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Foxconn Affirms Wisconsin Factory Plan, Citing Trump Chat

Foxconn, the Taiwanese consumer electronics giant, said Friday that it was committed to building a factory in Wisconsin after a conversation between the company’s chairman and President Trump.

In a statement, the company said it “is moving forward with our planned construction of a Gen 6 fab facility,” a type of plant that turns out displays for consumer products.

Foxconn did not say when the conversation between Mr. Trump and Foxconn’s chairman, Terry Gou, had taken place or who had initiated it.

Mr. Trump hailed the announcement Friday in a Twitter post, calling it “great news.”

The development followed a tumultuous few days in which Foxconn sent mixed signals about its proposed $10 billion facility in Wisconsin — an investment that Mr. Trump announced in 2017 at a White House event with Mr. Gou.

It was not immediately clear how many manufacturing jobs the company would ultimately create. The project, with a promise of 13,000 jobs, became a focus of political contention in Wisconsin over the $4 billion in tax credits and other inducements that it involved over a 15-year period.

On Wednesday, Louis Woo, the special assistant to Mr. Gou, told Reuters that the company was reconsidering whether it would make advanced TV screens at the site, citing the high cost of making them in the United States.

“In terms of TV, we have no place in the U.S.,” Mr. Woo told Reuters. “We can’t compete.”

The comments took Wisconsin lawmakers by surprise, and prompted concern among local officials that the company might not devote the facility to large-scale production, after all.

After Mr. Woo’s initial statement, the company insisted that it was not retreating from its plan to build a factory but was re-evaluating what products would be made there. Mr. Woo later told The New York Times that while the company still planned to hire 13,000 workers, he expected that only 25 percent of them would be focused on manufacturing. “The remainder of our work force will be knowledge workers,” he added.

Mr. Woo said that “the global market environment has necessitated a reconsideration of which technology” would be produced in Wisconsin.

The company did not say Friday whether the expected mix of its work force would change after the conversation with the president.

Taking questions from reporters at the State Capitol on Friday, Gov. Tony Evers said he had spoken with Mr. Woo before Friday’s announcement and said it was a reiteration of previous commitments, not a shift.

“Their message hasn’t changed much recently,” said Mr. Evers, a Democrat who took office last month. “But the fact of the matter is, it is different from what the original plan was.”

Foxconn last year committed to building a Generation 6 facility. That plan was itself a step back from its original promise to build a Generation 10.5 plant, producing larger screens.

Asked if he still thought Foxconn’s investment would produce 13,000 jobs, Mr. Evers said, “It’s likely not going to be tomorrow, I’ll tell you that.” The governor said the state would need to “continually monitor the progress and thinking that goes on” and noted that the state incentives were pegged to specific goals that Foxconn would need to achieve.

Republicans who control Wisconsin’s Legislature welcomed the president’s intervention.

“Our state has an ally in the White House,” said a statement from the Assembly’s speaker, Robin Vos, and the Senate’s majority leader, Scott Fitzgerald. “Southeast Wisconsin and the entire state will see an influx of manufacturing jobs and billions in investments.”

But Mr. Woo’s comments to Reuters about the infeasibility of making liquid-crystal display panels have some lawmakers questioning whether the thousands of promised jobs will ever materialize.

“They’re giving us the prospect of making cash payments to a company for the next 15 years for a factory that the company has admitted can’t be competitive in the marketplace,” Assemblyman Gordon Hintz, the Democratic minority leader, said in an interview. “That doesn’t sound like a good taxpayer investment.”

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NYT > Economy


Author: NATALIE KITROEFF

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Italy Slides Into Recession as Europe Stalls, Stoking Global Fears

Italy has officially slipped into recession, and Europe as a whole is essentially at an economic standstill, raising anxieties that the world is on the verge of a significant slowdown.

The timing could not be worse. The lousy performance of the Italian economy, reported on Thursday, is likely to aggravate relations between the European Commission and Italy’s populist government, which has pursued spending policies widely regarded as irresponsible. Leaders on the Continent are already dealing with Britain’s messy exit from the European Union.

At the same time, China’s economy is slowing, in part because of President Trump’s trade war. The data published Thursday by official statistics agencies provided a glimpse of just how intertwined China and Europe have become, and how vulnerable that leaves the eurozone. This weakness, in turn, adds to risks facing the United States, which is Europe’s top trading partner.

In Italy, the government’s debt load is one of the highest in the world. A prolonged economic slump would significantly add to the risk of default, with global repercussions.

The European Central Bank has in the past come to the rescue of Europe, and Italy in particular, but it has less scope to do so now. The bank is scaling back its purchases of government bonds, a stimulus measure that helped ensure there were buyers for Italian government debt.

“We have weaker economic momentum and at the same time the E.C.B. is getting out of the market,” said Katharina Utermöhl, an economist at German insurer Allianz. “That means there is less room for policy mistakes.”

Giuseppe Conte, the Italian prime minister, hardly reassured his European partners when he said Thursday that the economic setback had nothing to do with his government.

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A menswear plant in Mantova, Italy. For the second straight quarter, economic growth was negative in Italy, the mark of a recession. It is Italy’s third since 2008.CreditGianni Cipriano for The New York Times

“I am not worried in the least,” Mr. Conte told reporters, calling the recession “temporary” and blaming a tariff war between the United States and China that had hurt Italy’s No. 1 trading partner, Germany, and “will find us all losers.”

The Italian economy shrank 0.2 percent in the fourth quarter of 2018 compared with the third quarter, Istat, the Italian statistics agency, said. It was the second quarter in a row of declining output and that, by one common definition, means a recession. It is Italy’s third since 2008.

Growth in the eurozone itself was just 0.2 percent in the fourth quarter compared with the third quarter, the European Union statistics agency said. That rate matched the previous quarter’s, and anemic as it is, it might have been worse but for Spain and France. Spain’s economy grew at an unexpectedly strong clip, rising 0.7 percent in the fourth quarter compared with the third. And in France, where the government has been struggling with mass public protests over economic duress, growth hit 0.3 percent.

Economists agree with Mr. Conte on one point — that China’s woes are weighing on Europe.

During the last decade, Europe profited from China’s push to modernize its infrastructure. China equals the United States as a customer for heavy-duty German machinery, like cranes, textile machines or equipment for steel mills, and companies like Volkswagen have made the country a priority.

“It’s our biggest market,” said Ralph Wiechers, chief economist at the Mechanical Engineering Industry Association, which represents German machine manufacturers. “We still have growth, but we are noticing a lack of momentum.”

Critics of the Italian government blame its economic policies at home for its performance. Economists say the populist alliance has sowed uncertainty, prompting many Italians to spend less. A decline in consumer spending was a major culprit in the economy’s setback.

Carlo Cottarelli, a former director of the International Monetary Fund who led a spending review of the previous Italian government, reviewed the statistics on Thursday and said the alliance, in power since June, was responsible for Italy’s slide. “This recession here, it can’t be the fault of the previous government,” he told a radio station in Padua.

After a protracted fight last year with Brussels, Italy’s government increased spending for broader welfare programs and generous pensions. The government, pulling together its first budget, assured Europe that its growth would be much higher than estimated by experts — although it blocked major infrastructure projects that could stimulate growth.

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An installation by the Italian street artist Maupa. The lousy performance of the Italian economy is likely to aggravate relations between the European Commission and Italy’s populist government.CreditFilippo Monteforte/Agence France-Presse — Getty Images

Italian business leaders have become bolder in their criticism, as seen Wednesday when Mr. Conte hinted to a powerful business association in the northern Lombardy region that the new economic figures might disappoint.

Carlo Bonomi, the group’s president, implored the prime minister to stop governing from the “easy street” of electoral politics, and to introduce responsible economic policies. “Stop this drift towards violence and hate, also rhetorical, that is starting to rend the fabric of Italian society,” Mr. Bonomi said, in remarks broadcast on television news and in press reports.

After the statistics of a new recession became official, the criticism spread.

“We need to immediately open the construction sites,” Vincenzo Boccia, president of the Confindustria business association, told reporters on Thursday. He added: “We need to react as soon as possible, so that we can compensate the external effect from the global economy.”

Some analysts said that economic pain could be the only way to break the spell cast by Italian populists. But others warned that a struggling economy helped set the conditions that fueled the extreme parties’ rise.

On Thursday, the Italian government wasted no time in blaming someone else, in this case, its predecessors.

“Today’s data from Istat show a fundamental thing, that those who were in government before us lied to us,” said Luigi Di Maio, the political leader of the Five Star Movement and Italy’s economic development minister, speaking at a party event. “They never got us out of the crisis.”

He predicted that government initiatives, including an expensive unemployment program, would soon increase employment.

Mr. Conte was similarly sanguine. “We need to focus on relaunching our economy and that will surely happen in 2019,” he said. “This will be realized mostly in the second semester of 2019, and there is a lot of enthusiasm about that.”

Source:

NYT > Economy


Author: JACK EWING and JASON HOROWITZ

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U.S. Job Gains Show Employers Shrugged Off Government Shutdown

Add the recent government shutdown to the list of things that didn’t slow the American job market.

Over the past eight years, the American economy has endured trade tensions, debt-limit standoffs, foreign-policy crises and all manner of natural disasters. Through it all, companies kept on hiring.

The resilience continued in January as employers shrugged off both the monthlong shutdown and fears of an economic slowdown to add 304,000 jobs, far more than forecasters had anticipated. The report from the Labor Department marked the 100th consecutive month of job gains, more than double the previous record.

“This jobs report is showing no evidence of an economy slowing, certainly not falling into recession,” said Michelle Meyer, chief United States economist for Bank of America Merrill Lynch. “It’s still a tight labor market. Employers are still actively looking for jobs, and with wages ticking up, it looks like workers are getting some more bargaining power.”

Friday’s report does not mean the economy escaped the shutdown unscathed. The Congressional Budget Office this week estimated that the funding lapse shaved $11 billion off total output, $3 billion of which will never be recovered. Those totals don’t include indirect costs from permits not issued, loans not processed and flights not taken because of delays at airports.

The effects on spending, investment and output should show up in other government reports, some of which were themselves delayed by the shutdown.

Those disruptions didn’t deter employers, however. The unemployment rate rose slightly, to 4 percent, at least partly because of the idling of hundreds of thousands of federal workers. But hiring in the private sector was strong and broad-based, with manufacturers, retailers and construction companies all adding jobs. Wage growth, which has picked up in recent months after years of sluggish gains, remained solid, and the strong labor market continued to pull in workers from the sidelines.

The Labor Department did revise downward its estimate of December hiring by 90,000 jobs, an unusually large adjustment. But the strong growth in January, combined with upward revisions to earlier months, meant that the pace of hiring, averaged over six months, actually rose.

That combination of strong hiring and modest wage gains has put the economy on a strong, sustainable footing. More jobs means more income for consumers, which leads to more spending, and in turn more hiring.

“The virtuous cycle continues,” said Michael Gapen, chief United States economist for Barclays. “What’s kept this recovery going, what’s kept the U.S. economy so resilient to all the things that have clouded the outlook, is a virtuous cycle of a continuously growing U.S. labor market.”

None of the threats to the economy over the past several years have disrupted that central pattern. The shutdown, for example, caused ripple effects throughout the private sector, but companies and businesses also found ways to cope. Ben Herzon, an economist for Macroeconomic Advisers, a forecasting firm, said that as a result, the shutdown’s economic impact might be more muted than simple economic models might suggest.

“The economy is resilient,” Mr. Herzon said. “People and businesses find a way to work around these disruptions. People want to buy stuff, and businesses want to find a way to make that happen.”

James Diana and his wife started JD’s Canine Cruiser, a dog-walking and pet-sitting business in the Virginia suburbs of Washington, in 2012. The area’s strong economy has allowed them to expand the business and bring on more contract employees, many of whom are at-home parents and others who might not find work in a less robust economy.

Many of Mr. Diana’s customers are federal employees or contractors, and the shutdown hit his business hard. He said cancellations in January were roughly double their normal level, costing him thousands of dollars in lost business. Government workers, he noted, will get back pay, but that won’t help him.

“That actually is lost income for us,” he said. “They’re going to get their money back. I’m not going to get my money back.”

Mr. Diana said he pared his own spending, but he also tried to fill in the gap in his business. He doubled down on efforts to find new customers, including on Thumbtack, an online marketplace for hiring people to complete tasks.

“It forced me to go out there and get more clients,” he said — to “really get out there and start cranking.”

The relative invisibility of the shutdown in Friday’s data wasn’t a total surprise. Because federal workers will receive back pay, the figures counted all of them as having been on payrolls in January, even if they weren’t actually on the job.

Government contractors generally won’t receive back pay, so if they didn’t work, they weren’t counted. Ditto for other private-sector workers who were laid off (or weren’t hired) because of the shutdown. But most economists expected those effects to be small in an economy that employs more than 150 million people. Sure enough, private employers added nearly 300,000 jobs last month.

MORE ON THE SHUTDOWN AND THE ECONOMY

Government Shutdown Shakes Stability of Jobs That Are Often the Best Around

The shutdown does help explain why the unemployment rate ticked up in January. Unlike the monthly hiring figures, which come from a survey of employers and are based on their payrolls, the unemployment rate is based on a survey of households. In that survey, 175,000 more people than in December reported themselves as being unemployed because of a “temporary layoff” — a total that included government workers.

“Where’s your shutdown impact? There it is,” said Brett Ryan, an economist for Deutsche Bank in New York. “It just showed up in the unemployment rate.”

Economists have become increasingly concerned in recent months about a range of possible threats to the United States economy. Growth has slowed in Europe and China; trade tensions are threatening the American manufacturing sector; stock market jitters could make consumers less likely to spend; and the shutdown, of course, could erode confidence among consumers and businesses.

None of that, however, has yet affected the job market.

“There’s a caution or concern in people’s voices, but it hasn’t turned into action,” said Teresa Carroll, executive vice president for Kelly Services, a staffing firm. “Anybody in a hiring situation in a company is probably waiting for that next shoe to drop, but it doesn’t mean they’re stopping.”

It isn’t just Friday’s data that looked strong. Claims for unemployment insurance recently hit a nearly 50-year low. Paychecks are growing — data released Thursday showed that wages and salaries rose 3.1 percent in the final three months of 2018 compared with a year earlier, the fastest growth since the recession ended a decade ago. And employers report in private surveys that they plan to keep on adding workers, at least if they can find them.

“The underlying foundation hasn’t changed,” said Becky Frankiewicz, president of ManpowerGroup North America, a staffing firm. She said what she was hearing from clients was “nice, robust optimism continuing around hiring.”

As the unemployment rate has fallen, companies have had to work harder to find workers. Ms. Frankiewicz said companies were increasingly offering training, rethinking job requirements and letting employees work remotely.

They are also raising pay — a factor that may be attracting people who had previously stopped looking for work. The labor force grew by nearly half a million people in January, suggesting that more Americans are willing and able to work than the low unemployment rate might indicate.

“If wages are rising, that gives a greater incentive for folks to come back into the labor force and look for jobs,” Ms. Meyer of Bank of America Merrill Lynch said.

The Federal Reserve had signaled this week that it was pressing “pause” on plans to continue raising interest rates this year. Jerome H. Powell, the Fed’s chairman, said that “the case for raising rates has weakened somewhat” because of low inflation and slowing global growth.

Friday’s report seemed to offer a sharp counterpoint to those comments. The economy, at least in the United States, still seems strong, and wage growth has been picking up.

Still, economists said the report was unlikely to lead the Fed to reverse course yet again.

“This is just one piece of news,” Mr. Ryan of Deutsche Bank said. “They’re going to have to see several more of these before they’re comfortable hiking again.”

For President Trump, whose approval ratings have been battered by the shutdown, the Russia investigation and other factors, Friday’s data was welcome news. Both Mr. Trump’s re-election campaign and the White House issued news releases highlighting the jobs figures, and the president hailed the report on Twitter.

Source:

NYT > Economy


Author: BEN CASSELMAN