US Senate Democrats Approve Climate, Tax Legislation

The evenly split U.S. Senate has passed sweeping climate and tax legislation, which Democrats also dubbed the Inflation Reduction Act of 2022. With Vice President Kamala Harris casting the tiebreaking vote and all Democrats on board, lawmakers worked late Saturday into Sunday debating the measure. As VOA’s Arash Arabasadi reports, Senate Republicans – unified in opposition – warn the legislation will lead to reckless spending.

your ad here

US Senate Democrats Poised to Approve Climate, Tax Legislation 

U.S. Senate Democrats, over uniform Republican opposition, are poised Sunday to approve sweeping legislation to combat climate change, trim health care costs and raise taxes on highly profitable corporations.

The measure, a scaled-down version of President Joe Biden’s long-stalled economic legislative plan, calls for the biggest U.S. investment ever in attacking the effects of global warming, $370 billion to boost the use of clean energy, encourage Americans to buy electric vehicles and reduce plant-warming emissions 40% by 2030.

The legislation would also for the first time authorize the U.S. government to negotiate the cost of some drugs with pharmaceutical companies to potentially lower the cost of medicines for older Americans, extend health insurance subsidies for millions of people and impose a 15% minimum tax on billion-dollar companies that now pay nothing. The bill would also add 87,000 more federal tax agents to further scrutinize individual and corporate tax returns to catch tax cheaters and cut the chronic U.S. budget debt by about $300 billion.

The measure narrowly survived a key test vote Saturday by a 51-50 margin, with Vice President Kamala Harris casting the tie-breaking vote after all 50 Senate Democrats supported the legislation and the 50-member Republican caucus uniformly opposed it.

Democrats engaged in months of rancorous debate over what was originally a $2 trillion measure, what Biden called his Build Back Better plan. Now, with U.S. consumers worried about the sharpest increase in consumer prices in four decades — a 9.1% annualized surge in June — Democrats are calling the legislation the Inflation Reduction Act.

However, the non-partisan Congressional Budget Office review of the legislation said the bill’s provisions would have a “negligible effect” on inflation during the remainder of 2022 and little effect next year either.

The entirety of the legislation appeared doomed until Senate Democratic Majority Leader Chuck Schumer, with Biden’s approval, was recently able to reach agreement with two centrist Democrats, Senators Joe Manchin of West Virginia and Kyrsten Sinema of Arizona, on tax and climate control provisions in the proposal that they would accept.

As debate opened Saturday, before lawmakers from both parties offered an array of amendments that were rejected, Schumer said, “This historic bill will reduce inflation, lower costs, fight climate change, and it’s time to move this nation forward.”

Senate debate on the measure was continuing Sunday but Democrats are hoping to approve the legislation later in the day, almost certainly on the same 51-50 party-line margin requiring Harris to cast the tie-breaking vote as she did on the opening vote to begin debate. If the Senate approves it, the House of Representatives is expected to pass it Friday and send it to the White House for Biden’s signature.

The debate also played out on Sunday television talk shows.

Democratic Senator Richard Blumenthal of Connecticut, who supports the legislation, told CNN’s “State of the Union” show that its passage would give the tax-collecting Internal Revenue Service agency the greatly expanded staff it needs to “go after” tax cheats and “the biggest earners.”

He also noted that Americans “overwhelmingly want to cut the cost of their medicine,” a provision that could be achieved for some drugs prescribed for older Americans under the country’s Medicare health insurance program.

But Republican Senator Lindsay Graham of South Carolina balked at Blumenthal’s analysis of the measure, saying that tax agents are “going after Uber drivers and nurses. They’re going after everyone.”

He said the legislation is “going to make everything worse. It’s not going to help [cut] inflation.”

your ad here

US Senate Preps for Landmark Climate Legislation

Congressional Democrats appear to be on the cusp of passing legislation that would dedicate $369 billion to combat climate change through a combination of grants, tax cuts, subsidies and other measures aimed at reducing carbon emissions.

In addition to its climate-related elements, the Inflation Reduction Act of 2022 (IRA) makes it possible for Medicare, the government-sponsored health insurance program for older Americans, to negotiate certain drug prices with the pharmaceuticals industry, a move expected to lower drug costs for all Americans. It also creates a minimum tax on large corporations, raises taxes on the wealthiest Americans, and will reduce the federal deficit by an estimated $300 billion over 10 years.

In a statement issued Thursday, President Joe Biden praised the legislation and called on lawmakers to pass it quickly.

The bill, Biden said, “makes the largest investment in history in combating climate change and increasing energy security, creating jobs here in the U.S. and saving people money on their energy costs. I look forward to the Senate taking up this legislation and passing it as soon as possible.”

Key provisions

A major element of the bill is a package of rebates, tax credits, and grants to help individual American families reduce their reliance on fossil fuels by subsidizing energy efficient home improvement projects and the purchase of electric vehicles.

The bill would dedicate $60 billion to helping establish clean energy production in the U.S. That includes tax credits to support $30 billion in spending on the domestic production of solar panels, wind turbines, batteries and other critical clean energy components as well as $20 billion in low-cost loans to support the manufacture of electric vehicles.

Other elements of the bill aim to support a broad range of decarbonization efforts across the economy, including $30 billion in grants and loans to states and electric utilities to “accelerate the transition to clean energy.”

The bill also earmarks tens of billions of dollars for “environmental justice” efforts meant to reduce the impact of climate change on disadvantaged communities and billions more toward increasing the climate resilience of farms and rural communities.

A catalyst for global action

“We could not be more excited about this huge breakthrough,” David Kieve, president of EDF Action, an arm of the Environmental Defense Fund, told VOA. “There’s been a shift in the attitudes of the American public in recent years towards an understanding that the jobs of the future are going to be in clean energy. And the only open question is, are they going to be here in the United States?”

Kieve said that in addition to creating those jobs in the U.S., he believes the investments in the bill will put the U.S. “on the fast track” to hitting the administration’s broader climate goals. He said he also expects it to catalyze action in other countries.

“What we’ve heard from other nations for quite some time, is that it’s nice that America has a president who’s saying the right thing about climate change, but do they really have the political will to execute on it?” he said. “When this bill is passed, and goes to President Biden’s desk, we will have answered that question definitively for the rest of the world and other nations will have no excuse but to get in line and follow our lead.”

Big promises

In an effort to push the bill across the finish line, Democrats in Congress have been touting its expected impact on the Biden administration’s pledge to reduce U.S. carbon emissions. While the $369 billion of climate-directed spending falls short of the $555 billion that the administration was seeking last year, many experts say that the IRA will have a major impact.

As negotiations were ongoing last week, Sen. Tom Carper, a Democrat from the state of Delaware who chairs the Senate Committee on Environment and Public Works issued a statement that said, “In what would amount to the most ambitious climate bill ever enacted, this legislation would put our nation on track to nearly 40% emissions reduction by the end of the decade, unleash the potential of the American clean energy industry, and create good-paying jobs across the country.”

Experts and activists who have reviewed the legislation have broadly agreed that the bill lives up to the hype.

In a statement calling the legislation “transformative,” Sierra Club President Ramón Cruz said the bill “will be the single largest investment in our communities — including those that have long been disproportionately impacted by climate-fueled disasters — and a healthy and secure future for all of us.”

Energy Innovation: Policy and Technology, a non-partisan energy and climate policy think tank analyzed the legislation and issued a report that read, in part, “We find that the IRA is the most significant federal climate and clean energy legislation in U.S. history, and its provisions could cut greenhouse gas emissions 37-41% below 2005 levels.”

Criticism from the right

Not all analyses of the bill’s climate provisions were positive. The Heritage Foundation, a conservative think tank, argued that the effort to move the country toward greater use of renewable energy is an infringement on Americans’ freedom.

“Energy impacts every aspect of our lives and every sector of the economy. By dictating how we produce and consume energy, this bill would dictate how we live our lives and limit the freedoms we enjoy,” the report argued. “It’s a pretext for control. And there is little to no regard for the high prices incurred by Americans and the costs that will arise for trying to achieve the left’s radical climate agenda. And what’s even worse, this is all pain for no gain.”

Republican Sen. Shelley Moore Capito, who represents West Virginia, a state that relies heavily on fossil fuel for both jobs and energy, also criticized the bill.

“It will hurt our industries in West Virginia, our hard working men and women in the oil and gas business or in the coal business,” she said. “That will also, I think, hamper our energy security in this country.”

Former EPA officials in support

A bipartisan group of former Environmental Protection Administration leaders released a statement Friday in support of the bill’s climate components.

“The legislation meets the moment of urgency that the climate crisis demands, and will position the U.S. to meet President Biden’s climate goals of reducing emissions 50-52% by 2030, while making unprecedented investments in clean energy solutions that will save families hundreds of dollars a year and create new, good paying union jobs across the country,” the former administrators said.

The group included Carol Browner, who ran the EPA under President Barack Obama, and Christine Todd Whitman, who ran the agency under President George W. Bush.

Complicated process

The bill is the product of months of negotiations among Senate Democrats, who had to make a number of concessions to appease centrist members of their party. Keeping all Democrats on board was essential because the Senate is currently divided 50-50 between Democrats and Republicans, with Democratic Vice President Kamala Harris able to cast deciding votes in the instance of a tie. Republicans appear united in opposition to the bill.

Democrats are moving to pass the bill through a process called “budget reconciliation” that makes legislation immune to the filibuster, a rule that allows a minority of senators to block a piece of legislation unless it receives 60 votes in the 100-member body. Under budget reconciliation, the Democrats’ 50 votes, plus Harris’s tie-breaker, would be sufficient to pass the Inflation Reduction Act even if Republicans unanimously oppose it.

If the Senate passes the bill, which could happen within days, it would then go to the House of Representatives, where it is expected to pass and to be sent to Biden for his signature.

your ad here

US Employers Added 528,000 Jobs; Unemployment Falls to 3.5%

Defying anxiety about a possible recession and raging inflation, America’s employers added a stunning 528,000 jobs last month, restoring all the jobs lost in the coronavirus recession. Unemployment fell to 3.5%, lowest since the pandemic struck in early 2020.

July’s job creation was up from 398,000 in June and the most since February.

The red-hot jobs numbers from the Labor Department on Friday arrive amid a growing consensus that the U.S. economy is losing momentum. The U.S. economy shrank in the first two quarters of 2022 — an informal definition of recession. But most economists believe the strong jobs market has kept the economy from slipping into a downturn.

That surprisingly strong jobs numbers will undoubtedly intensify the debate over whether the U.S. is in a recession or not.

“Recession – what recession?” wrote Brian Coulton, chief economist at Fitch Ratings, wrote after the numbers came out. “The U.S. economy is creating new jobs at an annual rate of 6 million – that’s three times faster than what we normally see historically in a good year. ”

Economists had expected only 250,000 new jobs this month.

The Labor Department also revised May and June hiring, saying an extra 28,000 jobs were created in those months. Job growth was especially strong last month in the healthcare industry and at hotels and restaurants.

Hourly earnings posted a healthy 0.5% gain last month and are up 5.2% over the past year — still not enough to keep up with inflation.

The strong job numbers are likely to encourage the Federal Reserve to continue raising interest rates to cool the economy and combat resurgent inflation.

There are, of course, political implications in the numbers being released Friday: Voters have been worried about rising prices and the risk of recession ahead of November’s midterm elections as President Joe Biden’s Democrats seek to maintain control of Congress. The unexpectedly strong hiring number will be welcomed at the White House.

The economic backdrophas been troubling: Gross domestic product — the broadest measure of economic output — fell in both the first and second quarters; consecutive GDP drops is one definition of a recession. And inflation is roaring at a 40-year high.

The resiliency of the current labor market, especially the low jobless rate — is the biggest reason most economists don’t believe a downturn has started yet, though they increasingly fear that one is on the way.

Recession is not an American problem alone.

In the United Kingdom, the Bank of England on Thursday projected that the world’s fifth-largest economy would slide into recession by the end of the year.

Russia’s war in Ukraine has darkened the outlook across Europe. The conflict has made energy supplies scarce and driven prices higher. European countries are bracing for the possibility that Moscow will keep reducing — and perhaps completely cut off — flows of natural gas, used to power factories, generate electricity and keep homes warm in winter.

If Europeans can’t store enough gas for the cold months, rationing may be required by industry.

Economies have been on a wild ride since COVID-19 hit in early 2020.

The pandemic brought economic life to a near standstill as companies shut down and consumers stayed home. In March and April 2020, American employers slashed a staggering 22 million jobs and the economy plunged into a deep, two-month recession.

But massive government aid — and the Feds decision to slash interest rates and pour money into financial markets — fueled a surprisingly quick recovery. Caught off guard by the strength of the rebound, factories, shops, ports and freight yards were overwhelmed with orders and scrambled to bring back the workers they furloughed when COVID hit.

The result has been shortages of workers and supplies, delayed shipments — and rising prices. In the United States, inflation has been rising steadily for more than a year. In June, consumer prices jumped 9.1% from a year earlier — the biggest increase since 1981.

The Fed underestimated inflation’s resurgence, thinking prices were rising because of temporary supply chain bottlenecks. It has since acknowledged that the current spate of inflation is not, as it was once referred to, ” transitory.”

Now the central bank is responding aggressively. It has raised its benchmark short-term interest rate four times this year, and more rate hikes are ahead.

Higher borrowing costs are taking a toll. Rising mortgage rates, for instance, have cooled a red-hot housing market. Sales of previously occupied homes dropped in June for the fifth straight month.

Real estate companies — including lending firm loanDepot and online housing broker Redfin — have begun laying off workers.

The labor market is showing other signs of wobbliness.

The Labor Department reported Tuesday that employers posted 10.7 million job openings in June — a healthy number but the lowest since September.

And the four-week average number of Americans signing up for unemployment benefits — a proxy for layoffs that smooths out week-to-week swings — rose last week to the highest level since November, though the numbers may have been exaggerated by seasonal factors.

your ad here

Democrats Say They’ve Reached Agreement on US Economic Package

Senate Democrats have reached an accord on eleventh-hour changes to their top-priority economic legislation, they announced late Thursday, clearing their major hurdle to moving the measure through the chamber in coming days.

Democrat Sen. Kyrsten Sinema, a centrist who was seen as the pivotal vote, said in a statement that she had agreed to changes in the measure’s tax and energy provisions and was ready to “move forward” on the bill.

Senate Majority Leader Chuck Schumer, a Democrat, said lawmakers had achieved a compromise “that I believe will receive the support” of all Democrats in the chamber. His party needs unanimity to move the measure through the 50-50 Senate, along with Vice President Kamala Harris’ tie-breaking vote.

Schumer has said he hopes the Senate can begin voting on the energy, environment, health and tax measure on Saturday. Passage by the House, which Democrats control narrowly, could come next week.

Final congressional approval of the election-year measure would be a marquee achievement for President Joe Biden and his party, notching an accomplishment they could tout to voters as November approaches.

Sinema said Democrats had agreed to remove a provision raising taxes on “carried interest,” or profits that go to executives of private equity firms. That’s been a proposal she has long opposed, though it is a favorite of other Democrats, including conservative West Virginia Sen. Joe Manchin, an architect of the overall bill.

The carried interest provision was estimated to produce $13 billion for the government over the coming decade, a small portion of the measure’s $739 billion in total revenue.

It will be replaced by a new excise tax on stock buybacks, which will bring in more revenue than that, said one Democrat familiar with the agreement who spoke on condition of anonymity because they were not authorized to discuss the deal publicly.

The official provided no other details.

The Senate won’t be in session Friday as Democrats continue their talks. That pause will also provide time for the Senate parliamentarian, Elizabeth MacDonough, to decide if any of the bill’s provisions violate the chamber’s rules and should be removed.

your ad here

Biden Pushes Inflation Reduction Act, Amid Divided Opinion

The Biden administration on Thursday pushed Congress to pass its proposed $260 billion Inflation Reduction Act, which the White House says will “lower costs, reduce inflation, and address a range of critical and long-standing economic challenges.”

“My message to Congress is this: Listen to the American people,” Biden said during a virtual roundtable of U.S. business leaders. “This is the strongest bill you can pass to lower inflation, continue to cut the deficit, reduce health care costs, tackle the climate crisis and promote America’s energy security, all while reducing the burdens facing working-class and middle-class families.”

Economists, politicians and ordinary consumers alike agree that rising prices are a problem — U.S. inflation hit 9.1% in June, according to the U.S. Bureau of Labor Statistics. Food price hikes are especially painful for many American families: In the past year those have risen, on average, by about 10%, the highest yearly increase in more than 40 years.

What few can agree on, however, is what needs to be done to bring it back down.

Biden’s supporters say the act will raise government revenues by $313 billion by imposing a 15 percent minimum corporate tax — a move that will affect some of the nation’s wealthiest companies, especially those that paid nothing in federal corporate income taxes on their profits in 2020.

It will also reform prescription drug pricing, which the administration estimates will save the federal government $288 billion a year. The act also invests more than $400 billion in energy security, climate change mitigation and health care.

The country’s largest union umbrella group, the American Federation of Labor and Congress of Industrial Organizations, supports the act, its president said Thursday during the roundtable with Biden.

“I’m bringing the voice of our 57 unions, 12.5 million members, who believe this bill is going to help us reshape the future and deliver real help to working families by reducing rising energy and health care costs,” said AFL-CIO President Liz Shuler. “This is going to deliver fundamental economic change across America.”

But some economists are not so sure.

A study from the Penn Wharton Budget Model predicts the act would have little impact on inflation, forecasting prices would slightly increase for another two years and then fall.

The Committee for a Responsible Federal Budget reached the opposite conclusion, saying that the act would “very modestly reduce inflationary pressures in the near term while lowering the risk of persistent inflation over time.”

Moody’s Analytics reached a similar conclusion, while the nonpartisan Congressional Budget Office estimated the bill would trim U.S. budget deficits by $102 billion over 10 years.

Economist Steve H. Hanke, a professor of applied economics at Johns Hopkins University and founder and co-director of the university’s Institute for Applied Economics, Global Health, and the Study of Business Enterprise, said Thursday that the act is “ill-conceived” and involves the one thing that people seem to dislike more than rising prices: taxes.

“The idea it’s going to do anything with inflation is ridiculous,” he said Thursday during a seminar with the Jewish Policy Center. “It will change the relative prices of different things — exactly how, I don’t know, because I haven’t gone through the 10,000-page thing. And it looks to me like it’s a tax increase bill.”

A Senate vote on the legislation in the next few days appeared more likely late Thursday. Democrats said they had reached an agreement on some changes to the bill, clearing a path for its consideration by the chamber.

Senator Kyrsten Sinema, an Arizona Democrat who was seen as the pivotal vote, said in a statement that she had agreed to changes in the measure’s tax and energy provisions. Senate Majority Leader Chuck Schumer, a New York Democrat, said he believed the compromise “will receive the support” of all Democrats in the chamber. The party needs unanimity to succeed in the 50-50 Senate, along with Vice President Kamala Harris’ tiebreaking vote.

Schumer has said he hopes the Senate can begin voting on the bill Saturday. Passage by the House, which Democrats control, could come next week.

Some information for this report came from The Associated Press.

your ad here

As Food Prices Skyrocket, US Food Lines Get Longer

From Phoenix, Arizona, in the southwest United States, to Jackson, Mississippi, in the southeast U.S., people are waiting in long lines in their vehicles to receive food assistance from food banks and mobile pantries.

Soaring inflation in the U.S. is raising the price of everything from food to gas to rent. And that’s been making it hard for many people to buy the food they need.

“We’re seeing a lot more families who are struggling to make ends meet because the dollar isn’t going as far as it used to at the grocery store,” said Kellie O’Connell, CEO at Nourishing Hope, a food pantry in Chicago. “So now folks are needing to make difficult choices like paying for medicine or buying food.”

In Phoenix, “a lot of people on fixed incomes, especially in our senior community, go to the grocery store and see the skyrocketing prices, especially on necessities like milk, eggs and meat,” said Jerry Brown, director of media relations for St. Mary’s Food Bank. “And they may not be able to afford these items.”

In Virginia, Maria Aguilar, who immigrated from El Salvador, works two jobs to stay afloat and take care of her three children.

“Going to the grocery store is a challenge because food is so expensive,” she told VOA. “Knowing I can get additional food makes a big difference,” she said, as she brought bread, fruit and other provisions to her car at Food for Others, a food bank in Fairfax, Viriginia, near Washington.

More food needed

The demand for food is continuing to grow.

“Last week, the number jumped to about 68% at our main locations in Phoenix — that’s 800 to 1,200 families a month,” Brown said.

“We are seeing much longer lines at food pantries and soup kitchens in Mississippi,” said Kelly Durrett, director of external affairs for the Mississippi Food Network.

The network’s 430 partners provide food to those in need in the state, the poorest in the U.S. Starting in June, Durrett said, the number of people coming to the network’s partners had increased between 10% and 20%.

“Our clientele is the working poor who have minimum wage jobs that keep them at the poverty level,” Durrett told VOA.

“Some people are arriving early at mobile food pantries, waiting for them to open,” she said. “With so much demand, some pantries quickly run out of food.”

The largest food bank in the U.S., in the city of Houston, Texas, feeds some 1 million people every year through schools, churches and other partners.

Brian Greene, president and CEO of the Houston Food Bank, told VOA, “We’re not having to turn anyone away, but we can’t be as generous with food now as we would like. A family is probably not going to get as much food as they would have a year ago.”

Some are concerned that the food situation could become as serious as it was during the height of the coronavirus pandemic.

“We’re inching closer every month,” said Meredith Knopp, president and CEO of the St. Louis Area Foodbank. “It is troubling to see so many people in line and needing assistance, many for the first time. We also have people who are coming and saying, ‘I’m only able to feed my kids, and I haven’t eaten in two days.'”

Lack of donations

Annie Turner, executive director of Food for Others, said that while the need for food has gone up, food donations have gone down.

“The number of families who came to our warehouse to get food nearly doubled from June 2021 to June 2022,” she said. At the same time, “we’ve seen a 42% decrease in food donations since the high cost of food is also affecting our donors.”

“We used to purchase about 9% of the food we distributed,” she added, “but now that’s grown to 32% during this past year.”

The story is similar at other food banks across the U.S.

“Our donations from grocery stores have decreased by about 33%, and so we have to supplement that by buying food,” said O’Connell in Chicago.

In Phoenix, “we will probably have to purchase about 200% more food in the coming year since we know we’re not going to receive it in donations,” Brown said.

Seeking help

“I’m hopeful that communities will rally to provide food aid like they did during the coronavirus pandemic.” O’Connell said.

“We’re telling local farmers that we’ll arrange for volunteers to pick fruit and vegetables that can be distributed to people in need,” Knopp said.

At Food for Others, William Gonzales said he was grateful for the food he had been given. “My family has been struggling, and this is helping make our lives so much easier.”

The network’s 430 partners provide food to those in need in the state, the poorest in the U.S. Starting in June, Durrett said, the number of people coming to the network’s partners had increased between 10% and 20%.

your ad here

Chinese Subsidiary of British Investment Bank Now Includes Communist Party Committee

British bank and financial services giant HSBC, a longtime presence in East Asia, has become the first foreign lender to install a Chinese Communist Party committee in its investment banking subsidiary in China.  

HSBC’s China investment bank, HSBC Qianhai Securities, established a CCP committee after the lender increased its stake in the joint venture from 51% to 90% in April.  

Some experts are concerned that the move might expose HSBC to increased influence from Beijing. But other analysts told VOA Mandarin that the development isn’t a big deal, saying there is little evidence that these party committees exert substantial influence in privately owned companies. 

“The establishment of a party committee at HSBC may be super important, or it may be entirely irrelevant and not worth the attention it’s getting,” Scott Kennedy, a senior adviser at the Center for Strategic and International Studies in Washington, told VOA Mandarin in an interview.  

“The vast majority, as far as I can tell, really don’t do anything. They haven’t affected the normal procedures for corporate governance,” he said. “But in Xi Jinping’s China, nothing is impossible.”

Founded during a growth phase

Founded as the Hongkong and Shanghai Banking Corporation, Ltd., HSBC was established in Hong Kong in March 1865, and opened its doors in Shanghai one month later. It launched at a time of burgeoning trade among China, India and Europe.  

China’s legal requirement that all companies with more than three party members must establish a party committee dates back to the 1993 PRC Company Law, according to Gabriel Wildau, a managing director at the consulting company Teneo. But before Xi became the CCP’s general secretary in 2012, this requirement was lightly enforced, especially for private and foreign companies.   

“Under Xi Jinping, enforcement has intensified, and the share of private companies with party cells has increased,” Wildau wrote in an email to VOA Mandarin, referring to China’s president since 2013. Xi has expanded the party’s influence over the economy in many ways, apparently based on his sense that both state-owned and private companies were often operating business models that undermined the party’s political, economic and social objectives, Wildau said. 

Seven international banks control investment banking operations in mainland China, including HSBC, Goldman Sachs, JPMorgan, Credit Suisse, Morgan Stanley, UBS and Deutsche Bank, according to the Financial Times. So far, only HSBC has set up a CCP committee, according to the report.  

Dennis Kwok, a partner at Elliott, Kwok, Levine & Jaroslaw, a New York City law firm, thinks establishing a party committee risks exposing HSBC to increased party reach. 

“What China is doing is that it is opening its financial market to foreign firms, and you see a lot of investment banks and other financial institutions have shown great interest in going into the China market. But at the same time, China is also using these party cells to increase their control and influence of these financial institutions,” Kwok said in an interview with VOA Mandarin. 

After a lengthy period of political and economic isolation under Mao Zedong, Deng Xiaoping began opening China to foreign companies with the launch of his reform and opening policy in 1978. 

Following the establishment of this HSBC committee, foreign companies should reevaluate the risks associated with doing business in China, Kwok said. 

“This is the time to reassess your risk exposure. This is the time to do a stress test on your operations on the ground to see if you are managing the legal and political risk in the right way,” said Kwok. “And if things don’t go your way, can your international operation handle any political or legal crises that emerge from China?” 

The development also drew the attention of some high-level U.S. politicians.  

Florida Republican Senator Marco Rubio, long known for his anti-Beijing stance, criticized the move. “Communist party committees are not just for show. They exist to influence, monitor, and ultimately control the company,” he said on July 21. “Investors need to be aware.”  

But multiple China analysts with whom VOA Mandarin spoke were less concerned.  

One reason is because these committees are relatively common in China, and they don’t appear to do much in practice, according to Teneo’s Wildau, a former Shanghai bureau chief for the Financial Times.  

“My sense from Chinese corporate executives and investors is that party organizations rarely intervene in substantive decision making and are often quite irrelevant in practice. Often they do little more than organize occasional ideological study sessions,” Wildau wrote.  

Still, he recognizes that foreign business leaders and investors are concerned that party cells may grow more assertive and influential. “But I don’t think we’re at that point yet,” Wildau said. 

The Chinese embassy in Washington did not respond to VOA’s request for comment. 

In a statement, HSBC told the Financial Times that “[e]mployees of private firms in China are able to form a Party branch. These branches are common and can be set up by as few as three employees. It is important to note that management has no role in establishing such groups, they do not influence the direction of the business, and have no formal role in the day-to-day activities of the business.”   

What distinguishes this particular party committee from others is the fact that HSBC is such a significant stakeholder in HSBC Qianhai Securities, according to Wildau.  

Up until now, party committees have usually been in companies that are more equally Sino-foreign joint ventures, Wildau said. The fact that HSBC now owns a 90% stake in HSBC Qianhai Securities and still established a party committee makes it look “like a milestone,” he said. 

Hoping for ‘business as usual’

“Still, HSBC and foreign banks probably hope that establishing the committee will be a box-ticking exercise that doesn’t disrupt business as usual,” Wildau wrote. “That a party committee has been established tells us very little about what influence it will have, if any.” 

Victor Shih, a professor at the University of California, San Diego, agrees that some responses to the development have been “a bit of an over-reaction,” but says it’s still something people should be aware of. 

“Most of the time it is for show, but in an emergency situation, when the party would like to mobilize all resources, these committees potentially serve as the links between the party and resources in society,” Shih wrote in an email to VOA Mandarin. 

Political developments in Hong Kong, like the controversial 2020 National Security Law, also inform this move, Shih said, since HSBC makes almost all of its profit in that city.  

“The bank has had to walk a tight line in the run-up to the Hong Kong national security law and in the aftermath of its passage,” Shih wrote. “HSBC’s eagerness to announce the formation of a party committee might be related to its desire to score points with the Chinese government.” 

your ad here

America’s Biggest Warehouse Running Out of Room; It’s About to Get Worse 

America’s largest warehouse market is full as major U.S. retailers warn of slowing sales of the clothing, electronics, furniture and other goods that have packed the distribution centers east of Los Angeles.

The merchandise keeps flooding in from across the Pacific, and for one of the busiest U.S. warehouse complexes, things are about to get worse.

Experts have warned the U.S. supply chain would get hit by the “bullwhip effect” if companies panic-ordered goods to keep shelves full and got caught out by a downturn in demand while shipments were still arriving from Asia.

In the largest U.S. warehouse and distribution market — stretching east from Los Angeles to the area known as the “Inland Empire” — that moment appears to have arrived.

“We’re feeling the sting of the bullwhip,” said Alan Amling, a supply-chain professor at the University of Tennessee.

The sprawl of Inland Empire warehouses centered in Riverside and San Bernardino counties grew quickly in recent years to handle surging demand and goods imported from Asia.

That booming area, visible from space, anchors an industrial corridor encompassing 1.6 billion square feet of storage space that extends from the busiest U.S. seaport in Los Angeles to near the Arizona and Nevada borders. That much storage space is nearly 44 times larger than New York City’s Central Park and 160 times bigger than Tesla Inc’s TSLA.O new Gigafactory in Texas.

But a consumer spending pullback now threatens to swamp warehouses here and around the country with more goods than they can handle — worsening supply —  chain snarls that have stoked inflation. Retailers left holding unwanted goods are faced with the choice of paying more money to store them or denting profits by selling them at discount.

Inland Empire warehouse vacancies are among the lowest in the nation, running at a record 0.6% versus the national average of 3.1%, according to real estate services firm Cushman & Wakefield. 

The market is poised to get even tighter as shoppers at Walmart WMT.N, Best Buy BBY.N and other retailers retreat from early COVID-era spending binges.

Binge to backlog

While U.S. consumer spending remains above pre-pandemic levels, retailers and suppliers are raising alarms about backlogs in categories that have fallen out of fashion as consumers catch up on travel and struggle with the highest inflation in 40 years.

Last week, Walmart said surging food and fuel prices left its lower-income customers with less cash to spend on goods, and Best Buy said shoppers were curbing spending on discretionary products like computers and televisions. Those cautionary signals followed Target Corp’s TGT.N alert that it was saddled with too many TVs, kitchen appliances, furniture and clothes.

Suppliers —  ranging from barbecue grill maker Weber Inc WEBR.N to Helen of Troy Ltd HELE.O, a consumer brands conglomerate that includes OXO kitchen tools — also have warned of slowing demand and an urgent need to clear inventories.

While the U.S. economy was downshifting, goods kept pouring in at near-record levels.

Imports to U.S. container ports that process retail goods from China and other countries jumped more than 26% in the first half of 2022 from pre-pandemic levels, according to Descartes Datamyne. Christmas shipments and the reopening of major Chinese factory hubs could goose volumes further.

Meanwhile, cargo keeps flooding in to the busiest U.S. seaport complex at Los Angeles/Long Beach. During the first half of this year, dockworkers there handled about 550,000 more 40-foot containers than before the pandemic started, according to port data.

Christmas toys and winter holiday decor landed on those docks in July, along with some patio furniture for Walmart and stretch pants, jeans and shoes for Target, said Steve Ferreira, CEO of Ocean Audit, which scrutinizes marine shipping invoices.

Retailers ordered most of those goods months ago and many are destined for the Inland Empire’s already jam-packed warehouses.

“It’s a domino effect. Now the inventory is going to really build up,” said Scott Weiss, a vice president at Performance Team, a Maersk MAERSKb.CO company with 22 warehouses in greater Los Angeles.

Demand for space in the Inland Empire is so intense that when 100,000 to 200,000 square feet of space frees up, it “gets gobbled up in a second,” said Weiss.

Sears and parking lots

Investors have almost 40 million square feet under construction in the Inland Empire — including Amazon.com Inc’s AMZN.O biggest-ever warehouse — and at least 38% is spoken for, said Dain Fedora, vice president of research for Southern California at Newmark, a commercial real estate advisory firm.

While Amazon’s 4.1 million square-foot facility rises on former dairy land in the city of Ontario, the online retailer has been shelving construction plans in other parts of the country.

Amazon is the biggest warehouse tenant in the Inland Empire and the nation. Its decision to scale back on building, coupled with rising interest rates and the slowing economy, is sidelining other would-be Inland Empire warehouse builders, area real estate brokers and economists told Reuters.

Meanwhile, the scramble for space continues.

Trucking company yards and spare lots around the region have already been converted to makeshift container storage, so entrepreneurs are marketing vacant stores as last-resort warehouses in waiting.

Brad Wright is CEO of Chunker, which bills itself as an AirBNB for warehouses, and works with everyone from state officials to the owners of vacated big-box stores to find new places to stash goods.

During a recent tour at the former Sears anchor store in San Bernardino’s Inland Center mall, Wright and a potential tenant strolled past collapsed ceiling tiles, sagging wall panels and idled escalators while working out how forklifts would navigate the abandoned space. Wright sees the empty stores as one answer to easing the log jams.

“There’s a lot of them sitting around, and they’re in good locations,” he said.

your ad here

West African Bakers Aim to Reduce Dependence on Imported Grains 

Commercial bakers from eight West Africa countries are doing what they can to reduce their dependence on foreign wheat and strengthen their nations’ food security by forming a trade association. For VOA Allison Fernandes reports from Dakar, Senegal. Carol Guensburg narrates her report.

your ad here

Excitement Over Investing in Cryptocurrency Tinged With Fear of Big Slide

The price of Bitcoin and other cryptocurrencies has fallen dramatically in recent months. Still, many investors are excited about the future of digital currencies despite the risks. VOA’s Michelle Quinn reports from San Francisco. VOA footage by Matt Dibble and Michelle Quinn.

your ad here

China’s Factory Activity Contracts Unexpectedly in July as COVID Flares Up

China’s factory activity contracted unexpectedly in July after bouncing back from COVID-19 lockdowns the month before, as fresh virus flare-ups and a darkening global outlook weighed on demand, a survey showed on Sunday.

The official manufacturing purchasing managers’ Index (PMI) fell to 49.0 in July from 50.2 in June, the National Bureau of Statistics (NBS) said, below the 50-point mark that separates contraction from growth and the lowest in three months.

Analysts polled by Reuters had expected a reading of 50.4.

“The level of economic prosperity in China has fallen, the foundation for recovery still needs consolidation,” NBS senior statistician Zhao Qinghe said in a statement on the NBS website.

Continued contraction in the energy-intensive industries, such as petrol, coking coal and ferrous metals, contributed most to pulling down the July manufacturing PMI, he said.

Sub-indexes for output and new orders fell by 3 points and about 2 points in July, respectively, while the employment sub-index edged down by 0.1 point.

Weak demand has constrained recovery, Bruce Pang, chief economist and head of research at Jones Lang Lasalle Inc, said in a research note. “Q3 growth may face greater challenges than expected, as recovery is slow and fragile,” he added.

The official non-manufacturing PMI in July fell to 53.8 from 54.7 in June. The official composite PMI, which includes manufacturing and services, fell to 52.5 from 54.1.

China’s economy barely grew in the second quarter amid widespread lockdowns, and top leaders recently signaled their strict zero-COVID policy would remain a top priority.

Policymakers are prepared to miss their GDP growth target of “around 5.5%” for this year, state media reported after a high-level meeting of the ruling Communist Party.

Beijing’s decision to drop mention of the target has doused speculation that the authorities would roll out massive stimulus measures, as they often have in previous downturns.

Capital Economics says that policy restraint, along with the constant threat of more lockdowns and weak consumer confidence, is likely to make China’s economic recovery more drawn-out.

Faltering recovery

After a rebound in June, the recovery in the world’s second-biggest economy has faltered as COVID flare-ups led to tightening curbs on activity in some cities, while the once mighty property market lurches from crisis to crisis.

Chinese manufacturers continue to wrestle with high raw material prices, which are squeezing profit margins, as the export outlook remains clouded with fears of a global recession.

China’s southern megacity of Shenzhen has vowed to “mobilize all resources” to curb a slowly spreading COVID outbreak, ordering strict implementation of testing and temperature checks, and lockdowns for COVID-hit buildings.

The port city of Tianjin, home to factories linked to Boeing and Volkswagen, and other areas tightened curbs this month to fight new outbreaks.

According to World Economics, the lockdown measures had some impact on 41% of Chinese companies in July, though its index of manufacturing business confidence rose significantly from 50.2 in June to 51.7 in July.

your ad here

More Americans Struggling to Find Affordable Housing

Danira Ford is a lifelong resident of New Orleans, Louisiana. Like tens of thousands of the city’s inhabitants, she has struggled to find an affordable place to live for her and her five children.

“Affordable housing would bring stability,” she said.

“My kids can’t play sports, be in band or get tutored on their homework because mommy needs to pick up extra shifts to cover rent,” Ford continued. “An affordable home would let them live more like normal children.”

A 2018 report by the United States Department of Housing and Urban Development (HUD) estimated that 80% of New Orleans households pay more for housing than they can afford. The Greater New Orleans Fair Housing Action Center recently estimated that 30,000 families in the city are languishing on a waitlist for an affordable housing voucher from the Housing Authority of New Orleans. By issuing a voucher, the city is agreeing to pay up to a certain amount of the voucher holder’s rent.

But the problem extends far beyond New Orleans. In a May 2022 news release on the Biden Administration’s housing supply action plan the White House said that while estimates vary, financial research company Moody’s Analytics estimates that the shortfall in the housing supply is more than 1.5 million homes nationwide.

In a 2021 white paper “Overcoming the Nation’s Daunting Housing Supply Shortage,” by Moody’s Analytics, co-authored by Jim Parrot, a nonresident fellow at Urban Institute, and Mark Zandi, chief economist at Moody’s, the U.S. has less housing available for rent or sale now than at any point in the last three decades.

As federal, state and local officials search for solutions, an ongoing affordable housing crisis is having real effects on residents.

Ford and her family, for example, have been waiting for an affordable housing voucher for more than a decade. Without it, she has cobbled together only enough money to live in the farther reaches of the metropolis, away from many of its amenities.

“It’s far from my work, it’s far from my kids’ schools, it’s far from grocery stores, it’s far from public transportation, it’s far from friends,” Ford said. “When it’s all you can afford, what choice do you have? But, also, what kind of life is it?”

Getting pushed out

Since the onset of the coronavirus pandemic, potential homebuyers and renters across the U.S. have seen real estate prices skyrocket and the supply of available units plummet. According to a Pew Research Center study last year, 85% of Americans said availability of affordable housing was a problem in their community. Forty-nine percent of respondents indicated it was a major problem, up from 39% just three years earlier.

According to HUD, housing becomes a problem when a household spends more than 30% of its income on home-related costs. This is known as “cost burdened,” a designation that applies to nearly 1 in 3 Americans.

Exacerbating the problem, Real Estate brokerage company Redfin found rent has risen sharply over the past two years, as much as 40% in some metro areas, while according to data this year from the U.S. Bureau of Labor Statistics, real wages — or the amount workers earn relative to inflation — has actually fallen by 1.2% since the end of 2019.

Workers can no longer afford to purchase or rent homes in the neighborhoods they once could.

“The result is that thousands of residents — mostly people of color — get pushed farther and farther outside of desirable neighborhoods,” said Maxwell Ciardullo, director of policy and communications at the Louisiana Fair Housing Action Center.

Evidence of the trend isn’t hard to find in New Orleans. Just east of the city’s famed French Quarter, the Bywater neighborhood was once considered a dangerous area, a perception that helped keep rents low. Over the past 20 years, however, helped in large part by its faring better than most during Hurricane Katrina, the Bywater has seen one of the area’s most rapid increases in home and rental prices.

“And that’s resulting in a demographic shift,” Ciardullo told VOA. “In the year 2000, the census tract that encompasses most of the Bywater had 74% Black residents. Just 20 years later, that was down to 37%.”

Multifaceted problem

A crisis of this magnitude stems from many causes.

The white paper blames the shortage of affordable housing primarily on the 2008 financial crisis. In the years that followed, a shortage of land, lending, labor and building materials drove up the cost of building new homes. This cut into contractors’ profit margins and reduced their incentive to build.

The coronavirus pandemic exacerbated the problem as more Americans sought larger homes where they could telework and live comfortably during lockdowns.

“In New Orleans, we were certainly experiencing these issues,” Ciardullo said, “but we also had some unique challenges, such as an aged housing stock and a lot of gentrification.”

“You used to be able to buy a home for really cheap,” said Alton Osborne, co-owner of the Bywater Bakery. In the 1990s, he bought a home in the neighborhood that he still owns today.

“They were blighted, but at least they were affordable,” Osborne said. “Nowadays, you have a lot of people who moved here from out of town and bought those homes, rehabilitated them, and now they’re worth a lot more. Is it a good thing? Is it a bad thing? It’s complicated, but what’s certain is a lot of people don’t have enough money to live in this neighborhood anymore.”

Short-term rentals

One of the most high-profile reasons for New Orleans’ lack of affordable housing is the prevalence of short-term rentals, through Airbnb and other services, popular with the throngs of tourists who visit the city.

“In the Bywater, you’ve got entire blocks now taken over by Airbnb,” Osborne said.

According to the Inside Airbnb website, which looks at the rental service’s impact on communities, the city has more than 5,500 short-term rental units on Airbnb alone — dwellings that could otherwise go to local tenants. Renting to tourists at high prices also tends to drive up the rents on other types of units.

It’s simple math, according to Bywater Neighborhood Association President John Guarnieri.

“A landlord can make a ton more money renting short term on something like Airbnb than they can by renting to locals with a long-term lease,” he said. “It’s not even close.”

New Orleans City Council has worked in recent years to combat the problem by passing laws regulating how much of each property can be used as a short-term rental, as well as limiting the number of guests allowed per unit. Additionally, fees from each booking are used to contribute to a citywide affordable housing fund.

“It’s a good and important step,” said Ciardullo, “but enforcement has been severely lacking so far.”

In addition to attempting to regulate short-term rentals, lawmakers across the U.S. have sought to address the affordable housing crisis with proposals as varied as raising the minimum wage, mandating rent control, subsidizing affordable housing and pursuing partnerships with developers.

In New Orleans, the City Council passed a zoning ordinance that allows the construction of larger buildings if a percentage of those units are made available at affordable prices.

Policies like these can take years to bring about tangible results, but several large projects in the Bywater are said to be close to breaking ground. But forcing change in a neighborhood can trigger resistance from existing residents.

“As neighbors, we’ve learned to fight back against so much development,” said Julie Jones, president of the Neighbors First for Bywater organization. “It’s just too much for one neighborhood to be expected to take. We like our Bywater as it feels now.”

Jones is far from alone. As each housing project is announced, more residents seem to worry about its effect.

For example, a plot of land awaiting development into a 90-unit mixed income residential building currently serves as a de facto park for the community. As the project’s groundbreaking nears, neighbors bemoan the eventual loss of this greenspace.

New Orleanian Danira Ford just shakes her head.

“I understand they enjoy that space,” she said, “but for families like mine, affordable housing like this would change our lives. We’re not talking about a park. We’re talking about a home and a new and better life.”

your ad here

Pakistan Army Chief Reportedly Seeking US Help in Securing Crucial IMF Loan

Pakistan’s military chief has reportedly sought help from the United Sates in securing the early disbursement of an International Monetary Fund loan as the high price of energy imports pushes the cash-strapped South Asian nation to the brink of a payment crisis.

General Qamar Javed Bajwa spoke by phone to Deputy U.S. Secretary of State Wendy Sherman earlier this week and raised the issue, government sources told VOA late Friday on condition of anonymity.

Pakistan last week reached a staff-level agreement with the IMF for the revival of a multibillion-dollar bailout package. However, the deal is subject to approval by the lender’s board, which is due to meet in late August. Islamabad is expected to get about $4.2 billion under the loan program, starting with an initial tranche of about $1.2 billion.

Foreign Ministry spokesperson Asim Iftikhar Ahmad has confirmed the phone contact between Bajwa and Sherman but did not share details.

“Well, I understand conversation has taken place, but at this stage, I am not in direct knowledge of the content of this discussion,” Ahmad told a weekly news conference in Islamabad.

A State Department spokesperson in Washington would not directly confirm whether the conversion had taken place.

“U.S. officials talk to Pakistani officials regularly on a range of issues. As standard practice, we don’t comment on the specifics of private diplomatic conversations,” the spokesperson told VOA.

Nikkei Asia first reported Friday on the Bajwa-Sherman contact, saying the Pakistani military chief asked for the White House and Treasury Department to use their leverage to help speed up the release of the loan. The United States is the largest shareholder in the IMF.

“Yes,” the sources in Islamabad said when asked whether the two officials had spoken on the matter involving the IMF loan disbursement. The outcome of Bajwa’s appeal was not known immediately, however.

Critics attributed the delay in the release of the loan to Pakistan’s track record of not living up to commitments to undertake crucial economic reforms.

Late on Friday, Bajwa also spoke by phone to General Michael Erik Kurilla, the commander of the U.S. CENTCOM.

The army’s media wing in a statement quoted its chief as telling Kurilla that Pakistan “values its relations with (the) U.S. and we earnestly look forward to enhance mutually beneficial multi-domain relations based on common interests.”

The statement quoted U.S. commander as pledging “to play his role for further improvement in cooperation with Pakistan at all levels.”

The approval of the IMF program is key to Pakistan’s access to other avenues of finances for the country, including the World Bank and the Asian Development Bank.

Pakistan’s central bank foreign exchange reserves have dwindled to just about $8.5 billion, barely enough to cover a few weeks of imports, and its currency has fallen to historic lows against the U.S. dollar in recent days, with inflation at its highest in more than a decade.

Shortly after negotiating the deal with the IMF, Prime Minister Shehbaz Sharif’s coalition government said it would “very soon” receive the first tranche of $1.17 billion.

But Sharif is under increasing pressure from ousted Prime Minister Imran Khan, who is demanding the government step down and hold snap general elections in Pakistan.

Khan criticized Bajwa for reaching out to Washington, saying “it is not the job of an army chief to talk to the U.S. on financial matters.” The deposed prime minister told local ARY television channel in an interview the army chief’s move had demonstrated that neither the IMF nor foreign governments trust the Shehbaz administration.

Analysts noted, however, that both civilian and military leaders in Pakistan have traditionally conducted economic dealings with Washington, citing the army’s role in  Pakistani politics and foreign policy matters.

Khan alleges Shehbaz conspired with Washington to orchestrate his government’s ouster in a parliamentary vote of confidence in April, triggered in part by rising inflation. The U.S. rejects the charges.

The former prime minister indirectly also has accused the military chief of playing a role in his removal from office, charges the army rejects as politically motivated.

Khan and his Pakistan Tehreek-e-Insaf party are campaigning hard to stage a comeback in the next election widely expected to be held by October. The opposition leader has organized and addressed massive anti-government public rallies across Pakistan since his ouster.

your ad here

Record EU Inflation Expected; Economy Continues to Grow

The European Union’s statistical office, Eurostat, on Friday estimated inflation is expected to reach a record 8.9% in July, while the Eurozone and EU economy overall continued to grow during the first quarter of 2022.

In its report, Eurostat indicated inflation in July was driven largely by the energy sector with 39.7% growth, down from 42% in June. The food, alcohol and tobacco sector follows, with a rise of 9.8%, compared with 8.9% in June. The non-energy industrial goods sector grew 4.5% compared with 4.3% in June, and the services sector grew 3.7%, compared with 3.4% in June.

For months, inflation has been running at its highest levels since 1997, when record-keeping for the euro began, leading the European Central Bank to raise interest rates last week for the first time in 11 years and signal another boost in September.

Meanwhile, Eurostat also reported Friday the eurozone’s seasonally adjusted GDP increased by 0.7% and by 0.6% in the EU overall, compared with the previous quarter. In the first quarter of 2022, GDP had grown by 0.5% in the euro area and 0.6% throughout the EU.

The positive numbers come despite stagnant growth in Germany, Europe’s largest economy. France showed modest 0.5% growth, while Italy and Spain exceeded expectations with 1 and 1.1% economic expansions, respectively.

Eurostat says the numbers for both GDP growth and inflation are preliminary flash estimates based on data that are incomplete and subject to further revision.

The Associated Press, citing regional economic analysts, reports a rebound in tourism following the COVID-19 pandemic helped drive economic growth. The analysts caution, however, that inflation, rising interest rates and the worsening energy crisis are expected to push the region into recession later this year.

Some information for this report was provided by the Associated Press.

your ad here

Biden Administration Rejects Recession Label for Economy

The U.S. president and members of his administration are avoiding the “R word” – recession – despite the assertion by opposition party politicians and some economists that the country’s economy now meets that definition.

Speaking in the White House State Dining Room on Thursday, President Joe Biden said Federal Reserve Chairman Jerome Powell, as well as “many of the significant banking personnel and economists, say we’re not in recession.”

He then outlined the job growth and high-tech investment during his administration, concluding “that doesn’t sound like a recession to me.”

Biden’s remarks came after the Commerce Department released data on Thursday showing the U.S. economy has contracted for a second straight quarter, a traditional benchmark for a recession.

The president and his administration’s chief financial officer, Treasury Secretary Janet Yellen, are to make remarks later in the afternoon about the nation’s economy.

The gross domestic product of the United States – the broad measure of goods and services produced in the country – shrank at a seasonally adjusted annual rate of 0.9 percent in the April through June period, according to the Commerce Department’s Bureau of Economic Analysis. That follows a 1.6% decline in this year’s first quarter.

“Popularly we are in a recession, because most people think that a recession involves two consecutive quarters of negative economic growth, and we’ve got that,” Desmond Lachman, an economist at the American Enterprise Institute, told VOA.

Consumer sentiment “now is close to record low levels, they’re struggling with high inflation, the wages are getting eroded, they’ve lost a lot of money on the stock exchange. So, consumers don’t feel good about the economy,” added Lachman.

Recessions in the United States are officially declared by the National Bureau of Economic Research, but such determinations are made in retrospect. Its definition of a recession is based on a significant decline in economic activity over numerous months, taking into consideration such factors as employment, output, retail sales, and household income.

“They [the BEA] only make that judgment, something like six months or a year after the numbers look like they’re indicating the recession. So, in short, it’s too early to say that we’re officially in a recession,” said Lachman.

In the meantime, economists outside the government and elected officials are free to spin the numbers to make their own declarations.

“The Biden White House can play word games and try and contort the English language as it sees fit in order to advance its radical and harmful agenda. What this administration cannot change is the fact that American consumer confidence continues to fall under Biden’s watch,” said Steve Moore, an economist with FreedomWorks, a conservative advocacy group. “Americans are overwhelmingly pessimistic about the state of the Biden economy, and no wordplay over the definition of ‘recession’ can change that.”

Numerous Republican members of Congress quickly took to Twitter immediately after the data was released to declare the country is now in a recession.

“Democrats threw us into recession,” said Senator Ted Cruz, a member of the Senate’s joint economic committee.

“Biden and his army of woke journalists can obscure this all they want, but they cannot escape this fact: America is in a recession,” declared Carlos Gimenez, a congressman from Florida and member of the House transportation and infrastructure committee. “Hardworking American families deserve so much better than what this administration has put us through in the last year.”

“The U.S. is officially in a recession, thanks to the Democrats’ reckless spending. Americans are suffering because of Joe Biden’s America-last policies,” said Jeff Duncan, a congressman from South Carolina and a member of the House Energy and Commerce committee.

Inflation in the country hit a 40-year high of 9.1 percent last month. The country’s central bank, the Federal Reserve, hiked interest rates on Wednesday by three-quarters of a percent, its latest such increase to try to tame price hikes, but a move some economists warn could trigger a recession.

“The problem with the Federal Reserve is they do too little, too late,” according to Lachman. “By the time that they started raising interest rates at the beginning of this year, the inflation genie was well out of the bottle – we had multi-decade highs in the inflation rate. The same thing is now occurring this time around that the Fed keeps raising interest rates, even though there are rather clear signs that the economy is slowing.”

Lachman, a former official of the International Monetary Fund, noted that the actions by the Federal Reserve have put a lot of developing economies under pressure as capital that had flowed to those countries has returned to the United States, and a stronger dollar is making it difficult for those countries to fund their balance of payment deficits.

“Once the United States economy slows, it means that the export markets for the emerging market countries isn’t as robust as it was before. So, we could see difficulty for the emerging market, certainly the remainder of this year, but there might be relief next year, once the Fed stops this interest rate hiking cycle and begins cutting interest rates,” predicted Lachman.

“Our goal is to bring inflation down and have a so-called soft landing, by which I mean a landing that doesn’t require a significant increase in unemployment,” Powell told reporters on Wednesday. “We understand that’s going to be quite challenging. It’s gotten more challenging in recent months.”

your ad here