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Retail sales jump in September as consumers spend more and prices rise.

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Shopping for Halloween supplies at a Target store in Miami. Excluding auto sales, retail spending was up 0.8 percent in September.
Credit...Joe Raedle/Getty Images

Retail sales rose in September, the Commerce Department reported Friday, a second-straight month of gains as consumer spending dodged a hit from rising prices and widespread supply-chain disruptions.

The 0.7 percent increase in sales last month, which followed a 0.9 percent increase in August, was better than economists had expected. Along with the uptick in overall spending, sales at restaurant and bars, gas stations and clothing stores continued to rise in September.

Economists polled by Bloomberg had forecast a drop of 0.2 percent in overall sales.

Auto sales rose 0.5 percent in September, despite a shortage in semiconductors and shipment delays that have hampered the car market. Excluding auto sales, retail spending was up 0.8 percent, thanks in part to higher gasoline prices. Oil prices climbed to their highest level in seven years in recent weeks amid a global energy crunch, with only gradual efforts to lift production.

The gains come as supply chain disruptions tied to the pandemic persist and rising prices continue to dampen consumer confidence. The Conference Board’s Consumer Confidence Survey, a gauge for spending behaviors, fell in September after declines in the previous two months, prompted by the spread of the Delta variant of the coronavirus and inflationary pressures.

Prices of consumer goods rose more than expected in September, with people paying more for items like meat, eggs and furniture, the Labor Department reported on Wednesday. In response to rising inflation, the Social Security Administration announced the same day that benefits would increase 5.9 percent in 2022, the biggest jump in 40 years.

To relieve some of the supply chain issues, President Biden announced Wednesday that the Port of Los Angeles will double its hours of operation. The move comes ahead of the all-important holiday season and is intended to resolve a logjam that has slowed the shipment of manufactured goods from Asia.

Major companies including Walmart, UPS and FedEx will also expand their working hours in hopes of addressing backlogs in the global supply chains that deliver critical goods to the United States.


Credit...Michel Spingler/Associated Press

The Japanese automaker Toyota said on Friday that it would cut November production targets at home and abroad by as much as 15 percent as the pandemic and a global semiconductor shortage have made it difficult for the company to meet its short-term manufacturing goals.

Automakers worldwide have struggled to keep up with rebounding demand for their vehicles as pandemic restrictions in the world’s largest auto markets ease and consumers look to make up for lost time. The European Automobile Manufacturers’ Association said Friday that new car registrations in September were down 25 percent from a year ago, largely because of dealers don’t have enough cars to sell because of a shortage of semiconductors.

The global shortage of semiconductors — caused by such factors as supply chain woes and surging sales of home electronics during lockdowns — has hit the automotive industry hard, with Volkswagen reporting a 28 percent decline for September, the European manufacturers association said. Many automakers reduced orders for parts last year because of uncertainty about the pandemic’s effect on sales, and they are now struggling to source new components.

Other industry players have announced cutbacks in their manufacturing plans as a result, but Toyota, which had stockpiled chips, was able to hold out longer than its competitors.

In September, however, Toyota announced substantial cuts to its production targets for September and October, citing the lack of semiconductors and difficulties obtaining parts from suppliers in Southeast Asia hit by the coronavirus.

Toyota had initially planned to produce a million vehicles in November, hoping to make up for previous production shortfalls and meet strong global demand.

But continuing difficulties obtaining supplies have forced it to change those plans. The company now projects it will make 850,000 to 900,000 vehicles next month. It made 830,000 vehicles during the same period last year.

In a statement posted on its website, Toyota said that it still expected to meet its annual production forecast of nine million vehicles — adjusted down in September from 9.3 million — by the end of its fiscal year next March.

The company said that it was considering strategies to deal with its supply chain difficulties, noting that “we expect the shortage of semiconductors to continue in the long term.”


Credit...Michelle Mcloughlin/Reuters

University endowment managers, long criticized for the fees they pay to private equity firms and hedge funds, have something to show for it: eye-popping returns.

On Thursday, M.I.T. reported that its endowment had gained 56 percent in its most recent fiscal year, which ended in June. Yale also published its latest returns Thursday, with its endowment up 40 percent over the same period, its third-highest annual return since 1970. Dartmouth posted a return of nearly 47 percent. Duke reported a 56 percent return.

Harvard, which runs the biggest endowment (worth $53 billion), said Thursday that its fiscal-year return lagged many of its rivals, rising a mere 34 percent. Harvard’s endowment manager said this “tremendous” return nonetheless reflected “the opportunity cost of taking lower risk” than many of the school’s peers.

A big reason for the gains is investments with private equity firms, which in some years have received more in fees than endowments have paid out in tuition help. Harvard’s private equity investments, worth a third of its total portfolio, returned 77 percent in its latest fiscal year. Venture capital funds are also recording huge returns: The University of North Carolina logged a 142 percent return from that portion of its $10 billion endowment.

Many endowments, like Harvard’s, have increased their allocations to private equity, venture capital and hedge funds in recent years, saying that this provides crucial diversification from broader stock and bond market trends. These “alternative” investments can result in outsize returns, subject to hefty fees, but can be less predictable than more conservative choices.

The S&P 500 was up about 40 percent in the year to June, putting endowments’ returns in perspective. Even with U.N.C.’s venture capital gains, its total endowment was up 42 percent. Yale’s fund had nearly 40 percent of its portfolio in private equity funds, and matched the return of a diversified index fund.

High returns also complicate the debate about big endowments’ tax status. One of the few tax increases that President Donald J. Trump pushed through was a 1.4 percent levy on the largest university endowments’ investment income. Facing lobbying by the affected institutions, Democrats have discussed reducing the tax as part of the spending bills slowly working their way through Congress. The bumper returns that many schools just reported could make that harder to justify.


Credit...Gabby Jones for The New York Times

Coinbase, the cryptocurrency exchange, started a prominent public policy campaign on Thursday, posting its blueprint for crypto regulations on GitHub, a software code-sharing platform, for public comment. “Our purpose in publishing this proposal was to contribute to a broad conversation and to do so openly and democratically,” a Coinbase spokeswoman told the DealBook newsletter.

Federal agencies are racing to address the potential risks in the fast-growing crypto industry, and a burgeoning lobby has emerged to influence the shape of regulations.

Coinbase is flipping the script. Traditionally, lawmakers and regulators solicit comments from the public when considering new rules and regulations. But Coinbase appears to be losing patience, feuding publicly last month on Twitter with the Securities and Exchange Commission over a proposed crypto product and now subtly co-opting the government’s role as representative of the people.

But old-fashioned lobbying is still important. Although Coinbase did not submit its proposal to the Senate Banking Committee, which recently requested input on crypto regulations, it met with staff at 30 congressional offices and engaged directly with at least 20 members of Congress before publishing it, the company told reporters. It also “reached out” to the S.E.C., it said.

Industry advocates are flooding the zone in Washington this week. The venture capital firm Andreessen Horowitz, an early Coinbase investor, submitted its thoughts to the banking panel, and representatives have been making the rounds to advance the firm’s views. Katie Haun, a former federal prosecutor who co-leads Andreessen’s crypto fund, was also in town.

“Crypto knows how to get through to members,” Kristin Smith of the Blockchain Association told lawyers this week at a D.C. Bar Association event. The industry’s ability to engage with Congress and encourage enthusiasts to press its policy views is unique, she said. Crypto now has “more of a voice and a seat at the table,” she added. Mobilizing crypto Twitter — a “highly communicative community” — is the industry’s “special tool,” she said.


Credit...Karsten Moran for The New York Times

Rents are shooting higher after a brief pandemic slump, burdening households and fueling overall inflation. That is bad news for the Federal Reserve, because it could make the latest rapid price gains last longer. It’s also problematic for the White House because it hits households right in their pocketbooks, diminishing well-being and fueling unhappiness among voters.

A combination of factors seems to have created a perfect storm that pushed the Consumer Price Index measure of rent up 0.5 percent in September from the month before, the fastest pace in about 20 years.

That’s a concern for the Fed, because housing prices tend to move slowly and once they go up, they tend to stay up for a while, Jeanna Smialek writes for The New York Times. Rent data also feed into what is called “owners’ equivalent rent” — which tries to put a price on how much owners would pay for housing if they hadn’t bought a home. Together, housing measures make up about a third of the overall Consumer Price Index.

Overall consumer prices have jumped sharply in 2021, climbing 5.4 percent in September from the prior year. Fed officials have been betting that the move is temporary, but they are watching housing measures carefully as a risk to that outlook.

Rent is a big part of consumers’ experience with prices, so it could help shape their expectations about future cost increases.

Those expectations matter a lot to the Fed. If consumers come to anticipate faster inflation, they may begin to demand higher wages to cover their rising expenses. As businesses lift prices to cover rising costs, it could set off an upward spiral. Already, some key measures of inflation expectations have jumped higher.

Economic policymakers have said inflation will prove temporary, but rising rents may challenge that view and pressure Washington to react. READ THE ARTICLE →


Credit...Odd Andersen/Agence France-Presse — Getty Images

Just as economies seemed to be returning to something like normal, an energy crunch has hit Britain, the rest of Europe and much of the world.

Natural gas, the main focus of this squeeze, is crucial for generating electricity, running factories and heating homes. It is also seen by some as a transition fuel away from highly polluting coal.

Prices for natural gas have risen about sixfold, to record levels. The surge means the wholesale price of electricity has reached stratospheric levels, and consumers, battered by the pandemic, are hit by big increases in their home energy bills. These high costs are also undermining the economics of companies that make fertilizer, steel, glass and other materials that require a lot of electricity.

Britain, whose power system depends heavily on gas, is taking some of the hardest blows, creating major headaches for the government of Prime Minister Boris Johnson

The jump in gas prices is also making geopolitical waves. Russia, Europe’s largest gas supplier, is being blamed for manipulating prices. The United States, in turn, has warned Moscow not to try to exploit the gas crunch for its own ends. The pinch could open the way for more exports of liquefied natural gas from shale drilling in the United States.

Stanley Reed, who reports on energy and the environment for The New York Times from London, answers questions about the crunch, including why natural gas prices have jumped so high and why Britain is in such bad shape. READ THE ARTICLE →

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