awaiting Senate confirmation, is the latest economic test that he has had to contend with during his tenure.

Mr. Powell, 69, began his first four years as Fed chair in early 2018. By that Christmas, the central bank’s campaign of steady rate increases intended to fend off inflation had collided with President Donald J. Trump’s trade war to send markets plummeting.

In 2019, Mr. Trump publicly pushed for lower rates and accosted Mr. Powell — whom the president had chosen to lead the central bank — in interviews and on Twitter, calling him a “bonehead,” an “enemy” and a golfer who could not putt.

Then came the onset of the pandemic in 2020, and Mr. Powell and his colleagues crossed red lines and upended norms to rescue markets and the economy. They averted a financial crisis, but 2021 brought with it a new challenge: rapid inflation.

Now, critics are questioning whether the monetary help that Mr. Powell’s Fed unleashed to protect the pandemic-stricken economy — lowering rates to near zero and buying trillions of dollars in government bonds — combined with huge fiscal stimulus to supercharge demand and release an inflationary genie that could prove hard to trap.

The Fed has already begun removing some of that support, stopping bond purchases and communicating plans to raise interest rates by a quarter-point this month and steadily throughout the rest of the year. Mortgage rates have already begun climbing in anticipation of those actions.

wanted to see full employment return before paring back its support, has been too slow to react to changing conditions.

This moment “represents a decade of economic experience in the late 1960s and 1970s, compressed into a year,” said Lawrence H. Summers, a former Treasury secretary who spent last year warning that inflation was going to take off as the government overstimulated the economy.

“The question is: Is this the Fed’s Paul Volcker moment, or is this the Fed’s Arthur Burns moment?” he said.

Mr. Burns preceded Mr. Volcker as Fed chair and was late to react to fast inflation, afraid of slowing the job market and hurting Republicans politically. Mr. Summers warned that so far, today’s situation looked more Burns than Volcker, because the Fed spent 2021 only slowly adjusting to the reality of inflation and is now planning to only steadily adjust policy.

While White House and Fed officials had expected inflation to fade last year, optimistically labeling it “transitory,” their hopes were foiled as rapid consumer demand for couches, cars and other goods collided with pandemic-constrained supply chains. Price gains accelerated rather than slowing down.

“Transitory” has now become a dirty word in policymaking circles. Though officials continue to predict that inflation will moderate, they acknowledge more clearly how uncertain that is.

“We have never put our economy into a deep freeze and then defrosted it before,” said Megan Greene, a senior fellow at a Harvard Kennedy School center and chief global economist for the Kroll Institute. “And we haven’t had a war in continental Europe for a while.”

in Shanghai and Shenzhen, China, a major technology manufacturing hub and port city, are boosting the risk that supply chains remain roiled in the coming months. Those shocks from outside come when price pressures have already begun broadening to categories like rent, another development that could make inflation last.

It is not clear whether those factors will keep inflation drastically higher, but Fed officials will be watching warily.

If the Fed has to raise interest rates to painful levels to cool off the economy and put a lid on prices, it could send financial markets tumbling, erasing stock and housing wealth. It could also slow wage increases and throw people out of jobs as companies retrench, curtailing investment and hiring.

But Fed inaction — or under-action — would also carry risks. High prices that chip away at consumer buying power year after year would make it hard for families and businesses to plan for the future. They could especially hurt people who are out of work and living on savings, or the poor, who devote a big chunk of their budgets to necessities and have less room to cut back if costs get out of control.

Mr. Volcker, Mr. Powell’s long-ago predecessor, one of his professional idols and — potentially, if things go wrong — his muse, died in 2019. But he had thoughts on the trade-off.

Maintaining confidence that a dollar will be able to buy tomorrow what it can today “is a fundamental responsibility of monetary policy,” Mr. Volcker wrote in his 2018 memoir. “Once lost, the consequences can be severe and stability hard to restore.”

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Factbox: Commodity supplies at risk after Russia invades Ukraine, article with image

>>> Don’t Miss Today’s BEST Amazon Deals!<<<<

LONDON, March 4 (Reuters) – Russia’s invasion of Ukraine and the imposition of new Western sanctions against Russia have fuelled fears about supplies of key commodities produced and exported by Russian companies.

See for a Factbox on commodity price gains since the close on Feb. 23, the day before the invasion started.

Following are some details about Russia’s major commodity exports.

Register now for FREE unlimited access to Reuters.com

CRUDE OIL

Russia is the world’s third largest oil producer after the United States and Saudi Arabia with output of 11 million barrels per day (bpd).

It rivals Saudi Arabia for the title of the world’s largest oil exporter with around 7 million bpd of crude and oil products exported abroad, of which Asia takes around a half while Europe, the United States and the rest of the world take the rest.

GAS

Russia is the world’s second largest gas producer after the United States and the largest exporter, with flows going predominantly to Europe and covering 40% of the continent’s gas needs.

COAL

Russia is the world’s sixth largest coal producer with output of 400 million tonnes of coal, amounting to more than 5% of global production.

It is the world’s third largest exporter, shipping more than half its output overseas, with China being the main destination.

ALUMINIUM

Most Russian metal producers have so far escaped sanctions imposed by the West since Moscow annexed the Crimea in 2014.

One exception is the world’s largest aluminium producer outside China, Rusal , under sanctions imposed by the United States between April 2018 and early 2019.

Rusal produced 3.8 million tonnes of aluminium in 2021, about 6% of the estimated world production.

Europe, Asia and North America are Rusal’s main markets. Miner and commodity trader Glencore (GLEN.L) has a long-term deal running until 2025 to buy primary aluminium from Rusal.

COBALT

Data from U.S. Geological Survey (USGS) shows Russia produced 7,600 tonnes of cobalt last year, more than 4% of the global total.

Russia was the second largest producer, far behind the Democratic Republic of Congo which produced 120,000 tonnes.

Nornickel (GMKN.MM) is the largest producer in Russia, selling 5,000 tonnes in 2021. Nornickel sells most of its output to Europe.

COPPER

Russia produced 920,000 tonnes of refined copper last year, about 3.5% of the world total, according to USGS, out of which Nornickel produced 406,841 tonnes.

Asia and Europe are the main export markets.

NICKEL

Nornickel is the world’s top producer of refined nickel. It produced 193,006 tonnes in 2021 or about 7% of global mine production estimated at 2.7 million tonnes. It sells to global industrial consumers under long-term contracts.

PALLADIUM AND PLATINUM

Nornickel is also the world’s largest producer of palladium and a major producer of platinum.

It produced 2.6 million troy ounces of palladium last year or 40% of global mine production and 641,000 ounces of platinum or about 10% of total mine production.

GOLD

Russia is the world’s third largest producer of gold after Australia and China and accounts for about 10% of global mine production, which according to the World Gold Council totalled 3,500 tonnes last year.

Russian gold is produced by companies that include Polyus (PLZL.MM) and Polymetal (POLYP.L). Russian miners mainly sell their gold to the country’s commercial banks which then export it.

TITANIUM

Russia’s VSMPO-Avisma (VSMO.MM) supplies titanium to Boeing and Airbus. read more

Data from USGS shows Russia produced 27,000 tonnes of titanium sponge and Ukraine 5,400 tonnes last year, 15% of the global total at 210,000 tonnes.

STEEL

Russia produced 76 million tonnes of steel or nearly 4% of the global total, according to the World Steel Association.

Severstal (CHMF.MM), NLMK (NLMK.MM), Evraz (EVRE.L), MMK (MAGN.MM) and Mechel (MTLR.MM) are Russia’s main producers. They export about half of their production, mainly to Europe.

DIAMONDS

State-controlled Alrosa (ALRS.MM), the world’s largest producer of rough diamonds, produced 32.4 million carats in 2021, about 30% of the global total. It exports mostly to Belgium, India and the United Arab Emirates.

FERTILISERS

Russia is a major producer of potash, phosphate and nitrogen containing fertilisers – key crop and soil nutrients. It produces more than 50 million tonnes a year of the fertilisers, 13% of the global total.

Phosagro (PHOR.MM), Uralchem, Uralkali, Acron (AKRN.MM) and Eurochem are the biggest players.

They export to Asia and Brazil.

GRAINS/OILSEEDS

Russia and Ukraine are both major wheat suppliers, accounting for a combined 29% of global exports, the bulk of which go through ports in the Black Sea.

The movement of vessels on the smaller Azov Sea has already been suspended and if shipments are disrupted from the Black Sea it will leave major importers, particularly in the Middle East and North Africa, scrambling to find alternative supplies.

Ukraine is one of the world’s top four corn (maize) exporters along with the United States, Argentina and Brazil.

The two countries also account for about 80% of global exports of sunflower oil.

Register now for FREE unlimited access to Reuters.com

Reporting by Pratima Desai, Moscow newsroom, Nigel Hunt and Dmitry Zhdannikov;
Editing by Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Rising Gas Prices Have Drivers Asking, ‘Is This for Real?’

After months of working from home, Caroline McNaney, 29, was excited about going back to work in an office, even if her new job in Trenton, N.J., meant commuting an hour each way.

But when she spent $68 filling the tank of her blue Nissan Maxima this week, she felt a surge of regret about switching jobs.

“Is this for real?” Ms. McNaney recalled thinking. “I took a job further from home to make more money, and now I feel like I didn’t do anything for myself because gas is so high.”

The recent rise in gas prices — which the war in Ukraine has pushed even higher — has contributed to her sense of disappointment with President Biden. “I feel like he wants us to go out and spend money into the economy, but at the same time everything is being inflated,” she said.

higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.

While oil prices worldwide have shot up since the Russian invasion of Ukraine, President Biden and Democrats, who hold control of Congress, have faced consumers’ ire.

Cat Abad, 37, who lives in the San Francisco area, where prices have hit nearly $6 for the highest-grade gas, said she saw stickers on the pumps at one local station saying that Mr. Biden was responsible for the rise. She took the stickers off, she said, believing that he was not at fault.

Still, she said, “It’s a good time to have a Prius,” as she filled up for her commute down the peninsula to Foster City.

Inflation is already proving a perilous issue for Mr. Biden and fellow Democrats as the midterm elections approach, with many voters blaming them for failing to control the rising cost of living. The higher gas prices add further political complexity for Mr. Biden, who has vowed to curb the nation’s dependence on fossil fuels.

In light of the war in Ukraine, the energy industry is pushing the Biden administration to support more domestic oil production by opening up drilling in federal lands and restarting pipeline projects.

“This moment is a reminder that oil and natural gas are strategic assets and we need to continue to make investments in them,” said Frank Macchiarola, a senior vice president at the American Petroleum Institute, a trade group.

There is a chance that the strain on consumers may be temporary as global oil supply and demand are rebalanced. And, in the near term, lower consumer spending may have some benefits. Reduced spending could help constrain inflation, but at the expense of slower economic growth.

Even before Russia invaded Ukraine, rapidly rising energy prices were contributing to the fastest inflation in 40 years. Energy prices — including not just gasoline but home heating and electricity as well — accounted for more than a sixth of the total increase in the Consumer Price Index over the 12 months ending in January.

The recent jump in energy prices will only make the problem worse. Forecasters surveyed by FactSet expect the February inflation report, which the Labor Department will release on Thursday, to show that consumer prices rose 0.7 percent last month, and are up 7.9 percent over the past year. The continued run-up in gasoline prices over the past week suggests overall inflation in March will top 8 percent for the first time since 1982.

Some drivers said the higher gas prices were a necessary result of taking a hard line on Mr. Putin.

Alan Zweig, 62, a window contractor in San Francisco, said: “I don’t care if it goes to $10 a gallon. It’s costing me dearly, but not what it’s costing those poor people in Ukraine.”

Destiny Harrell, 26, drives her silver Kia Niro hybrid about 15 minutes each day from her home in Santa Barbara to her job at a public library. She is now considering asking her boss if she can spend some days working from home.

She said the rise in prices has contributed to her anger at Mr. Putin and his decision to invade Ukraine.

“It’s super frustrating that a war that shouldn’t even really affect us has global reach.”

Ben Casselman, Coral Murphy Marcos and Clifford Krauss contributed reporting.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Ukrainian Invasion Adds to Chaos for Global Supply Chains

And if the conflict is prolonged, it could threaten the summer wheat harvest, which flows into bread, pasta and packaged food for vast numbers of people, especially in Europe, North Africa and the Middle East. Food prices have already skyrocketed because of disruptions in the global supply chain, increasing the risk of social unrest in poorer countries.

On Tuesday, the global shipping giant Maersk announced that it would temporarily suspend all shipments to and from Russia by ocean, air and rail, with the exception of food and medicine. Ocean Network Express, Hapag-Lloyd and MSC, the world’s other major ocean carriers, have announced similar suspensions.

“The war just makes the worldwide situation for commodities more dire,” said Christopher F. Graham, a partner at White and Williams.

Jennifer McKeown, the head of global economics service at Capital Economics, said the global economy appeared relatively insulated from the conflict. But she said shortages of materials like palladium and xenon, used in semiconductor and auto production, could add to current difficulties for those industries. Semiconductor shortages have halted production at car plants and other facilities, fueling price increases and weighing on sales.

“That could add to the shortages that we’re already seeing, exacerbate those shortages, and end up causing further damage to global growth,” she said.

International companies are also trying to comply with sweeping financial sanctions and export controls imposed by Europe, the United States and a number of other countries that have clamped down on flows of goods and money in and out of Russia.

In just a few days, Western governments moved to exclude certain Russian banks from using the SWIFT messaging system, limit the Russian central bank’s ability to prop up the ruble, cut off shipments of high-tech goods and freeze the global assets of Russian oligarchs.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Live Updates: Ukraine Agrees to Talks with Russia, as Putin Places Nuclear Forces on Alert

The British oil giant BP said on Sunday that it would “exit” its nearly 20 percent stake in Rosneft, the Russian state-controlled oil company. BP also said that both its chief executive, Bernard Looney, and his predecessor, Bob Dudley, would resign their seats on the Rosneft board.

BP, which is based in London, has worked in Russia for over 30 years, but the invasion of Ukraine “represents a fundamental change,” the company’s chairman, Helge Lund, said in a statement on Sunday. “It has led the BP board to conclude, after a thorough process, that our involvement with Rosneft, a state-owned enterprise, simply cannot continue.”

BP came under pressure in recent days from both the British government and opposition lawmakers over the Rosneft stake. Prime Minister Boris Johnson has taken a hard line against the Russian invasion ordered by President Vladimir V. Putin, arguing strongly that Europe needs to rapidly reduce its dependence on imports of natural gas from Russia.

In these circumstances, BP’s large holding in Rosneft looked increasingly untenable. The government’s concerns were expressed during a video call between Mr. Looney and the business secretary, Kwasi Kwarteng, on Friday afternoon. A BP spokesman, David Nicholas, said the decision was made by the BP board “after careful and due consideration.”

Mr. Kwarteng praised the decision on Sunday. “Russia’s unprovoked invasion of Ukraine must be a wake up call for British businesses with commercial interests in Putin’s Russia,” he said on Twitter.

It was not clear how BP would accomplish its exit from Rosneft. A BP spokesman said the company would begin to dispose of its stake, valued by BP at $14 billion at the end of last year, but did not yet know how it would accomplish that. Rosneft shares have plummeted in recent days, and the only buyers might be Russian state entities. The opportunity to buy a substantial slice of one of the world’s largest oil producers might also appeal to other state-owned companies like those from China willing to bargain-shop in Russia.

BP, in exiting Rosneft, might draw protests from investors over the resulting loss of dividends from the Russian stake as well as market value. On the other hand, some analysts welcomed BP’s move.

“While we’re surprised it happened so quickly, equity investors will now benefit from removal of Russian news flow volatility and much stronger” environmental credentials at BP, said Oswald Clint, an analyst at Bernstein, a research firm.

The board resignations will lead to accounting changes at BP. The company will no longer book its share of Rosneft’s profits ($2.7 billion last year) and reserves (about 55 percent of BP’s holdings) as well as production (about one-third).

BP received $600 million in dividends from Rosneft last year, and would have been expected to receive more this year because of higher oil prices.

BP also said it would write off at least $11 billion in the first quarter of 2022, but potentially much more, related to the Rosneft holding.

While BP is the Western oil company with the most to lose in Russia, it will remain a relatively large player that under Mr. Looney has been aggressively investing in offshore wind and other clean energy businesses, although these remain small compared with oil and gas at the company.

Moving away from Rosneft fits with this new tack. Biraj Borkhataria, an analyst at RBC Capital Markets, said “the Rosneft stake is out of sync with BP’s longer-term strategic direction,” even though “walking away at this time is obviously not ideal from a shareholder value perspective.”

BP’s exit from Rosneft, once accomplished, will draw at least a temporary line on BP’s long experiment with Russia, which began early this century with the company investing $8 billion in a joint venture called TNK-BP with a group of Russian oligarchs headed by Mikhail Fridman.

After a decade of stormy relations among the partners, BP sold its share in the joint venture to Rosneft in 2013 for $12.5 billion in cash plus the 19.75 percent stake Rosneft.

Other large Western oil companies may also feel a chill over continued operating in Russia. TotalEnergies, the French giant, has a stake in Novatek, a Russian gas producer, and a share in a large liquefied natural gas facility in the Russian Arctic. Shell has a modest shareholding in an L.N.G. facility on Sakhalin Island in the Russian Far East, where Exxon Mobil has been producing oil for a quarter of a century in a joint venture with Rosneft.

Analysts say that Russian operations have already lost relative importance in the portfolios of the Western oil industry. Russia may have vast troves of oil and gas, but the appetite for investing there has been curbed by the combination of climate change concerns and sanctions imposed on the Russian industry over Mr. Putin’s annexation of Crimea in 2014.

Surging oil and gas prices and resulting higher profits may also help paper over whatever earnings hit the companies take in Russia this year, analysts say.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Live Updates: Biden Vows Putin Will Pay for Ukraine Invasion

This time, the United States intelligence community got it right, unearthing a rival’s secret planning and accurately predicting and broadcasting Russia’s intentions to carry out a full-scale invasion of Ukraine.

For months, the Biden administration has been sharing — with allies and the public — intelligence about President Vladimir V. Putin’s intentions, taking away any element of surprise and stripping the Russian leader of his capacity to go to war on a false pretext.

But even with the threat of substantial sanctions and allied unity, it was not enough in the end to deter Mr. Putin from carrying out the broad assault that got underway early on Thursday.

But it improved Washington’s ability to bring the trans-Atlantic alliance into a unified front against Moscow and to prepare waves of sanctions and other steps to impose a cost on Russia. And after high-profile intelligence failures in Afghanistan, Iraq and other global crises over the past several decades, the accuracy of the intelligence and analysis about Mr. Putin gave the C.I.A. and the broader array of U.S. intelligence agencies new credibility at home and abroad.

The result has been a remarkable four months of diplomacy, deterrence and American-led information warfare, including a last-ditch effort to disrupt Mr. Putin’s strategy by plugging into the Russian military’s plans and then exposing them publicly. Unlike the withdrawal from Afghanistan, it was executed almost flawlessly. Even the Germans and other European nations highly dependent on Russian-supplied gas signed onto the playbook.

The U.S. used its intelligence in innovative ways as the crisis built. William J. Burns, the C.I.A. director, confronted the Russian government with its own war plans. Avril D. Haines, the director of national intelligence, shared secret intelligence with allied governments to build support for the American assessment. And the White House and State Department shared some declassified intelligence publicly to expose Mr. Putin’s plans for “false flag” operations and deny him the pretext he wanted to invade.

Credit…Evgeniy Maloletka/Associated Press

The intelligence disclosures may not be over now that the invasion has begun. The Biden administration has made clear it does not want to take on the job of publicly calling out Russian troop movements. But the United States is considering continuing its information releases, mulling various options to hold Russia accountable for actions it will take in Ukraine, according to people familiar with the discussion.

Those new efforts could involve countering Russian propaganda that they are guardians and liberators of the Ukrainian people, not an occupying force. They could also involve work to expose potential war crimes and try to give the lie to Russian claims that their war aims are limited.

Mr. Putin’s plan to topple the government in Kyiv was his goal from the beginning, American officials have said, and some officials are keen to show Russia is simply carrying out a plan crafted months ago.

“It’s not something you want to do forever or as a permanent feature of policy or it loses its novelty, but in extraordinary, life-or-death situations, it is justified,” said John E. McLaughlin, a former acting C.I.A. director. “I always found in confronting Russians with our knowledge of what they were doing, that they would inevitably deny it but that it threw them off balance to know that we knew. And I think it has rattled Putin this time.”

In the end it was not enough to stop Mr. Putin, though it is not clear what strategy, if any, he might have.

The American effort to reveal Mr. Putin’s plans to the world, has “been a distraction to him, it’s been somewhat annoying,” James Clapper, the former director of national intelligence, said Wednesday. But, he added, “It remains to be seen what difference it has made on his decision-making.”

Some of information the United States shared with allies, beginning with a trip to NATO by Ms. Haines in November, was initially greeted skeptically, according to Western officials. Many Europeans still remember the bad intelligence around the Iraq war.

But as the information provided grew and the Russian war plan played out as Ms. Haines had predicted, European officials shifted their view. The intelligence-sharing campaign ultimately succeeded in uniting Europe and America on a series of tough sanctions.

Credit…Alexey Nikolsky/Sputnik, via

Republicans have been critical of Mr. Biden for not being more aggressive in the military supplies it sent to Kyiv or acting earlier to impose stiff sentences on Russia to change Mr. Putin’s course of action.

It will take time to know if more and better weapons could have made a difference for the Ukrainian army’s resistance. But administration officials have said they have had to act judiciously not to escalate the situation and not allow Mr. Putin to use American military supplies as excuse to start the war.

More clearly, American sanctions against Mr. Putin go only so far. It is European sanctions against Russia and its billionaire class that really bite, and it took time, and intelligence, for Europe to come on board with a tough package of sanctions.

While the United States clearly has the some of the best, if not the best, intelligence collection in the world, it also had a reputation that remained tarnished, at home and abroad, by the 2003 Iraq invasion, when faulty information was publicly released to justify the war. While the intelligence community had long been pessimistic about the survival prospects for the U.S.-supported Afghan government, some in the administration criticized the spy agencies last year for not accurately predicting how quickly the country’s military forces would fold.

There is little doubt that reputation increased some of the skepticism of the assessment of Mr. Putin’s intentions, both by reporters questioning public officials for more evidence, and by allies.

The warnings this time were far different, the information released to try to prevent a war, not to start one. But releasing the information was nevertheless a risk. Had it proved wrong, the intelligence agencies would have been saddled with fresh doubts about their ability to collect and properly analyze intelligence about an adversaries’ capabilities and intentions. Their ability to credibly warn against future threats would have diminished.

Instead, the public got a rare glimpse of an intelligence success. It is usually the failures, or partial failures, like Iraq, the Sept. 11 terror attacks, the surveillance of domestic civil rights groups or the Bay of Pigs, that are publicly aired.

Credit…Lynsey Addario for The New York Times

But the failures do not mean America’s spy agencies do not have many successes, said Nicholas Dujmovic, a former C.I.A. historian who now teaches at the Catholic University of America.

“This is a rare case that intelligence successes are being made public, and the public should conclude, in my view, that this is rather the norm,” Dr. Dujmovic said. “They are getting a rare glimpse of the normal process and production of intelligence that normally they do not see.”

Most accusations of intelligence failures are failures to properly warn about an attack or to overstate a threat. And it is those warnings that this time proved prescient.

“The warning analysts have the hardest job in analysis because they are trying to figure out intentions — whether the attack will come, when it will come, how it will come,” Dr. Dujmovic said. “The best way to penetrate that fog is with a human source close to the decision maker, in this case, Putin — and it’s also the hardest kind of collection to acquire.”

The intelligence agencies succeeded in divining Mr. Putin’s intentions early on. And that was no easy feat. It is simply not publicly known how strong is America’s source network in Russia or how close those people are to Putin, but it is clear Mr. Putin shares his counsel with very few.

Monday’s televised meeting of Russia’s national security aides showed the foreign intelligence chief being berated by Mr. Putin for failing to endorse recognition of the breakaway enclaves in Eastern Ukraine. Juxtaposed with the months of American disclosures, the scene suggested that people atop America’s spy agencies, for once, may have understood Mr. Putin’s intentions better than his own intelligence officers.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

What the Conflict in Ukraine Means for the U.S. Economy

Russia’s threatened invasion of Ukraine could have economic repercussions globally and in the United States, ramping up uncertainty, roiling commodity markets and potentially pushing up inflation as gas and food prices rise around the world.

Russia is a major producer of oil and natural gas, and the brewing geopolitical conflict has sent prices of both sharply higher in recent weeks. It is also the world’s largest wheat exporter, and is a major food supplier to Europe.

The United States imports relatively little directly from Russia, but a commodities crunch caused by a conflict could have knock-on effects that at least temporarily drive up prices for raw materials and finished goods when much of the world, including the United States, is experiencing rapid inflation.

Global unrest could also spook American consumers, prompting them to cut back on spending and other economic activity. If the slowdown were to become severe, it could make it harder for the Federal Reserve, which is planning to raise interest rates in March, to decide how quickly and how aggressively to increase borrowing costs. Central bankers noted in minutes from their most recent meeting that geopolitical risks “could cause increases in global energy prices or exacerbate global supply shortages,” but also that they were a risk to the outlook for growth.

contending with quickly rising prices, businesses are trying to navigate roiled supply chains and people report feeling pessimistic about their financial outlooks despite strong economic growth.

“The level of economic uncertainty is going to rise, which is going to be negative for households and firms,” said Maurice Obstfeld, a senior fellow at the Peterson Institute for International Economics, noting that the effect would be felt most acutely in Europe and to a lesser degree in the United States.

A major and immediate economic implication of a showdown in Eastern Europe ties back to oil and gas. Russia produces 10 million barrels of oil a day, roughly 10 percent of global demand, and is Europe’s largest supplier of natural gas, which is used to fuel power plants and provide heat to homes and businesses.

The United States imports comparatively little Russian oil, but energy commodity markets are global, meaning a change in prices in one part of the world influences how much people pay for energy elsewhere.

It is unclear how much a conflict would push up prices, but energy markets have already been jittery — and fuel prices have risen sharply — on the prospect of an invasion.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

If a conflict drives global uncertainty and causes investors to pour money into dollars, pushing up the value of the currency, it could actually make United States imports cheaper.

Other trade risks loom. Unrest at the nexus of Europe and Asia could pose risk for supply chains that have been roiled by the pandemic.

Phil Levy, the chief economist at Flexport, said that Russia and Ukraine were far less linked into global supply chains than a country like China, but that conflict in the area could disrupt flights from Asia to Europe. That could pose a challenge for industries that move products by air, like electronics, fast fashion and even automakers, he said at an event at the National Press Foundation on Feb. 9.

“Air has been a means of getting around supply chain problems,” Mr. Levy said. “If your factory was going to shut because you don’t have a key part, you might fly in that key part.”

Some companies may not yet realize their true exposure to a potential crisis.

Victor Meyer, the chief operating officer of Supply Wisdom, which helps companies analyze their supply chains for risk, said that some companies were surprised by the extent of their exposure to the region during the Russian invasion of Ukraine in 2014, when it annexed Crimea.

Mr. Meyer noted that if he were a chief security officer of a company with ties to Ukraine, “I would militate rather strongly to unwind my exposure.”

There could also be other indirect effects on the economy, including rattling consumer confidence.

Households are sitting on cash stockpiles and probably could afford higher prices at the pump, but climbing energy costs are likely to make them unhappy at a moment when prices overall are already climbing and economic sentiment has swooned.

“The hit would be easily absorbed, but it would make consumers even more miserable, and we have to assume that a war in Europe would depress confidence directly too,” Ian Shepherdson at Pantheon Macroeconomics wrote in a Feb. 15 note.

Another risk to American economic activity may be underrated, Mr. Obstfeld said: The threat of cyberattack. Russia could respond to sanctions from the United States with digital retaliation, roiling digital life at a time when the internet has become central to economic existence.

“The Russians are the best in the world at this,” he said. “And we don’t know the extent to which they have burrowed into our systems.”

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

What’s at Stake for the Global Economy as Conflict Looms in Ukraine

After getting battered by the pandemic, supply chain chokeholds and leaps in prices, the global economy is poised to be sent on yet another unpredictable course by an armed clash on Europe’s border.

Even before the Kremlin ordered Russian troops into separatist territories of Ukraine on Monday, the tension had taken a toll. The promise of punishing sanctions in return by President Biden and the potential for Russian retaliation had already pushed down stock returns and driven up gas prices.

An outright attack by Russian troops could cause dizzying spikes in energy and food prices, fuel inflation fears and spook investors, a combination that threatens investment and growth in economies around the world.

However harsh the effects, the immediate impact will be nowhere near as devastating as the sudden economic shutdowns first caused by the coronavirus in 2020. Russia is a transcontinental behemoth with 146 million people and a huge nuclear arsenal, as well as a key supplier of the oil, gas and raw materials that keep the world’s factories running. But unlike China, which is a manufacturing powerhouse and intimately woven into intricate supply chains, Russia is a minor player in the global economy.

spikes in heating and gas bills, which are already soaring. Natural gas reserves are at less than a third of capacity, with weeks of cold weather ahead, and European leaders have already accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.

United Nations report. Russia is the world’s largest supplier of wheat, and together with Ukraine, accounts for nearly a quarter of total global exports. For some countries, the dependence is much greater. That flow of grain makes up more than 70 percent of Egypt and Turkey’s total wheat imports.

This will put further strain on Turkey, which is already in the middle of an economic crisis and struggling with inflation that is running close to 50 percent, with skyrocketing food, fuel and electricity prices.

And as usual, the burden falls heaviest on the most vulnerable. “Poorer people spend a higher share of incomes on food and heating,” said Ian Goldin, a professor of globalization and development at Oxford University.

Ukraine, long known as the “breadbasket of Europe,” actually sends more than 40 percent of its wheat and corn exports to the Middle East or Africa, where there are worries that further food shortages and price increases could stoke social unrest.

Lebanon, for example, which is experiencing one of the most devastating economic crises in more than a century, gets more than half of its wheat from Ukraine, which is also the world’s largest exporter of seed oils like sunflower and rapeseed.

On Monday, the White House responded to Mr. Putin’s decision to recognize the independence of two Russian-backed territories in the country’s east by saying it would begin imposing limited sanctions on the so-called Donetsk and Luhansk People’s Republics. Jen Psaki, the White House press secretary, said Mr. Biden would soon issue an executive order prohibiting investment, trade and financing with people in those regions.

range of scenarios from mild to severe. The fallout on working-class families and Wall Street traders depends on how an invasion plays out: whether Russian troops stay near the border or attack the Ukrainian capital, Kyiv; whether the fighting lasts for days or months; what kind of Western sanctions are imposed; and whether Mr. Putin responds by withholding critical gas supplies from Europe or launching insidious cyberattacks.

“Think about it rolling out in stages,” said Julia Friedlander, director of the economic statecraft initiative at the Atlantic Council. “This is likely to play out as a slow motion drama.”

As became clear from the pandemic, minor interruptions in one region can generate major disruptions far away. Isolated shortages and price surges— whether of gas, wheat, aluminum or nickel — can snowball in a world still struggling to recover from the pandemic.

“You have to look at the backdrop against which this is coming,” said Gregory Daco, chief economist for EY-Parthenon. “There is high inflation, strained supply chains and uncertainty about what central banks are going to do and how insistent price rises are.”

at 7.5 percent in January, and is expected to start raising interest rates next month. Higher energy prices set off by a conflict in Europe may be transitory but they could feed worries about a wage-price spiral.

“We could see a new burst of inflation,” said Christopher Miller, a visiting fellow at the American Enterprise Institute and an assistant professor at Tufts University.

Also fueling inflation fears are possible shortages of essential metals like palladium, aluminum and nickel, creating another disruption to global supply chains already suffering from the pandemic, trucker blockades in Canada and shortages of semiconductors.

The price of palladium, for example, used in automotive exhaust systems, mobile phones and even dental fillings, has soared in recent weeks because of fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, used to make steel and electric car batteries, has also been jumping.

It’s too early to gauge the precise impact of an armed conflict, said Lars Stenqvist, the chief technology officer of Volvo, the Swedish truck maker. But he added, “It is a very, very serious thing.”

“We have a number of scenarios on the table and we are following the developments of the situation day by day,” Mr. Stenqvist said Monday.

The West has taken steps to blunt the impact on Europe if Mr. Putin decides to retaliate. The United States has ramped up delivery of liquefied natural gas and asked other suppliers like Qatar to do the same.

negotiations to revive a deal to curb Iran’s nuclear program. Iran, which is estimated to have as many as 80 million barrels of oil in storage, has been locked out of much of the world’s markets since 2018, when President Donald J. Trump withdrew from the nuclear accord and reimposed sanctions.

Some of the sanctions against Russia that the Biden administration is considering, such as cutting off access to the system of international payments known as SWIFT or blocking companies from selling anything to Russia that contains American-made components, would hurt anyone who does business with Russia. But across the board, the United States is much less vulnerable than the European Union, which is Russia’s largest trading partner.

Americans, as Mr. Biden has already warned, are likely to see higher gasoline prices. But because the United States is itself a large producer of natural gas, those price increases are not nearly as steep and as broad as elsewhere. And Europe has many more links to Russia and engages in more financial transactions — including paying for the Russian gas.

Oil companies like Shell and Total have joint ventures in Russia, while BP boasts that it “is one of the biggest foreign investors in Russia,” with ties to the Russian oil company Rosneft. Airbus, the European aviation giant, gets titanium from Russia. And European banks, particularly those in Germany, France and Italy, have lent billions of dollars to Russian borrowers.

“Severe sanctions that hurt Russia painfully and comprehensively have potential to do huge damage to European customers,” said Adam Tooze, director of the European Institute at Columbia University.

Depending on what happens, the most significant effects on the global economy may manifest themselves only over the long run.

economic ties to China. The two nations recently negotiated a 30-year contract for Russia to supply gas to China through a new pipeline.

“Russia is likely to pivot all energy and commodity exports to China,” said Carl Weinberg, chief economist at High Frequency Economics.

The crisis is also contributing to a reassessment of the global economy’s structure and concerns about self-sufficiency. The pandemic has already highlighted the downsides of far-flung supply chains that rely on lean production.

Now Europe’s dependence on Russian gas is spurring discussions about expanding energy sources, which could further sideline Russia’s presence in the global economy.

“In the longer term, it’s going to push Europe to diversify,” said Jeffrey Schott, a senior fellow working on international trade policy at the Peterson Institute for International Economics. As for Russia, the real cost “would be corrosive over time and really making it much more difficult to do business with Russian entities and deterring investment.”

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

How Europeans Are Responding to Exorbitant Gas and Power Bills

A German retiree facing sky-high energy bills is turning to a wood-burning stove. The owner of a dry cleaning business in Spain adjusted her employees’ work shifts to cut electric bills and installed solar panels. A mayor in France said he ordered a hiring freeze because rising electrical bills threaten a financial “catastrophe.”

Europeans have long paid some of the world’s highest prices for energy, but no one can remember a winter like this one. Lives and livelihoods across the continent are being upended by a series of factors, including pandemic-induced supply shortages and now geopolitical tensions that are driving some energy prices up fivefold.

Matters could get worse if tensions between Russia and Ukraine escalate further, potentially interrupting the flow of gas. Russia provides more than a third of Europe’s natural gas, which heats homes, generates electricity and powers factories. Even as politicians and leaders in capitals across Europe are freezing prices, slashing taxes on energy and issuing checks to households hardest hit by the price increases, concerns are growing about what the persistently high prices could mean for people’s jobs and their ability to pay their bills.

“People are very upset and very distressed,” said Stefanie Siegert, who counsels consumers in the eastern German state of Saxony who find themselves struggling to pay their gas and power bills.

rocked France in 2018. But Ms. Siegert, whose agency counseled more than 300 customers in January — three times its monthly average — said she wouldn’t be surprised if the anger currently directed at the prospect of a vaccine mandate shifted its sights to energy prices.

“When you talk with people, you feel their anger,” she said. “It is very depressing.”

price cap on energy bills was recently raised 54 percent, increasing annual charges to 1,971 pounds. That increase will affect 22 million households beginning in April, contributing to broadening worries in Britain about the rising cost of living.

Similar concerns can be found throughout the continent.

Athina Sirogianni, 46, a freelance translator in Athens, said she remembered fondly the day about a decade ago when her building switched from oil to natural gas. The move cut her utility bill in half.

Nyrstar, the world’s second-largest zinc processor, produces nearly 500 tons of the metal each day at a sprawling factory in Auby, in northern France, a complex that consumes as much energy as the French city of Lyon.

When its electrical rates surged from €35 to €50 per megawatt-hour to €400 last December, it made no sense to keep the factory running, said Xavier Constant, Nyrstar France’s general manager. At that rate, he said, “the more we produce the more we lose,” and so the plant shut down last month for three weeks.

Nyrstar temporarily halved production at its other European plants in October when the energy crisis set in, prompting a brief spike in the global price of zinc.

Last fall, fertilizer plants in Britain were forced to close because of gas prices. And several German companies that produce glass, steel and fertilizer have also scaled back production in recent months.

To ease the burden of the high prices, the government in Berlin reduced by half an energy surcharge on bills aimed at funding the country’s transition to renewable sources of power, and plans to phase it out by the end of next year.

on Twitter. He said the facility’s electricity prices had increased 100 percent.

He and other hospital directors have appealed to the government in Warsaw to intervene, saying the recent cuts to taxes on energy and gasoline were not enough.

In Germany, there is rising tension in municipally owned utilities that must accept customers, like Mr. Backhaus in Saxony, whose relatively low-cost contracts have been dropped by private energy companies because the companies can’t pay ballooning energy rates.

The municipal utilities are forced to increase the rates for these new customers, often almost astronomically high, to cover the cost of buying extra energy on the spot market at record prices. That leads to tensions in communities, and can threaten municipal finances.

“Anyone who wants to will be supplied with energy by the municipal utilities,” said Markus Lewe, president of the German Association of Cities and Towns. “But it must not lead to the municipal utilities and their loyal customers being asked to pay for questionable business models of other providers and having to answer for their shortsighted financing.”

He called on the federal government to intervene, to protect cities from the price instability.

In France, local leaders are also looking to the federal government to help ease the sting of skyrocketing energy bills.

Boris Ravignon, the mayor of Charleville-Mézières, said his city is facing “a catastrophe” after its January energy bill more than tripled, wiping out the region’s budget surplus for infrastructure and public services in a single month. The city is trying to cut costs by switching streetlights to LED bulbs, which use less electricity, and has proposed a new hydroelectric project.

The mayor has already frozen planned hirings and said the city may have no choice but to raise the cost of public services like water, transportation, fees to use sports halls like the city’s public pool, and cultural events.

“We really want to protect citizens from these increases,” Mr. Ravignon said. “But when prices reach such crazy heights, it’s impossible.”

Reporting contributed by Adèle Cordonnier in France, Raphael Minder in Spain and Niki Kitsantonis in Greece.

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<

Pandemic’s Economic Impact Is Easing, but Aftershocks May Linger

The pandemic’s grip on the economy appears to be loosening. Job growth and retail spending were strong in January, even as coronavirus cases hit a record. New York, Massachusetts and other states have begun to lift indoor mask mandates. California on Thursday unveiled a public health approach that will treat the coronavirus as a manageable long-term risk.

Yet the economy remains far from normal. Patterns of work, socializing and spending, disrupted by the pandemic, have been slow to readjust. Prices are rising at their fastest pace in four decades, and there are signs that inflation is creeping into a broader range of products and services. In surveys, Americans report feeling gloomier about the economy now than at the height of the lockdowns and job losses in the first weeks of the crisis.

In other words, it may no longer be that “the virus is the boss” — as Austan Goolsbee, a University of Chicago economist, has put it. But the changes that it set in motion have proved both more persistent and more pervasive than economists once expected.

“I — totally naïvely — thought that once a vaccine was available, that we were six months away from a complete re-evaluation of the economy, and instead we’re just grinding it out,” said Wendy Edelberg, director of the Hamilton Project, an economic policy arm of the Brookings Institution. “A switch didn’t get flipped, and I thought it was going to.”

computer chips, lumber and even garage doors have held up production of items from cars to houses, while a lack of shipping containers has led to delays in almost anything transported from overseas. Some bottlenecks have let up in recent months, but logistics experts expect it to take months if not years for supply chains to run smoothly again.

disproportionate share of them women — have not.

Diahann Thomas was at work at a Brooklyn call center in January when she got a call from her son’s school: Her 11-year-old had been exposed to a classmate who had tested positive for Covid-19, and she needed to pick him up.

“There are all these moving parts now with Covid — one moment, they’re at school, the next moment they’re at home,” she said.

Ms. Thomas, 50, said her employer declined to provide flexibility while her son was in quarantine. So she quit — a decision she said was made easier by the knowledge that employers are eager to hire.

“It did boost my confidence to know that at the end of this, it’s not going to be difficult for me to pick up the pieces, and I have more bargaining power now,” she said. “There is this whole entire shift in terms of employee-employer relationship.”

Ms. Thomas expects to return to work once school schedules become more reliable. But the pandemic has shown her the value of being at home with her three children, she said, and she wants a job where she can work from home.

Whether and how people like Ms. Thomas return to work will be crucial to the economy’s path in coming months. If workers flood back to the job market as school and child care becomes more dependable and health risks recede, it will be easier for manufacturers and shipping companies to ramp up production and deliveries, giving supply a chance to catch up to demand. That in turn could allow inflation to cool without losing the economy’s progress over the past year.

care for children may not go back to work right away, or may choose to work part time. And other changes may be similarly slow to reverse: Companies that were burned by shortages may maintain larger inventories or rely on shorter supply chains, driving up costs. Workers who enjoyed flexibility from employers during the pandemic may demand it in the future. Rates of entrepreneurship, automation and, of course, remote work all increased during the pandemic, perhaps permanently.

Some of those changes could lead to higher inflation or slower growth. Others could make the economy more dynamic and productive. All make it harder for forecasters and policymakers to get a clear picture of the postpandemic economy.

“In almost every respect, economic ripple effects that we might have expected to be temporary or short-lived are proving to be more long-lasting,” said Luke Pardue, an economist for Gusto, a payroll platform for small businesses. “The new normal is looking a lot different.”

View Source

>>> Don’t Miss Today’s BEST Amazon Deals! <<<<