The World Bank warns that the pandemic will slow economic growth in 2022.
Global growth is expected to slow to 4.1 percent this year, from 5.5 percent in 2021, a projection underscores the stubborn nature of the public health crisis.
Construction at the Route 50 interchange with I-66 in Fairfax, Va. The World Bank said that the recently passed infrastructure law would do little to buttress growth in the United States in the near term.Credit…Jim Lo Scalzo/EPA, via Shutterstock
WASHINGTON — The World Bank said on Tuesday that the pace of global economic growth was expected to slow in 2022, as new waves of the pandemic collide with rising prices and snarled supply chains, blunting the momentum of last year’s recovery.
This projection underscores the stubborn nature of the public health crisis, which is widening inequality around the world. The pandemic is taking an especially brutal toll on developing countries, largely owing to rickety health care infrastructure and low vaccination rates.
“The Covid-19 crisis wiped out years of progress in poverty reduction,” David Malpass, the World Bank president, wrote in an introduction to the report. “As government’s fiscal space has narrowed, many households in developing countries have suffered severe employment and earning losses — with women, the unskilled and informal workers hit the hardest.”
Global growth is expected to slow to 4.1 percent this year, from 5.5 percent in 2021, according to the World Bank. Output is expected to be weaker, and inflation is likely to be hotter than previously thought.
The World Bank said growth rates in most emerging markets and developing economies outside East Asia and the Pacific would return to their prepandemic levels, still falling short of what would be needed to recoup losses during the pandemic’s first two years. The slowdown in these regions will be more abrupt than what advanced economies will experience, leading to what the World Bank describes as “substantial scarring” to output.
Income inequality is widening both within and between countries, the World Bank said, and could become entrenched if disruptions to education systems persist and if high national debt hinders the ability of nations to support their low-income populations. Globally, the prospect of higher interest rates and withdrawal of fiscal support could take a toll on low-income countries while they are already vulnerable.
Growth in the world’s two largest economies, the United States and China, is poised to moderate considerably. The World Bank said that the recently passed infrastructure law would do little to buttress growth in the United States in the near term and that pandemic restrictions were curbing consumer spending and residential investment in China.
The World Bank is recommending stronger debt relief initiatives to help poor countries as well as urging support for policies that will strengthen their financial systems and improve local infrastructure in ways that will spur growth. Easing global supply chain bottlenecks, particularly for Covid vaccine doses, will be crucial.
“At the start of 2022 the supply of vaccines is increasing appreciably, but new variants and vaccine deployment bottlenecks remain major obstacles,” Mr. Malpass said.
Jerome H. Powell, the Federal Reserve chair, will testify before members of the Senate Banking Committee on Tuesday as he seeks confirmation for a second term as head of the world’s most powerful central bank.
Mr. Powell, whom President Biden has nominated to a second four-year stint, could face tough questions from lawmakers at a complicated economic juncture and as an ethics scandal dogs the institution he leads.
Here’s what to watch.
Policy changes: They call it “inflationary pressure” for a reason. Mr. Powell is likely to face a volley of question from senators about why the Fed continued to stimulate the economy throughout the summer and fall even as prices rose sharply, why the central bank mistakenly presumed inflation would fade and what policymakers plan to do about it now.
The Fed is charged with maintaining price stability and fostering full employment, and officials have recently signaled that they could raise interest rates several times this year. Economists increasingly expect three or four increases, a forecast that could be shored up by an inflation report, slated for release on Wednesday, that is expected to show the fastest growth in consumer prices since June 1982.
Labor market. Mr. Powell is also likely to face questions about the job market, which is marked by swiftly falling unemployment, jumping wages and — paradoxically — millions of missing workers.
As the coronavirus keeps many former employees on the labor market’s sidelines because of health risks and caregiving duties, many industries face labor shortages. That has prompted Fed officials to say the economy is probably nearing full employment, setting the stage for higher interest rates that would aim to cool down the economy and keep it operating at a more even keel.
Trading scandal. A handful of Fed officials traded for their own portfolios just before and after the central bank swooped in to rescue a wide array of markets at the pandemic’s onset in 2020.
News of the trades broke in September, but they have stayed in the headlines and some officials have resigned over the issue. The Fed’s vice chair, Richard H. Clarida, announced on Monday that he was stepping down early. He didn’t give a reason, but he faces scrutiny over one of his 2020 transactions, the full extent of which was disclosed only when he corrected his financial filings in December. That makes him the third official to leave the central bank early since the news reports started, something out of the ordinary for the usually tame central bank.
His response. Mr. Powell released prepared remarks before the hearing, so we already have an early peek at what’s on his mind headed into the big day. “We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing and transportation,” Mr. Powell plans to tell lawmakers, explaining that he and his colleagues are dedicated to preventing high price gains from sticking around.
Citadel Securities, the powerful trading firm that serves brokerage firms like Robinhood, said on Tuesday that it had sold a stake to the venture capital firms Sequoia Capital and Paradigm for $1.15 billion, uniting an established financial giant with two top Silicon Valley investors.
The deal, which values Citadel Securities at about $22 billion, is the first outside investment in the firm, which was founded two decades ago by the billionaire Kenneth C. Griffin, who runs the multibillion-dollar hedge fund Citadel.
It’s a bet on disrupting Wall Street. Citadel Securities has become a trading giant, dominating market making for stocks and options. Its institutional business now has more than 1,600 clients, while it also works with consumer-facing brokerage firms like Robinhood.
“Citadel Securities has carved out a unique place in the financial markets through its ability to absorb and price risk using techniques and capabilities from far outside the traditional world of Wall Street,” Alfred Lin, a Sequoia partner who will take a seat on Citadel Securities’ board, said in a statement.
Sequoia is one of Silicon Valley’s top venture firms, having backed the likes of Apple, DoorDash and WhatsApp. Paradigm was founded by Fred Ehrsam, a co-founder of the cryptocurrency exchange Coinbase, and Matt Huang, who led crypto investments at Sequoia.
Citadel Securities has been criticized for its relationship with Robinhood, where it pays the firm for the right to process users’ trades, which some say could create conflicts of interest. Sequoia is also an investor in Robinhood.
Mr. Huang of Paradigm said that Citadel Securities would move into more markets and asset classes, “including crypto.” Mr. Griffin has mixed feelings about crypto, so this is a noteworthy aside.
Mr. Griffin, whose net worth was most recently estimated at $21 billion, is believed to own about 85 percent of the securities unit, according to Bloomberg. If that’s the case, his stake in Citadel Securities alone would be valued at some $18 billion.
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The National Labor Relations Board announced Monday that it had certified a victory for a union at a second Starbucks store in the Buffalo area, where votes were tallied in December but remained inconclusive as the union challenged the ballots of several employees it said did not work at the store.
The labor board declared the union the winner at another Buffalo-area store when it counted the votes on Dec. 9, and the union lost an election at a third store.
The board agreed with the union that the challenged ballots should not count, giving the union a 15-to-9 win. None of the other roughly 9,000 company-operated Starbucks locations in the United States have a union.
Labor experts have said that establishing a second unionized store in the same market could provide a significant boost to the union, Starbucks Workers United. The union is part of Workers United, an affiliate of the giant Service Employees International Union.
Under U.S. labor law, employers are obligated to bargain in good faith with a union that has won an N.L.R.B. election, but they are not required to reach agreement on a contract. As a result, winning a contract often requires unions to apply economic pressure such as a work stoppage, something that a second store could make more potent.
The newly unionized store, near the Buffalo airport, filed for a union election in late August, along with the two other stores that voted in December. The union has formally objected to the outcome of the election that it lost, and that objection is pending before the labor board.
Starbucks has 10 business days to request an appeal of the decision announced on Monday. If the request was filed and denied, the result would become final. A company spokesman said that Starbucks was evaluating whether or not to appeal and that it believed its employees’ voices should be heard.
Throughout the union campaign last year, Starbucks dispatched out-of-town managers and a top executive to Buffalo in what it said was an attempt to fix operational issues like understaffing and the poor layout of certain stores. The officials often questioned employees about their workplaces and helped with menial tasks like throwing out garbage.
Several union supporters said they were intimidated by the presence of the officials and were disoriented by other disruptions to their work lives, such as the company’s decision to temporarily close certain stores and send employees to other locations.
Since the initial victory in Buffalo, workers at several other Starbucks stores throughout the country have filed for union elections, including in Boston, Chicago, Seattle and Knoxville, Tenn.
“Today we put an end to Starbucks’s delay attempts and formed our union,” Alexis Rizzo, a shift supervisor at the second unionized location, said in a statement, adding: “We demand that Starbucks stop their union busting in Buffalo and across the nation immediately. No other partners should have to endure what we went through to have a voice on the job.”
Starbucks has denied that it has sought to intimidate employees, but it has said it prefers that its employees not unionize.
Last week, the federal labor board scheduled an election for a Starbucks store in Mesa, Ariz., where workers had filed paperwork in November. Ballots in the election will be mailed out on Friday and will be due back by Jan. 28. Workers at more than 10 other locations, including three in the Buffalo area, are still awaiting decisions from the board on if and when it will set election dates.
Reporting to work has always meant accepting a variety of unpleasantries: commutes, pre-coffee chitchat, people who would like you to do what they tell you to do even if it’s not yet 10 a.m.
But for some, the last year has rebalanced the power seesaw between worker and boss. Maybe it was the surge of people quitting: A record high 4.5 million Americans voluntarily left their jobs in November. Maybe it was the ebbing will-they-won’t-they tides of return to office plans. Whatever the change, more workers are feeling empowered to call out their managers, Emma Goldberg writes for The New York Times.
The scrutiny of workplace behavior comes after several years of prominent conversation about appropriate office conduct. The #MeToo movement propelled dozens of executives to step down after accusations of sexual assault. The Black Lives Matter protests after the killing of George Floyd prompted corporate leaders to issue apologies for past discriminatory behaviors and the lack of racial diversity in their work forces and to pledge to make amends.
And increasingly, as people’s work routines have been upended by the pandemic, they’ve begun to question the thrum of unpleasantness and accumulation of indignities they used to shrug off as part of the office deal.
“The tolerance for dealing with jerky bosses has decreased,” said Angelina Darrisaw, chief executive of the firm C-Suite Coach, who saw interest in her executive coaching services rise last year. “You can’t just wake up and lead people,” she added. “Companies are thinking about how do we make sure our managers are actually equipped to manage.”