The Week in Business: Taking On Inflation
Central banks in the United States, Britain and the European Union took measures to address rapidly rising prices.,
What’s Up? (Dec. 12-18)
Central Banks Act on Inflation
The Federal Reserve signaled on Wednesday that it would take more serious measures to address rapidly rising inflation. The central bank said it would speed up its plans to ease pandemic support measures, by ending its bond-buying program in March. In a new set of economic projections, Fed officials said they expected to raise interest rates three times next year. The Fed is one of several central banks to announce they would tweak their monetary policy in response to high inflation this week: The European Central Bank announced on Thursday that it would also end its pandemic-era bond-buying program in March, and the Bank of England voted to raise its interest rate.
Omicron Leads to Added Precautions
As the United States passed 800,000 deaths from Covid-19, the Centers for Disease Control and Prevention warned on Tuesday that a significant surge in cases driven by the Omicron variant could arrive as soon as next month. Already, the average number of cases per day has risen by 40 percent from two weeks ago, according to a New York Times database. In response to the new threat, companies announced additional precautions last week and pulled back on plans to return to prepandemic working conditions. Conferences scheduled to take place in person moved to virtual platforms, and holiday parties were canceled. Google set deadlines for complying with its vaccine mandate. Apple delayed its return-to-office date to “indefinite.” The National Football League, The Metropolitan Opera and The Washington Post set new rules requiring all or some employees to receive booster shots. The good news? New studies suggest that vaccines, especially boosters, offer substantial protection against the Omicron variant.
Officials Examine Amazon’s Warehouse Collapse
Federal and state regulators said they would investigate the collapse of an Amazon delivery station in Illinois that a tornado struck this month, killing six people. The investigations will focus on the building’s construction and Amazon’s adherence to safety regulations. But the incident also highlighted an aspect of Amazon’s labor model. Only seven people who worked at the facility were full-time Amazon employees, a county commissioner told The Times. The other 102 people who worked at the facility across all of its shifts were employed by contractors for Amazon. This system allows Amazon to more easily shrink and expand its work force as needed, as well as avoid some of the liability and risks of hiring employees directly. In this case, it may have also complicated rescue plans: The police chief in Edwardsville, Ill., said that the model made it challenging to know how many workers were in the building when it collapsed.
What’s Next? (Dec. 19-25)
Holiday Travel Takes Off
Over the Thanksgiving holiday, travel rebounded close to prepandemic levels. The emergence of the Omicron variant and the new risk calculus it brings have not dashed the travel industry’s hopes for a second busy holiday season from Christmas through Jan. 2. The AAA predicts that more than 109 million people will travel more than 50 miles from their homes, a 34 percent increase from 2020. And Delta Air Lines and United Airlines both said last week that they expected strong demand for the end of December.
Shopping Season Could Test Retailers
We’re close to the end of an unusual shopping season. Retail sales were up for the fourth straight month in November, according to new data released last week, but they grew more slowly than in October. Analysts said that the sluggish growth in November might mean that consumers got an early start on gift buying before Thanksgiving amid news of supply chain shortages and rising inflation. The bigger test for retailers may arrive when it comes time for gift recipients to return the gifts that aren’t to their liking. With shortages, inflation and Covid precautions, retailers face rising costs in processing those returns.
Student Loan Repayment Resumes
For nearly two years, most federal student loan payments have been on pause because of the pandemic. But in February, almost 27 million borrowers will be expected to begin making payments again. Those who can’t pay can request deferment or forbearance to temporarily put payments back on hold. And those who made automatic payments before Covid-19 shouldn’t count on their automatically restarting — they’ll need to opt back in.
What is inflation? Inflation is a loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation costs and toys.
Reddit confidentially filed for a public offering of its stock. Lawyers in the Elizabeth Holmes trial concluded their closing arguments. The electric vehicle maker Rivian is building a $5 billion factory in Georgia. And the World Economic Forum says its annual gathering of the global elite in Davos, Switzerland, is still on for next month.