US Gas Prices Lowest in 5 Months

Gasoline prices have dipped to their lowest in more than five months — good news for consumers who are struggling with high prices for many other essentials.

AAA said the national average for a liter of regular was $1.05 on Thursday, down from the mid-June record of $1.37. However, that’s still about 21 cents higher than the average a year ago.

Energy is a key factor in the cost of many goods and services, and falling prices for gas, airline tickets and clothes are giving consumers a bit of relief, although inflation is still close to a four-decade high.

Glen Smith, a for-hire driver, sized up the price — $1.01 a liter — while waiting between rides at a gas station in Kenner, Louisiana.

“I’m not tickled pink, but I’m happier it’s less than what it was,” Smith said. “There for a while, every two days I put $50 of gas in my car. It’s $12 to run from the airport to drop off in the city — $12 a trip!”

Oil prices began rising in mid-2020 as economies recovered from the initial shock of the pandemic. They rose again when the U.S. and allies announced sanctions against Russian oil over the country’s war against Ukraine.

Recently, however, oil prices have dropped on concern about slowing economic growth around the world. U.S. benchmark crude oil has recently dipped close to $90 a barrel from over $120 a barrel in June.

It is unclear whether gasoline prices got so high that consumers cut back on their driving. Some experts believe that is true, although they acknowledge that the evidence is largely anecdotal.

“I don’t know that $5 ($1.32 per liter) was the magic amount. I think it was the amount of increase in a short period of time,” said Peter Schwarz, an expert on energy pricing and an economics professor at the University of North Carolina at Charlotte. “People were starting to watch their driving.”

Schwarz expects oil prices to remain relatively stable at least for the next month or so, particularly after OPEC and partners including Russia agreed to only a small oil production increase in September, which won’t be enough to drive prices lower.

Christian vom Lehn, an economics professor at Brigham Young University, said the price of oil is the key factor for gasoline, but that seasonal trends could also keep prices from surging again.

“We are coming to the end of summer, and summer is a peak travel season, so demand is naturally going to fall,” he said. “That is certainly contributing to the most recent decline” in gas prices.

The average gas price has dropped 58 straight days, but that streak will end soon, predicted Tom Kloza, head of energy analysis at the Oil Price Information Service. He said the industry will face challenges to meet gasoline demand for the rest of the year.

Kloza noted that it’s still early in the hurricane season, which in the past has shut down some of the nation’s biggest refineries that sit in hurricane-prone areas of the Gulf Coast; the Gulf of Mexico is speckled with oil-producing platforms. Also, he said, “refinery runs will come down because of a lot of delayed maintenance that can’t be delayed indefinitely.”

Prices at the pump are likely to be a major issue heading into the mid-term elections in November.

Republicans blame President Joe Biden for the high gasoline prices, seizing on his decisions to cancel a permit for a major pipeline and suspend new oil and gas leases on federal lands.

Biden has previously targeted the oil companies, accusing them of not producing as much energy as they could while posting huge profits. “Exxon made more money than God this year,” he said in June.

Exxon said it has increased oil production. The CEO of Chevron said Biden was trying to vilify his industry.

Biden has also ordered the release of oil from the nation’s strategic petroleum reserve this year. While not large enough to account for the drop in gasoline prices, the extra supply from reserves might have helped stem the rise in pump prices, according to analysts.

The nationwide average for gas hasn’t been under $1.05 per liter since early March. Prices topped out at $1.32 per liter on June 14, according to AAA. They declined slowly the rest of June, then began dropping more rapidly. The shopping app GasBuddy reported that the national average dropped under $1.05 per liter on Tuesday.

Motorists in California and Hawaii are still paying above $1.32 per liter, and other states in the West are paying close to that. The cheapest gas is in Texas and several other states in the South and Midwest.

A year ago, the nationwide average price was just under 84 cents per liter, according to AAA. After a long climb, that price has dropped steadily this summer, falling 4 cents per liter in the past week and 18 cents in the last month.

“If you talk to people who are not economists, gas prices always go up faster than they come down,” said Schwarz, the energy-pricing expert. “These are still high gas prices.” 

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Ukraine Cyber Chief Visits ‘Black Hat’ Hacker Meeting in Las Vegas

Ukraine’s top cyber official addressed a room full of security experts at a hackers convention following a two-day trip from Kyiv to a casino in Las Vegas.

During his unannounced visit, Victor Zhora, deputy head of Ukraine’s State Special Communications Service, told the so-called Black Hat convention Wednesday that the number of cyber incidents that have hit Ukraine tripled in the months following Russia’s invasion of his country in late February.

“This is perhaps the biggest challenge since World War II for the world, and it continues to be completely new in cyberspace,” Zhora told an audience at the annual conference.

Ukraine faced a number of “huge incidents” in cyberspace from the end of March to the beginning of April, Zhora said, including the discovery of the “Industroyer2” malware that could manipulate equipment in electrical utilities to control the flow of power.

Russian hackers also hit Ukraine at the onset of the war though a cyberattack that took down regional satellite internet service.

Since the beginning of the year, Ukraine had detected over 1,600 “major cyber incidents,” Zhora said.

Zhora told Reuters in an interview that Microsoft, Amazon and Google had offered pro bono cloud computing services to the Ukrainian government as it moves its data out of the country, away from the destruction wreaked by Russian bombs and missiles.

Some of Ukraine’s data archives are being held within data centers across “multiple [European] countries,” he added, without elaborating.

Zhora said his trip to Las Vegas took two days. He traveled to neighboring Poland to stay a night before flying to the United States.

Zhora said he would not waste time on the slot machines at the sprawling Mandalay Bay casino, where the Black Hat conference is being held: “It would be inappropriate for me to gamble here while Ukrainian soldiers are defending our land.” 

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COVID-19 Wreaks Havoc on Youth Employment

The International Labor Organization says the COVID-19 pandemic has wreaked havoc on the youth labor market. The ILO’s just released “Global Employment Trends for 2022” report finds job prospects for young people between the ages of 15 and 24 are lagging behind other age groups.

Latest data estimate the total global number of unemployed youths will reach 73 million this year. While that is a slight improvement from 2021 levels, the ILO says the number of young people without jobs is still six million above the pre-pandemic level of 2019.

ILO Deputy Director-General Martha Newton says the COVID-19 crisis has exposed shortcomings in the way the needs of young people are being addressed. She says those least able to gain a foothold in the labor market include first-time jobseekers, school dropouts, inexperienced fresh graduates, and those who remain inactive not by choice.

“Following the arrival of the pandemic in 2020, the share of young people who are neither in employment, education, or training– and we refer to them as NEETS—rose to 23.3 percent, reaching the highest level…We saw the youth NEET rate jump to its highest level in 15 years,” Newton said.

The ILO says young people have faced multi-dimensional crises throughout the pandemic. It says interruptions in their education and training have robbed them of the skills needed to get a job. That, it says, threatens to damage their long-term employment, education and earning prospects.

Newton says job opportunities are narrowing for many young people. She adds young women are worse off than young men in finding employment. She says the ILO projects 27.4 percent of young women globally are likely to be employed in 2022, compared to 40.3 percent of young men.

“The impact of the pandemic has a feminine face. And we also know from our data that women are not coming back into the labor force at the same rates as the men in many countries around the world,” Newton said. “This is partly tied to the care responsibilities of women.”

The report finds recovery in youth unemployment is likely to be more successful in high-income countries than in low-and-middle-income countries. It projects the youth unemployment rate in North America to be below world average levels, at 8.3 percent compared to an unemployment rate of 20.5 percent in Latin America this year.

While youth unemployment stands at 12.7 percent in Africa, the report says that figure masks the fact that many young people in Africa have chosen to withdraw from the labor market.

The ILO cites the Arab states as the region with the highest and fastest growing youth unemployment rate in the world. It says the situation for women is particularly bad. The report notes the 42.5 percent unemployment rate for young women in the region is nearly three times higher than the global average for young women.

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At 75, India Seeks Way Forward in Big but Job-Scarce Economy

As India’s economy grew, the hum of factories turned the sleepy, dusty village of Manesar into a booming industrial hub, cranking out everything from cars and sinks to smartphones and tablets. But jobs have run scarce over the years, prompting more and more workers to line up along the road for work, desperate to earn money.

Every day, Sugna, a young woman in her early 20s who goes by her first name, comes with her husband and two children to the city’s labor chowk — a bazaar at the junction of four roads where hundreds of workers gather daily at daybreak to plead for work. It’s been days since she or her husband got work and she has only 5 rupees (6 cents) in hand.

Scenes like this are an everyday reality for millions of Indians, the most visible signs of economic distress in a country where raging unemployment is worsening insecurity and inequality between the rich and poor. It’s perhaps Prime Minister Narendra Modi’s biggest challenge as the country marks 75 years of independence from British rule on Monday.

“We get work only once or twice a week,” said Sugna, who says she earned barely 2,000 rupees ($25) in the past five months. “What should I do with a life like this? If I live like this, how will my children live any better?” Entire families leave their homes in India’s vast rural hinterlands to camp at such bazaars, found in nearly every city. Out of the many gathered in Manesar recently, only a lucky few got work for the day — digging roads, laying bricks and sweeping up trash for meager pay — about 80% of Indian workers toil in informal jobs including many who are self-employed.

India’s phenomenal transformation from an impoverished nation in 1947 into an emerging global power whose $3 trillion economy is Asia’s third largest has turned it into a major exporter of things like software and vaccines. Millions have escaped poverty into a growing, aspirational middle class as its high-skilled sectors have soared.

“It’s extraordinary — a poor country like India wasn’t expected to succeed in such sectors,” said Nimish Adhia, an economics professor at Manhattanville College. 

This year, the economy is forecast to expand at a 7.4% annual pace, according to the International Monetary Fund, making it one of the world’s fastest growing.

But even as India’s economy swells, so has joblessness. The unemployment rate remains at 7% to 8% in recent months. Only 40% of working age Indians are employed, down from 46% five years ago, the Center for Monitoring the Indian Economy (CMIE) says.

“If you look at a poor person in 1947 and a poor person now, they are far more privileged today. However, if you look at it between the haves and the have nots, that chasm has grown,” said Gayathri Vasudevan, chairperson of LabourNet, a social enterprise.

“While India continues to grow well, that growth is not generating enough jobs — crucially, it is not creating enough good quality jobs,” said Mahesh Vyas, chief executive at CMIE. Only 20% of jobs in India are in the formal sector, with regular wages and security, while most others are precarious and low-quality with few to no benefits.

That’s partly because agriculture remains the mainstay, with about 40% of workers engaged in farming.

As workers lost jobs in cities during the pandemic, many flocked back to farms, pushing up the numbers. “This didn’t necessarily improve productivity — but you’re employed as a farmer. It’s disguised unemployment,” Vyas said.

With independence from Britain in 1947, the country’s leaders faced a formidable task: GDP was a mere 3% of the world’s total, literacy rates stood at 14% and the average life expectancy was 32 years, said Adhia.

By the most recent measures, literacy stands at 74% and life expectancy at 70 years. Dramatic progress came with historic reforms in the 1990s that swept away decades of socialist control over the economy and spurred remarkable growth.

The past few decades inspired comparisons to China as foreign investment poured in, exports thrived and new industries — like information technology — were born. But India, a latecomer to offshoring by Western multinationals, is struggling to create mass employment through manufacturing. And it faces new challenges in plotting a way forward.

Financing has tended to flow into profitable, capital intensive sectors like petrol, metal and chemicals. Industries employing large numbers of workers, like textiles and leather work, have faltered. This trend continued through the pandemic: despite Modi’s 2014 ‘Make in India’ pitch to turn the country into another factory floor for the world, manufacturing now employs around 30 million. In 2017, it employed 50 million, according to CMIE data.

As factory and private sector employment shrink, young jobseekers increasingly are targeting government jobs, coveted for their security, prestige and benefits.

Some, like 21-year-old Sahil Rajput, view such work as a way out of poverty. Rajput has been fervently preparing for a job in the army, working in a low-paid data-entry job to afford private coaching to become a soldier and support his unemployed parents.

But in June, the government overhauled military recruitment to cut costs and modernize, changing long-term postings into four-year contracts after which only 25% of recruits will be retained. That move triggered weeks of protests, with young people setting vehicles on fire.

Rajput knows he might not be able to get a permanent army job. “But I have no other options,” he said. “How can I dream of a future when my present is in tatters?”

The government is banking on technology, a rare bright spot, to create new jobs and opportunities. Two decades ago, India became an outsourcing powerhouse as companies and call centers boomed. An explosion of start-ups and digital innovation aims to recreate that success — “India is now home to 75,000 startups in the 75th year of independence and this is only the beginning,” Minister of Commerce, Piyush Goyal, tweeted recently. More than 740,000 jobs have been created via start-ups, a 110% jump over the last six years, his ministry said.

There’s still a long way to go, in educating and training a labor force qualified for such work. Another worry is the steady retreat of working women in India — from a high of nearly 27% in 2005 to just over 20% in 2021, according to World Bank data.

Meanwhile, the stopgap of farming appears increasingly precarious as climate change brings extreme temperatures, scorching crops.

Sajan Arora, a 28-year-old farmer in India’s breadbasket state of Punjab, can no longer depend on ancestral farmland his family has relied on to survive. He, his wife and seven-month-old daughter, plan to join family in Britain and find work there after selling some land.

“Agriculture has no way forward,” said Arora, saying he will do whatever work he can get, driving a taxi, working in a store or on a construction site.

He’s sad to leave his parents and childhood home behind, but believes the uncertainty of change offers “better prospects” than his current reality.

“If everything was right and well, why would we go? If we want a better life, we will have to leave,” he said.

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In Solomon Islands, Some Wary of Beijing-backed Construction

On the main street of Honiara, capital of the Solomon Islands, the Chinese presence is noticeable — some people on the street, some characters on the signs and at almost every cashier’s counter.

Locals say almost all of the grocery stores and convenience shops selling everything from snacks to electronics are owned by ethnic Chinese. In the city’s Chinatown, where three people died during riots in November that many blamed on Chinese ties, the Chinese presence is almost inescapable.

These days, some local residents are expressing dissatisfaction at what they see as China’s takeover of the Solomon Islands’ construction industry.

“A lot of Chinese firms, construction firms, have come into the country and there’s no way we can compete with them in terms of pricing,” Ricky Fuo’o, chairman of Solomon Islands Chamber of Commerce and Industry, told VOA Mandarin.

“Just the sheer size of these companies. … They are huge. So that’s one of the industries that we’ve seen that’s slowly being penetrated and taken over,” Fuo’o said.

In October 2019, the small but strategically important South Pacific island nation cut ties with Taiwan, established diplomatic relations with China, and signed agreements with China’s Belt and Road Initiative, a massive infrastructure project that is planned to stretch from Asia to Europe.

In return, China promised $730 million for financial aid, and has taken over multiple infrastructure projects in the country. Chinese state-owned enterprises (SOE) such as China Civil Engineering Construction Company (CCECC), China Railway Construction Company (CRCC) and China Harbor Engineering Company (CHEC), are building most of these projects in the Solomon Islands.

The stadium project for the 2023 Pacific Games is one example. China’s state-owned company CCECC has won five of the seven infrastructure projects for the stadium in Honiara that includes facilities to accommodate many sports. At the same time, CCECC is building half of the main road in Honiara. There’s only one road, and aJapanese company is building the other half.

Bob Pollard, managing director of the local firm, Kokonut Pacific Solomon Islands, which makes coconut oil-based personal care products, told VOA Mandarin he thinks it is unfair because local companies cannot compete with these Chinese state-owned enterprises.

“I think it’s a real concern. … I don’t think it’s a level playing field,” Pollard said. “Who knows how much subsidy they receive from the Chinese government.”

Others think China is just helping the island develop its economy. The Solomon Islands consist of six major islands and more than 900 smaller islands in Oceania, covering a land area of about 28,400 square kilometers. The country achieved independence from Britain in 1978.

“I think China is not taking over Solomon Islands. … China is developing [the] Solomon Islands and they build public facilities and so forth,” Walton Naezon, former minister for Commerce, Industries and Employment, told VOA. Naezon is now the director at Gold Ridge Mining, an open-pit mining operation about 30 kilometers outside Honiara.

“That’s a good thing for the country. I’m happy that most of the Chinese investments here are in terms of public property. They are not loans, they are grant money,” he said.

A report from the Council on Foreign Relations pointed out China’s interest in the region.

“The Chinese government views the Pacific Island region as an important component of its Belt and Road Initiative (BRI),” the report said. “Specifically, it sees the region as a critical air freight hub in its so-called Air Silk Road, which connects Asia with Central and South America.”

Although all can see China’s influence here in Honiara, few know how these Chinese companies operate.

Michelle Lam, a consultant, is an ethnic Chinese born in the Solomon Islands to Hong Kong immigrants who came to teach English in the 1960s.

“They (ethnic Chinese) are everywhere. They run the shops, they have businesses, they move around. But you can’t call them Chinese presence. I guess this is just people doing their work,” Lam told VOA. “When people talk about Chinese presence, I guess they mean the (Chinese) SOEs (state-owned enterprises) who are here to do certain work,” in the construction industry on infrastructure projects.

Lam, who previously worked at China Harbor Engineering Company, said this has to do with how the Chinese SOEs operate.

“According to them, they’re just here to do their construction work. They don’t mingle at all,” she told VOA.

“When I was with China Harbor, the camp was very tight. They bring people in to work. They (the workers) basically work, eat, sleep, work, eat, sleep. They (the company) have zero tolerance for socialization,” she added.

VOA approached staff from China Harbor and China Civil Engineering Company for interviews, but both rejected offering comments on their current projects.

Liu Ze, the secretary of the Solomon Islands Chinese Business Council, told VOA Mandarin that Chinese workers arrived more than a century ago when the nation was a British protectorate.

Five people arrived from Guangdong Province, brought in to work as cooks to work as carpenters, according to Liu. By 1914, one, Kwong Cheong, had a trading business at Tulagi, the colonial capital, according to the Solomon Encyclopedia, which states that between 1920 and 1933, the Chinese population increased from 55 to 193.

“Most of them are from China’s Guangdong Province. They came over 100 years ago with the British and expanded their businesses here in Honiara,” he said. Britain had declared a protectorate over the island mainly to forestall a threat of annexation by France.

After World War II, the Chinese community increased and in the late 1940s, 1950s and 1960s began to integrate into colonial society, took out British citizenship and came to control much of the Protectorate’s retail trade and became dominant in Honiara and the main provincial towns, according to the Solomon Encyclopedia. 

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Facebook Use Plunges Among US Teens, Survey Finds

U.S. teens have left Facebook in droves over the past seven years, preferring to spend time at video-sharing venues YouTube and TikTok, according to a Pew Research Center survey data out Wednesday.

TikTok has “emerged as a top social media platform for U.S. teens” while Google-run YouTube “stands out as the most common platform used by teens,” the report’s authors wrote.

Pew’s data comes as Facebook-owner Meta is in a battle with TikTok for social media primacy, trying to keep the maximum number of users as part of its multibillion-dollar, ad-driven business.

The report said some 95% of the teens surveyed said they use YouTube, compared with 67% saying they are TikTok users.

Just 32% of teens surveyed said they log on to Facebook — a big drop from the 71% who reported being users during a similar survey some seven years ago.

Once the place to be online, Facebook has become seen as a venue for older folks with young drawn to social networks where people express themselves with pictures and video snippets.

About 62% of the teens said they use Instagram, owned by Facebook-parent Meta, while 59% said they used Snapchat, researchers stated.

“A quarter of teens who use Snapchat or TikTok say they use these apps almost constantly, and a fifth of teen YouTube users say the same,” the report said.

In a bit of good news for Meta’s business, its photo and video sharing service Instagram was more popular with U.S. teens than it was in the 2014-2015 survey.

Meanwhile, less than a quarter of the teens surveyed said they ever use Twitter, the report said.

The study also confirmed what casual observers may have suspected: 95% of U.S. teens say they have smartphones, while nearly as many of them have desktop or laptop computers.

And the share of teens who say they are online almost constantly has nearly doubled to 46 percent when compared with survey results from seven years ago, researchers noted.

The report was based on a survey of 1,316 U.S. teens, ranging in age from 13 years old to 17 years old, conducted from mid-April to early May of this year, according to Pew.

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Race for Semiconductors Influences Taiwan Conflict 

China has blocked many of Taiwan’s exports in retaliation for U.S. House Speaker Nancy Pelosi’s visit to Taiwan on August 2, but certain goods including semiconductors and high-tech products have been spared because of China’s reliance on those products from Taiwan, experts say.

“It is unlikely that Beijing will take serious trade actions against electronic exports from Taiwan. Doing so would be China shooting itself in its own foot,” Dexter Roberts, a senior fellow at the Atlantic Council, told VOA.

Taiwan makes 65% of the world’s semiconductors and almost 90% of the advanced chips.

By comparison, China produces a little over 5% while the U.S. produces approximately 10%, according to market analysts. South Korea, Japan, and the Netherlands are the other sources of the product, which is at the heart of many electronic devices and machinery.

Though China produces some semiconductors, it depends heavily on supplies from Taiwan for advanced chips. Taiwan’s TSMC makes most of the advanced chips in the world and counts Advanced Micro Devices, Apple and Nvidia among its customers.

Semiconductor Manufacturing International Corp. (SMIC) in China, which has 5% of the global fabrication market, produces 14-nanometer chips. There is also evidence that SMIC has 7-nm technology, according to a TechInsights blog. These are considered less advanced than the 3-nm chips produced by TSMC.

Beijing may not block the flow of semiconductors even if the military confrontation escalates, analysts say.

“Taiwan-based TSMC is the biggest world producer of chips, and China and the rest of the world need TSMC semiconductors. Hence, I don’t expect China to target electronic exports,” said Lourdes Casanova, Gail and Rob Canizares director of the Emerging Markets Institute at Cornell University.

Though China’s People’s Liberation Army says it is rehearsing to impose a military blockade around Taiwan, it will be careful not to hurt semiconductor companies like TSMC, Casanova said.

“The stoppage of supply of TSMC semiconductors would be the worst scenario for China and for many other countries. TSMC’s semiconductors are used by Foxconn, another Taiwanese firm, which is the main manufacturer of the iPhone in plants based in China and elsewhere,” she said.

Fear of invasion

A military invasion of Taiwan could disrupt supplies of semiconductors and seriously hamper dozens of high-tech companies that depend on them. TSMC Chairman Mark Liu voiced that fear when he said a military invasion would make TSMC factories inoperable.

“Our interruption would create great economic turmoil in China — suddenly their most advanced component supply disappears. It is an interruption, I must say, so people will think twice on this,” Liu said.

“Nobody can control TSMC by force … because it is a sophisticated manufacturing facility that depends on the real-time connection with the outside world,” such as Europe, the U.S. and Japan, for materials, chemicals and engineering software, he said.

Even with China’s ban on certain imports from Taiwan, analysts said, Taiwan is unlikely to retaliate because it is heavily dependent on Beijing in terms of trade and investment.

“Companies like TSMC are deeply reliant simultaneously on both the U.S. and China markets. Unless the situation in the Taiwan Strait badly deteriorates and turns to outright open hostilities, Taiwan will try to avoid taking any drastic action which would be cutting off chips to China,” said Roberts, author of The Myth of Chinese Capitalism.

 

China’s domestic manufacturing

China has been pushing to boost its domestic semiconductor manufacturing capacity. Beijing has pledged $150 billion to expand the industry and be more self-reliant. Plans are in place for new semiconductor factories.

Just last year, China’s chip manufacturing grew by 33.3%, according to China’s National Bureau of Statistics.

“China’s rapid growth in semiconductor chip sales is likely to continue due in large part to the unwavering commitment from the central government and robust policy support in the face of deteriorating U.S-China relations,” the Semiconductor Industry Association said in a blog.

Much of what will be produced in China is expected to be chips containing more mature technologies, analysts say.

US action

Under President Joe Biden, the U.S. has intensified efforts to strengthen its chip-making capabilities and reduce the reliance on external sources.

On Tuesday, Biden signed the much-awaited CHIPS and Science Act, which allocates around $52 billion to promote the production of microchips, the powerful driver for high-end electronics used in a wide range of products, including smartphones, electric vehicles, aircraft and military hardware.

Biden said the legislation would help “win the economic competition in the 21st century.”

U.S. Commerce Secretary Gina Raimondo said last month that it was necessary to reduce the dependence on supplies from Taiwan.

“Our dependence on Taiwan for chips is untenable and unsafe,” she said on July 22. “This is a Sputnik moment for America,” Raimondo said, referring to the CHIPS Act. “I mean that very sincerely. And this is a project we’re working on.”

Taiwan’s TSMC website states it is building a fabrication plant in the U.S. state of Arizona with the aim of starting production in 2024. It will produce semiconductor wafers using 5-nm technology.  During her recent controversial visit to Taiwan, Pelosi met TSMC’s Liu. TSMC is expected to be one of the beneficiaries of the $52 billion CHIPS and Science Act.

The U.S. is also countering China’s semiconductor industry in different ways. It recently broadened its ban on sales of chip-making equipment to China, according to Tim Archer, the chief executive officer of Lam Research Corp., a California supplier of silicon wafer fabrication gear.

The restriction would affect the shipment of machinery to produce 14 nm chips in China. This is an extension of the earlier ban, which prevented the supply of machinery for making advanced technology nodes of 10 nanometers. The idea is to cover a wider range of semiconductor equipment going to China.

South Korea, a U.S. ally, has indicated it would also cut off the chip supply to China in case Washington imposed global sanctions on it. Cutting off supplies would put China and Russia at a major technological disadvantage and hamper their manufacture of advanced military hardware. 

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US Inflation Slips From 40-Year Peak but Remains High 8.5% 

Falling gas prices gave Americans a slight break from the pain of high inflation last month, though the surge in overall prices slowed only modestly from the four-decade high it reached in June. 

Consumer prices jumped 8.5% in July compared with a year earlier, the government said Wednesday, down from a 9.1% year-over-year jump in June. On a monthly basis, prices were unchanged from June to July, the smallest such rise more than two years. 

Still, prices have risen across a wide range of goods and services, leaving most Americans worse off. Average paychecks are rising faster than they have in decades — but not fast enough to keep up with accelerating costs for such items as food, rent, autos and medical services. 

Last month, excluding the volatile food and energy categories, so-called core prices rose just 0.3% from June, the smallest month-to-month increase since April. And compared with a year ago, core prices rose 5.9% in July, the same year-over-year increase as in June. 

President Joe Biden has pointed to declining gas prices as a sign that his policies — including large releases of oil from the nation’s strategic reserve — are helping lessen the higher costs that have strained Americans’ finances, particularly for lower-income Americans and Black and Hispanic households. 

Yet Republicans are stressing the persistence of high inflation as a top issue in the midterm congressional elections, with polls showing that elevated prices have driven Biden’s approval ratings down sharply. 

On Friday, the House is poised to give final congressional approval to a revived tax-and-climate package pushed by Biden and Democratic lawmakers. Economists say the measure, which its proponents have titled the Inflation Reduction Act, will have only a minimal effect on inflation over the next several years. 

While there are signs that inflation may ease in the coming months, it will likely remain far above the Federal Reserve’s 2% annual target well into next year or even into 2024. Chair Jerome Powell has said the Fed needs to see a series of declining monthly core inflation readings before it would consider pausing its rate hikes. The Fed has raised its benchmark short-term rate at its past four rate-setting meetings, including a three-quarter point hike in both June and July — the first increases that large since 1994. 

A blockbuster jobs report for July that the government issued Friday — with 528,000 jobs added, rising wages and an unemployment rate that matched a half-century low of 3.5% — solidified expectations that the Fed will announce yet another three-quarter-point hike when it next meets in September. Robust hiring tends to fuel inflation because it gives Americans more collective spending power. 

One positive sign, though, is that Americans’ expectations for future inflation have fallen, according to a survey by the Federal Reserve Bank of New York, likely reflecting the drop in gas prices that is highly visible to most consumers. 

Inflation expectations can be self-fulfilling: If people believe inflation will stay high or worsen, they’re likely to take steps — such as demanding higher pay — that can send prices higher in a self-perpetuating cycle. Companies then often raise prices to offset higher their higher labor costs. But the New York Fed survey found that Americans’ foresee lower inflation one, three and five years from now than they did a month ago. 

Supply chain snarls are also loosening, with fewer ships moored off Southern California ports and shipping costs declining. Prices for commodities like corn, wheat and copper have fallen steeply. 

Yet in categories where price changes are stickier, such as rents, costs are still surging. One-third of Americans rent their homes, and higher rental costs are leaving many of them with less money to spend on other items. 

Data from Bank of America, based on its customer accounts, shows that rent increases have fallen particularly hard on younger Americans. Average rent payments for so-called Generation Z renters (those born after 1996) jumped 16% in July from a year ago, while for baby boomers the increase was just 3%. 

Stubborn inflation isn’t just a U.S. phenomenon. Prices have jumped in the United Kingdom, Europe and in less developed nations such as Argentina. 

In the U.K., inflation soared 9.4% in June from a year earlier, a four-decade high. In the 19 countries that use the euro currency, it reached 8.9% in June compared with a year earlier, the highest since record-keeping for the euro began. 

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Biden Signs Semiconductor Bill Boosting US Competitiveness

U.S. President Joe Biden has signed the CHIPS and Science Act, which aims to boost U.S. competitiveness against China by allocating billions of dollars toward domestic semiconductor manufacturing and scientific research.

“The United States must lead the world in the production of these advanced chips. This law will do exactly that,” Biden said in remarks during the signing ceremony Tuesday. The president is recovering from COVID-19 and coughed repeatedly during his remarks.

He called the bipartisan legislation a “once in a generation investment” in the country and said it will create good jobs, grow the economy and protect U.S. national security.

Biden noted stiff competition with China in the chips industry. “It’s no wonder the Chinese Communist Party actively lobbied U.S. business against this bill,” he remarked.

Biden was joined on stage for the event by House Speaker Nancy Pelosi, Senate Majority Leader Charles Schumer, Commerce Secretary Gina Raimondo, and Joshua Aviv, CEO of Spark Charge, an electric vehicle charging network.

Schumer called the legislation the “largest investment in manufacturing science and innovation in decades” and thanked Republican Senator Todd Young for his partnership for over three years working on semiconductor-related legislation, beginning with what was then called the Endless Frontier Act.

The proposed act went through various iterations before it was passed as the $280 billion CHIPS and Science Act on a 243-187 vote in the House of Representatives and a 64-33 vote in the Senate in July.

Last year, a semiconductor shortage affected the supply of automobiles, electronic appliances and other goods, causing higher inflation globally and pummeling Biden’s public approval rating among American voters.

Catching up in the chips race

The CHIPS Act includes $52 billion in incentives for domestic semiconductor production and research, as well as an investment tax credit for semiconductor manufacturing. Advocates say it will allow the U.S. to catch up in the global semiconductor manufacturing race currently dominated by China, Taiwan and South Korea.

Following the passage of the bill, the White House noted that Micron, a leading U.S. chip manufacturer, will announce a $40 billion plan to boost domestic chip production while Qualcomm and GlobalFoundries will unveil a $4.2 billion expansion of a chip plant in New York.

The U.S. share of global semiconductor manufacturing capacity has decreased from 37% in 1990 to 12% today, largely because other governments have offered manufacturing incentives and invested in research to strengthen domestic chipmaking capabilities, according to a state of the industry report by the Semiconductor Industry Association.

Now China accounts for 24% of the world’s semiconductor production, followed by Taiwan at 21%, South Korea at 19% and Japan at 13%, the report said.

The CHIPS Act also includes $4.2 billion to fund defense initiatives and the U.S. mobile broadband market, particularly efforts to promote non-Chinese 5G equipment manufacturing.

Broadly, the legislation lays out a strategy for Washington as it aims for global technological and economic dominance – gaining production autonomy by leveraging allies, including South Korea and Japan and eliminating political dependencies on the global semiconductor supply chain.

That strategy puts the U.S. on a collision course with China, which also aims to be the global leader in semiconductors. In 2015, Beijing launched the Made in China 2025 project, which aimed to increase chip production from less than 10% of global demand at the time to 40% in 2020 and 70% in 2025.

The Taiwan factor

Taiwan — a self-governed island that Beijing claims to be its breakaway province — is the main producer of the world’s most high-tech chips. It lies at the heart of the semiconductor showdown, the latest battlefront in the increasingly tense U.S.-China strategic rivalry.

Taiwan accounts for 92% of the global production of 10 nm or smaller semiconductors, essentially creating what some observers have characterized as a “silicon shield” that ensures American support in the event of a Chinese attack, as well as a deterrence against such a move.

In a visit to Taipei that angered Beijing earlier this month, U.S. House Speaker Nancy Pelosi met with Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co., the world’s biggest chipmaker.

Pelosi delivered all but one Democratic vote in the House of Representatives for the CHIPS Act. “Mr. President with the stroke of your pen, America declares our economic independence,” she said in her remarks Tuesday. “We strengthen our national security, and we enhance our family’s financial future.”

Following Pelosi’s Taiwan visit, Beijing halted key communication channels with Washington and conducted live-fire military drills, raining Dongfeng ballistic missiles into the waters near Taiwan’s eastern, southern, and northern coasts.

While most experts don’t believe a war over Taiwan is imminent, many fear a conflict there would disrupt semiconductor production and have disastrous effects on global manufacturing.

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Australia to Permit Offshore Wind Farms 

Offshore wind farms are to be permitted for the first time in Australia. The Climate Change Minister Chris Bowen has declared part of the Victoria coast an offshore wind zone and a 60-day community consultation process will soon begin.

The Australian government has designated the country’s first offshore wind zone, which gives developers permission to increase their planning and consultation for wind farm projects.

Australia currently has no offshore wind generation, which was seen as too expensive and hard to build compared to onshore wind or solar projects.

The Climate Change Minister Chris Bowen says there is no time to lose.

“We are way behind the game, way behind the rest of the world in producing wind off our coastline. Again, we have a lot of catching up to do. Offshore wind is jobs-rich and energy-rich,” he said.

The first official offshore wind zone is off the Gippsland coast in the state of Victoria. There are plans to install up to 200 wind turbines, with the closest located 7 kilometers from the coastline. It would be one of the world’s largest wind farms. Construction could begin in 2025.

Other areas will follow off the coasts of New South Wales, Tasmania and Western Australia.

Erin Coldham, the acting chief executive of the Danish-owned Star of the South wind project in the Bass Strait in Victoria, says the project will help reduce Australia’s reliance on fossil fuels.

“In the region where we are looking to put a project in Gippsland, it is a region that has been generating power for over 100 years and been working in the offshore oil and gas business. But those communities know those opportunities will not be around forever. So, there is a really strong sense of enthusiasm for technologies like offshore wind to continue that tradition into the future,” said Coldham.

Wind turbines have been identified as a key part in Australia’s plan to generate more than 80% of its energy needs with renewable sources by 2030.

In 2020, 24% of Australia’s electricity came from renewable energy, up from 21% in 2019.

Solar is Australia’s largest source of green power. A quarter of Australian homes have rooftop solar systems — the highest uptake in the world.

But despite this, Australia has been one of the world’s worst per capita emitters of greenhouse pollution. Coal and gas still generate most of its electricity. Analysts have said that for years it has been regarded as a climate laggard.

But that perception is now changing.

For the first time, Australia has a legislated target to cut greenhouse gas output.

Last week, new laws were passed by the federal parliament in Canberra that will cut carbon emissions by 43% by 2030.

 

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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.

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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.”

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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.

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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.

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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.

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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.

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