Bank of England Joins US Fed in Avoiding Another Interest Rate Hike After Inflation Declines

The Bank of England has paused nearly two years of interest rate increases after a surprising fall in U.K. inflation eased concerns about the pace of price rises.

In a development Thursday that few predicted just two days ago, the central bank kept its main interest rate unchanged at a 15-year high of 5.25%. It comes to the relief of millions of homeowners who are facing higher mortgage rates. 

The decision was split, with four of the nine members of the Monetary Policy Committee voting for a hike.

Central banks worldwide appear to be near the end of an aggressive rate-hiking cycle meant to curb an outburst of inflation triggered by the bounceback from the COVID-19 pandemic and Russia’s war in Ukraine. The U.S. Federal Reserve left rates unchanged Wednesday.

Clearly influencing the bank’s decision was news Wednesday that inflation unexpectedly fell to 6.7% in August, its lowest level since Russia invaded Ukraine in February 2022.

Inflation, however, is still way above the bank’s target rate of 2% and higher than in any other Group of Seven major economy.

Higher interest rates, which cool the economy by making it more expensive to borrow, have contributed to bringing down inflation worldwide.

But for many homeowners, the pain has yet to hit. Unlike in the U.S., for example, most homeowners in Britain lock in mortgage rates for only a few years, so those whose deals expire soon know that they face much higher borrowing costs in light of the sharp rise in interest rates over the past couple of years.

Like other central banks around the world, the Bank of England has raised interest rates aggressively from near zero as it sought to counter price rises first stoked by supply chain issues during the coronavirus pandemic and then Russia’s invasion of Ukraine, which pushed up food and energy costs. U.K. inflation hit a peak of 11.1% in October 2022.

As inflation has eased, the hiking cycle looks to be nearing an end.

The Swiss National Bank joined the Fed in holding rates steady on Thursday, but in a busy day for central bank action in Europe, Sweden’s and Norway’s central banks pushed ahead with quarter-point hikes.

The European Central Bank, which sets interest rates for the 20 European Union countries that use the euro currency, last week hinted that its 10th straight hike could be its last. 

Fed Keeps Rates Unchanged, Signals Another Hike Later This Year

The Federal Reserve left its key interest rate unchanged Wednesday for the second time in its past three meetings, a sign that it’s moderating its fight against inflation as price pressures have eased. But Fed officials also signaled that they expect to raise rates once more this year.

Consumer inflation has dropped from a year-over-year peak of 9.1% in June 2022 to 3.7%. Yet it’s still well above the Fed’s 2% target, and its policymakers made clear Wednesday that they aren’t close to declaring victory over the worst bout of inflation in 40 years. The Fed’s latest decision left its benchmark rate at about 5.4%, the result of 11 rate hikes it unleashed beginning in March 2022.

The Fed’s hikes have significantly raised the costs of consumer and business loans. In fine-tuning its rate policies, the central bank is trying to guide the U.S. economy toward a tricky “soft landing” of cooling inflation without triggering a deep recession.

The Fed’s decisions Wednesday underscored that even while its policymakers approach a peak in their benchmark rate, they intend to keep it at or near its high for a prolonged period. Besides forecasting another hike by year’s end, Fed officials now envision keeping rates high deep into 2024.

They expect to cut interest rates just twice next year, fewer than the four rate cuts they had predicted in June. They predict that their key short-term rate will still be 5.1% at the end of 2024 — higher than it was from the 2008-2009 Great Recession until May of this year.

The policymakers’ inclination to keep rates high for an extended period suggests that they remain concerned that inflation might not be falling fast enough toward their 2% target. The job market and the economy have remained resilient, confounding expectations that the Fed’s series of hikes would cause widespread layoffs and a recession.

“The process of getting inflation sustainably down to 2% has a long way to go,” Chair Jerome Powell said at a news conference. “We’ve seen progress, and we welcome that, but we need to see more progress” before concluding that it’s appropriate to end the rate hikes.

At the same time, Powell said he feels confident that the end of the rate-hiking cycle is near: “We’re fairly close, we think, to where we need to get.”

Treasury yields moved sharply higher Wednesday after the Fed issued a statement after its latest policy meeting and updated its economic projections. The yield on the two-year Treasury note, which tends to track expectations of future Fed actions, rose from 5.04% to 5.11%.

In their new quarterly projections, the policymakers estimate that the economy will grow faster this year and next year than they had previously envisioned. They now foresee growth reaching 2.1% this year, up from a 1% forecast in June, and 1.5% next year, up from their previous 1.1% forecast.

Core inflation, which excludes volatile food and energy prices and is considered a good predictor of future trends, is now expected to fall to 3.7% by year’s end, better than the 3.9% forecast in June. Core inflation, under the Fed’s preferred measure, is now 4.2%.

The approach to rate increases the Fed is now taking reflects an awareness among the officials that the risks to the economy of raising rates too high is growing. Previously, they had focused more on the risks of not doing enough to slow inflation.

In generating sharply higher interest rates throughout the economy, the Fed has sought to slow borrowing — for houses, cars, home renovations, business investment and the like — to help ease spending, moderate the pace of growth and curb inflation.

Though clear progress on inflation has been achieved, gas prices have lurched higher again, reaching a national average of $3.88 a gallon as of Tuesday. Oil prices have surged more than 12% in just the past month.

And the economy is still expanding at a solid pace as Americans, buoyed by steady job growth and pay raises, have kept spending. Both trends could keep inflation and the Fed’s interest rates high enough and long enough to weaken household and corporate spending and the economy as a whole.

While overall inflation has declined, the costs of some services — from auto insurance and car repairs to veterinary services and hair salons — are still climbing faster than they were before the pandemic. Still, most recent data is pointing in the direction the Fed wants to see: Inflation in June and July, excluding volatile food and energy prices, posted its two lowest monthly readings in nearly two years.

China Eases Visa Requirements to Revive Tourism

After a strict COVID-19 lockdown that shattered its tourism industry between 2020 and 2022, China is trying to revive the market by making it easier for foreigners to visit the country.

Under a new set of visa application requirements announced this week, applicants only must report one year of travel history instead of five years, as previously required.

“The improvement involves seven major items and 15 sub-items, concerning mainly the applicants’ educational background, family information and previous travel history,” said Mao Ning, a spokesperson for China’s foreign ministry, at a press briefing on Wednesday.

In addition, until now, visa applicants had to report their entire educational background.  The new guidelines require only the highest degree achieved.

The changes are expected to shorten the time it takes to fill out and process visa applications.

“The foreign ministry will continue to facilitate people-to-people exchange between China and other countries and serve high-quality development and high-level opening up,” Mao said.

More than 65 million international visitors traveled to China in 2019, yielding the country nearly $900 billion in revenue, according to China’s Ministry of Culture and Tourism.

There has been no official data about foreign travelers visiting China from 2020 to 2022, when the country enforced a strict COVID-19 quarantine regime and shut all domestic and foreign travel.

Tourism revenue has reportedly dropped by more than 60% in the past three years.

Unlike other countries that top the list of most visited places in the world such as the United States, the United Kingdom and France, China does not allow visa-free entry to visitors from most countries.

Meanwhile, more Chinese are travelling abroad for leisure and education.

In 2019, China was reportedly the world’s largest outbound tourism market with Chinese visitors spending $127.5 billion on foreign travels.

Between January and May this year, 1 million Chinese tourists visited Thailand, where officials expect to welcome more than 5 million Chinese visitors this year, Reuters reported.

The number of Chinese visiting the United States dropped from 2.8 million in 2019 to 192,000 in 2021 during the height of COVID-19 restrictions. The number of Chinese visitors to the United States is expected to increase from 850,000 this year to nearly 1.4 million in 2024, according to the U.S. National Travel & Tourism Office.

Some material for this report was obtained from Reuters. 

MCC Awards Kenya $60 Million to Help Improve Urban Transport  

Kenyan President William Ruto has signed a $60 million dollar grant agreement with the U.S. Millennium Challenge Corporation on the sidelines of the U.N. General Assembly session in New York. The grant will help improve urban transport in Nairobi by concentrating on four projects, making the Kenya program the largest of its kind within MCC’s portfolio.

Kenyan President William Ruto lauded the new agreement with the U.S. foreign aid agency MCC, at the signing in New York City Tuesday evening where he is also attending the 78th session of this year’s U.N. General Assembly.

“There is a whole one million people who come in and out of Nairobi every day; that poses a very significant challenge on the transport infrastructure. Apart from the Matatu transport system, the mass bus transport system is a very important component,” he said.

Threshold grants help countries to reduce constraints to faster economic growth and increase transparency and accountability in the provision of public services.

Millennium Challenge Corporation CEO Alice Albright says this grant — the second one to Kenya since 2003 — will be the largest and most ambitious threshold agreement that MCC has signed in its 20-year history.

“We like to measure with all of our work, and in this case we estimate to about 4.3 million people could be helped by this threshold agreement,” she said.

James Gerard, MCC’s managing director for threshold programs, told VOA this program, which includes four projects, will help support the Kenyan government in improving transportation and land use planning in the capital, Nairobi.

“One, to help build the capacity of the Nairobi metropolitan area transport authority [NMATA] with their transportation planning needs,” he said. “Second project will focus on what we call, non-motorized transport, so helping citizens — particularly citizens of working class — who use non-motorized transport as well as informal forms of transport, such as Matatus.”

Matatus are privately owned public transport vehicles. Some are old and not in the best shape but often beautifully decorated with famous sayings and/or people. A vast majority of commuter trips in and out of Nairobi are taken using Matatus.

“The third project will focus on land use in and around certain areas of Nairobi trying to help urban planning around transportation hubs to better make use of that land. And finally, the fourth project is really to focus on helping finance future options around bus rapid transit in Nairobi and particularly looking at greener options to move citizens around the city perhaps using electric vehicles,” said Gerard.

Korir Sing’Oei, Kenya’s principal secretary for foreign affairs in the ministry of foreign and diaspora affairs, has been one of the lead negotiators for this grant. He told VOA it is exhilarating to finally get to this point.

“It’s a moment of pride for Kenya because eligibility for MCC programs financing is predicated on democratic governance, economic freedom and investment in people that is evident in a particular country. So, to have Kenya be eligible for this program under MCC represents an acknowledgement on the part of the U.S. that Kenya sits in a very big space in relations to these issues,” said Sing’Oei.

Additionally, he says this program will allow Kenya to build the necessary capacity to become eligible for a much bigger financing program under MCC known as the compact program, which could be worth around $800 million.

Report: Africa Steering Geopolitical Challenges with Resilience, Economic Opportunities

A leading global risk consultancy says that despite the impacts of the war in Ukraine, global inflation, climate and security challenges, Africa continues to find resilience. A new report by Control Risks and its economics consulting partner, Oxford Economics Africa, finds that as global tensions create disruptions, they are also providing many African governments significant political, economic, and security opportunities.

The research, released on Tuesday, examines how African countries, governments, and corporations navigate a world marked by global tension and competition for resources and alliances, particularly among China, Russia, and the United States.

Given the continent’s security measures and developing financial sector, the researchers focused on African states’ efforts to retain neutrality while under pressure to join with global geopolitical corporations.

Patricia Rodrigues, a Senior Analyst at Control Risks, a firm specializing in political, security, and integrity risks, said Africa is attracting investment from various countries vying for support and access to the continent’s economic opportunities.

“What we’ve seen from major geopolitical actors, be that the U.S., China, Russia, or the EU as a bloc, everybody’s increasingly viewing Africa as a place where they can entice to either align with them on key geopolitical or global affairs. And in doing so, there’s a lot of at least pledged investment that is being directed towards the continent. In addition to this, African governments are attempting to, I guess, play all sides, attempting to secure pledges of investment,” she said.

During the U.S.-Africa Summit in December, Washington committed to allocate $55 billion to Africa over the next three years, focusing on healthcare, trade, climate change, and women’s issues.

Recent reduced U.S. involvement in Africa has created opportunities for China, which has invested $10 billion in the continent from 2017 to 2022, and has also led to increased trade between Africa and Russia, growing from $9.9 billion in 2013 to $17.7 billion in 2021.

These three major global powers compete to secure access to Africa’s mineral resources, which are critical in advancing new technologies. Africa holds almost one-third of the world’s mineral reserves and eight and twelve percent of global gas and oil reserves.

Vincent Rouget is the head of Control Risks. He said the demand for African mineral wealth has also created the urge to industrialize in the continent.

“What we have seen in the last few months is more assertive moves by various countries to try to make sure that this surge in interest also benefits their economies. And we’re seeing what you could call a critical resource nationalism coming back in some economies, where we see an insistence on local processing, more stringent local content requirements and generally an attempt to integrate these critical mineral supply chains with a broader drive for industrialization,” he said.

In most African countries, natural capital accounts for between 30% to 50% of their overall wealth.

The continent loses $195 billion yearly of its natural capital due to illicit financial flows, illegal mining, logging, the illegal trade in wildlife, unregulated fishing and environmental damage.

Researchers say North African countries are positioning themselves as manufacturing destinations as Western countries are looking to disengage from China.

The head of Africa Macro at Oxford Economics Africa, Jacque Nel, said African economies will face challenges in an increasingly competitive global environment.

“We continue to see progress. It wasn’t a short-term boost to access to financial services that we’ve seen. We continue to see the expansion and access to financial services improve across the continent, which is really important because, secondly, this is a catalyst for broader economic growth. Access to financial services is required and supports economic growth in most, if not all, other sectors of the economy,” said Nel.

According to researchers, wars on the continent are receiving little attention from the international community, although it is affecting the continent and attracting external actors, such as Wagner and terror organizations. 

American Visitors Help Post-Pandemic Recovery of Britain’s Tourism Industry

Tourism industry watchers say one of the top overseas destinations for US travelers this summer was Britain, where Americans helped the recovery of the British tourism industry after the crisis caused by the COVID pandemic. Marcus Harton narrates this report from Umberto Aguiar in London. (Camera and Produced by Umberto Aguiar)

Nigeria, South Africa Leaders Look to Advance Economic Cooperation

The leaders of Nigeria and South Africa held talks Monday on the sidelines of the U.N. General Assembly in New York, with the goal of increasing cooperation, especially in mining and telecommunications.

Experts say more cooperation between Africa’s two largest economies in line with the African Continental Free Trade Agreement would boost growth and development across the continent.

A spokesperson for Nigerian President Bola Tinubu said Tinubu’s discussion with South African President Cyril Ramaphosa was the first meeting the Nigerian leader is expected to hold with counterparts from around the world this week at the 78th U.N. General Assembly. His intent is to attract investments that will strengthen Nigeria’s economy.

On Monday, Tinubu and Ramaphosa discussed cooperation in the mining and telecom sectors — specifically about easing stringent business policies that discourage investment.

Tinubu said improving economic ties would create more jobs and benefit both countries. 

Nigerian economist Isaac Botti agreed, saying, “It’s expected that having a strong alliance with South Africa will also enhance our economic growth, particularly recognizing that South Africa is the second-largest economy in Africa.”

Botti also said that an agreement between the two nations would “enhance, within the U.N. system, opportunities for expanding investments, opportunities for improving sources of revenue.”

“For example,” he said, “if they could get into a concrete agreement on mining, it means that as a nation we will be able to diversify our economy.”

Political affairs analyst Rotimi Olawale said African nations need to work together if they are to improve health and living standards for the millions stuck in poverty.

“It’s high time to begin to see deeper collaborations between players on the continent,” Olawale said. “When push comes to shove, like we saw during Covid, every continent looked inward. European Union began to negotiate as a bloc for the purchase of vaccines. So it’s much more important for especially the big countries to lead the way in seeking closer ties and collaborations.”

During his campaign this year, Tinubu promised to boost Nigeria’s economy if elected president. Since assuming office in May, the president has embarked on the country’s boldest economic reforms in decades, including scrapping a popular but highly expensive fuel subsidy.

This week, Tinubu is scheduled to meet with U.S. President Joe Biden and executives from Microsoft, Meta and Exxon Mobil.

Olawale said the president is likely to hold other such meetings designed to pave the way for foreign investment.

“I expect that we’d see many more of such meetings,” Olawale said. “Nigeria is in dire need of investments in many sectors — construction, telecoms, innovation, science and technology. I expect that many of these things will be at the top of the president’s agenda as he begins to discuss with many of these countries.”

Last week, Tinubu visited the United Arab Emirates and met with the country’s president. The visit led to the UAE lifting a visa ban on Nigerian travelers. Tinubu’s office said the UAE also promised to invest several billion dollars in the Nigerian economy across multiple sectors, including defense and agriculture.

US Auto Workers Remain on Strike, Demanding Better Pay

The United Auto Workers’ strike against the three biggest U.S. automakers reached into its third day on Sunday with no resolution in sight, although union negotiations with General Motors were set to resume.

About 12,700 UAW workers were on strike at three factories, one each owned by Ford, Stellantis, and GM, in the most significant U.S. industrial labor action in decades. It was the first time the UAW union had gone on strike simultaneously against all three automakers.

The union and the companies appear far apart in settling on a new pact, with the automakers offering raises of about 20% over a 4½-year contract proposal, including an immediate 10% raise. The unions are demanding a 40% increase.

UAW President Shawn Fain told MSNBC on Sunday that progress in the talks has been slow. Union talks with Stellantis and Ford were set to resume on Monday.

“I don’t really want to say we’re closer,” he said. “It’s a shame that the companies didn’t take our advice and get down to business from the beginning of bargaining back in mid-July.”

Asked in a subsequent appearance on CBS’s “Face the Nation” show whether workers would walk out at more plants this week, Fain said the union was “prepared to do whatever we have to do.”

U.S. President Joe Biden, who has signaled support for the union’s efforts, dispatched acting Labor Secretary Julie Su and economic adviser Gene Sperling to Detroit, the hub of the U.S. auto industry, to speak to the UAW and the automakers.

‘Boiling Planet’ Reducing Spain’s Olive Crop, Raising Olive Oil Prices

Farmers say extreme temperatures caused a huge drop in the output of olive oil in Spain, the world’s largest producer, triggering a big jump in world olive oil prices. Elizabeth Cherneff narrates this report from Alfonso Beato in Barcelona, who says Europe’s leadership is blaming climate change.

China Police Detain Some Evergrande Wealth Management Staff

Police in southern China have detained some staff at China Evergrande Group’s wealth management unit, suggesting a new investigation that could add to the property giant’s woes.

“Recently, public security organs took criminal compulsory measures against Du [Liang] and other suspected criminals at Evergrande Financial Wealth Management Co.,” Shenzhen city police said in a social media statement Saturday night.

During protests by disgruntled investors at Evergrande’s Shenzhen headquarters in 2021, Du Liang was identified by staff as general manager and legal representative of Evergrande’s wealth management division.

Reuters could not confirm that Du was among those detained, and the police statement did not specify the number of people detained, the charges or the date they were taken into custody.

China Evergrande did not immediately respond to a request for comment on Sunday outside of normal business hours.

The police said the investigation into the financial management unit was ongoing and urged investors to report any further financial crimes.

China Evergrande 3333.HK, the world’s most indebted property developer, is at the center of a crisis in China’s property sector, which has seen a string of debt defaults since late 2021 that has dragged on the growth of the world’s second-largest economy.

The group, currently undergoing a protracted debt restructuring which has seen it offload a range of assets, said Friday it has delayed making a decision on offshore debt restructuring from September to next month.

Trade in Evergrande’s stock was suspended for 17 months until Aug. 28.

Moody’s on Thursday cut the outlook on China’s property sector to negative from stable, citing economic challenges it said would dampen sales despite government support. 

Workers Strike at All 3 Detroit Automakers in New Tactic

Nearly one in 10 of America’s unionized auto workers went on strike Friday to pressure Detroit’s three automakers into raising wages in an era of big profits and as the industry begins a costly transition from gas guzzlers to electric vehicles.

By striking simultaneously at General Motors, Ford and Chrysler owner Stellantis for the first time in its history, the United Auto Workers union is trying to inflict a new kind of pain on the companies and claw back some pay and benefits workers gave up in recent decades.

The strikes are limited for now to three assembly plants: a GM factory in Wentzville, Missouri, a Ford plant in Wayne, Michigan, near Detroit, and a Jeep plant run by Stellantis in Toledo, Ohio.

The workers received support from U.S. President Joe Biden, who dispatched aides to Detroit to help resolve the impasse and said the automakers should share their “record profits.”

Union President Shawn Fain said workers could strike at more plants if the companies don’t come up with better offers. The workers are seeking across-the-board wage increases of 36% over four years; the companies have countered by offering increases ranging from 17.5% to 20%.

Workers on the picket lines said that they hoped the strikes didn’t last long but added that they were committed to the cause and appreciated Fain’s tough tactics.

“We didn’t have a problem coming in during COVID, being essential workers and making them big profits,” said Chrism Hoisington, who has worked at the Toledo Jeep plant since 2001. “We’ve sacrificed a lot.”

In its 88-year history, UAW had always negotiated with one automaker at a time, limiting the industrywide impact of any possible work stoppages. Each deal with an automaker was viewed as a template, but not a guarantee, for subsequent contract negotiations.

Now, roughly 13,000 of 146,000 workers at the three companies are on strike, making life complicated for automakers’ operations, while limiting the drain on the union’s $825 million strike fund.

If the contract negotiations drag on — and the strikes expand to affect more plants — the costs will grow for workers and the companies. Auto dealers could run short of vehicles, raising prices and pushing customers to buy from foreign automakers with nonunionized workers. It could also put fresh stress on an economy that’s been benefiting from easing inflation.

The new negotiating tactic is the brainchild of Fain, the first leader in the union’s history to be elected directly by workers. In the past, outgoing leaders picked their replacements by choosing delegates to a convention.

But that system gave birth to a culture of bribery and embezzlement that ended with a federal investigation and prison time for two former UAW presidents.

The combative Fain narrowly won his post last spring with a fiery campaign against that culture, which he called “company-unionism” and said sold out workers by allowing plant closures and failing to extract more money from the automakers.

“We’ve been a one-party state for longer than I’ve been alive,” Fain said while campaigning as an adversary to the companies rather than a business partner.

David Green, a former local union leader elected to a regional director post this year, said it’s time for a new way of bargaining. “The risks of not doing something different outweigh the risks of doing the same thing and expecting a different result,” Green said.

During his more than two-decade career at General Motors, Green saw the company close an assembly plant in Lordstown, Ohio, that employed 3,000 workers. The union agreed to a series of concessions made to help the companies get through the Great Recession. “We’ve done nothing but slide backward for the last 20 years,” Green said, calling Fain’s strategy “refreshing.”

Carlos Guajardo, who has worked at Ford for the past 35 years and was employed by GM for 11 years before that, said he likes the new strategy.

“It keeps the strike fund lasting longer,” said Guajardo, who was on the picket line in Michigan Friday before the sun came up.

The strikes will likely chart the future of the union and of America’s homegrown auto industry at a time when U.S. labor is flexing its might and the companies face a historic transition from building internal combustion automobiles to making electric vehicles.

The walkouts also will be an issue in next year’s presidential election, testing Biden’s claim to being the most union-friendly president in American history.

The limited-strike strategy could have ripple effects, GM CEO Mary Barra said Friday on CNBC.

Many factories are reliant on each other for parts, Barra said. “We’ve worked to have a very efficient manufacturing network, so yes, even one plant is going to start to have impact.”

Citing strike disruptions at its Wayne plant, Ford told about 600 nonstriking workers at the plant not to report to work on Friday, Ford spokeswoman Jennifer Enoch said.

Even Fain has called the union’s demands audacious, but he said the automakers are raking in billions and can afford them. He scoffed at company claims that costly settlements would force them to raise vehicle prices, saying labor accounts for only 4% to 5% of vehicle costs.

In addition to the wage increases, union negotiators are also seeking: restoration of cost-of-living pay raises; an end to varying tiers of wages for factory jobs; a 32-hour week with 40 hours of pay; the restoration of traditional defined-benefit pensions for new hires who now receive only 401(k)-style retirement plans; and pension increases for retirees, among other items.

Starting in 2007, workers gave up cost-of-living raises and defined benefit pensions for new hires. Wage tiers were created as the UAW tried to help the companies avoid financial trouble ahead of and during the Great Recession. Even so, only Ford avoided bankruptcy protection.

Many say it’s time to get the concessions back because the companies are making huge profits and CEOs’ pay packages are soaring.

China Economic Data Show Signs Slowdown May Be Easing

China’s factories picked up their pace and retail sales also gained momentum in August, the government reported Friday, suggesting the economy may be gradually recovering from its post-pandemic malaise.

However, despite busy activity in restaurants and stores, the figures showed continuing weakness in the all-important property sector, where real estate developers are struggling to repay heavy loads of debt in a time of slack demand. Investment in real estate fell 8.8% in August from the year before. The decline has been worsening since the beginning of the year.

Acting to relieve the burden on banks, the People’s Bank of China, or central bank, announced late Thursday that the reserve requirement for most lenders would be cut by 0.25 percentage points as of Friday.

That would free up more money for lending, “In order to consolidate the foundation for economic recovery and maintain reasonable and sufficient liquidity,” the central bank said.

Friday’s report showed retail sales rose 4.6% in August from a year earlier, with auto sales climbing 5.1%. Retail sales rose a meager 2.5% in July.

Consumers grew more cautious about spending in the past year, even as China loosened stringent policies to contain outbreaks of COVID-19.

Industrial output grew at a 4.5% annual pace, up from 3.7% in July and the fastest rate since April.

“Overall, in August, major indicators improved marginally, the national economy recovered, high-quality development was solidly advanced, and positive factors accumulated,” Fu Linghui, spokesperson for the National Bureau of Statistics, told reporters.

But Fu added that there were “still many external factors of instability and uncertainty” and that domestic demand remains weak, so that “the foundation for economic recovery still needs to be consolidated.”

The trends in August were somewhat better than expected, Julian Evans-Pritchard of Capital Economics said in a report.

“Fiscal support shored up investment, but the real bright spot was a healthy pick-up in consumer spending, suggesting that households may be turning slightly less cautious,” he said.

China’s economy expanded by 0.8% in the three months ending in June compared with the previous quarter, down from 2.2% in January-March. That is equivalent to a 3.2% annual rate, which would be among the weakest pace in decades.

Roughly one in five young workers is unemployed, a record high, adding to pressures on consumer spending.

The downturn in the housing market, which spills into many other sectors in addition to construction and materials, also has weighed on China’s recovery from severe disruptions of the past several years as the ruling Communist Party tried to eliminate waves of COVID-19 infections.

Share prices advanced Friday after the figures were released, with Hong Kong’s Hang Seng gaining 1.7% while the Shanghai Composite index rose 0.3%.

“There’s a growing sense of optimism among a cohort of investors who believe that Beijing’s recent initiatives to stimulate the economy and stabilize financial markets are showing signs of success,” Stephen Innes of SPI Asset Management said in a commentary. 

13,000 US Auto Workers Strike Seeking Better Wages, Benefits

About 13,000 U.S. auto workers stopped making vehicles and went on strike Friday after their leaders couldn’t bridge a giant gap between union demands in contract talks and what Detroit’s three automakers are willing to pay.

Members of the United Auto Workers union began picketing at a General Motors assembly plant in Wentzville, Missouri, a Ford factory in Wayne, Michigan, near Detroit, and a Stellantis Jeep plant in Toledo, Ohio.

It was the first time in the union’s 88-year history that it walked out on all three companies simultaneously as four-year contracts with the companies expired at 11:59 p.m. Thursday.

The strikes will likely chart the future of the union and of America’s homegrown auto industry at a time when U.S. labor is flexing its might and the companies face a historic transition from building internal combustion automobiles to making electric vehicles.

If they last a long time, dealers could run short of vehicles and prices could rise. The walkout could even be a factor in next year’s presidential election by testing Joe Biden’s proud claim to be the most union-friendly president in American history.

“Workers all over the world are watching this,” said Liz Shuler, president of the AFL-CIO, a federation of 60 unions with 12.5 million members.

The strike is far different from those during previous UAW negotiations. Instead of going after one company, the union, led by its pugnacious new president, Shawn Fain, is striking at all three. But not all of the 146,000 UAW members at company plants are walking picket lines, at least not yet.

Instead, the UAW targeted a handful of factories to prod company negotiators to raise their offers, which were far lower than union demands of 36% wage increases over four years. GM and Ford offered 20% and Stellantis, formerly Fiat Chrysler, offered 17.5%.

Even Fain has called the union’s demands audacious, but he maintains the automakers are raking in billions and can afford them. He scoffed at company statements that costly settlements would force them to raise vehicle prices, saying labor accounts for only 4% to 5% of vehicle costs.

“They could double our raises and not raise car prices and still make millions of dollars in profits,” Fain said. “We’re not the problem. Corporate greed is the problem.”

In addition to general wage increases, the union is seeking restoration of cost-of-living pay raises, an end to varying tiers of wages for factory jobs, a 32-hour week with 40 hours of pay, the restoration of traditional defined-benefit pensions for new hires who now receive only 401(k)-style retirement plans, pension increases for retirees and other items.

Starting in 2007, workers gave up cost-of-living raises and defined benefit pensions for new hires. Wage tiers were created as the UAW tried to help the companies avoid financial trouble ahead of and during the Great Recession. Even so, only Ford avoided government-funded bankruptcy protection.

Many say it’s time to get the concessions back because the companies are making huge profits and CEOs are raking in millions. They also want to make sure the union represents workers at joint-venture electric vehicle battery factories that the companies are building so workers have jobs making vehicles of the future.

Top-scale assembly plant workers make about $32 per hour, plus large annual profit-sharing checks. Ford said average annual pay including overtime and bonuses was $78,000 last year.

Outside the Ford plant in suburban Detroit, worker Britney Johnson, 35, has worked for the company about 3 1/2 years and has yet to reach top union wages. “I like the job. It’s just that we deserve more,” she said.

She’s after higher pay, the return of pensions, cost of living raises and an end to different tiers of wages.

Johnson said this is her first strike, but she’s been preparing for it for months and putting away money. “It’s not fun. There are a lot of people who are not going to get paid,” she said. She guesses that the strike will last a couple of weeks.

“We’re the ones for the last 20 years who have been kind of hoping things would change and we would get back some of the stuff that we lost with the bankruptcy,” said Tommy Wolikow, who delivers parts to an assembly line at GM’s pickup truck plant in Flint, Michigan, which is still making vehicles. “And every contract, it just seemed like we didn’t get what we deserved.”

Wolikow called this year’s talks huge, and said meeting the company in the middle isn’t good enough. “I think it needs to be a little bit closer to the top of what were asking for,” he said.

The automakers, however, say they’re facing unprecedented demands on capital as they develop and build new electric vehicles while at the same time making gas-powered cars, SUVs and trucks to pay the bills. They’re worried that labor costs will rise so much that they’ll have to price their cars above those sold by foreign automakers with U.S. factories.

GM CEO Mary Barra told workers in a letter Thursday that the company is offering historic wage increases and new vehicle commitments at U.S. factories. GM’s offer, she wrote, “addresses what you’ve told us is most important to you, in spite of the heated rhetoric from UAW leadership.”

The limited strikes will help to preserve the union’s $825 million strike fund, which would run dry in about 11 weeks if all 146,000 workers went on strike.

Under the UAW strategy, workers who go on strike would live on $500 per week in strike pay from the union, while others would stay on the job at full pay. It’s unlikely the companies would lock the remaining workers out of their factories because they want to keep building vehicles.

But Fain has said the union would increase the number of plants on strike if it doesn’t get fair offers from the companies.

It’s tough to say just how long it will take for the strikes to cut inventories at dealers and start hurting the companies’ bottom lines.

Jeff Schuster, head of automotive for the Global Data research firm, said Stellantis has the most inventory and could hold out longer. The company has enough vehicles at or en route to dealers to last for 75 days. Ford has a 62-day supply and GM has 51. All have been building as many highly profitable pickup trucks and big SUVS as they can.

Still, Schuster predicted the strikes could last longer than previous work stoppages such as a 2019 strike against GM that lasted 40 days.

“This one feels like there’s a lot more at risk here on both sides,” he said.

Italy Mulls Quitting China’s ‘Belt and Road’ but Fears Offending Beijing

Italy is considering whether to leave the Belt and Road Initiative, Beijing’s multibillion-dollar global trade and infrastructure program, by the end of the year. The dilemma comes amid geopolitical pressures from Western allies and domestic disappointment that the program has not delivered the economic benefits that the country hoped for.

Italian Prime Minister Giorgia Meloni spoke to reporters after meeting the Chinese delegation at last week’s G20 summit in New Delhi.

“There are European nations which in recent years haven’t been part of the Belt and Road but have been able to forge more favorable relations [with China] than we have sometimes managed,” Meloni said. “The issue is how to guarantee a partnership that is beneficial for both sides, leaving aside the decision that we will take on the BRI.”

BRI benefits?

Italy signed on to China’s BRI in 2019, the only member of the Group of 7 most advanced economies — including Canada, France, Germany, Japan, the United Kingdom and the United States — to do so. But Italy has not received the expected economic benefits, Filippo Boni, a lecturer in politics and international studies at the Open University in England, told VOA.

“From the Italian side, the idea was to both try and boost its exports but also to make a political move towards Brussels, as a signal that Italy was able to sign successful deals with third countries independently from the European Union,” Boni said, adding that Meloni is seeking to make a clear break with previous [Italian] governments by forging new relationships with China and the EU.

“There is a growing realization that the memorandum of understanding that was signed with China in March 2019 did not really bring the benefits that were expected,” he said. “Trade balance is still heavily tilted in China’s favor, and Italian exports to China did not pick up, did not see the increase that those who wanted [the BRI] were envisaging and hoping for.”

Geopolitics

There are also geopolitical reasons for Italy rethinking its membership in China’s BRI, said Luigi Scazzieri, a senior research fellow at the Centre for European Reform.

“There’s come to be a certain diplomatic stigma attached to it, partly because the whole of the West is rethinking its relationship with China,” Scazzieri told VOA. “And Italy being the only G7 country having signed up to the Belt and Road makes it, on the other hand, look like it’s trying to get closer to Beijing.”

Italy’s Western allies are reducing their reliance on some Chinese imports and restricting the sale of technologies such as advanced semiconductors to Beijing.

In recent years, Italy’s government has blocked the sale of some of its biggest companies to Chinese firms, such as the tire maker Pirelli, under its so-called Golden Power rules.

“It’s really a clear signal the government in Rome is sending to its partners in the European Union, and Washington most importantly, about Italy’s position on the international chess board,” Boni said.

China’s response

Questioned about Italy’s potential departure from the BRI this week, China’s Foreign Ministry insisted the program brings benefits to its members.

“The Belt and Road Initiative has attracted more than 150 countries and a wide range of partners in various fields over the past 10 years and has brought tangible benefits to the people of all countries,” Foreign Ministry spokesperson Mao Ning told reporters. “It is in the interests of all participating countries to further tap the potential of cooperation.”

Italy is choosing its language carefully and said it wants to boost trade with Beijing outside the BRI, Scazzieri said.

“The fear of Beijing reacting in a negative way has been precisely why Meloni has been quite careful about how to go about extracting Italy from BRI,” he said.

Italy already has a strategic partnership with China, an agreement Beijing has signed with many countries aimed at fostering economic and cultural ties. It’s likely Rome will seek to amend that document in the hope of replacing its BRI membership with a looser relationship.

“Given the centrality that ‘strategic partnerships’ have in China’s foreign policy — as of the end of last year, there were 110 strategic partnerships that China signed with countries globally — I think it might be a good way out of the Belt and Road Initiative for both countries to say, ‘We’re still engaged in bilateral cooperation,’ ” Boni said.

Is this the Office of the Future?

All About America explores American culture, politics, trends, history, ideals and places of interest.

While the COVID-19 pandemic dramatically transformed the way Americans work, with millions of people now working a hybrid schedule, the office itself remains stuck in pre-pandemic times.

“The offices that we have have largely been designed as a place that people need to come. Many of them are cube farms that are really boring, unexciting, and nobody wants to be there,” says Aditya Sanghvi, senior partner at McKinsey & Company, who leads the management consulting firm’s real estate practice. “The office has suddenly become a choice. It’s an option. And the office has to be better for someone than working from home and enduring the commute to come into the office.”

More Americans than ever have a hybrid schedule, splitting time between working from home and going into the office. A spring 2022 survey of 25,000 Americans by McKinsey & Company found that 58% of respondents were able to work from home at least one day a week. The U.S. Department of Labor reported that more than one-third of Americans, 34%, worked from home at least some of the time in 2022.

Despite these changes in how Americans work, the workplace has largely remained the same.

“If you’re going to be working in a cubicle, you might as well be working from home. You won’t have to engage in the commute, which is a productivity killer,” says Ryan Luby, an associate partner at McKinsey & Company who co-authored the report. “And then when you get to the office, if you’re not engaging with anyone else, you might as well not be there.”

Enter the U.S. federal government. Even though the government is often perceived as an unwieldy bureaucracy where little changes, the U.S. General Services Administration (GSA), the agency that oversees federal buildings, is among those taking the lead to determine what the office of the future will look like.

“What we’re trying to do is create a workplace and an environment that allows you to be as productive as you can be without getting in the way. And that means a variety of spaces for a variety of the people that work for us,” says Chuck Hardy, GSA’s chief architect.

Hardy is overseeing GSA’s Workplace Innovation Lab, a 25,000-square-foot space, located inside the organization’s Washington headquarters, where federal workers can try out the latest in workplace furnishings and technology, supplied by private vendors. During the yearlong experiment, federal workers from across the government can sign up to work in the lab, testing out the different layouts and latest innovations. In return, they are asked to provide feedback on their experience.

“The office should be a magnet not a mandate. We’re looking to have an office that brings people back to it purposefully,” Hardy says. “It’s not a one-size-fits-all. And in certain agencies and certain offices, it can be multiple solutions. And so, we’re looking at what is that mix of a solution?”

Some spaces in the lab feature comfortable chairs and sofas. Others look more like traditional workspaces. Almost everything can be moved around. The air quality is monitored, and sustainable technology solutions are being tested. Hardy says the office of the future also needs to have advanced acoustics and technology.

Sanghvi foresees more seamless meeting spaces.

“There needs to be immersive conference rooms where it almost feels like there’s no difference between whether or not someone’s sitting with you in the office or somebody’s by video,” he says. “And I assume over the next 10 years, we’ll get a great evolution in that.”

The office needs to change because the role of the workplace has changed, according to Luby.

“The office should be a place where you’re doing group work, where you’re doing community-oriented collaborative activities,” Luby says. “That space should be suited for collaboration, community gathering and facilitating those moments that matter. It’s going to be much more group oriented. It’s going to be a more flexible space, more modular.”

The office of the future might even help workers with their errands.

“One of the reasons that a lot of people work from home is that they have to pick up the kids or do dry cleaning. They have to take care of the dog,” Sanghvi says. “And so, what if there were pet care in the building? What if there was child care in the building?”

Sanghvi believes landlords have to take a more active role in transforming workspaces for the new post-pandemic reality.

“We all trust our hotels to help us with services when we stay in a hotel,” he says. “Many retailers trust the shopping mall owners with doing marketing on behalf of everyone and driving traffic. So, it’s just a different motion for offices, but it’s pretty well-established elsewhere.”

Office planners of the future will likely try to address three main criteria, according to Hardy at the GSA.

“It has to be quality, has to be serving a purpose, but it still has to be beautiful,” he says. “And so, that’s what we’re looking for here — you don’t want to go into a building that looks like you’re in a basement. … You’re seeing office settings that have similarities to a living room setting or have similarities to a den. You’re seeing furniture that’s a little more comfortable.”

Which means the office of the future could feel a little bit more like home.

Here’s How the Office of the Future Could Look

The COVID-19 pandemic changed the way Americans work. With millions of people now working from home at least part of the time, experts say offices must evolve to meet their needs. The U.S. General Services Administration, the agency that oversees federal buildings, is trying to determine what that means. VOA’s Dora Mekouar visited its Workplace Innovation Lab to learn more. Camera: Adam Greenbaum.

US Consumer Prices Accelerated in August

U.S. consumer prices jumped by the most in more than a year in August, mostly riding higher on an increase in gasoline prices, the government said Wednesday. However, analysts say underlying price pressures were tame enough that the country’s central bank may not see the need to increase its benchmark interest rate at next week’s meeting.

The country’s consumer price index edged higher last month by 3.7% on an annualized basis, after a 3.2% increase in July, the Labor Department said. Prices were up six-tenths of a percentage point in August over July after increasing by 0.2% for two straight months.

Even with the higher prices, analysts said policymakers at the central bank, the Federal Reserve, could refrain from increasing their benchmark interest borrowing rate at next week’s meeting as they wait for further evidence of the country’s inflation track.

The Fed has raised the rate 11 times in the last year and a half to curb borrowing and spending to tame inflation, which reached a recent peak of 9.1% in June 2022. The Fed’s key borrowing rate courses through the U.S. economy, helping establish interest rates for business and consumer loans.

Greg McBride, the chief financial analyst at Bankrate.com, said in a statement, “The Federal Reserve is poised to hold interest rates steady at their meeting next week but there are still some concerns within this [consumer price] report — gasoline prices, motor vehicle insurance, maintenance and repair — that the Fed won’t dispel the idea of an additional interest rate hike before year-end.”

The key culprit in the August inflation increase was the rising price of gasoline for motorists at service stations, where prices peaked at nearly $4 a gallon (3.8 liters) in the third week of the month.

U.S. President Joe Biden, campaigning for reelection in 2024, took note of the economic trends in a statement, “Overall inflation has also fallen substantially over the last year, but I know last month’s increase in gas prices put a strain on family budgets.”

In national polling, Americans who are particularly conscious of their household expenses have given Biden poor marks for his handling of the economy. Biden in turn noted in his statement, “Unemployment has remained below 4% for 19 months in a row, the share of working-age Americans with a job is the highest in 20 years, and real wages are higher now than they were before the pandemic.”

The Federal Reserve attempts to adopt policies that keep the increase in U.S. consumer prices at an annualized rate of 2%.

With the rate currently higher than that, U.S. economic fortunes are certain to be a key factor in next year’s presidential contest, with Biden’s Republican opponents blaming him for higher inflation because of increased government spending that he supported. Biden said the money for infrastructure repairs helped create thousands of new jobs and was needed to fix deteriorating roads and bridges.