Thursday, June 17, 2021

Evening Sunset

Explosions lit-up the night sky at Khan Yunis in the southern Gaza Strip, as Israeli forces shell the Palestinian enclave, early on June 16, 2021.
Explosions lit-up the night sky at Khan Yunis in the southern Gaza Strip, as Israeli forces shell the Palestinian enclave, early on June 16, 2021 (SAID KHATIB/AFP via Getty Images)

What a magical sight that was visible over New England skies Thursday if you were outside, and later that evening the moon came out.

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They were greeted by Thomas R. Nides, a former State Department official who was nominated by Biden to serve as the ambassador to Israel.

Time to come back down to Earth:

"NEWS ANALYSIS: Is it time to worry about inflation? Some experts say the rising prices will be short-lived" by Jim Puzzanghera Globe Staff, June 16, 2021

WASHINGTON — The unsettling headlines about surging prices arrive almost daily:

Biggest 12 month inflation spike since 2008. Rising airfares and hotel rates are making vacations more expensive. Car prices are soaring and they’re not going to stop. Sky high prices for homes may be scaring off buyers.

A blast of economic activity triggered by the end of COVID restrictions has sent prices for a variety of products and services skyward. High inflation could derail the recovery, and, in an unlikely worst-case scenario, bog down the economy for years as it did in the 1970s and early 1980s.

It’s enough to cause a nervous consumer’s blood pressure to jump like the price of lumber, which, by the way, was up 15.5 percent last month, but don’t freak out — yet.

[It's a good thing!]

While economists are becoming more concerned about the potential for prolonged high inflation, many still expect the price spikes are a temporary result of surging consumer spending — fueled in part by government stimulus money — causing short-term bottlenecks in supply chains. There’s already evidence this is happening, with some commodity prices coming back down to earth.


Where and for what?]

Officials in the Biden administration and at the Federal Reserve share that view and assert that the high inflation will be short-lived; nonetheless, Powell and other Fed monetary policy makers on Wednesday significantly upped their inflation projection for this year to 3.4 percent, and indicated they could start increasing a key interest rate sooner than expected to slow economic growth; however, Powell noted that by next year Fed officials believe inflation will settle at 2.1 percent, just slightly above the central bank’s ideal level, but, if it continues to run high, Powell said the Fed “wouldn’t hesitate to use our tools to address that.”

In the meantime, the rapidly rising prices are tough to swallow — and some people are getting worried.

Consumers expect inflation to be much worse a year from now. Paul Turano, owner and executive chef of Cook restaurants in Newton and Needham, said, “We’re paying everyone more and our profits are even less than they were before, which were low. Things have just gotten so insane.”

Economists had warned that inflation would jump in the short term as vaccinations increased, the economy began to reopen, and Congress enacted a $1.9 trillion COVID rescue bill in March.

One reason for that jump is a statistical anomaly: comparisons to last year are skewed because prices plummeted when the nation locked down. They were up 24.1 percent in May from a year earlier, but are still below their average level in February 2020.

“As the economy’s opening back up again, prices are now moving back toward normal levels in leisure, hospitality, airfares, and the like,” Treasury Secretary Janet Yellen said at a Senate Finance Committee hearing Wednesday. Still, she conceded inflation this year would be higher than the administration’s earlier estimate of 2 percent, and although Yellen continues to believe the price increases are temporary, she promised “we’re going to monitor this very, very carefully.”

Getting the economy back to full speed, particularly with pent-up demand and extra savings after a year when many Americans were stuck at home, presents unprecedented obstacles, said Mark Zandi, chief economist at Moody’s Analytics, an economics research and consulting firm.

“Demand picks up faster than the supply side of the economy can respond,” he said. “Nobody likes to pay more for a car or for groceries or a new computer. . . . It’s not desirable, but it’s understandable.”

Ramping up production can be difficult. A global shortage of computer chips stalled new production of automobiles, causing buyers to turn to used cars. Those prices jumped 9.6 percent in April and 6.5 percent last month.

The lumber industry shows the complexities of restarting the economy. Sawmills shut down because of the pandemic and prices jumped last summer as locked-down Americans took on home-improvement projects, increasing demand for soft wood such as 2-by-4 boards, said Shawn Church, editor of the industry trade journal Fastmarkets Random Lengths.

Then demand for new homes in the suburbs and exurbs picked up, causing supply shortages for the soft wood used to build housing frames. The publication’s framing composite index, which has tracked prices since the 1970s, posted a record increase the first week of May, Church said. The National Association of Home Builders estimated this spring that the high prices increased the cost of the average new single family home by nearly $36,000.

As bottlenecks eased, soft wood lumber prices have tumbled; last week, the index saw a record decline. Meanwhile, demand has jumped for the structural panels also used in home building. Accordingly, the Fastmarkets Random Lengths price index for those products hit a record high last week.

“It’s significant inflation in the building materials area,” said Mike Procopio, chief executive of The Procopio Companies, a developer in Lynnfield. “It’s absolutely crazy.”

If these price spikes do not end up being temporary, President Biden’s congressional agenda may end up in the crossfire. Former treasury secretary Larry Summers and some other economists warned the $1.9 trillion rescue package risked high inflation by pumping too much money into the economy. Now, Senate minority leader Mitch McConnell and his Republican colleagues are using rising inflation to argue against Biden’s proposals to spend another $4 trillion on infrastructure, child care, and education over eight years.

[What do you mean IF?]

Douglas Holtz-Eakin, president of the conservative-leaning American Action Forum think tank, said the Biden administration might want to push more of the spending from those proposals out into future years to avoid adding to inflation pressures. He wasn’t particularly worried about inflation in March, but is now more concerned in light of recent economic data.

“It’s certainly stronger than I expected, so I am watching it,” said Holtz-Eakin, a former director of the Congressional Budget Office. “We will know in a few months if it’s largely transitory.”

Your bonus will be worth le$$, but....


"The Federal Reserve expects inflation will climb to 3.4 percent this year, higher than the central bank’s previous forecasts, while also projecting for the first time that there could be two interest rate hikes in 2023. The predictions, released Wednesday after the Fed’s two-day policy meeting, depict a delicate but mostly upbeat narrative of where central bankers think the economy is headed, as well as a serious revamp of predictions from just three months earlier; however, the Fed also expects that the labor market will keep building strength, and while the central bank isn’t ready to stem inflation by raising interest rates just yet, Chair Jerome H. Powell sent the message that the Fed is keeping a close eye on inflation. Recent benchmarks have shown an increase in consumer prices, including for products like used cars and lumber; however, officials from the Fed and the Biden administration say those increases are largely expected as the economy emerges from the sharp, pandemic-induced downturn, when prices dropped. On Wednesday, Powell said he expected certain categories — like planes, hotels and lumber — would see their prices simmer down over time. “We expect those prices will get back up to where they were, but there’s no reason to think they‘re going to keep going up a lot,” Powell said. “Because if they are, people will build new hotels; there’s no reason for supply and demand to be out of whack in the hotel business over any period of time,” however, Republican lawmakers argue that the Fed could lag behind the curve when it decides to raise interest rates and that inflation could jump to dangerous levels in the meantime. “We are seeing substantial increases in inflation, which means the prices of everyday goods are going up for families in Florida and across the nation,” Sen. Rick Scott (R-Fla.) said. “Government shouldn’t work this way.”

And yet it does, what babble is Powell talking about, and when was it exactly when prices went down because they never did around here?

Prices haven't returned to where they were, they are up dramatically because of all the money-printing!

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"Home prices around Boston may be getting so high that they are scaring some prospective buyers away, a real estate trade group said Wednesday, pointing to signs that the blistering seller’s market is softening modestly after months of rising values. Dino Confalone, an agent with Gibson Sotheby’s International Realty in Cambridge and the GBAR’s president, said foot traffic has been dropping at open houses in recent weeks as house-hunters opt to extend their leases or delay their searches until the market delivers more-affordable options. “For now, demand remains strong with lots of millennials entering their peak homebuying years, but affordability is becoming more of a factor in our market as prices continue to rise and mortgage rates start to creep up,” he said in a news release. Even if the market may be cooling slightly, the realtor’s association said, underlying factors driving the recent surge in values remain in place. Inventory is lower than usual, even as demand has been boosted by a rebounding economy and a general desire for more space. The trend is especially pronounced when it comes to single-family homes. The inventory of condos has risen, on the other hand, and overall, Confalone expects prices “to ease in the second half of the year, as the current level of activity isn’t sustainable long-term. We’re already seeing homes with inflated values sitting longer and undergoing price adjustments,” Confalone said. “Properties should be fairly priced, in excellent condition, and have a desirable location to sell quickly, even in today’s seller’s market.”

"A group of pro-development forces, led by one of Boston’s biggest construction unions, is marshaling resources and at least $500,000 to try to influence the mayoral race, in which housing has emerged as a major issue with little consensus on how to tackle it. Notably, the Responsible Development Coalition, as the group calls itself, is not immediately endorsing a candidate in the six-way race, and may never. Instead, the Dorchester-based North Atlantic States Regional Council of Carpenters and its developer partners have formed the coalition to launch a slate of television, radio, and digital ads urging candidates to sign a pledge to support “responsible real estate development . . . crucial to our future, our economy and collective quality of life.” The group’s formation underscores a sea change from the last open mayoral race, in 2013, when labor groups largely coalesced around Martin J. Walsh, a former head of the Building and Construction Trades Council, in his successful campaign. Over the next seven years, Walsh retained the loyalty of construction unions while also winning broad support from developers as he oversaw the construction of 30,000 new units of housing and millions of square feet in office and lab space. Still, rents and home prices here remain among the highest in the nation....."

Then the state will have to seize the property:

"Governor Charlie Baker on Wednesday signed legislation that will allow restaurants to sell to-go cocktails until next May, extend certain protections around evictions, and keep in place a series of pandemic-era rules that had expired, or were slated to, with the end of the COVID-19 state of emergency. The Legislature scrambled to pass a compromise version of the bill roughly 20 hours after Massachusetts’s emergency lifted just after midnight Tuesday, allowing some rules to lapse. The 14-page law allows restaurants to sell to-go beer, wine, and cocktails through May 1, 2022, and requires they be sold at the same prices as those consumed on-site. It provides another boost for restaurants by extending the time towns and cities could allow for expanded outdoor dining at restaurants — which had been slated to end in mid-August — until April 1, 2022. It also allows town councils, state boards, and other bodies to continue to hold remote public meetings, which many have continued to do as millions of people have become vaccinated, until April 1, 2022. Town meetings can be held remotely until Dec. 15, 2021. The law also temporarily keeps in place measures designed to protect renters....."

Which means they can't be evicted for non-payment, and how will the property owner explain that to the bank?

Time for dinner:

"US producer prices for processed poultry jumped to an all-time high in May, climbing 2.1 percent in the eighth straight monthly increase, US government data showed Tuesday. The surge comes after several large fast-food restaurant chains recently launched fried-chicken sandwiches in a bid to match Popeyes’ 2019 viral success. Sales have also surged with consumers preparing more meals at home during the pandemic; meanwhile, poultry producers have struggled to keep up with the growing demand, with labor shortages at meat plants and severe winter storms that killed thousands of birds constricting chicken supplies."

Preparing you for the famine they will toast:

"Salaries and bonuses paid to Heineken managers may soon depend on how committed they are to fighting climate change as the world’s second-largest brewer searches for ways to meet its 2040 net-zero emissions goal. Companies are increasingly under pressure from board members, investors, and customers to prove they’re taking meaningful steps to lessen their impact on the planet. Experts say linking executive pay is a key step to incentivize corporate management to meet climate goals. About 90 percent of Heineken’s emissions come from suppliers, packaging, and the logistics of storing and transporting its beer. The remainder is generated when producing the beverage."

Bottoms up and let's bring back Prohibition -- for the sake of the planet!