Business

Biden Insists There’s No Recession as He Confronts Latest Economic Risk

Published

2 years ago

July 27, 2022

Biden Insists There’s No Recession as He Confronts Latest Economic Risk

After a digital assembly with tech manufacturing executives on Monday, President Biden was requested about his newest financial headache: How apprehensive ought to Individuals be that the nation could be in a recession?

“We’re not going to be in a recession,” he replied.

The president’s aides have spent a lot of the previous a number of days making that case publicly, forward of crucial financial knowledge set for launch on Thursday that would, at the least informally, sign the beginning of a recession by a standard shorthand definition.

It’s the newest chapter in a problem that Mr. Biden has confronted since taking workplace: attempting, largely unsuccessfully, to influence Individuals that the financial restoration is stronger than individuals understand.

After greater than a 12 months of trying to assuage client anxieties over hovering inflation, Biden administration officers have segued right into a sustained public marketing campaign to extinguish fears that the nation’s economic system has dipped again into recession. Officers have leaned closely on the power of the job market and referred incessantly to the factors utilized by the financial analysis committee that formally declares when recessions begin and finish.

The marketing campaign has been difficult by the Federal Reserve, which has tried to gradual the economic system in searching for to wrestle inflation beneath management. On Wednesday, the Fed was anticipated to make one other supersized rate of interest enhance, possible lifting charges by three quarters of a share level and elevating the chances of a policy-induced downturn later this 12 months.

The administration’s arguments that the nation was not at the moment in recession had been supported by some financial indicators, by many forecasters and by the technical definitions of what constitutes a recession which might be employed by the Nationwide Bureau of Financial Analysis’s enterprise cycle courting committee.

“Client spending stays stable, family stability sheets stay in good condition,” Brian Deese, the director of the Nationwide Financial Council, mentioned at a White Home briefing on Tuesday. The complete scope of financial knowledge, he mentioned, was “not in line with a recession.”

However the truth that Mr. Biden and his aides have spent a lot time heading off speak of a recession exhibits simply how glum Individuals have grown in regards to the economic system, and why it has been so arduous for the administration to vary their minds.

To paraphrase an outdated political adage: For those who’re explaining how recession calls are made, you’re shedding.

Mr. Biden has tried for greater than a 12 months to influence Individuals that the economic system is powerful and that inflation, which has been operating at its quickest tempo in 40 years, will fade. He has emphasised fast job creation and a falling unemployment charge, noting on Monday that it was down to three.6 %.

Individuals haven’t purchased it. Client confidence has slumped as meals, gasoline and different costs soared. Voter dissatisfaction with Mr. Biden’s financial stewardship has grown, as have assaults by Republicans, who’ve blamed the president’s insurance policies for fueling inflation and eroding Individuals’ buying energy, simply months earlier than midterm elections that can decide whether or not Democrats proceed to manage Congress.

About half of respondents in a June survey of Individuals nationwide carried out for The New York Instances by the web analysis platform Momentive mentioned they believed the economic system was already in a recession or a melancholy. One other quarter mentioned the economic system was “stagnating.” Republican responders had been extra pessimistic than Democrats, reflecting an ongoing partisan break up in views of financial efficiency relying on who occupies the White Home.

However greater than half of impartial voters mentioned the nation’s economic system was in a melancholy or recession, as did a 3rd of Democrats.

Administration officers incessantly acknowledge the squeeze Individuals have felt from rising costs, which have had the impact of decreasing the standard employee’s wages after adjusting for inflation. They’ve additionally expressed frustration that Mr. Biden had not gotten extra credit score for a fast jobs rebound after he inherited an economic system that had simply started to climb out from the steep and swift pandemic recession of 2020.

Officers have pointed to persevering with robust job development as proof that the U.S. was not in a downturn, together with an unemployment charge that’s close to a 50-year low, and be aware that gasoline costs have now fallen for six straight weeks.

Nonetheless, the Biden administration’s insistence that the nation is just not in a recession could also be drawing extra consideration to the darkish prospects at the moment hanging over the economic system than the White Home would possibly in any other case prefer to see. Fox and CNN set information this week for on-air mentions of the phrase “recession” within the Biden presidency, and CNBC got here near reaching one as nicely. Taken collectively, these three cable networks have talked about “recession” extra occasions this month than in any month since 2009 besides one, based on knowledge compiled by the GDELT Mission.

And officers have been keenly conscious that the U.S. economic system may quickly meet a generally used shorthand for recession, if the Commerce Division experiences on Thursday that the economic system shrank for a second consecutive quarter this spring.

That definition is straightforward to grasp and broadly employed: A recession, it holds, is triggered when the economic system contracts for 2 consecutive quarters. Within the first quarter of this 12 months, the U.S. economic system shrank by 1.6 %. Many forecasters anticipated Thursday’s gross home product report would present additional shrinkage within the second quarter, although some projected barely optimistic development as a substitute.

World developments haven’t helped the White Home make its case. A dismal forecast from the Worldwide Financial Fund launched on Tuesday mentioned some indicators instructed that the US was already in a “technical” recession, which the I.M.F. defines within the shorthand method — two consecutive quarters of unfavourable development. Forecasters warned of slowing development throughout America, Europe and China, elevating the probabilities of a world downturn.

The administration has tried to make the case that the shorthand recession definition doesn’t match the unusual circumstances of the pandemic restoration within the U.S., particularly given the robust labor market. “Each official determinations of recessions and economists’ evaluation of financial exercise are based mostly on a holistic have a look at the info — together with the labor market, client and enterprise spending, industrial manufacturing, and incomes,” members of the White Home Council of Financial Advisers wrote final week.

Treasury Division officers wrote this week that “appreciable proof means that the economic system is just not at the moment in a recession.” They pointed to a divergence within the measurement of financial development by gross home product, which counts the worth of products and companies produced within the economic system, and an alternate measure referred to as gross home earnings, which counts up wages, income and investments. Gross home product shrank within the first quarter of the 12 months, whereas gross home earnings expanded.

In some methods, there was no want — or capacity — to settle the query anytime quickly. The Commerce Division will revise its estimate of second-quarter development at the least twice after its preliminary studying on Thursday, and it may revise the first-quarter estimate in an annual replace later this 12 months. All these revisions may push the nation in or out of the shorthand recession standards a number of occasions. A pair tenths of a share level on an financial development studying may tip the scales both method, however Individuals could be hard-pressed to note a distinction of their every day lives from it.

Nonetheless, the excellence issues each politically and in sensible phrases. Spiraling financial pessimism has undercut Mr. Biden’s approval scores and contributed to Democrats’ fears of shedding at the least one chamber of Congress within the midterm elections. Fear that the economic system was coming into a recession may doubtlessly trigger shoppers to tug again on spending or employers to reduce hiring. Simply this week, Walmart slashed its revenue forecasts and reported excessive costs had been affecting client decisions at its shops.

Mr. Biden tried to stir financial optimism on Tuesday, showing just about with executives from a Korean firm, SK Group, to announce $22 billion in new investments in the US. Mr. Biden mentioned the investments had been “additional proof that America is open for enterprise.”

Maybe the largest political hazard for Mr. Biden is that he finally ends up right about the opportunity of a recession within the second, however mistaken down the highway. Even when the economic system grew within the second quarter, it may fall into recession this summer season or proper earlier than the midterms, particularly if international oil costs spike once more, a improvement administration officers had been attempting to move off.

The I.M.F. warned on Tuesday that the dangers for the worldwide economic system had been “overwhelmingly tilted to the draw back.” It revised down its projections of development in the US, forecasting simply 0.6 % annual development for the fourth quarter of 2023.

Such a slowdown, I.M.F. officers wrote, “will make it more and more difficult to keep away from a recession” — irrespective of the way you outline the time period.

Ben Casselman contributed reporting.

Business

Albania Gives Jared Kushner Hotel Project a Nod as Trump Returns

Published

1 hour ago

January 16, 2025

Press Room

Albania Gives Jared Kushner Hotel Project a Nod as Trump Returns

The government of Albania has given preliminary approval to a plan proposed by Jared Kushner, Donald J. Trump’s son-in-law, to build a $1.4 billion luxury hotel complex on a small abandoned military base off the coast of Albania.

The project is one of several involving Mr. Trump and his extended family that directly involve foreign government entities that will be moving ahead even while Mr. Trump will be in charge of foreign policy related to these same nations.

The approval by Albania’s Strategic Investment Committee — which is led by Prime Minister Edi Rama — gives Mr. Kushner and his business partners the right to move ahead with accelerated negotiations to build the luxury resort on a 111-acre section of the 2.2-square-mile island of Sazan that will be connected by ferry to the mainland.

Mr. Kushner and the Albanian government did not respond Wednesday to requests for comment. But when previously asked about this project, both have said that the evaluation is not being influenced by Mr. Kushner’s ties to Mr. Trump or any effort to try to seek favors from the U.S. government.

“The fact that such a renowned American entrepreneur shows his interest on investing in Albania makes us very proud and happy,” a spokesman for Mr. Rama said last year in a statement to The New York Times when asked about the projects.

Mr. Kushner’s Affinity Partners, a private equity company backed with about $4.6 billion in money mostly from Saudi Arabia and other Middle East sovereign wealth funds, is pursuing the Albania project along with Asher Abehsera, a real-estate executive that Mr. Kushner has previously teamed up with to build projects in Brooklyn, N.Y.

The Albanian government, according to an official document recently posted online, will now work with their American partners to clear the proposed hotel site of any potential buried munitions and to examine any other environmental or legal concerns that need to be resolved before the project can move ahead.

The document, dated Dec. 30, notes that the government “has the right to revoke the decision,” depending on the final project negotiations.

Mr. Kushner’s firm has said the plan is to build a five-star “eco-resort community” on the island by turning a “former military base into a vibrant international destination for hospitality and wellness.”

Ivanka Trump, Mr. Trump’s daughter, has said she is helping with the project as well. “We will execute on it,” she said about the project, during a podcast last year.

This project is just one of two major real-estate deals that Mr. Kushner is pursuing along with Mr. Abehsera that involve foreign governments.

Separately, the partnership received preliminary approval last year to build a luxury hotel complex in Belgrade, Serbia, in the former ministry of defense building, which has sat empty for decades after it was bombed by NATO in 1999 during a war there.

Serbia and Albania have foreign policy matters pending with the United States, as both countries seek continued U.S. support for their long-stalled efforts to join the European Union, and officials in Washington are trying to convince Serbia to tighten ties with the United States, instead of Russia.

Virginia Canter, who served as White House ethics lawyer during the Obama and Clinton administrations and also an ethics adviser to the International Monetary Fund, said even if there was no attempt to gain influence with Mr. Trump, any government deal involving his family creates that impression.

“It all looks like favoritism, like they are providing access to Kushner because they want to be on the good side of Trump,” Ms. Canter said, now with State Democracy Defenders Fund, a group that tracks federal government corruption and ethics issues.

Business

Craft supplies retailer Joann declares bankruptcy for the second time in a year

Published

2 hours ago

January 16, 2025

Press Room

Craft supplies retailer Joann declares bankruptcy for the second time in a year

The craft supplies and fabric retailer Joann filed for bankruptcy for the second time in less than a year, as the chain wrestles with declining sales and inventory shortages, the company said Wednesday.

The retailer emerged from a previous Chapter 11 bankruptcy process last April after eliminating $505 million in debt. Now, with $615 million in liabilities, the company will begin a court-supervised sale of its assets to repay creditors. The company owes an additional $133 million to its suppliers.

“We hope that this process enables us to find a path that would allow Joann to continue operating,” said interim Chief Executive Michael Prendergast in a statement. “The last several years have presented significant and lasting challenges in the retail environment, which, coupled with our current financial position and constrained inventory levels, forced us to take this step.”

Joann’s more than 800 stores and websites will remain open throughout the bankruptcy process, the company said, and employees will continue to receive pay and benefits. The Hudson, Ohio-based company was founded in 1943 and has stores in 49 states, including several in Southern California.

According to court documents, Joann began receiving unpredictable and inconsistent deliveries of yarn and sewing items from its suppliers, making it difficult to keep its shelves stocked. Joann’s suppliers also discontinued certain items the retailer relied on.

Along with the “unanticipated inventory challenges,” Joann and other retailers face pressure from inflation-wary consumers and interest rates that were for a time the highest in decades. The crafts supplier has also been hindered by competition from others in the space, including Michael’s, Etsy and Hobby Lobby, said Retail Wire Chief Executive Dominick Miserandino.

“It did not necessarily learn to evolve like its nearby competitors,” Miserandino said of Joann. “Not many people have heard of Joann in the way they’ve heard of Michael’s.”

Joann is not the first retailer to continue to struggle after going through bankruptcy. The party supply chain Party City announced last month it would be shutting down operations, after filing for and emerging from Chapter 11 bankruptcy in 2023.

Over the last two years, more than 60 companies have filed for bankruptcy for a second or third time, Bloomberg reported, based on information from BankruptcyData. That’s the most over a comparable period since 2020, when the COVID-19 pandemic kept shoppers home.

Discount chain Big Lots filed for bankruptcy last September, and the Container Store, a retailer offering storage and organization products, declared bankruptcy last month. Companies that rely heavily on brick-and-mortar locations are scrambling to keep up with online retailers and big-box chains. Fast-casual restaurants such as Red Lobster and Rubio’s Coastal Grill have also struggled.

High prices have prompted consumers to pull back on discretionary spending, while rising operating and labor costs put additional pressure on businesses, experts said. The U.S. annual inflation rate for 2024 was 2.9%, down from 3.4% in 2023. But inflation has been on the rise since September and remains above the Federal Reserve’s goal of 2%.

If a sale process for Joann is approved, Gordon Brothers Retail Partners would serve as the stalking-horse bidder and set the floor for the auction.

Business

U.S. Sues Southwest Airlines Over Chronic Delays

Published

9 hours ago

January 15, 2025

Press Room

U.S. Sues Southwest Airlines Over Chronic Delays

The federal government sued Southwest Airlines on Wednesday, accusing the airline of harming passengers who flew on two routes that were plagued by consistent delays in 2022.

In a lawsuit, the Transportation Department said it was seeking more than $2.1 million in civil penalties over the flights between airports in Chicago and Oakland, Calif., as well as Baltimore and Cleveland, that were chronically delayed over five months that year.

“Airlines have a legal obligation to ensure that their flight schedules provide travelers with realistic departure and arrival times,” the transportation secretary, Pete Buttigieg, said in a statement. “Today’s action sends a message to all airlines that the department is prepared to go to court in order to enforce passenger protections.”

Carriers are barred from operating unrealistic flight schedules, which the Transportation Department considers an unfair, deceptive and anticompetitive practice. A “chronically delayed” flight is defined as one that operates at least 10 times a month and is late by at least 30 minutes more than half the time.

In a statement, Southwest said it was “disappointed” that the department chose to sue over the flights that took place more than two years ago. The airline said it had operated 20 million flights since the Transportation Department enacted its policy against chronically delayed flights more than a decade ago, with no other violations.

“Any claim that these two flights represent an unrealistic schedule is simply not credible when compared with our performance over the past 15 years,” Southwest said.

Last year, Southwest canceled fewer than 1 percent of its flights, but more than 22 percent arrived at least 15 minutes later than scheduled, according to Cirium, an aviation data provider. Delta Air Lines, United Airlines, Alaska Airlines and American Airlines all had fewer such delays.

The lawsuit was filed in the United States District Court for the Northern District of California. In it, the government said that a Southwest flight from Chicago to Oakland arrived late 19 out of 25 trips in April 2022, with delays averaging more than an hour. The consistent delays continued through August of that year, averaging an hour or more. On another flight, between Baltimore and Cleveland, average delay times reached as high as 96 minutes per month during the same period. In a statement, the department said that Southwest, rather than poor weather or air traffic control, was responsible for more than 90 percent of the delays.

“Holding out these chronically delayed flights disregarded consumers’ need to have reliable information about the real arrival time of a flight and harmed thousands of passengers traveling on these Southwest flights by causing disruptions to travel plans or other plans,” the department said in the lawsuit.

The government said Southwest had violated federal rules 58 times in August 2022 after four months of consistent delays. Each violation faces a civil penalty of up to $37,377, or more than $2.1 million in total, according to the lawsuit.

The Transportation Department on Wednesday also said that it had penalized Frontier Airlines for chronically delayed flights, fining the airline $650,000. Half that amount was paid to the Treasury and the rest is slated to be forgiven if the airline has no more chronically delayed flights over the next three years.

This month, the department ordered JetBlue Airways to pay a $2 million fine for failing to address similarly delayed flights over a span of more than a year ending in November 2023, with half the money going to passengers affected by the delays.