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Inflation Rose in June With C.P.I. Up 5.4 Percent

The Fed targets 2 percent annual price gains on average over time, a goal it defines using a different index. Still, the C.P.I. is closely watched because it comes out more rapidly than the Fed’s preferred gauge and it feeds into the favored number, which has also accelerated.

Republicans have pointed to rapid price gains as a sign of the Biden administration’s economic mismanagement, and an argument against the kind of additional spending that President Biden has called for as part of his $4 trillion economic agenda, including investments to fight climate change, bolster education and improve child care.

“Bidenflation is growing faster than paychecks, wiping out workers’ wage gains, and leaving American families behind,” Republicans on the House Ways and Means Committee said in a news release following the data report.

The talking point has proved potent because the recent strength in inflation has outstripped the pickup that many officials had expected. In Mr. Biden’s official budget request, released this spring, officials forecast an inflation rate that stayed near historical averages for 2021 and never rose past 2.3 percent a year over the course of a decade. Administration officials have now begun to acknowledge that higher inflation could stay with the economy for a year or two.

The possibility that inflation will not fade as quickly or as much as expected is becoming a defining economic risk of the era. Signs that strong demand could bolster prices, at least for a time, abound. A New York Fed survey out Monday showed that consumers expect to keep spending robustly in the year ahead.

Some members of the business community see price pressures lasting.

Hugh Johnston, the chief financial officer of PepsiCo, told analysts on Tuesday that the company was anticipating more inflationary pressures via higher costs for raw materials, labor and freight. “Are we going to be pricing to deal with it? We certainly are,” he said.

Jamie Dimon, JPMorgan Chase’s chief executive, told analysts on a conference call on Monday that “it’ll be a little bit worse than the Fed thinks. I don’t think it’s all going to be temporary. But that doesn’t matter if we have very strong growth.”

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A Great Inflation Redux? Economists Point to Big Differences.

“It gave me a feeling of déjà vu, because that’s what we were doing in the ’70s — we were trying to get supply-side effects,” said Barry P. Bosworth, a senior fellow at the Brookings Institution who led the Council on Wage and Price Stability under President Jimmy Carter. The efforts failed to control overall inflation, he said.

“It doesn’t work,” he said. “As a macro policy, you can’t go around trying to put your finger in the dike everywhere it pops up.”

The big price spikes in the 1960s and 1970s reversed once the underlying conditions that created them eased. But not all the way — in each case, the rate of inflation bottomed out a bit higher than the time before. Many economists believe that pattern had to do with human psychology: Workers and businesses had come to expect a higher rate of inflation, and had adapted their behavior accordingly, creating a self-sustaining cycle.

Economists particularly highlight the role of wages. Businesses can cut prices just as easily as they can raise them, but cutting wages is harder. No worker wants to be told that a job that was worth $10 an hour yesterday is worth just $9.50 an hour today. And if workers expect prices to rise at 5 percent per year, they will want raises to keep up with inflation.

Most economists believe that the forces driving the current surge in inflation will ease in the months ahead. The question is whether that will happen before expectations shift. Some surveys have found that consumers are already beginning to anticipate faster inflation to stick around, although that evidence is mixed. Wages, too, have continued rising as employers struggle to rehire workers, although it’s not yet clear that they are taking off.

One reason that temporary price increases turned into permanent wage increases in the middle of the 20th century is that many union contracts had escalator clauses that tied wage gains directly to inflation. Those provisions effectively helped lock in price increases, feeding into the price spiral, said David Card, an economist at the University of California, Berkeley, who has studied the role of union contracts in inflation. Far fewer workers are members of unions today, and few contracts have inflation clauses, in part because they haven’t been necessary in a period of low inflation.

Perhaps the largest difference of all? Time. In the 1960s, it took years of price spikes and policy failures for Americans to lose confidence that their leaders could keep inflation under control.

“What happened by the ’70s took almost 10 years to develop,” Mr. Card said. “I don’t think it’s that feasible that it could happen that quickly.”

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Pandemic Wave of Automation May Be Bad News for Workers

“You can pull a less-skilled worker in and have them adapt to our system much easier,” said Ryan Hillis, a Meltwich vice president. “It certainly widens the scope of who you can have behind that grill.”

With more advanced kitchen equipment, software that allows online orders to flow directly to the restaurant and other technological advances, Meltwich needs only two to three workers on a shift, rather than three or four, Mr. Hillis said.

Such changes, multiplied across thousands of businesses in dozens of industries, could significantly change workers’ prospects. Professor Warman, the Canadian economist, said technologies developed for one purpose tend to spread to similar tasks, which could make it hard for workers harmed by automation to shift to another occupation or industry.

“If a whole sector of labor is hit, then where do those workers go?” Professor Warman said. Women, and to a lesser degree people of color, are likely to be disproportionately affected, he added.

The grocery business has long been a source of steady, often unionized jobs for people without a college degree. But technology is changing the sector. Self-checkout lanes have reduced the number of cashiers; many stores have simple robots to patrol aisles for spills and check inventory; and warehouses have become increasingly automated. Kroger in April opened a 375,000-square-foot warehouse with more than 1,000 robots that bag groceries for delivery customers. The company is even experimenting with delivering groceries by drone.

Other companies in the industry are doing the same. Jennifer Brogan, a spokeswoman for Stop & Shop, a grocery chain based in New England, said that technology allowed the company to better serve customers — and that it was a competitive necessity.

“Competitors and other players in the retail space are developing technologies and partnerships to reduce their costs and offer improved service and value for customers,” she said. “Stop & Shop needs to do the same.”

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June Jobs Report Shows an 850,000 Gain, Better Than Expected

Anxieties over a lag in hiring lifted on Friday as the government reported that employers added 850,000 workers in June, the largest monthly gain since last summer.

Wages jumped for the third month in a row, a sign that employers are trying to attract applicants with higher pay and that workers are gaining bargaining power.

Rising Covid-19 vaccination rates and a growing appetite for travel, dining out, celebrations and entertainment gave a particular boost to leisure and hospitality businesses. The biggest chunk of June’s gains — 343,000 — could be found there.

accelerated rate of early retirements means that some of those workers will never come back.

“Today there are more job openings than before the pandemic and fewer people in the labor force,” said Becky Frankiewicz, president of the staffing company ManpowerGroup North America. “The single defining challenge for employers is enticing American workers back to the work force.”

The report follows several promising economic developments this week. Consumer confidence, which surged in June, is at its highest point since the pandemic’s onset last year. Stocks closed out the first half of the year at record highs. And the Congressional Budget Office said Thursday that the economy was on track to recover all the jobs lost in the pandemic by the middle of next year.

But economists cautioned against trying to divine the complex currents crisscrossing the labor market from a single month’s data, particularly given how much the pandemic has disrupted employment patterns.

may reflect smaller-than-expected layoffs rather than big gains. Over a longer period, employment in both public and private education remains significantly below its prepandemic level.

remarks from the White House.

The June figures are unlikely to allay the concerns of small-business owners and managers who complain about the difficulty finding workers. Nearly half report that they cannot fill openings, according to a recent survey by the National Federation of Independent Business.

The competition for workers has pushed up wages. Average hourly earnings climbed 3.6 percent in the year through June and 0.3 percent over the month. Low-wage workers seem to be the biggest beneficiaries of the bump in pay.

Ms. Frankiewicz of ManpowerGroup said the rise of “superemployers” like Amazon and Walmart was making it even more difficult for small and medium-size businesses to attract workers. In the summer of 2019, the top 25 employers had 10 percent of the open jobs, she said, while “today 10 employers do.”

moved to end distribution of federal pandemic-related jobless benefits even though they are funded until September, arguing that the assistance — including a $300 weekly supplement — was discouraging people from returning to work.

The latest jobs report did not reflect the cutoff’s impact because the government surveys were completed before any states ended benefits.

Staffing firms said they had not seen a pickup in job searches or hiring in states that have since withdrawn from the federal jobless programs.

Indeed surveyed 5,000 people in and out of the labor force and found that child care responsibilities, health concerns, vaccination rates and a financial cushion — from savings or public assistance — had all affected the number looking for work. Many employers are desperate to hire, but only 10 percent of workers surveyed said they were urgently seeking a job.

And even among that group, 20 percent said they didn’t want to take a position immediately.

Aside from ever-present concerns about pay and benefits, workers are particularly interested in jobs that allow them to work remotely at least some of the time. In a survey of more than 1,200 people by the staffing company Randstad, roughly half said they preferred a flexible work arrangement that didn’t require them to be on site full time.

Some employers are getting creative with work arrangements in response, said Karen Fichuk, chief executive of Randstad North America. One employer changed the standard shift to match the bus schedule so employees could get to work more easily. Others adjusted hours to make it easier for parents with child care demands.

Health and safety concerns are also on the minds of workers whose jobs require face-to-face interactions, the survey found.

Black and Hispanic workers, who were disproportionately affected by the coronavirus and by job losses, are having trouble regaining their foothold. “The Black unemployment rate is still exceptionally high,” at 9.2 percent compared with 5.2 percent for white workers, said Michelle Holder, an economist at John Jay College in New York.

One factor in the elevated Black jobless rate is that the ranks of Black workers employed or seeking jobs grew sharply last month. But participation in the labor force remains lower than it was before the pandemic among all major racial and ethnic groups.

Professor Holder said some people were reluctant to rejoin the labor force because of the quality and the pay of the work available.

“We don’t have a shortage of people to work,” she said. “What we don’t have are decent jobs.”

Jeanna Smialek and Ben Casselman contributed reporting.

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The Luckiest Workers in America? Teenagers.

Roller-coaster operators and lemonade slingers at Kennywood amusement park, a Pittsburgh summer staple, won’t have to buy their own uniforms this year. Those with a high school diploma will also earn $13 as a starting wage — up from $9 last year — and new hires are receiving free season passes for themselves and their families.

The big pop in pay and perks for Kennywood’s seasonal work force, where nearly half of employees are under 18, echoes what is happening around the country as employers scramble to hire waiters, receptionists and other service workers to satisfy surging demand as the economy reopens.

For American teenagers looking for work, this may be the best summer in years.

As companies try to go from hardly staffed to fully staffed practically overnight, teens appear to be winning out more than any demographic group. The share of 16- to 19-year-olds who are working hasn’t been this high since 2008, before the unfolding global financial crisis sent employment plummeting. Roughly 256,000 teens in that age group gained employment in April — counting for the vast majority of newly employed people — a significant change after teenagers suffered sharp job losses at the beginning of the pandemic. Whether the trend can hold up will become clearer when jobs data for May is released on Friday.

It could come with a downside. Some educators warn that jobs could distract from school. And while employment can itself offer learning opportunities, the most recent wave of hiring has been led by white teens, raising concerns that young people from minority groups might miss out on a hot summer labor market.

antique roller coaster and snapping people into paddle boats when she thought it paid $9 — so when she found out the park was lifting pay to $13 an hour, she was thrilled.

“I love it,” she said. She doesn’t even mind having to walk backward on the carousel to check that everyone is riding safely, though it can be disorienting. “After you see the little kids and they give you high-fives, it doesn’t matter at all.”

It’s not just Kennywood paying up. Small businesses in a database compiled by the payroll platform Gusto have been raising teen wages in service sector jobs in recent months, said Luke Pardue, an economist at the company. Teens took a hit at the onset of the pandemic but got back to their pre-coronavirus wage levels in March 2021 and have spent the first part of May seeing their wages accelerate above that.

raised the starting pay to $10 an hour and dropped the minimum age for applicants from 16 years old to 15. It seems to have worked: More teenagers applied and the city has started interviewing candidates for the open positions.

“Between 2020 and 2021, it seems like a lot of the retail starting salaries really jumped up, and we just kind of had to follow suit if we wanted to be competitive and get qualified applicants,” said Trace Stevens, the city’s director of parks and recreation.

Apps for Apps” deal in which applicants who were interviewed received a free appetizer voucher. Restaurants and gas stations across the country are offering signing bonuses.

But the perks and better pay may not reach everyone. White teens lost employment heavily at the beginning of the pandemic, and they’ve led the gains in 2021, even as Black teens have added comparatively few and Hispanic teens actually lost jobs. That’s continuing a long-running disparity in which white teens work in much greater numbers, and the gap could worsen if the current trajectory continues.

More limited access to transportation is one factor that may hold minority teens back from work, Ms. Sasser Modestino said. Plus, while places like Cape Cod and suburban neighborhoods begin to boom, some urban centers with public transit remain short on foot traffic, which may be disadvantaging teens who live in cities.

“We haven’t seen the demand yet,” said Joseph McLaughlin, research and evaluation director at the Boston Private Industry Council, which helps to place students into paid internships and helps others to apply to private employers, like grocery stores.

Ms. Sasser Modestino’s research has found that the long-running decline in teen work has partly come from a shift toward college prep and internships, but that many teens still need and want jobs for economic reasons. Yet the types of jobs teens have traditionally held have dwindled — Blockbuster gigs are a thing of the past — and older workers increasingly fill them.

Teenagers who are benefiting now may not be able to count on a favorable labor market for the long haul, said Anthony P. Carnevale, the director of Georgetown University’s Center on Education and the Workforce.

“There may be what will surely be a brief positive effect, as young people can move into a lot of jobs where adults have receded for whatever reason,” he said. “It’s going to be temporary, because we always take care of the adults first.”

Educators have voiced a different concern: That today’s plentiful and prosperous teen jobs might be distracting students from their studies.

When in-class education restarted last August at Torrington High School, which serves 330 students in a small city in Wyoming, principal Chase Christensen found that about 10 of his older students weren’t returning. They had taken full-time jobs, including working night shifts at a nursing home and working at a gravel pit, and were reluctant to give up the money. Five have since dropped out of or failed to complete high school.

“They had gotten used to the pay of a full-time worker,” Mr. Christensen said. “They’re getting jobs that usually high schoolers don’t get.”

If better job prospects in the near term overtake teenagers’ plans for additional education or training, that could also spell trouble. Economic research consistently finds that those who manage to get through additional training have better-paying careers.

Still, Ms. Sasser Modestino pointed out that a lot of the hiring happening now was for summer jobs, which have less chance of interfering with school. And there may be upsides. For people like Ms. Bailley, it means an opportunity to save for textbooks and tuition down the road. She’d like to go to community college to complete prerequisites, and then pursue an engineering degree.

“I’ve always been interested in robots, I love programming and coding,” she said, explaining that learning how roller coasters work lines up with her academic interests.

Shaylah Bentley, 18 and a new season pass taker at Kennywood, said the higher-than-expected wage she’s earning will allow her to decorate her dorm room at Slippery Rock University. She’s a rising sophomore this year, studying exercise science.

“I wanted to save up money for school and expenses,” she said. “And have something to do this summer.”

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What Digital Nomads Need to Know About Taxes Abroad

It’s risky. Employers need to know where their employees work in case their presence leads to corporate tax obligations abroad. The risk is higher when employees are bringing in revenue for companies, such as in sales positions, said David McKeegan, who co-founded Greenback Tax Services, an accounting firm for U.S. expatriates.

Still, many companies are operating on a “don’t ask, don’t tell” policy. A science writer in his 50s from California, who was granted anonymity because he did not want senior managers to know he had worked from Costa Rica for a few months, said his human resources department discouraged employees from working outside of California, but did not say anything explicit about working abroad. His setup from an Airbnb by the beach worked perfectly until he lost power because of a hurricane and had to work from a bar a few times. He used his company’s Zoom background, but colleagues started asking about where he was when they heard ocean waves and music. “At a restaurant,” he would tell them, without elaborating.

As more people work from abroad, it may be harder for companies to turn a blind eye. About 10.9 million Americans last year described themselves as digital nomads — people who work remotely and tend to travel from place to place — up from 7.3 million in 2019, according to MBO Partners, which provides services for self-employed workers.

“The tax system globally right now is not prepared for what the work force is going through,” Mr. McKeegan said. “I think at some point we’ll see a system where people are asked on the way in or out if they were working and countries will try and get some more tax revenue from this very mobile work force.”

Potentially. If you qualify for the Foreign Earned Income Exclusion, your first $108,700 is exempt from U.S. income tax. But keep in mind that this applies only if you’re a U.S. citizen who resides in a foreign country for more than 330 days within 12 consecutive months, not including time on planes, or if you are a bona fide resident of a foreign country. (You would still have to pay federal and state taxes on unearned income including interest, dividends and capital gains.)

It is important to track the number of days abroad to be able to prove to U.S. tax authorities that you were there.

Paige Brunton, 30, a Canadian website designer based in Hannover, Germany, learned about how complicated the tax rules are for expats the hard way: One year, she had to file tax returns in three countries. The situation was unavoidable, since she had lived and worked in Germany, Canada and the United States during that tax year, but her biggest advice for others who may have complicated situations is to get an accountant who specializes in international tax right away.

“Don’t congregate in Facebook groups and Google, it’ll really stress you out,” she said.

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New Zealanders Are Flooding Home. Will the Old Problems Push Them Back Out?

WELLINGTON, New Zealand — Like many New Zealanders before her, Cat Moody chased the broader horizons of life abroad, unsure if she would ever return to a homeland she saw as remote and limiting.

But when the pandemic arrived, it “changed the calculus” of what she valued, she said. Suddenly, fresh air, natural splendor and a sparse population sounded more appealing, as did the sense of security in a country whose strict measures have all but vanquished Covid-19.

In February, Ms. Moody, 42, left her house and the life she had built in Princeton, N.J., and moved back to New Zealand with her husband, a U.S. citizen. She is among more than 50,000 New Zealanders who have flocked home during the pandemic, offering the country a rare opportunity to win back some of its best and brightest.

The unexpected influx of international experience and connections has led to local news reports heralding a societal and industrial renaissance. Policymakers are exhorting businesses to capitalize on the “fundamental competitive advantage” offered by the country’s success against the coronavirus.

have received both doses of a Covid-19 vaccine, and Australians and residents of the Cook Islands are the only non-New Zealanders who can visit.

“Shifting into how we take advantage of the way things have changed, I think having a government that is risk-averse is actually going to be damaging to New Zealand,” Ms. Moody said.

Ms. Imam, who worked in communications for the computer company Dell in the United States, said that New Zealand’s reputation abroad was better than it deserved.

Still, she said that new government policies, such as paid leave for women who have miscarriages, had convinced her that the “project that is New Zealand” was worth returning for.

“At least we’re doing something right,” she said. “I want to be part of that.”

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Defying Critics, Biden and Federal Reserve Insist Economic Recovery Remains on Track

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“We should be on track for a fantastic American comeback summer, full steam ahead,” Senator Mitch McConnell of Kentucky, the Republican leader, said this month on the chamber floor. “From vaccinations to job growth, the new Biden administration inherited favorable trends in every direction.”

“But in several important ways, the decisions of elected Democrats have contributed to slowing the return to normalcy,” he added.

Critics have also questioned the wisdom of the Fed’s commitment to keeping interest rates low and buying bonds even as prices begin to rise. Senator Patrick J. Toomey, Republican of Pennsylvania, said last month that while the Fed “maintains that this bout of inflation will be mild and temporary,” it “may be time for the central bank to consider the alternative.”

Mr. Biden’s aides say they continue to monitor the threat that consumer prices could spiral upward, forcing a rapid policy response that could slam the brakes on economic growth. They say that those risks remain low, and that they see no reason to change course on the president’s agenda, including proposed infrastructure and social programs that the president asserts will bolster the economy for years to come. That agenda could prove a more difficult sell, even among congressional Democrats, if job growth continues to disappoint and inflation soars higher than expected.

Fed officials also remain undaunted. They show no sign of raising interest rates soon and are continuing to buy $120 billion in government-backed bonds each month. Officials have given only the earliest hints that they might begin to tiptoe away from that emergency policy setting. They argue that their job is to manage risks, and the risk of withdrawing help early is bigger than the risk that the economy will overheat.

“I don’t think it would be good for the industries we want to see thriving as the recovery continues for us to close off that recovery prematurely,” Randal K. Quarles, the Fed’s vice chair for supervision, said at a House committee hearing this week as lawmakers pressed him on the threat of inflation. The Fed is independent of the White House, but responsible for keeping prices in check.

Voters give Mr. Biden high marks for his economic stewardship thus far. A solid majority of Americans — including many Republicans — approve of the president’s plans to raise taxes on high earners and corporations to fund new spending on water pipes, electric vehicles, education, child care assistance, paid leave and other programs, according to polling for The New York Times conducted by the online research firm Survey Monkey from May 3 to 9.

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Is It Time to Panic About Inflation? Ask These 5 Questions First.

Typically, these relative price changes are not a problem of macroeconomics — something best solved by the Federal Reserve (by raising interest rates) or Congress (by raising taxes) — but a problem of the microeconomics of those industries.

The core challenge of an economy emerging from a pandemic is that numerous industries are going through major shocks in demand and supply simultaneously. That means more big swings in relative price than usual.

Last year, relative price changes cut in both directions (prices for energy and travel-related services fell, while prices for meat and other groceries rose). But this spring, the overwhelming thrust is toward higher prices. There are fewer goods and services with falling prices to offset the rises.

Still, many of the most vivid and economically significant examples of price inflation so far, like for used cars, have unique industry dynamics at play, and therefore represent relative price changes, not economywide price rises. One important thing to watch is whether that changes — whether we start seeing uncomfortably high price increases more dispersed across the full range of goods and services.

That would be a sign that we were in a period not simply of an economy adjusting itself, but one of too much money chasing too little stuff.

Not all price changes have equal meaning for inflation. Much depends on what happens next.

If the price of something rises but then is expected to fall back to normal, it will act as a drag on inflation in the future. This often happens when there is a shortage of something caused by an unusual shock, like weather that ruins a crop. In an opposite example, in 2017 a price war brought down the price of mobile phone service, pulling down inflation. But when the price war was over, the downward pull ended.

On the other hand, a price that is expected to rise at exceptional rates year after year has considerably greater implications. Consider, for example, the multi-decade phenomenon in which health care prices rose faster than prices for most other goods, creating a persistent upward push on inflation.

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