Biden and Republicans Spar Over Unemployment as Job Gains Disappoint

WASHINGTON — The disappointing jobs report released Friday by the Labor Department is posing the greatest test yet of President Biden’s strategy to revive the economy, with business groups and Republicans warning that the president’s policies are causing a labor shortage and that his broader agenda risks stoking runaway inflation.

But the Biden administration showed no signs on Friday of changing course, with the president defending the more generous jobless benefits included in the $1.9 trillion bill he signed into law in March and saying the $4 trillion in spending he proposed for infrastructure, child care, education and other measures would help create more and better-paying jobs after the pandemic.

Speaking at the White House, Mr. Biden urged “perspective” on the report, which showed only 266,000 new jobs added in April. He said it would take time for his aid bill to fully reinvigorate the economy and hailed the more than 1.5 million jobs added since he took office. And he rejected what he called “loose talk that Americans just don’t want to work.”

“The data shows that more workers are looking for jobs,” he said, “and many can’t find them.”

Republicans cast the report as a sign of failure for Mr. Biden’s policies, even though job creation has accelerated since Mr. Biden replaced President Donald J. Trump in the White House. They called on his administration to end the $300 weekly unemployment supplement, while several Republican governors — including those in Arkansas, Montana and South Carolina — moved to end the benefit for unemployed people in their states, citing worker shortages.

relief money to subsidize tax cuts, which could further slow the rollout.

Mr. Biden said at the White House that the administration would begin releasing the first batch of money to state and local governments this month. He said the money would not restore all of the lost jobs in one month, “but you’re going to start seeing those jobs in state and local workers coming back.”

The administration also took steps on Friday to get money out the door more quickly, saying the Treasury Department would release $21.6 billion of rental assistance that was included in the pandemic relief legislation to provide additional support to millions of people who could be facing eviction in the coming months.

Officials said they expected increased vaccination rates to ease some lingering fears about returning to jobs in the pandemic. The number of Americans 18 to 64 who are fully vaccinated grew by 22 million from mid-April, when the survey for the jobs report was conducted, to Friday. That was an acceleration from the previous month. Some White House officials said the administration’s push to further increase the ranks of the vaccinated could be the most important policy variable for the economy this summer.

Treasury Secretary Janet L. Yellen, speaking at the White House, said that a lack of child care related to irregular school schedules was making it a challenge to get the labor market back to full strength. She also said that health concerns about the pandemic were holding back some workers who might return to the market.

“I don’t think that the addition to unemployment compensation is really the factor that’s making the difference,” Ms. Yellen said.

She said that she believed the labor market was healthier than the figures released on Friday suggested, but she allowed that the economic recovery would take time.

“We’ve had a very unusual hit to our economy,” Ms. Yellen said, “and the road back is going to be somewhat bumpy.”

Ms. Boushey and Mr. Bernstein said that it appeared the economy was working through a variety of rapid changes related to the pandemic, including supply chain disruptions that have hurt automobile manufacturing by reducing the availability of semiconductor chips and businesses beginning to rehire after a year of depressed activity because of the virus.

“It’s our view that these misalignments and bottlenecks are transitory,” Mr. Bernstein said, “and they’re what you expect from an economy going from shutdown to reopening.”

Other key economic officials treated the report as a sign that the labor recovery ahead is likely to prove wildly unpredictable. Robert S. Kaplan, the president at the Federal Reserve Bank of Dallas, said in an interview that his economics team had warned him that the April report might show a significant slowdown as shortages of materials — including lumber and computer chips — and labor bit into employment growth.

He said he was hoping to see those supply bottlenecks cleared up, but he was watching carefully in case they did not resolve quickly.

“It shows me that getting the unemployment rate down and moving forward to improved employment to population is going to have fits and starts,” Mr. Kaplan said. He noted that sectors that were struggling to acquire materials, like manufacturing, shed jobs, and he said leisure and hospitality companies would have added more positions if not for challenges in finding labor.

“It’s just one jobs report,” cautioned Tom Barkin, the president of the Federal Reserve Bank of Richmond, in Virginia. But he said labor supply issues could be at play: Some people may have retired, others may have health concerns, and unemployment insurance could be encouraging low-paid workers to stay at home or allowing them to come back on their own terms.

“I get the feeling that people are being choosy,” Mr. Barkin said. “The first question I have in my mind is — is it temporary or is it more structural?”

He said that the supply constraints playing out were likely to fade over time, and that while businesses complain about rising input costs and might have to raise entry-level wages somewhat, he struggled to see that leading to much higher inflation — the kind that would worry the Fed.

The Fed is trying to achieve maximum employment and stable inflation around 2 percent on average. It has pledged to keep its cheap-money policies, which make borrowing inexpensive, in place until it sees realized progress toward those goals.

Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, said the payrolls disappointment vindicated the Fed’s slow-moving stance.

“I feel very good about our policy approach, which is outcome-based,” Mr. Kashkari said, speaking on a Bloomberg television interview shortly after the report came out. “Let’s actually allow the labor market to recover, let’s not just forecast that it’s going to recover.”

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Weak Jobs Report Could Help Fed Argue for Low Rates

Federal Reserve officials have been facing a chorus of criticism for pledging to keep interest rates at rock bottom and for buying government-backed bonds at an enormous scale even as the United States economy bounces back from the pandemic. But after a weaker-than-expected April jobs report, they may have an easier time selling the idea that patience is a virtue.

“I feel very good about our policy approach, which is outcome-based,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said in a Bloomberg television interview shortly after the report came out. “Let’s actually allow the labor market to recover, let’s not just forecast that it’s going to recover.”

American employers added 266,000 jobs last month, far short of the one million that economists had been expecting. Analysts agreed that the figure was a severe disappointment, but lined up on little else: Some pointed to the numbers as a sign that the economy remains in a deep hole, while others saw in it validation for the idea that expanded unemployment insurance is discouraging work, causing labor supply issues that are hurting businesses.

What is clear is that the economy is nowhere near any mainstream estimate of full employment. And how the labor market recovery will look going forward — as the economy reopens and a huge number of displaced workers must reshuffle into jobs that suit their needs and interests — is wildly uncertain.

economically damaging downward spiral. Still, Fed officials have faced recent criticism for their new, less forward-looking approach. Some economists have worried that it could make them too slow to react to changes in the economy.

Fed doctrine had long been “to take away the punch bowl before the party gets out of hand,” Lawrence H. Summers, a former Treasury secretary, said at a recent webcast event. “What we’ve now said is — we’re not going to do anything until we see a bunch of drunk people staggering around.”

April’s report could make it easier for the central bank to justify the new method, since it shows how challenging it will be to forecast the speed and tenor of the recovery from the pandemic, which is likely to proceed differently than economic healing after a typical recession would.

“This is a highly uncertain environment that we’re in,” Mr. Kashkari told Bloomberg. “We have a long way to go, and let’s not prematurely declare victory.”

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Jobless Claims Continue to Fall: Live Updates

filed first-time applications for state jobless benefits, the Labor Department said Thursday, down more than 100,000 from a week earlier. In addition, 101,000 people filed for Pandemic Unemployment Assistance, a federal program covering freelancers, self-employed workers and others who don’t qualify for regular benefits. Neither figure is seasonally adjusted.

Applications for unemployment benefits remain high by historical standards, but they have fallen significantly in recent weeks after progress stalled in the fall and winter. Weekly filings for state benefits, which peaked at more than six million last spring, fell below 700,000 for the first time in late March and has now been below that level for four straight weeks.

“In the last few weeks we’ve seen a pretty dramatic improvement in the claims data, and I think that does signal that there’s been an acceleration in the labor market recovery in April,” said Daniel Zhao, senior economist at the employment site ZipRecruiter.

Economists should get a clearer picture of the labor market’s progress on Friday when the Labor Department will release data on hiring and unemployment in April. The report is expected to show that employers added about one million jobs last month, up from 916,000 in March. The leisure and hospitality industry, which was hardest hit by the initial phase of the pandemic last spring, has led the way in the recovery in recent months, a trend that forecasters believe continued in April.

Many employers have said in recent weeks that they would like to hire even faster but have struggled to find enough workers. Some have blamed enhanced unemployment benefits for discouraging people from returning to work. On Tuesday, Gov. Greg Gianforte of Montana said his state would pull out of a federal program offering enhanced benefits to unemployed workers and would instead pay a $1,200 bonus to recipients when they find new jobs.

Economic research has found that unemployment benefits can reduce the intensity with which workers search for jobs. But most studies find that the impact on the overall labor market is small, especially when unemployment is high. And Mr. Zhao and other economists say there are other reasons that labor supply might be rebounding more slowly than labor demand. Many potential workers are juggling child care or other responsibilities at home; others remain cautious about the health risks of returning to in-person work.

“I think we will see labor supply improve pretty dramatically in the coming months as the pandemic abates,” Mr. Zhao said.

The Bank of England in London. Policymakers forecast unemployment in Britain to peak at 5.5 percent later this year, thanks to the extension of the government’s furlough program.
Credit…Matt Dunham/Associated Press

The Bank of England unveiled a much brighter outlook for the British economy on Thursday, saying it would return to its prepandemic levels at the end of this year as lockdowns ended, consumers spent billions of pounds in extra savings and the vaccine rollout reduced public health worries.

The central bank, in its quarterly monetary report, raised its growth forecasts and slashed its predictions for unemployment. The British economy is now projected to grow 7.25 percent this year, compared to a forecast of 5 percent growth three months ago. This would be the fastest pace of expansion for the economy since official records began in 1949, pulling Britain out of its worst recession in three centuries.

The higher forecast comes after the government has announced tens of billions of pounds in additional spending to see workers and businesses through the summer, and outlined its plan to end lockdown restrictions by late June.

Britain’s economic output “recovers strongly over the course of 2021, albeit only back to pre-Covid levels,” Andrew Bailey, the governor of the Bank of England, said in a news conference on Thursday.

“Of course, there remains uncertainty around how the pandemic might evolve and so there are risks around this projection, including from renewed waves of infections in the U.K. and other countries,” he said.

He added that there was also an “enormous amount of uncertainty” about how the pandemic might permanently change people’s working and living patterns, and the effect that will have on the shape of the economy.

Even though inflation is expected to rise above the central bank’s 2 percent target, policymakers voted unanimously to keep the benchmark interest rate at 0.1 percent. It cut rates to that level in March 2020 at the start of the coronavirus pandemic.

The central bank also said it would slow the pace of its £875 billion government bond-buying program, which was projected to run through 2021, so that it does not finish the program before the end of the year. If the central bank had continued at its current pace, the buying program would have ended several months early. Instead of buying £4.4 billion government bonds a week, the central bank will buy £3.4 billion. The program helps keep government borrowing costs low and supports the economy by encouraging investors to buy other assets.

The minutes of the central bank’s policy meeting showed that officials don’t intent to tighten monetary policy until “there is clear evidence that significant progress” is made on the economic recovery and inflation is sustainably at the bank’s target.

The Bank of England now forecasts unemployment to peak at 5.5 percent later this year, because of the extension of the government’s furlough program. In February, the central bank predicted the unemployment rate would rise as high as 7.75 percent.

The easing of pandemic restrictions will also increase consumer spending. The central bank added that it now expected people to spend about 10 percent of the excess savings they built up in lockdown based on new survey evidence. The previous estimate was just 5 percent.

But these extra savings are “not evenly distributed,” Mr. Bailey said. And they are concentrated among people who are older and already wealthier.

Gary Gensler, Chairman of the Securities and Exchange Commission.
Credit…Kayana Szymczak for The New York Times

Gary Gensler, the newly installed chair of the Securities and Exchange Commission, is testifying on Thursday, at noon Eastern time, before the House Financial Services Committee. He will address the meme-stock volatility in January that led to trading restrictions and prompted an outcry about Wall Street’s relationship with retail investors.

“I think these events are part of a larger story about the intersection of finance and technology,” Mr. Gensler will say in his prepared remarks, highlighting seven factors at play that also hint at his regulatory priorities in the months ahead:

  • Gamification. Fun features combined with predictive analytics on trading apps increase engagement. Watching a movie based on a streaming app recommendation, “we might lose a couple of hours,” Mr. Gensler said. “Following the wrong prompt on a trading app, however, could have a substantial effect on a saver’s financial position.” He suggested it may be time for new rules to address the practice.

  • Payment for order flow. Many retail brokers don’t charge fees for trades, earning money instead by directing customer orders to wholesalers to execute. More trades generate more payments, which raises questions about conflicts of interest, consumer protection and data aggregation, Mr. Gensler said.

  • Market structure. A few wholesalers account for a growing share of retail stock trading volume, with Citadel Securities particularly dominant. This concentration can “lead to fragility, deter healthy competition and limit innovation,” Mr. Gensler said.

  • Short-selling transparency. He wants to increase “transparency in the stock loan market.”

  • Social media. Investors exchanging views online is fine, but Mr. Gensler worries bad actors take advantage of legitimate debates. In particular, this risks sending false signals to algorithms that some investors use to gauge the “relationships between words and prices.”

  • Plumbing. When brokers restricted customer trading in meme stocks, they blamed clearinghouses and two-day settlement times. Mr. Gensler said same-day settlement is technologically possible and has asked for a draft proposal on speeding up settlement.

  • Systemic risks. The S.E.C. will issue a report over the summer, the chair said, examining what happened in detail during the meme-stock frenzy and considering “whether expanded enforcement mechanisms are necessary.”

Volkswagen’s display at the Shanghai auto show in China last month. China is the German carmaker’s largest market.
Credit…Aly Song/Reuters

A spike in sales to Chinese customers helped Volkswagen rebound strongly from the disruption caused by the pandemic, the carmaker said Thursday, underlining China’s importance to the German economy.

Sales in the first three months of 2021 rose 13 percent compared to a year earlier, to 62.4 billion euros, or $75 billion, while profit rose nearly sevenfold to 3.4 billion euros, the company said. Vehicle sales in China, which is Volkswagen’s largest market, rose more than 60 percent.

The recovery in sales bodes well for the German economy. Vehicles are the country’s biggest export product. But Volkswagen also illustrates Germany’s dependence on China when tensions between Beijing and the European Union are rising because of the Chinese government’s treatment of minority groups and its crackdown on dissent in Hong Kong.

As is typical for Volkswagen, the company’s Audi and Porsche divisions generated most of the profit. The luxury vehicles have a higher profit margin than the more affordable cars that account for most of Volkswagen’s volume.

Volkswagen said it was able to manage the shortage of semiconductors that has afflicted all carmakers in recent months, but warned that the chip famine could become more acute in months to come.

Volkswagen sold 60,000 battery-powered vehicles out of a total of 2.4 million during the quarter. That may be a disappointment to the company, which has staked its future on a new line of electric cars, the first of which went on sale late in 2020.

A coronavirus testing center in Soweto, South Africa. The World Trade Organization is considering a proposal to provide drugmakers around the world access to the patents behind coronavirus vaccines.
Credit…Joao Silva/The New York Times
  • Stocks on Wall Street were flat on Thursday, while European shares were mixed, as investors digested an assortment of corporate earnings reports.

  • The S&P 500 was little changed in early trading. The benchmark Stoxx Europe 600 index was 0.3 percent lower and the FTSE 100 in Britain was 0.2 percent higher.

  • In the United States, the Labor Department revealed its weekly tally for new state claims for unemployment insurance on Thursday, which showed the number is continuing to decline. About 505,000 people filed first-time applications, down more than 100,000 from a week earlier.

  • Oil futures fell after recent gains, with West Texas Intermediate, the American benchmark, down 0.6 percent to $65.25 a barrel. Yields on 10-year Treasury notes were unchanged.

  • The Biden administration’s surprise announcement that it would support efforts to waive intellectual property protections for coronavirus vaccines caused share prices for some pharmaceutical companies to tumble.

  • Pfizer fell 3.6 percent in early trading Thursday. BioNTech, the German firm that developed a vaccine with Pfizer, was also lower.

  • Shares of Moderna fell nearly 10 percent, while Novavax, the Maryland-based drug maker which is expected to seek U.S. approval for its vaccine soon, dropped more than 6 percent on Thursday.

  • The British pound rose 0.2 percent against the U.S. dollar as the Bank of England announced it would hold interest rates at 0.1 percent but would slow down the pace of its bond-buying program for the rest of the year. Policymakers also increased their forecasts for the British economy.

A Eurostar train in London’s St. Pancras International station in December. As an independent train operator, Eurostar isn’t eligible for direct state aid.
Credit…Suzie Howell for The New York Times

Consider it a small victory.

Eurostar, the sleek and speedy high-speed train service that ties London, Paris, Brussels, Amsterdam and other cities, will increase as of May 27 its timetable to two trains per day on its once heavily-traveled Paris-London route, up from just one round-trip train per day imposed during the pandemic.

The slightly increased service comes as governments in Europe plan to slowly lift longstanding national restrictions on travel designed to combat the spread of the virus. From a peak of running more than 60 trains a day, Eurostar cut service during the pandemic to one daily round-trip between London and Paris, and one on its London-Brussels and Amsterdam routes.

The Brussels/Amsterdam route will remain the same with one train in each direction per day, a spokesman said, adding that Eurostar will adapt its timetable should demand increase, which still depends on travel restrictions across its routes.

Eurostar’s future has been thrown into turmoil as pandemic measures led last year to a 95 percent slump in ridership, creating a cash crunch and pushing the iconic company to the brink of bankruptcy.

While some airlines and other tourist-related businesses in Europe have been able to rely on government support during the crisis, Eurostar, an independent train operator, isn’t eligible for direct state aid.

Last month, the company, which is now owned by a consortium that includes the French and Belgium national railways, reportedly secured a deal with its lenders to refinance a debt pile worth £400 million ($553 million). The British government, which in 2015 sold its stake in the rail company, last month declined to back a broader financial rescue package.

A spokesman for Eurostar said it had no new details on a financial rescue, but said that “conversations are still progressing.” The spokesman added that it is “too early to predict a recovery to prepandemic levels, this would be very much dependent on the easing of international travel restrictions which are yet to be confirmed.”

Eurostar trains will continue to maintain some vacant seats onboard to allow for social distancing. The company said it is advising riders to check with their embassies before traveling, and to consult the company’s website for the latest information.

Tim Lorentz with the LaBoata in Spokane, Wash.
Credit…Allie Lorentz

Tim Lorentz, a special-education teacher in Spokane, Wash., loves both cars and boats. He has raced cars and has owned a variety of muscle and exotic vehicles.

“Car guys always want to own or drive a unique car that no one else owns,” Mr. Lorentz said. “I created an eight-passenger convertible. Why not a boat mounted over a convertible? I have never seen another one like it.”

And so the LaBoata was born. Mr. Lorentz, now 65, built it in 2009 using a white 1993 LeBaron a used 17-foot boat he got for $100, Mercedes Lilienthal reports for The New York Times.

The LaBoata was “instant fun,” he said, until he received a letter from the Washington Department of Motor Vehicles canceling his registration and title. The authorities had noticed his converted convertible, and they weren’t amused. He removed the boat shell, drove the car to the D.M.V. and had it reinspected, reinstated and relicensed. He went home and popped the boat back on, and he has had no issues since.

Mr. Lorentz is part of a community that builds cars out of scrap. Kelvin Odartei Cruickshank, who is 19 and lives in Accra, Ghana’s capital city, built, from scratch, a two-person car that looks like a ramshackle DeLorean. It took three years to complete. Mr. Cruickshank used about $200 of scrap metal and parts not normally used in cars because of financial constraints.

  • Fox News, the cable news giant controlled by Rupert Murdoch, kept its parent company flush in the first three months of the year, notching a slight gain in profit and sales despite a drop in viewers. Altogether, Fox Corporation beat Wall Street expectations with a sevenfold increase in profit to $567 million and a 6.5 percent drop in revenue to $3.2 billion compared with the same period a year prior. But revenue at most of its businesses dropped as fewer viewers tuned into the company’s cable channels and the Fox broadcast network, in part because Fox did not host the Super Bowl this year. Total advertising sales fell 24 percent to $1.2 billion.

  • Uber said its business was recovering from the slowdown caused by the pandemic, although it continued to lose money. The company said on Wednesday that revenue was $2.9 billion in the first three months of the year, down 11 percent from the same period a year ago. Excluding money earmarked for a settlement with drivers in Britain, Uber’s revenue was $3.5 billion, an 8 percent increase from the previous year that outpaced Wall Street expectations of $3.28 billion.

  • The New York Times Company recorded its smallest gain in new subscribers in a year and a half. The Times reported a total of 7.8 million subscribers across both print and digital platforms, with 6.9 million coming for online news or its Cooking and Games apps. The company added 301,000 digital customers for the first three months of the year, the lowest increase since the third quarter of 2019. The company reported adjusted operating profit of $68 million, a 54 percent jump from last year, as it generated more dollars from each subscriber, partly because of the expiration of promotional rates as the new year rolled over. Total revenue rose modestly, about 6.6 percent, to $473 million.

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Bank of England predicts a faster recovery and slows down its bond-buying program.

The Bank of England unveiled a much brighter outlook for the British economy on Thursday, saying it would return to its prepandemic levels at the end of this year as lockdowns ended, consumers spent billions of pounds in extra savings and the vaccine rollout reduced public health worries.

The central bank, in its quarterly monetary report, raised its growth forecasts and slashed its predictions for unemployment. The British economy is now projected to grow 7.25 percent this year, compared to a forecast of 5 percent growth three months ago. This would be the fastest pace of expansion for the economy since official records began in 1949, pulling Britain out of its worst recession in three centuries.

The higher forecast comes after the government has announced tens of billions of pounds in additional spending to see workers and businesses through the summer, and outlined its plan to end lockdown restrictions by late June.

Britain’s economic output “recovers strongly over the course of 2021, albeit only back to pre-Covid levels,” Andrew Bailey, the governor of the Bank of England, said in a news conference on Thursday.

“Of course, there remains uncertainty around how the pandemic might evolve and so there are risks around this projection, including from renewed waves of infections in the U.K. and other countries,” he said.

He added that there was also an “enormous amount of uncertainty” about how the pandemic might permanently change people’s working and living patterns, and the effect that will have on the shape of the economy.

Even though inflation is expected to rise above the central bank’s 2 percent target, policymakers voted unanimously to keep the benchmark interest rate at 0.1 percent. It cut rates to that level in March 2020 at the start of the coronavirus pandemic.

The central bank also said it would slow the pace of its £875 billion government bond-buying program, which was projected to run through 2021, so that it does not finish the program before the end of the year. If the central bank had continued at its current pace, the buying program would have ended several months early. Instead of buying £4.4 billion government bonds a week, the central bank will buy £3.4 billion. The program helps keep government borrowing costs low and supports the economy by encouraging investors to buy other assets.

The minutes of the central bank’s policy meeting showed that officials don’t intent to tighten monetary policy until “there is clear evidence that significant progress” is made on the economic recovery and inflation is sustainably at the bank’s target.

The Bank of England now forecasts unemployment to peak at 5.5 percent later this year, because of the extension of the government’s furlough program. In February, the central bank predicted the unemployment rate would rise as high as 7.75 percent.

The easing of pandemic restrictions will also increase consumer spending. The central bank added that it now expected people to spend about 10 percent of the excess savings they built up in lockdown based on new survey evidence. The previous estimate was just 5 percent.

But these extra savings are “not evenly distributed,” Mr. Bailey said. And they are concentrated among people who are older and already wealthier.

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Fed Officials Tamp Down Overheating Concerns

Inflation jitters are popping up in earnings call chatter, spooking investors and dominating business television talk shows. One place they aren’t taking over, it appears, is the Federal Reserve.

America’s central bank is responsible for fostering maximum employment and stable inflation — making it the first line of defense against fast price gains. Fed officials have been clear for months that they expect prices to pop this spring and summer as the economy reopens but that they think the jump will prove temporary. By and large, they are sticking to that script.

During a volley of speeches and appearances on Wednesday, central bank policymakers made clear that they do not think incipient price pressures are going to prove painful or last long. Some suggested that they would even welcome what a hotter economy might have to offer.

“You talk about the economy overheating, you kind of go: ‘Gosh, I kind of like producing as much as we can,’” Charles Evans, president of the Federal Reserve Bank of Chicago, said during a call with reporters. “Why would you like unemployment to be higher when it can be lower? It depends on what the added cost is.”

aims for inflation at 2 percent on average over time, so it is currently angling for a period of slightly higher price gains to offset years and years of very weak gains. Price pressures are picking up a bit from very slow readings a year ago during the worst of the pandemic shutdowns, and economists think supply bottlenecks could keep them elevated for a time as producers try to ramp up for a national reopening.

But officials have been clear they do not expect that situation to force them to rapidly dial back the policies they have in place to bolster the economy — buying $120 billion in government-backed bonds per month and keeping interest rates at rock bottom.

“We’re still a long way away from our goals, and in our new framework we want to see actual progress, not just forecast progress,” Richard H. Clarida, the central bank’s vice chair, said on CNBC on Wednesday afternoon. “As we move through the year, we’ll get more data.”

The Fed’s policymakers have repeatedly said they want to see “substantial further progress” before slowing bond purchases, and full employment and 2 percent inflation with evidence that it will stay above that level for some time before lifting interest rates.

They’ve drawn a distinction between inflation that jumps in 2021 because of reopening quirks and sustainable price pressures that suggest they’ve achieved their goals.

prepared remarks released Wednesday morning. “I am encouraged by the recent pace of the economic recovery, and I remain optimistic that this strength will continue in the coming months.”

If prices take off, the Fed could dial back its buying or lift rates. Either move would make borrowing more expensive, likely slowing the economy and denting the stock market.

“Our baseline view is that we don’t overheat,” Mr. Clarida said. “If there are unforeseen, persistent upward pressures on prices,” then “we would use our tools to bring it down.”

Historically, abrupt Fed policy changes have at times set off recessions. That’s why some economists are worried. If the Fed is forced to act to choke off pesky price pressures, it entails real risks for the economy that could hurt the most vulnerable, who tend to lose jobs first in downturns.

avoid taking too defensive a position.

If the Fed signals that it may lift rates sooner and market-based financial conditions tighten in response — often the case with central bank communications — it could make borrowing more expensive and slow the economy. In that event, it might take longer for the labor market to reach full strength.

“Why do we have bottlenecks?” Ms. Daly asked on Twitter on Wednesday. “Newly vaccinated people are spending, so we have a ‘freedom-induced demand spurt.’ Producers have to catch up. So ride through the temporary pops in inflation — the economy’s in transition.”

Mr. Evans said he wished people who fretted about an overheating economy would explain precisely how high they thought inflation was about to go — and how the economy was going to get to a place where prices remained sustainably hotter.

“I really wish that people who say they’re concerned about inflation, that they would sort of fill in the dots on exactly what kinds of numbers are you talking about,” Mr. Evans said.

He also expressed comfort in the possibility that wages might rise, even if companies didn’t have the pricing power to pass that on as inflation, forcing businesses to eat higher costs and cutting into their profits.

“If wages go up, if labor share was to increase relative to capital share, I mean, I’m kind of agnostic about that,” Mr. Evans said. “We saw labor share fall over a long period of time, and if we didn’t get our nose out of joint then, why would we get our nose out of joint when labor share goes up?”

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Goldman Sachs Wants Its Bankers Back at the Office

Goldman Sachs has joined JPMorgan Chase in telling its bankers that it’s almost time to come back to the office. David Solomon, Goldman’s C.E.O., sent a memo to employees advising them to “make plans to be in a position to return to the office” by June 14 in the U.S. and June 21 in Britain. JPMorgan plans to open its offices on May 17 on a voluntary basis and require that workers return to their desks in rotations starting in July.

Goldman and JPMorgan’s moves put pressure on other banks to put an end to remote work, several bankers told DealBook. While many thought they could work from home through the summer, some executives are keen to get employees back into the office sooner. (Retail branches have been open throughout the pandemic.) Other major banks aren’t expecting employees to return in meaningful numbers for several months:

  • Citigroup expects to have about 30 percent of its North America-based employees back in the office by the end of the summer.

  • Bank of America’s C.E.O., Brian Moynihan, said recently that a return to the office probably wouldn’t take place until after Labor Day.

  • Wells Fargo said it was “optimistic” that workers would be able to return to the office on Sept. 6.

These decisions may be complicated by where the banks’ offices are. It could be easier to coax workers back to JPMorgan’s headquarters in Midtown East, for example, than to Times Square, home to Barclays and Morgan Stanley, where businesses were especially hard-hit by the pandemic and a handful of highly publicized crimes have recently taken place. “People are so on edge and so uncertain about their own future that all these situations are exaggerated,” Kathryn Wylde, the president of the Partnership for New York City, told The Times.

Jamie Dimon appears eager for the end of remote working. “I’m about to cancel all my Zoom meetings,” the JPMorgan chief said at an event hosted by The Wall Street Journal. Working from home “does not work for younger people, it doesn’t work for those who want to hustle, it doesn’t work in terms of spontaneous idea generation,” he noted. Dimon said his bank had lost some business because rivals had visited a potential client in person and JPMorgan’s bankers hadn’t. He acknowledged that there was some pushback on the bank’s plans, but didn’t seem willing to give in. “Yes, people don’t like commuting, but so what,” he said.

In other Manhattan workplace moves, the New York Stock Exchange issued guidance that allows trading firms to increase their staff on the floor if the employees provide proof of vaccination. And the United Nations is taking a more cautious approach to reopening than its host city, saying that it was premature to plan for an in-person General Assembly in September.

Zoom fatigue. As a result, he has stopped scheduling back-to-back video chats. “I’m so tired of that,” he said.

Business groups oppose voting restrictions in Texas. A coalition including HP and Microsoft published a letter yesterday criticizing “any changes that would restrict eligible voters’ access to the ballot.” A second letter, signed by more than 100 Houston executives, criticized the Texas legislation as “voter suppression.” Both show how companies are more willing to wade into the debate over voting limits after Georgia enacted a bill with restrictions last month.

More details emerge about the Gates divorce. Cascade Investment, a holding company owned by Bill Gates, transferred over $1.8 billion worth of assets to Melinda Gates on Monday, the day that the two announced their plans to split. And although they will retain their roles as co-chairs and trustees of the Gates Foundation, questions remain about whether they will focus more on their individual philanthropies after they divorce.

The White House alters its Covid-19 vaccination strategy. The Biden administration will shift emphasis from mass inoculation sites to smaller ones like pharmacies to get more people in the U.S. vaccinated. Meanwhile, the campaign to vaccinate the world is floundering, with the virus spreading more rapidly than ever, driven by new waves in South America and India.

Global Task Force on Pandemic Response, organized by the Chamber of Commerce, Microsoft, IBM and Accenture, with support from the Business Roundtable, will organize assistance to the country. It will begin by sending 1,000 ventilators and 25,000 oxygen concentrators by the end of the month.

$3.5 billion in sales from the shot, likely equating to roughly $900 million in pretax profits. It plans to seek emergency approval to use the vaccine in children age 2 to 11 in September and full approval for use in adults this month.

Janet Yellen, the Treasury secretary and former Fed chair, got in a bit of a tangle yesterday. She rattled the markets at one event — then used her appearance at a second conference to clarify her remarks.

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat,” she said at the first event, hosted by The Atlantic. Investors seized on those words — tech stocks tumbled most of all on the prospects of higher rates — and critics said she was improperly interfering in monetary policy. Fed officials have said that any spike in inflation linked to robust government spending and a postpandemic reopening is likely to be temporary; the central bank has pledged to keep interest rates low for a long time.

“Let me be clear, it’s not something I’m predicting or recommending,” Yellen said at the second event, hosted by The Wall Street Journal, a few hours later. “If anybody appreciates the independence of the Fed, I think that person is me.” Indeed, when she was the Fed chair, Yellen had to deal with persistent jawboning from Donald Trump, who spoke out more explicitly about Fed policy than many previous presidents. Stocks pared their losses.

first appearance in court over criminal fraud charges in more than a year. A federal prosecutor responded that Holmes “defrauded patients by saying tests were accurate and reliable when they weren’t — and she knew it.”


host of “Saturday Night Live” could get more people interested in trading the crypto token. (It’s as good a reason as any for those who try to rationalize its movements.)

The latest bout of Dogecoin mania has overshadowed what’s going on in Ethereum, the second-largest cryptocurrency, which set records this week and made its 27-year-old co-creator, Vitalik Buterin, a billionaire (in dollars). Ethereum is up more than 350 percent for the year to date, outpacing Bitcoin’s relatively pedestrian 90 percent gain — which, for context, outpaces every stock in the S&P 500.

the Facebook Oversight Board will announce whether it believes Facebook was justified in barring Donald Trump after he used the platform to incite a mob of supporters who attacked the Capitol on Jan. 6. Here’s what you need to know about what Mark Zuckerberg has called Facebook’s “Supreme Court,” whose decision could influence how all social networks treat political speech.

What is the Facebook Oversight Board? Facebook assembled the board to vet its most sensitive decisions on moderating content. It consists of 20 members, including experts in human rights, constitutional law and journalism. The board’s cases, which are referred by Facebook or the public, are reviewed by a panel of five members, who consider whether the company’s decision is consistent with its rules and human rights laws. A majority of the full board must approve the final decision.

Does the board have any power? Only what Facebook gives it. The company has said it will abide by the board’s rulings, and the board’s charter emphasizes its independence. But Facebook has no legal obligation to follow those decisions, and it funds the organization through a $130 million trust.

What exactly will the board decide in this case? It could vote to reinstate Trump’s Facebook account or uphold the ban. Or it could provide a ruling with more nuance, such as finding that the ban was appropriate at the time it was initiated but is no longer necessary. In addition to a ruling in this case, Facebook has asked for broader policy recommendations.

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Janet Yellen says interest rates might need to rise to keep economy from overheating.

Treasury Secretary Janet L. Yellen said higher interest rates might be needed to keep the economy from overheating given the large investments that the Biden administration is proposing to rebuild the nation’s infrastructure and remake its labor force.

The comments, shown on Tuesday at an event sponsored by The Atlantic, come amid heightened concern from some economists and businesses that the United States is in for a period of higher inflation as stimulus money flows through the economy and consumers begin spending again. The Treasury secretary has no role in setting interest rate policies.

Jerome H. Powell, the Federal Reserve chair, said last month that the central bank is unlikely to raise interest rates this year and wants to see further healing in the American economy before officials will consider pulling back their support by slowing government-backed bond purchases and lifting interest rates.

While the Fed is watching for signs of inflation, Mr. Powell and other Fed officials have said they believe any price spikes will be temporary and will not be sustained. On Monday, John C. Williams, president of the Federal Reserve Bank of New York, said that while the economy is recovering, “The data and conditions we are seeing now are not nearly enough” for the Fed’s policy-setting committee “to shift its monetary policy stance.”

spending approximately $4 trillion over a decade and would pay for the investments with tax increases on companies and the rich.

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Verizon Says It Will Sell Yahoo and AOL to Apollo: Live Updates

sell Yahoo and AOL to the private equity firm Apollo Global Management for $5 billion.

The sale includes Verizon’s advertising technology business as well, and the company will retain a 10 percent stake in the business, Verizon said in a statement announcing the deal on Monday.

The transaction is the latest turn in the history of two of the internet’s earliest pioneers. Yahoo used to be the front page of the internet, cataloging the furious pace of new websites that sprang up in the late 1990s. AOL was once the service that most people used to get online.

But both were ultimately supplanted by nimbler start-ups, like Google and Facebook, though Yahoo and AOL still publish highly trafficked websites like Yahoo Sports and TechCrunch.

The sale signals the unraveling of a strategy Verizon heralded in 2015 when it acquired the faded internet giant AOL for $4.4 billion. The purchase was meant to give Verizon a pathway into mobile, with the goal of using AOL’s advertising technology to sell ads against digital content. Verizon doubled down on that strategy in 2017 with its $4.48 billion acquisition of Yahoo, which it combined with AOL under the umbrella Oath.

But Google and Facebook have proved to be formidable competitors in the digital advertising market. Verizon acknowledged their might in 2018 when it wrote down the value of Oath by $4.6 billion, attributing the move in part to “increased competitive and market pressures” that had resulted in “lower-than-expected revenues and earnings.”

Still, the media business generates plenty of revenue. It recorded $1.9 billion in sales in the first quarter, a 10 percent gain over last year.

A worker at MTA, a maker of electronic components, in Codogno, Italy. Eurozone manufacturers have been reporting new orders.
Credit…Flavio Lo Scalzo/Reuters

Apple and Epic Games, maker of the wildly popular game Fortnite, are set to square off on Monday in a trial that could decide how much control Apple can exert over the app economy. The trial is scheduled to open with testimony from Tim Sweeney, the chief of Epic, on why he believes Apple is a monopoly abusing its power.

The trial, which is expected to last about three weeks, carries major implications, Jack Nicas and Erin Griffith report in The New York Times. If Epic wins, it will upend the economics of the $100 billion app market and create a path for millions of companies and developers to avoid sending up to 30 percent of their app sales to Apple.

An Epic victory would also invigorate the antitrust fight against Apple. Federal and state regulators are scrutinizing Apple’s control over the App Store, and on Friday, the European Union charged Apple with violating antitrust laws over its app rules and fees. Apple faces two other federal lawsuits about its App Store fees — one from developers and one from iPhone owners — that are seeking class-action status.

Beating Apple would also bode well for Epic’s coming trial against Google over the same issues on the app store for Android devices. That case is expected to go to trial this year and would be decided by the same federal judge, Yvonne Gonzalez Rogers of the Northern District of California.

If Apple wins, however, it will strengthen its grip over mobile apps and stifle its growing chorus of critics, further empowering a company that is already the world’s most valuable and topped $200 billion in sales over just the past six months.

As the post-pandemic economic recovery ramps up, prices are going up on goods as varied as toilet paper, diapers and wood flooring — and the increases may soon be felt in consumers’ wallets.

Procter & Gamble is raising prices on items like Pampers and Tampax in September. Kimberly-Clark said in March that it would raise prices on Scott toilet paper, Huggies and Pull-Ups in June, a move that is “necessary to help offset significant commodity cost inflation.”

And General Mills, which makes cereal brands including Cheerios, is facing increased supply-chain and freight costs “in this higher-demand environment,” the company’s chief financial officer, Kofi Bruce, said recently.

These price increases reflect what some economists are calling a major shift in the way companies have responded to demand during the pandemic, Gillian Friedman reports in The New York Times.

Before the virus hit, retailers often absorbed the cost when suppliers raised prices on goods, because stiff competition forced retailers to keep prices stable. The pandemic changed that.

The people who profit off corporate America’s use of offices are trying to coax corporate America back to the office.

They have refined their sales pitches to play up air filtration systems, flexible lease terms and swing space and brokers are back in their own workplaces in force. They are acknowledging that some things have changed while also seeking to prove to their clients, and themselves, that the office will soon return to something close to what it was, Rebecca R. Ruiz reports in The New York Times.

With New York City set to reopen fully in July, and many companies expecting to summon workers back this summer and fall, those in commercial real estate are hoping that the rebirth they’ve tried to hasten may finally happen.

“We opened our offices as soon as we were allowed across the country,” said David Lipson, a vice chairman for Savills, a global brokerage firm. “If you’re in the office real-estate business, should you be comfortable getting too comfortable working from home?”

The industry, coming off a boom of continuous growth, has seen commissions fall off as vacancy rates have climbed to their highest levels in decades. Real estate executives, characteristically bullish on their prospects, are facing existential questions.

With 1.3 billion square feet of office space available across America’s top markets — and more now on the market in Manhattan than exists in all of Nashville, Orlando or San Antonio, according to the research firm CoStar — strains in rosy projections are showing.

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Biden’s Proposals Aim to Give Sturdier Support to the Middle Class

Skeptics have warned of government overreach and the risk that deficit spending could ignite inflation, but Mr. Biden and his team of economic advisers have, nonetheless, embraced the approach.

“It’s time to grow the economy from the bottom and middle out,” Mr. Biden said in his speech to a joint session of Congress last week, a reference to the idea that prosperity doesn’t trickle down from the wealthy, but flows out of a well-educated and well-paid middle class.

He underscored the point by singling out workers as the dynamo powering the middle class.

“Wall Street didn’t build this country,” he said. “The middle class built the country. And unions built the middle class.”

Of course, the economy that lifted millions of postwar families into the middle class differed sharply from the current one. Manufacturing, construction and mining jobs, previously viewed as the backbone of the labor force, dwindled — as did the labor unions that aggressively fought for better wages and benefits. Now, only one out of every 10 workers is a union member, while roughly 80 percent of jobs in the United States are in the service sector.

And it is these types of jobs, in health care, education, child care, disabled and senior care, that are expected to continue expanding at the quickest pace.

Most of them, though, fall short of paying middle-income wages. That does not necessarily reflect their value in an open market. Salaries for teachers, hospital workers, lab technicians, child care providers and nursing home attendants are determined largely by the government, which collects tax dollars to pay their salaries and sets reimbursements rates for Medicare and other programs.

They are also jobs that are filled by significant numbers of women, African-Americans, Latinos and Asians.

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