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.”

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Judge orders New York Times to return Project Veritas internal memos

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WASHINGTON, Dec 24 (Reuters) – A New York state judge on Friday ordered the New York Times to return internal documents to the conservative activist group Project Veritas, a restriction the newspaper said violates decades of First Amendment protections.

In an unusual written ruling, Justice Charles Wood of the Westchester County Supreme Court directed the New York Times to return to Project Veritas any physical copies of legal memos prepared by one of the group’s lawyers, and to destroy electronic versions.

Wood had entered a temporary order against the New York Times last month, drawing criticism from freedom of the press advocates. read more

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Project Veritas, led by James O’Keefe, has used what critics view as misleading tactics like secret audio recording to expose what it describes as liberal media bias. The group is the subject of a Justice Department probe into its possible role in the theft of a diary from President Joe Biden’s daughter, Ashley, pages of which were published on a right-wing website.

Project Veritas objected to a Nov. 11 Times article that drew from the legal memos and purported to reveal how the group worked with its lawyers to “gauge how far its deceptive reporting practices can go before running afoul of federal laws.”

Wood said in Friday’s ruling that the Project Veritas legal memos were not a matter of public concern and that the group has a right to keep them private that outweighs concerns about freedom of the press.

“Steadfast fidelity to, and vigilance in protecting First Amendment freedoms cannot be permitted to abrogate the fundamental protections of attorney-client privilege or the basic right to privacy,” Wood wrote.

A.G. Sulzberger, publisher of the New York Times, said the newspaper would appeal the ruling.

Sulzberger said the decision barred the Times from publishing newsworthy information that was obtained legally in the ordinary course of reporting.

“In addition to imposing this unconstitutional prior restraint, the judge has gone even further (and) ordered that we return this material, a ruling with no apparent precedent and one that could present obvious risks to exposing sources should it be allowed to stand,” Sulzberger said.

Libby Locke, a lawyer for Project Veritas, said in a statement that the New York Times’ behavior was “irregular,” and that the ruling affirms that view.

“The New York Times has long forgotten the meaning of the journalism it claims to espouse, and has instead become a vehicle for the prosecution of a partisan political agenda,” Locke said.

Project Veritas has been engaged in defamation litigation against the New York Times since last year, when the newspaper published a piece calling the group’s work “deceptive.”

The Times had not faced any prior restraint since 1971, when the Nixon administration unsuccessfully sought to block the publication of the Pentagon Papers detailing U.S. military involvement in Vietnam.

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Reporting by Jan Wolfe;
Editing by Mary Milliken and Leslie Adler

Our Standards: The Thomson Reuters Trust Principles.

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As World Shuts Borders to Stop Omicron, Japan Offers a Cautionary Tale

TOKYO — With the emergence of the new Omicron variant of the coronavirus late last week, countries across the globe rushed to close their borders to travelers from southern Africa, even in the absence of scientific information about whether such measures were necessary or likely to be effective in stopping the virus’s spread.

Japan has gone further than most other countries so far, announcing on Monday that the world’s third-largest economy would be closed off to travelers from everywhere.

It is a familiar tactic for Japan. The country has barred tourists since early in the pandemic, even as most of the rest of the world started to travel again. And it had only tentatively opened this month to business travelers and students, despite recording the highest vaccination rate among the world’s large wealthy democracies and after seeing its coronavirus caseloads plunge by 99 percent since August.

Now, as the doors slam shut again, Japan provides a sobering case study of the human and economic cost of those closed borders. Over the many months that Japan has been isolated, thousands of life plans have been suspended, leaving couples, students, academic researchers and workers in limbo.

United States, Britain and most of Europe reopened over the summer and autumn to vaccinated travelers, Japan and other countries in the Asia-Pacific region opened their borders only a crack, even after achieving some of the world’s highest vaccination rates. Now, with the emergence of the Omicron variant, Japan, along with Australia, Thailand, Sri Lanka, Singapore, Indonesia and South Korea, are quickly battening down again.

outbreak of the Delta variant.

Japan is recording only about 150 coronavirus cases a day, and before the emergence of the Omicron variant, business leaders had been calling for a more aggressive reopening.

“At the beginning of the pandemic, Japan did what most countries around the world did — we thought we needed proper border controls,” Yoshihisa Masaki, director of communications at Keidanren, Japan’s largest business lobbying group, said in an interview earlier this month.

But as cases diminished, he said, the continuation of firm border restrictions threatened to stymie economic progress. “It will be like Japan being left behind in the Edo Period,” Mr. Masaki said, referring to Japan’s isolationist era between the 17th and mid-19th centuries.

Thailand had recently reopened to tourists from 63 countries, and Cambodia had just started to welcome vaccinated visitors with minimal restrictions. Other countries, like Malaysia, Vietnam and Indonesia, were allowing tourists from certain countries to arrive in restricted areas.

Wealthier Asian countries like Japan resisted the pressure to reopen. With the exception of its decision to hold the Summer Olympics, Japan has been cautious throughout the pandemic. It was early to shut its borders and close schools. It rolled out its vaccination campaign only after conducting its own clinical trials. And dining and drinking hours remained restricted in many prefectures until September.

Foreign companies could not bring in executives or other employees to replace those who were moving back home or to another international posting, said Michael Mroczek, a lawyer in Tokyo who is president of the European Business Council.

In a statement on Monday, the council said business travelers or new employees should be allowed to enter provided they follow strict testing and quarantine measures.

“Trust should be put in Japan’s success on the vaccination front,” the council said. “And Japan and its people are now firmly in a position to reap the economic rewards.”

Business leaders said they wanted science to guide future decisions. “Those of us who live and work in Japan appreciate that the government’s policies so far have substantially limited the impact of the pandemic here,” said Christopher LaFleur, former American ambassador to Malaysia and special adviser to the American Chamber of Commerce in Japan.

But, he said, “I think we really need to look to the science over the coming days” to see whether a complete border shutdown is justified.

Students, too, have been thrown into uncertainty. An estimated 140,000 or more have been accepted to universities or language schools in Japan and have been waiting months to enter the country to begin their courses of study.

Carla Dittmer, 19, had hoped to move from Hanstedt, a town south of Hamburg, Germany, to Japan over the summer to study Japanese. Instead, she has been waking up every morning at 1 to join an online language class in Tokyo.

“I do feel anxious and, frankly speaking, desperate sometimes, because I have no idea when I would be able to enter Japan and if I will be able to keep up with my studies,” Ms. Dittmer said. “I can understand the need of caution, but I hope that Japan will solve that matter with immigration precautions such as tests and quarantine rather than its walls-up policy.”

The border closures have economically flattened many regions and industries that rely on foreign tourism.

When Japan announced its reopening to business travelers and international students earlier this month, Tatsumasa Sakai, 70, the fifth-generation owner of a shop that sells ukiyo-e, or woodblock prints, in Asakusa, a popular tourist destination in Tokyo, hoped that the move was a first step toward further reopening.

“Since the case numbers were going down, I thought that we could have more tourists and Asakusa could inch toward coming back to life again,” he said. “I guess this time, the government is just taking precautionary measures, but it is still very disappointing.”

Mr. Dery and Ms. Hirose also face a long wait. Mr. Dery, who met Ms. Hirose when they were both working at an automotive parts maker, returned to Indonesia in April 2020 after his Japanese work visa expired. Three months before he departed, he proposed to Ms. Hirose during an outing to the DisneySea amusement park near Tokyo.

Ms. Hirose had booked a flight to Jakarta for that May so that the couple could marry, but by then, the borders were closed in Indonesia.

“Our marriage plan fell apart,” Mr. Dery, 26, said by telephone from Jakarta. “There’s no clarity on how long the pandemic would last.”

Just last week, Mr. Dery secured a passport and was hoping to fly to Japan in February or March.

Upon hearing of Japan’s renewed border closures, he said he was not surprised. “I was hopeful,” he said. “But suddenly the border is about to close again.”

“I don’t know what else to do,” he added. “This pandemic seems endless.”

Reporting was contributed by Hisako Ueno and Makiko Inoue in Tokyo; Dera Menra Sijabat in Jakarta, Indonesia; Richard C. Paddock in Bangkok; John Yoon in Seoul; Raymond Zhong in Taipei, Taiwan; and Yan Zhuang in Sydney, Australia.

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Supply Chain Shortages Help a North Carolina Furniture Town

HICKORY, N.C. — Six months into the coronavirus pandemic, as millions of workers lost their jobs and companies fretted about their economic future, something unexpected happened at Hancock & Moore, a purveyor of custom-upholstered leather couches and chairs in this small North Carolina town.

Orders began pouring in.

Families stuck at home had decided to upgrade their sectionals. Singles tired of looking at their sad futons wanted new and nicer living room furniture. And they were willing to pay up — which turned out to be good, because the cost of every part of producing furniture, from fabric to wood to shipping, was beginning to swiftly increase.

More than a year later, the furniture companies that dot Hickory, N.C., in the foothills of the Blue Ridge Mountains, have been presented with an unforeseen opportunity: The pandemic and its ensuing supply chain disruptions have dealt a setback to the factories in China and Southeast Asia that decimated American manufacturing in the 1980s and 1990s with cheaper imports. At the same time, demand for furniture is very strong.

In theory, that means they have a shot at building back some of the business that they lost to globalization. Local furniture companies had shed jobs and reinvented themselves in the wake of offshoring, shifting to custom upholstery and handcrafted wood furniture to survive. Now, firms like Hancock & Moore have a backlog of orders. The company is scrambling to hire workers.

12 percent nationally through October. Furniture and bedding make up a small slice of the basket of goods and services that the inflation measure tracks — right around 1 percent — so that increase has not been enough to drive overall prices to uncomfortable levels on its own. But the rise has come alongside a bump in car, fuel, food and rent costs that have driven inflation to 6.2 percent, the highest level in 31 years.

The question for policymakers and consumers alike is how long the surge in demand and the limitations in supply will last. A key part of the answer lies in how quickly shipping routes can clear up and whether producers like the craftsmen in Hickory can ramp up output to meet booming demand. But at least domestically, that is proving to be a more challenging task than one might imagine.

container ships cannot clear ports quickly enough, and when imported goods get to dry land, there are not enough trucks around to deliver everything. All of that is compounded by foreign factory shutdowns tied to the virus.

With foreign-made parts failing to reach domestic producers and warehouses, prices for finished goods, parts and raw materials have shot higher. American factories and retailers are raising their own prices. And workers have come into short supply, prompting companies to lift their wages and further fueling inflation as they increase prices to cover those costs.

Chad Ballard, 31, has gone from making $15 per hour building furniture in Hickory at the start of the pandemic to $20 as he moved into a more specialized role.

according to data from Zillow.

toilet paper to new cars. The disruptions go back to the beginning of the pandemic, when factories in Asia and Europe were forced to shut down and shipping companies cut their schedules.

“We have a labor market that is tight and getting tighter,” said Jared Bernstein, a White House economic adviser. Mr. Bernstein said the administration was predicting that solid wage growth would outlast rapid inflation, improving worker leverage.

domestic manufacturing. This moment could help that agenda as it exposes the fragility of far-flung supply networks.

But pandemic employee shortages, which are happening across the United States in part because many people have chosen to retire early, could also serve as a preview of the demographic shift that is coming as the country’s labor force ages. The worker shortages are one reason that ambitions to bring production and jobs back from overseas could prove complicated.

Hickory’s furniture industry was struggling to hire even before the coronavirus struck. It has a particularly old labor force because a generation of talent eschewed an industry plagued by layoffs tied to offshoring. Now, too few young people are entering it to replace those who are retiring.

Local companies have been automating — Hancock & Moore uses a new digital leather cutting machine to save on labor — and they have been working to train employees more proactively.

Several of the larger firms sponsor a local community college’s furniture academy. On a recent Thursday night, employers set up booths at a jobs fair there, forming a hopeful ring around the doorway of the school’s warehouse, welcoming potential candidates with branded lanyards and informational material. It was the first furniture-specific event of its kind.

But progress is slow, as companies try to assure a new — and smaller — generation of young people that the field is worth pursuing. Corporate representatives far outnumbered job seekers for much of the night.

“It’s such a tough market to find people,” said Bill McBrayer, human resources manager at Lexington Home Brands. Companies are turning to short-term workers, but even firms specializing in temporary help cannot find people.

“I’ve been in this business 35 years,” he said, “and it’s never been like this.”

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Vietnam’s Workers Hesitate to Return After Covid Outbreak

Thu Trang traveled to Ho Chi Minh City, Vietnam, in 2019, ecstatic to get a job at a factory. She worked eight-hour shifts and was guaranteed overtime pay, and the wages were nearly triple what she had made as a farmer back home.

But during a Covid-19 outbreak this summer, the factory where she worked making Adidas, Converse and New Balance shoes virtually shut down. She and her co-workers were forced to live in a cramped apartment for nearly three months, subsisting on a diet of rice and soy sauce. In October, when restrictions loosened as global supply chain issues surged, Thu Trang decided she would pack up and return to her home province, Tra Vinh.

Her manager promised her higher wages, but she didn’t bother to find out how much.

“Even if the company doubles or triples our wages, I insist on moving back home,” said Thu Trang, who asked to be identified only by her first name because she feared retribution from her company and the government. “Ho Chi Minh City was once a destination where we sought our future, but this is no longer a safe place.”

Just last year, Vietnam’s coronavirus controls were lauded by health officials around the world. The country was so successful that it achieved the highest economic growth in Asia last year, at 2.9 percent. That outlook has dimmed: Workers have fled their factories, managers are struggling to get them back, and economists are forecasting that a full recovery in output won’t come until next year.

monthslong factory shutdowns in the Southeast Asian country. It could mean a longer wait for Nike sneakers, Lululemon yoga pants and Under Armour tank tops before the holidays. Several American retailers have already switched to suppliers in China to ease the crunch.

Patagonia and other brands.

Ms. Doan said that when the government imposed coronavirus restrictions, she went days without food and received only about $130 for August and September from local authorities. The subsidy was not enough for her to pay rent. She said she was waiting for the company to approve her resignation.

“My trust in the authorities has vanished,” she said. “They failed to control the pandemic effectively, causing many to die from infection and to live in hunger.”

the deliveries of gifts during the Christmas season.

Nike cut its 2022 revenue growth forecast, saying in September that it had lost 10 weeks of production because 80 percent of its footwear factories were in the south of Vietnam and nearly half of its apparel factories in the country were closed.

On earnings calls, Chico’s, a women’s clothing maker based in Florida, and Callaway, the golf company, said they had moved some of their production out of Vietnam.

Adam Sitkoff, the executive director of the American Chamber of Commerce in Vietnam, said many companies were looking for workarounds and other remedies to help ease the stress.

“American companies are seeing what they can do,” Mr. Sitkoff said. “If we charter buses and send them to whatever province and hometown, will that help us get the people back?”

American businesses have pushed the Vietnamese government to speed up its vaccine program, which they say is essential for workers to feel safe. Only 29 percent of the population has been fully inoculated, one of the lowest rates in Southeast Asia. Vietnam says it hopes to fully vaccinate 70 percent of its population by the end of the year.

Nguyen Huyen Trang, a 25-year-old worker for Changshin Vietnam, a major supplier for Nike, is fully vaccinated but said she still feared being back on the factory floor. Ms. Nguyen and her husband returned to their home in Ninh Thuan, a province in central Vietnam, from Dong Nai when cases there started soaring at the end of July. Her husband wants to go back to the city, but her family is pressuring her to stay.

She said her manager called her in October and offered to increase her wages if she returned. Her response, she said, was “a definite head-shaking no.”

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