Everything Is Getting More Expensive

Prices and policy

Consumer prices rose more than economists expected last month, new numbers show, on top of an already high August reading. While a jump in prices was expected as the economy recovered from the pandemic shock, persistently high inflation is complicating plans for both the Fed and the White House, who face pressure to act so that price gains don’t become a permanent fixture.

Americans are paying more for dinner, fuel and housing, and wage gains, while decent, aren’t keeping up. Hopes that a spike in prices would quickly fade — that pandemic-induced inflation would be “transitory,” to use the economic lingo — are being challenged by rising prices for a wide range of items: Meat rose by nearly 13 percent in the year to September, gasoline was up 42 percent and rent rose by more than 3 percent (double the rate six months ago).

What it means for the Fed: As the central bank prepares to remove emergency stimulus measures to support the economy, sustained inflation could force the Fed to move faster than it would like, before the labor market is fully healed. In newly released minutes from their latest policymaking meeting, Fed officials appear split, with “various” members arguing that interest rates should stay near zero for a couple of years, while “a number” said that rates would need to go up next year, with inflation most “likely to remain elevated in 2022 with risks to the upside.” A recent Fed survey suggests that consumer expectations for inflation are running at historic highs.

What it means for the White House: The tricky task of passing two enormous spending packages is made harder as opponents argue that the bills could worsen inflation. Fixing the supply chain snarls that are behind some of the price pressures has become a priority, with President Biden announcing yesterday that the Port of Los Angeles will operate around the clock and that major companies including FedEx, UPS and Walmart will expand their working hours. But it’s not clear how much those efforts can help because the blockages stretch up and down supply chains, from foreign harbors to American railyards and warehouses.

The most visible policy effect of high inflation is on Social Security. The Social Security Administration said yesterday that it would raise benefits 5.9 percent in 2022, the biggest cost-of-living adjustment in the past 40 years. “You’re glad that you get a 5.9 percent increase,” said Nancy Altman, the president of Social Security Works, an advocacy group, “but it doesn’t feel like you’re getting 5.9 percent when all of your other costs are going up much higher.”

HERE’S WHAT’S HAPPENING

Thousands of John Deere workers go on strike. Some 10,000 workers at the agriculture equipment maker’s facilities primarily in Iowa and Illinois went on strike early this morning after rejecting a contract proposal that union negotiators had reached with the company. As employers grapple with labor shortages, workers across the country appear more willing to strike, as at Kellogg and Nabisco.

More big banks report bumper earnings. Bank of America, Morgan Stanley and Wells Fargo beat expectations for their latest quarterly earnings. This follows a similar pattern at JPMorgan Chase, which reported yesterday, easing some worries about the strength of the economic recovery.

A study suggests that J&J vaccine recipients may fare better with a Moderna or Pfizer booster. The finding from a federal clinical trial, along with a mixed review from the F.D.A., is a blow to Johnson & Johnson’s case for approving a booster of its single-dose coronavirus vaccine. F.D.A. advisers meet today and tomorrow to decide on allowing J&J and Moderna to offer booster shots.

The S.E.C. is sued for its stance on proxy advisers. The National Association of Manufacturers took issue with the securities regulator for not enforcing a Trump-era rule that sought to rein in the firms that are hired by institutional investors to advise them on how to vote their shares. Some companies argue that proxy advisory firms distort shareholder votes, but a recent study found that the firms can lead to better corporate outcomes.

MindBody acquires ClassPass in a merger of exercise services. The combination of the two companies that help individuals find open exercise classes, and studios fill open spots, is a bet that people will soon return to gyms. Meanwhile, Tonal, a maker of connected fitness equipment, announced that the basketball star LeBron James has invested in the company, a bet that people will upgrade their home gyms.

A duty to think of the big picture

The Labor Department proposed rule changes yesterday that would make it easier for retirement plans to add investment options based on environmental, social and governance, or E.S.G., considerations.

Reversing a Trump-era policy, the proposal not only permits pension plan administrators from considering these factors, but it may make it their legal duty to do so, especially as the economic consequences of climate change continue to emerge. The Biden administration’s regulations would also make it possible for E.S.G. funds to be the default setting upon enrollment, which the previous administration prohibited.

The existing rule appears to have a “chilling effect” on using E.S.G. factors to judge investments, said Marty Walsh, the labor secretary. “If these legal concerns were keeping fiduciaries on the sidelines, it could mean worse outcomes for workers and retirees,” Walsh said. E.S.G. factors are now incorporated in some $17 trillion worth of investments, or about one in three dollars under professional management. A small fraction of these investments are held by retirement plans, even as interest is rising fast, especially among younger investors.

Retirement plan overseers can’t sacrifice returns or take on greater risks in pursuit of E.S.G. objectives, according to the proposed new rule. But investment managers could consider these issues earlier in the analytical process than under the old rule.

Some investors have used E.S.G. factors in proxy fights with companies. Increasingly, shareholders have made environmental and social proposals at companies — and won. This year, such resolutions got an “eye-popping” amount of support. With even more money potentially unlocked to invest in these strategies, this trend is likely to continue.

“I doubt we’ll be talking about supply chain stuff in a year. I just think that we’re focusing on it too much. It’s simply dampening a fairly good economy. It’s not reversing a fairly good economy.”

— Jamie Dimon of JPMorgan Chase on the bank’s latest earnings call.

Piercing the veil of incarceration

Larry Miller, the chairman of Nike’s Jordan Brand, was living in a kind of prison even as he rose through the top ranks of business — at Campbell Soup, at Kraft Foods and at the N.B.A. He had harbored a secret for more than 50 years that he feared would destroy him: When he was 16, Miller shot and killed another teenager and was imprisoned.

Revealing his secret has been “a real freeing exercise.” Miller, 72, kept the truth from almost everyone, even some of his children, he told Sports Illustrated. Opening up about it, he said, could help change how others perceive people with criminal convictions.

Criminal justice has become a popular cause in boardrooms, with a wide range of companies — like JPMorgan Chase, Koch Industries, McDonald’s, Third Point and Walmart — joining initiatives to train and hire formerly incarcerated individuals who have paid their debt to society. Miller’s success in business, described in a book about his life that comes out next year, may persuade people to rethink redeemability, he said.

“It’s really about making sure that people understand that formerly incarcerated people can make a contribution,” Miller said. “And that a person’s mistake, or the worst mistake that they made in their life, shouldn’t control what happens with the rest of your life.”

Why ‘no jab, no job’ policies are rare in Britain

Starting next week, Blackstone will require employees who want to work at its London office to be vaccinated against the coronavirus, according to a memo seen by The Times. That means the American private equity giant is taking a much more forceful approach to vaccinations than many other businesses in Britain, Eshe Nelson and Lananh Nguyen write.

Data protection and employment discrimination laws make corporate vaccine mandates rare in Britain. In the U.S., it is increasingly common to require employees to be inoculated to remain in their jobs, with companies with more than 100 workers getting ahead of a rule by Biden that will apply to them. (United Airlines’ C.E.O., Scott Kirby, confirmed yesterday that 232 of its unvaccinated U.S. employees were “going through the termination process.”) Companies in Britain, by contrast, have been advised to encourage vaccination rather than enforce it. Collecting proof of vaccination is particularly charged because medical records have special protection under British privacy laws.

This highlights the challenge for international companies as they bring workers back to offices. In the U.S., Blackstone asked vaccinated deal makers to return to offices three months ago. In London, where more than 400 people work for the firm, working in the office remains voluntary, as does uploading proof of vaccination.

THE SPEED READ

Deals

• AvidXchange, a fintech firm backed by Mastercard and Peter Thiel, slipped in its first day of trading, ending with a market cap of $4.9 billion. (Bloomberg)

• Tech investors have made more than $580 billion from listings and M.&A. deals so far this year. (FT)

• The winemaker Winc is targeting a valuation of more than $260 million for its upcoming I.P.O. (Reuters)

• The British payment processor SumUp is acquiring Fivestars of San Francisco as it expands into the U.S. to compete with Square and PayPal. (CNBC)

Policy

• The Biden administration is planning to develop wind farms along nearly the entire U.S. coastline. (NYT)

• The Bank of England has banned its policy-setting committee members from having private discussions with bankers. (FT)

• The venture capital firm Andreessen Horowitz is shopping its ideas about crypto regulation around Washington. (CNBC)

• The S.E.C. plans to break from its common practice of “no admit, no deny” settlements of civil enforcement actions. (WSJ)

• The top federal auto safety regulator has questioned Tesla on its lack of a recall after an update to its driver-assistance software. (NYT)

Best of the rest

• Jack Ma, the billionaire founder of Alibaba who has laid low during China’s tech crackdown, has reappeared in Hong Kong. (Reuters)

• “The Most Important Global Meeting You’ve Probably Never Heard Of Is Now” (NYT)

• Workers in China are sharing details of their hours in a spreadsheet to protest the country’s excessive work culture. (Bloomberg)

• “How New York’s Skewed Property Tax Benefits the Rich” (Bloomberg Businessweek)

• The “Star Trek” actor William Shatner, 90, became the world’s oldest space traveler after his trip aboard a Blue Origin rocket. (NYT)

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