The coronavirus pandemic last year left millions of people out of work and set off the worst economic contraction since the Great Depression. Yet the share of people living in poverty in the United States last year actually declined by at least one measure because of the government’s enormous relief effort.
About 9.1 percent of Americans were poor last year, the Census Bureau reported Tuesday, down from 11.8 percent in 2019. That is based on a measure of poverty that accounts for the impact of government aid programs, which last year lifted millions of people out of poverty. The government’s official measure, which leaves out some major aid programs, rose to 11.4 percent, from a record low 10.5 percent in 2019.
The fact that poverty did not rise more during such an enormous economic disruption reflects the equally enormous government response. Congress expanded unemployment benefits and food aid, doled out hundreds of billions of dollars to small businesses and sent direct checks to most American households. The Census Bureau estimated that the direct checks alone lifted 11.7 million people out of poverty last year, and that unemployment benefits prevented 5.5 million people from falling into poverty.
“Despite the pandemic, the unemployment, the recession, poverty did not increase,” said Irwin Garfinkel, a co-director of the Center on Poverty and Social Policy at the Columbia University School of Social Work, referring to the alternative measure. “If it hadn’t been for the government benefits, poverty would have skyrocketed.”
Poverty rose much more drastically after the last recession, peaking at 15.1 percent in 2010 and improving only slowly after that.
Still, government aid programs excluded some groups, such as undocumented immigrants and their families, and failed to reach others. Millions of people endured delays of weeks or months before receiving benefits, forcing many to seek help from food banks or other charities.
“We measure poverty annually, when the reality of poverty is faced on a day-to-day-to-day basis,” said Hilary Hoynes, an economist at the University of California, Berkeley, who has studied the government’s response to the pandemic.
Many of the programs that helped people avert poverty last year have expired, even as the pandemic continues. An estimated 7.5 million people lost unemployment benefits this month after Congress allowed pandemic-era expansions of the program to lapse.
The new data could feed into efforts by President Biden and congressional leaders to enact a more lasting expansion of the safety net. Democrats’ $3.5 trillion plan, which is still taking shape, could include paid family and medical leave, government-supported child care and a permanent expansion of the Child Tax Credit. Liberals said the success of relief programs last year showed that such policies ought to be continued and expanded.
“It tells us it works to go big,” said Arloc Sherman, a poverty researcher at the Center on Budget and Policy Priorities, a progressive research group. “We had the answer all along. These policies are extremely effective when they’re actually used.”
But many conservatives contend that although some expansion of government aid was appropriate during the pandemic, those programs should be wound down as the economy recovers.
“We needed to balance concerns about poverty, which is at an all-time low, with concerns about the federal debt,” said Scott Winship, a senior fellow and the director of poverty studies at the American Enterprise Institute, a conservative group.
A recent run-up in consumer prices cooled slightly in August, signaling that although inflation is higher than normal, the White House and Federal Reserve may be beginning to see the slowdown in price gains they have been hoping for.
Policymakers have consistently argued that a surprisingly strong burst of inflation this year has been tied to pandemic-related quirks and should prove temporary, and most economists agree that prices will climb more slowly as businesses adjust and supply chains return to normal. The major question hanging over the economy’s future has been how much and how quickly the jump will fade.
Tuesday’s data suggested that a surge in Delta-variant coronavirus cases is weighing on airfares and hotel rates, but it also showed that price increases for key products — like cars — are beginning to moderate, helping to cool off overall inflation. The Consumer Price Index rose 5.3 percent in August from the prior year, data released by the Labor Department on Tuesday showed. That’s a slightly slower annual pace than the 5.4 percent increase in July.
On a monthly basis, price gains moderated to a 0.3 percent increase between July and August, down from 0.5 percent the prior month and a bigger slowdown than economists in a Bloomberg survey had expected.
The news on core inflation, which strips out volatile food and fuel prices to try to get a cleaner read of underlying price trends, was even more encouraging for policymakers hoping to see signs that price increases are slowing. That index picked up by 0.1 percent on the month and 4 percent over the past year, down from 0.3 percent and 4.3 percent in the July report.
“We’re seeing the unwinding of a lot of factors that pushed inflation prints higher early in the summer,” said Guy Lebas, chief fixed income strategist at Janney Capital Management. “We’ll see these rolling supply and demand imbalances gradually diminish into 2022.”
White House economists greeted the report as confirmation of their view that prices should stop climbing so quickly headed into 2022.
“We view the report as consistent with the story we, the Federal Reserve and the vast majority of forecasters have been talking about,” Jared Bernstein, a member of the White House Council of Economic Advisers, said after the report was released. “It’s one month, and we’re going to continue to vigilantly watch the data.”
Inflation has been running hot this year as the economy has reopened from the pandemic, causing airline fares and hotel room rates to bounce back from depressed levels. At the same time, supply chain snarls have pushed shipping costs higher, feeding into prices for all sorts of products, from lumber to toys. Labor costs have climbed for some companies, nudging inflation up around the edges, and rents are rising again as workers return to cities after fleeing during 2020.
But policymakers are betting that annual price gains will settle down toward the Fed’s 2 percent average target over time. Officials define their target using a different index than what was released on Tuesday, a measure known as the Personal Consumption Expenditures index. That gauge has also picked up this year, but by less, climbing by 4.2 percent in the year through July.
“The rapid reopening of the economy has brought a sharp run-up in inflation,” Jerome H. Powell, the Fed chair, acknowledged in a speech last month. But “the baseline outlook is for continued progress toward maximum employment, with inflation returning to levels consistent with our goal of inflation averaging 2 percent over time.”
Central bankers are hoping that quick inflation will dissipate before consumers learn to expect steadily higher prices, which can become a self-fulfilling prophecy as shoppers accept loftier price tags and workers demand higher pay. A closely watched tracker of household inflation outlooks released by the Federal Reserve Bank of New York on Monday showed that expectations rocketed up to 5.2 percent in the short term and 4 percent in the medium term.
That data point is disquieting, but market-based inflation expectations have been relatively stable after moving up earlier this year, and real-world prices may begin to ease in important categories in the months ahead.
The price index for airline fares declined in August, the Labor Department report showed, which may have been partly because a virus surge affected travel and advance bookings.
But the price index for used cars also fell, a signal that inventories are returning to more normal levels, helping to restore some regularity to the pre-owned vehicle market. Cars have been in short supply this year amid a computer chip shortage tied to shipping snarls and factory shutdowns overseas, and a surge in prices for used vehicles has been a major contributor to overall inflation in the United States.
Prices are still picking up for new cars, and a measure of housing costs tied to local rental conditions — which makes up a big chunk of the overall price index — continued to climb at a steady pace.
Mr. Lebas said he thinks those housing costs will help to keep inflation slightly elevated into next year, perhaps in the mid-2 percent range.
That’s “higher than it’s been historically, but not scary high,” he said. “If that happens, it’s a win for the Fed.”
The central bank is closely watching inflation as it considers when and how to reduce the big bond purchases it has undertaken to help cushion the economy against the pandemic shock — a move that officials have repeatedly signaled could come later this year. The report likely confirmed expectations among key officials, keeping policy on its measured and heavily-communicated course.
“At the margin, the recent data will dampen some of the more excitable inflation forecasts in the markets and at the Fed,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note following the release.
Job vacancies in Britain climbed to a record in August, rising above one million for the first time, as the labor market continued its uneven recovery, according to data released Tuesday by the Office for National Statistics.
As Britain emerged from lockdowns, the demand for workers has soared. Every sector is seeking more workers, with restaurants, bars, hotels and other accommodation and food businesses trying to hire the most over the summer.
It has helped push the unemployment rate down, to 4.6 percent, and has shrunk the number of people who are out of the work force.
Nearly a quarter of a million people were added to company payrolls in August, returning this part of the labor market (which doesn’t include the self-employed) to its prepandemic size, the statistics office said. But not every region had fully recovered. The number of employees was still down in London, in southeast England and in Scotland. And some of the workers on payroll were still receiving wage subsidies from the government’s furlough program.
The soaring vacancy rate has highlighted mismatches in the labor market. Even as people return to work, lots of businesses report they are struggling to hire. The staff they are looking for have either moved into different industries or left the country. And job seekers don’t have the right training or experience. Growth in the manufacturing sector has been hampered by the challenge of filling open positions. And businesses across Britain are running low on supplies because there are too few truck drivers.
Analysts predict that some of the gains in the labor market will be reversed when the furlough program ends this month, and employers can no longer rely on the government to top up staff wages up to 80 percent for the hours they don’t work. At the end of July, there were 484,000 employers with 1.6 million workers still on furlough. Layoffs are expected; a group representing the travel sector said more than two-thirds of businesses with staff on furlough expect to cut jobs when the program ends.
“With the furlough scheme ending in little over two weeks’ time, we should expect a fresh rise in unemployment this autumn, particularly among furloughed staff that aren’t able to return to their previous jobs,” Nye Cominetti, an economist at the Resolution Foundation, a think tank studying living standards, wrote in a note.
Samuel Tombs, an economist at Pantheon Macroeconomics, said the end of the furlough program would increase unemployment and underemployment, as people can’t find as much work as they would like, despite the high number of vacancies.
“About 60 percent of staff on furlough are attached to small businesses employing fewer than 20 people, who are unlikely to have the financial strength to re-employ them for all their pre-Covid hours,” he wrote in a note to clients. Businesses with high vacancies are different from the ones using the furlough program, so people will need to retrain before they return to employment, he added, predicting that the unemployment rate would to rise to 5 percent later this year.
It’s that time of the year again, when Apple unveils its latest gadgets ahead of the holiday season.
On Tuesday, the iPhone maker will hold its annual product event — virtually, because of the coronavirus pandemic — and present its newest lineup. The new products — including iPhones and Apple Watch — will have a strong focus on screens, in an era when people are increasingly glued to them.
The company plans to broadcast a video presentation starting at 10 a.m. Pacific time to show new iPhones with improved displays and Apple Watches with slightly larger screens, according to people briefed on the event, who were not authorized to speak publicly about the products. Apple declined to comment.
The aesthetic of the new iPhones will closely resemble that of last year’s models, the people said. The biggest change will be to the screen, which will have what is known as a higher “refresh rate” that will make videos and motion look smoother. The camera will also be improved, the people said.
The new Apple Watch will also look similar to last year’s models but will include slightly larger displays that can show more pixels, the people briefed on the products said. That will make images and text shown on the watch face look more compelling.
Apple issued emergency software updates on Monday after security researchers uncovered a flaw that allows highly invasive spyware to infect anyone’s iPhone, iPad, Apple Watch or Mac computer without so much as a click.
Apple has urged customers to run the latest software updates for the fixes to take effect, by installing iOS 14.8, MacOS 11.6 and WatchOS 7.6.2.
Apple issued a software update on Monday to fix a critical flaw in its products that had allowed governments to invisibly spy on Apple users without so much as a click.
Here’s how to update your iPhone with the software patch →
“This spyware can do everything an iPhone user can do on their device and more.” READ MORE →
Asian American investment professionals are getting stuck in middle management. More than 90 percent of respondents to a new poll said they had reached a ceiling that blocked them from climbing the corporate ladder.
And about two-thirds said Asian Americans and Pacific Islanders were stereotyped as lacking leadership skills, according to a series of interviews and a survey of 100 finance professionals in the United States published on Tuesday by the Association of Asian Americans in Investment Management.
At investment firms, Asian American and Pacific Islanders “fill middle management ranks, but their percentages plummet in senior management and C-suites,” the organization wrote in the report. “Our research shows that this bias and these racial assumptions are a deep-seated obstacle for some of the industry’s most accomplished professionals.”
Respondents said they were often tapped as technical experts and benefited from the perception that they are good workers. But their advancement stalled as they sought more senior roles that emphasize networking and communication skills.
One senior executive said colleagues often mistook her for other women of Asian descent and treated them as interchangeable. Another investment manager said she received the nickname “Stephanie 2.0,” because white male co-workers preferred her over another Asian American woman who had worked there before.
“There were tons of personal comments and stories” about discrimination and bias at work, Jim Park, the head of the organization, said in an interview. “We’re at a moment in time in our community where people are beginning to say, ‘You know what? We do need to start to speak up.’”
Gary Gensler, the Securities and Exchange Commission chair, will testify before the Senate Banking Committee on Tuesday, after five months on the job. Based on his prepared remarks, he’ll make the case for additional resources to achieve a more expansive agenda than many of his predecessors at the commission.
Since his confirmation, Mr. Gensler’s public statements have generated much debate, many headlines and more than a few market movements, the DealBook newsletter reports. Here’s what to expect on Tuesday on some hot-button issues:
Mr. Gensler wants to “freshen up” the rules. To promote efficiency and competition, he’s considering structural issues, like whether there is too much concentration among market makers, and conflicts of interest, like those arising from payment for order flow. Speeding up transaction settlements, which now take about two business days, is also a goal he notes in his remarks, and one that Republican senators want him to pursue, a committee aide said.
When it comes to cryptocurrencies, buyers beware. Mr. Gensler will say that the new digital currency markets resemble a time before securities laws: He wants more investor protection in crypto finance, issuance, trading and lending.
Senator Elizabeth Warren, Democrat of Massachusetts, who has been outspoken about regulatory gaps in the crypto industry, will follow up on those concerns, an aide said. Senator Cynthia Lummis, Republican of Wyoming, will also press Mr. Gensler for regulation, but with an emphasis that reflects her support of the crypto industry. “We must have a balanced legal framework for digital assets that enables innovation and protects consumers,” she told DealBook in a statement.
More required disclosures on climate risk, human capital and cybersecurity are in the works. Perhaps sensing the resistance he’ll face on this issue, Mr. Gensler will note that “these proposals will be informed by economic analysis and will be put out to public comment, so that we can have robust public discussion,” according to his prepared remarks. Patrick Toomey, Republican of Pennsylvania and the ranking committee member, has pushed back on added disclosures on environmental, social and governance issues before, and he’ll likely renew these criticisms at the hearing.
Other priorities include greater transparency on SPACs, China and insider info. The surge in special purpose acquisition companies that allow businesses to go public with fewer rules than traditional initial public offereings is cause for concern, Mr. Gensler will say, because of conflicts of interest that he believes are “inherent” in the structures.
He also wants the risks of Chinese companies that list on U.S. exchanges to be made more apparent. And he will discuss efforts to “modernize” a rule known as 10b5-1 on executive stock sales, which helps insulate insiders from accusations of trading on nonpublic information.
At the hearing, Mr. Gensler will get guidance from senators on what they think his priorities should be. How far he can advance his plans could depend, in part, on whether lawmakers give him more authority and resources.
Like Mr. Gensler, Sherrod Brown, Democrat of Ohio and the committee chairman, is keen on added transparency and stricter investor protections. According to his prepared remarks, Mr. Brown will open the hearing by saying that “the disconnect between the stock market and most Americans’ lives has never been more painfully clear,” and that, whatever the economic circumstances, “the hedge funds, the SPAC sponsors, the big banks, the brokers — the big guys seem to do just fine.”
U.S. stocks swung from gains to losses on Tuesday, with the S&P 500 ticking down 0.3 percent by midmorning after climbing at the start of trading, while the Nasdaq composite was down 0.2 percent.
The Labor Department reported that consumer prices rose 5.3 percent in August from a year earlier, in line with economists’ expectations. The rise in prices from July to August, of 0.3 percent, was slower than forecast and could ease pressure on Federal Reserve as it weighs the risks from elevated inflation.
Yields on 10-year U.S. Treasury notes fell to 1.28 percent from 1.33 percent.
Oil prices rose, with West Texas Intermediate, the U.S. crude benchmark, up 0.5 percent to $70.81 a barrel.
European stock indexes were flat, with the Stoxx Europe 600 little changed. Asian markets closed mixed on Tuesday.
Shares for Apple were up half a percent. The tech giant is set to unveil its latest products, including iPhones and Apple Watch, in its annual product event later on Tuesday.
Intuit, the parent company of TurboTax and QuickBooks, will acquire Mailchimp, a company best known as a provider of email marketing services, the companies announced on Monday. The cash-and-stock deal, which is subject to regulatory approvals, will value Mailchimp at about $12 billion.
The deal is Intuit’s largest to date and is a notable expansion into customer-relationship management for a company largely know for its finance software. Intuit hopes to combine Mailchimp’s digital marketing services with QuickBooks, its accounting program, to help small businesses manage their customers as well as their books.
Fox Corporation announced on Monday that it had bought the celebrity gossip brand TMZ from AT&T’s WarnerMedia. Financial terms of the deal were not disclosed. Three people with knowledge of the discussions said the deal valued TMZ under $50 million.
Harvey Levin, who co-founded TMZ in 2005, will continue in his role as managing editor, Fox said in a news release. Under the deal, Fox will run TMZ’s flagship website and culture website TooFab.com, as well as its syndicated television programs and celebrity bus tours.
James N. Gianopulos was ousted as chief executive of Paramount Pictures on Monday, with his status as the consummate Hollywood insider having curdled into a liability, at least to ViacomCBS, the conglomerate that owns Paramount, where streaming, streaming, streaming is the new currency of the realm.
Brian Robbins, 58, who runs Viacom’s children’s television business, will succeed Mr. Gianopulos, 69, ViacomCBS said. Mr. Gianopulos, or “Jim G” as everyone in Hollywood refers to him, will remain a consultant until the end of the year, ViacomCBS said.
Denis P. Coleman III will be the next chief financial officer of Goldman Sachs, succeeding Stephen M. Scherr, who will retire at the end of January, the bank said Tuesday.
Mr. Coleman, 47, has served as co-head of Goldman’s global financing group in its investment banking arm since 2018. He joined the company in 1996 as an analyst and moved up the ranks to run loan businesses in the United States and Europe.
“His strong foundation across capital markets and risk management position him well to succeed,” Goldman’s chief executive, David M. Solomon, said in a statement.
Mr. Scherr, 57, has been with Goldman for 28 years and has served as finance chief since 2018. He formerly ran the consumer and commercial banking business.
The announcement came days after Bank of America named Alastair Borthwick as its chief financial officer on Friday in a sweeping overhaul of top management. The biggest U.S. lenders are reshuffling their leadership ranks as bosses who steered the companies out of the 2008 financial crisis get closer to retirement.
HOUSTON — Chevron announced on Tuesday that it would more than triple its modest spending on green energy by 2028, including investments in renewable fuels, hydrogen and capturing carbon before it can warm the atmosphere.
The announcement appears to be aimed at forestalling challenges from activist investors like Engine No. 1, the hedge fund that was able to elect three members to the Exxon Mobil board this year. It was not clear whether Chevron’s move would satisfy activists who are pushing American oil and gas companies to commit to achieving net zero emissions from their operations and the use of their products by 2050 as concerns over climate change grow.
The company pledged to spend roughly $10 billion on cleaner fuels and technologies. That is still a small portion of its total annual capital spending that is projected to be $14 billion to $16 billion through 2025.
A fifth the new spending will go to lowering emissions from Chevron’s exploration, production and refining operations.
“Renewable fuels, hydrogen and carbon capture target customers such as airlines, transport companies and industrial producers,” Jeff Gustavson, president of Chevron New Energies, said in a statement. “These sectors of the economy are not easily electrified, and customers are seeking lower carbon fuels and other solutions to reduce carbon emissions.”
Chevron, the second-largest American oil and gas company after Exxon Mobil, and other U.S. oil companies have fallen behind their European competitors in investing in clean energy in recent years but are slowly trying to catch up under growing pressure from investors. Harvard said last week that it would not make any new investment in fossil fuels.
Chevron said it hoped to finance its emission reducing efforts with improved cash flow from higher oil and gas prices as the economy recovers from the pandemic.
“Chevron intends to be a leader in advancing a lower carbon future,” said Mike Wirth, the company’s chief executive.