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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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U.S. President Joe Biden, Chinese President Xi Jinping and leaders of the Asia-Pacific Economic Cooperation member economies concluded their virtual APEC Leaders’ Meeting on Friday, agreeing on a series of commitments regarding the coronavirus pandemic, economic recovery and climate change mitigation.

Following the meeting chaired by New Zealand Prime Minister Jacinda Ardern, leaders adopted a declaration under the theme of “Join, Work, Grow. Together,” which highlights policy actions to respond to COVID-19.

According to organizers, the declaration “lays out commitments in accelerating economic recovery and achieving sustainable and inclusive growth, including further actions in tackling climate change, empowering groups with untapped economic potential, supporting the region’s micro, small and medium enterprises and addressing the digital divide.”

The 21 APEC member economies account for nearly 3 billion people and about 60 percent of global GDP, spanning the Pacific Rim from Chile to Russia to Thailand to Australia.

Officials said they made significant progress during some 340 preliminary meetings. APEC members had agreed to reduce or eliminate many tariffs and border holdups on vaccines, masks and other medical products important to fighting the COVID-19 pandemic.

The APEC meeting came on the heels of an unexpected U.S.-China declaration made Wednesday at the COP26 climate summit in Glasgow, Scotland, where the world’s two biggest CO2 emitters said they would work together to achieve the goal set out in the 2015 Paris climate agreement of limiting warming since pre-industrial times to 1.5 degrees Celsius (2.7 F) by the end of the century.

While the declaration was thin on details, Washington and Beijing pledged to cooperate on cutting emissions and to create a joint working group that will meet regularly to address the climate crisis over the next decade. Analysts called these small positive signs ahead of the Biden-Xi virtual summit scheduled for Monday.

The Glasgow statement moves the two countries significantly back toward a cooperative relationship in the many areas where Biden and Xi have complementary or similar interests, said Charles Morrison, adjunct senior fellow at the East-West Center, a research group established by the U.S. Congress in 1960 to strengthen relations among the peoples of Asia, the Pacific and the United States.

“What I would like to see is a collaborative examination of where they have common ground and next an implementation strategy,” Morrison added.

According to the White House, during his address at the virtual meeting, Biden “underscored his commitment to strengthening our relationship with APEC economies in order to advance fair and open trade and investment, bolster American competitiveness, and ensure a free and open Indo-Pacific.” 

Xi’s pledge

Xi made a similar pledge in his address, saying China would “unswervingly” expand its opening up to the outside world and share China’s development opportunities with the world and Asia-Pacific countries, state broadcaster CCTV said.

Jennifer Bouey, Tang chair for China policy studies at the RAND Corporation, an American global policy research group, noted, however, that Beijing recently passed two new privacy and security laws that limit data sharing under the pretext of national security and the public interest.

“They also become a barrier for China’s collaboration not only with the U.S. but with the world at large,” Bouey said.

Issues remain

APEC members failed to reach a consensus on a U.S. proposal to host APEC gatherings in 2023. Russia rejected the bid because of a U.S. blacklist of its diplomats set in April, when Washington sanctioned the Kremlin for interference in the 2020 U.S. presidential election and hacking federal agency systems.

“The Russians simply did not want to accept the United States’ ability to make persona non grata for the Russian so-called diplomats who are no longer welcome in the United States, and the United States was not going to negotiate over security issue,” said Patrick Cronin, the Asia-Pacific security chair at the Hudson Institute, a Washington research group.

There are no other bidders to host the 2023 meetings, though APEC works on a consensus basis so all members must agree.

“One economy is still undergoing consultations and has not yet joined consensus,” a White House official told VOA. “We hope this impasse is resolved quickly to ensure we can continue the positive momentum on economic cooperation through APEC.”

Meanwhile, Taiwanese President Tsai Ing-wen used the APEC meetings to rally support for her bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact that Beijing also is seeking to be a part of. Beijing considers Taiwan to be a breakaway province and has vowed to block Taipei’s bid.

Lengthy process

CPTPP members likely will negotiate with Beijing and settle on the issue of Chinese membership first before Taiwan’s bid — a process likely to take years.

“It needs approval from, among others, Japan, Canada and Australia, none of which are inclined to roll out the red carpet for China right now,” said Robert Daly, director of the Kissinger Institute on China and the United States at the Wilson Center, a global policy group in Washington.

Daly said there’s a chance, however, that more countries gradually will come to accommodate China.

“We know that China is patient, that they are gradualist, and that they will work with the other parties, one by one,” he said. “And China goes into this still as the leading trading nation in the world, and the lodestone of Asian economics.”

The Biden administration has not indicated interest in joining CPTPP, the 11-nation trade pact formed in 2018 after former President Donald Trump in 2017 pulled out of the Trans-Pacific Partnership (TPP), a free trade agreement negotiated by President Barack Obama to deepen U.S. economic engagement in the Asia-Pacific region and counter China’s growing influence there.

Some information for this report came from The Associated Press.
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The European Commission lowered its forecast for Spanish growth this year as the country’s recovery from the COVID-19 pandemic lagged behind other European nations.

The commission said Thursday it estimates that the rise of Spanish gross domestic product will be 4.6% this year and 5.5% next year, almost two points less than earlier forecasts of 6.5% this year and 7% in 2022.

Spain was the European economy hit hardest by COVID-19, and its recovery has been slower than those of its continental neighbors.

At the end of the third quarter, Italy’s GDP was 1.4% below its level at the end of 2019.

Germany has narrowed the gap to 1.1% compared with pre-pandemic levels, and France has reduced the difference to just 0.1%.

However, in Spain — the eurozone’s fourth-largest economy — GDP is 6.6% below 2019 levels.

Unemployment remains stubbornly high at 14.9%, while youth joblessness, for those under age 24, is the worst in Europe at 30.6%.

Inflation has soared to 5.5% compared to October 2020, the highest figure since 1992 when the peseta was paired with the German deutschmark. Soaring energy costs, as well as the rising cost of summer holidays, pushed up inflation, analysts said. Core inflation stood at 1.4%.

The nation’s budget deficit is expected to hit 8.4% by the end of the year, way above the European Union target of 3%, which has been relaxed until 2022.

Spain’s coalition government is staking its hopes on the arrival of EU recovery funds to revive the economy.

Under the 2022 budget, Spain plans to spend a record $46 billion of state funds on investments that analysts say will boost growth and lower the deficit to a projected 5% in 2022 and 4% in 2023.

Nadia Calviño, Spain’s economy minister, told a meeting of European finance ministers Tuesday the nation was on course to cut its deficit.

“We have adopted a prudent attitude when preparing the budgets for 2021 and also for 2022 so that, in fact, tax revenues allow us, even in a not-so-positive macroeconomic situation, to reduce the public deficit in 2022,” she said.

Macroeconomics aside, on the streets, some are still waiting for the recovery from the pandemic.

Oscar Díaz, managing director of Mundopalet, a company that makes pallets to transport goods, is a worried man. He told VOA on Thursday he had to stop half of his production lines at his company’s factory in Toledo, 55 miles south of Madrid.

The company, which employs 100 people, is struggling to find enough wood to make its products, as countries such as Brazil, China and Lithuania have raised prices from $1,382 per truckload earlier this year to $10,362.

Major economies such as the United States, China and Germany have also raised their demand for timber as their economies start to recover from the pandemic, further pushing up the prices.

“Yes, I am concerned. Some of our clients’ companies have stopped working. We have halted work on 10 of our 20 production lines. We are in danger,” Díaz told VOA from his factory.

Mundopalet is by far not alone, as Spanish companies grapple with supply chain problems, typical of other sectors, from winemakers to farmers.

To make things worse, Spain’s truck drivers plan to strike for three days the week before Christmas, the National Road Transportation Committee in Spain said Wednesday.

In the run-up to one of the busiest periods of the year, the drivers are threatening to disrupt supply chains if the Spanish government does not meet its demands, which include safer rest areas and a ban on requiring truckers to load and unload goods.

However, analysts say the health of Spain’s labor market shows the effects of the pandemic are fading.

The number of employed workers rose in the third quarter of 2021 by 359,300 workers, according to the National Statistics Institute, bringing the total to over 20 million, the first time this figure has been reached since 2008, when the global financial crisis began.

During the same summer period, the ranks of the jobless decreased by 3.59%, according to data from the institute.

Javier Díaz, an economist at IESE business school in Madrid, said Spain has suffered more from the pandemic than other European countries because of its reliance on tourism and the automotive sector, which is struggling because of a global chip shortage and lower consumer demand.

“What is important to look at is not the unemployment level but the employment. That shows the economy is not in such a bad way,” he told VOA.

Spanish inflation has gone up because of the global rise in fuel and energy prices, and a lack of demand in key sectors such as tourism and the car industry, which are still recovering from the shock of COVID-19, he said.

“Spain is not really struggling. Growth of between 6% and 4% this year is actually better than it was before the pandemic,” Díaz said. 
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German Finance Minister and Vice Chancellor Olaf Scholz, the presumptive leader of the next government, presented an updated financial forecast Thursday indicating increased revenues for future government projects.

At a news conference in Berlin, Scholz said that despite the COVID-19 pandemic, the recent “fourth wave” of new infections and the worldwide supply chain problems, Germany’s tax revenue over the next few years would be higher than the estimates made in May.

Scholz said the new revenue forecast showed all levels of government collecting about $205 billion more in revenue through 2025 than the earlier prediction. He credited the higher-than-expected revenue to “a robust labor market.”

Scholz’s Social Democratic Party won the most seats in September’s parliamentary elections, but because it does not control more than 50% of parliament, it is in negotiations with the third- and fourth-place finishing parties, the environmentalist Greens and pro-business Free Democrats, to form a coalition government.

When asked how the power-sharing negotiations were going, Scholz said he was optimistic.

“I see very concrete things going on, and the observations I had are that a lot of things have come together. Everything still left to discuss is not so difficult that it cannot be overcome,” he said.

Scholz said this new forecast meant the next government could “work sensibly,” though he cautioned there were still financial burdens from the pandemic.

He identified investments in mitigating climate change and upgrading Germany’s public sector computer and internet infrastructure as two of his priorities.​

Some information for this report came from The Associated Press, Reuters and Agence France-Presse.
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Afghanistan is “at the brink of economic collapse” and the international community must urgently resume funding and provide humanitarian assistance, Pakistan’s foreign minister warned Thursday as U.S., Chinese, Russian and Taliban diplomats met in Islamabad.

Shah Mehmood Qureshi spoke at the opening of the so-called “troika plus” meeting, which included Thomas West, the new U.S. special envoy for Afghanistan. The delegates also met later Thursday with Taliban foreign minister Amir Khan Muttaqi.

“Today, Afghanistan stands at the brink of an economic collapse,” Qureshi said, adding that any further downward slide would “severely limit” the new Taliban government’s ability to run the country.

“It is, therefore, imperative for the international community to buttress provision of humanitarian assistance on an urgent basis,” he said.

That included enabling Afghanistan to access funds frozen by Western donors since the Taliban took control of the country in August, he added.

Resuming the flow of funding “will dovetail into our efforts to regenerate economic activities and move the Afghan economy towards stability and sustainability”, Qureshi said.

Doing so would benefit Western countries also, he argued in later comments to state media.

“If you think that you are far, Europe is safe and those areas you imagine will not be affected by terrorism, don’t forget the history,” he said. “We have learned from the history and we don’t want to repeat those mistakes made in the past.”

The United Nations has repeatedly warned that Afghanistan is on the brink of the world’s worst humanitarian crisis, with more than half the country facing “acute” food shortages and winter forcing millions to choose between migration and starvation.

The troika plus meeting represents envoy West’s first trip to the region since taking over from Zalmay Khalilzad, the long-serving diplomat who spearheaded talks that led to the U.S. withdrawal from Afghanistan earlier this year.

The State Department said earlier in the week that West also plans to visit Russia and India.

“Together with our partners, he will continue to make clear the expectations that we have of the Taliban and of any future Afghanistan government,” State Department spokesman Ned Price told a briefing this week.

West, who was in Brussels earlier this week to brief NATO on US engagement with the Taliban, told reporters the Islamists have “very clearly” voiced their desire to see aid resumed, normalise international relations and achieve sanctions relief.

He called for unity from allies on those issues, noting that Washington “can deliver none of these things on our own”. 
…

China on Thursday held a subdued version of its annual “Single’s Day” shopping spree, shorn of the usual boasting on sales volume as the country’s chastened e-commerce sector reels under a government crackdown on platforms like Alibaba. 

The world’s biggest shopping festival has for years been accompanied by aggressive promotions and breathless hourly updates by Alibaba starting at midnight and detailing ever-rising sales figures that dwarf the annual GDP of many nations. 

But there were no rolling tallies or triumphant comments by executives from major platforms as of Thursday morning, and state media have described a quieter event this year in the wake of Beijing’s campaign to rein in Big Tech. 

11-day shopping event 

“Single’s Day,” so-called for its 11.11 date, began more than a decade ago and for years was a one-day, 24-hour event. 

But Alibaba and its rivals have expanded that out to an 11-day promotion culminating on November 11, while some retailers and platforms have started offering discounts, special offers and pre-sales as early as October.  

Thanks to the Chinese consumer’s predilection for smartphone-enabled bargain-hunting, Single’s Day now dwarfs the pre-Christmas “Black Friday” promotion in the United States. 

Platforms operated by Alibaba and its closest competitor JD.com reported combined sales of $115 billion during last year’s promotion. 

The festival has gradually become a closely watched gauge of consumer sentiment in the world’s second-largest economy, but it was unclear on Thursday when any sales figures might be released. 

Heads down 

E-commerce platforms are keeping their heads down because of the government scrutiny, which targets alleged abuse of user data and monopolistic business practices, but also appears motivated in part by wider concerns that Big Tech had become too powerful and unregulated.  

Some early indicators, however, had pointed to continued robust spending, with Alibaba saying hundreds of brands had gotten off to a stronger start from November 1 compared with the previous year, while providing no figures. 

The government scrutiny has rattled big players like Alibaba, Tencent, and JD, slicing billions of dollars from their equity values, but experts say the ruling Communist Party is not about to significantly hobble e-commerce. 

The party is waging a long-term campaign to diversify China’s economy away from an over-dependence on manufacturing, exports and government investment, toward a more market-based, consumer-driven model. 

E-commerce has aided greatly in this effort, and Chinese e-commerce executives have said the pandemic has boosted online purchases further, partly by discouraging in-person shopping in crowded stores. 

Less ‘gunpowder’ 

Alibaba fell out of favor late last year after billionaire co-founder Jack Ma issued an unprecedented criticism of Chinese government regulators. 

The company was fined $2.75 billion, authorities postponed a record-breaking IPO by its financial affiliate Ant Group, and other tech giants were hit with fines and business restrictions. 

The government has targeted practices by e-commerce leaders that are seen as abusing their dominant market positions, such as banning merchants from selling their products on rival platforms or using algorithms to bombard consumers with recommendations for further purchases. 

Last weekend, the government issued special “Single’s Day” guidelines reminding platforms that misleading claims on discounts or on the efficacy of products, manipulating sales figures, and selling counterfeit products, were all strictly forbidden. 

Chinese state media have reported less aggressive promotional activity this year. 

“Although the excitement remains, the smell of gunpowder among the e-commerce giants is significantly weakened,” respected financial-news website Jiemian.com said in a recent report. 
…

The United States and China surprised the COP26 climate summit in Glasgow on Wednesday with a joint declaration to take action to limit global warming over the next decade.

The declaration came as delegates entered the final hours of negotiations to agree on a final text at the conference that will outline how the world will limit global warming to less than 1.5 degrees Celsius above pre-industrial levels.

China and the United States are the world’s two biggest polluters, and scientists say their future actions are critical in the fight against climate change. The absence of Chinese leader Xi Jinping from the summit last week was strongly criticized by U.S. President Joe Biden.

U.S. climate envoy John Kerry told reporters in Glasgow on Wednesday that the joint declaration builds on statements made by both countries in April.

“We also expressed a shared desire for success at this COP on mitigation, adaptation, support and, frankly, all of the key issues which will result in the world raising ambition and being able to address this crisis. Now, with this announcement, we’ve arrived at a new step, a road map for our present and future collaboration on this issue,” Kerry said at a press conference.

“The United States and China have no shortage of differences, but on climate, cooperation is the only way to get this job done. This is not a discretionary thing, frankly. This is science. It’s math and physics that dictate the road that we have to travel,” Kerry added.

China’s chief climate negotiator, Xie Zhenhua, echoed those sentiments.

“Climate change is a challenge, a common challenge, faced by humanity,” Xie told reporters. “It bears on the well-being of future generations. Now, climate change is becoming increasingly urgent and severe, making it a future challenge into an existential crisis. In the area of climate change, there is more agreement between China and the U.S. than divergence, making it an area with huge potential for our cooperation. We are two days away from the end of the Glasgow COP, so we hope that this joint declaration can make a China-U.S. contribution to the success of COP26.”

Among the joint pledges were cooperation on controlling methane emissions, tackling illegal deforestation, enhancing renewable energy generation and speeding up financial support for poorer nations. But the declaration did not include many specific dates or targets.

Cautious welcome

After the joint declaration, U.N. Secretary-General Antonio Guterres tweeted, “I welcome today’s agreement between China and the USA to work together to take more ambitious #ClimateAction in this decade. Tackling the climate crisis requires international cooperation and solidarity, and this is an important step in the right direction.”

Climate activists offered a cautious welcome to the declaration.

“This announcement comes at a critical moment at COP26 and offers new hope that with the support and backing of two of the world’s most critical voices, we may be able to limit climate change to 1.5 degrees,” Genevieve Maricle, director of U.S. climate policy action at the World Wildlife Fund, wrote in an email to VOA. “But we must also be clear-eyed about what is still required if the two countries are to deliver the emission reductions necessary in the next nine years. 1.5C-alignment will require a whole-of-economy response.”

Momentum

The joint declaration has given new momentum to the negotiations as delegates try to agree on a final text, officially known as the “cover decision,” by the end of the conference on Friday. The text details how parties to the COP26 summit will limit global warming to no more than 1.5 degrees C in Earth’s average temperatures above pre-industrial levels — the target agreed on at the Paris climate summit in 2015.

The first draft text of the decision, published Wednesday, urges countries to “revisit and strengthen” their targets on cutting emissions before the end of 2022. It says rich countries should go beyond the pledge to pay poorer nations $100 billion a year. The draft text calls on governments to phase out coal and fossil fuels, but with no fixed dates.

The COP26 host, British Prime Minister Boris Johnson, urged delegates to “grasp the opportunity.”

“We’re now finding things are tough, but that doesn’t mean it’s impossible. It doesn’t mean that we can’t keep 1.5 alive,” Johnson said. “I think with sufficient energy and commitment, and with leaders from around the world now ringing up their negotiators and asking them to move in the ways that they know they can move and should move, I still think we can achieve it. But I’m not going to pretend to you that it is by any means a done deal.”

Jennifer Morgan, executive director of Greenpeace International, told VOA that the language of the draft text was weak.

“This is not a plan to address the climate emergency. It’s a bit like a pledge and a wink and a hope,” Morgan said. “Countries need to commit to actually come back to increase and strengthen their targets and their actions. That’s clearly one thing. The text does include that coal will be phased out and fossil fuel subsidies will be phased out. I think optimally, you would have dates by which time they would be phased out, but it’s important that they’re there.”

Climate finance

Delegates are also negotiating how much — and quickly — richer nations should pay poorer countries to help them deal with the impact of climate change and de-carbonize their economies. While richer countries are responsible for the majority of greenhouse gas emissions, developing countries tend to suffer greater impacts of climate change. A pledge first made in 2009 by richer nations to pay $100 billion annually — and renewed at the Paris climate summit in 2015 — has still not been fulfilled.

“It’s very frustrating to see countries that have spent six years conspicuously patting themselves on the back for signing that promissory note in Paris, quietly edging towards default now that vulnerable nations and future generations are demanding payment here now in Glasgow,” Johnson said Wednesday.
…

A coalition of 19 countries including Britain and the United States on Wednesday agreed to create zero emissions shipping trade routes between ports to speed up the decarbonization of the global maritime industry, officials involved said. 

Shipping, which transports about 90% of world trade, accounts for nearly 3% of the world’s CO2 emissions.

U.N. shipping agency the International Maritime Organization (IMO) has said it aims to reduce overall greenhouse gas emissions from ships by 50% from 2008 levels by 2050. The goal is not aligned with the 2015 Paris Agreement on climate change and the sector is under pressure to be more ambitious.

The signatory countries involved in the ‘Clydebank Declaration’, which was launched at the COP26 climate summit in Glasgow, agreed to support the establishment of at least six green corridors by 2025, which will require developing supplies of zero emissions fuels, the infrastructure required for decarbonization and regulatory frameworks.

“It is our aspiration to see many more corridors in operation by 2030,” their mission statement said.

Britain’s maritime minister Robert Courts said countries alone would not be able to decarbonize shipping routes without the commitment of private and non-governmental sectors.

“The UK and indeed many of the countries, companies and NGOs here today believe zero emissions international shipping is possible by 2050,” Courts said at the launch.

U.S. Transportation Secretary Pete Buttigieg said the declaration was “a big step forward for green shipping corridors and collective action”.

Buttigieg added that the United States was “pressing for the IMO to adopt a goal of zero emissions for international shipping by 2050”.

The IMO’s Secretary General Kitack Lim said on Saturday “we must upgrade our ambition, keeping up with the latest developments in the global community”.

Industry needs regulatory help

Jan Dieleman, president of ocean transportation with agri business giant Cargill, one of the world’s biggest ship charterers, said “the real challenge is to turn any statements (at COP26) into something meaningful”.

“The majority of the industry has accepted we need to decarbonize,” he told Reuters.

“Industry leadership needs to be followed up with global regulation and policies to ensure industry-wide transformation. We will not succeed without global regulation.”

Christian Ingerslev, chief executive of Maersk Tankers, which has over 210 oil products tankers under commercial management, said it had spent over $30 million over the last three years to bring their carbon emissions down through digital solutions.

“We need governments to not only back the regulatory push but also to help create the zero emissions fuels at scale,” he said.

“The only way this is going to work is to set a market-based measure through a carbon tax.”

Other signatory countries are Australia, Belgium, Canada, Chile, Costa Rica, Denmark, Fiji, Finland, France, Germany, Republic of Ireland, Japan, Marshall Islands, Netherlands, New Zealand, Norway and Sweden.
…

U.S.-based drugmaker Pfizer is seeking to make a booster shot of its COVID-19 vaccine available to all adult Americans 18 years of age and older.

Pfizer filed the request Tuesday with the U.S. Food and Drug Administration, citing a new clinical trial involving 10,000 volunteers who received a third injection of the two-dose vaccine, which it developed in collaboration with German-based BioNTech. According to Pfizer, the preliminary results show the third shot boosted a person’s protection against the virus to about 95%.

The request comes just weeks after the FDA and the U.S. Centers for Disease Control and Prevention authorized a third shot of the Pfizer vaccine for Americans 65 and older, adults at a high risk of severe illness, plus front-line workers such as teachers, health care workers and others whose jobs place them at greater risk of contracting COVID-19. The Pfizer booster shot is available for people regardless of whether they initially received the two-shot Moderna vaccine or the single-dose Johnson & Johnson vaccine, which offers less protection than either the Pfizer or Moderna vaccines.

Astra-Zeneca’s separate unit

British-Swedish drugmaker Astra-Zeneca announced Tuesday that it is creating a separate unit entirely devoted to developing and manufacturing COVID-19 vaccines and treatments. The company’s two-shot vaccine, developed in collaboration with the University of Oxford, had a troubled rollout due to manufacturing delays and confirmation of a link between the vaccine and rare, possibly fatal blood clots, prompting some governments to limit its use among certain age groups.

But the AstraZeneca vaccine is cheaper and easier to use because it does not need to be stored at ultra-cold temperatures than either the Pfizer or Moderna vaccines. The vaccine makes up the bulk of the vaccine supply of COVAX, the international vaccine sharing mechanism for the world’s poorest nations supported by the United Nations and the health organizations Gavi and CEPI.

Meanwhile, the current surge of new COVID-19 infections in Germany prompted Dr. Christian Drosten, the head of virology at Berlin’s Charite Hospital, to issue a warning Wednesday that 100,000 people could die if the vaccination rate does not pick up quickly, and that Germany faces “a very tough winter with new shutdown measures.”

Drosten’s warning coincided with an announcement by the country’s Robert Koch Institute of 39,676 new COVID-19 infections across Germany, a new one-day record. Charite Hospital announced Tuesday that it is postponing all non-critical operations due to the growing rate of new COVID-19 patients.

In a related matter, the country’s vaccine advisory committee Wednesday recommended that people 30 years of age and under be vaccinated only with the Pfizer vaccine. The committee cited a higher risk of younger people developing a rare side effect of myocarditis, an inflammation of the heart, from the Moderna vaccine than the Pfizer version.

NFL vaccination

In the U.S. sports world, quarterback Aaron Rodgers of the National Football League’s Green Bay Packers franchise acknowledged “misleading” the public about his vaccination status shortly before the start of the current season.

Rodgers has been under intense criticism since last week’s revelation that he had tested positive for COVID-19, contradicting his earlier claims back in August that he had been “immunized.” Rodgers told radio sports host Pat McAfee after his diagnosis that he had not taken any of the approved vaccines because of concerns about adverse side effects, and instead relied on homeopathic treatments as an alternative.

In a follow-up interview with McAfee Tuesday, Rodgers said he took “full responsibility” for his comments back in August, but also said that he continued to stand by his concerns about the vaccines. He also said he expects to be cleared to rejoin the Packers in time for Sunday’s game against the Seattle Seahawks.

The NFL has fined Rodgers and teammate Allen Lazard $14,650 each for violating the league’s COVID-19 protocols for unvaccinated players when they attended a Halloween party despite their status. The Packers were also fined $300,000 for failing to discipline the players and for not reporting the violations to NFL officials.

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

U.S. food banks already dealing with increased demand from families sidelined by the pandemic now face a new challenge — surging food prices and supply chain issues walloping the nation.   

The higher costs and limited availability mean some families may get smaller servings or substitutions for staples such as peanut butter, which costs nearly double what it did a year ago. As holidays approach, some food banks worry they won’t have enough stuffing and cranberry sauce for Thanksgiving and Christmas.   

“What happens when food prices go up is food insecurity for those who are experiencing it just gets worse,” said Katie Fitzgerald, chief operating officer of Feeding America, a nonprofit organization that coordinates the efforts of more than 200 food banks across the country.   

Food banks that expanded to meet unprecedented demand brought on by the pandemic won’t be able to absorb forever food costs that are two to three times what they used to be, she said. 

Supply chain disruptions, lower inventory and labor shortages have all contributed to increased costs for charities on which tens of millions of people in the U.S. rely on for nutrition. Donated food is more expensive to move because transportation costs are up, and bottlenecks at factories and ports make it difficult to get goods of all kinds.   

If a food bank has to swap out for smaller sizes of canned tuna or make substitutions in order to stretch their dollars, Fitzgerald said, it’s like adding “insult to injury” to a family reeling from uncertainty.   

In the prohibitively expensive San Francisco Bay Area, the Alameda County Community Food Bank in Oakland is spending an extra $60,000 a month on food. Combined with increased demand, it is now shelling out $1 million a month to distribute 4.5 million pounds (2 million kilograms) of food, said Michael Altfest, the Oakland food bank’s director of community engagement.   

Pre-pandemic, it was spending a quarter of the money for 2.5 million pounds (1.2 million kilograms) of food. 

The cost of canned green beans and peaches is up nearly 9% for them, Altfest said; canned tuna and frozen tilapia up more than 6%; and a case of 5-pound frozen chickens for holiday tables is up 13%. The price for dry oatmeal has climbed 17%. 

On Wednesdays, hundreds of people line up outside a church in east Oakland for its weekly food giveaway. Shiloh Mercy House feeds about 300 families on those days, far less than the 1,100 families it was nourishing at the height of the pandemic, said Jason Bautista, the charity’s event manager. But he’s still seeing new people every week. 

“And a lot of people are just saying they can’t afford food,” he said. “I mean they have the money to buy certain things, but it’s just not stretching.” 

Families can also use a community market Shiloh opened in May. Refrigerators contain cartons of milk and eggs while sacks of hamburger buns and crusty baguettes sit on shelves.

Oakland resident Sonia Lujan-Perez, 45, picked up chicken, celery, onions bread and and potatoes — enough to supplement a Thanksgiving meal for herself, 3-year-old daughter and 18-year-old son. The state of California pays her to care for daughter Melanie, who has special needs, but it’s not enough with monthly rent at $2,200 and the cost of milk, citrus, spinach and chicken so high.   

“That is wonderful for me because I will save a lot of money,” she said, adding that the holiday season is rough with Christmas toys for the children. 

It’s unclear to what extent other concurrent government aid, including an expanded free school lunch program in California and an increase in benefits for people in the federal Supplemental Nutrition Assistance Program, will offset rising food prices. An analysis by the Urban Institute think tank in Washington, D.C. found that while most households are expected to receive sufficient maximum benefits for groceries, a gap still exists in 21 percent of U.S. rural and urban counties. 

Bryan Nichols, vice president of sales for Transnational Foods Inc., which delivers to more than 100 food banks associated with Feeding America, said canned foods from Asia— such as fruit cocktail, pears and mandarin oranges— have been stuck overseas because of a lack of shipping container space.   

Issues in supply seem to be improving and prices stabilizing, but he expects costs to stay high after so many people got out of the shipping business during the pandemic. “An average container coming from Asia prior to COVID would cost about $4,000. Today, that same container is about $18,000,” he said. 

At the Care and Share Food Bank for Southern Colorado in Colorado Springs, CEO Lynne Telford says the cost for a truckload of peanut butter —40,000 pounds (18,100 kilograms)_has soared 80% from June 2019 to $51,000 in August. Mac and cheese is up 19% from a year ago and the wholesale cost of ground beef has increased 5% in three months. They’re spending more money to buy food to make up for waning donations and there’s less to choose from. 

The upcoming holidays worry her. For one thing, the donation cost to buy a frozen turkey has increased from $10 to $15 per bird. 

“The other thing is that we’re not getting enough holiday food, like stuffing and cranberry sauce. So we’re having to supplement with other kinds of food, which you know, makes us sad,” said Telford, whose food bank fed more than 200,000 people last year, distributing 25 million pounds (11.3 million kilograms) of food.   

Alameda County Community Food Bank says it is set for Thanksgiving, with cases of canned cranberry and boxes of mashed potatoes among items stacked in its expanded warehouse. Food resourcing director Wilken Louie ordered eight truckloads of frozen 5-pound chickens —which translates into more than 60,000 birds— to give away free, as well as half-turkeys available at cost. 

For that, Martha Hasal is grateful. 

“It’s going to be an expensive Thanksgiving, turkey is not going to cost like the way it was,” said Hasal as she loaded up on on cauliflower and onions on behalf of the Bay Area American Indian Council. “And they’re not giving out turkey. So thank God they’re giving out the chicken.” 
…

The Federal Reserve is warning that spillover effects from a worsening debt crisis in the Chinese real estate sector could roil global financial markets and damage economic growth, including that of the United States. 

The warning Monday came in the Financial Stability Report, issued twice a year by the U.S. central bank. Previous versions of the report have noted concerns about high levels of debt among Chinese companies.    

But the most recent report specifically mentions China Evergrande Group, a heavily indebted real estate conglomerate that late Tuesday appeared to have narrowly avoided what could have been a catastrophic default on bonds issued to international investors. 

Evergrande has become the symbol of an ongoing effort by the Chinese government to force large companies to shed heavy debt burdens. The government has created new restrictions that make it difficult or impossible for companies like Evergrande to “roll over” their debts as they come due by simply taking out new loans. As a result, many are trying to sell off assets to pay down their debts. 

Although construction on many of its dozens of projects across China has been halted as laborers and suppliers go unpaid, Evergrande has put a brave face on its predicament. In a note to employees published on WeChat, management said, “All employees of the group swear to ensure the construction of the project with the greatest determination and strength, and complete the delivery of the real estate with the highest quality and quantity.” 

Risk of miscalculation 

Forcing large Chinese firms to deleverage is, on the whole, considered a worthy goal. Many analysts believe that the excessive debt of Chinese businesses, much of which is carried on the books of Chinese banks, has injected far too much risk into the Chinese economy.   

However, experts consulted by the Fed said they were concerned that the Chinese government might miscalculate, cracking down too tightly and precipitating a crisis that Beijing cannot control.   

“Several noted that the Chinese authorities appear willing to countenance more volatility than in the past as they pursue their deleveraging and regulatory goals, while worrying that officials could misjudge the scale of instability and contagion emanating from the campaign,” the report said. 

‘Tip of the iceberg’

“It’s tempting to use metaphors like ‘tip of the iceberg’ to describe what’s going on in China’s real estate sector,” Doug Barry, spokesperson for the U.S.-China Business Council, told VOA in an email exchange. “But that we’re even tempted is itself disconcerting, given we’re talking about the world’s second largest economy – one linked to most of the others including the United States’.”   

Barry noted that many Chinese banks are considered “zombies” by most analysts – meaning that they are carrying so much bad debt on their books that they are essentially insolvent and are only being propped up by government support.   

“Time now for China’s leaders to get their macroeconomic policy house in order, which is consistent with the mantra-like message of reforming and opening-up,” Barry added. “Help is available from many quarters including the US government and business community.  How to help should be on the Biden-Xi summit agenda. We all lose if the iceberg finds its mark.” 

Global consequences

According to the Fed report, if the crisis in China were to get out of control, the impact on the rest of the world could be serious. 

“Given the size of China’s economy and financial system as well as its extensive trade linkages with the rest of the world, financial stresses in China could strain global financial markets through a deterioration of risk sentiment, pose risks to global economic growth, and affect the United States,” the report found. 

A narrow escape 

Evergrande has been in the news in recent months because it has been unable to make payments on bonds it has issued. On Wednesday, it was expected to make a late payment of $141.8 million on three different bonds, just as a 30-day grace period was due to expire and plunge the company into default.   

Evergrande came up with the money by orchestrating what appeared to be a last-minute sale of a $144 million portion of its interests in HengTen Networks Group, a Hong Kong-based internet company, according to the South China Morning Post. 

The expected payments do not mean that Evergrande is out of trouble. The company still has more than $300 billion in outstanding debts, with regular payments coming due every few weeks into 2022. 

Signs of spreading contagion 

Evergrande’s share price has already plummeted, and the rates that investors are demanding on existing bonds have skyrocketed. If the effects were limited to Evergrande, that might be manageable. But there is increasing evidence that the “contagion” infecting the company and other large real estate firms is spreading. 

Investors are now selling off bonds issued by other Chinese real estate giants that are considered to be much less risky than Evergrande, such as Country Garden Holdings and Vanke Inc., the largest and second-largest real estate firms in the country, respectively. 

Worse yet, there are signs that investors are getting jittery about companies well outside of the real estate sector. A Bloomberg index tracking investment-grade bonds issued by Chinese firms indicates that the impact is being felt across multiple sectors of the Chinese economy.   

For example, Tencent Holdings, an entertainment conglomerate that owns TikTok and WeChat, among other popular services, saw a sharp decrease in its bond prices over the past two days.  

Restructuring expected 

In general, investment analysts following the developments in China’s property market expect that Beijing will, at some point, step in to prevent a major crisis. But that may not happen in the immediate future. 

In a research note published Monday, economists Ting Lu and Jing Wang of the investment bank Nomura International (Hong Kong) wrote, “We expect most of Beijing’s property curbs will remain in place for a while, with the worst likely yet to come for both China’s property sector and macro-economy.”    

They added, “Beijing’s policy makers may opt to ramp up support to prevent worsening defaults in coming months.” 

It is unclear exactly what a government-led restructuring of Evergrande would look like, but most experts believe it would involve investors in the company’s dollar-denominated bonds facing a significant “haircut.” That is, they would be forced to accept less than they are owed by the company in final payment of its obligations. 
…

Randal Quarles announced Monday that he will resign from the Federal Reserve’s Board of Governors at the end of the year after completing a four-year term as its top bank regulator, opening up another vacancy on the Fed’s influential board for President Joe Biden to fill.

Quarles has served as the Fed’s first vice chair of supervision, which gave him wide-ranging authority over the banking system. In that role, he oversaw a broad loosening of some of the financial regulations that were put in place after the 2008-2009 global financial crisis and recession. 

Quarles’ deregulatory approach prompted criticism from some on the Fed and from many progressives. It has also sparked resistance from progressives to the potential re-nomination of Jerome Powell as Fed chair, who has voted in favor of Quarles’ regulatory changes.

With Powell’s term as chair ending in February, an announcement is expected sometime this month on whether Biden will offer him a second four-year term. The president is considered likely to renominate Powell, although he could decide instead to elevate Lael Brainard, who is the lone Democrat on the Fed’s seven-member board, to the position of chair.

Besides Quarles’ soon-to-be vacated position on the board, a second slot is vacant and a third will open up in January, when Vice Chair Richard Clarida’s term will expire. Counting the seat held by the Fed chair, that gives Biden a total of four potential slots to fill.

The president may decide to renominate Powell while also promoting Brainard to replace Quarles as vice chair for supervision. That move could potentially mollify at least some of Powell’s critics. Brainard cast some dissenting votes against Quarles’ deregulatory efforts.

With several vacancies to fill, Biden has an opportunity to shift the Fed’s board toward a more Democratic-dominated one. That would undercut one key argument against Powell: That even if Biden elevated Brainard to the Fed’s top bank supervisory post, Powell could ignore or override efforts she might take to toughen financial rules. If Biden were to successfully appoint three new governors to the Fed’s board, Democratic appointees would outnumber Republican ones. 

Late last month, in an appearance on CNN, Treasury Secretary Janet Yellen defended Powell against any notion that he has weakened bank rules. Yellen asserted that financial regulations were “markedly strengthened” under Ben Bernanke’s Fed leadership, during her own subsequent term as chair and under Powell, as well.

Members of the Board of Governors have permanent votes at each Fed meeting on interest-rate policy, a powerful tool that affects hiring and the economy. The 12 regional Fed bank presidents also attend policymaking meetings, though only five of them are able to vote on the Fed’s decisions. The New York Fed president holds a permanent vote, and the regional bank presidents hold four votes that rotate among them each year.

The Fed governors also vote on financial regulations, and they could take steps to regulate some cryptocurrencies, known as stablecoins. Some of the officials, including Brainard and Powell, have discussed incorporating climate change considerations into the Fed’s bank oversight, a possibility that has met with opposition from congressional Republicans.

With four slots open, the Biden administration could nominate several candidates as a package. Potential nominees for the three vacancies on the Fed’s board include Lisa Cook, an economist at Michigan State University who would be the first Black woman to serve as a Fed governor, and Sarah Bloom Raskin, who previously served as a Fed governor and as a financial regulator in Maryland. 

Another potential nominee is William Spriggs, chief economist at the AFL-CIO and an economics professor at Howard University. 

Karine Jean-Pierre, a White House spokeswoman, declined to say how Quarles’ departure might influence Biden’s selections for the board. 

“All I can say is this is incredibly important to the president, and he’s taking this seriously,” Jean-Pierre said at Monday’s briefing. 

At a Senate hearing in September, Senator Sherrod Brown, an Ohio Democrat who chairs the Senate Banking Committee, which oversees Fed nominations, said, “It’s time we had a Black woman on the Board of Governors.” 
…

Renting an apartment can be a challenge for new college graduates who are facing the hottest U.S. rental market in a decade, along with some unexpected competition from millennials — people aged 24 to 40 — and even baby boomers — the over-57 club.

“You have aging millennials who are creating families who should be moving from rental situations into ownership but, because of the lack of housing supply, that has been stopped in a lot of instances. And so, what you see is the aging millennial population continues to rent,” says Doug Ressler, manager of business intelligence at Yardi-Matrix, a commercial real estate data and research firm.

“It’s not just about millennials, it’s not just about [Gen] Z [people under 24], we also see that boomers are making a transition, he added. “Their percentage of moving into rental properties is growing in the last five years.” 

There are a variety of reasons older people are opting for rentals, according to Ressler. 

“They’ve lived in a home for so long and they want to be able to reduce their expenses on a fixed income,” he says. “They want to live in a social cohort, like a retirement community, and things like that where it’s much more socially amenable to them.” 

The asking price of apartment rentals was up 10.7% in September 2021 compared to last year at the same time, according to the National Association of Realtors (NAR). 

“It’s a hot market. We have never seen this market so hot in the last decade,” says Gay Cororaton, NAR’s senior economist and director of housing and commercial research. “The average rent growth, year-over-year, is about 3-to-5%. We’re seeing 11% rent growth now, so, clearly, way above trends we’ve had in the past.” 

Renters are feeling the squeeze because the COVID-19 pandemic caused supply chain issues, slowing down home building in the United States. Instead of the usual 5-to-6 month supply of available single-family homes, supply dropped below two months in January 2021. The lack of housing supply means millennials are having a harder time buying a single-family home, which has been the traditional trajectory in the past. 

“The whole building industry was beset by supply chain issues,” Cororaton says. “Shipments couldn’t come in, the price of lumber was rising, manufacturing slowed, workers could not come in [to work], so you have shortages of frames, appliances. So, essentially, just a short supply.” 

The housing supply got even tighter during the pandemic as more investors put their money into housing, according to Cororaton, while existing homeowners looked for second homes. 

“With the pandemic, there was also a big demand for second homes, for vacation homes. Typically, vacation homes accounted for just about 5% [of the market],” she says. “Early this summer they rose to about 8%. So again, strong demand and strong imbalance of demand and supply caused home prices to rise, made them less affordable.” 

The hottest rental markets right now are in the West and South. More renters are moving to Dallas and Houston in Texas, followed by Atlanta, Georgia; New York; Los Angeles; Austin, Texas; Phoenix, Arizona; and Washington, D.C., according to NAR. 

Cororaton expects the coming year to be a little better but says the housing shortage is likely to continue for the next few years. 

 “You know, the old adage of moving from rentals into homeownership, that whole polemic may be changing,” says Ressler. “The sweet spot was always the millennials, and now the millennials are being replaced by the [Gen] Z’s, but the millennials are staying longer and the Z’s are coming on board, and now you’ve got the demographic of the boomers … What it means is a very profitable and dynamic [rental] market that’s going to continue to grow.”
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