Статті

China’s expanding sphere of influence and economic reach in Europe is met with a mixture of praise and complaints in the Greek port of Piraeus. Athens reporter Laurent Laughlin has the details.
…

U.S. consumer prices jumped 7% in December compared to a year earlier, the highest inflation rate in 40 years, the government’s Labor Department reported Wednesday.

Higher prices coursed throughout the U.S. economy in 2021, with the biggest increases since 1982. The annualized jump in December was up from the 6.8% figure in November and was a half-percentage point gain over the course of a month.

Analysts say robust consumer demand collided with coronavirus-related supply shortages, pushing up prices over the year for big ticket items like cars and furniture, but more importantly for must-buy, everyday purchases like food and gasoline for motorists.

The rapidly rising costs for consumers have caught the attention of the White House and policy makers at the country’s central bank, the Federal Reserve, even as they say they expect inflation to remain high throughout 2022.

President Joe Biden has called for the Federal Trade Commission to investigate “mounting evidence of anti-consumer behavior by oil and gas companies.” The Fed is signaling new efforts to rein in inflation by ending its direct financial support of the economy in March, sooner than originally planned, and to increase its benchmark interest rate that influences borrowing costs for businesses and consumers.

Federal Reserve Chairman Jerome Powell told a congressional committee Tuesday that getting prices down to more stable levels was key to ensure a lasting recovery from the pandemic.

“If inflation does become too persistent, if these high levels of inflation become too entrenched in the economy or people’s thinking, that will lead to much tighter monetary policy from us, and that could lead to a recession and that would be bad for workers,” Powell told lawmakers.

For consumers, inflation is often more of a daily fact of life than other aspects of the American economy that have recovered smartly since the coronavirus pandemic first swept into the U.S. in March 2020.

The U.S. economy added a record-setting 6.4 million jobs last year, the unemployment rate dropped from 6.3% in January to 3.9% in December and rank-and-file workers’ hourly paychecks rose by 5.8%. Government assistance checks sent to all but the wealthiest American households helped many families. 

But prices consumers paid rose markedly.

Government statistics showed that gasoline prices paid by motorists at service stations were up 58% last year, while the price of used cars and trucks were up 31% and new vehicles by 11%.

Meat, poultry and fish prices were up 13%, furniture and bedding by nearly 12%. Fast-food and casual dining places raised their prices by nearly 8%.
…

Cyberthreats and the growing space race are emerging risks to the global economy, adding to existing challenges posed by climate change and the coronavirus pandemic, the World Economic Forum said in a report Tuesday.  

The Global Risks Report is usually released ahead of the annual elite winter gathering of CEOs and world leaders in the Swiss ski resort of Davos, but the event has been postponed for a second year in a row because of COVID-19. The World Economic Forum still plans some virtual sessions next week. 

Here’s a rundown of the report, which is based on a survey of about 1,000 experts and leaders:  

World outlook 

As 2022 begins, the pandemic and its economic and societal impacts still pose a “critical threat” to the world, the report said. Big differences between rich and poor nations’ access to vaccines mean their economies are recovering at uneven rates, which could widen social divisions and heighten geopolitical tensions. 

By 2024, the global economy is forecast to be 2.3% smaller than it would have been without the pandemic. But that masks the different rates of growth between developing nations, whose economies are forecast to be 5.5% smaller than before the pandemic, and rich countries, which are expected to expand 0.9%.  

Digital dangers 

The pandemic forced a huge shift — requiring many people to work or attend class from home and giving rise to an exploding number of online platforms and devices to aid a transformation that has dramatically increased security risks, the report said.  

“We’re at the point now where cyberthreats are growing faster than our ability to effectively prevent and manage them,” said Carolina Klint, a risk management leader at Marsh, whose parent company Marsh McLennan co-authored the report with Zurich Insurance Group and SK Group.  

Cyberattacks are becoming more aggressive and widespread, as criminals use tougher tactics to go after more vulnerable targets, the report said. Malware and ransomware attacks have boomed, while the rise of cryptocurrencies makes it easy for online criminals to hide payments they have collected.  

While those responding to the survey cited cybersecurity threats as a short- and medium-term risk, Klint said the report’s authors were concerned that the issue wasn’t ranked higher, suggesting it’s a “blind spot” for companies and governments. 

Space race 

Space is the final frontier — for risk.  

Falling costs for launch technology has led to a new space race between companies and governments. Last year, Amazon founder Jeff Bezos’ space tourism venture Blue Origin and Virgin Galactic’s Richard Branson took off, while Elon Musk’s Space X business made big gains in launching astronauts and satellites.  

Meanwhile, a host of countries are beefing up their space programs as they chase geopolitical and military power or scientific and commercial gains, the report said.  

But all these programs raise the risk of friction in orbit.  

“Increased exploitation of these orbits carries the risk of congestion, an increase in debris and the possibility of collisions in a realm with few governance structures to mitigate new threats,” the report said.  

Space exploitation is one of the areas that respondents thought had among the least amount of international collaboration to deal with the challenges.  

Experts and leaders responding to the survey “don’t believe that much is being done in the best possible way moving forward,” World Economic Forum’s managing director, Saadia Zahidi, said at a virtual press briefing from Geneva.  

Other areas include artificial intelligence, cyberattacks and migration and refugees, she said.  

Climate crisis  

The environment remains the biggest long-term worry.  

The planet’s health over the next decade is the dominant concern, according to survey respondents, who cited failure to act on climate change, extreme weather, and loss of biodiversity as the top three risks.  

The report noted that different countries are taking different approaches, with some moving faster to adopt a zero-carbon model than others. Both approaches come with downsides. While moving slowly could radicalize more people who think the government isn’t acting urgently, a faster shift away from carbon intense industries could spark economic turmoil and throw millions out of work.  

“Adopting hasty environmental policies could also have unintended consequences for nature,” the report added. “There are still many unknown risks from deploying untested biotechnical and geoengineering technologies.” 
…

Warning that high inflation could make it harder to restore the job market to full health, Federal Reserve Chair Jerome Powell said Tuesday that the Fed will raise interest rates faster than it now plans if needed to stem surging prices.

With America’s households squeezed by higher costs for food, gas, rent, autos and many other items, the Fed is under pressure to rein in inflation by raising rates to slow borrowing and spending. At the same time, the economy has recovered enough that the Fed’s ultra-low-interest rate policies are no longer needed.

“If we have to raise interest rates more over time, we will,” Powell said during a hearing of the Senate Banking Committee, which is considering his nomination for a second four-year term.

The stark challenge for Powell if he is confirmed for a new term, as expected, was underscored by the questions he faced Tuesday from both Democratic and Republican senators. They pressed him to raise rates to reduce inflation, though without ramping up borrowing costs so much that the economy tumbles into a recession.  

Fed officials have forecast three increases in their benchmark short-term rate this year, though some economists say they envision as many as four hikes in 2022.  

Powell’s nomination is expected to be approved by the committee sometime in the coming weeks and then confirmed by the full Senate with bipartisan support. At Tuesday’s hearing, he drew mostly supportive comments from senators from both parties. A Republican first elevated to the chair by then-President Donald Trump, Powell has also been credited by many Democrats for sticking with ultra-low-rate policies to support rapid hiring for the past 18 months.  

In his testimony, Powell rebuffed suggestions from some Democratic senators that rate increases would weaken hiring and potentially leave many people, particularly lower-income and Black Americans, without jobs. Fed rate increases usually boost borrowing costs on many consumer and business loans and have the effect of slowing the economy.

But Powell argued that rising inflation, if it persists, also poses a threat to the Fed’s goal of getting nearly everyone who wants a job back to work. Low-income families have been particularly hurt by the surge in inflation, which has wiped out the pay increases that many have received.

“High inflation is a severe threat to the achievement of maximum employment,” he said.

The economy, the Fed chair added, must grow for an extended period to put as many Americans back to work as possible. Controlling inflation before it becomes entrenched is necessary to keep the economy expanding, he said. If prices keep rising, the Fed could be forced to slam on the brakes much harder by sharply raising interest rates, threatening hiring and growth.  

Powell won praise from Ohio Democratic Sen. Sherrod Brown, the chairman of the committee, and Pennsylvania Sen. Pat Toomey, the senior Republican on the panel.  

“The president is putting results over partisanship, re-nominating a Federal Reserve chair of the other political party,” Brown said. “As chair, together with President Biden, he has helped us deliver historic economic progress.”

“There is broad bipartisan backing for Chairman Powell’s re-nomination,” Toomey added.

Still, Toomey also criticized some of the Fed’s 12 regional banks for holding events that addressed climate change and “so-called racial justice,” which, Toomey argued, went far beyond the Fed’s mandate. He cited one event, organized by the Federal Reserve Bank of Boston, in which he said participants called for defunding police.  

“The troubling politicization of the Fed puts its independence and effectiveness at risk,” Toomey said.

And Sen. Richard Shelby, an Alabama Republican, criticized Powell for the central bank’s initial characterization of the price spikes that began this spring as “transitory.”

“I’m concerned if the Fed missed the boat on addressing inflation sooner, a lot of us are,” Shelby said. “As a result of that, the Fed under your leadership has lost a lot of credibility.”

Inflation has soared to the highest levels in four decades, and on Wednesday the government is expected to report that consumer prices jumped 7.1% over the past 12 months, which would be the largest such jump since 1982.

Powell said the Fed mistakenly expected that supply chain bottlenecks driving up prices for goods such as cars, appliances and furniture would not last nearly as long as they have. Once unsnarled, prices for things like used cars, which have spiked in the past year, would come back down, he said.  

But for now, those supply chain problems have persisted, and while there are signs they are loosening, Powell said that progress is limited. He noted that many cargo ships remain docked outside the port of Los Angeles and Long Beach, the nation’s largest, waiting to unload.  

The number of people working or looking for work also remains far below pre-pandemic levels, Powell noted. Millions of Americans have retired early or are avoiding jobs because of fear of the coronavirus. The Fed had anticipated that more of those people would return to the workforce than have done so.  

The smaller workforce has forced businesses to offer much higher pay to attract and keep employees. Powell said that isn’t mainly why prices are high right now, but it “can be an issue going forward for inflation.”

Economists and former Fed officials are raising concerns that the Fed is behind the curve on inflation. Last Friday’s jobs report for December, which showed a sharp drop in the unemployment rate to a healthy 3.9%, and an unexpected wage increase, has helped fan those concerns. While lower unemployment and higher pay benefit workers, those trends can potentially fuel rising prices by encouraging more spending.  

At the Fed’s most recent meeting in December, Powell said the central bank was rapidly accelerating its efforts to tighten credit with the goal of reining in inflation. The Fed will stop buying billions of dollars of bonds in March, ahead of its previously announced goal of doing so in June. Those bond purchases have been intended to encourage more borrowing and spending by lowering longer-term rates.  

And Fed officials’ expectation that they will raise short-term rates three times this year marks a sharp shift from September, when they were divided over doing it even once.  

The flood of new omicron infections won’t slow the Fed’s shift toward policies more appropriate for an economy getting back to normal, Powell said at the hearing, because so far it doesn’t appear to be weighing on the economy.  

“It is really time for us to move away from those emergency pandemic settings to a more normal level,” he added. “It’s a long road to normal from where we are.”
…

As the raging omicron variant of COVID-19 infects workers across the nation, millions of those whose jobs don’t provide paid sick days are having to choose between their health and their paycheck.

While many companies instituted more robust sick leave policies at the beginning of the pandemic, some of those have since been scaled back with the rollout of the vaccines, even though omicron has managed to evade the shots. Meanwhile, the current labor shortage is adding to the pressure of workers having to decide whether to show up to their job sick if they can’t afford to stay home. 

“It’s a vicious cycle,” said Daniel Schneider, professor of public policy at the Harvard Kennedy School of Government. “As staffing gets depleted because people are out sick, that means that those that are on the job have more to do and are even more reluctant to call in sick when they in turn get sick.” 

Low-income hourly workers are especially vulnerable. Nearly 80% of all private sector workers get at least one paid sick day, according to a national compensation survey of employee benefits conducted in March by the U.S. Bureau of Labor Statistics. But only 33% of workers whose wages are at the bottom 10% get paid sick leave, compared with 95% in the top 10%. 

A survey this past fall of roughly 6,600 hourly low-wage workers conducted by Harvard’s Shift Project, which focuses on inequality, found that 65% of those workers who reported being sick in the last month said they went to work anyway. That’s lower than the 85% who showed up to work sick before the pandemic, but much higher than it should be in the middle of a public health crisis. Schneider says it could get worse because of omicron and the labor shortage. 

What’s more, Schneider noted that the share of workers with paid sick leave before the pandemic barely budged during the pandemic — 50% versus 51% respectively. He further noted many of the working poor surveyed don’t even have $400 in emergency funds, and families will now be even more financially strapped with the expiration of the child tax credit, which had put a few hundred dollars in families’ pockets every month. 

The Associated Press interviewed one worker who started a new job with the state of New Mexico last month and started experiencing COVID-like symptoms earlier in the week. The worker, who asked not to be named because it might jeopardize their employment, took a day off to get tested and two more days to wait for the results.

A supervisor called and told the worker they would qualify for paid sick days only if the COVID test turns out to be positive. If the test is negative, the worker will have to take the days without pay, since they haven’t accrued enough time for sick leave.

“I thought I was doing the right thing by protecting my co-workers,” said the worker, who is still awaiting the results and estimates it will cost $160 per day of work missed if they test negative. “Now I wish I just would’ve gone to work and not said anything.” 

A Trader Joe’s worker in California, who also asked not to be named because they didn’t want to risk their job, said the company lets workers accrue paid time off that they can use for vacations or sick days. But once that time is used up, employees often feel like they can’t afford to take unpaid days.

“I think many people now come to work sick or with what they call ‘allergies’ because they feel they have no other choice,” the worker said. 

Trader Joe’s offered hazard pay until last spring, and even paid time off if workers had COVID-related symptoms. But the worker said those benefits have ended. The company also no longer requires customers to wear masks in all of its stores. 

Other companies are similarly curtailing sick time that they offered earlier in the pandemic. Kroger, the country’s biggest traditional grocery chain, is ending some benefits for unvaccinated salaried workers in an attempt to compel more of them to get the jab as COVID-19 cases rise again. Unvaccinated workers enrolled in Kroger’s health care plan will no longer be eligible to receive up to two weeks paid emergency leave if they become infected — a policy that was put into place last year when vaccines were unavailable.

Meanwhile, Walmart, the nation’s largest retailer, is slashing pandemic-related paid leave in half — from two weeks to one — after the Centers for Disease Control and Prevention reduced isolation requirements for people who don’t have symptoms after they test positive. 

Workers have received some relief from a growing number of states. In the last decade, 14 states and the District of Columbia have passed laws or ballot measures requiring employers to provide paid sick leave, according to the National Conference of State Legislatures.

On the federal front, however, the movement has stalled. Congress passed a law in the spring of 2020 requiring most employers to provide paid sick leave for employees with COVID-related illnesses. But the requirement expired on Dec. 31 of that same year. Congress later extended tax credits for employers who voluntarily provide paid sick leave, but the extension lapsed at the end of September, according to the U.S. Department of Labor. 

In November, the U.S. House passed a version of President Joe Biden’s Build Back Better plan that would require employers to provide 20 days of paid leave for employees who are sick or caring for a family member. But the fate of that bill is uncertain in the Senate. 

“We can’t do a patchwork sort of thing. It has to be holistic. It has to be meaningful,” said Josephine Kalipeni, executive director at Family Values @ Work, a national network of 27 state and local coalitions helping to advocate for such policies as paid sick days. 

The U.S. is one of only 11 countries worldwide without any federal mandate for paid sick leave, according to a 2020 study by the World Policy Analysis Center at the University of California, Los Angeles. 

On the flipside are small business owners like Dawn Crawley, CEO of House Cleaning Heroes, who can’t afford to pay workers when they are out sick. But Crawley is trying to help in other ways. She recently drove one cleaner who didn’t have a car to a nearby testing site. She later bought the cleaner some medicine, orange juice and oranges.

“If they are out, I try to give them money but at the same time my company has got to survive,” Crawley said. ″If the company goes under, no one has work.” 

Even when paid sick leave is available, workers aren’t always made aware of it. 

Ingrid Vilorio, who works at a Jack in the Box restaurant in Castro Valley, California, started feeling sick last March and soon tested positive for COVID. Vilorio alerted a supervisor, who didn’t tell her she was eligible for paid sick leave — as well as supplemental COVID leave — under California law. 

Vilorio said her doctor told her to take 15 days off, but she decided to take just 10 because she had bills to pay. Months later, a co-worker told Vilorio she was owed sick pay for the time she was off. Working through Fight for $15, a group that works to unionize fast food workers, Vilorio and her colleagues reported the restaurant to the county health department. Shortly after that, she was given back pay. 

But Vilorio, who speaks Spanish, said through a translator that problems persist. Workers are still getting sick, she said, and are often afraid to speak up. 

“Without our health, we can’t work,” she said. “We’re told that we’re front line workers, but we’re not treated like it.” 
…

At the start of 2022 most measures show the U.S. economy is booming, with an unemployment rate that is approaching record lows and a demand for goods that has imports from the rest of the world surging.

On Friday, the Labor Department announced that the unemployment rate had fallen to 3.9% in December, even as the economy produced a smaller-than-expected increase of 199,000 new jobs. The report came a day after the Commerce Department announced that U.S. imports in November had increased by 4.6% over the previous month to $304.4 billion.

The rising level of imports contributed to a trade deficit of $80.2 billion for the month, which is close to the record high of $81.4 billion set in September. While a large trade deficit is seen as a negative by many, particularly former President Donald Trump, who went to great lengths to close the gap between imports and exports, economists say it points to a U.S. economy that is leading the global recovery from the pandemic-induced recession.

“When we do better than everybody else, we get a bigger trade deficit,” said economist Gary Hufbauer, a senior fellow with the Peterson Institute for International Economics.

US as economic engine

It’s a popular misconception that a trade deficit is a sign of bad economic times in the United States, Hufbauer told VOA. “Not at all. It’s an indicator of great times in the U.S., relative to other countries. And that’s exactly where we are. We’re doing very well, relative to other countries, so the dollar tends to be stronger, that tends to increase the trade deficit, because demand is greater.”

The benefits of a strong U.S. economy are felt around the world, as other countries find U.S. consumers eager to purchase their goods.

China, as usual, was the largest net beneficiary of the U.S. trade deficit, selling U.S. consumers $28.4 billion more than it purchased. The U.S. ran a significant trade deficit with other trade partners as well, including the European Union, at $19.4 billion; Mexico, at $11 billion; Germany, at $6.1 billion; and Canada, at $5.4 billion.

The U.S. runs a trade surplus with only a few partners. The largest is a $4.5 billion surplus with all of Central and South America. The only other surpluses of $1 billion or more are with Hong Kong, at $1.6 billion, and Brazil, at $1.0 billion.

Job growth continues

The monthly jobs report from the Department of Labor, released Friday, told a similar story of an economy that continues to demonstrate a strong recovery from the pandemic recession. The 199,000 figure for the month of December was lower than expected but contributed to an average of about 537,000 jobs per month over all of 2021.

All told, the unemployment rate fell from 6.4% at the beginning of the year to 3.9% in December.

Not all of the decline in unemployment can be attributed to job growth. Millions of American workers dropped out of the labor force, largely as a result of the pandemic. That means that even though the unemployment rate is low, there are still about 3.6 million fewer workers in the U.S. than there were in the months prior to the beginning of the pandemic.

“We still have aways to go in terms of absorbing the labor force, and people who’ve left the labor force, as well as population growth, but it’s certainly a positive sign,” said Elise Gould, senior economist with the Economic Policy Institute, a Washington think tank.

On a more sobering note, the report revealed that when it comes to employment, the economic recovery has not been evenly distributed. From November to December, the unemployment rate among Black Americans rose from 6.1% to 6.5%. The problem is particularly acute among Black women, who face an unemployment rate of 5.6%, double the rate of white women.

Omicron is wild card

What the most recent economic data cannot yet tell us is the degree to which the surging omicron variant of the coronavirus has had on U.S. employment. The Labor Department uses a “reference week” each month when calculating job numbers, and the reference week in December was unusually early, encompassing Dec. 5-11, before the omicron surge began in earnest.

“Most of it happened in the second half of the month,” Gould told VOA. “So, it’s really not being reflected here at all. On February 4, when the January data comes out, I’m sure we will see a pretty big impact — hopefully a short-lived one — but probably a significant impact on the labor market.” 

 
…

The European Union is under increasing pressure to further ease rules on airport take-off and landing slots to cut the number of “ghost flights” airlines are running to retain them.

Carriers say the requirement for them to use 50% of their slots — down from 80% in pre-pandemic days — or lose them is forcing them to operate empty or half-empty flights.

A sluggish return to air travel, as travelers shrink away from the omicron COVID variant and quickly changing rules for passengers, is dragging out the practice longer than they planned.

Belgium’s Brussels Airlines, for instance, says it will have to operate 3,000 under-capacity flights up to the end of March.

Its parent company Lufthansa warned last month it expected it would have to run 18,000 “pointless flights” over the European winter.

Belgium’s transport minister, Georges Gilkinet, has written to the European Commission urging it to loosen the slot rules, arguing the consequences run counter to the EU’s carbon-neutral ambitions.

The current reduced quotas were introduced in March last year in a nod to the hardship airlines faced as COVID washed over Europe for a second year running, shriveling passenger numbers.

In December, the commission said the 50% threshold would be raised to 64% for this year’s April-to-November summer flight season.

“Despite our urgings for more flexibility at the time, the EU approved a 50%-use rule for every flight schedule/frequency held for the winter. This has clearly been unrealistic in the EU this winter against the backdrop of the current crisis,” a spokesperson for the International Air Transport Association (IATA) told AFP.

He said the commission needed to show more “flexibility … given the significant drop in passengers and impact of omicron numbers on crewing planned schedules.”

But a commission spokesperson on Wednesday said the EU executive believed “the overall reduced consumer demand… is already reflected in a much-reduced rate of 50% compared to the usual 80%-use rate rule.”

The spokesperson, Daniel Ferrie, said: “The Commission expects that operated flights follow consumer demand and offer much needed continued air connectivity to citizens.” 

 
…

U.S. employers added 199,000 new jobs in December, 50,000 fewer than November, the Labor Department reported Friday, as business continue to struggle to fill vacancies due to American workers’ reluctance to return to the workforce during the ongoing coronavirus pandemic.

Despite the hiring slowdown, December’s jobless rate fell to a healthy 3.9% — a 22-month low — from November’s 4.2%.

December’s modest jobs gains belie the fact that 2021 was one of the best years for U.S. workers in decades, even though the pandemic caused the previous year to be one of the job market’s worst since the government began tracking hiring in 1939.

A monthly average of 537,000 jobs were added to the economy in 2021, the Labor Department said Friday, and a record 6.4 million jobs were created”America is back to work,” President Biden declared Friday before reporters at the White House. “The increase in Americans joining the labor force was the fastest this year of any year since 1996.”

Companies posted a record high number of job vacancies in 2021 and offered sharply higher pay to try to attract and retain employees, a record number of whom quit their jobs in search of higher-quality positions.

Biden said U.S. workers saw their wages increase last year by nearly 16%, “the highest in history.”

“Wage gains for all workers who are not supervisors went up more in 2021 than any year in four decades. There’s been a lot of press coverage of people quitting their jobs,” Biden said. “Well, today’s report tells you why: Americans are moving up to better jobs with better pay, with better benefits. That’s why they’re quitting their jobs.”

December’s report reflects the state of the economy early in the month, before the highly contagious omicron variant sickened millions of people in the U.S., forcing the cancellation of thousands of commercial flights and leading to reduced traffic at bars and restaurants and some school closures.

Many economists believe job growth may slow in January and possibly in February because of the omicron outbreak, which has forced millions of sick workers to quarantine at home, potentially disrupting employers, including hospitals, airlines and ski resorts.

Some information for this report came from The Associated Press and Reuters.
…

First-time claims for U.S. unemployment compensation remained near a five-decade- low level last week, with employers retaining their workers and searching for more as the United States continues its rapid economic recovery from the coronavirus pandemic.

The Labor Department said Thursday that 207,000 jobless workers made first-time claims for unemployment compensation, up 7,000 from the revised figure of the week before. The weekly total of new claims has hovered around 200,000, for a month now.

Even with the increase in claims last week, the figures from the last several weeks were well below the 256,000 total in mid-March 2020, when the pandemic first swept into the United States and employers started laying off workers by the hundreds of thousands.

The diminished number of claims for unemployment benefits, down from a 2021 high of 900,000 in one week last January, shows that many employers are hanging on to their workers, even as millions have quit jobs to move to other companies offering higher pay and more benefits.

Many employers are looking for more workers, despite about 6.9 million workers remaining unemployed in the United States.

At the end of November, there were 10.4 million job openings in the U.S., but the skills of available workers often do not match what employers want, or the job openings are not where the unemployed live. In addition, many of the available jobs are low-wage service positions that the jobless are shunning.

U.S. employers added only 210,000 new jobs in November, a lower-than-expected figure. But overall, the U.S. has added 6.1 million jobs through the first 11 months of the year in a much quicker recovery than many economists had originally forecast a year ago. The unemployment rate dropped in November to 4.2%, a figure some experts had projected would not be reached until mid-2024.

Information on job growth in December and the unemployment rate is set for release on Friday.

The U.S. economic advance is occurring even as President Joe Biden and Washington policy makers, along with consumers, voice concerns about the biggest increase in consumer prices in nearly four decades – 6.8% at an annualized rate in November.

The surging inflation rate has pushed policy makers at the country’s central bank, the Federal Reserve, to move more quickly to end their asset purchases they had used to boost the country’s economic recovery, by March rather than in mid-2022 as originally planned.

On Wednesday, minutes of the Fed board’s most recent meeting showed that policy makers are eyeing a faster pace for raising the benchmark interest rate that they have kept at near zero percent since the pandemic started.

The Federal Reserve has said it could raise the rate, which influences the borrowing costs for loans made to businesses and consumers, by a quarter of a percentage point three times this year to tamp down inflationary pressures.
…

Royal Caribbean and Norwegian Cruise Line on Wednesday canceled sailings amid rising fears of omicron-related coronavirus infections that have dampened the nascent recovery of the pandemic-ravaged cruise industry.

Royal Caribbean Cruises Ltd. called off its Spectrum of the Seas cruise for January 6 after nine guests on its January 2 trip were identified as close contacts to a local Hong Kong COVID-19 case.

The contacts have tested negative, but the cruise ship will return to Kai Tak Cruise Terminal in Hong Kong on January 5 to test all guests and crew who must take a second test on January 8, the company said.

A similar decision to cancel trips by Norwegian Cruise Line Holdings Ltd. was made against the backdrop of the United States reporting the highest daily tally of any country for new coronavirus infections on Monday.

“Due to ongoing travel restrictions, we’ve had to modify a few sailings and unfortunately have had to cancel,” the 17-ship strong cruise operator said, with the embarkation dates for a few canceled sailings as far out as late April.

The cruise line, which requires everyone on board to be vaccinated, has also had to cut short a 12-day round trip from Miami on its Norwegian Pearl ship, citing “COVID-related circumstances.”

The U.S. Centers for Disease Control and Prevention had last week advised people to avoid cruise travel after launching investigations into onboard cases on more than 90 ships. The health agency starts a scrutiny if at least 0.1% of the guests test positive.

Norwegian Cruise said guests, who were supposed to embark on the canceled sailings on the eight ships, will receive full refunds and bonus credits for future bookings.

The omicron-led travel uncertainty is also causing guests on other sailings to cancel their bookings as a few ships have also had to skip ports due to onboard infections.

“We booked the cruise last March and assumed that things would be getting back to normal… by mid-December, I was mentally prepared for a change of plans,” said Holly Bromley, a consulting arborist, who canceled her booking on Norwegian Epic.

Meanwhile, bigger rival Carnival Corp. said it has not canceled any upcoming voyages, but its shares fell on Wednesday to close down 2.6%. Royal Caribbean lost 2.1% and Norwegian Cruise Line Holdings 3.6%.

 
…

U.S. human rights and trade groups on Tuesday blasted Tesla’s New Year’s Eve announcement that it had opened a showroom in Xinjiang, the latest foreign firm caught up in tensions related to the far-western Chinese region where detention camps have drawn heavy criticism. 

The Council on American-Islamic Relations, the largest U.S. Muslim advocacy organization, said Tesla was “supporting genocide.” Similar criticism came from a U.S. trade group, the Alliance for American Manufacturing, and U.S. senator Marco Rubio. 

“Elon Musk must close Tesla’s Xinjiang showroom,” the Council on American-Islamic Relations said on its official Twitter account, referring to Tesla’s founder. 

Xinjiang has become a significant point of conflict between Western governments and China in recent years. U.N. experts and rights groups estimate more than a million people, mainly Uyghurs and members of other Muslim minorities, have been detained in camps there. 

U.S. President Joe Biden and members of the U.S. Congress have pressed companies to distance themselves from Xinjiang. On December 23, Biden signed a bill barring imports of goods made in the region.

White House spokeswoman Jen Psaki said she would not comment directly on Tesla’s action, but generally the “private sector should oppose the PRC human rights abuses and genocide in Xinjiang,” she said. “The international community, including the public and private sectors, cannot look the other way when it comes to what is taking place in Xinjiang.” 

The United States has labeled China’s treatment of ethnic Uyghurs and other Muslims in Xinjiang as genocide. The United States and a few other countries plan a diplomatic boycott of the Beijing Winter Olympics in February over the issue. 

China has rejected accusations of forced labor or any other abuses there, saying that the camps provide vocational training and that companies should respect its policies. 

Tesla, the world’s most valuable automaker, announced on December 31 that it was opening a showroom in Xinjiang’s regional capital, Urumqi.

“On the last day of 2021 we meet in Xinjiang,” Tesla said in a post on its official Weibo account. 

Other U.S. and European automakers or their Chinese partners have showrooms in Urumqi, a city of some 3 million people. German automaker Volkswagen AG has a car factory near Urumqi.

Tesla did not immediately respond to a request for comment for this story. The carmaker operates a factory in Shanghai and is ramping up production there amid surging sales in China. China has also become an export hub for Teslas headed to Europe and other markets. 

Musk last year had to smooth over relations with Chinese authorities after Teslas were banned from government properties because of concerns that data collected by the vehicles’ cameras was being transferred out of China. 

A number of foreign firms in recent months have been tripped up by tensions between the West and China over Xinjiang, as they try to balance Western pressure with China’s importance as a market and supply base. 

“There is this tension between global investors and the Chinese government. The global investors want market access. And the Chinese government says the cost of access is acquiescence,” said Michael Dunne, chief executive of Zo Zo Go, an investment adviser that works with automotive and technology companies doing business in China. 

In July, Swedish fashion retailer H&M reported a 23% drop in local currency sales in China for its March-May quarter after it was hit by a consumer boycott in March for stating publicly that it did not source products from Xinjiang. 

Last month, U.S. chipmaker Intel faced similar calls after telling its suppliers not to source products or labor from Xinjiang, prompting it to apologize for “the trouble caused to our respected Chinese customers, partners and the public.” 

Although some have been trying to reduce their supply chain exposure to the region, especially as Washington bans imports such as Xinjiang cotton and blacklists Chinese companies that it says have aided Beijing’s policy there, many foreign brands operate stores there.

 
…

U.S. manufacturing activity slowed in December amid a cooling in demand for goods, but supply constraints are starting to ease and a measure of prices paid for inputs by factories fell by the most in a decade. 

The Institute for Supply Management (ISM) survey on Tuesday also suggested some improvement in labor supply, with a gauge of factory employment rising to an eight-month high. Still, Timothy Fiore, chair of the ISM manufacturing business survey committee, noted that “shortages of critical lowest-tier materials, high commodity prices and difficulties in transporting products continue to plague reliable consumption.” 

The survey does not fully capture the impact of the Omicron COVID-19 variant, which is rapidly spreading across the United States and abroad. Sky-rocketing infections could force workers to stay home and halt the tentative supply-chain progress. 

“There’s still a lot of ground to make up before supply chains fully normalize, but cooling prices and increased employment are positive signs,” said Will Compernolle, a senior economist at FHN Financial in New York. 

The ISM’s index of national factory activity fell to a reading of 58.7 last month, the lowest level since January 2021, from 61.1 in November. A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy. 

Economists polled by Reuters had forecast the index would fall to 60.1. 

All of the six biggest manufacturing industries — chemical products, fabricated metal products, computer and electronic products, food, transportation equipment, and petroleum and coal products — reported moderate-to-strong growth. 

Manufacturers of fabricated metal products expressed optimism that “we have reached the top of the hill to start down a gentle slope that lets us get back to something that resembles normal.” Their counterparts in the chemical products industry said the “gut feeling says it’s getting easier to source chemical raw materials.” 

Machinery makers reported that “costs for steel seem to be coming down some.” They also noted improvements in “performance by suppliers” and “on-time deliveries.” But transportation equipment manufacturers said capacity remained “limited due to the global chip shortage.” 

The ISM survey’s measure of supplier deliveries declined to a reading of 64.9 from 72.2 in November. A reading above 50% indicates slower deliveries to factories. 

The ISM’s Fiore said transportation networks, a harbinger of future supplier delivery performance, were still performing erratically, but there are signs of improvement. 

Raw materials have been in short supply as global economies rebounded from the coronavirus pandemic. Shortages have also been exacerbated by the shift in demand to goods from services early in the pandemic. Millions of workers needed to produce and move raw materials remain sidelined. 

U.S. stocks were trading mixed, with the Dow Jones Industrial Average and the S&P 500 index having hit fresh record highs earlier in the session. The dollar was flat against a basket of currencies. U.S. Treasury prices were mostly lower. 

Price gauge falls 

The nascent signs of improvement in supply chains suggest inflation at the factory gate could soon begin to subside. The survey’s measure of prices paid by manufacturers tumbled to 68.2 last month, the lowest level since November 2020, from 82.4 in November. The 14.2-point plunge was the biggest since October 2011. 

This supports the Federal Reserve’s long-held view that the current period of high inflation is transitory. Inflation is well above the U.S. central bank’s flexible 2% target. 

“The report is consistent with our expectation that inflation will hit an inflection point probably in the first quarter of this year,” said Tim Quinlan, a senior economist at Wells Fargo in Charlotte, North Carolina. 

The ISM survey’s forward-looking new orders sub-index fell to a still-high reading of 60.4 from 61.5 in November. With customer inventories remaining depressed, the slowdown in new order growth is likely to be temporary or limited. 

Factories hired more workers, but turnover rates remained high, a trend which manufacturers said started in August. 

Indeed, a separate report from the Labor Department on Tuesday showed a record 4.5 million Americans voluntarily quit their jobs in November, which will put pressure on businesses to raise wages to attract workers. 

“Replacing those workers is proving unusually challenging,” said Julia Pollak, chief economist at ZipRecruiter. “This is the tightest labor market ever.”

There were 10.6 million job openings at the end of November. The high number of vacancies meant there was a 0.65 unemployed person per job opening, an all-time low. Before the pandemic, there were normally about 2.3 unemployed people per job opening. 

The ISM’s measure of manufacturing employment rose to an eight-month high of 54.2 from 53.3 in November. This, together with very low first-time applications for unemployment benefits, supports the view that job growth accelerated in December. 

According to a preliminary Reuters survey of economists, nonfarm payrolls likely increased by 400,000 jobs in December after rising by 210,000 in November. The Labor Department is scheduled to publish December’s employment report on Friday. 

 
…

China’s economy will increasingly rely on state investment, high-tech development and domestic consumption – with less input from its past staple of export manufacturing – as it stands to overtake the United States in the coming decade, analysts predict. 

China’s GDP should grow 5.7% per year through 2025 and then 4.7% annually until 2030, British consultancy Centre for Economics and Business Research (CEBR) forecasts. Its forecast says that China, now the world’s second-largest economy, would overtake the No. 1-ranked U.S. economy by 2030. Credit insurance firm Euler Hermes made a similar forecast. 

Chinese leaders have pushed over the past decade to rely more on value-added services over traditional factory exports, state media have said.  The Sino-U.S. trade dispute and early 2020 workplace closures due to COVID-19 have added pressure on manufacturing. 

Reducing factory output in China, foreign multinationals have been expanding outside China, targeting places such as Vietnam to avoid rising wages and environmental compliance costs. By offshoring in multiple countries they hope to head off any repeat of China’s early 2020 COVID-19 lockdowns that shut down factories.

China’s economy totaled $15.92 trillion in 2020, and market research firm IHS Markit estimates that it reached $18 trillion last year on export manufacturing growth and capital for new projects. The U.S. economy reached about $23 trillion last year, the market research firm said.

State investment

The country that’s already known for fast economic growth over the past 20 years would see the state take more control over key sectors after intervening in several, including the internet, in 2021, economists expect.

“Beijing has the funds and the unfettered domestic political power to use China’s large public treasury to make strategic investments in the service of the leadership’s national and global objectives,” said Denny Roy, senior fellow at the East-West Center think tank in Honolulu.

China scored 2.98 in 2018, up from 2.45 eight years earlier and approaching about three times the world average, on the Organisation for Economic Co-operation Development policy forum’s Direct Control Over Enterprises index. 

That means the government’s direct control over enterprises “well exceeded the open economy average” and “reflects China’s increasing emphasis on the role of the state in the economy under Xi Jinping,” the think tank Atlantic Council says in its October report China Pathfinder: Annual Scorecard .

Growth in tech hardware

Chinese leaders will probably prioritize tech, especially hardware that does not require constant innovation, as a growth engine, economists say.

State intervention in the internet sector won’t hobble expansion in semiconductors and infrastructure software, said Zennon Kapron, founder and director of the Shanghai-based financial industry research firm Kapronasia.

“If the country does become self-sufficient in terms of technology and then is able to sell and export those products and services that are based on the technology, then that would be a huge bump to its economy, because [that] is a key driver certainly of the U.S. GDP now,” Kapron said.

The U.S. economy will keep growing but without spurts through 2030, Kapron predicts.

China has a “huge base of engineers,” albeit less creativity than it needs to foster the “zany ideas” that drive development of new technology, said Douglas McWilliams, founder and executive deputy chairman of CEBR.

Consumer spending

Domestic spending has driven most of China’s economic growth before 2021 as the country reduced its exposure to the world in view of the Sino-U.S. trade dispute, McKinsey & Co. says in its China consumer report 2021. Supply chains have “matured and localized, and its innovation capabilities were enhanced” in turn, McKinsey & Co says.

That trend is likely to continue despite hits to income under lockdowns during the first year of COVID-19, analysts say. China’s population exceeds that of the United States by 3.5 times, though American consumers are wealthier on average.

“In the past five years, domestic consumption has … become a more significant growth driver as China’s domestic consumer market has grown dramatically in size,” said Rajiv Biswas, Asia-Pacific chief economist with IHS Markit.

Beijing’s leadership “aims to create more than 11 million new urban jobs and expand domestic demand and effective investment,” the official Xinhua News Agency said in mid-2021. Those measures, it said, “are expected to put the economy firmly back to pre-pandemic vibrancy.”

What if China overtakes US economy?

Status as the world’s largest economy does not confer any automatic advantages over others, economists said, but countries dependent on the Chinese economy would take note.

“There is no gold medal or anything like that,” CEBR’s McWilliams told VOA. “But when you’ve got more money to spend, you do have the ability to influence things, and China will have that ability to influence things.”

China would be better placed, he said, to advance its Belt and Road Initiative, a 9-year-old effort aimed at building land and sea trade routes through Asia, Europe and Africa in the form of infrastructure projects and investments.

Officials in Beijing are already leveraging their economy in disputes with other countries, said Roy of the East-West Center. China vies with four Southeast Asian governments over maritime sovereignty, contests a group of islets with Japan and has gotten into territorial standoffs with India since 2017.

“The result of that expectation (China surpassing the United States economically) has been a bolder PRC (People’s Republic of China) foreign policy that seeks to settle regional disputes in China’s favor and to de-legitimize U.S. regional and global leadership under the assumption that China is destined to set the new rules of international relations,” Roy said. 
…

Global stocks began 2022 in bullish fashion, with major bourses notching records and Apple’s valuation briefly hitting $3 trillion as investors monitor the COVID-19 pandemic and looming central bank rate decisions. 

The CAC 40 index in Paris kicked off the rally with new intraday and closing records while Frankfurt’s DAX rose 0.9 percent in thin holiday trading. London and Tokyo were among global markets that were shuttered for holidays. 

On Wall Street, both the Dow and S&P 500 ended at records as indices pushed higher. 

Apple briefly climbed to $3 trillion in value, becoming the first U.S. company to hit that benchmark. The tech giant’s valuation later retreated, though its share price was 2.5 percent higher at the close. 

“Welcome to 2022, which is looking like 2021 so far for the equity market,” market analyst Patrick O’Hare at Briefing.com said. 

The market “looks as if it will keep riding the rails with the help of new inflows that are typically seen on the first trading day of a new month,” he added. 

Monday’s landmarks come on the heels of a series of all-time highs in December as markets continue to bet the latest surge in COVID-19 cases won’t derail economic growth. 

Comments from health experts characterizing the omicron variant as less lethal than earlier COVID-19 strains have boosted markets. 

A bigger question mark is the shift in monetary policy, with investors now betting that the Federal Reserve will raise interest rates later this year.

The yield on the 10-year U.S. Treasury note vaulted above 1.6 percent Monday, the latest indication of this expectation.

A note from Briefing.com said the rise in yields may also reflect “an improving perspective on the economy.” 

Oil prices

Elsewhere, oil prices finished a volatile session higher as eyes turn to the meeting of OPEC and other major producers on Tuesday. 

So far OPEC+ has resisted pressure by top oil-consuming nations, such as the United States, to more aggressively boost production.

The 23 members of OPEC+ are expected to continue to stay the course and modestly boost output at their monthly meeting to be held via videoconference. 

 
…

The United States will issue new rules and $1 billion in funding this year to support independent meat processors and ranchers as part of a plan to address a lack of “meaningful competition” in the meat sector, President Joe Biden said on Monday. 

The initiative comes amid rising concerns that a handful of big beef, pork and poultry companies have too much control over the American meat market, allowing them to dictate wholesale and retail pricing to profit at the expense of their suppliers and customers. 

“Capitalism without competition isn’t capitalism. It’s exploitation,” Biden said. “That’s what we’re seeing in meat and poultry industries now.” 

A recent White House analysis found that the top four meatpacker companies – Cargill, Tyson Foods Inc., JBS SA and National Beef Packing Co. – control between 55% and 85% of the market in the hog, cattle and chicken sectors. 

The Department of Agriculture (USDA) will spend the $1 billion from the American Rescue Plan to expand the independent meat processing sector, including funds for financing grants, guaranteed loans and worker training, said Agriculture Secretary Tom Vilsack, who was speaking at an event with Biden. 

USDA will also propose rules this year to strengthen enforcement of the Packers and Stockyards Act and to clarify the meaning of “Product of USA” meat labels, which domestic ranchers have said unfairly advantage multinational companies that raise cattle abroad and only slaughter in the United States. 

Attorney General Merrick Garland, also speaking at the event, said “too many industries have become too consolidated over time,” and that the antitrust division of the Department of Justice has been chronically underfunded. 

The Biden administration issued an executive order last year that advocated a whole of government approach to antitrust issues. 

A central concern in agriculture has been meat prices, which have risen at a time when the White House is fighting inflation. An analysis in December by the White House economic council found a 120% jump in the gross profits of four top meatpackers since the pandemic began. 

Reaction to plan

The meat industry has said the White House analysis was inaccurate and criticized the new plan. 

National Chicken Council President Mike Brown called the plan “a solution in search of a problem.” 

North American Meat Institute spokesperson Sarah Little said staffing plants remains the biggest issue for meatpackers and that the White House plan would not address it. 

“Our members of all sizes cannot operate at capacity because they struggle to employ a long-term stable workforce,” she said. “New capacity and expanded capacity created by the government will have the same problem.” 

Eric Deeble, policy director at the National Sustainable Agriculture Coalition, cheered the plan, calling it a “very positive step to ensure farmers and ranchers receive fair prices.” 

The anticipated rulemaking under the Packers and Stockyards Act “could have a significant impact,” said Peter Carstensen, emeritus professor of law at University of Wisconsin-Madison and former antitrust attorney at the Department of Justice. But he noted that investment in independent processing itself would not address market concentration. 

Austin Frerick, deputy director of the Thurman Arnold Project at Yale University, an antitrust research center, said the plan does not go far enough to tackle the power of the top meatpackers. 

“I do not believe this (plan) will meaningfully change the concentration numbers,” he said. 

 
…

U.S. premium electric vehicle maker Tesla said on Sunday it delivered nearly 1 million vehicles in 2021, almost twice as many as 2020, doing better than expected despite global supply challenges.

Tesla delivered more than 936,000 cars of all models in 2021, representing growth of 87.4% from the previous year. The manufacturer is thus doing much better than the objective announced last January, to increase its deliveries by 50% on average per year for several years.

The group, which chose to move its headquarters from Palo Alto (California) to Austin (Texas), sold 911,208 vehicles of its 3 and Y models, and 24,964 vehicles of its luxury S and X models.

In the fourth quarter alone, 308,600 cars were delivered, up 0.9% compared to the same quarter last year. Earlier in the year, in the second quarter, Tesla had crossed, for the first time, the threshold of 200,000 cars delivered (201,250).

Tesla has managed to sidestep the global logistics issues that have plagued the entire auto industry. Elon Musk previously said he was able to get around much of the semiconductor shortage by using new chip designs and rewriting software accordingly. 

In October, Tesla was boosted by a mega-order of 100,000 electric vehicles from the rental company Hertz, by the end of 2022. This announcement brought the automaker into the very select club of companies worth more than $1 trillion on the stock market.

The manufacturer is, however, in the crosshairs of the American road safety agency (NHTSA) for its controversial driver assistance system called “Autopilot.” 

The automaker has also agreed to update its software to prevent drivers from playing video games on the car’s system while the car is in motion, after an investigation was opened.
…

Egypt’s Suez Canal Authority said the key waterway netted record revenues last year, despite the coronavirus pandemic and a six-day blockage by a giant cargo ship, the Ever Given.

Connecting the Red Sea and the Mediterranean, the canal accounts for roughly 10% of global maritime trade and is a source of much-needed foreign currency for Egypt.

In 2021, some 1.27 billion tons of cargo were shipped through the canal, earning $6.3 billion (5.5 billion euros) in transit fees, 13% more than the previous year and the highest figures ever recorded, Suez Canal Authority (SCA) chief Osama Rabie said.

The number of ships using the canal rose from 18,830 in 2020 to 20,694 in 2021, or more than 56 ships per day, the SCA said in a statement.

In March, the Ever Given super tanker — a behemoth with deadweight tonnage of 199,000 — got stuck diagonally across the canal during a sandstorm.

A round-the-clock salvage operation took six days to dislodge it and one employee of the SCA died during the rescue operation. Egypt lost some $12 million to $15 million each day during the canal closure, according to the SCA.

The Ever Given safely returned back through the canal without a hitch in August.

In November, the SCA said it will hike transit tolls by six percent starting in 2022, but tourist vessels and liquefied natural gas carriers are to be exempted.
…