have claimed credit for strong economic growth.

“Some have a curious obsession with exaggerating impact of the Rescue Plan while ignoring the degree high inflation is global,” Gene Sperling, a senior White House adviser overseeing the implementation of the stimulus package, wrote on Twitter last week, adding that the law “has had very marginal impact on inflation.”

Brian Deese, the director of the National Economic Council, acknowledged in an interview last week that there were some disagreements among White House economic officials when it came to how to talk about and respond to inflation, but he portrayed that as a positive — and as something that is not leading to any kind of dysfunction.

“If there wasn’t healthy disagreement, debate and people feeling comfortable bringing issues and ideas to the table, then I think we would be not serving the president and the public interest well,” he said.

He also pushed back on the idea that the administration was deeply divided on the March 2021 package’s aftereffects, saying in a separate emailed comment that “there is agreement across the administration that many factors contributed to inflation, and that inflation has been driven by elevated demand and constrained supply across the globe.”

How to portray the Biden administration’s stimulus spending is far from the only challenge the White House faces. As price increases last, Democrats have grappled with how to discuss their plans to combat them.

deficit reduction as a way to lower inflation and arguing that Republicans have a bad plan to deal with rising costs. Mr. Biden regularly acknowledges the pain that higher prices are causing and has emphasized that the problem of taming inflation rests largely with the Fed, an independent entity whose work he has promised not to interfere with.

The administration has also highlighted that inflation is widespread globally, and that the United States is better off than many other nations.

The renewed messaging comes as Mr. Biden and his top aides have grown increasingly concerned about the public’s negative views of the economy, according to an administration official. Economists within the administration are more sidelined when it comes to setting the tone on issues like inflation than in previous White Houses, another person familiar with the discussions said.

So far, the talking points have done little to change public perception or to mollify concerns on Capitol Hill, where some Democrats are pushing for the White House to find a more compelling story.

“There has to be more of a laser focus on the economy, a bolder message, a clearer story,” said Representative Ro Khanna, a California Democrat who wrote a New York Times opinion piece last week saying that Democrats need a more ambitious plan for fighting inflation. He added that “rhetoric about ‘Well, we’re doing really well’ does not capture the profound sense of anxiety that Americans feel.”

Part of the difficulty is that there is only so much politicians can do to fight price increases.

suspended a ban on summertime sales of higher-ethanol gasoline blends to try to temper price increases at the pump, spurring frustration among climate activists still angry over the collapse of the president’s climate and social-spending package.

Talks over whether to roll back Trump-era tariffs on Chinese goods have also gotten caught in the inflation maw. Ms. Yellen has said she supports relaxing tariffs to help ease prices, but other Democrats are wary that removing them would make Mr. Biden look weak on China.

Inflation is also influencing conversations about whether to forgive student loan debt, one of Mr. Biden’s key campaign promises. Economists in the administration think that loan forgiveness would, at most, push inflation up a little bit by giving people with outstanding student debt more financial wiggle room. But some economists in the administration’s orbit have expressed concern about the possibility of doing something that could stimulate demand — even slightly — at a moment when it is already hot.

To help mute the inflationary effect, forgiveness would most likely be accompanied by a resumption of interest payments on all student loans that have been paused since the pandemic.

For now, the administration is considering forgiving at least $10,000 for borrowers in a certain income range, according to people familiar with the matter. Mr. Cárdenas said that Mr. Biden knew he would be attacked over inflation but that he did not think the issue would prevent the president from canceling at least $10,000 worth of debt.

“Will it affect him going beyond that? It may,” he said.

Jonathan Martin contributed reporting.

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Modern Monetary Theory Got a Pandemic Tryout. Inflation Is Now Testing It.

The problem is that the alternative to a Fed response is, at the moment, not obvious. The Biden administration’s attempts at tamping down price increases — longer port hours, release of strategic petroleum reserves, calling out corporate price gouging — have mostly tinkered around the edges of the issue.

Those kinds of precise moves to counter inflation are what M.M.T. economists would recommend, though. Ms. Kelton laid out other suggestions M.M.T. economists have made in a recent blog post. Among them: Medicare for All, cutting the Pentagon budget, repealing some tariffs and unclogging the ports.

Not exactly “easy peasy,” to borrow a phrase of hers.

“M.M.T. was already pretty marginal,” said Jason Furman, a Harvard economist, noting that, in his view, most policymakers and prominent academics ignored it already. Even if policy in the pandemic effectively embraced the idea that you do not have to pay for your spending, that idea, he said, was also Keynesian.

And the M.M.T crowd, while dismissing the Fed’s role, has not come up with a clear and obviously workable idea for how to stem inflation, he argued, adding, “If you were open-minded, this would discredit it still further.”

In Washington, the suite of ideas has clearly been dealt a setback. Deficit concerns have returned. Mr. Biden’s sweeping policy agenda has not passed because Senator Joseph Manchin, a West Virginia Democrat and member of his own party, has opposed it on concerns about government debt and inflation.

Despite that, some of M.M.T.’s proponents are still sounding celebratory.

“We’ve won the debate on the intellectual level — there are no flaws,” Mr. Wray said.

Flaws or not, there are questions.

Questions like: “Did Congress ‘experiment’ with MMT, and does the run-up in inflation mean that MMT has ‘failed’?”

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Why Critics Fear the Fed’s Policy Shift May Prove Late and Abrupt

That caused the Fed to change course late last year — and to do so fairly abruptly.

“Inflation really popped up in the late spring last year, and we had a view — it was very, very widely held in the forecasting community — that this would be temporary,” Mr. Powell said in December. But officials grew more concerned as employment cost data moved higher and inflation indicators showed hot readings, he said, so they pivoted on policy.

“It was essentially higher inflation and faster, turns out much faster, progress in the labor market,” Mr. Powell said.

Asset prices have been jerking around in recent weeks as investors try to make sense of the Fed’s new stance and what it will mean for the economy. Stocks have generally slumped, Bitcoin prices have fallen, and bond prices have been increasing as part of the cacophony.

Had the Fed changed course earlier, “there wouldn’t be this sense that the Fed is behind the curve, and this fear in the market that they are going to go aggressively,” Ms. Markowska at Jefferies said.

Part of the challenge is that while the central bank had clearly detailed a plan for when it would slow bond-buying and lift rates — emphasizing what conditions it would want to see — it has not been as clear about its follow-up moves.

Mr. El-Erian thinks that the Fed should promptly stop buying bonds while clearly signaling the path ahead for rate increases. Otherwise, he said, officials risk having to pull back support all at once later this year.

But there are also arguments for gradualism.

Foreign economic officials are nervously eyeing the Fed’s path, especially when other central banks are also pulling back support amid a widespread burst in prices — the Bank of England, for instance, has already raised interest rates. When big economies raise domestic borrowing costs, it can cause capital to flow away from emerging markets, roiling exchange rates and damaging or destabilizing their economic growth.

“If major economies slam on the brakes or take a U-turn in their monetary policies, there would be serious negative spillovers,” President Xi Jinping of China said during a speech this month, warning of “challenges to global economic and financial stability.”

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Rapid Inflation Fuels Debate Over What’s to Blame: Pandemic or Policy

The price increases bedeviling consumers, businesses and policymakers worldwide have prompted a heated debate in Washington about how much of today’s rapid inflation is a result of policy choices in the United States and how much stems from global factors tied to the pandemic, like snarled supply chains.

At a moment when stubbornly rapid price gains are weighing on consumer confidence and creating a political liability for President Biden, White House officials have repeatedly blamed international forces for high inflation, including factory shutdowns in Asia and overtaxed shipping routes that are causing shortages and pushing up prices everywhere. The officials increasingly cite high inflation in places including the euro area, where prices are climbing at the fastest pace on record, as a sign that the world is experiencing a shared moment of price pain, deflecting the blame away from U.S. policy.

But a chorus of economists point to government policies as a big part of the reason U.S. inflation is at a 40-year high. While they agree that prices are rising as a result of shutdowns and supply chain woes, they say that America’s decision to flood the economy with stimulus money helped to send consumer spending into overdrive, exacerbating those global trends.

The world’s trade machine is producing, shipping and delivering more goods to American consumers than it ever has, as people flush with cash buy couches, cars and home office equipment, but supply chains just haven’t been able to keep up with that supercharged demand.

by 7 percent in the year through December, its fastest pace since 1982. But in recent months, it has also moved up sharply across many countries, a fact administration officials have emphasized.

“The inflation has everything to do with the supply chain,” President Biden said during a news conference on Wednesday. “While there are differences country by country, this is a global phenomenon and driven by these global issues,” Jen Psaki, the White House press secretary, said after the latest inflation data were released.

the euro area. Data released in the United Kingdom and in Canada on Wednesday showed prices accelerating at their fastest rate in 30 years in both countries. Inflation in the eurozone, which is measured differently from how the U.S. calculates it, climbed to an annual rate of 5 percent in December, according to an initial estimate by the European Union statistics office.

“The U.S. is hardly an island amidst this storm of supply disruptions and rising demand, especially for goods and commodities,” said Eswar Prasad, a professor of trade policy at Cornell University and a senior fellow at the Brookings Institution.

But some economists point out that even as inflation proves pervasive around the globe, it has been more pronounced in America than elsewhere.

“The United States has had much more inflation than almost any other advanced economy in the world,” said Jason Furman, an economist at Harvard University and former Obama administration economic adviser, who used comparable methodologies to look across areas and concluded that U.S. price increases have been consistently faster.

The difference, he said, comes because “the United States’ stimulus is in a category of its own.”

White House officials have argued that differences in “core” inflation — which excludes food and fuel — have been small between the United States and other major economies over the past six months. And the gaps all but disappear if you strip out car prices, which are up sharply and have a bigger impact in the United States, where consumers buy more automobiles. (Mr. Furman argued that people who didn’t buy cars would have spent their money on something else and that simply eliminating them from the U.S. consumption basket is not fair.)

Administration officials have also noted that the United States has seen a robust rebound in economic growth. The International Monetary Fund said in October that it expected U.S. output to climb by 6 percent in 2021 and 5.2 percent in 2022, compared with 5 percent growth last year in the euro area and 4.3 percent growth projected for this year.

“To the extent that we got more heat, we got a lot more growth for it,” said Jared Bernstein, a member of the White House Council of Economic Advisers.

$5 trillion in spending in 2020 and 2021. That outstripped the response in other major economies as a share of the nation’s output, according to data compiled by the International Monetary Fund.

Many economists supported protecting workers and businesses early in the pandemic, but some took issue with the size of the $1.9 trillion package last March under the Biden administration. They argued that sending households another round of stimulus, including $1,400 checks, further fueled demand when the economy was already healing.

Consumer spending seemed to react: Retail sales, for instance, jumped after the checks went out.

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 costs and toys.

Americans found themselves with a lot of money in the bank, and as they spent that money on goods, demand collided with a global supply chain that was too fragile to catch up.

Virus outbreaks shut down factories, ports faced backlogs and a dearth of truckers roiled transit routes. Americans still managed to buy more goods than ever before in 2021, and foreign factories sent a record sum of products to U.S. shops and doorsteps. But all that shopping wasn’t enough to satisfy consumer demand.

stop spending at the start of the pandemic helped to swell savings stockpiles.

And the Federal Reserve’s interest rates are at rock bottom, which has bolstered demand for big purchases made on credit, from houses and cars to business investments like machinery and computers. Families have been taking on more housing and auto debt, data from the Federal Reserve Bank of New York shows, helping to pump up those sectors.

But if stimulus-driven demand is fueling inflation, the diagnosis could come with a silver lining. It may be easier to temper consumer spending than to rapidly reorient tangled supply lines.

People may naturally begin to buy less as government help fades. Spending could shift away from goods and back toward services if the pandemic abates. And the Fed’s policies work on demand — not supply.

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Fed’s Moves in 2022 Could End the Stock Market’s Pandemic Run

For two years, the stock market has been largely able to ignore the lived reality of Americans during the pandemic — the mounting coronavirus cases, the loss of lives and livelihoods, the lockdowns — because of underlying policies that kept it buoyant.

Investors can now say goodbye to all that.

Come 2022, the Federal Reserve is expected to raise interest rates to fight inflation, and government programs meant to stimulate the economy during the pandemic will have ended. Those policy changes will cause investors, businesses and consumers to behave differently, and their actions will eventually take some air out of the stock market, according to analysts.

“It’s going to be the first time in almost two years that the Fed’s incremental decisions might force investors or consumers to become a little more wary,” said David Schawel, the chief investment officer at Family Management Corporation, a wealth management firm in New York.

At year’s end, the overarching view on Wall Street is that 2022 will be a bumpier ride, if not quite a roller coaster. In a recent note, analysts at J.P. Morgan said that they expected inflation — currently at 6.8 percent — to “normalize” in coming months, and that the surge of the Omicron variant of the coronavirus was unlikely to lower economic growth.

16 percent gain during the first year of the pandemic. The index hit 70 new closing highs in 2021, second only to 1995, when there were 77, said Howard Silverblatt, an analyst at S&P Dow Jones Indices. Shares on Friday fell slightly.

The market continued to rise through political, social and economic tensions: On Jan. 7, the day after a pro-Trump mob stormed the U.S. Capitol, the S&P set another record. Millions of amateur investors, stuck at home during the pandemic, piled into the stock market, too, buying up shares of all kinds of companies — even those that no one expects will earn money, like the video game retailer GameStop.

Wall Street also remained bullish on business prospects in China despite Beijing’s growing tension with the United States and tightening grip on Chinese companies. Waves of coronavirus variants, from Delta to Omicron, and a global death toll that crossed five million did not deter the stock market’s rise; its recovery after each bout of panic was faster than the previous one.

“2021 was a terrific year for the equity markets,” said Anu Gaggar, the global investment strategist for Commonwealth Financial Network, in an emailed note. “Between federal stimulus keeping the economy going, easy monetary policy from the Fed keeping markets liquid and interest rates low, and the ongoing medical improvement leading to surprising growth, markets have been in the best of all possible worlds.”

400 private companies raised $142.5 billion in 2021. But investors had sold off many of the newly listed stocks on the New York Stock Exchange or Nasdaq by the end of the year. The Renaissance IPO exchange-traded fund, which tracks initial public offerings, is down about 9 percent for the year.

Shares of Oatly, which makes an oat-based alternative to dairy milk, soared 30 percent when the company went public in May but are now trading 60 percent lower than their opening-day closing price. The stock-trading start-up Robinhood and the dating app Bumble, two other big public debuts, were down about 50 percent for 2021.

supply chain disruptions stemming from the pandemic. Prices for used cars skyrocketed amid a global computer chip shortage. As Covid-19 vaccination rates improved, businesses trying to reopen had to raise wages to attract and retain employees. Consumer prices climbed 5.7 percent in November from a year earlier — the fastest pace since 1982.

But even when “inflation” had become a buzzword worthy of a headline in The Onion, the stock market appeared slow to react to price increases.

“The market is on the side that inflation is transitory,” said Harry Mamaysky, a professor at Columbia Business School. “If it’s not and the Fed needs to go in and raise interest rates to tame inflation, then things could get a lot worse in terms of markets and economic growth.”

And that is what the Fed has signaled it will do in 2022.

When interest rates go up, borrowing becomes more expensive for both consumers and companies. That can hurt profit margins for companies and make stocks less attractive to investors, while sapping consumer demand because people have less money to spend if their mortgage and other loan payments go up. Over time, that tends to deflate the stock market and reduce demand, which brings inflation back under control.

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 costs and toys.

Mr. McBride said the values of many stocks were being supported by extremely low yields on Treasury bonds, especially the 10-year yield, which has held to about 1.5 percent.

“If that yield moves up, investors are going to re-evaluate how much they’re willing to pay for per dollar of earnings for stocks,” he said. Even if corporate profits — which were strong in 2021 — continue to grow in 2022, he added, they are unlikely to expand “at a pace that continues to justify the current price of stocks.”

quicken the pace of pulling back on that aid, set to finish in March.

“The nightmare scenario is: The Fed tightens and it doesn’t help,” said Aaron Brown, a former risk manager of AQR Capital Management who now manages his own money and teaches math at New York University’s Courant Institute of Mathematical Sciences. Mr. Brown said that if the Fed could not orchestrate a “soft landing” for the economy, things could start to get ugly — fast.

And then, he said, the Fed may have to take “very aggressive action like a rate hike to 15 percent, or wage and price controls, like we tried in the ’70s.”

By an equal measure, the Fed’s moves, even if they are moderate, could also cause a sell-off in stocks, corporate bonds and other riskier assets, if investors panic when they realize that the free money that drove their risk-taking to ever greater extremes over the past several years is definitely going away.

Sal Arnuk, a partner and co-founder of Themis Trading, said he expected 2022 to begin with something like “a hiccup.”

“China and Taiwan, Russia and Ukraine — if something happens there or if the Fed surprises everyone with the speed of the taper, there’s going to be some selling,” Mr. Arnuk said. “It could even start in Bitcoin, but then people are going to start selling their Apple, their Google.”

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Japan’s Economy Shrinks, but Outlook Is Brighter as Virus Ebbs

Japan’s economy continued to wobble in the third quarter of 2021, tipping back into contraction, as the country struggled to find its economic footing in the face of coronavirus restrictions and a supply chain crunch that hit its biggest manufacturers.

In the July-to-September period, the country’s economy, the third largest after the United States and China, shrank by an annualized rate of 3 percent, government data showed on Monday. The result, a quarterly drop of 0.8 percent, followed a slight expansion in the previous three-month period, when economic output grew at a revised annualized rate of 1.5 percent, or a quarterly rate of 0.4 percent.

But brighter days may be ahead, at least in the near term.

Japan now has one of the highest vaccination rates among major nations, and it has lifted virtually all restrictions on its economy as its virus caseload has fallen in recent weeks to one of the lowest levels in the world.

Seventy-five percent of the country is fully vaccinated. And coronavirus case counts have hovered in the low hundreds since mid-October, a decline of about 99 percent since their August peak, heralding the return of long-suppressed consumer spending.

back foot because of a clunky vaccine rollout that left it far behind its peer countries.

By midsummer, it was in the midst of its toughest battle yet with the virus. The Delta variant caused cases to surge just as Tokyo prepared to kick off the Summer Olympics. Sponsors rolled back advertising campaigns, and tourists stayed home. The Games, which were conducted without spectators, failed to deliver the economic boost that had been promised when the country was chosen as host.

As the virus spread, Japan entered a new state of emergency. Restaurants and bars closed early and travel dried up, with many people deciding to stay home rather than brave record-high case counts.

At the same time, semiconductor shortages battered the country’s automakers, forcing many to drastically cut production. In September, the top eight Japanese manufacturers made about half as many cars as they had at the same time in the previous year.

“There was an enormous drop in production, and even if people wanted to buy cars, they couldn’t,” Ms. Kobayashi said.

Since the country ended its state of emergency last month, however, foot traffic has nearly returned to prepandemic levels, said Tomohiko Kozawa, a researcher at the Japan Research Institute.

“There’s a risk that infections could begin to spread again, but for the moment, the outlook points to recovery,” he said, adding that “we can expect high growth” in domestic consumption in the coming months.

The auto industry, too, is expected to rebound, he said, as chip manufacturers expand production and the pandemic ebbs in Southeast Asia, where the virus shut down factories that manufacture critical parts for Japanese vehicles.

“Exports should recover in the first three months of next year,” Mr. Kozawa said.

Hoping to get the economy back on track, the government is expected to pass its economic stimulus package in the coming days, which would provide cash handouts to families with children under 18, give aid to small businesses and put in place measures to offset rising fuel prices, which have increased costs across a range of industries.

Still, other factors will continue to weigh on growth. The country remains closed to tourists — and difficult to enter for many businesspeople and students — and it is unclear when the borders might reopen. Before the pandemic, many businesses in Japan had relied on a steady stream of visitors from abroad.

Although the country should be congratulated for its success in tackling the virus, it needs to articulate a vision for what comes next, said Daisuke Karakama, chief market economist at Mizuho Bank.

Even as daily reported infections in Tokyo have dropped to low double digits, “there’s no road map” he said, and “no strategy.”

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Racial Bias Skewed Small-Business Relief Lending, Study Says

But Sergey Chernenko, an associate professor of finance at Purdue University’s Krannert School of Management, who was not involved in Dr. Howell’s research, said the new paper aligned with his own findings on race-based gaps in Paycheck Protection Program lending. At an economic conference next month, he will present a paper that concluded that Black-owned businesses were disproportionately left out of the relief program.

“This fits very well with and complements our finding that minority-owned businesses were less likely to get loans because of racial bias, and to the extent that they do get them, they’re more likely to get them from fintechs than banks,” Dr. Chernenko said.

The government designed the Paycheck Protection Program to be virtually risk-free for lenders: They would advance small companies up to $10 million — the size of the loan was based on the company’s head count and payroll — and the government would then pay off the loans in full for business owners that followed the rules. If the borrower defaulted, the government would still repay the lender. In theory, any lender should have been willing to lend to any qualified applicant.

It didn’t work out that way. Many banks limited their loans to their current customers, which was a hurdle for owners who lacked business checking accounts or loans. But even Black owners who had accounts were noticeably more likely than those of other races to end up with a fintech loan, Dr. Howell and her co-authors found.

The effects were strongest in parts of the country with higher levels of racial animus, which the study measured with variables like the extent of local housing segregation and the prevalence of racially charged Google searches.

The researchers tested — and found little evidence for — other common hypotheses about the program’s racial lending disparities. Even after controlling for variables like the applicant’s ZIP code, industry, recent revenue, affinity for online lenders, and loan size and approval date, the gap persisted.

This was not the case, they found, at the nation’s biggest banks. After researchers controlled for those elements, Black-owned businesses appeared to be just as likely as any other to get a loan from Bank of America, Citibank, JPMorgan Chase and Wells Fargo.

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Could This Covid Wave Reverse the Recovery? Here’s What to Watch.

The spread of the Delta variant has delayed office reopenings, disrupted the start of school and generally dashed hopes for a return to normal after Labor Day. But it has not pushed the U.S. economic recovery into reverse.

Now that recovery faces a new test: the removal of much of the aid that has helped keep households and businesses afloat for the past year and a half.

The Paycheck Protection Program, which distributed hundreds of billions of dollars in grants and loans to thousands of small businesses, concluded last spring. A federal eviction moratorium ended last month after the Supreme Court blocked the Biden administration’s last-minute effort to extend it. Most recently, an estimated 7.5 million people lost unemployment benefits when programs that expanded the system during the pandemic were allowed to lapse.

Next up: the Federal Reserve, which on Wednesday indicated it could start pulling back its stimulus efforts as early as November.

OpenTable, for example, have fallen less than 10 percent from their early-July peak. That is a far smaller decline than during the last Covid surge, last winter.

“It has moved down, but it’s not the same sort of decline,” Mr. Bryson said of the OpenTable data. “We’re living with it.”

$120 billion in monthly bond purchases — which have kept borrowing cheap and money flowing through the economy — but it will almost certainly keep interest rates near zero into next year. Millions of parents will continue to receive monthly checks through the end of the year because of the expanded child tax credit passed in March as part of President Biden’s $1.9 trillion aid package.

That bill, known as the American Rescue Plan, also provided $350 billion to state and local governments, $21.6 billion in rental aid and $10 billion in mortgage assistance, among other programs. But much has not been spent, said Wendy Edelberg, director of the Hamilton Project, an economic-policy arm of the Brookings Institution.

“Those delays are frustrating,” she said. “At the same time, what that also means is that support is going to continue having an effect over the next several quarters.”

Economists, including officials in the Biden administration, say that as the economy heals, there will be a gradual “handoff” from government aid to the private sector. That transition could be eased by a record-setting pile of household savings, which could help prop up consumer spending as government aid wanes.

A lot of that money is held by richer, white-collar workers who held on to their jobs and saw their stock portfolios swell even as the pandemic constrained their spending. But many lower-income households have built up at least a small savings cushion during the pandemic because of stimulus checks, enhanced unemployment benefits and other aid, according to researchers at the JPMorgan Chase Institute.

“The good news is that people are going into the fall with some reserves, more reserves than normal,” said Fiona Greig, co-director of the institute. “That can give them some runway in which to look for a job.”

recent survey by Alignable, a social network for small business owners. Not all have had sales turn lower, said Eric Groves, the company’s chief executive. But the uncertainty is hitting at a crucial moment, heading into the holiday season.

“This is a time of year when business owners in the consumer sector in particular are trying to pull out their crystal ball,” he said. “Now is when they have to be purchasing inventory and doing all that planning.”

open a new location as part of a development project on the West Side of Manhattan.

Go big. If some aid ended up going to people or businesses that didn’t really need help, that was a reasonable trade-off for the benefit of getting money to the millions who did.

Today, the calculus is different. The impact of the pandemic is more tightly focused on a few industries and groups. At the same time, many businesses are having trouble getting workers and materials to meet existing demand. Traditional forms of stimulus that seek to stoke demand won’t help them. If automakers can’t get needed parts, for example, giving money to households won’t lead to more car sales — but it might lead to higher prices.

That puts policymakers in a tight spot. If they don’t get help to those who are struggling, it could cause individual hardship and weaken the recovery. But indiscriminate spending could worsen supply problems and lead to inflation. That calls for a more targeted approach, focusing on the specific groups and industries that need it most, said Nela Richardson, chief economist for ADP, the payroll processing firm.

“There are a lot of arrows in the quiver still, but you need them to go into the bull’s-eye now rather than just going all over,” Ms. Richardson said.

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Federal Reserve Signals a Shift Away From Pandemic Support

Federal Reserve officials indicated on Wednesday that they expect to soon slow the asset purchases they have been using to support the economy and predicted they might raise interest rates next year, sending a clear signal that policymakers are preparing to curtail full-blast monetary help as the business environment snaps back from the pandemic shock.

Jerome H. Powell, the Fed’s chair, said during a news conference that the central bank’s bond purchases, which have propped up the economy since the depths of the pandemic downturn, “still have a use, but it’s time for us to begin to taper them.”

That unusual candor came for a reason: Fed officials have been trying to fully prepare markets for their first move away from enormous economic support. Policymakers could announce a slowdown to their monthly government-backed securities purchases as soon as November, the Fed’s next meeting, and the program may come to a complete end by the middle of next year, Mr. Powell later said. He added that there was “very broad support” on the policy-setting Federal Open Market Committee for such a plan.

Nearly 20 months after the coronavirus pandemic first shook America, the Fed is trying to guide an economy in which business has rebounded as consumers spend strongly, helped along by repeated government stimulus checks and other benefits.

markets on edge. In the United States, partisan wrangling could imperil future government spending plans or even cause a destabilizing delay to a needed debt ceiling increase.

Mr. Powell and his colleagues are navigating those crosscurrents at a time when inflation is high and the labor market, while healing, remains far from full strength. They are weighing when and how to reduce their monetary policy support, hoping to prevent economic or financial market overheating while keeping the recovery on track.

“They want to start the exit,” said Priya Misra, global head of rates strategy at T.D. Securities. “They’re putting the markets on notice.”

Investors took the latest update in stride. The S&P 500 ended up 1 percent for the day, slightly higher than it was before the Fed’s policy statement was released, and yields on government bonds ticked lower, suggesting that investors didn’t see a reason to radically change their expectations for interest rates.

The Fed has been holding its policy rate at rock bottom since March 2020 and is buying $120 billion in government-backed bonds each month, policies that work together to keep many types of borrowing cheap. The combination has fueled lending and spending and helped to foster stronger economic growth, while also contributing to record highs in the stock market.

fresh set of economic projections on Wednesday, laying out their predictions for growth, inflation and the funds rate through the end of 2024. Those included the “dot plot” — a set of anonymous individual estimates showing where each of the Fed’s 18 policymakers expect their interest rate to fall at the end of each year.

last released in June. This was the first time the Fed has released 2024 projections, and officials expected rates to stand at 1.8 percent at the end of that year.

sharply higher in recent months, elevated by supply-chain disruptions and other quirks tied to the pandemic. The Fed’s preferred metric, the personal consumption expenditures index, climbed 4.2 percent in July from a year earlier.

Fed officials expected inflation to average 4.2 percent in the final quarter of 2021 before falling to 2.2 percent in 2022, the new forecasts showed.

Central bankers are trying to predict how inflation will evolve in the coming months and years. Some officials worry that it will remain elevated, fueled by strong consumption and newfound corporate pricing power as consumers come to expect and accept higher costs.

Others fret that the same factors pushing prices higher today will lead to uncomfortably low inflation down the road — for instance, used car prices have contributed heavily to the 2021 increase and could fall as demand wanes. Tepid price increases prevailed before the pandemic started, and the same global trends that had been weighing inflation down could once again dominate.

“Inflation expectations are terribly important, we spend a lot of time watching them, and if we did see them moving up in a troubling way” then “we would certainly react to that,” Mr. Powell said. “We don’t really see that now.”

The Fed’s second goal — full employment — also remains elusive. Millions of jobs remain missing compared with before the pandemic, even after months of historically rapid employment gains. Officials want to avoid lifting interest rates to cool off the economy before the labor market has fully healed. It’s difficult to know when that might be, because the economy has never recovered from pandemic-induced lockdowns before.

“The process of reopening the economy is unprecedented, as was the shutdown at the onset of the pandemic,” Mr. Powell said on Wednesday.

Given those uncertainties, the Fed is likely to move cautiously on raising interest rates. And while Mr. Powell teed up a possible November announcement that the Fed would start slowing its bond-buying, even that is subject to change if the economy does not shape up as expected — or if major risks on the horizon materialize.

“The start of tapering would be delayed if the debt ceiling standoff is unresolved and markets are in turmoil,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note following the meeting.

Yet Mr. Powell made clear that the Fed was not equipped to ride to the rescue if lawmakers could not resolve their differences.

“It’s just very important that the debt ceiling be raised in a timely fashion,” Mr. Powell said, adding that “no one should assume the Fed or anyone else can protect markets and the economy in the event of a failure” to “make sure that we do pay those, when they’re due.”

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August Jobs Report is Concerning News for Fed

Disappointing August jobs numbers intensified the economic uncertainty caused by the Delta variant, putting pressure on the Federal Reserve as it considers when to reduce its policy support and on the White House as it tries to get more Americans vaccinated.

Fed officials and President Biden had been looking for continued improvement in the job market, but the Labor Department reported on Friday that employers added just 235,000 jobs in August — far fewer than projected and a sign that the ongoing coronavirus surge may be slowing hiring.

“There’s no question that the Delta variant is why today’s job report isn’t stronger,” Mr. Biden said in remarks at the White House. “I know people were looking, and I was hoping, for a higher number.”

A one-month slowdown is probably not enough to upend the Fed’s policy plans, but it does inject a dose of caution. It also will ramp up scrutiny of upcoming data as the central bank debates when to take its first steps toward a more normal policy setting by slowing purchases of government-backed bonds.

speech last week that as of the central bank’s July meeting, he and most of his colleagues thought they could start reducing the pace of asset purchases this year if the economy performed as they expected.

sharp pullback in hotel and restaurant hiring, which tends to be particularly sensitive to virus outbreaks. The participation rate, a closely watched metric that gauges what share of the population is working or looking, stagnated.

But there were other signs that underlying demand for workers remained strong. Wages continued to rise briskly, suggesting that employers were still paying up to lure people into work. Over the last three months, job gains have averaged 750,000, which is a strong showing. And the unemployment rate continued to decline in spite of the weakness in August, slipping to 5.2 percent.

4.2 percent in the year through July — well above the 2 percent average that officials aim to achieve over time.

Officials widely expect those price gains to slow as the economy returns to normal and supply chain snarls clear up. But they are monitoring consumer inflation expectations and wages keenly: Prices could keep going up quickly if shoppers begin to accept higher prices and workers come to demand more pay.

That’s why robust wage gains in the August report stuck out to some economists. Average hourly earnings climbed by 0.6 percent from July to August, more than the 0.3 percent economists in a Bloomberg survey had forecast. Over the past year, they were up 4.3 percent, exceeding the expected 3.9 percent.

The fresh data put the Fed “in an uncomfortable position — with the slowdown in the real economy and employment growth accompanied by signs of even more upward pressure on wages and prices,” wrote Paul Ashworth, the chief North America economist at Capital Economics.

referred to that consideration in a footnote to last week’s speech.

“Today we see little evidence of wage increases that might threaten excessive inflation,” he said.

Plus, it is unclear whether pay gains will remain robust as workers return. While it is hard to gauge how much enhanced unemployment benefits discouraged workers from taking jobs, and early evidence suggests that the effect was limited, a few companies have signaled that labor supply has been improving as they sunset.

Other trends — the end of summer and the resumption of in-person school and day care — could allow parents who have been on the sidelines to return to the job search, though that might be foiled if Delta keeps students at home.

“There’s still so much disruption, it’s hard for businesses and workers to make plans and move forward when you don’t know what’s coming around the next bend,” said Julia Coronado, the founder of MacroPolicy Perspectives, adding that this is a moment of “delicate transition.”

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