US ECONOMY & POLITICS

U.S. Producer Prices Increased in August by More Than Forecast – Bloomberg, 9/10/2021

• Prices paid to U.S. producers increased in August by more than forecast as persistent supply chain disruptions squeeze production costs higher.
• The producer price index for final demand increased 0.7% from the prior month and 8.3% from a year ago, a fresh series high, Labor Department data showed Friday. Excluding the volatile food and energy components, the so-called core PPI advanced 0.6%, and was up 6.7% from August of last year.
• The PPI report showed prices for goods increased 1% after a 0.6% gain in the prior month, while the cost of services rose 0.7%.
• Producer prices excluding food, energy, and trade services — a measure often preferred by economists because it strips out the most volatile components — rose 0.3% from the prior month and increased 6.3% from a year earlier.
• The PPI data come ahead of next week’s consumer price index report, which is forecast to show a 0.4% advance in the CPI from the prior month and a 5.3% increase from August of 2020.

U.S. wholesale inventories rise; inventories-to-sales ratio lowest in seven years – Reuters, 9/10/2021

• U.S. wholesale inventory accumulation slowed in July, lagging further behind sales, and it is now taking wholesalers the shortest time in seven years to clear shelves.
• The Commerce Department said on Friday that wholesale inventories rose 0.6% as estimated last month.
• Stocks at wholesalers increased 1.2% in June. Wholesale inventories climbed 11.5% in July from a year earlier.
• Inventories are a key part of gross domestic product.
• The component of wholesale inventories that goes into the calculation of GDP increased 0.7% in July.
• Sales at wholesalers increased 2.0% in July after accelerating 2.3% in June.
• At July’s sales pace it would take wholesalers 1.20 months to clear shelves, the fewest since July 2014, from 1.22 in June.

U.S. applications to start a business fall in August – Reuters, 9/10/2021

• Applications to start new U.S. businesses declined in August for just the third time this year and the first time since June as the recent surge in coronavirus cases put entrepreneurs on hold.
• The Commerce Department said on Thursday that business applications fell 4.7% to a seasonally adjusted 427,842 last month.
• The data is derived from business applications for tax identification numbers.
• There were a seasonally adjusted 50,564 applications from corporations, down 2.5% from July.
• Applications for businesses with planned wages totaled 51,240, a decrease of 3.7% from the prior month.

Fed Officials Prepare for November Reduction in Bond Buying – Wall Street Journal, 9/10/2021

• Federal Reserve officials will seek to forge agreement at their coming meeting to begin scaling back their easy money policies in November.
• Many of them have said in recent interviews and public statements that they could begin reducing, or tapering, their $120 billion in monthly purchases of Treasurys and mortgage-backed securities this year.
• While they are unlikely to do so at their meeting on Sept. 21-22, Fed Chairman Jerome Powell could use that gathering to signal they are likely to start the process at their following session, on Nov. 2-3.
• Under the plans taking shape, officials could reduce those purchases at a pace that allows them to conclude asset buying by the middle of next year.

Democrats Float Partnership, Buyback Taxes to Fund $3.5 Trillion Spending Plan – Wall Street Journal, 9/10/2021

• Senate Democrats offered proposals Friday for tighter tax rules on partnerships and an excise tax on stock buybacks, as lawmakers look to plug gaps in their fast-moving, $3.5 trillion healthcare, education and climate legislation.
• Finance Committee Chairman Ron Wyden of Oregon detailed possible changes to partnership taxation that could raise more than $172 billion over a decade. Sen. Sherrod Brown (D., Ohio), along with Mr. Wyden, is releasing a bill that would impose a 2% excise tax on publicly traded companies’ stock buybacks.
• Lawmakers have talked about a proposal as large as $3.5 trillion over a decade, potentially all paid for with spending cuts and tax increases. But they have struggled to find enough tax increases that have support among all Democrats.
• The House Ways and Means Committee began considering its piece of the proposal on Thursday, with Democrats largely united on the paid-leave program and retirement-policy changes and Republicans objecting.

Treasury Could Hit Debt Ceiling Deadline by Mid-October, Analysts Say – Wall Street Journal, 9/10/2021

• The government will likely run out of cash and could begin to miss payments on its obligations some time between mid-October and mid-November, according to a new projection from the Bipartisan Policy Center, a Washington think tank.
• Treasury Secretary Janet Yellen on Wednesday said her agency may run out of room to keep paying the government’s bills on time during the month of October, unless Congress lifts the federal borrowing limit, which was reinstated on Aug. 1 after a two-year suspension.
• The Treasury has been using extraordinary measures since then to conserve cash and keep making payments to bondholders, Social Security beneficiaries, veterans and others.
• A significant majority of those measures, such as temporarily suspending investments in some federal employee retirement programs, have already been exhausted, said Shai Akabas, the director of economic policy at the Bipartisan Policy Center.
• Most of the resources the Treasury has left include cash on hand, which at the end of August amounted to roughly $356 billion, he said.

Democrats Advance Plan to Require Employers to Offer Retirement Plans – Wall Street Journal, 9/10/2021

• Democrats have included a provision in their $3.5 trillion healthcare, education and climate bill that would require companies without retirement plans to automatically enroll workers in individual retirement accounts.
• The House Ways and Means Committee on Thursday voted 22-20 to approve the measure, which committee chairman Richard Neal, (D., Mass.) has supported for years.
• Should the package pass, the move could significantly broaden access to workplace retirement savings accounts, especially for employees of small businesses, many of which offer no plan at all.
• Some small business groups say the requirement would be too onerous for small employers.
• Starting on Jan. 1, 2023, the provision would require employers to deduct at least 6% from workers’ paychecks and automatically increase that savings rate by 1 percentage point a year until reaching 10% of pay.

EUROPE & WORLD

China vehicle sales fall for fourth month on chip shortages – Reuters, 9/10/2021

• China’s vehicle sales slid 17.8% in August from a year earlier, falling for a fourth consecutive month, as the world’s biggest car market was hard hit by a global shortage of semiconductors.
• Overall sales in China stood at 1.8 million vehicles in August, data from the China Association of Automobile Manufacturers (CAAM) showed.
• China’s vehicle sales jumped 13.7% in the first eight months of 2021 from the same period a year ago, as the market recovered from pandemic lows.
• CAAM now expects 2021 growth to be slower than a previously forecast 6.5%, said Chen Shihua, a senior official at CAAM.

Toyota cuts production target by 3% on parts and chips shortages – Reuters, 9/10/2021

• Toyota Motor cut its annual production target by 300,000 vehicles on Friday as rising COVID-19 infections slowed output at parts factories in Vietnam and Malaysia, compounding a global shortage of auto chips.
• Unlike other big global automakers that were forced earlier to scale back production plans, Toyota had managed to avoid cuts to output because it had stockpiled key components along a supply chain hardened against disruption following northeast Japan’s devastating earthquake in 2011.
• The Japanese carmakers’ announcement on Friday is a further sign that no part of the global car industry has escaped the effects of a pandemic that has sapped sales and is hobbling their ability to take advantage of the recovery in demand that followed the initial waves of COVID-19.
• Toyota now expects to build 9 million vehicles in the year to March 31, rather than 9.3 million. It did not revise its 2.5 trillion yen ($22.7 billion) operating profit forecast for the business year.

Chip shortage pushes Reliance, Google to delay India smartphone launch – Reuters, 9/10/2021

• Indian conglomerate Reliance Industries delayed the launch of a low-cost smartphone it is developing with Google to November, citing an industry-wide semiconductor shortage.
• The “ultra-affordable” smartphone, developed jointly by Reliance’s telecom arm and Google, was set to be rolled out from Sept. 10.
• The annual festive season in India typically lasts for 30 days, beginning in October and ending with Diwali — set for Nov. 4 this year. Indians usually make big-ticket purchases from jewellery to gadgets and cars around this period.
• The additional time will also help mitigate the current industry-wide global semiconductor shortages, Jio added.

Factmonster – TODAY in HISTORY

• Elias Howe of Massachusetts received a patent for his sewing machine. (1846)
• Twenty black students entered public schools in Birmingham, Mobile, and Tuskegee, Alabama, after President John F. Kennedy sent National Guardsman to end the standoff with Alabama Governor George Wallace. (1963)
• Switzerland became the 190th member of the United Nations. (1990)