Economics

It's a trend that has surprised many: Why, despite being squeezed by high prices, have Americans kept spending at retail stores and restaurants at a robust pace?

One key reason is a relatively simple one: Wealthier consumers, boosted by strong gains in income, home equity and stock market wealth, have increasingly driven the spending.

That trend, documented by Federal Reserve research, represents something of a shift from the pre-pandemic period. And it suggests that consumer spending, the primary driver of the U.S. economy, could help sustain healthy growth this year and next.

Lower-income consumers, by contrast, have been disproportionately squeezed by higher-priced rent, groceries and other necessities, leaving them less able to spend on discretionary items, like electronics, entertainment and restaurant meals, than they were before the pandemic. Though their spending is starting to rebound as inflation-adjusted incomes rise, it could be years before their finances fully recover.

The slowdown in consumer price increases comes as the European Central Bank is expected to cut interest rates.

Year-on-year inflation in the eurozone slowed to 1.7% last month, slightly lower than previously estimated, according to official data published Thursday. 

It is the first time in more than three years that the inflation rate in the single currency area has fallen below the European Central Bank's (ECB)target of 2%.

Cash-starved Boeing, contending with massive financial losses from a crippling strike and years of operational and safety problems, is turning to major banks and Wall Street to raise tens of billions of dollars in cash.

In a regulatory filing early Tuesday, the company announced plans to borrow $10 billion from a consortium of banks. It also separately announced plans to raise $25 billion by selling stock and debt.

The company’s debt surged in the last six years as Boeing reported core operating losses of more than $33 billion. Its commercial airplane production has ground to a near halt by a month-long strike by 33,000 members of the International Association of Machinists.

In third week of standoff, planemaker has no plans for further talks with union, which is seeking 40% increase

Boeing has withdrawn a 30% pay offer for striking workers as talks between the company and unions reached a stalemate in the third week of a standoff over pay.

The US planemaker said it had removed its offer that would result in a pay increase by almost a third over three years for 33,000 US staff, with no further negotiations with the International Association of Machinists and Aerospace Workers (IAM) planned.

Boeing and the union held their latest round of negotiations with federal mediators on Monday and Tuesday, but talks collapsed with both parties locked in an acrimonious stalemate showing no signs of being resolved soon, Reuters reported.

KEY POINTS

• Hurricane Milton’s once-in-a-century potential could cause damage of more than $50 billion, with the potential to leave behind devastation approaching $175 billion or more in a worst-case scenario.
• “A 1-in-100 year event is estimated by some to result in $175 [billion] in losses for landfall in the Tampa region, and $70 [billion] in losses in the [Fort] Myers region,” Jefferies analysts said.

Hyundai has begun producing electric SUVs in Georgia less than two years after breaking ground on its sprawling, $7.6 billion manufacturing plant west of Savannah.

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The South Korean automaker and battery partner LG Energy Solution plan to employ 8,500 total workers at the Bryan County site, about 50 miles (80 kilometers) west of Savannah, once the plant is fully operational. Hyundai has said it will produce up to 300,000 EVs per year in Georgia, as well as the batteries that power them.

The plant’s vehicle production areas have been completed and are being staffed by more than 1,000 workers, Johnson said. Its battery-making facilities remain under construction.

Employers added 254,000 jobs in September, blowing away forecasts and reversing a slowdown in hiring that had prompted the Federal Reserve to make a jumbo rate cut at its meeting last month. 

Economists had forecast 140,000 new jobs, according to financial data provider FactSet. 

The unemployment rate inched down to 4.1%, versus 4.2% in the prior month.

Big taxes will be imposed on imports of electric vehicles from China to the EU after the majority of member states backed the plans.

The move to introduce tariffs aims to protect the European car industry from being undermined by what EU politicians believe are unfair Chinese-state subsidies on its own cars.

Charges of up to 45% are to be enforced on electric cars made in China for the next five years, but there have been concerns such a move could raise electric vehicle (EV) prices for buyers.

The flare-up of inflation that followed the pandemic, combined with flush consumers ready to spend, ushered in an new era of profitability even more massive than previously estimated.

Longshoremen’s union says wage demands must be met or members will strike on Tuesday for first time since 1977

Ten of the busiest ports in North America are at risk of shutdown next week, as a leading union warns that 45,000 workers stand ready to walk off the job if industry operators fail to make key concessions.

The International Longshoremen’s Association (ILA) has accused the United States Maritime Alliance (USMX), which represents 40 ocean carrier and terminal operators, of making “insulting offers” to staff demanding higher pay and commitments on automation.

Workers are slated to strike on Tuesday if a new agreement is not reached, hitting 36 ports along the east and Gulf coasts of the US in what would be the first work stoppage since 1977.

JP Morgan analysts have estimated a strike could cost the US economy $5bn per day. A one-day strike backlog could take an estimated four to six days to clear, according to analysts at Sea-Intelligence, a shipping advisory firm.

The US has filed a lawsuit against Visa, accusing the financial giant of illegally stifling competition to maintain a monopoly over the debit card market.

It said Visa had punished companies that wanted to use alternative payment networks and paid off potential competitors to keep its hold over the market. 

The Department of Justice said the moves had slowed innovation and led to significant additional fees for American consumers and businesses.

Boeing said Monday it made a “best and final offer” to striking machinists that includes bigger raises and larger bonuses, but the workers’ union said the proposal isn’t good enough and there won’t be a ratification vote before Boeing’s deadline at the end of the week.

The union complained that Boeing publicized its latest offer to 33,000 striking workers without first bargaining with union negotiators.

“Boeing does not get to decide when or if you vote,” leaders of the International Association of Machinists and Aerospace Workers district 751 told members Monday night. “The company has refused to meet for further discussion; therefore, we will not be voting” on Friday, as Boeing insisted.

Attention, Kmart shoppers, the end is near!

The erstwhile retail giant renowned for its Blue Light Specials — featuring a flashing blue orb affixed to a pole enticing shoppers to a flash sale — is shuttering its last full-scale store in mainland United States.

The store, located in swank Bridgehampton, New York, on Long Island, is slated to close Oct. 20, according to Denise Rivera, an employee who answered the phone at the store late Monday. The manager wasn't available, she said.

That will leave only a small Kmart store in Miami. It has a handful of stores in Guam and the U.S. Virgin Islands.

Wall Street romped to records Thursday as a delayed jubilation swept markets worldwide following the Federal Reserve’s big cut to interest rates.

The strike at Boeing by 33,000 members of the International Association of Machinists union, which reaches its seventh day today, has already cost the company and workers $572 million, according to an estimate from Anderson Economic Group.

And the pace of losses will climb rapidly if there’s no settlement, as soon as the second week of the strike, said Patrick Anderson, the founder and president of the Michigan research firm, which has experience estimating the cost of economic disruptions like strikes.

A new report shows minimum wage increases have had little effect on the number of jobs in Maryland and nationwide.

While the rhetoric around increasing the minimum wage often comes with the caution it will reduce low-wage employment, a new review of decades of research showed most studies found no job losses after the state or local minimum wage is raised.

Ben Zipperer, senior economist for the Economic Policy Institute and the review's co-author, said raising the minimum wage has unquestionably benefited workers.

I was expecting a conservative quarter point reduction, but it seems like the Fed is feeling bullish about inflation and concerned with the labor market, which has cooled much faster than was previously predicted.

What do you think? Will this move come with the positive effects while keeping inflation below 3%?

US brand Tupperware has filed for bankruptcy as it struggles to survive in the face of sliding sales.

The food storage container firm said it will ask for court permission to start a sale of the business and that it aimed to continue operating.

The 78-year-old firm has become so synonymous with food storage that many people use its name when referring to any old plastic container.

Despite attempts to freshen up its products in recent years and reposition itself to a younger audience, it has failed to stand out from competitors.

Boeing is freezing recruitment and drawing up plans to furlough “many” employees as the aerospace giant scrambles to curb spending after tens of thousands of its workers went out on strike.

Warning that the industrial action “jeopardizes our recovery in a significant way”, the US planemaker said it would pause most employee travel and suspend non-essential capital expenditures.

About 33,000 Boeing workers walked off the job early on Friday after voting overwhelmingly to strike for higher pay. The company’s new CEO, Kelly Ortberg had pleaded with workers not to go on strike – the first since 2008 – before the vote.

• More than 30,000 Boeing workers, members of the company's biggest unionized group, were set to strike Friday after staff rejected a new labor contract and approved a strike with a 96% vote.
• The work stoppage will halt production of most of the company's aircraft, including its best-selling 737 Max.
• The strike is another costly blow to the company trying to increase output and improve its reputation.

Price growth continued to soften in the US last month, falling to its lowest level since February 2021 as the Federal Reserve prepares to cut interest rates for the first time since the start of the pandemic.

As inflation continues to fade, the consumer price index rose at an annual rate of 2.5% in August – down from 2.9% in July, and below the 2.6% expected by economists.

On a month-to-month basis, the index rose 0.2% last month, in line with its rate of growth during July.

• Europe’s top court on Tuesday ruled against Apple in the tech giant’s 10-year court battle over its tax affairs in Ireland. 
• The case stems back to 2016 when the European Commission ordered Ireland to recover up to 13 billion euros ($14.4 billion) in back taxes from Apple.
• The Commission said at the time Apple had received “illegal” tax benefits from Ireland over the course of two decades.