December 2022

Yet this could all quickly change next year if the kind of recession that economists are predicting arrives — and the hard times for workers could come just as President Joe Biden launches an expected reelection campaign.

“Tech and finance are taking the impact of rate hikes the hardest because they gorged the most on low rates,” said David Kotok, chief investment officer at Cumberland Advisors. “But if you are a carpenter or a retail worker right now you can still quit your job whenever you want and instantly go somewhere else and get paid more. This won’t continue to be true if we go into a real recession.”

The numbers tell the story of the higher-end pain, lower-end gain phenomenon.

American companies this year have announced the layoffs of 320,173 workers, a 6 percent increase over the first 11 months of 2021, according to data firm Challenger. Of that number, by far the most came in the tech sector — 80,978, or more than a quarter.

Wealthy investors who rely on market gains have also taken a punch. All three major Wall Street indexes are down by double digits on the year with the tech-dominated Nasdaq off the most at 34 percent as of Dec. 23. Over the last year, the cryptocurrency market implosion vaporized over $2 trillion in investor wealth and cost thousands of well-paid workers their jobs.

But predictions of hurt for rank-and-file workers have not fully materialized — at least not yet. And there has been plenty of such concern.

“Do you know what’s worse than high prices and a strong economy? It’s high prices and millions of people out of work,” Warren said back in August. In October, she led a letter with nine other lawmakers accusing Fed Chair Jerome Powell of “an apparent disregard for the livelihoods of millions of working Americans.”

Instead, the market for retail workers, laborers, cooks, cleaners and a broad swath of other lower-paying jobs has remained strong despite officials even in the Biden administration saying they expect a significant decline in employment growth.

Employers created a robust 263,000 jobs in November with only minor signs of cooling in demand for labor. Average hourly earnings are rising at a 5.1 percent annual pace and monthly gains are now outpacing increases in the Consumer Price Index.

These are good times for lower-paid job seekers. But it’s also a potentially big problem for the economy since their wage gains could spur the Fed to crank up interest rates so much that it will trigger a recession. That’s because wage growth this solid feeds into overall inflation as employers pass greater labor costs on to consumers.

The Fed’s Powell has said the economy cannot sustain such wage growth without stoking inflation and that the country needs millions more people to enter the labor market. Even with wage increases, that’s not happening, with the labor force participation rate stuck at 62.1 percent, below its pre-pandemic level.

“Despite very high wages and an incredibly tight labor market, we don’t see participation moving up, which is contrary to what we thought,” Powell said at a December press conference, adding that the slowdown in immigration in recent years has fueled the problem of a lack of workers.

“We need more people,” he said, while also noting that some of the highest wage increases are now occurring in lower-income brackets.

But if wage inflation does not ease, Powell and the Fed are prepared to use rate hikes — both in size and duration — to push down business demand for labor. And in doing so they could spark a significant recession and kick off the kind of job losses that would be brutal for workers and for Biden and the Democrats heading in 2024.

“The speculative, bubble parts of the economy like technology that benefited greatly from the Fed keeping long-term rates lower for longer than were justified have already started to weaken,” said Richard Bernstein, founder of a financial advisory firm that bears his name. “But if we do get a true recession, then the demand for labor will probably significantly subside and you’ll see millions more workers impacted.”

The White House — and some economists — contend that a recession remains avoidable as inflation slowly eases and the impact of previous hikes takes hold. Administration officials note that previous predictions of recession have been wrong — the economy grew at a healthy 3.2 percent pace in the third quarter of the year, the government said on Dec. 22. They also say policies enacted in the last two years on infrastructure and technology development will help avoid a serious downturn.

Both the Fed and the White House got some good news on the inflation front on Dec. 23 with a key metric, the Personal Consumption Expenditures index, dipping to a 5.5 percent increase in November from the same time last year, down from 6.1 percent in October.

“The appetite and action to invest in the U.S. is very high right now,” Brian Deese, White House National Economic Council Director, told POLITICO. “And that’s a reflection of the relative strength of the United States and a reflection of a policy environment that has provided long-term certainty to invest.”

But such a scenario, in which labor shortages ease and wage inflation cools quickly enough for the Fed to relax its restrictive stance, is not the consensus view of economists.

Rather, prognosticators from Bank of America to JPMorgan Chase mostly predict at least a mild recession beginning sometime next year, driving the unemployment rate perhaps substantially more than the current 3.7 percent.

Democratic economist and former Treasury Secretary Larry Summers — among the few to predict the sustained run of elevated inflation — sees joblessness rising to as much as 7 percent before the Fed is done killing inflation.

Such an increase would come at a dangerous time, both for Democrats and workers. Lower-income Americans are cutting deeply into their savings while battling inflation. They are putting more spending on credit cards. And a split Congress is unlikely to agree on any recession-fighting relief spending. Increased immigration seems politically impossible in the near term.

Meanwhile, the state-run, patchwork unemployment-benefit system is underfunded which could make it difficult for policymakers to push cash into laid-off workers’ pockets.

“There is no way we are even close to recession-ready at this point,” said Kathryn Edwards, an economist at the Rand Corp. who focuses on labor market issues. “The unemployment benefit process is how we stop downturns from becoming much larger and more painful than they need to be. And it’s a mess and we’ve done nothing about it. We were not in a good place when Covid hit in 2020 and we are in a terrible place now.”

Minnesota has a budget surplus of nearly $18 billion, which some lawmakers and school meals advocates hope can go toward hunger initiatives.

State Rep. Sydney Jordan plans to reintroduce a universal school meals bill in the 2023 session, which starts in January, after an identical bill stalled in 2022. Jordan said the funding mechanism for the program would stay the same — maximizing support from the federal Community Eligibility Provision, which allows high-poverty schools to serve meals at no cost, and getting the rest of the money from the state’s general fund.

“We have a budget surplus and we know we can do this. No child in Minnesota should be going hungry,” Jordan, a Democrat, said in an interview.

Gov. Tim Walz, a Democrat, has also made free school meals a priority for his second term.

Investing in educational services like “making sure that every child has a meal when they come through that door” should be a priority in the coming legislative session, the governor said at a December press conference on the budget surplus. Walz, a former educator, stressed that the state “need[s] to see universal meals so this food insecurity issue is taken away.”

The pandemic waiver for free school meals, which launched in March 2020, expired at the beginning of the 2022-23 school year after a Covid-19 aid package allowed the Agriculture Department to waive certain regulations for the first time. The percentage of free lunches served dropped from 99.8 percent in May 2022 to 67.5 percent in September, according to data from USDA.

Data backs the benefits of universal free school meals. Schools that provided no-cost meals for all students, through the Community Eligibility Provision, saw academic and behavioral benefits for students who didn’t meet the income qualifications for free meals, according to research from Krista Ruffini, a Georgetown University professor who has studied universal free school meals and student achievement.

“We see that expanding the school meals program to all kids, regardless of their families’ income leads to improvements for kids and families,” Ruffini said. “Math test scores go up, exclusionary discipline — basically out-of-school suspensions — go down and the use of food bank services also falls.”

A budget surplus from Covid aid is helping states continue a version of the federal program in several regions.

California and Maine started permanent universal school meal programs this school year by leveraging budget surpluses.

Colorado will tax wealthier residents to generate $100.7 million to fund free meals — a program overwhelmingly approved by Republican and Democratic voters through a 2022 ballot measure.

Vermont, Nevada and Massachusetts extended no-cost meals to all students for the current school year and Pennsylvania extended universal breakfast through the 2022-23 school year.

“States are doing this because federally, we’re not able to find consensus and pass legislation to make this happen,” Jessica Gould, chair of the School Nutrition Association’s public policy and legislation committee, said.

Washington state Superintendent Chris Reykdal submitted a free school meal proposal to the governor and legislature in September for consideration in the upcoming biennial budget.

The superintendent’s budget proposal cites the end of the USDA’s pandemic waivers as a reason the office is requesting that the state fund no-cost meals adding that the expiration came “at a time when families are still recovering from the financial impact of Covid-19, and the cost of food continues to rise.” Washington’s program would cost the state roughly $86 million annually.

In Connecticut, where lawmakers set aside $30 million in pandemic funds to help schools transition out of federal free meals, state Sen. Saud Anwar said in December he’d introduce legislation in the upcoming session to create a permanent statewide program. Missouri state Rep. Brian Seitz has pre-filed a free school meal bill ahead of the new legislative session, which starts in January. New Mexico Gov. Michelle Lujan Grisham, a Democrat, will pursue universal free school meals legislation next year.

Several states could have a big backer for free school meals. Tusk Philanthropies’ Solving Hunger, which was founded by venture capitalist and political strategist Bradley Tusk, is supporting universal school meal campaigns in 2023 for Vermont, North Carolina, Connecticut and New York.

Anore Horton, executive director of Hunger Free Vermont, which is receiving a grant from Solving Hunger, said she doesn’t want families to associate school with debt collection for unpaid school meal costs, a situation she says “the federal government has thrown so many school districts around the country into this year.”

Vermont is among the few states that have already funded an extension of free meals for the 2022-23 school year. The state set up the temporary program with the intention of considering permanent solutions.

Rosie Krueger, state director of child nutrition programs, chaired a task force directed to recommend a permanent solution for universal school meals by the 2026-27 school year. She said the increase in meals served was both a challenge and a benefit: More students were eating but schools are dealing with a shortage of food service workers.

“I’m really proud of the meals that we serve in Vermont,” Krueger said, adding that most schools try to serve fresh meals made from scratch. She noted that “universal meals means increased participation, which is kind of butting up against that staffing issue. So I think once we can right size that, folks are getting more reimbursement for those meals.”

A three-judge panel from the appeals court previously sided with Adams in 2020, but the full appeals court decided to take up the case. Though his assigned gender was female at birth, Adams began the transition to become male before he enrolled in Allen D. Nease High School in Ponte Vedra Beach, just southeast of Jacksonville.

Judge Barbara Lagoa wrote in the majority opinion that that the school board policy advances the important governmental objective of protecting students’ privacy in school bathrooms. She said the district’s policy does not violate the law because it’s based on biological sex, not gender identity.

Judge Jill Pryor wrote in a dissenting opinion that the interest of protecting privacy is not absolute and must coexist alongside fundamental principles of equality, specifically where exclusion implies inferiority.

Lambda Legal, a LGBTQ rights group that has been providing aid to Adams, didn’t immediately respond to a message seeking comment from The Associated Press.

His dramatic decision paved the way for the conclave that elected Francis as his successor. The two popes then lived side-by-side in the Vatican gardens, an unprecedented arrangement that set the stage for future “popes emeritus” to do the same.

A statement from Vatican spokesman Matteo Bruni on Saturday morning said that: “With sorrow I inform you that Pope Emeritus Benedict XVI died today at 9:34 in the Mater Ecclesia Monastery in the Vatican. Further information will be released as soon as possible.”

The Vatican said Benedict’s remains would be on public display in St. Peter’s Basilica starting Monday for the faithful to pay their final respects. Benedict’s request was that his funeral would be celebrated solemnly but with “simplicity,” Bruni told reporters.

He added that Benedict, whose health had deteriorated over Christmas, had received the sacrament of the anointing of the sick on Wednesday, after his daily Mass, in the presence of his his longtime secretary and the consecrated women who tend to his household.

The former Cardinal Joseph Ratzinger had never wanted to be pope, planning at age 78 to spend his final years writing in the “peace and quiet” of his native Bavaria.

Instead, he was forced to follow the footsteps of the beloved St. John Paul II and run the church through the fallout of the clerical sex abuse scandal and then a second scandal that erupted when his own butler stole his personal papers and gave them to a journalist.

Being elected pope, he once said, felt like a “guillotine” had come down on him.

Nevertheless, he set about the job with a single-minded vision to rekindle the faith in a world that, he frequently lamented, seemed to think it could do without God.

IIn vast areas of the world today, there is a strange forgetfulness of God,” he told 1 million young people gathered on a vast field for his first foreign trip as pope, to World Youth Day in Cologne, Germany, in 2005. “It seems as if everything would be just the same even without him.”

With some decisive, often controversial moves, he tried to remind Europe of its Christian heritage. And he set the Catholic Church on a conservative, tradition-minded path that often alienated progressives. He relaxed the restrictions on celebrating the old Latin Mass and launched a crackdown on American nuns, insisting that the church stay true to its doctrine and traditions in the face of a changing world. It was a path that in many ways was reversed by his successor, Francis, whose mercy-over-morals priorities alienated the traditionalists who had been so indulged by Benedict.

Benedict’s style couldn’t have been more different from that of John Paul or Francis. No globe-trotting media darling or populist, Benedict was a teacher, theologian and academic to the core: quiet and pensive with a fierce mind. He spoke in paragraphs, not soundbites. He had a weakness for orange Fanta as well as his beloved library; when he was elected pope, he had his entire study moved — as is — from his apartment just outside the Vatican walls into the Apostolic Palace. The books followed him to his retirement home.

“In them are all my advisers,” he said of his books in the 2010 book-length interview “Light of the World.” “I know every nook and cranny, and everything has its history.”

It was Benedict’s devotion to history and tradition that endeared him to members of the traditionalist wing of the Catholic Church. For them, Benedict remained even in retirement a beacon of nostalgia for the orthodoxy and Latin Mass of their youth — and the pope they much preferred over Francis.

In time, this group of arch-conservatives, whose complaints were amplified by sympathetic U.S.-based conservative Catholic media, would become a key source of opposition to Francis who responded to what he said were threats of division by reimposing the restrictions on the old Latin Mass that Benedict had loosened.

Like his predecessor John Paul, Benedict made reaching out to Jews a hallmark of his papacy. His first official act as pope was a letter to Rome’s Jewish community and he became the second pope in history, after John Paul, to enter a synagogue.

In his 2011 book, “Jesus of Nazareth,” Benedict made a sweeping exoneration of the Jewish people for the death of Christ, explaining biblically and theologically why there was no basis in Scripture for the argument that the Jewish people as a whole were responsible for Jesus’ death.

“It’s very clear Benedict is a true friend of the Jewish people,” said Rabbi David Rosen, who heads the interreligious relations office for the American Jewish Committee, at the time of Benedict’s retirement.

Yet Benedict also offended some Jews who were incensed at his constant defense of and promotion toward sainthood of Pope Pius XII, the World War II-era pope accused by some of having failed to sufficiently denounce the Holocaust. And they harshly criticized Benedict when he removed the excommunication of a traditionalist British bishop who had denied the Holocaust.

Benedict’s relations with the Muslim world were also a mixed bag. He riled Muslims with a speech in September 2006 — five years after the Sept. 11 attacks in the United States — in which he quoted a Byzantine emperor who characterized some of the teachings of the Prophet Muhammad as “evil and inhuman,” particularly his command to spread the faith “by the sword.”

A subsequent comment after the massacre of Christians in Egypt led the Al Azhar center in Cairo, the seat of Sunni Muslim learning, to suspend ties with the Vatican, which were only restored under Francis.

The Vatican under Benedict suffered notorious PR gaffes, and sometimes Benedict himself was to blame. He enraged the United Nations and several European governments in 2009 when, en route to Africa, he told reporters that the AIDS problem couldn’t be resolved by distributing condoms.

“On the contrary, it increases the problem,” Benedict said. A year later, he issued a revision saying that if a male prostitute were to use a condom to avoid passing HIV to his partner, he might be taking a first step toward a more responsible sexuality.

But Benedict’s legacy was irreversibly colored by the global eruption in 2010 of the sex abuse scandal, even though as a cardinal he was responsible for turning the Vatican around on the issue.

Documents revealed that the Vatican knew very well of the problem yet turned a blind eye for decades, at times rebuffing bishops who tried to do the right thing.

Benedict had firsthand knowledge of the scope of the problem, since his old office — the Congregation for the Doctrine of the Faith, which he had headed since 1982 — was responsible for dealing with abuse cases.

In fact, it was he who, before becoming pope, took the then-revolutionary decision in 2001 to assume responsibility for processing those cases after he realized bishops around the world weren’t punishing abusers but were just moving them from parish to parish where they could rape again.

And once he became pope, Benedict essentially reversed his beloved predecessor, John Paul, by taking action against the 20th century’s most notorious pedophile priest, the Rev. Marcial Maciel. Benedict took over Maciel’s Legionaries of Christ, a conservative religious order held up as a model of orthodoxy by John Paul, after it was revealed that Maciel sexually abused seminarians and fathered at least three children.

In retirement, Benedict was faulted by an independent report for his handling of four priests while he was bishop of Munich; he denied any personal wrongdoing but apologized for any “grievous faults.”

As soon as the abuse scandal calmed down for Benedict, another one erupted.

In October 2012, Benedict’s former butler, Paolo Gabriele, was convicted of aggravated theft after Vatican police found a huge stash of papal documents in his apartment. Gabriele told Vatican investigators he gave the documents to Italian journalist Gianluigi Nuzzi because he thought the pope wasn’t being informed of the “evil and corruption” in the Vatican and that exposing it publicly would put the church on the right track.

Once the “Vatileaks” scandal was resolved, including with a papal pardon of Gabriele, Benedict felt free to take the extraordinary decision that he had hinted at previously: He announced that he would resign rather than die in office as all his predecessors had done for almost six centuries.

“After having repeatedly examined my conscience before God, I have come to the certainty that my strengths due to an advanced age are no longer suited” to the demands of being the pope, he told cardinals.

He made his last public appearances in February 2013 and then boarded a helicopter to the papal summer retreat at Castel Gandolfo, to sit out the conclave in private. Benedict then largely kept to his word that he would live a life of prayer in retirement, emerging only occasionally from his converted monastery for special events and writing occasional book prefaces and messages.

Usually they were innocuous, but one 2020 book — in which Benedict defended the celibate priesthood at a time when Francis was considering an exception — sparked demands for future “popes emeritus” to keep quiet.

Despite his very different style and priorities, Francis frequently said that having Benedict in the Vatican was like having a “wise grandfather” living at home.

Benedict was often misunderstood: Nicknamed “God’s Rottweiler” by the unsympathetic media, he was actually a very sweet and fiercely smart academic who devoted his life to serving the church he loved.

“Thank you for having given us the luminous example of the simple and humble worker in the vineyard of the Lord,” Benedict’s longtime deputy, Cardinal Tarcisio Bertone, told him in one of his final public events as pope.

Benedict inherited the seemingly impossible task of following in the footsteps of John Paul when he was elected the 265th leader of the Church on April 19, 2005. He was the oldest pope elected in 275 years and the first German in nearly 1,000 years.

Born April 16, 1927, in Marktl Am Inn, in Bavaria, Benedict wrote in his memoirs of being enlisted in the Nazi youth movement against his will in 1941, when he was 14 and membership was compulsory. He deserted the German army in April 1945, the waning days of the war.

Benedict was ordained, along with his brother, Georg, in 1951. After spending several years teaching theology in Germany, he was appointed bishop of Munich in 1977 and elevated to cardinal three months later by Pope Paul VI.

His brother Georg was a frequent visitor to the papal summer residence at Castel Gandolfo until he died in 2020. His sister died years previously. His “papal family” consisted of Monsignor Georg Gaenswein, his longtime private secretary who was always by his side, another secretary and consecrated women who tended to the papal apartment.