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María Ribeiro da Silva, 64, spent a hot afternoon hawking a new contraption to acquaintances and friends who passed by her small grocery store on the outskirts of São Paulo, Brazil’s largest city and home to more than 12 million people.

Everyone who passed by received the same invitation from her: “Come, come and see my stove. It’s beautiful. I made it.”

Each guest received the same explanation: “I built a real wood fire oven, with a chimney and everything. No more smoke, no more heat.”

It had been almost 50 years since Ribeiro da Silva cooked with firewood. Since she arrived in São Paulo in 1974, fleeing drought, hunger and poverty in the impoverished northeast region of Brazil, she has only cooked with gas.

“I spent my childhood using firewood. We didn’t have gas. We didn’t have the money to have a real stove. But since I arrived in Sao Paulo … wood was in the past,” she told VOA. 

But with the Brazilian economy worsening, and the devastating effects of the COVID-19 pandemic on the poorest parts of the population, firewood has become the only option for millions of families like Ribeiro da Silvas’. 

It was a slow and gradual process for Ribeiro da Silva. First, firewood was only used in extreme cases when the gas ran out and there was not enough money to replace it. But when she lost her job as a cleaner at a company in downtown São Paulo six months ago, firewood became the primary fuel to cook food.

“Now, I only use the gas stove for simple things like making coffee or heating the food I cooked on firewood. I don’t have any more money to buy gas. The price is too high. It’s impossible,” she said. 

Skyrocketing fuel prices

According to data from the Brazilian Institute of Geography and Statistics, at least 25% of the Brazilian population is using wood as their primary cooking source.

This was before the onset of the COVID-19 pandemic.

“Due to the pandemic, the Brazilian Statistical Institute stopped carrying out quarterly in-person surveys, so we don’t have data for 2020 and 2021,” said Adriana Gioda, a professor in the department of chemistry at Pontifical Catholic University of Rio de Janeiro and a leading researcher on firewood consumption by Brazilian families. 

“But since 2016, when the federal government cut subsidies for residential gas and tied the fuel price policy to the international prices, there has been a steady growth in the use of firewood to make food,” she told VOA. 

Fuel prices have been rising steadily over the past five years but have skyrocketed since President Jair Bolsonaro took office in 2019. He promised not to interfere with the country’s state oil company and allow fuel prices to follow the international market.

This year alone, the price of residential gas rose by an average of 35%. Liquefied petroleum gas is the primary fuel for food production in Brazil, and its cost is linked directly to the price of the oil barrels.

‘Back in time’ 

“In the interior of Brazil, in rural and more isolated areas, using firewood is a tradition. But what impressed us most is that the use of wood is advancing precisely in the most urban areas, in large Brazilian cities, such as Rio de Janeiro and São Paulo,” Gioda said. 

And it is rising in areas such as Jardim Marajoara, a poor neighborhood of migrants from the northeast region of Brazil on Sao Paulo’s outskirts, where Ribeiro da Silva lives. It is in these regions that the poorest and those most affected by the economic crisis are concentrated.

Juarez Viana, a bus driver who also lost his job during the pandemic, has turned to firewood to cook. He, like Ribeiro da Silva, lives in a suburb of São Paulo that is sprawling into the last green areas of the city. Once a week, he crosses the street and enters a small forest to fetch wood.

“It’s hard work, and it seems like I’ve gone back in time,” said Viana, who is also a migrant from the Brazilian northeast. At 49, he remembers cooking with wood as a child. “But it’s worth it. We do not have more money to buy gas. The price is out of control. I’ve never seen anything like this.”

“We are going back in time, going back at least half a century,” said pulmonologist Elie Fiss, a research director at Hospital Alemão Oswaldo Cruz. “Since the 1960s, we no longer saw respiratory problems related to the use of firewood for cooking. But with so many people going back to the firewood, this is a problem that will soon return to hospitals.”

 
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Marco Metzler of Switzerland gets 2,000 new followers a day on LinkedIn, all watching to see what will happen to his money. Metzler invested $50,000 last month in the offshore bonds of real estate developer China Evergrande Group to see if he would get any returns. The former Fitch Ratings analyst is not expecting much. He’s out to prove a point about China’s troubled property sector by chronicling the fate of his investment on social media. 

“I was concerned about what was going on, and from my past I’m able to read rating reports and also to see what’s going on in the world in economics, and I felt obligated to speak out to the world and to warn about that situation,” Metzler told VOA. “We didn’t invest to get the money back, so I’m fully aware this will be lost.” 

Evergrande has struggled since last year, when the Chinese government began clamping down on the country’s property sector to rein in excessive debt and cap speculation.

Towering apartment blocks today extend far into the suburbs of major Chinese cities, but many flats are unoccupied, owned instead by absentee speculators and their banks. Evergrande Group, one of China’s biggest property developers by revenue, is now selling assets and may be staring down a massive restructuring to ease debt. 

Companies or governments that invest in offshore bonds, and individuals who trade stocks listed outside mainland China and its $15.42 trillion economy, are coming to terms — albeit more quietly than Metzler — with the Chinese property crisis of 2021. These troubles are threatening bond returns, lowering some stock prices and could erode at least a quarter of the world’s second largest economy. 

“I don’t think anyone debates the importance of the real estate market on the Chinese economy,” said James Macdonald, head of the property services firm Savills Research in Shanghai, who estimates real estate at 25% to 30% of China’s economy. 

“If we do see a significant slowdown in the real estate market, it will have an impact in terms of domestic economic growth rates, and that could have a knock-on effect in terms of global economy,” Macdonald said. 

As many analysts have noted, any major economic shocks that hit China, a country closely tied to the global manufacturing supply chain, and whose massive consumer base importers and exporters rely on, are inevitably felt around the world. 

Property crisis: Evergrande and beyond 

Evergrande is a bellwether firm that is more than $300 billion in debt. Hong Kong-listed shares in Evergrande have tumbled since February, though the developer averted default in October by paying interest on an overseas bond. 

Another Chinese development giant, Kaisa Group Holdings, faces limited funding access and uncertainty over refinancing a “significant amount” of U.S.-dollar bond payments into next year “in light of ongoing capital-market volatility,” Fitch said in an e-mailed news release last month. 

Smaller property developers are likely to rattle bond markets outside China because they are “less sound” than bigger ones, said Lillian Li, a vice president-senior credit officer at the Moody’s ratings service. 

“We see that the offshore bond market has actually shown larger volatility than the domestic market in front of these regulatory crackdowns, including in the property sector,” Li said. 

The Hang Seng Properties Index in Hong Kong, where foreigners are allowed to trade shares of Chinese companies, has lost about 1.2% year to date. 

Municipal officials in some cities capped home purchase prices in September to deter speculators, further hobbling property momentum in China. The domestic property market could shrink by half a percent in 2022, Li said. Last month, prices for new as well as resale homes fell amid a fall in construction starts. 

What happens next 

Evergrande has offered its investors cash payment by installments as well as putting forth actual structures as repayment assets, the state-run China Daily news website says. 

Central government officials hope to contain property speculation and leave property for people to occupy, the official Xinhua News Agency reports. 

About $52 billion in Chinese property bonds will mature next year and $44 billion the following year, said Henry Chin, Asia Pacific research head with the real estate services firm CBRE. Other bond issuers will default, he forecasts. 

No offshore investors want the bonds now, said Liang Kuo-yuan, president of the Taipei-based Yuanta-Polaris Research Institute, though he believes Taiwanese insurers and pension funds have invested in the past. 

“Taiwan’s insurers more or less will buy high-yield and high-risk investment products, because the interest rates on policies they’ve sold in the past are too high,” Liang said. 

Evergrande was once seen as the epitome of a Chinese property mainland market, Liang added. China’s real estate sector, the world’s largest, grew briskly from 2010 to 2018, says investment bank J.P. Morgan. 

But not all is lost, some analysts say. 

Investors in private equity for distressed debt could get a lift from China’s property spillover if companies look for new ways to repay debt, said Chin of CBRE. Some stock-buying vehicles have made money, too. Shares of the TAO-Invesco China Real Estate exchange-traded fund of Chinese stocks including Evergrande, for example, has grown 65% year to date. 

But back in Switzerland, Metzler wrote on LinkedIn that Evergrande had “officially defaulted on overdue interest payments” and that his current company, DMSA, would file a bankruptcy case against the group. He calls China’s property market “a first domino” in a broader financial and economic crisis. 

“The old system needs to come down before a new system will be established,” he told VOA. 
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U.S. President Joe Biden is headed Wednesday to the country’s auto-manufacturing hub in Detroit, Michigan, to promote the sale of all-electric vehicles in the future even as motorists are facing sharply higher gasoline prices to fuel the cars they almost uniformly drive now.

Biden, on a victory lap to highlight provisions of the trillion-dollar infrastructure package he championed and signed into law on Monday, plans to visit an electric vehicle assembly plant at General Motors, the biggest U.S. car maker that says it plans to go all-electric by 2035.

The president’s infrastructure package calls for construction of $7.5 billion worth of electric vehicle charging stations across the country — perhaps a half-million chargers — but Americans have been slow to embrace the purchase of electric vehicles. Last year, only 1.7% of vehicles sold in the U.S. were battery-powered, one-third of the Chinese market, and far behind world-leading Norway, where nearly three-fourths of vehicles sold are plug-in.

Ahead of his visit to Detroit, the White House said that with Biden’s approval of the infrastructure legislation, he “has sent a clear signal to the rest of the world that America can lead this race as we choose to build these electric vehicles and batteries in the United States and advance our national security by strengthening our domestic supply chains.”

The White House said the legislation will boost the creation of high-paying, union jobs, while two key Biden advisers, Brian Deese, director of the National Economic Council, and Jake Sullivan, national security adviser, said in an opinion column in the Detroit Free Press that the infrastructure legislation will help America regain its global competitiveness. 

“Nobody knows this better than Detroit, which has been at the heart of American industrial strategy in the past and now can again,” the Biden advisers said.

But currently, many more electric vehicles are sold in Europe and China because of financial incentives for consumers and government regulations. Surveys show there are about 1.3 million electric vehicles in use in the U.S. out of a world total of 7 million, but Biden has set a goal of 50% electric vehicle sales in the U.S. by 2030.

For the moment, however, many U.S. motorists are concerned about spiraling gasoline prices they are paying at service stations, the highest since 2014. U.S. motorists are typically paying $3.30 a gallon (3.8 liters), $1.08 more than 12 months ago, pinching household budgets, along with higher food prices.

But some Republican opponents of Biden, even some who voted for the infrastructure package like Senate Republican leader Mitch McConnell, have attacked Biden for being focused with electric vehicle technology at a time when Americans are faced with higher gasoline prices and natural gas price hikes to heat their homes in the winter months ahead.

“The Biden administration doesn’t have any strategic plan to snap its fingers and turn our massive country into some green utopia overnight,” McConnell said Tuesday.

“They just want to throw boatloads of government money at things like solar panels and electric vehicles and hope it all works out,” said McConnell, one of 19 Republican senators who voted in favor of the infrastructure bill, along with 13 Republicans in the House of Representatives.

Biden wants to provide more incentives to push American motorists to buy electric vehicles, calling for a $7,500 tax credit for those who buy electric vehicles through 2026 as part of his $1.85 trillion social safety net legislation that the House is planning to vote on later this week.
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The World Health Organization says Europe is once again the epicenter of the pandemic. As Henry Ridgwell reports, the latest wave of infections is casting a shadow over recent signs that European economies were rebounding.
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Treasury Secretary Janet Yellen told Congress Tuesday that she believed she would run out of maneuvering room to avoid the nation’s first-ever default soon after December 15. 

In a letter to congressional leaders, Yellen said that she believed Treasury could be left with insufficient resources to keep financing the government beyond December 15.

Yellen’s new date is 12 days later than the December 3 date she provided in a letter to Congress on October 18, after Congress had just passed a $480 billion increase in the debt limit days before as a stopgap measure. 

As she has done in the past, Yellen urged Congress to deal with the debt limit quickly to remove the possibility of a potential default on the nation’s obligations. 

“To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible,” Yellen wrote to congressional leaders. 

Yellen has repeatedly warned that failure to deal with the debt limit and allowing the government to default would be catastrophic and likely push the country into a recession. 

In her letter, Yellen said that the extra time reflected more up-to-date estimates of government revenues and spending and was impacted by the infrastructure bill that President Joe Biden signed into law Monday. That legislation requires the transfer by Treasury of $118 billion by December 15 into the Highway Trust Fund. 

Yellen said that while she had a “high degree of confidence she will be able to finance the U.S. government through Dec. 15” and complete the Highway Trust Fund transfer, there are scenarios where the government will be left with insufficient resources to finance operations beyond that date, she said. 

The need to raise or suspend the debt limit is just one of the budget issues facing Congress. Lawmakers must also approve a budget by December 3, when the current stopgap funding measures run out. Failure to do that would trigger a government shutdown. 

And Democrats are aiming to approve a $1.75 trillion measure to expand the social safety net and deal with climate change threats. Speaker Nancy Pelosi has said she hopes the House can pass this measure, which Republicans oppose, this week. It must also pass the Senate. 

 
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Lawmakers on Capitol Hill are renewing a push to pass legislation that would boost U.S. competition with China, amid rising concerns about the global supply chain.     

Senate Majority Leader Chuck Schumer said Tuesday the long-stalled U.S. Innovation and Competition Act (USICA) would be added to the National Defense Authorization Act (NDAA), the massive annual defense spending bill that needs to be passed by the end of the year.   

“A generation ago we used to produce about a third of the world’s chip supply – now fewer than 12% are made in America while other countries have lapped us, particularly China. This hurts American workers, American consumers and American national security. We should pass USICA this year – and it’s a bipartisan bill – so we can strengthen domestic chip production,” Schumer said Tuesday in remarks on the Senate floor.   

The USICA passed the U.S. Senate by a 68-32 vote in June but has yet to receive a vote in the U.S. House of Representatives. If passed, the measure would provide $190 billion in funding aimed at addressing areas of competition with China, including semiconductor production, technology security and training for the U.S. workforce. The bill would also provide for automatic sanctions on Chinese companies committing intellectual theft or cyberattacks in the United States. 

Sources told Reuters this week that China is actively lobbying against the legislation, sending letters to U.S. executives urging them to lobby Congress to alter or drop those bills.   

In a statement released in June when the USICA passed the U.S. Senate, the Foreign Affairs Committee of China’s National People’s Congress (NPC), said “The bill is full of Cold War mentality and ideological prejudice … It slanders China’s development path and its domestic and foreign policies.”   

The Biden administration has expressed support for the measures. But any version of the NDAA passed in the U.S. Senate would still have to be reconciled and passed in the U.S. House before heading to the White House to be signed into law.   

Addressing U.S. competition with China is one of the few areas of broad bipartisan support on Capitol Hill, although lawmakers differ on the approach. 

Following President Biden’s virtual meeting with Chinese President Xi Jinping this week, ranking Senate Foreign Relations Committee member Senator Jim Risch said in a statement, “While President Biden used this meeting to raise concerns regarding Beijing’s unfair trade and economic practices and the importance of transparency in global health, it’s past time for concrete results from Beijing. If President Xi actually wants a cooperative relationship with the United States, then he must stop threatening Taiwan.”   

Republican Senator Marco Rubio filed dozens of amendments to the NDAA addressing U.S. competition with China this week, including measures that would strengthen the U.S. relationship with Taiwan, provide funding for analysis of Chinese economic initiatives in developing African nations and clear the way for sanctions on Chinese individuals involved in reclaiming disputed areas in the South China Sea.   

There is strong bipartisan support in the U.S. Senate for another measure that would provide U.S. support for Taiwan’s admission into the Inter-American Development Bank as a non-borrowing member.   

“Despite Beijing’s reckless and hostile tactics to deny it participation on the world stage, Taiwan has proven a formative and effective partner across the Western hemisphere,” said Senate Foreign Relations Committee Chairman Bob Menendez in a bipartisan October 27 statement supporting the legislation.   

Earlier this week, six U.S. lawmakers visited Taiwan as part of a congressional visit to the island whose status has proved to be a constant irritant in U.S.-Chinese relations. China condemned the use of an American military aircraft for the visit.
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U.S. retail sales surged in October, the Commerce Department reported Tuesday, in a signal that at least at the start of the annual holiday shopping season, consumers were not scared off by sharply increasing prices.

Retail sales increased 1.7% last month, more than twice the advance of eight-tenths of a percent in September. Sales have now increased three straight months.

Brian Deese, director of the White House’s National Economic Council, touted the favorable report, saying, “In short, families have seen an increase in real disposable income, and stores and restaurants have the supplies to drive this recovery.”

He said that the retail sales report showed “that even as we work to address the real challenge that elevated inflation from supply chain bottlenecks poses for Americans’ pocketbooks and outlook, the economy is making progress.”

With U.S. consumer price inflation at a three-decade high, it is an open question whether robust consumer spending will continue during the holiday shopping season through the end of 2021.

The government reported last week that consumer prices increased at an annualized rate of 6.2% in October, with sharply higher prices for gasoline and food affecting consumers the most.

The Commerce Department said that October spending was up 4% at online retailers, along with big gains at electronics, appliance and hardware stores. Gas price increases pushed up the sales total at service stations by 3.9% while vehicles sales revenue increased 1.8%.

Aside from higher prices, U.S. consumers are facing shortages of many items they may want to buy.  

Several dozen container ships filled with consumer goods from Asia are anchored off the U.S. Pacific coast waiting for docking and unloading at California ports, a supply chain snarl that government officials are gradually unraveling but are far from fully resolving.
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Rising inflation in the U.S. may be putting the brakes on Democrats’ effort to push President Joe Biden’s signature package of climate and social spending measures through Congress before the end of the year, even though it’s not clear that the measures would add to rising prices. 

House Democrats are pushing for a vote on the package, known as the Build Back Better Act, in an effort to move it forward in advance of the Thanksgiving recess next week. Democratic leaders had hoped to secure a vote on the bill last week, but more moderate Democrats demanded a delay until the Congressional Budget Office (CBO) could complete its analysis of the bill’s expected effects on the federal budget. 

On Monday, the CBO said that its analysis would be completed by Friday of this week, clearing the way for a vote, so long as the agency finds that the bill fully offsets its spending with increased revenues, as Democrats have promised. 

Biden expressed hope Monday during a signing ceremony for a $1.2 trillion bipartisan infrastructure package that the bill would pass.

“I’m confident that the House will pass this bill, and then we’re going to have to pass it in the Senate,” he said in remarks delivered on the White House lawn. “It is fully paid for, it will reduce the deficit over the long term, according to leading economists … and again, no one earning less than $400,000 will pay a single penny more in federal taxes. Together, with the infrastructure bill, millions of lives will change for the better.” 

However, the bill may be facing trouble in the Senate, where West Virginia Senator Joe Manchin and Arizona Senator Kyrsten Sinema, both moderate Democrats, have expressed reservations about the $1.75 trillion package because they fear it might exacerbate price increases. 

If either of them were to vote against it, the package would fail, because the Democrats control only 50 of the 100 votes in the Senate and have to count on Vice President Kamala Harris to cast the deciding vote in the case of a tie. 

Last week, after the Labor Department announced that inflation for the fiscal year ending in October had reached a 30-year high of 6.2%, Manchin tweeted out a message that many in Washington read as a warning to his fellow Democrats. 

“By all accounts, the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse,” he wrote. “From the grocery store to the gas pump, Americans know the inflation tax is real and DC can no longer ignore the economic pain Americans feel every day.” 

However, it is far from clear that the Build Back Better agenda would be inflationary, despite Manchin’s and Sinema’s concerns or the assertions of Republicans in Congress. 

The bill would dedicate $555 billion to addressing climate change – money that would be spread out over a decade. It would also provide universal pre-K child care, paid family and medical leave, financial benefits to families with young children, and more. It would be paid for, among other things, by a 15% minimum tax on business profits. 

“Republicans are saying it’s highly inflationary in and of itself, and I don’t buy that,” Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, told VOA. “It’s not that big, when you think about how it’s spread out, and there are some tax increases that go along with it.” 

The White House has been touting a letter from 17 Nobel Prize-winning economists that said that the inflationary effects of the bill would be “negligible” over the medium term. However, the letter omitted the potential for near-term inflationary effects and was based on an early version of the bill in which tax increases figured much more prominently than they do in the current, smaller version. 

To some, the picture is less clear. 

“There are elements in the bill that I think should tend to relieve inflationary pressures, and there are elements in the bill that I think should tend to worsen inflationary pressures,” Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget, told VOA. “Analytically, I think it’s ambiguous, which is more powerful.” 

Goldwein said that he thinks the inflationary pressures might be marginally stronger but said, “I don’t think the bill is going to have a substantial effect either way. There’s a risk, because we are in a very high-inflation environment, and sometimes that last log you put in the fire is the one that causes it to spread. … But when you look at it as a whole, I don’t think it’s going to tend to push inflation up or down very much.” 

Biden has actually gone so far as to hint that the bill would help to improve the current high inflation being experienced by Americans.

Last week, for example, the president tweeted, “Congress has a tool at its disposal to lower costs for families right away: The Build Back Better Act. All we’ve got to do is pass it.” 

However, this is a bit of a two-step by the president. To the extent that the Build Back Better Act might reduce costs for American consumers, it would be doing so by having the government absorb some of the cost of things like child care and prescription drugs, not by reducing inflation in the near term. 

According to Gagnon of the Peterson Institute, “I don’t see that it would have an effect on near-term inflation.” 

 
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China’s output of coal increased to its highest level since at least March 2015 after authorities gave permission for mine expansions to boost supply and ease record prices. Chinese coal imports from Russia surged in September, but one of its traditional suppliers — Australia — remains frozen out of the lucrative trade because of diplomatic tensions.

China — the world’s leading consumer of coal — has an energy shortage triggered by strong demand from its manufacturers, industry and households. 

The government in Beijing is determined to avoid more power cuts. 

Since July, China has approved expansions at more than 150 coal mines, according to the National Development and Reform Commission. Figures from China’s National Bureau of Statistics showed domestic coal production exceeded 357 million tons in October, up from 334 million tons the previous month.

​Official customs data has also shown that China imported about 3.7 million tons of thermal coal from Russia — the main fuel for electricity generation — in September, up more than a quarter from August.

However, one of the world’s main coal producers — Australia — is noticeably absent from the list of nations shipping coal to China.

It was a prolific exporter of coal to China before an unofficial ban was imposed in late 2020 after Canberra supported calls for an international inquiry into the origins of COVID-19, the disease first detected in China. Beijing interpreted the move as criticism of its handling of the virus, and a range of trade restrictions were brought in.

China does have long term plans to slash its use of coal and fossil fuels. 

Sam Geall from China Dialogue, an environmental policy group, told the Australian Broadcasting Corp. that China’s consumption of coal will oscillate to reflect domestic political necessities. 

“There is room for hedging over the next five years that can allow kind of increased coal build up that would then need to be kind of ramped down again after 2025, and that speaks to this issue of the kind of push and pull that we see in the Chinese power sector with the recent black-outs and so on. It is difficult to just immediately, you know, turn the juggernaut around and there is a push and pull between different forces and different imperatives, including, you know, social stability, employment (and) keeping the lights on,” said Geall.

The increase in China’s coal production comes as India, supported by Beijing and other coal-dependent developing nations, brokered a last-minute amendment at the COP26 climate talks in Glasgow, Scotland. 

They managed to alter the final wording of the accord to “phase down” rather than “phase out” the use of coal. 
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Prices have gone up for a number of consumer products in the United States. President Joe Biden, whose poll numbers are slipping over concerns about how he is handling the economy, is pushing for the passage of his large social spending plan. Michelle Quinn reports.

Produced by: Mary Cieslak    
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U.S. President Joe Biden is hosting a ceremony Monday at the White House where he will sign a bipartisan $1 trillion infrastructure bill that earned final passage in Congress after months of negotiations. 

The legislation calls for massive spending across the country to address crumbling roads and bridges, improve rail service and expand public transportation. 

The White House said Monday’s signing event would include governors and mayors from both the Democratic and Republican parties, as well as leaders from labor unions and businesses.

The bill includes billions of dollars to address gaps in access to broadband internet, particularly for low-income households, rural areas and tribal communities. 

There are also programs to shore up the nation’s electricity grid, as well as its water and wastewater systems. Airports are also set to see improvements, and money is pledged for building electric vehicle charging stations and to purchase electric and hybrid school buses. 

The White House announced Sunday the selection of former New Orleans Mayor Mitch Landrieu to oversee the infrastructure plan. 

Biden and some of his Cabinet secretaries have already been holding events to highlight the benefits of the package. After signing the bill Monday, he is scheduled to head to the state of New Hampshire on Tuesday to visit a bridge listed among those badly in need of repair. On Wednesday he has an event scheduled at an electric car plant in Michigan. 

Some information for this report came from the Associated Press and Reuters. 
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The top White House economic adviser on Sunday acknowledged the pain for Americans of sharply rising consumer prices, saying that President Joe Biden remains open to the possibility of tapping the U.S. Strategic Petroleum Reserve to ease spiraling gasoline prices that motorists are paying at service stations.

“There’s no doubt inflation is high right now,” Brian Deese, director of the National Economic Council, told NBC’s “Meet the Press” show. “It’s affecting Americans’ pocketbooks. It’s affecting their outlook.”

U.S. consumer prices jumped at an annualized rate of 6.2% in October, the biggest increase since 1990, the government’s Labor Department reported last week.

Higher energy and food prices have affected consumers the most, with consumer spending accounting for 70% of the U.S. economy, the world’s biggest.

Fuel costs for motorists are up sharply over the last year, with motorists now paying $3.30 a gallon (3.8 liters), $1.08 more than a year ago, the highest average price since 2014. The cost of grocery bills has risen 5.3% over the last year, with beef prices increasing markedly, further pinching household budgets.

Deese offered no immediate solution for the higher consumer prices, but said economic forecasters expect the inflation rate to decrease in 2022.

He said “all options are on the table” to curb rising prices, including tapping the Strategic Petroleum Reserve, where the U.S. currently has 612 million barrels of oil stored in four salt caverns along the Gulf of Mexico coast. 

Some release of the reserve oil could be refined into gasoline for sale to motorists, which could in the short term ease gas prices at service station pumps. But U.S. presidents have only reluctantly tapped the reserve, instead holding it for use in the event of a possible true national emergency, such as a cutoff in Middle East and north Atlantic oil production.

The existing oil reserve is enough to replace more than half a year’s worth of U.S. crude net imports.

Deese said three things have to occur to improve U.S. economic growth and curb inflation.

”One, we have to finish the job on COVID,” he said, with more vaccinations to curb the spread of the coronavirus that causes the illness. “We have to return to a sense of economic normalcy by getting more workplaces COVID-free; getting more kids vaccinated so more parents feel comfortable going to work.”

But Biden’s mandate that 84 million U.S. workers be vaccinated at workplaces with 100 or more employees has been at least temporarily blocked by a U.S. appellate court pending further court hearings.

Secondly, Deese said, “We’ve got to address the supply chain issue” of consumer goods arriving into the U.S. from Asia, with 83 container ships currently anchored off the Pacific Coast waiting for docking and unloading.

He said the $1.2 trillion infrastructure legislation Biden is signing Monday will help ease transportation bottlenecks in the U.S., but that construction work does not occur overnight.

Lastly, he called for congressional passage of Biden’s nearly $2 trillion social safety legislation to provide more financial, educational and health care assistance to all but the wealthiest American families. The House of Representatives is planning to vote on the measure this week, but its fate in the Senate remains uncertain.

Despite the immediate inflationary pressures on American consumers and Biden’s sharply declining voter approval standing, Deese said the economy has sharply improved since Biden took office last January.

“When the president took office, we were facing an all-out economic crisis,” Deese said. “Eighteen million people were collecting unemployment benefits. Three thousand people a day were dying of COVID. And because of the actions the president has taken, we’re now seeing an economic recovery that most people didn’t think was possible then.”

“Economic growth in America is outstripping any other developed country,” Deese said. “And the unemployment rate has come down to 4.6%; that’s about two years faster than experts projected.”

But with higher consumer prices, the Democratic president’s Republican political foes are focusing on American pocketbooks as congressional elections halfway through Biden’s four-year presidential term loom in November of next year.

One Republican critic, Senator John Barrasso of Wyoming, told ABC’s “This Week” show, he would never have believed Biden would preside over the biggest increase in consumer prices in three decades.

But Barrasso blamed what he characterized as Biden’s “almost irreversibly bad” federal government spending choices, both for infrastructure and the pending social safety legislation. 

The infrastructure legislation was approved with both Republican and Democratic support, but no Republicans have voiced support for the social safety net measure, forcing Democrats to attempt to pass it with their own votes.
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The Covid-19 pandemic has changed the nature of homebuying in the United States, but one constant is that Black Americans do not have the same access to a home of their own.

Black purchasers made up just six percent of the total homebuyers this year — a figure that has changed little over the past two decades, a National Association of Realtors (NAR) report released Thursday said.

Pandemic dynamics have allowed many Americans to get caught up on student loans and build savings, since spending opportunities like travel and eating in restaurants were off limits.

As remote work became the norm, more buyers packed up and moved to be closer to family and friends rather than relocating for a job, according to NAR’s 2021 Profile of Home Buyers and Sellers.

However Black Americans are weighed down by student loan debt to a greater degree than their white counterparts, and less able to get help from family, the report said.

“Unfortunately, race hasn’t really changed much this year. We’re still seeing pretty consistent, low shares of minority homebuyers,” NAR’s Jessica Lautz told AFP in an interview.

While low interest rates made mortgages more accessible, the now-chronic shortage of homes for sale has driven prices higher and kept many first-time buyers out of the market, the data showed.

Even in the South, Blacks made up just nine percent of homebuyers in a region where their population in some states is more than double the 13 percent national average, the report said.

Prior NAR research shows white homeownership rates are 30 percentage points higher than those of Black buyers, who are more than twice as likely to have student loan debt and a higher amount, and are rejected for mortgages at more than twice the rate as white applicants.

And because they are less likely to own homes, they are not able to use proceeds from the sale of a home to finance a purchase.

Priced out

While the share of first-time buyers rose this year, it remains below the historic norm of 40 percent, said Lautz, NAR’s vice president of demographics and behavioral insights.

“We know that first-time homebuyers are struggling to enter into this housing market,” she said, adding they find it hard “to pull the money together and then to be able to compete with other buyers” who increasingly can pay all cash.

With historically low inventory — exacerbated by a shortage of workers and supply issues and tendency for builders to focus on large, expensive houses — sellers are getting full asking price and more for their homes, and a higher share of buyers can pay cash.

The median home price was $305,000, more than $30,000 higher than in 2020, according to the report.

President Joe Biden has made lowering home prices a plank of his Build Back Better bill under consideration in Congress, calling for $150 billion for “the single largest and most comprehensive investment in affordable housing in history.”

His plan would offer down payment assistance to help more buyers own their first home and build wealth, and focus on zoning reform to allow more construction.

Close to family

One of the biggest shifts during the pandemic has been the increase in demand for work-from-home opportunities as offices shut down.

“Home sellers are saying their number-one reason to sell is to get closer to friends and family,” Lautz said. “People really wanted their support system around them and needed it during the pandemic.”

Job relocation as the reason to move fell to seven percent from 11 percent.

She said she expects that trend to continue “as CEOs understand if they want to retain talent, they may need to allow more flexibility in working from home.”

Another trend is the dwindling share of homebuyers with children, which fell to 31 percent — the lowest on record, she said.

That shifts priorities, since those buyers will be less concerned about issues like schools or larger homes, which for cash-strapped buyers will “open up neighborhoods for them that would have been off limits if they had children in the home.”
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Although Australia seems likely to back Taiwan’s, rather than China’s bid, to join a major pan-Pacific trade bloc, Canberra must focus solely on their qualifications rather than link its decision to other issues, analysts say.

China and Taiwan are both lobbying for Australia’s backing of their inclusion in the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership, one of the largest free-trade areas in the world, which was signed in 2018.

Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam currently make up the CPTPP.

China’s courting of Australia’s support comes despite Beijing’s blocking of agricultural goods that have cost Australian exporters billions of dollars. It also coincides with a period of severely strained relations because of the new AUKUS security pact among Australia, the United States and Britain, which has infuriated Beijing. 

Any temptation to bargain with China to lift punitive sanctions against Australian wine, barley and lobster exports in exchange for championing its entry into the CPTPP risks rewarding Beijing’s trade coercion, according to an expert.

“Outright favoring China over Taiwan may help regain some favor in Beijing in the short run, but at what cost? Australia will only lose in the long run by horse-trading support for China in return for some loosening of the trade blockages imposed by Beijing,” Hugh Piper, a former strategic policy adviser in Australia’s Foreign Affairs and Trade Department, told VOA. 

“It sends an awful message to Beijing that it can extract concessions from Australia simply by restraining trade,” Piper said. 

Publicly endorsing Taiwan’s campaign for admission to the CPTPP could also backfire, he said.

“Australia should be cautiously supportive of Taiwan’s bid, but certainly no more enthusiastic than for any other prospective member,” Piper said. 

“Australia would lose whatever moral and rhetorical high ground it retains in its ongoing trade dispute with China if it was seen to be using the CPTPP as a vehicle for political retaliation,” he said. 

Taiwan is a significant regional economy and would be seen as a welcome addition to the cross-Pacific bloc, especially by Australia, which does not have a bilateral free trade agreement with the island, he said.  

Despite the absence of a bilateral Australia-Taiwan trade agreement, Taiwan is already a strong market for Australian exports. Taiwan was Australia’s 12th largest trading partner in 2020, worth $11.9 billion, and it was Australia’s ninth largest merchandise export market in 2020, worth $7.3 billion, according to Australia’s Department of Foreign Affairs and Trade. Major exports were coal, iron ore, natural gas, aluminum and copper.

“There’s certainly no need for Australia to dial up the rhetoric on Taiwan’s bid, publicly anyway. Australia’s focus should be on working intensely behind the scenes to convince other current members to look favorably on Taiwan’s bid, provided they can demonstrate that they meet the entry requirements,” he said.

Jennifer Hsu, a foreign policy research fellow at the Lowy Institute think tank, said Canberra has already indicated cautious support for Taiwan’s application.

“Trade Minister Dan Tehan has intimated that the Australian government and its representatives are seeking bilateral support [from other CPTPP member states] for Taiwan’s application to join the CPTPP,” Hsu told VOA. 

“So I think there is shifting perspectives, at least from the Australian government’s side, to see Taiwan as one of critical importance to the region and also to advancing Australia’s exports interests.”

While expanded tariff-free trade with Taiwan would not offset the losses from Chinese trade sanctions, it would open access to Taiwan’s technology products and provide new markets for Australia’s barley, lobster and wine.

Such a move chimes with Treasurer Josh Frydenberg’s public plug to Australian exporters to diversify and lessen their reliance on Chinese markets, saying in a public address, “It is no secret that China has recently sought to target Australia’s economy.”  

Supporting Taiwan’s admission into the trading bloc “is one demonstration of this process and this thinking,” Hsu said.

The bloc imposes entry requirements that include a commitment to workers’ rights, freedom of association, and a ban on forced labor.

Few believe that China would sign up to those commitments.   

China’s bid is “likely to come unstuck at the point of substantive commitments to market reforms that CPTPP membership demands,” Piper said. 

“Given [China’s] ongoing prioritization of state control over market liberalization under [President] Xi Jinping, the kind of reform required for the sake of a trade agreement seems unlikely to be prioritized over the desire for control over the economy. 

“That leads to the implication that China’s bid is more about strategy than economics: a move to further stymie Taiwan’s international space and voice.”

China will need to pull back on any reprisal language or behavior aimed at Australia while it seeks to join the pact, Hsu said.

“The Chinese government will articulate stronger and angrier words against Australia’s support for Taiwan’s application, but the Chinese government has to balance that with what it seeks from joining the trading bloc,” she said.

“How much more can China say about Australia without harming its application to join the trading bloc? That’s the framework one has to think about: how far will China push its language and economic coercion before it backfires?” she said.
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Agricultural commodities such as coffee, cotton and wheat faced sharp price swings this year as output was hit by extreme weather sparked partly by climate change. 

According to analysts, volatile weather conditions and temperatures have adversely impacted crop growth, harvest and supply in key exporters. 

“The weather has certainly created tightness in the (agricultural) markets,” Sucden analyst Geordie Wilkes told AFP. 

That has stoked prices of soft commodities at a time when global inflation is already soaring due to the post-pandemic demand recovery and supply-chain snarl-ups. 

Climate change is under the spotlight as global powers at the two-week COP26 summit in Glasgow attempt to reach agreement to slow the pace of global warming. 

Droughts and frost 

Brazil, the world’s biggest coffee producer and a major player in corn, was gripped in April by a severe drought, which sent prices briefly spiking on supply woes. 

Just three months later in July, the South American giant suffered harsh frosts that pushed coffee prices to multi-year peaks. 

Arabica coffee topped $2 a pound — the highest since 2014 — and still remains close to this level. 

Elsewhere, southwestern Canada and the northern plains in the United States faced a prolonged springtime drought that damaged wheat production. 

Wheat prices were ignited and still remain close to historic highs, with soft wheat trading at $300 per tonne on Euronext. 

Greater extremes 

Experts forecast the frequency of extreme weather events such as droughts, wildfires, floods and typhoons will simply accelerate. 

“The frequency of extreme weather events seen over (recent) years leads us to believe that these events will likely happen more often in the future and therefore agricultural commodity prices will remain elevated,” Rabobank analyst Carlos Mera told AFP. 

Wilkes agreed that the outlook was gloomy for soft commodity growers as weather patterns become “more volatile, more extreme.” 

Climate change, coupled with Amazon deforestation, was “changing weather patterns and increasing” the frequency of such extreme weather events, he noted. 

Volatility can also occur when investors find it difficult to anticipate prevailing weather conditions in key production areas. 

Market swings are likewise amplified by the uneven distribution of crops around the world — and the dependency on one country for certain crops, as is the case with arabica coffee in Brazil. 

Arabica, for example, is prone to volatility “because this is mainly grown on the highlands, where weather can fluctuate more strongly and crop losses can be more severe,” said Commerzbank analyst Carsten Fritsch. 

Brazil is also impacted by the El Nino phenomenon, a warming of surface ocean waters in the eastern Pacific that occurs every two to seven years and causes droughts in some areas and flooding in others. 

Domino effect 

Added to the picture, some agricultural commodities face a “domino effect” of indirect consequences due to harsh weather conditions elsewhere. 

For example, hurricanes in the U.S. Gulf of Mexico caused major damage to oil facilities in the summer, sparking a drop in crude supply and a rebound in oil prices. 

That prompted higher sugar prices because the commodity is used in the production of ethanol — a cheaper version of gasoline, or petrol. 

The cotton market meanwhile bounced because higher oil prices make it more expensive to produce synthetic fibers. 

Cotton prices currently stand at their highest levels for more than a decade. 

 
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President Joe Biden and his advisers appear to be nearing a decision on whether to reappoint Federal Reserve Board Chair Jerome Powell when his term ends in February.

But public outcry over persistently high inflation may have changed the terms of the discussion.

Biden is deciding as inflation climbs to levels not seen in three decades, with prices rising for various goods and services as well as necessities such as food and fuel. On Wednesday, the Labor Department reported that inflation in October jumped 6.2% from a year ago, a stunning leap after the Fed had spent nearly a decade unable to push inflation to 2%, its nominal target rate.

Last week, Powell and current Federal Reserve Board Governor Lael Brainard met individually with Biden in the White House, just days after Biden told reporters that he intends to make his plans for the Fed known “fairly quickly.”

With public approval of Biden’s job performance dropping, his party reeling from a gubernatorial election setback in Virginia in early November, and congressional Republicans hammering him for rising prices, Biden’s Fed appointment decision has taken on even greater weight.

Bank regulation on back burner

Since early this year, when speculation began over whether Biden would reappoint Powell, the clear alternative was for him to elevate Brainard to the job. But at the time, the focus of the debate appeared to be on their different approaches to banking regulation.

When people think of the Fed, they think mainly about its role in setting interest rates and controlling the money supply in the United States. However, the Fed also plays a major role in the regulation of some of the largest financial institutions in the country.

Powell, a Republican who was appointed to lead the Fed by former President Donald Trump, has taken what critics on the left view as an overly permissive stance when it comes to the regulation of large financial institutions.

Brainard, the only Democrat on the Fed board, is more aligned with left-leaning members of her party, such as U.S. Senator Elizabeth Warren of Massachusetts, in believing that stricter supervision is necessary to avoid a repeat of the financial crisis that crippled the U.S. economy between late 2007 and mid-2009.

Now, however, with inflation on the rise and the president and his party facing poor public approval ratings, tighter banking regulations may be a second-tier issue for Biden.

“If you want to look at the economy right now and have a ledger of things to worry about, the soundness and safety of the banking system is not at the top of that list,” Mark Hamrick, senior economic analyst for Bankrate.com, told VOA. “Over the long term, it should be toward the top of the list, but for now, banks are performing quite well. We haven’t had a major banking failure for quite some time.”

Inflation the key issue

People who pay attention to the Federal Reserve often categorize members of the board, and of the larger Federal Open Market Committee, which sets interest rates, as being either “hawkish” or “dovish.”

The hawks are policymakers who are sensitive to rising inflation and quick to raise interest rates to prevent inflation from getting out of control, even if it cools the economy to the point where not everyone seeking a job can find one.

Doves, by contrast, prioritize high rates of employment over low inflation, and they will vote to maintain low interest rates until the economy reaches what they consider “full employment.” This is not to say that doves will tolerate any level of inflation, but only that they do not mind if inflation slightly exceeds the Fed’s stated 2% target rate while jobs are still being created.

By any measure, both Powell and Brainard fall into the dovish category. As the U.S. economy has been recovering from the pandemic-induced recession last year, both have supported policies that have kept interest rates at near zero and have pumped huge amounts of money into the system, even as inflation began to rise.

Both have said that they believe the current wave of inflation is a transitory effect of the global economy trying to turn itself back on after the pandemic lockdowns. That stands in sharp contrast to many, such as former Treasury Secretary Lawrence Summers, who have been warning for months that inflation could surge out of control.

Powell, however, is largely seen as less of a dove than Brainard, and with Biden feeling the political pinch, that might tilt the balance in favor of Powell.

Relationship with Congress

Another factor in Powell’s favor is that at a time when the president’s relationship with Republicans in Congress is strained, the current chairman has a rapport with members from both sides of the aisle.

“Within Congress, Powell has built up a great amount of credibility with both sides, both Republicans and Democrats,” said Christopher Russo, a postgraduate research fellow at George Mason University’s Mercatus Center.

“In the pandemic, the Fed adopted a flexible average inflation target, meaning that they are going to run inflation above target after periods where it ran below target, and Powell has done a lot of work to explain the importance of that policy to skeptics in Congress,” Russo told VOA.

He added: “So, when we get to the current point in time, where inflation is running much higher than the inflation target, I think Powell’s credibility here would be an actual asset.”

Powell favored

Most experts have always considered Powell’s reappointment as chairman to be more likely than his replacement, especially as the job of vice chair for banking supervision is opening up, and placing Brainard there might partly placate the Warren wing of the president’s party.

Since the inflation numbers were announced on Wednesday, the odds of a Powell reappointment rose from 71% to 76% as of Friday afternoon on the political betting website PredictIt.

“I think that the politics of this become more complicated by burgeoning and more persistent inflation,” said Hamrick, of Bankrate.com. “And so what might have been seen as more of a competition six to 12 months ago has become less so.”
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Americans quit their jobs at a record pace for the second straight month in September, in many cases for more money elsewhere as companies bump up pay to fill job openings that are close to an all-time high. 

The Labor Department said Friday that 4.4 million people quit their jobs in September, or about 3% of the nation’s workforce. That’s up from 4.3 million in August and far above the pre-pandemic level of 3.6 million. There were 10.4 million job openings, down from 10.6 million in August, which was revised higher. 

The figures point to a historic level of turmoil in the job market as newly empowered workers quit jobs, often for higher pay or better working conditions. Incomes are rising, Americans are spending more, and the economy is growing; employers have ramped up hiring to keep pace. Rising inflation, however, is offsetting much of the pay gains for workers. 

Friday’s report follows last week’s jobs report, which showed that employers stepped up their hiring in October, adding 531,000 jobs, while the unemployment rate fell to 4.6%, from 4.8%. Hiring rebounded as the delta wave, which had restrained job gains in August and September, faded. 

It is typically perceived as a signal of worker confidence when people leave the jobs they hold. Most people quit for new positions. 

The number of available jobs has topped 10 million for four consecutive months. The record before the pandemic was 7.5 million. There were more job openings in September than the 7.7 million unemployed, illustrating the difficulties so many companies have had finding workers. 

In addition to the number of unemployed, there are about 5 million fewer people looking for jobs compared with pre-pandemic trends, making it much harder for employers to hire. Economists cite many reasons for that decline: Some are mothers unable to find or afford child care, while others are avoiding taking jobs out of fear of contracting COVID-19. Stimulus checks this year and in 2020, as well as extra unemployment aid that has since expired, have given some families more savings and enabled them to hold off from looking for work. 

Quitting has risen particularly sharply in industries that are mostly made up of in-person service jobs, such as restaurants, hotels, retail and in factories where people work in close proximity. That suggests that at least some people are quitting out of fear of COVID-19 and may be leaving the workforce. 

Goldman Sachs, in a research note Thursday, estimated that most of the 5 million were older Americans who decided to retire. Only about 1.7 million were aged 25 through 54, which economists consider prime working years. 

Goldman estimated that most of those people in their prime working years would return to work in the coming months, but that would still leave a much smaller workforce than before the pandemic. That could leave employers facing labor shortages for months or even years. 

Businesses in other countries are facing similar challenges, leading to pay gains and higher inflation in countries like Canada and the United Kingdom. 

Competition for U.S. workers is intense for retailers and delivery companies, particularly as they staff up for what is expected to be a healthy winter holiday shopping season. 

Online giant Amazon is hiring 125,000 permanent drivers and warehouse workers and is offering pay between $18 and $22 an hour. It’s also paying sign-on bonuses of up to $3,000. 

Seasonal hiring is also ramping up. Package delivery company UPS is seeking to add 100,000 workers to help with the crush of holiday orders and plans to make job offers to some applicants within 30 minutes.
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