEIRUT — Lebanon’s embattled central bank governor stepped down Monday under a cloud of investigation and blame for his country’s economic crisis as several European countries probe him for alleged financial crimes.

    Riad Salameh, 73, ended his 30-year tenure atop the central bank as tearful employees took photos and a band played celebratory music with drums and trumpets.

    In that same building, his four vice governors, led by incoming interim governor Wassim Mansouri, quickly pivoted to urge fiscal reforms for the cash-strapped country.

    “We are at a crossroads,” Mansouri said at a news conference. “There is no choice, if we continue previous policy … the funds in the Central Bank will eventually dry up.”

    Seventy-three-year-old Riad Salameh kicked off his tenure as central bank governor in 1993, three years after Lebanon’s bloody 15-year civil war came to an end. It was a time when reconstruction loans and aid was pouring into the country, and Salameh was widely celebrated at the time for his role in Lebanon’s recovery.

    Now, he leaves his post a wanted man in Europe, accused by many in Lebanon of being a main culprit in the country’s financial downfall since late 2019.

    It was a steep fall for a leader whose policies were once hailed for keeping the currency stable. Later, many financial experts saw him as setting up a house of cards that crumbled as the country’s supply of dollars dried up on top of decades of rampant and corruption and mismanagement from Lebanon’s ruling parties.

    The crisis has pulverized the Lebanese pound and wiped out the savings of many Lebanese, as the banks ran dry of hard currency.

    With the country’s banks crippled and public sector in ruins, Lebanon for years has run on a cash-based economy and relied primarily on tourism and remittances from millions in the diaspora.

    Mansouri said previous policies that permitted the Central Bank to spend large sums on money to prop up the Lebanese state is no longer feasible. He cited years of spending billions of dollars to subsidize fuel, medicine, and wheat and more to keep the value of the Lebanese pound stable.

    Instead, Mansouri proposed a six-month reform plan that included passing long awaited reforms such as capital controls, a bank restructuring law, and the 2023 state budget.

    “The country cannot continue without passing these laws,” Mansouri explained. “We don’t have time, and we paid a heavy price that we cannot pay anymore.”

    The reforms Mansouri mentioned are among those the International Monetary Fund set as conditions on Lebanon in April 2022 for a bailout plan, though he did not mention the IMF. None have been passed.

    France, Germany, and Luxembourg are investigating Salameh and his associates over myriad financial crimes, including illicit enrichment and the laundering of $330 million. Paris and Berlin issued Interpol notices to the central bank chief in May, though Lebanon does not hand over its citizens to foreign countries.

    Salameh has repeatedly denied the allegations and insisted that his wealth comes from his previous job as an investment banker at Merrill Lynch, inherited properties, and investments. He has criticized the probe and said it was part of a media and political campaign to scapegoat him.

    In his final interview as governor, Salameh said on Lebanese television that the responsibility for reforms lies with the government.

    “Everything I did for the past 30 years was to try to serve Lebanon and the Lebanese,” he said. “Some — the majority — were grateful, even if they don’t want to say so. And there are other people, well may God forgive them.”

    Salameh’s departure adds another gap to crisis-hit Lebanon’s withering and paralyzed institutions. The tiny Mediterranean country has been without a president nine months, while its government has been running in a limited caretaker capacity for a year. Lebanon has also been without a top spy chief to head its General Security Directorate since March.

    Lebanese officials in recent months were divided over whether Salameh should stay in his post or whether he should step down immediately in the remaining months of his tenure.

    Caretaker Economy Amin Salam wanted the latter, given that the central bank chief had a “legal question mark.”

    “I cannot explain anyone holding on to a person while a nation is failing unless there is something wrong or hidden,” Salam told The Associated Press.

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  • Russian missile attacks leave few options for Ukrainian farmers looking to export grain

    Russian missile attacks leave few options for Ukrainian farmers looking to export grain

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    PAVLIVKA, Ukraine — The summer winds carried the smell of burned grain across the southern Ukrainian steppe and away from the shards of three Russian cruise missiles that struck the unassuming metal hangars.

    The agricultural company Ivushka applied for accreditation to export grain this year, but the strike in mid-July destroyed a large portion of the stock, days after Russia abandoned the grain deal that would have allowed the shipments across the Black Sea without fear of attack.

    Men shirtless and barefoot, with blackened soles from ash, swept unburnt grain into piles and awaited the loader, whose driver deftly steered around twisted metal shrapnel, bits of missile and craters despite his shattered windshield.

    They hoped to beat the next rain to rescue what was left of the crop. According to the Odesa Regional Prosecutor’s Office, Russia struck the facility July 21 with three Kalibr- and Onyx-class cruise missiles.

    “We don’t have a clue why they did it,” explained Olha Romanova, the head of Ivushka. Romanova, who worked in the debris alongside the others, wore a red headscarf and an exhausted expression and was too frazzled to even estimate her losses.

    She cannot comprehend why the Russians targeted Ivushka, as there are no nearby military facilities and the frontlines are far from the village in the Odesa region.

    “They spent so much money on us,” she said, puzzled. The missiles that ruined the silos are worth millions of dollars — far more than the crop they destroyed.

    But Ivushka wasn’t the only target in Odesa. The main port also was struck, leaving Black Sea shipping companies that relied upon the grain deal to keep them safe and food supplies flowing to the world at a standstill.

    The Black Sea handled about 95% of Ukrainian grain exports before Russia’s invasion and the U.N.-brokered initiative allowed Ukraine to ship much of what farmers harvested in 2021 and 2022, said Joseph Glauber, senior research fellow at the International Food Policy Research Institute.

    Ukraine, a major supplier of corn, wheat, barley and vegetable oil, shipped 32.9 million metric tons (36.2 million U.S. tons) of grain under the nearly yearlong deal designed to ease a global food crisis. It has been able to export an additional 2 million to 2.5 million metric tons (2.2 to 2.7 million U.S. tons) monthly by the Danube River, road and rail through Europe.

    Those are now the only routes to ship grain, but have stirred divisions among nearby European countries and generated higher costs to be absorbed by Ukrainian farmers, said Glauber, former chief economist at the U.S. Department of Agriculture.

    Russian missiles strikes against the Danube port last Monday also raised questions about how much longer that route will remain viable.

    That’s a disincentive to keep planting fields already threatened by missiles and strewn with explosive mines. Corn and wheat production in agriculture-dependent Ukraine is down nearly 40% this year from prewar levels, analysts say.

    From the first of July last year until June 30 this year, Ukraine exported 68 million tons of grain, according to data from Mykola Horbachov, the president of the Ukrainian Grain Association. Ukrainian farmers shipped 11.2 million tons via railways, 5.5 million tons by road transport and around 18 million tons through Danube ports. Additionally, nearly half of the total exported grain, 33 million tons, was delivered through seaports under the Black Sea Grain Initiative.

    Ihor Osmachko, the general director of Agroprosperis Group, was unsurprised by Russia’s withdrawal from the deal leading to its collapse. His company had never considered it a reliable or permanent solution during wartime.

    He said Russians frequently stymied the deal, even while it was functioning, by delaying ship inspections until the cargos were sent back, leading to $30 million in losses for his company alone. Now, they are once again forced to pay to reroute 100,000 tons of grain trapped in ports that are no longer safe, Osmachko said.

    “We have been preparing for this whole time,” Osmachko said. “We haven’t stopped. We are moving forward.”

    Osmachko estimated around 80% to 90% of the approximately 3.2 million tons of grain Agroprosperis exported to China, Europe and African countries during the past year went through the grain corridor.

    “The most significant problem today is the cost of logistics,” explained Mykola Horbachov, president of the Ukrainian Grain Association. Before the war, farmers paid approximately $20 to $25 per ton to transport grain to the Odesa ports. Now, logistics costs have tripled as they are forced to pay more than $100 to transport a single ton via alternative routes through the Danube port to Constanta, Romania.

    “If we were to go on the Danube with the grain corridor closed, practically all our production would be unprofitable,” Osmachko said.

    The Danube ports can’t handle the same volume as seaports. The most Agroprosperis has sent through this route is 75,000 tons per month, compared with a monthly average of 250,000 tons through Black Sea ports.

    The Ukrainian harvest this year is the lowest in a decade, according to a July report from the U.S. Department of Agriculture. Horbachov said shipping costs to export around the world and uncertainty about the length of the war will last could quickly make new planting unprofitable for Ukrainian farmers.

    Ukraine currently produces three times more grain than it consumes, while global prices will inevitably rise if the country’s exports decrease.

    “I think you’re looking at a diminished Ukraine for at least the next couple of years and maybe longer,” said Glauber, the former U.S. agricultural official. “That’s something the rest of the world just needs to make up.”

    The war from all sides poses risks for Agroprosperis.

    In the Sumy region on the Russian border, farmers harvest their crops wearing body armor. Sometimes they must stop their combines in the middle of the wheat fields to pick up shrapnel from Russian projectiles.

    “It can get tough at times,” Osmachko acknowledged. “But there are responsibilities — some have duties on the front. Some must grow food and ensure the country’s and world’s security.”

    ___

    Volodymyr Yurchuk in Lviv, Ukraine, and Courtney Bonnell in London contributed.

    ___

    Follow AP’s coverage of the war in Ukraine at https://apnews.com/hub/russia-ukraine

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  • Why substituting cryptocurrency for gold exposure may be a costly mistake

    Why substituting cryptocurrency for gold exposure may be a costly mistake

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    Viewing cryptocurrency as “digital gold” may be a mistake.

    State Street Global Advisors’ George Milling-Stanley, whose firm runs the world’s largest gold exchange-traded fund, believes cryptocurrency is no substitute for the real thing due its vulnerability to big losses.

    “Volatility does not back up any claims for crypto to be a long-term strategic asset as a competitor to gold,” the firm’s chief gold strategist told CNBC’s “ETF Edge” earlier this week.

    Milling-Stanley’s firm is behind SPDR Gold Shares, the world’s largest physically backed gold ETF. It has a total asset value of more than $57 billion as of last week, according to the company’s website. The ETF is up 7% year to date as of Friday’s market close.

    Milling-Stanley believes gold’s 6,000-year history as a monetary asset serves as a significant sample basis to understand the benefits of investing in gold.

    “Gold is a hedge against inflation. Gold’s a hedge against potential weakness in the equity market. Gold’s a hedge against potential weakness in the dollar,” he noted. “To me, historically, the promise of gold for investors has … overtime [helped] to enhance the returns of a properly balanced portfolio.”

    The precious metal is having trouble this year staying above the $2,000 an ounce mark. But Milling-Stanley believes the economic backdrop bodes well for gold — recession or not.

    “It’s pretty clear that we’re liable to be in a period of slow growth. … Historically, gold has always done well during periods of slower growth,” Milling-Stanley said.

    Milling-Stanley also believes the relaxation of Covid-19 restrictions in China should spark more demand for gold. It’s known as the world’s largest consumer of gold jewelry behind India, according to the World Gold Council.

    “It’s not just China and India. It’s Vietnam, it’s Indonesia, it’s Thailand and Korea. It’s a whole raft of Asian countries that are really the main drivers of gold jewelry demand,” Milling-Stanley said.

    Gold settled at $1,960.47 an ounce Friday. The commodity is up more than 7% so far this year.

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  • Stock market today: Wall Street rises as economy keeps growing and profits keep rising

    Stock market today: Wall Street rises as economy keeps growing and profits keep rising

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    NEW YORK — Stocks are rising Thursday following fatter-than-expected profit reports from big companies and the latest signals that the economy continues to defy predictions for a recession.

    The S&P 500 was 0.6% higher in morning trading after touching its highest level in nearly 16 months. The Dow Jones Industrial Average was up 72 points, or 0.2%, at 35,592, as of 10:30 a.m. Eastern time, and on track for a 14th straight gain. The Nasdaq composite, meanwhile, was leading the market with a gain of 0.9% following a strong profit report from Meta Platforms.

    Earnings rose more for Meta, which owns Instagram and WhatsApp in addition to Facebook, than analysts expected after its services attracted additional active members. Meta is one of Wall Street’s most influential stocks because of its massive size, and it rose 6.9%.

    McDonald’s was helping to prop up the Dow after it easily topped analysts’ forecasts for profits during the spring. Its sales grew worldwide, and its stock rose 1.9%.

    In the bond market, Treasury yields were rising after a wave of reports indicated the economy is in stronger shape than expected.

    One estimate said growth for the overall economy accelerated in the spring. That easily topped forecasts from economists, who were expecting a slowdown from the first three months of the year. That report also suggested a measure of inflation wasn’t as high from April through June as expected.

    Another report, meanwhile, said that fewer workers applied for jobless benefits last week. It’s the latest indication the job market remains remarkably solid, while another report said orders for long-lasting manufactured goods strengthened more than expected last month.

    All the data helped keep Wall Street ebullient amid hopes the economy can keep defying predictions for a recession despite much higher interest rates.

    The Federal Reserve on Wednesday raised its federal funds rate to its highest level in more than two decades in hopes of dragging inflation lower. High rates work by bluntly slowing the entire economy and hurting prices for stocks and other investments. After zooming higher from virtually zero early last year, the sudden shock higher in interest rates has had investors on a long watch for a potential recession.

    Fed Chair Jerome Powell on Wednesday, though, said any further increases in rates will depend on what reports say about the path of inflation and economy in the future. That bolstered hopes among traders that Wednesday’s increase may have been the final one of this cycle.

    Investors see higher interest rates as hurting technology and other high-growth stocks in particular, which is part of why Big Tech stocks were helping to lead the market on Thursday beyond Meta’s fat profit report.

    Hopes for a halt to rate hikes are raising bets that the Fed can pull off what’s called a “soft landing” for the economy, where high inflation can come down to the Fed’s target without causing a painful recession.

    Such hopes have helped launch stocks higher this year, but critics say the market may have gone too far, too fast. While inflation has come down from its peak last summer, it’s still high and the hardest part of the Fed’s task may still be ahead. A recession may still ultimately hit, they say.

    But on Thursday, at least, optimism seemed to rule markets.

    Stocks also climbed in Europe after the European Central Bank raised interest rates. The French CAC 40 jumped 2.1%, and Germany’s DAX returned 1.6%.

    Asian stock indexes were also mostly higher, led by a 1.4% rally for Hong Kong’s Hang Seng.

    In the bond market, the yield on the 10-year Treasury rose to 3.94% from 3.87% late Wednesday. It helps set rates for mortgages and other important loans.

    The two-year Treasury yield, which moves more on expectations for the Fed, rose to 4.91% from 4.85%.

    ___

    AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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  • Facebook parent Meta posts higher profit, revenue for Q2 as advertising rebounds

    Facebook parent Meta posts higher profit, revenue for Q2 as advertising rebounds

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    Facebook parent company Meta Platforms posted stronger-than-expected results for the second quarter on Wednesday, buoyed by a rebound in online advertising after a post-pandemic slump

    ByBARBARA ORTUTAY AP Technology Writer

    FILE – Facebook’s Meta logo sign is seen at the company headquarters in Menlo Park, Calif., Oct. 28, 2021. Meta Platforms reports earnings on Wednesday, July 26, 2023. (AP Photo/Tony Avelar, File)

    The Associated Press

    Facebook parent company Meta Platforms posted stronger-than-expected results for the second quarter on Wednesday, buoyed by a rebound in online advertising after a post-pandemic slump.

    The Menlo Park, California-based company earned $7.79 billion, or $2.98 per share, in the April-June period. That’s up 16% from $6.69 billion, or $2.46 per share, in the same period a year earlier.

    Revenue jumped 11% to $32 billion from $28.82 billion in the year-ago quarter. It’s the first double-digit revenue growth for the company since 2021.

    Analysts, on average, were expecting earnings of $2.91 per share on revenue of $31.08 billion, according to a poll by FactSet Research.

    Facebook had 3.03 billion monthly active users as of June 30, up 3% year-over-year.

    Squeezed by a slump in online advertising and uncertainty around the global economy, Meta has cut more than 20,000 jobs since last November. It had 71,469 employees as of June 30, down 14% from a year earlier.

    Many other tech companies, including Google parent Alphabet and Amazon, have also cut thousands of jobs.

    “There’s a lot to feel good about when it comes to Meta right now. It has been able to maintain decent growth in monthly and daily active users across both Facebook and its family of apps, and it has seen strong performance from Advantage, its AI-driven suite of ad automation tools,” said Debra Aho Williamson, an analyst with Insider Intelligence.

    For the current quarter, Meta is forecasting revenue of $32 billion to $34.5 billion. That’s above the $31.22 billion that analysts are expecting.

    Meta’s rebound followed a solid earnings report from Alphabet a day earlier.

    Meta’s stock jumped $14.45, or 4.8%, to $313.02 in after-hours trading in response to the results.

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  • Santa Barbara’s paper, one of California’s oldest, stops publishing after owner declares bankruptcy

    Santa Barbara’s paper, one of California’s oldest, stops publishing after owner declares bankruptcy

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    SAN FRANCISCO — The Pulitzer Prize-winning Santa Barbara News-Press, one of California’s oldest newspapers, has ceased publishing after its owner declared the 150-year-old publication bankrupt.

    The newspaper became an online-only publication in April. But its last digital edition was posted Friday when owner Wendy McCaw filed for bankruptcy.

    Managing editor Dave Mason broke the news to staff in an email Friday, according to NoozHawk, a digital publication whose executive editor, Tom Bolton, used to lead the News-Press.

    “They ran out of money to pay us. They will issue final paychecks when the bankruptcy is approved in court,” Mason wrote to staff.

    On Monday, the News-Press’ website was still online, with the most recent stories published Friday. There was no mention that it would cease publishing or that it has declared bankruptcy.

    A voicemail message left Monday by The Associated Press in the newsroom’s phone number was not immediately returned.

    The Chapter 7 bankruptcy filing by Ampersand Publishing, the parent company of the Santa Barbara News-Press, said it has assets of less than $50,000 and debts and estimated liabilities of between $1 million and $10 million, according to federal court records. A meeting of creditors, which number between 200 and 999, is scheduled for Sept. 7.

    Anthony Friedman, the lawyer listed for Ampersand Publishing in the bankruptcy filing, did not immediately return a phone call or email seeking comment. McCaw could not be reached.

    At its height, the newspaper founded in 1855, had a daily circulation of 45,000 and was published seven days a week, serving Santa Barbara, an upscale city of 90,000 people. Editorial writer Thomas M. Storke won a Pulitzer Prize in 1962 for a series of editorials about the John Birch Society.

    McCaw, then a billionaire local philanthropist active on environmental and animal rights issues, bought the daily from The New York Times Co. in October 2000 and a few months later appointed herself and her fiancé, Arthur von Weisenberger, as acting co-publishers.

    Six years later, Santa Barbara News-Press Editor Jerry Roberts quit the newspaper along with four other top editors and a columnist to protest moves by McCaw that they said undermined the paper’s credibility. The editors who quit cited the publishers’ meddling in stories, which they said compromised the paper’s ethics. In one example, the editors alleged McCaw was against publishing a story about one editor’s drunken driving arrest and later intervened to stop a second story.

    The editors who quit were also upset that McCaw had appointed the paper’s editorial page editor as the acting publisher.

    “On one hand you have someone writing editorials and on the other hand editing news stories. There is an inherent conflict,” Don Murphy, who quit as the paper’s managing editor, told the AP at the time.

    The paper’s closure “is not a big surprise,” Roberts said Monday. “The paper’s been on a downhill slide for a while.”

    “But the fact that the community has lost its only paper is unspeakably sad,” he added.

    Santa Barbara, which sits along the coast about 100 miles northwest of Los Angeles, is known for its stunning geography and wineries, attracting tourists and celebrities alike for its mild climate and beautiful views. The nearby town of Montecito was the site of deadly 2018 mudslides that killed 23 people.

    About half of registered voters in Santa Barbara County are Democrats while roughly a quarter are Republicans, statistics that mirror the rest of the state. Under McCaw’s leadership, the paper in 2016 was among the few to endorse Republican Donald Trump for president. Democratic candidate Hillary Clinton won nearly twice as many votes in the county. McCaw personally wrote an editorial endorsing Trump again in 2020.

    The community still has a weekly newspaper, The Independent, as well as the digital site Noozhawk. The closest major daily newspapers, though, are now in San Luis Obispo to the north and Los Angeles to the south.

    The Press-News’ closure is the latest example of a struggling news media, said Tim Franklin, an expert in local news at Northwestern University’s Medill School of Journalism.

    “We are losing on average two newspapers a week in the U.S.,” Franklin said. “We’re on pace to have lost about a third of all newspapers by 2025.”

    Media companies are having to compete with Google, Facebook and Amazon, which are soaking up much of the ad market, and have yet to figure out a profitable business model for local news, he said.

    “The local news crisis is happening in every corner of the country, including in affluent cities and suburbs,” he added.

    The Los Angeles Times recently announced layoffs and earlier this month sold The San Diego Union-Tribune to MediaNews Group, which owns hundreds of papers around the country.

    The Union-Tribune, which covers the second-largest city in California, is now owned by the same chain that owns a slew of Southern California newspapers. The parent company is Alden Global Capital, which has bought up newspapers across the country and faced criticism for slashing budgets and cutting jobs.

    In January, the Mail Tribune, one of Oregon’s oldest operating newspapers, shut down, saying declines in advertising spending and difficulty hiring staff precipitated the closure.

    The paper-based in Medford, Oregon, stopped producing a print edition in September but continued operating in a digital format until closing.

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  • Key question as Federal Reserve meets: Can the central bank pull off a difficult ‘soft landing’?

    Key question as Federal Reserve meets: Can the central bank pull off a difficult ‘soft landing’?

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    WASHINGTON — When Chair Jerome Powell and other Federal Reserve officials gather this week for their latest decision on interest rates, they will do so on the cusp of achieving an elusive “soft landing” — the feat of curbing inflation without causing a deep recession.

    After the Fed began aggressively raising borrowing costs early last year, most economists predicted it would send the economy crashing as consumers cut spending and businesses slashed jobs and expansion plans.

    Yet even though the Fed is poised to raise its key rate on Wednesday for the 11th time since March 2022, to its highest point in 22 years, no one is panicking. Economists and financial traders have grown more optimistic that what some call “immaculate disinflation” — a steady easing of inflation pressures without an economic downturn — can be achieved. Most economists think this week’s hike in the Fed’s benchmark rate, to about 5.3%, will be the last, though they caution that that rate, which affects many consumer and business loans, will likely stay at a peak until well into 2024.

    “I would have been not super-optimistic about a soft landing a few months ago,” said Jeremy Stein, a Harvard University economist who served on the Fed’s Board of Governors from 2012 through 2014. “Now, I think the odds are clearly going up.”

    Economists at Goldman Sachs, who have sketched a more optimistic outlook than most others, have downgraded the likelihood of recession to just 20%, from 35% earlier this year.

    Even economists at Deutsche Bank, among the first large banks to forecast a recession, have been encouraged by the economy’s direction, though they still expect a downturn later this year.

    “We have greater resiliency within the economy than I would have anticipated at this point in time, given the extent of rate increases we’ve gotten,” said Matthew Luzzetti, Deutsche Bank’s chief U.S. economist.

    Luzzetti points to durable consumer spending as a key driver of economic growth. Many Americans still have extra savings stemming from the pandemic, when the government distributed several stimulus checks and people saved by spending less on travel, restaurant meals and entertainment.

    Hiring has remained healthy, with employers having added 209,000 jobs in June and the unemployment rate declining to 3.6%. That’s near the lowest rate in a half-century and about where it was when the Fed began raising rates 16 months ago — a sign of economic resilience that almost no one had foreseen.

    At the same time, inflation has steadily declined. In June, prices rose just 3% from a year earlier, down from a peak of 9.1% in June 2022 though still above the Fed’s 2% target.

    Even more encouragingly, measures of underlying inflation have dropped. “Core” prices, which exclude volatile food and energy costs, rose just 0.2% from May to June, the slowest monthly rise in nearly two years. Compared with a year ago, core inflation was still a relatively high 4.8%, though down sharply from 5.3% in May.

    Some economists warn that a recession cannot yet be ruled out. The Fed’s rate hikes, they note, have made the cost of buying a home, financing a car purchase or expanding a business much more burdensome.

    And with inflation still not fully contained, Fed officials have yet to sound the all-clear. One day after the government reported unexpectedly mild inflation, Christopher Waller, a key member of the Fed’s board, said he needed to see further evidence of smaller price increases before he would be sure inflation is slowing. Until then, Waller said, two more quarter-point rate hikes would likely be “necessary to keep inflation moving toward our target.”

    Waller expressed concern that the Fed might be “head-faked” by temporary slowdowns in inflation, only for prices to resurge again, which previously occurred in mid-2021 and the fall of 2020.

    Likewise, Lorie Logan, president of the Federal Reserve Bank of Dallas, said she favored a rate hike at last month’s meeting, when the Fed kept rates unchanged after 10 straight increases. Speaking before the latest inflation report, Logan suggested that more increases were needed.

    Some economists caution that inflation’s drop from above 9% to 3% was the relatively easy part. Getting it down to 2% will be harder and take longer. Average incomes haven’t kept up with rising prices for the past two years, and workers may keep pushing for sharp wage increases. Higher pay would boost Americans’ ability to spend and potentially perpetuate inflation.

    Yet many other experts say they think the recent mild inflation readings can be sustained. Rental cost increases, which have already fallen, should decline further as more apartment buildings are completed.

    Even though the Fed’s policymakers collectively predicted in June that they would raise their benchmark rate twice more this year, many economists think that after this week’s hike, the officials will hold rates steady when they next meet in September. And after that, inflation may be moving close enough to the Fed’s target that they forgo any further hikes.

    In a question-and-answer session last week, Waller held out the possibility that a second rate hike could be skipped if inflation came in as low in the next two months as it had in the most recent government report.

    Used car prices, while still much higher than before the pandemic, fell in June and are expected to ease further. The costs of furniture, appliances and clothing are slowing, too. Restaurant prices, while still high, are rising more slowly.

    “The breadth of disinflation is starting to broaden out,” said Omair Sharif, chief economist at Inflation Insights. “This is kind of what you have been hoping to see for a while.”

    Sung Won Sohn, an economics professor at Loyola Marymount University, said he still worries that the Fed will have to clamp down harder on the economy to slow inflation all the way to 2% and in the process ultimately cause a recession and higher unemployment.

    “The 2% inflation target… is an unrealistic target which can only be reached at huge cost,” Sohn said. “There’s a growing risk of the Fed overreacting, as they often have in the past, and pushing the economy into an overall real recession, which is not necessary.”

    Other economists have also expressed concerns. A potential strike at UPS could slow freight shipping and revive shortages and lift prices. Workers in other industries, such as airlines and automakers, are also pushing for higher pay, which could keep wage pressures elevated.

    And achieving a soft-landing, after inflation had spiked so high, is notoriously difficult. But the economy has broken new ground many times since the pandemic.

    “We are in uncharted territory.” said Riccardo Trezzi, founder of Underlying Inflation, a consulting firm, and former economist at the Fed and European Central Bank. “We have to be able to say, ‘We don’t know.’”

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