On Thursday, analysts spotlighted the news that the White House and congressional Democrats were moving toward dropping corporate tax increases they had wanted to include in the bill, as they hoped to forge a deal that could clear the Senate. A spending deal without corporate tax increases would be a potential boon to profits and share prices.
“A stay of execution on higher corporate tax rates would seem a potentially noteworthy development,” Daragh Maher, a currency analyst with HSBC Securities, wrote in a note to clients on Thursday.
An agreement among Democrats on what’s expected to be a roughly $2 trillion spending plan would also open the door to a separate $1 trillion bipartisan infrastructure plan moving through Congress. Progressives in the House are blocking the infrastructure bill until agreement is reached on the larger bill.
But the prospects for an agreement have helped to lift shares of major engineering and construction materials companies. Terex, which makes equipment used for handling construction materials like stone and asphalt, has jumped more than 5 percent this week. The asphalt maker Vulcan Materials has risen more than 4 percent. Dycom, which specializes in construction and engineering of telecommunication networking systems, was up more than 9 percent.
The renewed confidence remains fragile, with good reason. The coronavirus continues to affect business operations around the world, and the Delta variant demonstrated just how disruptive a new iteration of the virus can be.
Another lingering concern involves the higher costs companies face for everything from raw materials to shipping to labor. If they are unable to pass those higher costs on to consumers, it will cut into their profits.
“That would be big,” Mr. McKnight said. “That would be a material impact to the markets.”
But going into the final months of the year — traditionally a good time for stocks — the market also has plenty of reasons to push higher.
The recent weeks of bumpy trading may have chased shareholders with low confidence — sometimes known as “weak hands” on Wall Street — out of the market, offering potential bargains to long-term buyers.
“Interest rates are relatively stable. Earnings are booming. Covid cases, thankfully, are dropping precipitously in the U.S.,” Mr. Zemsky said. “The weak hands have left the markets and there’s plenty of jobs. So why shouldn’t we have new highs?”
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BEIRUT, Lebanon — Armed clashes between sectarian militias transformed Beirut neighborhoods into a deadly war zone on Thursday, raising fears that violence could fill the void left by the near-collapse of the Lebanese state.
Rival gunmen, chanting in support of their leaders, hid behind cars and dumpsters to fire automatic weapons and rocket-propelled grenades at their rivals. At least six people were killed and 30 wounded. Residents cowered in their homes, and teachers herded children into the hallways and basements of schools to protect them from the shooting.
It was some of the worst violence in years to convulse Beirut, aggravating the sense of instability in a small country already buffeted by devastating political and economic crises and inviting recollections of its civil war that ended more than three decades ago.
Since the fall of 2019, Lebanon’s currency has plummeted more than 90 percent in value, battering the economy and reducing Lebanese who were comfortably middle class to poverty. The World Bank has said Lebanon’s economic collapse could rank among the three worst in the world since the mid-1800s.
Grave fuel shortages in recent months have left all but the wealthiest Lebanese struggling with prolonged power blackouts and long lines at gas stations. The country’s once vaunted banking, medical and education sectors have all suffered profound losses, as professionals have fled to seek livelihoods abroad.
A huge explosion in the port of Beirut last year killed more than 200 people and exposed the results of what many Lebanese see as decades of poor governance and corruption. The Covid-19 pandemic has only aggravated the economic distress and sense of despair.
The fighting on Thursday was part of the continuing fallout from the port explosion.
Two Shiite Muslim parties — Hezbollah, an Iran-backed militant group, and the Amal Movement — had organized a protest calling for the removal of the judge charged with investigating the blast and determining who was responsible.
As the protesters gathered, gunshots rang out, apparently fired by snipers in nearby high buildings, according to witnesses and Lebanese officials, and protesters scattered to side streets, where they retrieved weapons and rejoined the fray.
posts on Twitter, saying that the clashes had been caused by “uncontrolled and widespread weapons that threaten citizens in every time and place,” a reference to Hezbollah’s vast arsenal.
His group accused Hezbollah of exploiting sectarian tensions to derail the port investigation over fears it could be implicated.
Hassan Diab, who, along with his cabinet, resigned after the port explosion.
There had been hope that Mr. Mikati would bring some stability as his new government took shape. But at the same time, tensions over the port investigation grew deeper.
The blast at the port was caused by the sudden combustion of some 2,750 tons of volatile chemicals that had been unloaded into the port years before, but more than a year later no one has been held accountable.
The judge investigating the explosion, Tarek Bitar, has moved to summon a range of powerful politicians and security officials for questioning, which could result in criminal charges against them.
Hezbollah has grown increasingly vocal in its criticism of Judge Bitar, and his inquiry was suspended this week after two former ministers facing charges lodged a legal complaint against him.
Families of the victims condemned the move, with critics saying that the country’s political leadership was trying to shield itself from accountability for the largest explosion in the turbulent country’s history.
On Monday, the judge had issued an arrest warrant for Ali Hussein Khalil, a prominent Shiite member of Parliament and a close adviser to the leader of the Amal party. The warrant leveled serious accusations against Mr. Khalil.
“The nature of the offense,” the document read, is “killing, harming, arson and vandalism linked to probable intent.”
On Tuesday, the Hezbollah leader Hassan Nasrallah issued some of his most scathing criticism of Judge Bitar, accusing him of “politically targeting” officials in his investigation and calling for a protest on Thursday.
When Hezbollah followers joined the protests to call for the judge’s removal, witnesses said, the sniper shots rang out.
Ben Hubbard reported from Beirut, and Marc Santora from London. Reporting was contributed by Hwaida Saad and Asmaa al-Omar from Beirut, and Vivian Yee and Mona el-Naggar from Cairo.
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Consumer prices jumped more than expected last month, with rent, food and furniture costs surging as a limited supply of housing and a shortage of goods stemming from supply chain troubles combined to fuel rapid inflation.
The Consumer Price Index climbed 5.4 percent in September from a year earlier, faster than its 5.3 percent increase through August and above economists’ forecasts. Monthly price gains also exceeded predictions, with the index rising 0.4 percent from August to September.
The figures raise the stakes for both the Federal Reserve and the White House, which are facing a longer period of rapid inflation than they had expected and may soon come under pressure to act to ensure the price gains don’t become a permanent fixture.
On Wednesday, President Biden said his administration was doing what it could to fix supply-chain problems that have helped to produce shortages, long delivery times and rapid price increases for food, televisions, automobiles and other products.
Social Security Administration said on Wednesday that benefits would increase 5.9 percent in 2022, the biggest boost in 40 years. The increase, known as a cost-of-living adjustment, is tied to rising inflation.
jumped early in 2021 as prices for airfares, restaurant meals and apparel recovered after slumping as the economy locked down during the depths of the pandemic. That was expected. But more recently, prices have continued to climb as supply shortages mean businesses cannot keep up with fast-rising demand. Factory shutdowns, clogged shipping routes and labor shortages at ports and along trucking lines have combined to make goods difficult to produce and transport.
expect higher prices. If people believe that their lifestyles will cost more, they may demand higher compensation — and as employers lift pay, they may charge more for their goods to cover the costs, setting off an upward spiral.
though typically too little to fully offset the amount of inflation that has occurred this year. There are notable exceptions to that, including in leisure and hospitality jobs, where pay has accelerated faster than prices.
The fact that rents and other housing costs are now climbing only compounds the concern that price gains are becoming stickier.
“You have the sticky, important and cyclical piece of inflation surprising to the upside,” said Laura Rosner-Warburton, an economist at MacroPolicy Perspectives. “It is certainly a very significant development.”
Matt Permar, a 24-year-old mail carrier from Toledo, Ohio, rents a two-bedroom apartment in a suburban area with a friend from college. The pair had paid $540 a month each for two years, which Mr. Permar called “pretty standard.” But that has changed.
“With the housing market being the way it is, they raised it about $100,” he said of his monthly rent. As a result, Mr. Permar said, he will have less cash to save or invest.
The Fed aims for 2 percent inflation on average over time, which it defines using a different but related index, the Personal Consumption Expenditures measure. That gauge is released at more of a delay, and has also jumped this year.
Central bankers have said they are willing to look past surging prices because the gains are expected to prove transitory, and they expect long-run trends that had kept inflation low for years to come to dominate. But they have grown wary as rapid price gains last.
The Fed’s September meeting minutes showed that “most participants saw inflation risks as weighted to the upside because of concerns that supply disruptions and labor shortages might last longer and might have larger or more persistent effects on prices and wages than they currently assumed.”
Fed officials’ moves toward slowing their bond purchases could leave them more nimble if they find that they need to raise rates to control inflation next year. Officials have signaled that they want to stop buying bonds before raising rates, so that their two tools are not working at odds with each other.
Wall Street is watching every inflation data point closely, because higher rates from the Fed could squeeze growth and stock prices. And climbing costs can cut into corporate profits, denting earning prospects.
White House officials and many Wall Street data watchers tend to emphasize a “core” index of inflation, which strips out volatile food and fuel prices. Core inflation climbed 4 percent in the year through last month, but the monthly gain was less pronounced, at 0.2 percent.
Some economists welcomed that moderation as good news, along with the cooling in key prices, like airfares, that had popped earlier in the economic reopening. Others emphasized that once supply chain kinks were worked out, prices could drop on products like couches, bikes and refrigerators, providing a counterweight to rising housing expenses.
Omair Sharif, founder of Inflation Insights, said he expected consumer price inflation to moderate, coming in at 2.75 percent to 3 percent on a headline basis by next July, and for core inflation to cool down even more.
“I don’t think there’s any reason to panic,” he said.
Ana Swanson and Ben Casselman contributed reporting.
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As the world economy struggles to find its footing, the resurgence of the coronavirus and supply chain chokeholds threaten to hold back the global recovery’s momentum, a closely watched report warned on Tuesday.
The overall growth rate will remain near 6 percent this year, a historically high level after a recession, but the expansion reflects a vast divergence in the fortunes of rich and poor countries, the International Monetary Fund said in its latest World Economic Outlook report.
Worldwide poverty, hunger and unmanageable debt are all on the upswing. Employment has fallen, especially for women, reversing many of the gains they made in recent years.
Uneven access to vaccines and health care is at the heart of the economic disparities. While booster shots are becoming available in some wealthier nations, a staggering 96 percent of people in low-income countries are still unvaccinated.
restrictions and bottlenecks at key ports around the world have caused crippling supply shortages. A lack of workers in many industries is contributing to the clogs. The U.S. Labor Department reported Tuesday that a record 4.3 million workers quit their jobs in August — to take or seek new jobs, or to leave the work force.
Germany, manufacturing output has taken a hit because key commodities are hard to find. And lockdown measures over the summer have dampened growth in Japan.
Fear of rising inflation — even if likely to be temporary — is growing. Prices are climbing for food, medicine and oil as well as for cars and trucks. Inflation worries could also limit governments’ ability to stimulate the economy if a slowdown worsens. As it is, the unusual infusion of public support in the United States and Europe is winding down.
6 percent projected in July. For 2022, the estimate is 4.9 percent.
The key to understanding the global economy is that recoveries in different countries are out of sync, said Gregory Daco, chief U.S. economist at Oxford Economics. “Each and every economy is suffering or benefiting from its own idiosyncratic factors,” he said.
For countries like China, Vietnam and South Korea, whose economies have large manufacturing sectors, “inflation hits them where it hurts the most,” Mr. Daco said, raising costs of raw materials that reverberate through the production process.
The pandemic has underscored how economic success or failure in one country can ripple throughout the world. Floods in Shanxi, China’s mining region, and monsoons in India’s coal-producing states contribute to rising energy prices. A Covid outbreak in Ho Chi Minh City that shuts factories means shop owners in Hoboken won’t have shoes and sweaters to sell.
worldwide surge in energy prices threatens to impose more hardship as it hampers the recovery. This week, oil prices hit a seven-year high in the United States. With winter approaching, Europeans are worried that heating costs will soar when temperatures drop. In other spots, the shortages have cut even deeper, causing blackouts in some places that paralyzed transport, closed factories and threatened food supplies.
China, electricity is being rationed in many provinces and many companies are operating at less than half of their capacity, contributing to an already significant slowdown in growth. India’s coal reserves have dropped to dangerously low levels.
And over the weekend, Lebanon’s six million residents were left without any power for more than 24 hours after fuel shortages shut down the nation’s power plants. The outage is just the latest in a series of disasters there. Its economic and financial crisis has been one of the world’s worst in 150 years.
Oil producers in the Middle East and elsewhere are lately benefiting from the jump in prices. But many nations in the region and North Africa are still trying to resuscitate their pandemic-battered economies. According to newly updated reports from the World Bank, 13 of the 16 countries in that region will have lower standards of living this year than they did before the pandemic, in large part because of “underfinanced, imbalanced and ill-prepared health systems.”
Other countries were so overburdened by debt even before the pandemic that governments were forced to limit spending on health care to repay foreign lenders.
In Latin America and the Caribbean, there are fears of a second lost decade of growth like the one experienced after 2010. In South Africa, over one-third of the population is out of work.
And in East Asia and the Pacific, a World Bank update warned that “Covid-19 threatens to create a combination of slow growth and increasing inequality for the first time this century.” Businesses in Indonesia, Mongolia and the Philippines lost on average 40 percent or more of their typical monthly sales. Thailand and many Pacific island economies are expected to have less output in 2023 than they did before the pandemic.
debt ceiling — can further set back the recovery, the I.M.F. warned.
But the biggest risk is the emergence of a more infectious and deadlier coronavirus variant.
Ms. Gopinath at the I.M.F. urged vaccine manufacturers to support the expansion of vaccine production in developing countries.
Earlier this year, the I.M.F. approved $650 billion worth of emergency currency reserves that have been distributed to countries around the world. In this latest report, it again called on wealthy countries to help ensure that these funds are used to benefit poor countries that have been struggling the most with the fallout of the virus.
“We’re witnessing what I call tragic reversals in development across many dimensions,” said David Malpass, the president of the World Bank. “Progress in reducing extreme poverty has been set back by years — for some, by a decade.”
Ben Casselman contributed reporting.
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SEOUL — North Korea on Monday showed off its growing arsenal of missiles in one of its largest-ever exhibitions of military gear, as its leader, Kim Jong-un, said he didn’t believe repeated assertions by the United States that it harbored no hostile intent toward his country.
The display of might occurred a day after the North marked the 76th anniversary of its ruling Workers Party. It had often celebrated such anniversaries with large military parades. But this year, it instead staged an indoor exhibition of its missile forces on Monday, and on Tuesday, the North’s Korean Central News Agency carried the text of Mr. Kim’s speech at the event.
Mr. Kim vowed to further build up his country’s military might.
“The U.S. has frequently signaled it’s not hostile to our state, but there is no action-based evidence to make us believe that they are not hostile,” he said.
He called the United States “hypocritical” for helping South Korea boost its missile and other military forces in the name of “deterring” North Korea — just as it was condemning the North’s own development and tests of missiles as “provocations.” He said his missiles were for self-defense and peace, not for war, adding that he had no intention of giving them up.
a new, untested intercontinental ballistic missile that made its first public appearance in a military parade last October. That missile looked bigger than the three long-range missiles North Korea launched in 2017, before Mr. Kim started his diplomacy with Donald J. Trump, then the U.S. president.
The exhibition was one of the biggest displays of weaponry North Korea has staged in recent years. It came as Washington repeatedly urged the country to return to nuclear disarmament negotiations.
The Biden administration has said that negotiations can be held “any time, anywhere” and “without preconditions,” adding that it has “no hostile intent” toward the isolated country.
only if Washington proves it’s not hostile — and not just by word, but “through action.”
missile tests — mostly with short-range ballistic missiles — and unveiled plans to build the kind of sophisticated weapons only the world’s major military powers possessed, such as a nuclear-powered submarine.
hamstrung by the pandemic and years of international sanctions.
Outside the exhibition hall, North Korean soldiers displayed their martial-art skills while an air force squadron flew overhead, leaving behind streaks of red, blue and yellow smoke, photos released through state news media showed. Paratroopers descended from the sky with a Worker’s Party flag.
“We are a nuclear power with self-reliance,” a large banner said. Another banner read, “We are a great missile power.”
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DHAKA, Bangladesh — Its name translates into “floating island,” and for up to 100,000 desperate war refugees, the low-slung landmass is supposed to be home.
One refugee, Munazar Islam, initially thought it would be his. He and his family of four fled Myanmar in 2017 after the military there unleashed a campaign of murder and rape that the United Nations has called ethnic cleansing. After years in a refugee camp prone to fires and floods, he accepted an invitation from the government of neighboring Bangladesh to move to the island, Bhasan Char.
Mr. Islam’s relief was short lived. Jobs on the island were nonexistent. Police officers controlled the refugees’ movements and sometimes barred residents from mingling with neighbors, or children from playing together outside. The island was vulnerable to flooding and cyclones and, until relatively recently, would occasionally disappear underwater.
So, in August, Mr. Islam paid human smugglers about $400 to ferry his family somewhere else.
“When I got the chance, I paid and left,” said Mr. Islam, who asked that his location not be revealed because leaving Bhasan Char is illegal. “I died every day on that island, and I didn’t want to be stuck there.”
worsened storms and sent sea levels rising. Human Rights Watch, in a recent report, said refugees and humanitarian workers alike fear that inadequate storm and flood protection could put those on the island at serious risk.
Nevertheless, the Bangladesh government has moved ahead with resettling Rohingya refugees there. They have built housing for more than 100,000 people, with a series of red-roofed dormitories checkering more than two square miles of the western side of the island.
The number of people trying to escape the island has become a growing problem. About 700 have tried to flee, according to the police, sometimes paying $150 per person to find rides on rickety boats. The police have arrested at least 200 people who attempted to leave.
The police cite safety concerns. In August, a boat carrying 42 people capsized, leaving 14 people dead and 13 missing.
“When we catch them, we send them back to the island,” said Abul Kalam Azad, a police officer in the port city of Chattogram on the southeastern coast of Bangladesh. “They say they are mostly upset for not having any job in Bhasan Char. They are eager to work and earn money.”
Some simply want to see their families again.
Last year, Jannat Ara left her hut in Cox’s Bazar for a dangerous sea journey to take a job in Malaysia that would provide food for eight members of her family. Her boat was intercepted by the Bangladesh navy. She was sent to Bhasan Char, where she lived with three other women.
Alone and desperate to leave, in May she seized the first chance she could get to escape. Her parents paid around $600 for the journey back to Cox’s Bazar, she said. She traveled for hours in pitch dark before arriving back at the camp.
“Only Allah knows how I lived there for a year,” Ms. Ara said. “It is a jail with red roof buildings and surrounded by the sea from all sides. I used to call my parents and cry every day.”
Human rights groups have questioned whether the refugees at Bhasan Char have enough access to food, water, schooling and health care. In an emergency, they say, the island also lacks an ability to evacuate residents.
“The fear is always there,” said Dil Mohammad, a Rohingya refugee who arrived on the island in December. “We are surrounded by the sea.”
But the biggest worry, Mr. Mohammad said, is the education of his children.
“My elder son used to go to the community school when we were in Cox’s Bazar,” he said, “but he is about to forget everything he learned, as there is no option for him to study in Bhasan Char.”
The fear of being stuck on the vulnerable island without any means of getting out has led to protests against Bangladeshi authorities by the refugees. The protests began in May, when U.N. human rights investigators paid a visit. They continued in August after the boat incident, with protesters carrying signs criticizing the Bangladesh government and appealing to the U.N. to get sent back to Cox’s Bazar.
Mr. Islam, the Rohingya refugee who fled in August, was one of the protesters. But he was already thinking about getting out.
He lost three cousins during a killing spree carried out by the Myanmar military in Rakhine state in 2017. Once they arrived in Cox’s Bazar, he and his family built a hillside hut out of sticks and plastic tarpaulins and shared it with another family of three.
During hot summer nights, Mr. Islam said, he and the other man slept outside so that their children and wives could sleep comfortably inside.
The promise of an apartment on Bhasan Char held appeal. In January, while other families were forced to go there, he volunteered. They carried a few blankets and two bags of clothes.
He came to regret the decision. When he arrived back at Cox’s Bazar in August, he saw it with new eyes.
“I felt,” he said, “as if I was walking into my home.”
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SAVANNAH, Ga. — Like toy blocks hurled from the heavens, nearly 80,000 shipping containers are stacked in various configurations at the Port of Savannah — 50 percent more than usual.
The steel boxes are waiting for ships to carry them to their final destination, or for trucks to haul them to warehouses that are themselves stuffed to the rafters. Some 700 containers have been left at the port, on the banks of the Savannah River, by their owners for a month or more.
“They’re not coming to get their freight,” complained Griff Lynch, the executive director of the Georgia Ports Authority. “We’ve never had the yard as full as this.”
As he speaks, another vessel glides silently toward an open berth — the 1,207-foot-long Yang Ming Witness, its decks jammed with containers full of clothing, shoes, electronics and other stuff made in factories in Asia. Towering cranes soon pluck the thousands of boxes off the ship — more cargo that must be stashed somewhere.
turmoil in the shipping industry and the broader crisis in supply chains is showing no signs of relenting. It stands as a gnawing source of worry throughout the global economy, challenging once-hopeful assumptions of a vigorous return to growth as vaccines limit the spread of the pandemic.
Germany’s industrial fortunes are sagging, why inflation has become a cause for concern among central bankers, and why American manufacturers are now waiting a record 92 days on average to assemble the parts and raw materials they need to make their goods, according to the Institute of Supply Management.
On the surface, the upheaval appears to be a series of intertwined product shortages. Because shipping containers are in short supply in China, factories that depend on Chinese-made parts and chemicals in the rest of the world have had to limit production.
But the situation at the port of Savannah attests to a more complicated and insidious series of overlapping problems. It is not merely that goods are scarce. It is that products are stuck in the wrong places, and separated from where they are supposed to be by stubborn and constantly shifting barriers.
The shortage of finished goods at retailers represents the flip side of the containers stacked on ships marooned at sea and massed on the riverbanks. The pileup in warehouses is itself a reflection of shortages of truck drivers needed to carry goods to their next destinations.
Vietnam, a hub for the apparel industry, was locked down for several months in the face of a harrowing outbreak of Covid. Diminished cargo leaving Asia should provide respite to clogged ports in the United States, but Mr. Lynch dismisses that line.
“Six or seven weeks later, the ships come in all at once,” Mr. Lynch said. “That doesn’t help.”
Early this year, as shipping prices spiked and containers became scarce, the trouble was widely viewed as the momentary result of pandemic lockdowns. With schools and offices shut, Americans were stocking up on home office gear and equipment for basement gyms, drawing heavily on factories in Asia. Once life reopened, global shipping was supposed to return to normal.
But half a year later, the congestion is worse, with nearly 13 percent of the world’s cargo shipping capacity tied up by delays, according to data compiled by Sea-Intelligence, an industry research firm in Denmark.
Many businesses now assume that the pandemic has fundamentally altered commercial life in permanent ways. Those who might never have shopped for groceries or clothing online — especially older people — have gotten a taste of the convenience, forced to adjust to a lethal virus. Many are likely to retain the habit, maintaining pressure on the supply chain.
“Before the pandemic, could we have imagined mom and dad pointing and clicking to buy a piece of furniture?” said Ruel Joyner, owner of 24E Design Co., a boutique furniture outlet that occupies a brick storefront in Savannah’s graceful historic district. His online sales have tripled over the past year.
On top of those changes in behavior, the supply chain disruption has imposed new frictions.
Mr. Joyner, 46, designs his furniture in Savannah while relying on factories from China and India to manufacture many of his wares. The upheaval on the seas has slowed deliveries, limiting his sales.
He pointed to a brown leather recliner made for him in Dallas. The factory is struggling to secure the reclining mechanism from its supplier in China.
“Where we were getting stuff in 30 days, they are now telling us six months,” Mr. Joyner said. Customers are calling to complain.
His experience also underscores how the shortages and delays have become a source of concern about fair competition. Giant retailers like Target and Home Depot have responded by stockpiling goods in warehouses and, in some cases, chartering their own ships. These options are not available to the average small business.
Bottlenecks have a way of causing more bottlenecks. As many companies have ordered extra and earlier, especially as they prepare for the all-consuming holiday season, warehouses have become jammed. So containers have piled up at the Port of Savannah.
Mr. Lynch’s team — normally focused on its own facilities — has devoted time to scouring unused warehouse spaces inland, seeking to provide customers with alternative channels for their cargo.
Recently, a major retailer completely filled its 3 million square feet of local warehouse space. With its containers piling up in the yard, port staff worked to ship the cargo by rail to Charlotte, N.C., where the retailer had more space.
Such creativity may provide a modicum of relief, but the demands on the port are only intensifying.
On a muggy afternoon in late September, Christmas suddenly felt close at hand. The containers stacked on the riverbanks were surely full of holiday decorations, baking sheets, gifts and other material for the greatest wave of consumption on earth.
Will they get to stores in time?
“That’s the question everyone is asking,” Mr. Lynch said. “I think that’s a very tough question.”
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Job growth slowed to the year’s weakest pace last month as the latest coronavirus wave dashed hopes of an imminent return to normal for the U.S. economy.
Employers added just 194,000 jobs in September, the Labor Department said Friday, down from 366,000 in August — and far below the increase of more than one million in July, before the highly contagious Delta variant led to a spike in coronavirus cases across much of the country. Leisure and hospitality businesses, a main driver of job growth earlier this year, added fewer than 100,000 jobs for the second straight month.
“Employment is slowing when it should be picking up because we’re still on the course set by the virus,” said Diane Swonk, chief economist for the accounting firm Grant Thornton.
for the Federal Reserve, which is weighing when to begin pulling back support for the economy.
It is possible that the recent slowdown is a Delta-driven blip and will soon fade — or, indeed, may already be largely in the past. The data released on Friday was collected in mid-September, when the Delta wave was near its peak. Since then, cases and hospitalizations have fallen in much of the country, and more timely data from private-sector sources suggests that economic activity has begun to rebound. If those trends continue, people on the sidelines could return to the labor force, and hiring should begin to pick up.
“This report is a glance in the rearview mirror,” said Daniel Zhao, an economist at the career site Glassdoor. “There should be some optimism that there should be a reacceleration in October.”
But it is also possible that the damage done by the pandemic will take longer to heal than economists had hoped. Supply-chain disruptions have been unexpectedly persistent, and shifts in consumer behavior during the pandemic may not soon reverse. In surveys, many workers say they are reconsidering their priorities and do not want to return to their old ways of working.
Expanded unemployment benefits, which many businesses blamed for discouraging people from looking for work, ended nationwide early last month. Schools reopened in person in much of the country, which should have made it easier for parents to return to work. Rising vaccination rates were meant to make reluctant workers feel safe enough to resume their job searches. As recently as August, many economists circled September as the month when workers would flood back into the job market.
Instead, the labor force shrank by nearly 200,000 people. The pandemic’s resurgence delayed office reopenings, disrupted the start of the school year and made some people reluctant to accept jobs requiring face-to-face interaction. At the same time, preliminary evidence suggests that the cutoff in unemployment benefits has done little to push people back to work.
“I am a little bit puzzled, to be honest,” said Aneta Markowska, chief financial economist for the investment bank Jefferies. “We all waited for September for this big flurry of hiring on the premise that unemployment benefits and school reopening would bring people back to the labor force. And it just doesn’t seem like we’re seeing that.”
Ms. Markowska said more people might begin to look for work as the Delta variant eased and as they depleted savings accumulated earlier in the pandemic. But some people have retired early or have found other ways to make ends meet and may be slow to return to the labor force, if they come back at all.
In the meantime, people available to work are enjoying a rare moment of leverage. Average earnings rose 19 cents an hour in September and are up more than $1 an hour over the last year, after a series of strong monthly gains. Pay has risen even faster in some low-wage sectors.
Many businesses are finding that higher wages alone aren’t enough to attract workers, said Becky Frankiewicz, president of the Manpower Group, a staffing firm. After years of expecting employees to work whenever they were needed — often with no set schedule and little notice — companies are finding that workers are now setting the terms.
“They get to choose when, where and in what duration they’re working,” Ms. Frankiewicz said. “That is a role reversal. That is a structural change in the workers’ economy.”
Arizmendi Bakery, a cooperative in San Rafael, Calif., recently raised its wages by $3 an hour, by far the biggest increase in its history. But it is still struggling to attract applicants heading into the crucial holiday season.
“There are many, many, many more businesses hiring than there used to be, so we’re competing with many other businesses that we weren’t competing with before,” said Natalie Baddorf, a baker and one of the owners.
The bakery has managed to hire a few people, including one who began this week. But other workers have given their notice to leave. The bakery, which has been operating on reduced hours since the pandemic began, now has enough business to return to its original hours, but cannot find enough labor to do so.
“We’re talking about cloning ourselves,” Ms. Baddorf said.
Jeanna Smialek and Jim Tankersley contributed reporting.
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As Jerome H. Powell’s term as the chair of the Federal Reserve nears its expiration, President Biden’s decision over whether to keep him in the job has grown more complicated amid Senator Elizabeth Warren’s vocal opposition to his leadership and an ethics scandal that has engulfed his central bank.
Mr. Powell, whose four-year term as chair expires early next year, continues to have a good chance of being reappointed because he has earned respect within the White House for his aggressive use of the Fed’s tools in the wake of the pandemic recession, people familiar with the administration’s internal discussions said.
But the decision and the timing of an announcement remain subject to an unusually high level of uncertainty, even for a top economic appointment. The White House will most likely announce Mr. Biden’s choice in the coming weeks, but that, too, is tenuous.
The administration is preoccupied with other major priorities, including passing spending legislation and lifting the nation’s debt limit. But the uncertainty also reflects growing complications around Mr. Powell’s renomination. Ms. Warren, Democrat of Massachusetts, has blasted his track record on big bank regulation and last week called him a “dangerous man” to lead the central bank.
Securities and Exchange Commission to investigate whether the transactions amounted to insider trading. “The responsibility to safeguard the integrity of the Federal Reserve rests squarely with him.”
Asked on Tuesday whether he had confidence in Mr. Powell, the president said he did but that he was still catching up on events.
The White House’s decision over Mr. Powell’s future is pending at a critical moment for the U.S. economy. Millions of jobs are still missing compared with before the pandemic, and inflation has jumped higher as strong demand clashes with supply chain disruptions, presenting dueling challenges for the Fed chair to navigate. The Fed’s next leader will also shape its involvement in climate finance policy, a possible central bank digital currency and the response to the central bank’s ethics dilemma.
“This is starting to feel like an incredibly consequential time for the Fed,” said Dennis Kelleher, the chief executive of Better Markets, a group that has been critical of the Fed’s deregulatory moves in recent years and has criticized it for insufficient ethical oversight.
26 transactions, albeit all in broad-based funds. He also noted that Lael Brainard, a Fed governor and a longtime favorite to replace Mr. Powell if he is not reappointed, did not report any transactions year.
“If you’re trying to go above and beyond, and be beyond reproach, not trading is the better option,” Mr. Hauser said.
bought and sold individual stocks, his 2017 disclosures showed. Ms. Brainard herself has in the past made broad-based transactions. It was the Fed’s more expansive role in 2020 that spurred the backlash.
Agencies often need a “wake-up call” to notice evolving problems with their oversight rules, said Norman Eisen, a senior fellow at the Brookings Institution and an ethics adviser in President Barack Obama’s White House.
“My own view is that Chair Powell is pivoting briskly to address the weaknesses in the Fed’s ethics system,” he said.
enabled big banks to become more intertwined with venture capital.
Critics say reappointing Mr. Powell amounts to retaining that more hands-off regulatory approach. And some progressive groups suggest that if Mr. Powell stays in place, Mr. Quarles will feel emboldened to stick around: He has hinted that he might stay on as a Fed governor once his leadership term ends.
That would mean four of seven Fed Board officials — a majority — would remain Republican-appointed. Two other governors — Michelle W. Bowman and Christopher J. Waller — were nominated by President Donald J. Trump.
During Mr. Powell’s Senate testimony last week, Ms. Warren said renominating him as chair meant “gambling that, for the next five years, a Republican majority at the Federal Reserve, with a Republican chair who has regularly voted to deregulate Wall Street, won’t drive this economy over a financial cliff again.”
Even without Ms. Warren’s approval, Mr. Powell would most likely draw enough support to clear the Senate Banking Committee, the first step before the full Senate could vote on his nomination, because of his continued backing from the committee’s Republicans. But having a powerful Democratic opponent whose support the administration needs on other legislative priorities is not helpful.
The Fed chair does have some powerful allies in the administration, including Ms. Yellen, the Treasury secretary. But the decision rests with Mr. Biden.
“I know he will talk to many people and consider a wide range of evidence and opinions,” Ms. Yellen said on CNBC on Tuesday.
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NECOCLÍ, Colombia — For decades, the Darién Gap, a roadless, lawless stretch of jungle linking South America to the north, was considered so dangerous that only a few thousand people a year were daring, or desperate, enough to try to cross it.
But the economic devastation wrought by the pandemic in South America was such that in the first nine months of this year, Panamanian officials say, an estimated 95,000 migrants, most of whom are Haitian, attempted the passage on their way to the United States.
They made the journey in shorts and flip-flops, their possessions stuffed in plastic bags, their babies in arms and their children by the hand. It’s uncertain how many made it — and how many didn’t. And yet tens of thousands more are gathered in Colombia, eager for their turn to try.
Del Rio and thrusting the Biden administration into a crisis, were just the leading edge of a much larger movement of migrants heading for the jungle and then the United States. People who had fled their troubled Caribbean nation for places as far south as Chile and Brazil began moving north months ago, hoping they would be welcomed by President Biden.
“We very well could be on the precipice of a historic displacement of people in the Americas toward the United States,” said Dan Restrepo, the former national security adviser for Latin America under President Barack Obama. “When one of the most impenetrable stretches of jungle in the world is no longer stopping people, it underscores that political borders, however enforced, won’t either.”
The Darién, also known as the Isthmus of Panama, is a narrow swath of land dividing the Pacific Ocean and the Caribbean Sea. Parts are so inaccessible that when engineers built the Pan-American Highway in the 1930s, linking Alaska to Argentina, only one section was left unfinished. That piece — 66 roadless miles of turbulent rivers, rugged mountains and venomous snakes — became known as the Darién Gap. Today, the journey through the gap is made more perilous by a criminal group and human traffickers who control the region, often extorting and sometimes sexually assaulting migrants.
a growing number of migrants had begun to brave the corridor, a journey that can take a week or more on foot. But after the pandemic, which hit South America particularly hard, that surge has become a flood of desperate families. At least one in five of those who crossed this year were children, Panamanian officials said.
As the number of migrants arriving at the U.S. border grew, the Biden administration retreated from a more open approach to migration embraced in the president’s first days in office to a tougher stance with a singular goal: deterring people from even attempting to enter the United States.
said in September. “Your journey will not succeed, and you will be endangering your life and your family’s lives.”
But the warning is unlikely to turn back the tens of thousands of Haitians who are already on the road.
On a recent day, there were about 20,000 migrants in Necoclí, in Colombia. And there are up to 30,000 Haitian migrants already in Mexico, according to a senior official in the Mexican foreign ministry who spoke on the condition of anonymity.
“They’ve already started the journey, they’ve already started to think about the U.S.,” said Andrew Selee, president of the Migration Policy Institute. “It’s not that easy to turn that off.”
On a recent morning, Ms. Alix and Mr. Damier woke their children before dawn in the small home they’d been sharing with a dozen other migrants. Their turn had come to board the boat that would take them to the edge of the jungle.
In the darkness, Ms. Alix threw her backpack over her shoulders and strapped Vladensky to her chest. In one hand she carried a pot of spaghetti, meant to sustain them while it lasted. Her other hand reached out to her toddler, Farline.
On the beach the family joined a crowd of others. A dockworker handed a large life vest to Ms. Alix. She draped it over Farline’s small body and climbed into the boat. Aboard: 47 adults, 13 children, seven infants, all migrants.
“Goodbye!” yelled a man from the boat company. “Have a good trip!”
Government officials are largely absent from the Darién. The area is controlled by a criminal group known as the Clan del Golfo, whose members view migrants much as they view drugs: goods they can tax and control.
Once the migrants step off the boats, they are met by smugglers — typically poor men in the area who offer to take them into the jungle, starting at $250 a person. For an extra $10 they will carry a backpack. For another $30, a child.
Farline and her family spent the night in a tent at the edge of the jungle. In the morning, they set out before sunrise, alongside hundreds of others.
“I carry bags,” smugglers shouted. “I carry children!”
Soon, a vast plain became a towering forest. Farline clambered between trees, following her parents. Vladensky slept on his mother’s chest. Other children cried, the first to show signs of exhaustion.
As the group crossed river after river, tired adults began to abandon their bags. They clambered up and then down a steep, muddy slope, only to stare up at the next one. Faces that were hopeful, even excited, that morning went slack with exhaustion.
A woman in a leopard-print dress fainted. A crowd formed. A man gave her water. Then they all rose, picked up their bags and began to walk.
Today, after all, was just day one in the Darién, and they had a long journey ahead.
Julie Turkewitz reported from Necoclí, Colombia; Natalie Kitroeff from Mexico City; and Sofía Villamil from Necoclí and Bajo Chiquito, Panama. Oscar Lopez contributed reporting from Mexico City, and Mary Triny Zea from Panama City.
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