The Biden administration on Friday said it expected economic growth and inflation to both reach their highest levels this year since the early 1980s, revising earlier forecasts to match the reality of the continued stimulus-fueled recovery from the recession.
In its mid-session review of the administration’s initial budget forecasts, the Office of Management and Budget said it expected inflation-adjusted growth to hit 7.1 percent for the year. That’s an increase from the 5.2 percent officials projected earlier this year, before Mr. Biden’s $1.9 trillion American Rescue Plan began to increase consumer spending by delivering direct payments to households, expanded safety net benefits and aid for state and local governments.
The administration also revised up its forecasts for the Consumer Price Index inflation rate, which officials now estimate will hit 4.8 percent for the year. That is more than double the administration’s initial forecast of 2.1 percent for the year.
Administration officials continue to insist that the surge of inflation this year is the product of pandemic-induced crimps in supply chains and will fade quickly, with the rate dropping to 2.5 percent in 2022. But their new forecast is an admission of sorts that prices have jumped higher and that the increase has lingered longer than they initially anticipated.
Jerome H. Powell, the Federal Reserve chairman, on Friday, struck a similar note in a Friday speech, suggesting that the Fed and the White House remain unified in their belief that high inflation will prove to be temporary — despite its unanticipated persistence this year.
The administration’s increase in its growth forecast mirrors a rise in private forecasters’ expectations for the year after Mr. Biden steered his stimulus bill through Congress, though many forecasters have begun to mark down those forecasts in recent weeks as the Delta variant of the coronavirus looms over the recovery. Still, administration officials cast the growth projection, which would be the highest since the first term of President Ronald Reagan, as vindication for Mr. Biden’s policies.
“Under the President’s leadership — and thanks to the grit and resilience of the American people — our economy is getting back on track,” Shalanda Young, the acting head of the budget office, wrote in a blog post.
Officials also said they expected stronger growth for the rest of the decade than they initially forecast, assuming Congress passes an infrastructure bill and a larger spending bill meant to overhaul the federal government’s role in the economy. The White House now sees growth averaging 2.2 percent over the decade starting in 2022, up from 2 percent earlier this year. That is significantly faster growth than other forecasters, including the Congressional Budget Office, expect.
As a result of those policies and the uptick in growth this year, they estimate the federal debt will grow by $1.2 trillion less than initially forecast over the next 11 years.
Amazon customers will soon have another payment option at checkout.
Affirm, a so-called buy now, pay later payment provider that allows customers to pay for their purchases in installments, said on Friday that it had reached a deal with the online retail giant.
Affirm said Amazon customers would be able to use its service on purchases of $50 or more — including items like furniture, home goods, electronics and fashion — and pay in monthly installments. Once approved, customers will be able to see the total purchase price upfront — and they won’t be charged any late or hidden fees, the company said.
The service is being tested with select customers now, Affirm said, and will become more broadly available to shoppers in the coming months. Certain purchases, including those from Whole Foods Market, Amazon Fresh and certain digital purchases like movies and books, will not be eligible, according to Affirm.
“Amazon is always looking to add flexible payment options,” an Amazon spokeswoman said, “and Affirm does just that by offering transparent pay-over-time solutions that customers can choose based on their needs.”
Buy now, pay later services have become an increasingly popular option among consumers. And the partnership follows another giant deal last month: Square, the payments firm run by the Twitter chief executive Jack Dorsey, agreed to acquire Afterpay for $29 billion. That deal will open the installment option to millions of small business that process their credit card transactions through Square’s app.
Affirm — whose shares rocketed more than 30 percent in after-hours trading — has already become partners with 12,000 merchants, including Walmart and Peloton. Peloton accounted for 30 percent of the company’s total revenues in the first fiscal quarter of 2021, according to an August research report from FT Partners, an investment banking firm focused on financial technology. That was up from 14 percent in the same quarter a year earlier.
Amazon’s partnership with Affirm is its first with a buy now, pay later provider in the United States; it works with Zip in Australia, where these options are already more established. Amazon had already provided monthly payment plan options on its own for select customers buying certain products. It also offered installment programs for customers with the Amazon.com Store Card, the Amazon Rewards Visa Card, and eligible Citi credit card members.
The Pulitzer Prize board issued a special citation on Friday for Afghan journalists, some of whom worked alongside Western news organizations, and announced a grant of $100,000 to provide emergency relief for the journalists and their families.
The grant is to be administrated by the Committee to Protect Journalists, a nonprofit group that provides resources to journalists around the world facing threats, violence and censorship. Reporters in Afghanistan are deeply concerned about a crackdown by the Taliban regime as it takes control of the country in the wake of the American military withdrawal.
“It’s critical in a moment of stark threat to support those Afghans whose bravery, skill and commitment to the ideals of a free press have helped create so much important journalism in recent decades,” the co-chairs of the Pulitzer board — Katherine Boo, Gail Collins and John Daniszewski — said in a written announcement.
The citation includes Afghan correspondents, interpreters, drivers, hosts and other journalistic staff who have “chronicled decades of life and war.” The $100,000 grant is intended to protect the safety of the recipients and, in some cases, to help fund their efforts to resettle in other countries.
Hundreds of Afghan journalists and their relatives have left Afghanistan in recent days, with news outlets including The New York Times endeavoring to arrange flights and safe passage out of the country. Major English-speaking media organizations have depended for years on local reporters, fixers and other employees who assisted in news gathering efforts.
Inflation in the United States rose sharply again in July, the Federal Reserve’s preferred measure of prices showed, a pandemic-related jump that’s expected to fade but will keep pressure on policymakers until it does.
The Personal Consumption Expenditures index, the measure of price gains that the Fed uses as its official target, rose 4.2 percent last month compared with a year earlier, the Commerce Department said on Friday. The increase was higher than the 4.1 percent jump that economists in a Bloomberg survey had anticipated, and the fastest pace since 1991.
The measure climbed 0.4 percent from June, in line with a 0.4 percent rise projected by economists.
The data, is based on household spending on goods and services, comes as the Fed is considering when and how to begin slowing its large-scale bond purchases, its first step toward a more normal policy setting as the economy heals. Speaking at an annual gathering of economists and central bankers, Jerome H. Powell, the Fed chair, indicated he favors slowing the bond purchases starting this year, while making it clear that the central bank is closely monitoring risks tied to the Del
ta variant of the coronavirus.
“The Fed has to show patience in the face of the inflation we have,” said Diane Swonk, chief economist at Grant Thorton. “The data is more backward than forward looking, and the course of the virus determines the course of the economy.”
Personal income increased 1.1 percent in July from June, a figure bolstered by reopening businesses and the Child Tax Credit payments created as part of the American Rescue Plan.
During a July meeting, Fed officials debated over when to slow bond purchases, with some members arguing that it should be done soon to guard against the risk of higher inflation. Others argued for a slower process, stressing that rising Delta variant coronavirus cases posed risks to the economic outlook.
The Fed is holding interest rates near zero, and officials have suggested that they may favor raising interest rates by late 2022 or — more popularly — 2023. They would like to see the labor market return to full employment before raising rates.
Other measures of inflation have also moved up this year. The Consumer Price Index, a related gauge that comes out earlier in the month, climbed 5.4 percent in July compared with a year earlier. Wage increases also offer signals about the future of inflation. Average hourly earnings rose 4 percent in July from a year earlier, and wages for nonsupervisory and production workers — which can give a clearer reading on what’s happening for typical workers — have climbed 4.7 percent over the past year.
“The economy is still recalibrating, which might take longer due to the resurgence of Covid,” said Lindsey Piegza, chief economist for Stifel Financial. “As we look forward, there are risks that remain that could exacerbate the trend of rising costs.”
Stocks on Wall Street jumped on Friday, capping a week of gains that lifted major benchmarks back into record territory. The S&P 500 rose 0.9 percent, reaching a new high, and the Nasdaq composite rose 1.2 percent.
For the week, the S&P 500 rose 1.5 percent, rebounding from a loss the week before.
Wall Street started the day slightly higher but the gains picked up after the release of prepared remarks by Jerome H. Powell, the Federal Reserve chair, that signaled the Fed could begin to remove some support for the economy this year but has no plans to raise interest rates soon. Mr. Powell made the comments at an annual gathering of central bankers and economists.
The Fed has been buying $120 billion in government-backed bonds to bolster the economic activity by keeping many kinds of borrowing cheap, and its officials are actively debating when to begin slowing those purchases.
The yield on 10-year Treasury notes fell to 1.30 percent.
Some gains on Friday may have reflected hopes for a recovery in China. A number of companies that depend on China as a major market rose. Goodyear Tire, which recently deepened its focus on selling to Chinese automakers by acquiring Cooper Tire, rose 5.7 percent. Engine maker Cummins, whose second largest market is in China, rose 1.4 percent.
Oil prices also rose, with West Texas Intermediate, the U.S. benchmark, rising 2 percent to nearly $69 a barrel.
Shares of Peloton Interactive tumbled 8.6 percent after the company’s forecast for its fiscal first-quarter revenue fell short of estimates. The company also reported that it had 874,000 paid digital subscribers at the end of the latest quarter, below analysts expectations of more than one million customers.
The wide range of recent cyberattack targets appears to reflect an increasingly aggressive campaign by Chinese government hackers: China’s premier spy agency is reaching beyond its own ranks to recruit from a vast pool of private-sector talent.
This new group of hackers has made China’s state spying machine stronger, more sophisticated and more unpredictable. Sponsored but not necessarily micromanaged by Beijing, this new breed of hacker attacks government targets and private companies alike, mixing traditional espionage with outright fraud and other crimes for profit, Paul Mozur and Chris Buckley report for The New York Times.
China’s new approach borrows from the tactics of Russia and Iran, which have tormented public and commercial targets for years.
Chinese hackers with links to state security demanded ransom in return for not releasing a company’s computer source code, according to an indictment released by the U.S. Department of Justice last year. Another group of hackers in southwest China mixed cyber raids on Hong Kong democracy activists with fraud on gaming websites, another indictment asserted.
Investigators believe these groups have been responsible for some big recent data breaches:
China’s tactics changed after Xi Jinping, the country’s top leader, transferred more hacking responsibility to the Ministry of State Security from the People’s Liberation Army following a slew of sloppy attacks and a reorganization of the military.
The ministry projects an image of remorseless loyalty to the Communist Party in Beijing, but its hacking operations can act like local franchises. Groups often act on their own agendas, sometimes including sidelines in commercial cybercrime, experts said.
The message: “We’re paying you to do work from 9 to 5 for the national security of China,” said Dmitri Alperovitch, the chairman of Silverado Policy Accelerator, a nonprofit geopolitical think tank. “What you do with the rest of your time, and with the tools and access you have, is really your business.”
Apple settled with a group of app developers on Thursday in a deal that allows developers to urge customers to pay them outside their apps. The move allows app makers to avoid paying Apple a commission on their sales and could appease developers and regulators concerned with its control over mobile apps, including strict policies intended to force developers to pay it a cut of their sales. The settlement appears to be a small price to pay for the world’s richest company to avoid another extended legal fight that could have posed major risks to its business by targeting the App Store.
California’s legislature advanced a bill on Thursday that would allow two-unit buildings on lots that have been reserved for single-family homes. The move, which was championed by housing advocates, is one of several piecemeal housing measures in the state. By allowing two units per parcel and permitting property owners to subdivide their lots, the law would increase density to as many as four units on a single-family plot.
Anne Finucane, Bank of America’s vice chair and one of Wall Street’s most powerful women, and Thomas K. Montag, the bank’s chief operating officer, will retire at the end of the year, the bank said Thursday. Both played crucial roles in restoring profits and rebuilding the company’s image after the bank took a major reputation and financial hit from the collapse of the housing market in 2008.
The German publishing giant Axel Springer agreed to buy Politico, the Washington news site, in a deal announced on Thursday. Springer will take control of Politico and its sister site, Politico Europe, as well as Politico’s tech news site, Protocol, the companies said. The deal, expected to close by the end of the year, is valued at more than $1 billion, two people with knowledge of the matter said.