US Economy Shrank by 1.5% in Q1 but Consumers Kept Spending

The U.S. economy shrank in the first three months of the year even though consumers and businesses kept spending at a solid pace, the government reported Thursday in a slight downgrade of its previous estimate for the January-March quarter.

Last quarter’s drop in the U.S. gross domestic product — the broadest gauge of economic output — does not likely signal the start of a recession. The contraction was caused, in part, by a wider trade gap: The nation spent more on imports than other countries did on U.S. exports. The trade gap slashed first-quarter GDP by 3.2 percentage points.

And a slower restocking of goods in stores and warehouses, which had built up their inventories in the previous quarter for the 2021 holiday shopping season, knocked nearly 1.1 percentage points off the January-March GDP.

Analysts say the economy has likely resumed growing in the current April-June quarter.

The Commerce Department estimated that the economy contracted at a 1.5% annual pace from January through March, a slight downward revision from its first estimate of 1.4%, which it issued last month. It was the first drop in GDP since the second quarter of 2020 — in the depths of the COVID-19 recession — and followed a robust 6.9% expansion in the final three months of 2021.

The nation remains stuck in the painful grip of high inflation, which has caused particularly severe hardships for lower-income households, many of them people of color. Though many U.S. workers have been receiving sizable pay raises, their wages in most cases haven’t kept pace with inflation. In April, consumer prices jumped 8.3% from a year earlier, just below the fastest such rise in four decades, set one month earlier.

High inflation is also posing a political threat to President Joe Biden and Democrats in Congress as midterm elections draw near. A poll this month by The Associated Press-NORC Center for Public Research found that Biden’s approval rating has reached the lowest point of his presidency — just 39% of adults approve of his performance — with inflation a frequently cited contributing factor.

Still, by most measures, the economy as a whole remains healthy, though likely weakening. Consumer spending — the heart of the economy — is still solid: It grew at a 3.1% annual pace from January through March. Business investment in equipment, software and other items that are intended to improve productivity rose at a healthy 6.8% annual rate last quarter.

And a strong job market is giving people the money and confidence to spend. Employers have added more than 400,000 jobs for 12 straight months, and the unemployment rate is near a half-century low. Businesses are advertising so many jobs that there are now roughly two openings, on average, for every unemployed American.

The economy is widely believed to have resumed its growth in the current quarter: In a survey released this month, 34 economists told the Federal Reserve Bank of Philadelphia that they expect GDP to grow at a 2.3% annual pace from April through June and 2.5% for all of 2022. Still, their forecast marked a sharp drop from the 4.2% growth estimate for the current quarter in the Philadelphia Fed’s previous survey in February.

Considerable uncertainties, though, are clouding the outlook for the U.S. and global economies. Russia’s war against Ukraine has disrupted trade in energy, grains and other commodities and driven fuel and food prices dramatically higher. China’s draconian COVID-19 crackdown has also slowed growth in the world’s second-biggest economy and worsened global supply chain bottlenecks. The Federal Reserve has begun aggressively raising interest rates to fight the fastest inflation the United States has suffered since the early 1980s.

The Fed is banking on its ability to engineer a so-called soft landing: Raising borrowing rates enough to slow growth and cool inflation without causing a recession. Many economists, though, are skeptical that the central bank can pull it off. More than half the economists surveyed by the National Association for Business Economics foresee at least a 25% probability that the U.S. economy will sink into recession within a year.

“While we still expect the Fed to steer the economy toward a soft landing, downside risks to the economy and the probability of a recession are increasing,” economists Lydia Boussour and Kathy Bostjancic of Oxford Economics cautioned Thursday in a research note.

“A more aggressive pace of Fed rate hikes, a tightening in financial conditions, the ongoing war in Ukraine and China’s zero-Covid strategy increase the risk of a hard landing in 2023,” they added.

In the meantime, higher borrowing rates appear to be slowing at least one crucial sector of the economy — the housing market. Last month, sales of both existing homes and new homes showed signs of faltering, worsened by sharply higher home prices and a shrunken supply of properties for sale.


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Sanctions Frustrating Russian Ransomware Actors

Russia’s invasion of Ukraine appears to be having an unanticipated impact in cyberspace — a decrease in the number of ransomware attacks. 

“We have seen a recent decline since the Ukrainian invasion,” Rob Joyce, the U.S. National Security Agency’s director of cybersecurity, told a virtual forum Wednesday. 

Joyce said one reason for the decrease in ransomware attacks since the February 24 invasion is likely improved awareness and defensive measures by U.S. businesses. 

He also said some of it is tied to measures the United States and its Western allies have taken against Moscow in response to the war in Ukraine. 

“We’ve definitively seen the criminal actors in Russia complain that the functions of sanctions and the distance of their ability to use credit cards and other payment methods to get Western infrastructure to run these [ransomware] attacks have become much more difficult,” Joyce told The Cipher Brief’s Cyber Initiatives Group. 

“We’ve seen that have an impact on their [Russia’s] operations,” he added. “It’s driving the trend down a little bit.” 

Just days after Russian forces entered Ukraine, U.S. cybersecurity officials renewed their “Shields Up” awareness campaign, encouraging companies to take additional security precautions to protect against potential cyberattacks by Russia itself or by criminal hackers working on Moscow’s behalf. 

 

 

And those officials caution Russia still has the capability to inflict more damage in cyberspace. 

“Russia is continuing to explore options for potential cyberattacks,” the Cybersecurity and Infrastructure Security Agency’s Matthew Hartman told a meeting of the U.S. Chamber of Commerce last week. 

“We are seeing glimpses into targeting and into access development,” Hartman said, noting Russia has for now held back from launching any major cyberattacks against the West. “We do not know at what point a calculus may change.” 

FBI cyber officials have likewise voiced concern that it could be a matter of time before the Kremlin authorizes cyberattacks targeting U.S. critical infrastructure, including against the energy, finance and telecommunication sectors. 

 

 

U.S. and NATO officials on Wednesday also cautioned that it would be a mistake to think that just because there have been few signs of “catastrophic effects” that Russia has not tried to leverage its cyber capabilities to its advantage. 

“It has been happening and it’s still happening,” said Stefanie Metka, head of the Cyber Threat Analysis Branch at NATO. “There’s a lot of cyber activity that’s happening all the time and probably we won’t know the full extent of it until we turn the computers back on.”  

Said the NSA’s Joyce: “If you look at Ukraine, they have been heavily targeted. What we’ve seen are a number of wiper viruses, seven or eight different or unique wiper viruses that have been thrown into the ecosystem of Ukraine and its near abroad.” Wiper viruses are viruses that erase a computer’s memory.

These included a cyberattack against a satellite communications company, which hampered the ability of Ukraine’s military to communicate and had spillover effects across Europe. 

 

But with help from the U.S. and other allies, Ukraine was able to mitigate the impact, Joyce said. 

“The Ukrainians have been under threat and under pressure for a number of years, and so they have continued to adapt and improve and develop their tradecraft to the point where they mount a good defense and, equally as important, they mount a great incident response,” he said.  

Some cybersecurity experts say that ability to respond might be one of the biggest take-aways, so far, from the invasion. 

“Resiliency matters,” said Dmitri Alperovitch, the founder of the Silverado Policy Accelerator and the former chief technology officer of cybersecurity firm CrowdStrike, at Wednesday’s virtual forum. “The Ukrainians have gotten really, really good at rebuilding networks, quickly mitigating damage.” 

Another key lesson, he said, is the limitations of cyber. 

“If you’ve got kinetic options, if you can create a crater somewhere, take out a substation, take out a communication system, that’s what you’re going to prefer to use,” Alperovitch said. “That’s what’s easiest [to do] to get lasting damage.” 

 


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Ivory Coast Chocolatier Strives to Sweeten Cocoa Processors’ Earnings

In Ivory Coast, an artisanal chocolatier blends good flavor and good intentions in his work. Axel-Emmanuel Gbaou trains women to get good taste and good profits from the cocoa beans they process, as Yassin Ciyow observes in this report narrated by Carol Guensburg.


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Pandemic Creates New Billionaires as Global Inequality Rises

The world’s billionaires have increased their wealth by trillions of dollars since the beginning of the coronavirus pandemic – while the poorest countries are struggling with soaring commodity prices and rising debts. These are the findings of a newly released analysis by the charity Oxfam, as Henry Ridgwell reports from London.


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Egyptian Wheat Farmers Cope with Compounding Disruptions

This year’s wheat harvest season in Egypt—the world’s biggest importer of the staple crop—comes at a time when the U.N. says the Ukraine war has sent international food prices soaring to “a new all-time high, hitting the poorest the hardest,” with the country’s annual inflation rate surging to a three-year high of 14.9 percent. Amid rising global wheat prices and food security concerns, Cairo photojournalist Hamada Elrasam shows the pressures facing Egyptian farmers.

Captions by Elle Kurancid.


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Meta Returns with Africa Day Campaign

Meta, the company that owns Facebook, is hosting its second annual Africa Day campaign to promote Africans who are making a global impact.

The content producer for the film project, South African filmmaker Tarryn Crossman, said Meta identified eight innovators, creators and businesspeople on the continent whose stories the company wanted told for the “Made by Africa, Loved by the World” campaign.

Crossman’s company, Tia Productions, teamed up with Mashoba Media to find four fellow filmmakers in Ghana, Nigeria, Kenya and the Democratic Republic of Congo. Their job was to make two- to three-minute documentaries about the subjects.

“So, for example we did Trevor Stuurman here in South Africa,” Crossman said. “He’s a visual artist and his line was, I just loved so much, he says: ‘Africa’s no longer the ghost writer.’ We’re telling our stories and owning our own narratives. That’s kind of the thread amongst all these characters. They all have that in common.”

Nairobi-based filmmaker Joan Kabangu made a movie about Black Rhino VR, a Kenyan virtual reality content producing company which has worked with international brands.

“They are the pioneers around creating VR content, 360 content, augmented mixed reality kind of content in Kenya, in the wider Africa. And it’s a company which is run by a young person and everybody who is working there is fairly young. And they are really getting into how tech is being used to elevate the way we are creating content in 2022, going forward,” Kabangu said.

Of Meta’s Africa Day campaign she said, “I feel it’s celebrating the good in Africa.”

In Ghana, Kofi Awuah’s movie making has been delayed by floods in the capital, Accra. But he is determined to finish. His innovator is designer Selina Beb, whose work can be seen on Instagram and is sold online, often to buyers in the U.S. and Britain.

“She’s very unique,” Awuah said. “Based on material she uses and even the processes she uses are kind of things that tell a Ghanian or African story. For instance, she uses a certain kind of stone that you can find only in the northern parts of Ghana.”

Awuah said being a part of the campaign is the chance of a lifetime.

“My manager called me to tell me that we gotten a contract from Meta and I almost, like I had a heart attack,” she said. “When that call came, I felt this is the moment for me to express myself to the millions or billions of people who are using Facebook, who are using social media.”

Meta will also be hosting free virtual training sessions throughout the week. These include training on monetization, cross-border business and branded content.


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Facebook, Instagram to Reveal More on How Ads Target Users

 Facebook parent Meta said it will start publicly providing more details about how advertisers target people with political ads just months ahead of the U.S. midterm elections. 

The announcement follows years of criticism that the social media platforms withhold too much information about how campaigns, special interest groups and politicians use the platform to target small pockets of people with polarizing, divisive or misleading messages. 

Meta, which also owns Instagram, said it will start releasing details in July about the demographics and interests of audiences who are targeted with ads that run on its two primary social networks. The company will also share how much advertisers spent in an effort to target people in certain states. 

“By making advertiser targeting criteria available for analysis and reporting on ads run about social issues, elections and politics, we hope to help people better understand the practices used to reach potential voters on our technologies,” Jeff King wrote in a statement posted to Meta’s website. 

The new details could shed more light on how politicians spread misleading or controversial political messages among certain groups of people. Advocacy groups and Democrats, for example, have argued for years that misleading political ads are overwhelming the Facebook feeds of Spanish-speaking populations. 

The information will be showcased in the Facebook ad library, a public database that already shows how much companies, politicians or campaigns spend on each ad they run across Facebook, Instagram or WhatsApp. Currently, anyone can see how much a page has spent running an ad and a breakdown of the ages, gender and states or countries an ad is shown in. 

The information will be available across 242 countries when a social issue, political or election ad is run, Meta said in a statement. 

Meta collected $86 billion in revenue during 2020, the last major U.S. election year, thanks in part to its granular ad targeting system. Facebook’s ad system is so customizable that advertisers could target a single user out of billions on the platform, if they wanted. 

Meta said in its announcement Monday that it will provide researchers with new details that show the interest categories advertisers selected when they tried to target people on the platform. 


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US Stocks Gain Ground Following 7 Straight Weeks of Losses

Stocks rallied in afternoon trading on Wall Street Monday, following seven weeks of declines that nearly ended the bull market that began in March 2020. 

The S&P 500 rose 1.8% as of 3:12 p.m. Eastern. The Dow Jones Industrial Average rose 588 points, or 1.9%, to 31,850, and the Nasdaq rose 1.3%. 

Banks made strong gains along with rising bond yields, which they rely on to charge more lucrative interest on loans. The yield on the 10-year Treasury rose to 2.86% from 2.77% late Friday. Bank of America rose 6.3%. 

Technology stocks also did some heavy lifting. Apple rose 3.4% and Microsoft rose 2.7%. The sector has been choppy over the last few weeks and has prompted many of the market’s recent big swings. 

VMware surged 20.8% following a report that chipmaker Broadcom is offering to buy the cloud-computing company. JPMorgan Chase jumped 6.9% after giving investors an encouraging update on its financial forecasts. 

Retailers and some other companies that rely on direct consumer spending lagged the rest of the market. Amazon fell 0.7%. A series of disappointing earnings reports from key retailers last week raised concerns that consumers are tempering spending on a wide range of goods as they get squeezed by rising inflation. 

Lingering concerns about inflation have been weighing on the market and have kept major indexes in a slump. The benchmark S&P 500 is so far experiencing its longest weekly losing streak since the dot-com bubble was deflating in 2001. It came close to falling 20% from its peak earlier this year, which would put the index at the heart of most workers’ 401(k) accounts into a bear market. 

Inflation’s impact on consumers and businesses has been the key worry for markets, along with the Federal Reserve’s attempt to temper that impact by aggressively raising interest rates. Inflation brought on by a big supply and demand disconnect has worsened because of Russia’s invasion of Ukraine and its impact on energy prices. 

Supply chains were further hurt by China’s recent series of lockdowns for several major cities facing rising COVID-19 cases. 

Investors are worried that the central bank could go too far in raising rates or move too quickly, which could stunt economic growth and potentially bring on a recession. On Wednesday, investors will get a more detailed glimpse into the Fed’s decision-making process with the release of minutes from the latest policy-setting meeting. 

Wall Street will also get a few economic updates this week from the Commerce Department. On Thursday, it will release a report on first-quarter gross domestic product, and on Friday, it will release data on personal income and spending for April. 

 


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Who is Buying Russia’s Oil?

So far, Russia’s oil exports have not slowed down a bit from the war in Ukraine and international sanctions. In fact, Russia exported more oil in April than it did before the war. And high oil prices mean Moscow is raking in money. That’s one reason Europe is considering a Russian oil ban: Current sanctions are not hurting Moscow enough. Europe gets more of its oil from Russia than anywhere else. It would have to make up for those banned barrels somewhere else, and that won’t be easy. And it’s likely to push oil prices everywhere up even further.


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Solar Crowdfunding Project Benefiting Zimbabwe’s Farmers

A South African company that promotes solar power and uses crowdsourcing to raise capital is financing a solar-powered farm in Zimbabwe that is also benefiting neighboring farmers. The company, The Sun Exchange, raised $1.4 million for the farm. Columbus Mavhunga reports from Marondera, Zimbabwe.


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With Roe in Doubt, Some Fear Tech Surveillance of Pregnancy

When Chandler Jones realized she was pregnant during her junior year of college, she turned to a trusted source for information and advice.

Her cellphone.

“I couldn’t imagine before the internet, trying to navigate this,” said Jones, 26, who graduated Tuesday from the University of Baltimore School of Law. “I didn’t know if hospitals did abortions. I knew Planned Parenthood did abortions, but there were none near me. So I kind of just Googled.”

But with each search, Jones was being surreptitiously followed — by the phone apps and browsers that track us as we click away, capturing even our most sensitive health data.

Online searches. Period apps. Fitness trackers. Advice helplines. GPS. The often obscure companies collecting our health history and geolocation data may know more about us than we know ourselves.

For now, the information is mostly used to sell us things, like baby products targeted to pregnant women. But in a post-Roe world — if the Supreme Court upends the 1973 decision that legalized abortion, as a draft opinion suggests it may in the coming weeks — the data would become more valuable, and women more vulnerable.

Privacy experts fear that pregnancies could be surveilled and the data shared with police or sold to vigilantes.

“The value of these tools for law enforcement is for how they really get to peek into the soul,” said Cynthia Conti-Cook, a lawyer and technology fellow at the Ford Foundation. “It gives [them] the mental chatter inside our heads.”

HIPAA, hotlines, health histories

The digital trail only becomes clearer when we leave home, as location apps, security cameras, license plate readers and facial recognition software track our movements. The development of these tech tools has raced far ahead of the laws and regulations that might govern them.

And it’s not just women who should be concerned. The same tactics used to surveil pregnancies can be used by life insurance companies to set premiums, banks to approve loans and employers to weigh hiring decisions, experts said.

Or it could — and sometimes does — send women who experience miscarriages cheery ads on their would-be child’s birthday.

It’s all possible because HIPAA, the 1996 Health Insurance Portability and Accountability Act, protects medical files at your doctor’s office but not the information that third-party apps and tech companies collect about you. Nor does HIPAA cover the health histories collected by non-medical “crisis pregnancy centers, ” which are run by anti-abortion groups. That means the information can be shared with, or sold to, almost anyone.

Jones contacted one such facility early in her Google search, before figuring out they did not offer abortions.

“The dangers of unfettered access to Americans’ personal data have never been more clear. Researching birth control online, updating a period-tracking app or bringing a phone to the doctor’s office could be used to track and prosecute women across the U.S.,” Sen. Ron Wyden, D-Ore., said last week.

For myriad reasons, both political and philosophical, data privacy laws in the U.S. have lagged far behind those adopted in Europe in 2018.

Until this month, anyone could buy a weekly trove of data on clients at more than 600 Planned Parenthood sites around the country for as little as $160, according to a recent Vice investigation that led one data broker to remove family planning centers from the customer “pattern” data it sells. The files included approximate patient addresses (down to the census block, derived from where their cellphones “sleep” at night), income brackets, time spent at the clinic, and the top places people stopped before and after their visits.

While the data did not identify patients by name, experts say that can often be pieced together, or de-anonymized, with a little sleuthing.

In Arkansas, a new law will require women seeking an abortion to first call a state hotline and hear about abortion alternatives. The hotline, set to debut next year, will cost the state nearly $5 million a year to operate. Critics fear it will be another way to track pregnant women, either by name or through an identifier number. Other states are considering similar legislation.

The widespread surveillance capabilities alarm privacy experts who fear what’s to come if Roe v. Wade is overturned. The Supreme Court is expected to issue its opinion by early July.

“A lot of people, where abortion is criminalized — because they have nowhere to go — are going to go online, and every step that they take (could) … be surveilled,” Conti-Cook said.

Punish women, doctors or friends?

Women of color like Jones, along with poor women and immigrants, could face the most dire consequences if Roe falls since they typically have less power and money to cover their tracks. They also tend to have more abortions, proportionally, perhaps because they have less access to health care, birth control and, in conservative states, schools with good sex education programs.

The leaked draft suggests the Supreme Court could be ready to let states ban or severely restrict abortion through civil or criminal penalties. More than half are poised to do so. Abortion foes have largely promised not to punish women themselves, but instead target their providers or people who help them access services.

“The penalties are for the doctor, not for the woman,” Republican state Rep. Jim Olsen of Oklahoma said last month of a new law that makes performing an abortion a felony, punishable by up to 10 years in prison.

But abortion advocates say that remains to be seen.

“When abortion is criminalized, pregnancy outcomes are investigated,” said Tara Murtha, the communications director at the Women’s Law Project in Philadelphia, who recently co-authored a report on digital surveillance in the abortion sphere.

She wonders where the scrutiny would end. Prosecutors have already taken aim at women who use drugs during pregnancy, an issue Justice Clarence Thomas raised during the Supreme Court arguments in the case in December.

“Any adverse pregnancy outcome can turn the person who was pregnant into a suspect,” Murtha said.

State limits, tech steps, personal tips

A few states are starting to push back, setting limits on tech tools as the fight over consumer privacy intensifies.

Massachusetts Attorney General Maura Healey, through a legal settlement, stopped a Boston-based ad company from steering anti-abortion smartphone ads to women inside clinics there that offer abortion services, deeming it harassment. The firm had even proposed using the same “geofencing” tactics to send anti-abortion messages to high school students.

In Michigan, voters amended the state Constitution to prohibit police from searching someone’s data without a warrant. And in California, home to Silicon Valley, voters passed a sweeping digital privacy law that lets people see their data profiles and ask to have them deleted. The law took effect in 2020.

The concerns are mounting, and have forced Apple, Google and other tech giants to begin taking steps to rein in the sale of consumer data. That includes Apple’s launch last year of its App Tracking Transparency feature, which lets iPhone and iPad users block apps from tracking them.

Abortion rights activists, meanwhile, suggest women in conservative states leave their cellphones, smartwatches and other wearable devices at home when they seek reproductive health care, or at least turn off the location services. They should also closely examine the privacy policies of menstrual trackers and other health apps they use.

“There are things that people can do that can help mitigate their risk. Most people will not do them because they don’t know about it or it’s inconvenient,” said Nathan Freed Wessler, a deputy director with the ACLU’s Speech, Privacy, and Technology Project. “There are very, very few people who have the savvy to do everything.”

Digital privacy was the last thing on Jones’s mind when she found herself pregnant. She was in crisis. She and her partner had ambitious career goals. After several days of searching, she found an appointment for an abortion in nearby Delaware. Fortunately, he had a car.

“When I was going through this, it was just survival mode,” said Jones, who took part in a march Saturday in downtown Baltimore to support abortion rights.

Besides, she said, she’s grown up in the Internet age, a world in which “all of my information is being sold constantly.”

But news of the leaked Supreme Court draft sparked discussions at her law school this month about privacy, including digital privacy in the era of Big Data.

“Literally, because I have my cell phone in my pocket, if I go to a CVS, they know I went to a CVS,” the soon-to-be lawyer said. “I think the privacy right is such a deeper issue in America [and one] that is being violated all the time.”


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Biden Highlights Hyundai Announcement of $10B US Investment

President Joe Biden tended to both business and security interests Sunday as he wraps up a three-day visit to South Korea, showcasing Hyundai’s pledge to invest at least $10 billion in electric vehicles and related technologies in the United States.

Before visiting U.S. and South Korean troops monitoring the rapidly evolving North Korean nuclear threat, Biden said the U.S. was ready for any provocation that Kim Jong Un might deliver.

Hyundai’s investment includes $5.5 billion for an electric vehicle and battery factory in Georgia.

Appearing with Biden, Hyundai CEO Euisun Chung said Sunday his company would spend another $5 billion on artificial intelligence for autonomous vehicles and other technologies.

“Electric vehicles are good for our climate goals, but they’re also good for jobs,” Biden said. “And they’re good for business.”

The major U.S. investment by a South Korean company is a reflection of how the U.S. and South Korea are leveraging their longstanding military ties into a broader economic partnership.

Biden said he was not concerned about any possible provocation by North Korea while he is touring the region.

“We are prepared for anything North Korea does,” Biden said in response to a reporter’s question. “We’ve talked through how we’d respond to whatever they do so I am not concerned, if that’s what you’re suggesting.”

The U.S. president has made greater economic cooperation with South Korea a priority, saying on Saturday that “it will bring our two countries even closer together, cooperating even more closely than we already do, and help strengthen our supply chains, secure them against shocks and give our economies a competitive edge.”

The pandemic and Russia’s invasion of Ukraine in February has forced a deeper rethinking of national security and economic alliances. Coronavirus outbreaks led to shortages of computer chips, autos and other goods that the Biden administration says can ultimately be fixed by having more manufacturing domestically and with trusted allies.

Biden’s meeting Sunday with Hyundai’s chief comes after the president made an earlier stop at a computer chip plant run by Samsung, the Korean electronics giant that plans to build a $17 billion production facility in Texas.

Hyundai’s Georgia factory is expected to employ 8,100 workers and produce up to 300,000 vehicles annually, with plans for construction to begin early next year and production to start in 2025 near the unincorporated town of Ellabell.

But the Hyundai plant shows that there are also tradeoffs as Biden pursues his economic agenda.

The president earlier in his term tried to link the production of electric vehicles to automakers with unionized workers. As part of a $1.85 trillion spending proposal last year that stalled in the Senate, Biden wanted extra tax credits to go to the buyers of EVs made by unionized factories. That would have provided a boost to the unionized auto plant owned by General Motors Co., Ford Motor Co. and Stellantis NV at a vital moment when union membership nationwide has been steadily decreasing.

During the Samsung visit, Biden called on Korean companies building plants in the U.S. to hire union workers. In addition to its coming Texas plant, Samsung has a deal in place with Stellantis to build an electric vehicle battery manufacturing plant in the U.S.

“I urge Samsung and Stellantis and any company investing in the United States to enter into partnerships with our most highly skilled and dedicated and engaged workers you can find anywhere in the world: American union members,” he said.

There so far has been no guarantee that the Hyundai Georgia plant’s workers will be unionized.

Katie Byrd, the press secretary for Georgia Gov. Brian Kemp, noted in an email that the state is “Right-to-Work,” which “means that workers may not be required to join a union or make payments to a union as a condition of employment.”

A Hyundai spokesperson did not respond to an email asking if the Georgia plant would be unionized. A senior Biden administration official, who briefed reporters on the condition of anonymity, said there was no contradiction between Biden encouraging investors to embrace union workforces while his administration does “whatever it can” to encourage investment and bring jobs to the U.S.

Before meeting Hyundai’s CEO, Biden attended Mass at his hotel in Seoul along with some White House staff. Biden will also meet with service members and military families at Osan Air Base and address U.S. and Korean troops. Biden and Korean President Yoon Sook Yeol on Saturday announced they will consider expanded joint military exercises to deter the nuclear threat posed by North Korea.

The push toward deterrence by Biden and Yoon, who is less than two weeks into his presidency, marks a shift by the leaders from their predecessors. President Donald Trump had considered scrapping the exercises and expressed affection for North Korean leader Kim Jong Un. And the last South Korean president, Moon Jae-in, remained committed to dialogue with Kim to the end of his term despite being repeatedly rebuffed by the North.

Biden decided to skip a visit to the demilitarized zone on the North and South’s border, a regular stop for U.S. presidents when visiting Seoul. Instead, Biden, who had visited the DMZ as vice president, was more interested in visiting Osan to see an installation “where the rubber hits the road” for U.S. and South Korean troops maintaining security on the Korean Peninsula, said White House national security adviser Jake Sullivan.

Yoon campaigned on a promise to strengthen the U.S.-South Korea relationship. He reiterated at a dinner on Saturday in Biden’s honor that it was his goal to move the relationship “beyond security” issues with North Korea, which have long dominated the relationship.

“I will try and design a new future vision of our alliances with you, Mr. President,” Yoon said.

Biden heads to Tokyo later Sunday. On Monday, he will meet with Japanese Prime Minister Fumio Kishida and lay out his vision for negotiating a new trade agreement called the Indo-Pacific Economic Framework.

A central theme for the trip, Biden’s first to Asia as president, is to tighten U.S. alliances in the Pacific to counter China’s influence in the region.

But within the Biden administration, there’s an ongoing debate about whether to lift some of the $360 billion in Trump-era tariffs on China. Earlier this week, Treasury Secretary Janet Yellen said some of the tariffs are doing more harm to U.S. business and consumers than they are to China.

Sullivan said the president’s national security and economic teams were still reviewing “how to move beyond the trade approach of the previous administration.”

On Tuesday, Japan will host Biden at a summit for the Quad, a four-country strategic alliance that also includes Australia and India.


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China’s COVID Lockdowns May Affect iPhone Shipments

The Apple Store at Union Square, the heart of San Francisco’s upscale tourist district, had drawn more than 30 customers within a few minutes of opening Friday morning. Visitors, couples and even a preschool-age boy browsed the atrium packed with iPhone 13s and watches to try out. A sign urged people to trade in old phones to save money on the 13s. 

But a staff member could not say when the iPhone 14 would come out — presumably sometime this year — or what it would cost. Some shoppers wondered whether it would be delayed or cost more than expected given the months of supply chain disruptions in China, where the phones are made. 

“This stuff has got to hit hard at some point,” said Bill Kimberlin, an Apple Store shopper from San Francisco. 

Apple, based in the Silicon Valley, just 50 miles south of San Francisco, outsources iPhone parts from around East Asia, and its handsets are assembled in China.  

Apple had to delay product rollouts first in 2020, when new gear was held up for a month because of China’s first COVID-19 wave, said Rachel Liao, senior industry analyst with the Taipei-based Market Intelligence & Consulting Institute. 

In the first quarter this year, she said, lockdowns in China suspended assembly plants, including at least one operated by Pegatron. Pegatron is the No. 2 iPhone assembler, with 25% of orders, after Foxconn. Both companies are based in Taiwan but manufacture in China.  

Since 2020, the costs of making the iPhone 12 and iPhone 13 series have increased “slightly” because of a materials shortage in the semiconductor supply chain, Liao said.  

“Sharp and protracted lockdowns are causing a lot of short-term havoc on logistics, and it’s obviously affecting delivery times significantly,” said Ivan Lam, senior research analyst with market analysis firm Counterpoint Research. 

Apple declined to answer a query from VOA about its China supply chain.   

Not just phones  

Supply chain upsets set off by China’s lockdowns in the major commercial hubs Shenzhen and Shanghai are slowing exports of products ranging from phones to building materials to motor vehicles. Western nations are experiencing shortages and higher prices imported goods.  

Chinese authorities ordered Shenzhen shuttered in March, and Shanghai, with a population of about 26 million, closed weeks later. Those closures have kept workers away from factories, delivery jobs and seaports.

Cities are locking down as part of Chinese President Xi Jinping’s “zero-COVID” policy, aimed at controlling deaths from the coronavirus.

“The impact of the COVID-19-related restrictions and lockdown there in Shanghai is going to be severe on businesses, not just in China but globally,” said Ker Gibbs, executive in residence at the University of San Francisco and former president of the American Chamber of Commerce in Shanghai. 

“Shanghai is so important as a port and as a logistics hub, as a supply chain, so that any business that is touching China is going to be impacted by the lockdown,” Gibbs said. 

COVID-19 cases in China, the world’s largest consumer market, “exacerbated” a drop in global mobile phone production in the first three months of 2022, Taipei-based market analysis firm TrendForce said in an emailed statement May 10. It says production volume worldwide was 310 million phones in the same period. 

Jayant Menon, a visiting senior fellow with the ISEAS Yusof Ishak Institute Regional Economic Studies Program in Singapore, calls demand for China-made goods “uneven” — another cause for supply chain upsets. He anticipates the disruptions will last for two more quarters. 

“The quantities involved, I think, will clearly reflect the kind of disruptions still ongoing in China because of their zero-COVID strategy,” he said.  

Strategies for smartphones 

Smartphone supplies are holding up better than those of many other China-made goods, analysts say. 

Phone parts such as chips and screens are sourced from outside China; for example, camera lenses are made in Taiwan, and flash memory is produced in South Korea.  

“These things are counted as exports from China, as if 100% of it were made there, and in fact, a much smaller percentage is actually created in China,” said Douglas Barry, vice president of communications at the U.S.-China Business Council, an advocacy group in Washington with over 260 members. 

Apple now requires suppliers to increase inventories as it plans further in advance for product launches, Liao said. That’s a hedge against more supply chain problems. 

The Silicon Valley icon is now asking its assemblers over the longer term to cut reliance on China and raise orders for factories in India, she added. Its chief assemblers — Foxconn, Pegatron and Wistron — will continue to increase production capacity in India, she predicted. Wistron is also based in Taiwan. 

Apple is diversifying further with assembly orders to China-based Luxshare Precision Industry. Liao says that firm handles 3% of iPhone orders, with the prospect of more this year. 

Apple was the world’s No. 2-selling brand of smartphone after Samsung in the first three months of this year, with an 18% market share and 56.5 million units shipped, according to market research firm IDC, up slightly from the same period in 2021.

Some smartphone factories are using “closed-loop operations” to keep production going in China, Lam said. Companies such as Foxconn have long housed workers in factory compounds so large that some have compared them to cities.

“At the end of the day, companies will assess their vulnerabilities and adjust their supply chains accordingly,” Barry said. “It won’t be easy, and consumers will feel their pain by having to wait and paying more for products they want.” 


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Grain Prices Soar as Ukraine War Drags On

As U.S. farmers head to the fields to plant this year’s crops, prices for grains like corn and soybeans are near record highs. As VOA’s Kane Farabaugh reports, those high prices come with increased costs for both farmers and consumers.


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Scanning the Corpse’s Face: Ukrainians Using Facial Recognition Technology to Identify Russian Soldiers

The Ukrainian government is using facial recognition software to identify Russian soldiers captured and dead. VOA’s Julie Taboh spoke with one software company CEO and an official with the Ukrainian national police about how the technology is contributing to the war effort


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Canada to Ban Huawei and ZTE From 5G Networks

Canada will ban Chinese telecommunications giants Huawei and ZTE from its 5G wireless networks because of national security concerns, officials said Thursday. 

The long-awaited move follows those of the United States and other key allies and comes on the heels of a diplomatic row between Ottawa and Beijing over the detention of a senior Huawei executive on a U.S. warrant, which has now been resolved. 

The United States has warned of the security implications of giving Chinese tech companies access to telecommunications infrastructure that could be used for state espionage. 

Both Huawei and Beijing have rejected the allegations, while Beijing warned of repercussions for nations placing restrictions on the telecom equipment provider. 

The company did not immediately respond to an AFP request for comment on Canada’s ban. 

Canadian Industry Minister Francois-Philippe Champagne and Public Safety Minister Marco Mendicino made the announcement at a news conference. 

“Today, we’re announcing our intention to prohibit the inclusion of Huawei and ZTE products and services in Canada’s telecommunication systems,” Champagne said. 

“This follows a full review by our security agencies and in consultation with our closest allies.” 

Canada had been reviewing the 5G technology and network access for several years, repeatedly delaying a decision that was first expected in 2019. 

It remained silent on the telecoms issue after China jailed two Canadians — diplomat Michael Kovrig and businessman Michael Spavor — in what observers believed was in retaliation for the December 2018 arrest of Huawei Chief Financial Officer Meng Wanzhou in Vancouver at the request of the United States. 

All three were released in September 2021 after Meng reached a deal with U.S. prosecutors on the fraud charges, ending her extradition fight. 

Champagne said Canadian telecommunications companies “will not be permitted to include in their networks products or services that put our national security at risk.” 

“Providers who already have this equipment installed will be required to cease its use and remove it,” he said. 

‘Hostile actors’ 

Huawei already supplies some Canadian telecommunications firms with 4G equipment. 

Most, if not all, had held off using Huawei in their fifth-generation (5G) wireless networks that deliver speedier online connections with greater data capacity, or looked to other suppliers while Ottawa hemmed and hawed. 

Mendicino said 5G innovation “represents a major opportunity for competition and growth” but also comes with risks. 

“There are many hostile actors who are ready to exploit vulnerabilities” in telecom networks, he said. 

The U.S., Australia, Britain, New Zealand, Japan and Sweden have already blocked or restricted the use of Huawei technology in their 5G networks. 

The U.S. government considers Huawei a potential security threat because of the background of its founder and CEO Ren Zhengfei, a former Chinese army engineer who is Meng’s father.

The concern escalated as Huawei rose to become the world leader in telecom networking equipment and one of the top smartphone manufacturers following Beijing’s passage of a 2017 law obliging Chinese companies to assist the government in matters of national security. 

Canada’s two spy agencies had reportedly been divided initially over whether to ban Huawei from Canada’s 5G networks. One favored a ban, while the other argued risks could be mitigated. 

The Canadian Security Intelligence Service and the Communications Security Establishment had been tasked with conducting a cybersecurity review to evaluate the risks, as well as the economic costs to Canadian telecoms and consumers, of blacklisting the equipment supplier. 

Huawei was already prohibited from bidding on Canadian government contracts and core network equipment such as routers and switches. 


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