The Federal Reserve’s vice chair said central bankers could soon begin to talk about how to begin dialing back their monetary policy support for the economy, even as he and several of his colleagues reiterated on Tuesday that they expected a recent pop in inflation to prove temporary.
The Fed has been buying $120 billion in government-backed bonds each month in addition to holding its main policy interest rate at near-zero. Together, the policies are meant to keep many types of borrowing cheap, stoking consumer and business spending and helping the economy recover from the pandemic downturn.
Fed officials have said they need to see “substantial” further progress toward their goals — inflation that averages 2 percent over time and full employment — before slowing down the bond purchases. That standard seems to be creeping closer. Minutes from their April meeting showed that a “number” of policymakers said that “if the economy continued to make rapid progress,” it might be appropriate to soon begin discussing a plan for tapering their purchases. Richard H. Clarida, the Fed’s vice chair, echoed that in an interview on Yahoo Finance on Tuesday.
“It may well be the time — that there will come a time in upcoming meetings, we’ll be at the point where we can begin to discuss scaling back the pace of asset purchases,” Mr. Clarida said. “Again, I think it’s going to depend on the flow of data that we get.”
Data since the Fed’s April meeting has offered conflicting signals, and Mr. Clarida said officials were trying to understand what was happening in the economy at a complicated moment. More than eight million jobs are missing compared with before the pandemic, but inflation has moved up faster than economists estimated, in what the Fed vice chair called an “unpleasant surprise.” He and his colleagues have repeatedly said they expect that pop to be short-lived as supply catches up with demand, but they are watching closely to make sure.
“It’s going to take some time to get a clearer sense of how supply and demand will balance,” Mr. Clarida said, later adding that “we need to be humble.”
Randal K. Quarles, the central bank’s vice chair for supervision, also said on Tuesday that the recent pickup in inflation is likely to fade with time, as did the Chicago Fed president, Charles Evans.
“It remains my view, and the general Fed view, that these pressures are most likely to be transitory,” Mr. Quarles told the Senate Banking Committee earlier in the day, adding that if that view is wrong, the Fed has the tools to react.
The Biden administration said on Tuesday that it had requested the establishment of a panel to address a dispute over American dairy exports to Canada, an early attempt by the United States to enforce the terms of the updated North American trade deal.
The request stems from a challenge announced in December by the Trump administration, which accused Canada of improperly limiting the ability of the American dairy industry to sell its goods into Canada.
The Trump administration had highlighted the trade deal, known as the United States-Mexico-Canada Agreement, as a victory for American dairy farmers, who stood to gain increased access to the Canadian market. Enabling exports of U.S. milk and other dairy products to Canada was a key issue in negotiations over the trade deal, with the Trump administration threatening to leave Canada out of the North American pact if it did not allow access.
The final agreement opened the Canadian market to more exported American dairy products, and it included a concession by Canada to jettison a program that helped Canadian sellers of certain milk products, both domestically and abroad.
But the Biden administration said that consultations with Canada over the challenge announced in December had not been successful in resolving the dispute.
“A top priority for the Biden-Harris administration is fully enforcing the U.S.M.C.A. and ensuring that it benefits American workers,” Katherine Tai, the United States trade representative, said in a statement, referring to the trade deal by its initials. “Launching the first panel request under the agreement will ensure our dairy industry and its workers can seize new opportunities under the U.S.M.C.A. to market and sell U.S. products to Canadian consumers.”
Mary Ng, Canada’s minister of small business, export promotion and international trade, said in a statement that Canada was “disappointed that the United States has requested a dispute settlement panel.”
Under the trade deal, she said, “Canada agreed to provide some additional market access to the United States for dairy while successfully defending our supply management system and dairy industry.” She added that Canada was “confident that our policies are in full compliance” with the pact.
Fox News entered the streaming video market in November 2018 with Fox Nation, a digital subscription service that now encompasses hundreds of hours of original programming including political commentary, documentaries and travel specials like “Castles USA,” in which the host Jeanine Pirro tours castles around the country.
Until now, the network had resisted rebroadcasting its marquee prime-time shows on the streaming service. That is set to change next week, in a significant shift in digital strategy for the Rupert Murdoch-owned channel.
Starting June 2, episodes of “Tucker Carlson Tonight,” “Hannity” and “The Ingraham Angle” will be available on demand on Fox Nation the day after they are shown live on cable. The shift “will add incredible value for subscribers,” Fox Nation’s president, Jason Klarman, said in a statement on Tuesday.
Fox News had reasons to initially avoid duplicating its traditional TV programming on Fox Nation. The channel earns significant revenue from cable distributors that pay to carry Fox News. And the network has the largest total weeknight audience in cable news; viewers who switch over to watch the programs on Fox Nation will not be counted by Nielsen.
Other networks, though, have seen benefits from making their cable programs available in digital venues. The shows can attract new subscribers and widen their viewership to the younger audiences that prefer streaming services.
A monthly subscription to Fox Nation costs $6. The network has declined to share its total number of subscribers. Lachlan Murdoch, the executive chairman of the Fox Corporation, said on a recent earnings call that the first quarter of 2021 had generated Fox Nation’s “highest number of customer acquisitions since launch.”
The District of Columbia, in what is believed to be the first government antitrust suit against Amazon in the United States, claimed in a complaint on Tuesday that the giant online marketplace is artificially raising prices for products by abusing its monopoly power.
Here is the full story by The New York Times’s David McCabe, Karen Weise and Cecilia Kang.
What D.C. says
“Amazon has used its dominant position in the online retail market to win at all costs,” said Karl Racine, the attorney general for the District of Columbia. “It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation and illegally tilting the playing field in its favor.”
What Amazon says
Mr. Racine “has it exactly backwards — sellers set their own prices for the products they offer in our store,” Jodi Seth, a spokeswoman for Amazon, said in a statement. She added that Amazon reserved the right “not to highlight offers to customers that are not priced competitively.”
The big picture
Amazon has attracted attention from critics because of the sweeping nature of its business. It operates a dominant web hosting operation and a streaming platform that competes with Netflix and Hulu, and it expanded into brick-and-mortar grocery stores with the 2017 acquisition of Whole Foods. But the lawsuit filed by Mr. Racine, a Democrat, concerns the core of its business: the online marketplace for outside merchants that accounts for more than half of the products it sells.
More airlines responded on Tuesday to the brazen decision over the weekend by Belarus’s president to force a commercial flight to land in an effort to arrest a dissident journalist.
Fallout was swift as the country’s strongman president, Aleksandr G. Lukashenko, drew reprimands and flight bans from countries and airlines around the world.
The European Union on Monday called on airlines based in the bloc to stop flying over Belarus as it also worked to ban the country’s airlines from flying over E.U. airspace. Britain imposed similar restrictions, while several major airlines said they would stop traversing the country altogether, effectively severing Belarus’s direct air connections to Western Europe.
Here’s the latest response from airlines on Tuesday:
Air France and KLM later said they too would suspend flights going through Belarus airspace, Reuters reported.
Finnair said it would do the same. “The change will make flight time a bit longer,” the Finnish national carrier said on Twitter.
“Due to the current dynamic situation, we are suspending the operation in Belarusian airspace for the time being,” Tal Muscal, a spokesman for Lufthansa, said Monday in a statement.
The German airline was joined by Austrian Airlines in stopping flights over Belarus.
Though not a major European hub, Belarus’s capital, Minsk, is served by several international airlines, including Lufthansa, Austrian Airlines and Turkish Airlines. U.S. airlines like American Airlines, Delta Air Lines and United Airlines offer flights to Minsk through partnerships with European carriers and Belavia, the Belarusian airline.
More than 12.6 million households adopted animals from March to December of last year, according to the American Pet Products Association, helping to propel an increase in visits and revenue to veterinary offices, as new owners took pets in for their first checkup.
The heightened demand for veterinary services has drawn investors and others to the market, reports Jane Margolies for The New York Times. Landlords — who might previously have spurned tenants associated with unpleasant odors and noise — are more amenable to leasing to the clinics after a year when the vets paid their rent while other businesses fell behind. And architecture firms that specialize in the design of vet space are busier than ever.
Tech-savvy start-ups are promising a reinvention of the experience, with phone apps, round-the-clock telemedicine and boutique storefronts where refreshments (for pet owners) run to LaCroix and cold brew.
In New York, Small Door Veterinary recently announced it had raised $20 million and planned to go from a single location to 25 by 2025. Bond Vet, another New York start-up, models itself on CityMD clinics; it recently raised $17 million and now has six offices.
And in Los Angeles, another membership-based company, Modern Animal, has an office in a high-end shopping district in West Hollywood, with three more to come in the city by year’s end and a dozen clinics in California by 2022, said the company’s founder and chief executive, Steven Eidelman.
The pet care business is riding a growth spurt: Morgan Stanley projected that it would be a $275 billion industry in 2030, up from $100 billion in 2019, with vet care the fastest-growing segment over the next decade.
“Ten years ago, there was a baby boom,” Arash Danialifar, chief executive of GD Realty Group, a California company that has leased space to a veterinary start-up, said about the proliferation of shops selling children’s fashion. “Now it’s all about pets.”
Stocks on Wall Street dipped, with the S&P 500 down 0.2 percent on Tuesday. The S&P 500 had gained 1 percent on Monday.
The Stoxx Europe 600 index was flat. The Hang Seng in Hong Kong closed 1.8 percent higher and the CSI 300 in China rose 3.2 percent, the biggest one-day increase since July.
A monthly report on consumer confidence showed that it dipped slightly in May. The Conference Board’s consumer confidence index fell to 117.2 from 117.5 in April. A measure of short-term views for income, business and the job market fell more sharply, which the Conference Board said may be attributed to the end of stimulus payments.
The price of a Bitcoin was above $37,000 on Tuesday. The cryptocurrency had dropped as low as about $31,000.
An improving outlook for the German economy is taking hold. A survey of German business managers on their expectations for the economy over the next six months showed increasing optimism in May, with the ifo Institute’s index rising to 102.9 points, the highest since 2011.
President Biden and congressional Democrats went to the mat this winter to secure $350 billion in assistance for state and local governments in their $1.9 trillion stimulus package. The aid was meant to help them rehire laid off government workers, invest in infrastructure projects and repair balance sheets damaged by the pandemic.
But it increasingly looks like many states — especially ones run by Democrats, with relatively high taxes on high earners — don’t need the money. California officials expect a $15 billion surplus this fiscal year. Virginia has seen nearly $2 billion in unanticipated revenues. In Oregon, economists recently upgraded the state’s revenue forecasts, moving the state from projected deficits to surplus.
The tax revenues are coming from a rebounding economy and soaring stock market, and raising pressure on Mr. Biden to repurpose hundreds of billions of dollars of federal spending approved earlier this year, The New York Times’s Jim Tankersley and Alan Rappeport report.
Republicans in Congress have urged Mr. Biden to redirect assistance for state, local and tribal governments to instead pay for roads, bridges and other portions of a potential bipartisan agreement on upgrading America’s infrastructure. Some economists and budget experts support that push. White House officials haven’t said whether they would be willing to redirect that spending, mindful that some states, like tourism-dependent Hawaii, still face large budget shortfalls.
The advent of legalized adult-use marijuana in New York and New Jersey is an entrepreneur’s dream, with some estimating that the potential market in the densely populated region will soar to more than $6 billion within five years.
But the rush to get plants into soil in factory-style production facilities underscores another fundamental reality in the New York metropolitan region: There are already shortages of legal marijuana, The New York Times’s Tracey Tully reports.
Within New Jersey’s decade-old medical marijuana market, the supply of dried cannabis flower, the most potent part of a female plant, has rarely met the demand, according to industry lobbyists and state officials. At the start of the pandemic, as demand exploded, it grew even more scarce, patients and business owners said.
The supply gap has narrowed as the statewide inventory of flower and products made from a plant’s extracted oils more than doubled between March of last year and this spring. Still, patients and owners say dispensaries often sell out of popular strains.
Because marijuana is illegal under federal law and cannot be transported across state lines, marijuana products sold in each state must also be grown and manufactured there.
Federal banking law also makes it nearly impossible for cannabis-related businesses to obtain conventional financing, creating a high hurdle for small start-ups and a built-in advantage for multistate and international companies with deep pockets.
Oregon, which issued thousands of cultivation licenses after legalizing marijuana six years ago, has an overabundance of cannabis. But many of the other 16 states where nonmedical marijuana is now legal have faced supply constraints similar to those in New York and New Jersey as production slowly scaled up to meet demand.
Today in the On Tech newsletter, Shira Ovide writes that with the antitrust lawsuit against Amazon, the D.C. attorney general is making a legal argument against the tech giant that is both old-school and novel, and it might become a blueprint for crimping Big Tech power.
Shares of Lordstown Motors, a start-up aiming to make electric pickup trucks, dropped 7 percent on Tuesday after the company said it would “at best” make just 50 percent of the vehicles it had previously hoped to build this year, unless it is able to raise additional capital.
“What we are saying is that if we don’t get any funding, we might only make half of what we thought,” Lordstown’s chief executive, Steve Burns, said Monday during a conference call.
Mr. Burns said the company was still on track to begin making trucks by September.
Lordstown has had discussions with some strategic investors who could pump money into the company, he said, and it has looked into borrowing money by using its plant or other assets as collateral.
He also said the company was looking into borrowing from a federal government program meant to support the development of electric vehicles, but it was unclear if it had any funds left.
Lordstown would be able to make as many as 2,200 trucks by the end of the year if it gets funding, Mr. Burns said. Without additional capital, it would probably make fewer than 1,000.
Mr. Burns has been hoping Lordstown would be the first to produce an electric pickup truck aimed at commercial fleets such as large construction and mining companies, but it will soon face some formidable competition. Ford Motor last week unveiled an electric version of its F-150 pickup that is supposed to go on sale next spring.
Lordstown gained attention because it bought an auto plant in Lordstown, Ohio, that General Motors had closed. It was also once hailed by former President Donald J. Trump for saving manufacturing jobs.
It became a publicly traded company last year by merging with a special purpose acquisition vehicle, a company set up with cash from investors and a stock listing. Several other electric vehicle and related businesses have gone public through similar mergers in recent months, taking advantage of investors’ desire to find the next Tesla.
Lordstown, which is being investigated by the Securities and Exchange Commission, said it lost $125 million in the first quarter of 2021, but ended the period with $587 million in cash.