Britain’s economic recovery nearly stalled in July as Delta variant spread.


Daily Business Briefing

Sept. 10, 2021, 10:14 a.m. ET

Sept. 10, 2021, 10:14 a.m. ET

Credit…Hannah Mckay/Reuters

The British economy almost stalled in July, even as most of the final pandemic restrictions were lifted. The services sector, which had been the engine of the economic recovery this year, ground to a halt as the Delta variant spread across the country, forcing people to stay home and consumer spending to decline.

Gross domestic product increased by 0.1 percent in July from the previous month, according to the first estimate by the Office for National Statistics, a slower expansion than most analysts had expected. Although Britain eked out a sixth consecutive month of gains, the pace was considerably slower.

The main reason the economy grew at all was the reopening of an oil field after planned maintenance. Services and manufacturing output were flat and construction contracted for a fourth month.

Output from the service industry, which include shops, restaurants and hotels, fell for the first time since January, the statistics agency said, primarily because of a decline in retail sales. These services are still nearly 7 percent below their prepandemic level. In the overall services sector, the return of music festivals and other large events in July wasn’t enough to offset declines in advertising, real estate and elsewhere.

At the same time, manufacturing was hampered by a struggle to fill vacancies and construction companies were waylaid by price increases and scarce materials such as steel and lumber.

The economy was still 2.1 percent below its prepandemic size in July and could struggle to fully recover as shortages of staff and products weigh on economic activity.

“Making up that last G.D.P. ‘lost’ portion of output will be the hard bit as the early gains from the reopening have been largely exhausted,” analysts at the Royal Bank of Canada wrote in a note.

The Bank of England expects the economy to return to its prepandemic size this year, but the shape of the recovery has changed. The central bank said last month that faster growth in the second quarter would be offset by a slowdown in the third quarter.

Since then, the central bankers have been paying close attention to supply chain disruptions and their impact on inflation. Because of the persistence of the virus, the central bank still hasn’t seen the rebalancing of demand toward services (such as travel and office catering), and away from goods (like cars and work-from-home equipment) that it expected, Andrew Bailey, the Bank of England governor, told British lawmakers this week.

And so, the global demand for goods was pushing commodity prices higher, like oil and metals, he said.

Policymakers expected supply bottlenecks to eventually be resolved as the pandemic comes to an end, but Mr. Bailey said he was more concerned about how long the mismatches in the labor market would go on. Businesses across nearly every sector have complained about not being able to fill positions, even though unemployment has risen and many people are still furloughed from their jobs.

“At the moment, we’re seeing some leveling off of the recovery,” Mr. Bailey said on Wednesday.

Many companies were already moving toward vaccine mandates, but they were focused on white-collar workers.
Credit…Eli Hartman/Odessa American, via Associated Press

President Biden on Thursday laid out a wide-ranging plan to tackle the pandemic, including requiring companies with more than 100 employees to mandate that their workers get vaccinated or face weekly testing.

The move comes as airlines, restaurants and other businesses are already feeling the pain of an economic pullback caused by the Delta variant of the virus. The new rule, which Biden instructed the Occupational Safety and Health Administration to put in place by drafting an emergency temporary standard, will affect some 80 million workers.

Many companies were already moving toward mandates. In a recent Willis Towers Watson survey, 52 percent of respondents said they planned to institute vaccine mandates by the end of the year, and 21 percent said they already had such requirements.

But many of those mandates, including at companies like Goldman Sachs and UPS, have focused on white-collar workers, who tend to have higher vaccination rates. This presidential directive will help industries that are facing labor shortages, like retail and hospitality, institute a requirement on their frontline workers.

“It levels the playing field,” said Ian Schaefer, a partner at the law firm Loeb & Loeb.

Companies will now face new decisions, like whether to pick up the tab for weekly testing and how to handle religious exemptions — tasks many are already finding challenging.

A recent poll by Aon of 583 global companies found that of the employers that have vaccine mandates, 48 percent said they were allowing for religious exemptions; only 7 percent said they would fire a worker for refusing to get vaccinated.

Among unanswered questions:

  • How will the government gather, store and track information on employee vaccinations?

  • What penalties will companies face if they choose not to follow the new requirement?

  • Does it apply to all workers, or only those going into an office?

  • When will the new rules take effect?

Reaction was, unsurprisingly, mixed. The Business Roundtable and the U.S. Chamber of Commerce both welcomed the Biden administration’s actions. But Gov. Greg Gianforte, Republican of Montana, the only state to ban vaccine mandates, called the new rules “unlawful and un-American.” The Republican National Committee said it intended to sue.

Whether legal challenges will prove successful is unclear. OSHA’s emergency temporary standards pre-empt state governments’ existing rules, except in states that have their own OSHA-approved workplace agencies. (About half do.) The legal basis for a challenge is likely to be weakest in states that are directly within OSHA’s jurisdiction, like Montana, Texas and Florida.

Do you run or work at a business that will be affected by the new vaccine mandate? If so we’d like to hear from you. Email Lauren.Hirsch@nytimes.com and please let us know how to reach you if we need to learn more.

Brian Moynihan, the chief executive of Bank of America, announced the changes in a staff memo.
Credit…Shannon Stapleton/Reuters

Bank of America overhauled its top management Friday after the decisions of two key executives to retire prompted a cascade of changes.

Alastair Borthwick, who has run the commercial banking business for nine years, was appointed chief financial officer starting in the fourth quarter, the bank said in a statement. He succeeds Paul Donofrio, who will become vice chair and oversee sustainable finance.

Lauren Mogensen will become global general counsel at the end of the year, succeeding David Leitch, who will retire next year. The heads of the bank’s investment-banking and trading divisions will stay in their current roles and report directly to the chief executive, Brian Moynihan.

“As we focus on the path ahead and what it requires, and individuals decide they are ready to transition and/or retire, we are able to promote and expand colleagues from inside the company resulting in new opportunities, smooth transitions, and continued momentum,” Mr. Moynihan wrote in a memo to staff.

Aditya Bhasin was promoted to chief technology and information officer. His predecessor, Cathy Bessant, will become vice chair of global strategy.

Employees entering Citigroup’s headquarters in Manhattan in July.
Credit…Jeenah Moon for The New York Times

The issue of vaccine mandates has been a delicate balance for employers, weaving in politics, health and privacy. But the government has put increasing pressure on employers to play a role in helping to vaccinate the country — and executives are desperate to get back to a degree of normalcy.

On Thursday, President Biden said the Occupational Safety and Health Administration was drafting a rule mandating that all businesses with 100 or more workers require their employees to either get vaccinated against the coronavirus or face mandatory weekly testing. That move would affect some 80 million workers.

Even before that announcement, mandates and inducements by city, state and federal governments, as well as full Food and Drug Administration approval of the Pfizer-BioNTech coronavirus vaccine for people 16 and older, made it easier for executives to go ahead.

The specifics have not yet been made public, but the president said two new requirements would apply to businesses with 100 or more employees: They must require that workers get vaccinated against the coronavirus or be tested at least once a week, and they must give workers paid time off to receive the vaccine and recover from any side effects.

Lawyers said Thursday that it was not immediately clear whether the rule would apply to all employees or only those who work in company offices or facilities.

OSHA has the authority to quickly issue a rule, known as an emergency temporary standard, if it can show that workers are exposed to a grave danger and that the rule is necessary to address that danger. The rule must also be feasible for employers to enforce.

Such a standard would pre-empt existing rules by state governments, except in states that have their own OSHA-approved workplace agencies — about half the states in the country. States with their own programs have 30 days to adopt a standard that is at least as effective, and that must cover state and local government employees, such as teachers. Federal OSHA rules do not cover state and local government employees.

The legal basis for a challenge is likely to be weakest in states that are directly within OSHA’s jurisdiction. Among them are some of the states that have recently been hardest hit by Covid-19 and where politicians have been resistant to mandates — such as Texas and Florida.

“I think that the Department of Labor probably is in good stead to be able to justify its mandate for health and safety reasons for the workers,” said Steve Bell, a partner at the law firm Dorsey & Whitney who specializes in labor and employment.

“They’ve got a broad pretty solid basis for saying: ‘We’re here to protect the workers, and this is part of our purview, and we think that this is something that will protect employees,’” he said.

Corporate vaccine mandates began to roll out substantially in late July, shortly after the Biden administration announced that it was requiring all civilian federal employees to be vaccinated against the coronavirus or to submit to regular testing and other strict requirements. Walmart and Disney led the way, followed by others including Uber and Google. When the F.D.A. granted its approval on Aug. 23, more mandates came flooding in from Goldman Sachs, Chevron and others.

Still, many are not comprehensive. Companies like Walmart and Citigroup have mandates for their corporate employees but not for frontline workers. Many companies are dealing with labor shortages and varying levels of vaccine hesitancy across state lines.

In a recent Willis Towers Watson survey of nearly 1,000 companies, which together employ almost 10 million people, 52 percent of respondents said they planned to have vaccine mandates by the end of the year, compared with 21 percent that said they already had vaccine requirements.

The approach to mandates has run the gamut. Some, like Tyson Foods, which is requiring vaccines for its entire U.S. work force, have said that vaccines are a condition for employment. United Airlines has said it will fire employees who do not abide by the airline’s vaccine mandate or get an exemption; those who are exempt will be placed on temporary leave, in many cases unpaid.

Others, though, have worked a degree of flexibility into their requirements. Many, like AstraZeneca, have allowed employees with religious or medical exemptions to undergo weekly testing as an alternative to vaccination. Some, including UBS, have said employees who do not want the vaccine may work from home.

A recent poll by Aon of 583 global companies found drastically different policies. Of employers that have vaccine mandates, 48 percent said they were allowing for religious exemptions; just 7 percent said they would fire a worker for refusing to get vaccinated.

Companies have been offering incentives to persuade workers to get the vaccine. Some, such as Kroger, have offered bonuses, while others have provided vaccinations in the workplace and additional paid time off to increase inoculation rates.

But others have been using deterrents, including loss of employment. Delta Air Lines, for example, has been requiring unvaccinated employees to pay an extra $200 a month to stay on the airline’s health plan. Other companies have been restricting office entry for those who are not vaccinated.

Workers who are unvaccinated because of a disability or conflicting religious beliefs have been told that they must follow strict safety guidelines like regular coronavirus testing, masking and social distancing. Some are allowed to work remotely.

Companies are legally permitted to make employees get vaccinated, according to guidance from the U.S. Equal Employment Opportunity Commission, though a number of states have proposed legislation limiting the ability to mandate for employees or guests.

Employers are allowed to ask about a worker’s vaccination status, which is not protected by the Health Insurance Portability and Accountability Act, known as HIPAA. The law, which protects a patient’s confidential health information, applies only to companies and professionals in the health care field.

Do you run or work at a business that will be affected by the new vaccine mandate? If so we’d like to hear from you. Email Lauren.Hirsch@nytimes.com and please let us know how to reach you if we need to learn more.

Wells Fargo received a $250 million fine and a stinging rebuke from a banking regulator on Thursday for failing to fix problems in its mortgage business.

The bank was penalized for “unsafe or unsound practices” in home lending, including errors that harmed customers, inadequate controls and ineffective governance, the Office of the Comptroller of the Currency said. The bank will be barred from transferring affected customers out of its loan-servicing business until the errors are corrected, and may have to halt some foreclosures.

The penalty stems from a 2018 order the regulator handed down for widespread failures, including improperly charging customers for mortgage fees. It was one in a series of missteps by the bank, which still faces a mountain of regulatory punishments over its sales practices — including a fake accounts scandal — even after one expired this week.

Michael J. Hsu, the acting head of the regulator, said in a statement that Wells Fargo’s actions were “unacceptable.” Thursday’s action, he said, “puts limits on the bank’s future activities until existing problems in mortgage servicing are adequately addressed.”

Wells Fargo’s chief executive, Charles W. Scharf, said the company’s top priority was to build systems to manage risk and controls. Still, he said, the regulator’s actions “point to work we must continue to do to address significant, longstanding deficiencies.”

The company noted one mark of progress in its cleanup efforts: A consent order from the Consumer Financial Protection Bureau related to the fake account scandal expired on Wednesday. The expiration of the order, which required the bank to pay fines and overhaul its sales practices, means that Wells Fargo has met the agency’s requirements. But serious limitations, including a cap on its assets, remain intact.

An apartment complex in Chicopee, Mass. In some places, tenants do not have official leases, making them hard to find, and harder to help.
Credit…Cody O’Loughlin for The New York Times

The vast majority of a $46.5 billion rental assistance fund sits unspent, despite one estimate that puts the number of renters in immediate danger of eviction at two million.

The House Financial Services Committee will hold a hearing on Friday to examine the shortcomings of the fund, known as the Emergency Rental Assistance Program, which had only distributed a fraction of its total funding by Aug. 1, according to the Treasury Department.

Federal and local officials, housing experts, landlords and tenants have cited an array of problems that slowed the flow of aid:

  • Bureaucratic missteps at all levels of government.

  • Onerous applications.

  • Resistance from landlords.

  • The reluctance of local officials to ease eligibility requirements for the poor.

  • Difficulty raising awareness that rental aid even existed.

  • A steep rise in rents that increased the incentive for kicking out low-income tenants.

Over the past several months, the White House and Treasury Department have been racing to deal with the program’s problems, repeatedly revising guidelines to allow tenants to receive payouts with a minimum of documentation, while enlisting state judges and even law school students to help tenants delay or prevent their evictions, report Glenn Thrush and Conor Dougherty of The New York Times.

Attempts to stave off evictions go back to last spring, when about $4 billion in rental assistance was tucked into the $2.2 trillion CARES Act signed last March by President Donald J. Trump. Unlike other federal emergency programs, like stimulus checks, which were mainly controlled by Washington, rental assistance was given to states and large cities and counties, which were free to design their own programs to suit their local needs.

How the program fell apart: From the beginning, local governments struggled with administrative headaches. Then the momentum stalled. READ THE FULL ARTICLE →

  • U.S. stocks rose in early trading Friday, with the S&P 500 heading for its first day of gains for the week. The index rose 0.4 percent, while the Nasdaq composite was up 0.6 percent.

  • President Biden on Thursday ordered new federal vaccine requirements to push two-thirds of American workers to be vaccinated against the coronavirus, reaching into the private sector to mandate that all companies with more than 100 workers require vaccination or weekly testing. The mandate presents challenges for businesses.

  • U.S. producer prices rose 0.7 percent in August, the Labor Department reported on Friday, signaling lasting inflation. The Producer Price Index was down from 1 percent in July.

  • European indexes were higher, with the Stoxx Europe 600 up 0.2 percent on Friday. Gross domestic product in Britain increased by 0.1 percent in July from the previous month, according to the first estimate by the Office for National Statistics.

  • Shares for Kroger fell more than 6 percent in early trading after the supermarket reported sales decreased by 0.6 percent in the quarter ending Aug. 14 compared with the same period last year.

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The disgraced founder of the blood testing start-up Theranos arrived at the federal courthouse and stood trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.CreditCredit…Mike Kai Chen for The New York Times

The judge in the trial of Elizabeth Holmes, the founder of the blood testing start-up Theranos, canceled Friday’s proceedings after a juror said he might have been exposed to someone with the coronavirus.

The juror reported no symptoms, and is getting a lab test on Saturday. Out of caution, Judge Edward J. Davila of the U.S. District Court for the Northern District of California proposed going dark while awaiting the test results. The trial is expected to last four months.

Lawyers for the government and the defense made their opening statements on Wednesday, and a former controller for the company began to testify before the proceedings ended for the day. [Read more about the trial’s opening statements.]

Robert Leach, an assistant U.S. attorney, methodically described the times that Theranos came close to going out of business. “Out of time and out of money, Elizabeth Holmes decided to lie,” he said, in what became a refrain

Mr. Leach described Theranos’s false claims that its technology was being used on battlefields. He showed apparently falsified reports that Ms. Holmes gave to investors from pharmaceutical companies endorsing Theranos’s technology. He said she had peddled wildly exaggerated revenue projections and had used the news media to execute her fraud.

“The scheme brought her fame, it brought her honor, and it brought her adoration,” Mr. Leach said.

The defense argued that Ms. Holmes was a hardworking, if naïve, entrepreneur who did not succeed but did not commit any crimes.

“The villain the government just presented is actually a living, breathing human being who did her very best each and every day,” said Lance Wade, a lawyer with Williams & Connolly who represents Ms. Holmes. “Trying your hardest and coming up short is not a crime.”

Mr. Wade argued that the reality of Theranos’s failure was more complicated than the government’s presentation and that the company had built some valuable blood-testing technology.

Credit…Nick Otto/Agence France-Presse — Getty Images

Interest in the trial was so high that a line began forming to get into the federal courthouse before 5 a.m. Entering the windy alley in front of the courthouse at about 8 a.m., Ms. Holmes was swarmed by camera crews. She was escorted through the scrum by her boyfriend, Billy Evans, and family members.

Curious members of the public also showed up, as did a crew of three blond-haired women in black suits who resembled the defendant. At one point, Mr. Evans and the women in black passed around a padded seat for the courtroom’s hard benches.


Who’s Who in the Elizabeth Holmes Trial

Erin Woo

Erin Woo📍Reporting from San Jose, Calif.

Who’s Who in the Elizabeth Holmes Trial

Erin Woo

Erin Woo📍Reporting from San Jose, Calif.

Carlos Chavarria for The New York Times

Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.

Here are some of the key figures in the case →

Item 1 of 9





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