ReportWire

Tag: Consumer affairs

  • Imagine making shadowy data brokers erase your personal info. Californians may soon live the dream

    Imagine making shadowy data brokers erase your personal info. Californians may soon live the dream

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    SAN FRANCISCO — You may not know it, but thousands of often shadowy companies routinely traffic in personal data you probably never agreed to share — everything from your real-time location information to private financial details. Even if you could identify these data brokers, there isn’t much you can do about their activities, including in California, which has some of the strongest digital privacy laws in the U.S.

    That’s on the verge of changing. Both houses of the California state Legislature have passed the Delete Act, which would establish a “one stop shop” where individuals could order hundreds of data brokers registered in the state to delete their personal data — and to cease acquiring and selling it in the future — with a single request.

    The Delete Act isn’t law yet. Democratic Gov. Gavin Newsom still has to decide whether to sign the measure, whose impact could potentially extend well beyond state lines given California’s history of setting similar trends.

    Here’s what you need to know.

    While California law already gives individuals the right to request data deletion, doing so currently require making separate requests to hundreds of data brokers registered in the state, many with their own unique requirements for drafting and handling such requests. Even then, nothing stops these companies from simply reacquiring the data after they delete it.

    The Delete Act would require the state’s new privacy office, the California Privacy Protection Agency, to set up a website where consumers can verify their identity and then make a single request to delete their personal data held by data brokers and to opt out of future tracking. Proponents call it a “do not track” signal similar to the “do not call” list for telemarketers maintained by the Federal Trade Commission.

    California already regulates data brokers, but the Delete Act would strengthen those provisions by requiring the companies to disclose more information about the data they collect on consumers and beefing up the state’s enforcement mechanisms.

    The Electronic Privacy Information Center, a Washington, D.C., nonprofit focused on bolstering the right to privacy, defines data brokers as companies that collect and categorize personal information, usually to build profiles on millions of Americans that the companies can then rent, sell or use to provide services.

    The data they collect, per EPIC, can include: “names, addresses, telephone numbers, email addresses, gender, age, marital status, children, education, profession, income, political preferences, and cars and real estate owned.”

    That is in addition to “information on an individual’s purchases, where they shop, and how they pay for their purchases,” plus “health information, the sites we visit online, and the advertisements we click on. And thanks to the proliferation of smartphones and wearables, data brokers collect and sell real-time location data.”

    Privacy advocates have warned for years that location and seemingly non-specific personal data — often collected by advertisers and amassed and sold by brokers — can be used to identify individuals. They also charge that the data often isn’t well secured and that the brokers aren’t covered by laws that require the clear consent of the person being tracked. They have argued for both legal and technical protections so consumers can push back.

    Data brokers say they get a bad rap for serving a vital need.

    Dan Smith, president of the Consumer Data Industry Association, which describes itself as “the voice of the consumer reporting industry,” called the Delete Act “severely flawed” and warned in a Wednesday release that the change could lead to unintended consequences by undermining consumer fraud protections, hurting the competitiveness of small businesses and entrenching big platforms such as Facebook and Google that collect vast amounts of consumer data but don’t sell it.

    Smith also argued that the heart of the bill — the one-stop data deletion program — could potentially allow malicious outsiders to impersonate consumers and delete their data without permission. The organization also argues that the cost of the legislation will be much greater than California regulators currently suggest.

    In other respects, though, the information collected by these companies can be startlingly easy to abuse. The general lack of U.S. restrictions on what brokers can do with the vast amount of data they collect means there’s aren’t many legal protections to prevent outsiders from spying on politicians, celebrities and just about anyone who is a target of idle curiosity, or malice.

    In mid-2021, for instance, the U.S. Conference of Catholic Bishops announced the resignation of its top administrative official, Monsignor Jeffrey Burrill, ahead of a report by the Catholic news outlet The Pillar probing his private romantic life. The Pillar said it obtained “commercially available” location data from an unnamed vendor that was “correlated” to Burrill’s phone to determine he had visited gay bars and private residences while using Grindr, a dating app popular with gay people.

    The Pillar alleged “serial sexual misconduct” by Burrill, as homosexual activity is considered sinful under Catholic doctrine and priests are expected to remain celibate. Following an extended leave, Burrill resumed his ministry in the small town of West Salem, Wisconsin, according to the Catholic News Service.

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  • Imagine making shadowy data brokers erase your personal info. Californians may soon live the dream

    Imagine making shadowy data brokers erase your personal info. Californians may soon live the dream

    [ad_1]

    SAN FRANCISCO — You may not know it, but thousands of often shadowy companies routinely traffic in personal data you probably never agreed to share — everything from your real-time location information to private financial details. Even if you could identify these data brokers, there isn’t much you can do about their activities, including in California, which has some of the strongest digital privacy laws in the U.S.

    That’s on the verge of changing. Both houses of the California state Legislature have passed the Delete Act, which would establish a “one stop shop” where individuals could order hundreds of data brokers registered in the state to delete their personal data — and to cease acquiring and selling it in the future — with a single request.

    The Delete Act isn’t law yet. Democratic Gov. Gavin Newsom still has to decide whether to sign the measure, which potentially could extend well beyond state lines given California’s history of setting similar trends.

    Here’s what you need to know.

    While California law already gives individuals the right to request data deletion, doing so currently require making separate requests to hundreds of data brokers registered in the state, many with their own unique requirements for drafting and handling such requests. Even then, nothing stops these companies from simply reacquiring the data after they delete it.

    The Delete Act would require the state’s new privacy office, the California Privacy Protection Agency, to set up a website where consumers can verify their identity and then make a single request to delete their personal data held by data brokers and to opt out of future tracking. Proponents call it a “do not track” signal similar to the “do not call” list for telemarketers maintained by the Federal Trade Commission.

    California already regulates data brokers, but the Delete Act would strengthen those provisions by requiring the companies to disclose more information about the data they collect on consumers and beefing up the state’s enforcement mechanisms.

    The Electronic Privacy Information Center, a Washington, D.C., nonprofit focused on bolstering the right to privacy, defines data brokers as companies that collect and categorize personal information, usually to build profiles on millions of Americans that the companies can then rent, sell or use to provide services.

    The data they collect, per the EPIC, can include: “names, addresses, telephone numbers, email addresses, gender, age, marital status, children, education, profession, income, political preferences, and cars and real estate owned.”

    That is in addition to “information on an individual’s purchases, where they shop, and how they pay for their purchases,” plus “health information, the sites we visit online, and the advertisements we click on. And thanks to the proliferation of smartphones and wearables, data brokers collect and sell real-time location data.”

    Privacy advocates have warned for years that location and seemingly non-specific personal data — often collected by advertisers and amassed and sold by brokers — can be used to identify individuals. They also charge that the data often isn’t well secured and that the brokers aren’t covered by laws that require the clear consent of the person being tracked. They have argued for both legal and technical protections so consumers can push back.

    Data brokers say they get a bad rap for serving a vital need.

    Dan Smith, president of the Consumer Data Industry Association, which describes itself as “the voice of the consumer reporting industry,” called the Delete Act “severely flawed” and warned in a Wednesday release that the change could lead to unintended consequences by undermining consumer fraud protections, hurting the competitiveness of small businesses and entrenching big platforms such as Facebook and Google that collect vast amounts of consumer data but don’t sell it.

    Smith also argued the heart of the bill — the one-stop data deletion program — could potentially allow malicious outsiders to impersonate consumers and delete their data without permission, although he didn’t explain what a third party might have to gain by deleting a consumer’s data without permission.

    The Delete Act specifically exempts credit reporting agencies such as Experian, Equifax and TransUnion, whose reports are often required for big-ticket consumer purchases such as homes or cars.

    The CDIA did not immediately reply to a request for clarification.

    In other respects, though, the information collected by these companies can be startlingly easy to abuse. The general lack of U.S. restrictions on what brokers can do with the vast amount of data they collect means there’s aren’t many legal protections to prevent outsiders from spying on politicians, celebrities and just about anyone who is a target of idle curiosity, or malice.

    In mid-2021, for instance, the U.S. Conference of Catholic Bishops announced the resignation of its top administrative official, Monsignor Jeffrey Burrill, ahead of a report by the Catholic news outlet The Pillar probing his private romantic life. The Pillar said it obtained “commercially available” location data from an unnamed vendor that was “correlated” to Burrill’s phone to determine he had visited gay bars and private residences while using Grindr, a dating app popular with gay people.

    The Pillar alleged “serial sexual misconduct” by Burrill, as homosexual activity is considered sinful under Catholic doctrine and priests are expected to remain celibate. Following an extended leave, Burrill resumed his ministry in the small town of West Salem, Wisconsin, according to the Catholic News Service.

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  • Nasdaq ends 1% down, leading stocks lower as tech shares slump

    Nasdaq ends 1% down, leading stocks lower as tech shares slump

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    U.S. stocks closed lower on Tuesday, with the Nasdaq Composite leading the way down, as Apple’s unveiling of its new iPhone and watch failed to boost appetite for equities. The Dow Jones Industrial Average
    DJIA,
    -0.05%

    shed about 16 points, or about 0.1%, to end near 34,647, while the S&P 500 index
    SPX,
    -0.57%

    closed 0.6% lower and the Nasdaq Composite Index
    COMP,
    -1.04%

    slumped 1%, according to preliminary FactSet data. That was the biggest daily percentage drop in about a week for the Nasdaq. Shares of Apple Inc.
    AAPL,
    -1.71%

    were a focus Tuesday as it rolled out a lineup of new consumer products, including its iPhone Pro Max, which will now start at $1,199 instead of $1,099, while its Pro model’s price stays the same. Investors also remain focused on the inflation data, including the release on Wednesday of the consumer-price index for August, before the U.S. stock market’s open. Apple shares fell 1.9% on Tuesday. Climbing bond yields can pressure high-growth stocks as borrowing costs rise. The benchmark 10-year Treasury yield
    TMUBMUSD10Y,
    4.297%

    edged down 2.4 basis points to 4.263% Tuesday, but was still near its highest level of the year.

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  • Carmakers fail privacy test, give owners little or no control on personal data they collect

    Carmakers fail privacy test, give owners little or no control on personal data they collect

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    BOSTON — Cars are getting an “F” in data privacy. Most major manufacturers admit they may be selling your personal information, a new study finds, with half also saying they would share it with the government or law enforcement without a court order.

    The proliferation of sensors in automobiles — from telematics to fully digitized control consoles — has made them prodigious data-collection hubs.

    But drivers are given little or no control over the personal data their vehicles collect, researchers for the nonprofit Mozilla Foundation said Wednesday in their latest “Privacy Not Included” survey Security standards are also vague, a big concern given automakers’ track record of susceptibility to hacking.

    “Cars seem to have really flown under the privacy radar and I’m really hoping that we can help remedy that because they are truly awful,” said Jen Caltrider, the study’s research lead. “Cars have microphones and people have all kinds of sensitive conversations in them. Cars have cameras that face inward and outward.”

    Unless they opt for a used, pre-digital model, car buyers “just don’t have a lot of options,” Caltrider said.

    Cars scored worst for privacy among more than a dozen product categories — including fitness trackers, reproductive-health apps, smart speakers and other connected home appliances — that Mozilla has studied since 2017.

    Not one of the 25 car brands whose privacy notices were reviewed — chosen for their popularity in Europe and North America — met the minimum privacy standards of Mozilla, which promotes open-source, public interest technologies and maintains the Firefox browser. By contrast, 37% of the mental health apps the non-profit reviewed this year did.

    Nineteen automakers say they can sell your personal data, their notices reveal. Half will share your information with government or law enforcement in response to a “request” — as opposed to requiring a court order. Only two — Renault and Dacia, which are not sold in North America — offer drivers the option to have their data deleted.

    “Increasingly, most cars are wiretaps on wheels,” said Albert Fox Cahn, a technology and human rights fellow at Harvard’s Carr Center for Human Rights Policy. “The electronics that drivers pay more and more money to install are collecting more and more data on them and their passengers.”

    “There is something uniquely invasive about transforming the privacy of one’s car into a corporate surveillance space,” he added.

    A trade group representing the makers of most cars and light trucks sold in the U.S., the Alliance for Automotive Innovation, took issue with that characterization. In a letter sent Tuesday to U.S. House and Senate leadership, it said it shares “the goal of protecting the privacy of consumers.”

    It called for a federal privacy law, saying a “patchwork of state privacy laws creates confusion among consumers about their privacy rights and makes compliance unnecessarily difficult.” The absence of such a law lets connected devices and smartphones amass data for tailored ad targeting and other marketing — while also raising the odds of massive information theft through cybersecurity breaches.

    The Associated Press asked the Alliance, which has resisted efforts to provide car owners and independent repair shops with access to onboard data, if it supports allowing car buyers to automatically opt out of data collection — and granting them the option of having collected data deleted. Spokesman Brian Weiss said that for safety reasons the group “has concerns” about letting customers completely opt out — but does endorse giving them greater control over how the data is used in marketing and by third parties.

    In a 2020 Pew Research survey, 52% of Americans said they had opted against using a product or service because they were worried about the amount of personal information it would collect about them.

    On security, Mozilla’s minimum standards include encrypting all personal information on a car. The researchers said most car brands ignored their emailed questions on the matter, those that did offering partial, unsatisfactory responses.

    Japan-based Nissan astounded researchers with the level of honesty and detailed breakdowns of data collection its privacy notice provides, a stark contrast with Big Tech companies such as Facebook or Google. “Sensitive personal information” collected includes driver’s license numbers, immigration status, race, sexual orientation and health diagnoses.

    Further, Nissan says it can share “inferences” drawn from the data to create profiles “reflecting the consumer’s preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes.”

    It was among six car companies that said they could collect “genetic information” or “genetic characteristics,” the researchers found.

    Nissan also said it collected information on “sexual activity.” It didn’t explain how.

    The all-electric Tesla brand scored high on Mozilla’s “creepiness” index. If an owner opts out of data collection, Tesla’s privacy notice says the company may not be able to notify drivers “in real time” of issues that could result in “reduced functionality, serious damage, or inoperability.”

    Neither Nissan nor Tesla immediately responded to questions about their practices.

    Mozilla’s Caltrider credited laws like the 27-nation European Union’s General Data Protection Regulation and California’s Consumer Privacy Act for compelling carmakers to provide existing data collection information.

    It’s a start, she said, by raising awareness among consumers just as occurred in the 2010s when a consumer backlash prompted TV makers to offer more alternatives to surveillance-heavy connected displays.

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  • Carmakers fail privacy test, give owners little or no control on personal data they collect

    Carmakers fail privacy test, give owners little or no control on personal data they collect

    [ad_1]

    BOSTON — Cars are getting an “F” in data privacy. Most major manufacturers admit they may be selling your personal information, a new study finds, with half also saying they would share it with the government or law enforcement without a court order.

    The proliferation of sensors in automobiles — from telematics to fully digitized control consoles — has made them prodigious data-collection hubs.

    But drivers are given little or no control over the personal data their vehicles collect, researchers for the nonprofit Mozilla Foundation said Wednesday in their latest “Privacy Not Included” survey Security standards are also vague, a big concern given automakers’ track record of susceptibility to hacking.

    “Cars seem to have really flown under the privacy radar and I’m really hoping that we can help remedy that because they are truly awful,” said Jen Caltrider, the study’s research lead. “Cars have microphones and people have all kinds of sensitive conversations in them. Cars have cameras that face inward and outward.”

    Unless they opt for a used, pre-digital model, car buyers “just don’t have a lot of options,” Caltrider said.

    Cars scored worst for privacy among more than a dozen product categories — including fitness trackers, reproductive-health apps, smart speakers and other connected home appliances — that Mozilla has studied since 2017.

    Not one of the 25 car brands whose privacy notices were reviewed — chosen for their popularity in Europe and North America — met the minimum privacy standards of Mozilla, which promotes open-source, public interest technologies and maintains the Firefox browser. By contrast, 37% of the mental health apps the non-profit reviewed this year did.

    Nineteen automakers say they can sell your personal data, their notices reveal. Half will share your information with government or law enforcement in response to a “request” — as opposed to requiring a court order. Only two — Renault and Dacia, which are not sold in North America — offer drivers the option to have their data deleted.

    “Increasingly, most cars are wiretaps on wheels,” said Albert Fox Cahn, a technology and human rights fellow at Harvard’s Carr Center for Human Rights Policy. “The electronics that drivers pay more and more money to install are collecting more and more data on them and their passengers.”

    “There is something uniquely invasive about transforming the privacy of one’s car into a corporate surveillance space,” he added.

    A trade group representing the makers of most cars and light trucks sold in the U.S., the Alliance for Automotive Innovation, took issue with that characterization. In a letter sent Tuesday to U.S. House and Senate leadership, it said it shares “the goal of protecting the privacy of consumers.”

    It called for a federal privacy law, saying a “patchwork of state privacy laws creates confusion among consumers about their privacy rights and makes compliance unnecessarily difficult.” The absence of such a law lets connected devices and smartphones amass data for tailored ad targeting and other marketing — while also raising the odds of massive information theft through cybersecurity breaches.

    The Associated Press asked the Alliance, which has resisted efforts to provide car owners and independent repair shops with access to onboard data, if it supports allowing car buyers to automatically opt out of data collection — and granting them the option of having collected data deleted. Spokesman Brian Weiss said that for safety reasons the group “has concerns” about letting customers completely opt out — but does endorse giving them greater control over how the data is used in marketing and by third parties.

    In a 2020 Pew Research survey, 52% of Americans said they had opted against using a product or service because they were worried about the amount of personal information it would collect about them.

    On security, Mozilla’s minimum standards include encrypting all personal information on a car. The researchers said most car brands ignored their emailed questions on the matter, those that did offering partial, unsatisfactory responses.

    Japan-based Nissan astounded researchers with the level of honesty and detailed breakdowns of data collection its privacy notice provides, a stark contrast with Big Tech companies such as Facebook or Google. “Sensitive personal information” collected includes driver’s license numbers, immigration status, race, sexual orientation and health diagnoses.

    Further, Nissan says it can share “inferences” drawn from the data to create profiles “reflecting the consumer’s preferences, characteristics, psychological trends, predispositions, behavior, attitudes, intelligence, abilities, and aptitudes.”

    It was among six car companies that said they could collect “genetic information” or “genetic characteristics,” the researchers found.

    Nissan also said it collected information on “sexual activity.” It didn’t explain how.

    The all-electric Tesla brand scored high on Mozilla’s “creepiness” index. If an owner opts out of data collection, Tesla’s privacy notice says the company may not be able to notify drivers “in real time” of issues that could result in “reduced functionality, serious damage, or inoperability.”

    Neither Nissan nor Tesla immediately responded to questions about their practices.

    Mozilla’s Caltrider credited laws like the 27-nation European Union’s General Data Protection Regulation and California’s Consumer Privacy Act for compelling carmakers to provide existing data collection information.

    It’s a start, she said, by raising awareness among consumers just as occurred in the 2010s when a consumer backlash prompted TV makers to offer more alternatives to surveillance-heavy connected displays.

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  • How the U.S. housing market got stuck in the ’80s

    How the U.S. housing market got stuck in the ’80s

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    The Federal Reserve’s inflation fight has been particularly brutal for anyone not already a U.S. homeowner before interest rates and mortgage rates rose to 15-year highs.

    With mortgage rates around 7.2% to kick off the post–Labor Day period, the difference between the rates on a new 30-year home loan and on all outstanding U.S. mortgage debt (see chart) has not been so wide since the 1980s.

    It’s the 1980s again in the U.S. housing market.


    Glenmede, FactSet

    “Generally, climbing interest rates curb demand and cause housing prices to fall,” Glenmede’s investment strategy team wrote, in a Tuesday client note, but not this time.

    Instead, U.S. homes remain in critically low supply after more than a decade of underbuilding, and with most homeowners who already refinanced at low pre-pandemic rates being “reluctant to leave their homes,” wrote Jason Pride, chief of investment strategy and research, and his Glenmede team.

    Also, while homes prices have come off their prepandemic highs, they still were fetching $416,000 in the second quarter, based on median sales prices, above $358,700 in the fourth quarter of 2020, according to U.S. Census and HUD data.

    “Until the supply gap is filled by new construction, home prices and building activity are unlikely to decline as meaningfully as they normally would given the headwind from rising rates,” the Glenmede team said.

    Read: Housing affordability is now at its worst level since 1984, Black Knight says

    The Glenmede team, however, does expect more pressure on consumers in the coming months, particularly as student-loan payments resume in October and if the Fed keeps interest rates high for a while, as increasingly expected. The benchmark 10-year Treasury yield
    BX:TMUBMUSD10Y,
    which underpins the U.S. economy, was back on the climb at 4.26% Tuesday.

    Meanwhile, shares of home-vacation rental platform Airbnb Inc.
    ABNB,
    +7.23%

    rose 7.2% on Tuesday, after the Labor Day weekend, and 66.4% higher on the year so far, according to FactSet.

    Don’t miss: New York City cracks down on Airbnb and other short-term-rental listings

    Shares of Invitation Homes Inc.
    INVH,
    -0.91%
    ,
    which grew out of the last decade’s home-loan foreclosure crisis to become a single-family-rental giant, were up 14.3% on the year, according to FactSet.

    Dallas Tanner, CEO of Invitation Homes, said he expected “the rising costs and the burden of homeownership” to continue to benefit his company, in a July earnings call. The company recently bought a portfolio of about 1,900 homes and has been snapping up newly constructed homes. Companies can borrow on Wall Street at much lower rates than individuals.

    Stocks closed lower Tuesday, with the Dow Jones Industrial Average
    DJIA
    off 0.5%, and the S&P 500 index
    SPX
    0.4% lower and the Nasdaq Composite Index
    COMP
    down 0.1%, according to FactSet.

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  • Intuit braces for negative FTC ruling on free tax prep advertising, vows appeal

    Intuit braces for negative FTC ruling on free tax prep advertising, vows appeal

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    More than a year ago, the Federal Trade Commission sued Intuit Inc., the maker of TurboTax, for allegedly tricking people into thinking they could file their income taxes for free with the tax-preparation giant.

    Now, an administrative judge inside the agency has ruled against Intuit — and the company said in a Friday afternoon SEC filing that it’s going to keep fighting the case, even if that means incurring “significant costs.”

    “We expect to appeal this decision to the FTC Commissioners and, if necessary, then to a federal court of appeals. We intend to continue to defend our position on the merits of this case,” the company said in its 10-K filing.

    “There is no monetary penalty, and Intuit expects no significant impact to its business,” Intuit spokesman Rick Heineman said in a statement. The company will appeal “this groundless and seemingly predetermined decision by the FTC to rule in its own favor,” he said.

    Intuit already reached a $141 million settlement with state attorneys general about the allegations of deceptive advertising. The company says it has been clear and upfront with customers about costs. It did not admit liability in the settlement.

    The FTC could not be immediately reached for comment Friday afternoon.

    In March 2022, the regulator sued Intuit in federal court to immediately stop commercials that repeated “free” over and over. Intuit pulled some of the advertising and after filing season ended, a San Francisco federal judge said the FTC bid for emergency halts didn’t need to happen under the circumstances.

    FTC lawyers also lodged an internal administrative complaint. “Intuit widely disseminated ads on television, on the radio, and online that gave consumers the impression that they could use TurboTax for free, even though two-thirds of taxpayers don’t qualify for Intuit’s free TurboTax offerings,” they wrote in administrative complaint proceedings.

    The ongoing legal fight is happening while the broader fight over of free tax preparation is heating up. The Internal Revenue Service is planning to test its own pilot program in the upcoming filing season where taxpayers can file their taxes directly with the IRS instead of through tax preparation companies or individual preparers.

    TurboTax and the tax software industry oppose the proposed IRS direct file system. So do Congressional Republicans.

    One sticking point in the looming government shutdown is how much money the IRS should be getting in its budget. The House appropriations bill would forbid the IRS from using any money to build the direct file system.

    Intuit Inc.
    INTU,
    +1.44%

    shares closed 1.4% higher Friday, at $549.60, and the disclosure didn’t seem to be having much effect on the shares in after-hours trading. Shares are up 41% year to date, while the Dow Jones Industrial Average
    DJIA
    is up 5% and the S&P 500
    SPX
    is up 17.6%.

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  • After outrage over Taylor Swift tickets, reform has been slow across the US

    After outrage over Taylor Swift tickets, reform has been slow across the US

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    SACRAMENTO, Calif. — When thousands of fans couldn’t get tickets for megastar Taylor Swift’s summer stadium tour, some diehards paid upwards of 70 times face value to see their favorite artist in person — an outrage that prompted Congressional hearings and bills in state legislatures to better protect consumers.

    After 10 months, Swift’s U.S. tour is finished, but so are most of the meaningful reforms consumer advocates and industry groups had hoped to pass this year. A proposal has so far failed to advance in the U.S. Senate. Legislation in Colorado was vetoed by the Democratic governor at the urging of some consumer groups.

    In California, home to iconic recording studios like Capitol Records and influential clubs like the Whiskey A Go Go and Hollywood Bowl, what started as a robust array of legislation has been watered down to a single bill banning hidden fees, something New York and Connecticut have done and most major industry players have already committed to do on their own.

    “That’s it? That’s all that California, the leading state in the nation on so many consumer protection issues, that’s all we’re going to do?” said Robert Herrell, executive director of the Consumer Federation of California. “That’s an embarrassment. It’s not enough.”

    The slow progress over changing how tickets should be sold and resold highlights not just the strength of industry opposition, but the regulatory difficulties in a market upended by technology. Gone are the days of standing in line at a box office to find out what seats were available and how much they cost.

    Today, nearly all tickets are sold online and downloaded to phones or other devices. Consumers often don’t know how much they will pay until just before they click the purchase button and fees and charges, which can sometimes be almost as much as the ticket price, are applied.

    Venues often don’t say how many seats are available for a specific event, according to consumer groups, but instead release tickets in batches, making consumers spend more out of the mistaken fear they’ll miss out.

    Some bad actors use software to quickly bulk-buy tickets for resale at much higher prices. They will even sell tickets before they have them, a practice known as “speculative ticketing” that consumer groups say is dangerous and does not guarantee the ticket. Some go so far as to mimic venue websites so consumers believe they are buying tickets directly.

    Sharp disagreements among venues, ticket sellers, consumer groups and artists have muddied what may seemingly straightforward consumer rights issues.

    Artists and venues want to restrict how fans can resell tickets, an attempt to crack down on “the secondary market to sweep the inventory, inflate the price and price gouge our fans,” said Jordan Bromley, who sits on the board of the Music Artist Coalition, an advocacy group representing artists.

    Consumer groups argue buyers can do what they want with their tickets, including upselling. That disagreement is partly why Colorado Democratic Gov. Jared Polis vetoed a bill earlier this year, despite the bill also containing consumer-friendly policies like banning hidden fees, price increases and speculative ticket sales.

    In California, consumer groups have mostly focused their ire on Live Nation Entertainment, the company that owns Ticketmaster and controls the bulk of ticket sales and venues in the U.S. for touring music artists. But the debate is spreading to artists, major men’s professional sports teams like the Los Angeles Dodgers and San Francisco 49ers, and independent venues with capacity for 1,000 people or fewer, including more than 600 in California alone.

    Most people are being vocal about “how this is an attempt to shoot at Ticketmaster and Live Nation,” said Julia Heath, president of the California chapter of the National Independent Venue Association. “What’s actually happening is they are aiming at them, but they are hitting everybody else, too.”

    The biggest disagreement was over whether to allow teams, venues and artists to restrict how fans could resell tickets they purchased.

    A bill to allow teams, venues and artists restrict how fans can resell tickets passed the Senate but failed to pass the Assembly this year after drawing concerns from consumer groups. State Sen. Anna Caballero, the bill’s author, promised to hold a hearing on the issue once the Legislature adjourns.

    A bill by Assemblymember Laura Friedman would ban venues and artists from restricting resales. The measure also would have required venues to disclose how many tickets were available for an event to prevent “holdbacks.” Ultimately, the bill was changed to remove both of those provisions after attracting strong industry opposition.

    “It’s been very difficult. It had a very strong and concerted effort from the very beginning lobby against this bill,” said Friedman, who added she was disappointed the bill was not stronger.

    Industry groups also are disappointed. Heath, who represents independent venues, called it a “do-nothing bill.”

    “A lot of the things we took issue with are gone, but we also see it as a missed opportunity,” she said. “There are issues in the ticketing world right now that need to be addressed.”

    Not everyone is disappointed. Jenn Engstrom, state director for the California Public Interest Research Group, said while it would be great to solve all of those problems, banning hidden fees is still a win for consumers.

    “I’m just all about incremental change,” she said. “This is a good first step.”

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  • Labor Day is just a ‘milestone’ in the marathon to get workers back to the office

    Labor Day is just a ‘milestone’ in the marathon to get workers back to the office

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    The U.S. Labor Day holiday will mark another milestone in the marathon to bring workers back to the office, but it won’t be a quick fix for landlords, according to Thomas LaSalvia, head of commercial real estate economics at Moody’s Analytics.

    Employers from Facebook parent Meta
    META,
    +0.27%

    to Goldman Sachs
    GS,
    -0.26%

    recently laid out mandates for staff to return to the office more frequently, starting this fall, including the big one — the federal government.

    “A lot of companies are saying that after Labor Day, ‘We expect more out of you,” LaSalvia said, referring to days in the office. Still, office attendance, he argues, likely only stages a fuller comeback if a job or promotion is on the line.

    Amazon.com Inc.’s
    AMZN,
    +2.18%

    Chief Executive Andy Jassy has been trying to drive home the point by warning staff to return at least three days a week, or face the consequences.

    That could prove difficult, with Friday’s U.S. jobs report for August expected to show U.S. unemployment at a scant 3.5%, near the lowest levels since the late 1960s, even if hiring has been slowing. The labor market, so far, appears unfazed by the Federal Reserve’s benchmark rate reaching a 22-year high.

    It has been a different story for landlords facing a roughly 19% vacancy rate nationally and piles of debt coming due, especially for owners of older Class B and C office buildings with a bleak outlook or properties in cities with wobbling business centers.

    See: San Francisco’s office market erases all gains since 2017 as prices sag nationally

    As with shopping malls, LaSalvia said it’s largely a problem of oversupply, with many office properties at risk of becoming obsolete as tenants flock to better buildings and locations staging a rebirth. The trend can be traced in leasing data since 2021, with Class A properties in central business districts (blue line) showing a big advantage over less desirable buildings in the heart of cities (orange line).

    Return to office isn’t going to save the entire office property market


    Moody’s Analytics

    “Little by little, we are finding the office isn’t dead,” LaSalvia said, but he also sees more promise in neighborhoods with a new purpose, those catering to hybrid work and communities that bring people together.

    Another way to look at the trend is through rents. Manhattan’s Penn Station submarket, with its estimated $13 billion overhaul and neighboring Hudson Yards development, has seen asking rents jump 32% to $74.87 a square foot in the second quarter since the fourth quarter of 2019, according to Moody’s Analytics. That compares with a 2% bump in asking rents in downtown New York City to $61.39 a square foot for the same period.

    The push for a return to the office also doesn’t mean a repeat of prepandemic ways. Goldman Sachs analysts estimate that part-time remote work in the U.S. has stabilized around 20%-25%, in a late August report, but that’s still up from 2.6% before the 2020 lockdowns.

    Furthermore, the persistence of remote work will likely add another 171 million square feet of vacant U.S. office space through 2029, a period that also will see tenants’ long-term leases expire and many companies opting for less space. The additional vacancies would roughly translate to 57% of Los Angeles roughly 300 million square feet of office space sitting empty.

    “The fundamental reason why we had offices in the first place have not completely disintegrated,” LaSalvia said. “But for some of those Class B and C offices, the writing was on the wall before the pandemic.”

    U.S. stocks were mixed Thursday, but headed for losses in a tough August for stocks, with the S&P 500 index
    SPX
    off about 1.5% for the month, the Dow Jones Industrial Average
    DJIA
    2.1% lower and the Nasdaq Composite
    COMP
    down 2% in August, according to FactSet.

    Related: Some employers mandate etiquette classes as returning office workers walk barefoot, burp loudly and microwave fish

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  • IRS says it’s catching more wealthy tax cheats and cutting phone wait times

    IRS says it’s catching more wealthy tax cheats and cutting phone wait times

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    It’s been one year since a law earmarked a massive cash infusion for the Internal Revenue Service, and the tax agency says it’s making a return on the investment.

    Now it has to sell that idea as the congressional budget process grinds on.

    Wednesday…

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  • Builder confidence falls for the first time in 2023, despite strong U.S. home-buying demand

    Builder confidence falls for the first time in 2023, despite strong U.S. home-buying demand

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    The numbers: Builder confidence waned in August as the 30-year mortgage rate surged, dampening U.S. home-buying interest.

    Despite a persistent shortage of homes on the market for resale, builders have lost confidence in the late summer amid declining customer traffic from higher mortgage rates, as well as challenges in the construction process.

    Mortgage…

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  • Want companies to lower their prices? Stop buying stuff from them.

    Want companies to lower their prices? Stop buying stuff from them.

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    The thing that will make companies lower prices is if consumers stop complaining about paying more for the things they need and want, and actually start refusing to buy them.

    As the U.S. corporate earnings-reporting season progresses, with earnings from major retailers Walmart Inc.
    WMT,
    +0.59%
    ,
    Target Corp.
    TGT,
    +0.10%

    and Home Depot Inc.
    HD,
    +0.52%

    on tap next week, investors can get a ground-floor view of how consumer demand may have been hurt, or not, by higher prices, and what the companies plan to do, or not do, about it.

    This dynamic of how consumers adjust their spending habits when prices change is referred to by economists as the price elasticity of demand.

    For companies to cut prices, ‘you have to have the consumer go on strike, and they’re not there yet.’


    — Jamie Cox, Harris Financial Group

    Those who trust companies will choose to ratchet down prices on their own, or at least not raise them because the rise in input costs has been slowing, haven’t been listening to what the many companies have told analysts on their post-earnings-report conference calls.

    Read: U.S. inflation eases again, PCE shows. Prices rise at slowest pace in almost two years.

    Kraft Heinz Co.
    KHC,
    +0.47%

    acknowledged after its second-quarter report that its relatively higher prices have hurt demand, but not by enough for the food and condiments company to consider cutting prices.

    Colgate-Palmolive Co.
    CL,
    +0.81%

    said it will continue to raise prices, even as inflation slows and selling volume declines, as the consumer-products company continues to be laser focused on boosting margins and profits.

    And while PepsiCo Inc.
    PEP,
    +0.16%

    was worried that elasticities would increase, given how its lower-income customers were being particularly pressured by inflation, the beverage and snack giant reported strong results as it witnessed “better elasticities” in most of the markets in which it operated.

    “Obviously, there is still carryover pricing, and I don’t think we’ll do anything different than our normal cycles on pricing in the balance of the year,” PepsiCo Chief Financial Officer Hugh Johnston told analysts, according to an AlphaSense transcript.

    Basically, as MarketWatch has reported, so-called greedflation is alive and well.

    Jamie Cox, managing partner for Harris Financial Group, said as long as the job market stays strong, as it is now, corporate greed will continue to pay off.

    “If something is more expensive, and you have a job, you’ll complain about it, but you won’t substitute it for something cheaper,” Cox said. For companies to cut prices, “you have to have the consumer go on strike, and they’re not there yet,” Cox added.

    ‘At some point, people are going to say, “All right — enough.” ’


    — Paul Nolte, Murphy & Sylvest Wealth Management

    The reason elasticity is so important in the current environment is that, as long as consumers continue to pay the higher prices companies are charging, inflation will remain stubbornly high, making it, in turn, more likely that the Federal Reserve will continue to raise interest rates or, at the very least, not lower them.

    But the longer interest rates stay high enough to crimp economic growth, the more likely the stock market will reverse lower as recession fears rise.

    “At some point, people are going to say, ‘All right — enough,’ ” said Paul Nolte, senior wealth manager and market strategist at Murphy & Sylvest Wealth Management. “But we just haven’t seen that yet.”

    What is elasticity?

    Economists use the term “price elasticity of demand” to refer to the way in which consumers adjust their spending habits when prices change.

    “Elasticity tries to measure how much more producers will want to produce if prices rise, and how much more consumers will want to buy if prices fall,” explained Bill Adams, chief economist at Comerica.

    Elasticity often depends on the type of product a company sells.

    For example, consumer-discretionary-goods companies that sell products and services that people want will often experience greater price elasticity than consumer-staples companies that sell things that people need, such as groceries and prescription drugs.

    But even for needs, consumers often still have a choice, as less expensive generic, or private-label, alternatives may be available.

    Andre Schulten, chief financial officer of consumer-staples maker Procter & Gamble Co.
    PG,
    +0.58%
    ,
    which recently beat earnings expectations as it continued to raise prices, telling analysts that, while there was “some trading into private label,” the overall market share of private-label products was unchanged for the year.

    As Harris Financial’s Cox said, consumers may be complaining about higher prices, but they aren’t yet desperate enough to stop buying.

    The Federal Reserve’s latest Beige Book economic survey stated that business contacts in some districts had observed a “reluctance” to raise prices as consumers appeared to have grown more sensitive to prices, but other districts reported “solid demand” allowed companies to maintain prices and profitability.

    That’s likely why companies and analysts have become less concerned about price elasticity. Based on a FactSet analysis, mentions of the word “elasticity” in press releases and conference calls of S&P 500 companies
    SPX
    increased as inflation and interest rates started surging in early 2022 through the end of the year.

    With inflation trends softening this year, the Fed took a brief pause in raising rates in June, helping fuel further stock-market gains, before raising rates again in July.

    Mentions of the word elasticity in earnings press releases and conference-call transcripts of S&P 500 companies.


    FactSet

    As the chart shows, “elasticity” popped up in more than 55% of earnings releases and conference calls in mid-2022, but with the second-quarter 2023 earnings-reporting season more than half over, mentions had dropped to about 20%.

    Perhaps that will pick up, as retailers, especially those catering to lower-income customers — recall the PepsiCo comment — assess the demand impact of continued price increases.

    Meanwhile, the branded-foods company Conagra Brands Inc.
    CAG,
    +0.71%
    ,
    whose wide-ranging food brands including Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim, were starting to see the emergence of a different dynamic.

    Chief Executive Sean Connolly said consumers were shifting behavior in some categories as prices remained high. Rather than trade down to lower-priced alternatives, he noticed some consumers buying fewer items overall, “more of a hunkering down than a trading down.”

    That’s exactly the kind of consumer behavior that is needed, if companies are to stop feeding into the greedflation phenomenon and to start pulling back on prices.

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  • Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

    Why have frozen fruit and vegetable prices soared by almost 12% — but the cost of fresh produce has not?

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    What’s going on with frozen fruit and vegetables?

    Food prices rose 0.2% on the month in July after remaining unchanged in June, and they rose 4.9% on the year, while the cost of food at home rose 3.6% on the year, government data released Thursday showed. Prices of fresh fruits and vegetables rose just 1.2% year over year.

    However, there were some big — even alarming — outliers: Frozen fruit and vegetable prices increased by 11.8% in July over last year, frozen vegetable prices rose 17.1% and frozen noncarbonated juice and drink prices rose 16.3%.

    Those price rises are at odds with overall inflation figures. U.S. consumer prices rose to 3.2% in July from 3% in the prior month, the Bureau of Labor Statistics said this week. It was the first increase in 13 months.  

    Why have the prices of frozen fruits and vegetables shot up over the past 12 months, while the cost of fresh fruits and vegetables has increased so little? 

    Climate change and extreme weather conditions — from heavy rainfall to drought, particularly in California — have led to big problems for farmers. This has been compounded by issues related to the war in Ukraine and an ongoing increase in the cost of labor, experts said.

    As a result, a large proportion of the fruits and vegetables grown were destined to be sold as fresh produce — which led to a shortage of ingredients for frozen goods, said Brad Rubin, sector manager at Wells Fargo Agri-Food Institute. “Because of the late crop, lots of produce is being pushed to the fresh market to keep up with demand,” he said.

    California weather

    California has experienced some drastic weather conditions over the last 12 months. Some 78 trillion gallons of water fell in California during winter 2022 and early spring 2023, according to data from the National Weather Service, delaying planting. And all that snow and rain was followed by a months-long drought in the region.

    What happens in California is felt by consumers across the country. 

    “California produces nearly half of U.S.-grown fruits, nuts and vegetables,” according to estimates from the Sciences College of Agriculture, Food & Environmental Sciences at California Polytechnic State University in San Luis Obispo. “California is the only state in the U.S. to export the following commodities: almonds, artichokes, dates, dried plums, figs, garlic, kiwifruit, olives, pistachios, raisins and walnuts,” it says.

    The subsequent price rises hit ingredients like strawberries and raspberries especially hard, Rubin added. Inventories of frozen berries are “near five-year lows” after winter storms in Watsonville flooded agricultural fields, damaging and delaying the strawberry crop. Most of the strawberries in the U.S. are grown in California. 

    Labor costs

    Frozen fruits and vegetables have a longer supply chain than fresh produce, which can make them more vulnerable to disruptions in inventory, experts say. Rising energy prices are also pushing up the cost of cold storage. 

    In addition to those issues, U.S. farmers are dealing with increased labor costs and fewer migrant workers, partly due to changes in government policies and the closure of borders during the COVID-19 pandemic, according to a February 2023 report from the Federal Reserve Bank of San Francisco. 

    “Immigration has traditionally provided an important contribution to the U.S. labor force,” the report said. “The flow of immigrants into the United States began to slow in 2017 due to various government policies, then declined further due to border closures in 2020-21 associated with the COVID-19 pandemic. This decline in immigration has had a notable effect on the share of immigrants in the U.S. labor force.”

    Russia’s invasion of Ukraine also continues to affect agricultural production in the U.S., said Curt Covington, senior director of institutional business at AgAmerica Lending, a financial-services company providing agricultural loans. Because the war disrupted supplies of commodities like wheat and corn — also pushing up prices for those goods — farmers have been prioritizing planting those crops over vegetables. 

    “These escalating frozen-vegetable prices present a challenge for farmers as they grapple with increased production costs and labor pressures,” and that presents a long-term challenge for farmers, “potentially impacting their profitability,” Covington said. 

    All of these factors — from international supply chains to extreme weather conditions — will have an effect on the cost of frozen goods in U.S. supermarkets. Ultimately, experts said, consumers will end up paying the price.

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  • Disney looking to crack down on password sharing, following Netflix’s lead

    Disney looking to crack down on password sharing, following Netflix’s lead

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    “We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family.”


    — Disney CEO Bob Iger

    Pour another one out for streaming freeloaders.

    Netflix Inc.
    NFLX,
    -2.14%

    has been cracking down on account-sharing, and now Walt Disney Co.
    DIS,
    -0.73%

    is likely to follow suit.

    Bob Iger, the media giant’s chief executive, said Wednesday that the company was “actively exploring” how to tackle the fact that many streaming subscribers on Disney+, Hulu and ESPN+ share passwords and accounts with loved ones.

    “Later this year, we will begin to update our subscriber agreements with additional terms on our sharing policies, and we will roll out tactics to drive monetization sometime in 2024,” he said, according to a transcript provided by AlphaSense/Sentieo.

    See also: Disney posts smaller streaming loss, will hike prices for Disney+ and Hulu

    Whereas Netflix suggested that it could be housing 100 million global account borrowers, Iger declined to put a number on Disney’s own base of password sharers, “except to say that it’s significant.”

    “What we don’t know, of course, is as we get to work on this, how much of the password-sharing, as we basically eliminate it, will convert to growth” in subscribers, he said. “Obviously, we believe there will be some, but we’re not speculating.”

    Read: The long-simmering rumor of Apple buying Disney is resurfacing as Bob Iger looks to sell assets

    The company plans to “get at this issue” next calendar year, and the initiative could have some impact on Disney’s business in that period.

    “It’s possible that we won’t be complete or the work will not be completed within the calendar year, but we certainly have established this as a real priority, and we actually think that there’s an opportunity here to help us grow our business,” Iger continued.

    Disney is making a big push to improve the financials of its streaming business, after spending the stay-home pandemic era focused on raw subscriber growth. Now the company is targeting streaming profitability by the end of fiscal 2024, and it just announced a new round of price hikes in pursuit of that goal.

    Don’t miss: Disney is raising prices on Hulu and Disney+ again. Here’s how much you’ll soon pay.

    “We grew this business really fast, really before we even understood what our pricing strategy should be or could be,” Iger commented. In the past six months, the company has started to pursue a pricing strategy “that’s really aimed at enabling us to improve the bottom line, ultimately to turn this into a growth business.”

    Netflix is farther along in its efforts, and it’s won praise from Wall Street for them. Executives at the streaming giant indicated early success with Netflix’s broad password-sharing crackdown, though it will take time for the impact to fully manifest in the company’s financials.

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  • Greedflation is not letting up. Here’s what companies are saying about it.

    Greedflation is not letting up. Here’s what companies are saying about it.

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    The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.

    “Greedflation,” or the practice of companies raising prices to protect their profit margins, is alive and well, based on the number of companies that have so far acknowledged raising prices yet again, even as inflation readings have come down and as some acknowledge that their input costs are falling.

    At the same time, companies continue to emphasize on earnings calls that their customers are showing signs they are weary of higher prices and are shopping more frequently at more stores, while spending less per trip.

    See: Consumers are shopping in more stores than ever before to save money

    Across industries, we’ve seen the same story over and over the last two years,” said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.

    “CEOs claim outside forces made them gouge consumers, then turn around and give themselves raises and boast of record profits and billions in new investor handouts,” she said, referring to the billions of stock buybacks and dividend payouts the same companies have made.

    See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike

    Also read: U.S. wholesale inflation slows to a crawl, PPI shows

    Procter & Gamble Co.
    PG,
    -1.10%
    ,
    for example, said it raised prices by up to 9% in its latest quarter, after raising them up to 10% the previous quarter and up to 10% in the same quarter in 2022.

    On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company’s innovation pipeline, which is creating must-have products.

    “If you look back historically, pricing has been a positive contributor to our top-line growth for something like 48 out of the 51 last quarters and again as we strengthen our innovation program even further, that will provide opportunities to continue to benefit from modest pricing,” said Moeller, according to a FactSet transcript.

    See also: Colgate to keep raising prices as inflation slows to boost margins and profit

    The company blew past earnings estimates with adjusted per-share earnings of $1.37, ahead of the $1.32 FactSet consensus, and sales of $20.6 billion, versus the $20 billion FactSet consensus.

    Gross margin increased 380 basis points from a year ago, driven by 340 basis points of pricing benefit and 290 basis points of productivity savings.

    Coca-Cola Co.
    KO,
    -1.51%

    also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company’s adjusted operating margin rose to 31.6% from 30.6% a year ago.

    Conagra Brands Inc.
    CAG,
    -0.62%

    raised prices by up to 17%, which Chief Executive Sean Connolly described as “inflation-justified.” The parent of brands such as Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim also reported that its customers are buying less food to stretch their budgets.

    For more, see: Consumers are now ‘hunkering down’ rather than ‘trading down’ on groceries, Conagra says

    Oreo cookie maker Mondelez International Inc.
    MDLZ,
    -1.82%

    raised prices in North America by 10.4 percentage points in the second quarter and raised prices for all developed markets by 12.4 percentage points. That’s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.

    The company’s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat.

    At Campbell Soup Co.
    CPB,
    -1.05%
    ,
    sales for its fiscal third quarter were up 5%, led by “favorable net price realization,” as the company disclosed as the very first bullet point in its release. Campbell raised prices of meals and beverages by 9% and if snacks by 15%, after raising them by 15% and 13%, respectively, in the second quarter.

    However, volumes were down in the third quarter as shoppers proved sensitive to higher prices.

    Kraft Heinz Co.
    KHC,
    -0.82%

    on Tuesday said it too has lost business because it raised prices more than its competitors, but it’s not planning to cut prices to try to get those customers back anytime soon.

    “[W]hile we did lose share in the quarter, as price gaps have stayed wider for longer than we would have liked, we are managing the business for the long term and still generated mid-single-digit top-line growth within the range of what we expected,” Chief Executive Miguel Patricio said.

    The company, parent to brands including Kraft Mac and Cheese, Heinz Ketchup, Jell-O and Lunchables, indicated on the post-earnings conference call with analysts that rather than increasing discounting, or just cutting prices, it will remain focused on protecting margins, which has been allowing it to accelerate investment in the business, particularly in marketing, research and development and technology.

    Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft’s prices and those of competitors are not getting worse. “If anything, they are slightly getting better,” Maciel said, according to an AlphaSense transcript.

    Considering the market-share losses and with inflation coming down, “do you think you took too much price, given you said you took price ahead of competitors, and they have not followed?” UBS analyst Cody Ross asked on the conference call.

    CEO Miguel Patricio’s answer was simple: “No.”

    “I mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it’s our role as leader to try to compensate … this inflation with price increases,” Patricio said. “So I would do everything again. I mean we can always go back on price if we think we have to or when we have to. But we had to lead price increases.”

    All of that leaves families to foot the bill for higher food prices, said Accountable.US’s Zelnick.

    The Consumer Staples Select Sector SPDR exchange-traded fund
    XLP
    has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
    XRT
    has gained 10.3%. The S&P 500
    XRT
    has gained 17%.

    Tomi Kilgore contributed.

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  • Greedflation is not letting up. Here’s what companies are saying about it.

    Greedflation is not letting up. Here’s what companies are saying about it.

    [ad_1]

    The second-quarter earnings season so far is showing that one trend that featured in the first quarter has not gone away.

    “Greedflation,” or the practice of companies raising prices to protect their profit margins, is alive and well, based on the number of companies that have so far acknowledged raising prices yet again, even as inflation readings have come down and as some acknowledge that their input costs are falling.

    At the same time, companies continue to emphasize on earnings calls that their customers are showing signs they are weary of higher prices and are shopping more frequently at more stores, while spending less per trip.

    See: Consumers are shopping in more stores than ever before to save money

    Across industries, we’ve seen the same story over and over the last two years,” said Liz Zelnick, director of economic security and corporate power at Accountable.US, a liberal-leaning consumer-advocacy group.

    “CEOs claim outside forces made them gouge consumers, then turn around and give themselves raises and boast of record profits and billions in new investor handouts,” she said, referring to the billions of stock buybacks and dividend payouts the same companies have made.

    See: U.S. inflation slows again, CPI shows, as Fed weighs another rate hike

    Also read: U.S. wholesale inflation slows to a crawl, PPI shows

    Procter & Gamble Co.
    PG,
    +0.18%
    ,
    for example, said it raised prices by up to 9% in its latest quarter, after raising them up to 10% the previous quarter and up to 10% in the same quarter in 2022.

    On a call with analysts, Chief Executive Jon Moeller signaled more price increases to come, which he attributed to the company’s innovation pipeline, which is creating must-have products.

    “If you look back historically, pricing has been a positive contributor to our top-line growth for something like 48 out of the 51 last quarters and again as we strengthen our innovation program even further, that will provide opportunities to continue to benefit from modest pricing,” said Moeller, according to a FactSet transcript.

    See also: Colgate to keep raising prices as inflation slows to boost margins and profit

    The company blew past earnings estimates with adjusted per-share earnings of $1.37, ahead of the $1.32 FactSet consensus, and sales of $20.6 billion, versus the $20 billion FactSet consensus.

    Gross margin increased 380 basis points from a year ago, driven by 340 basis points of pricing benefit and 290 basis points of productivity savings.

    Coca-Cola Co.
    KO,
    -0.49%

    also swept past estimates and raised guidance after the drinks and snacks giant increased prices by 10%. The company’s adjusted operating margin rose to 31.6% from 30.6% a year ago.

    Conagra Brands Inc.
    CAG,
    -0.75%

    raised prices by up to 17%, which Chief Executive Sean Connolly described as “inflation-justified.” The parent of brands such as Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim also reported that its customers are buying less food to stretch their budgets.

    For more, see: Consumers are now ‘hunkering down’ rather than ‘trading down’ on groceries, Conagra says

    Oreo cookie maker Mondelez International Inc.
    MDLZ,
    +0.09%

    raised prices in North America by 10.4 percentage points in the second quarter and raised prices for all developed markets by 12.4 percentage points. That’s after raising North America prices by 15 percentage points and prices in developed markets by 13.4 percentage points in the first quarter.

    The company’s second-quarter gross margins expanded by 3.1 percentage points to 39.4%. Revenues rose 17%, while volumes were flat.

    At Campbell Soup Co.
    CPB,
    -0.95%
    ,
    sales for its fiscal third quarter were up 5%, led by “favorable net price realization,” as the company disclosed as the very first bullet point in its release. Campbell raised prices of meals and beverages by 9% and if snacks by 15%, after raising them by 15% and 13%, respectively, in the second quarter.

    However, volumes were down in the third quarter as shoppers proved sensitive to higher prices.

    Kraft Heinz Co.
    KHC,
    -1.75%

    on Tuesday said it too has lost business because it raised prices more than its competitors, but it’s not planning to cut prices to try to get those customers back anytime soon.

    “[W]hile we did lose share in the quarter, as price gaps have stayed wider for longer than we would have liked, we are managing the business for the long term and still generated mid-single-digit top-line growth within the range of what we expected,” Chief Executive Miguel Patricio said.

    The company, parent to brands including Kraft Mac and Cheese, Heinz Ketchup, Jell-O and Lunchables, indicated on the post-earnings conference call with analysts that rather than increasing discounting, or just cutting prices, it will remain focused on protecting margins, which has been allowing it to accelerate investment in the business, particularly in marketing, research and development and technology.

    Besides, as Chief Financial Officer Andre Maciel said, the gaps between Kraft’s prices and those of competitors are not getting worse. “If anything, they are slightly getting better,” Maciel said, according to an AlphaSense transcript.

    Considering the market-share losses and with inflation coming down, “do you think you took too much price, given you said you took price ahead of competitors, and they have not followed?” UBS analyst Cody Ross asked on the conference call.

    CEO Miguel Patricio’s answer was simple: “No.”

    “I mean, we had very high inflation. And we are leaders in the vast majority of categories where we play. And it’s our role as leader to try to compensate … this inflation with price increases,” Patricio said. “So I would do everything again. I mean we can always go back on price if we think we have to or when we have to. But we had to lead price increases.”

    All of that leaves families to foot the bill for higher food prices, said Accountable.US’s Zelnick.

    The Consumer Staples Select Sector SPDR exchange-traded fund
    XLP
    has gained 1.2% in the year to date, while the SPDR S&P Retail ETF
    XRT
    has gained 10.3%. The S&P 500
    XRT
    has gained 17%.

    Tomi Kilgore contributed.

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  • Fitch slashes U.S. credit ratings to AA+ from AAA, points to ‘erosion’ of governance

    Fitch slashes U.S. credit ratings to AA+ from AAA, points to ‘erosion’ of governance

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    Fitch Ratings cut its top U.S. credit rating to AA+ from AAA on Tuesday, pointing to “erosion” of governance and the nation’s expected fiscal deterioration over the next three years.

    Fitch said eroding governance in the U.S. over the past two decades was among the factors for its downgrade, in a Tuesday evening statement. It also said it expected the general government deficit to climb to 6.3% of gross domestic product in 2023, from 3.7% in 2022, on weaker federal revenues, new spending initiatives and a higher interest burden.

    “In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” Fitch said.

    “The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management. In addition, the government lacks a medium-term fiscal framework, unlike most peers, and has a complex budgeting process.”

    Fitch warned in May that it might cut the U.S.’s AAA ratings as the latest debt-ceiling fight was dragging on for months without a resolution.

    Borrowing costs have climbed as the Treasury Department has unleashed a flood of Treasury issuance since its June debt-ceiling deal to restock it coffers. The 1-month Treasury yield was at 5.36% on Tuesday, while auctions of other Treasury bills maturing in one year often kick off yields north of 5%.

    See: ‘Eye-popping’ $1 trillion third-quarter borrowing need from U.S. Treasury raises risk of buyers’ fatigue

    Stocks ended trade Tuesday nearing record levels, with the Dow Jones Industrial Average
    DJIA,
    +0.20%

    and S&P 500 index
    SPX,
    -0.27%

    both less than 5% off their highest closing levels from early 2022.

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  • Am I being tricked into overtipping when I eat out? Should I tip before or after sales tax is added?

    Am I being tricked into overtipping when I eat out? Should I tip before or after sales tax is added?

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    Dear Quentin,

    I’ve read your previous responses to letters on tipping, and my thoughts are simple: Tipping is dependent on the service given. I won’t tip at a deli counter, but I will tip more in a diner. I see no reason to tip a deli counter person on a regular basis. The person who rings up my groceries isn’t allowed to accept tips, and they do a lot more than put a sandwich in a bag.

    As far as restaurants go, 15% is the starting point and I will go up from that as warranted. I do tend to tip a high percentage in diners. The waitstaff there are generally fabulous, deal with lower price points and a varied clientele. I feel they also suffer from customer bias where some people seem to think it’s only a diner not a fancy restaurant.

    ‘Helping others is not always through money. I volunteer my time with several charities and donate blood.’

    The job is the same whether my meal is $10 or $100. I try to pay in cash to ensure the waitstaff is promptly getting their tip, and to ensure that the money does indeed go to the wait staff. Are we expected to tip on a total that includes credit-card charges? What’s more, helping others is not always through money. I volunteer my time with several charities and donate blood.

    What troubles me is that throughout the New York City metro area, tipping recommendations in restaurants are based on faulty calculations. My friends and I all agree that tips are supposed to be based on the price of the meal — that is the subtotal or pre-tax figure. Restaurants frequently encourage people to tip on the final amount. 

    A Fair Tipper

    Related: I’m sick and tired of tipping 20% every time I eat out. Is it ever OK to tip less? Or am I a cheapskate? 

    Dear Fair,

    Yes, yes, yes, and yes. 

    Yes, wait staff in diners work as hard as any restaurant worker, and they deserve whatever your optimum tip — 15% or 20% — and as much as you would tip in a white-tablecloth restaurant. Yes, consumers should not be expected to tip in a deli — unless you have a good relationship with the staff, and you tip occasionally for goodwill. If you choose to “skip” the charity donation in a pharmacy, that’s OK too. Yes, donations and tips are increasingly being conflated, and that’s not always a good thing. We should be comfortable with the charity and 100% sure that the donation is going to the charity in question. 

    And your main point: Yes, tipping on the subtotal before tax and before credit-card charges is absolutely fair, although a lot of people — especially when calculating the tip among friends — tip on the after-tax total. Why? Perhaps we don’t want to be seen splitting hairs over the tax among friends and/or in front of a service worker who has given us exemplary service. Calculating tips is often done under pressure, and no one likes to be seen as a cheapskate. I almost always tip on the total amount, knowing that the sales tax is included, primarily because I figure that extra $1 or more is going to the person who served my table.

    My colleague, MarketWatch news editor Nicole Pesce, put together a guide for how much you should tip everyone, and who you should NOT tip. She also cited three reasons why tipping has become such a note of contention, and why it appears we are tipping more: people tipped staff more during the pandemic (they were, after all, putting their health and lives at risk with their jobs); 40-year high inflation over the last 12 months has increased the cost of everything and, as such our tips rose in tandem with prices; and, finally, digital tipping appears to be ubiquitous, and people have been suffering from tipping fatigue. 

    ‘You’re not the only one: Americans are souring on tipping.’

    You’re not the only one with tipping fatigue, though: Americans are generally souring on tipping. A large majority (66%) of U.S. adults have a negative view about tipping, according to a poll released by the personal-finance site Bankrate last month. The bottom line: consumers feel they are being forced to compensate employees for low pay (41%) and they don’t appreciate all that digital guilt tipping (32%) and, as a result, they believe that tipping culture has gotten out of control (30%). Respondents also said they were confused about how much to tip (15%), but a small minority (a paltry 16%) said they would be willing to pay higher prices in lieu of tipping.

    People appear to be less generous with their tipping amounts, and they also appear to be tipping less often. What’s perhaps most surprising from Bankrate’s research is that only 65% of diners actually tip when they eat out (that’s down from 73% last year). After restaurants, people are most likely to tip barbers/hairdressers (53% of those polled) and food-delivery workers (50%). From thereon, only a minority of people say they tip taxi or rideshare drivers (New York City cabs, which give tipping options upon payment, may be an outlier here), hotel housekeepers, baristas and food-delivery workers.

    It’s important that we have this conversation about tipping because expectations and digital tipping methods are evolving all the time. On the one hand, people are facing higher prices and they are understandably feeling under pressure to tip. On the other hand, this conversation naturally overlaps with the working conditions and pay of service workers. Americans are tipping less than they did during the worst days of the pandemic. Service workers — along with medical personnel, bus and train drivers and first responders — were among the heroes of the pandemic. That is something I hope we never forget.

    “The person who rings up my groceries isn’t allowed to accept tips, and they do a lot more than put a sandwich in a bag,” the letter writer says.


    MarketWatch illustration

    Also read:

    ‘I respect every profession equally, but I feel like so many people look down on me for being a waitress’: Americans are tipping less. Should we step up to the plate? 

    ‘We’re very upset!’ We gave a friend $400 concert tickets and $2,000 Rangers seats, but weren’t invited to his wedding. Do we speak up?

    ‘All of these tips add up’: If a restaurant adds a 20% tip, am I obliged to pay? Should tipping not be optional? 

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  • ‘I was outraged’: Our restaurant bill was $35 each, but our friend wanted to pay $22 for a gluten-free dish. Who’s right?

    ‘I was outraged’: Our restaurant bill was $35 each, but our friend wanted to pay $22 for a gluten-free dish. Who’s right?

    [ad_1]

    Dear Quentin,

    I went for dinner with six friends last weekend, and we each ordered entrees and desserts, and some side orders. One of our group only eats gluten-free food, so he ordered two starters. We split the bill, and it worked out at $36 each. But our gluten-free friend cried foul, and asked for a separate check to pay $22 for his gluten-free dish. I was outraged — and almost felt physically sick. I kicked my husband under the table, and said under my breath, “Can you believe that?’

    Can you believe it? Do you think he should have just paid the $35 instead of asking for a separate check? Adding insult to injury, he left the waiter a $10 tip. Why not just pay $35 like everyone else? I told my husband I was never going for dinner with him again. Don’t you think he should have just paid $35 like everyone else? It was a big crowd. If everyone did that, you’d need a forensic accountant to figure out how many breadsticks someone ate. 

    We otherwise had a nice evening, and it was a bring-your-own-bottle restaurant. I work as a teacher and my husband works in tech. We own a home together and have three kids. Our gluten-free friend is a freelance consultant, and is divorced with two kids. He had a very privileged upbringing. I worked hard for everything I have. I’m not saying any of us are rich, but when we go out to eat, we like to share and share alike, and split the bill down the middle. 

    When did eating out become so full of these cringeworthy moments?

    Equal Bill Splitter

    Dear Equal,

    I’m sorry to say that the most cringeworthy moment here happened when you kicked your husband under the table. I’m not a big fan of under-table communication in a group, and while we could debate the pros and cons of asking for a separate check for a $13 difference, I don’t think there’s much of a gray area when it comes to calling someone out at the dinner table, especially when your eye-rolling and disapproval could be picked up by the other guests.

    As far as your friend is concerned, $13 is a lot of money to pay when you did not eat all the food that was ordered by the table. Maybe it doesn’t seem like it to you or anyone reading this column, but your friend is divorced with two kids, and works as a freelancer — so let’s assume his income is not always stable. Could he have just split it down the middle and paid $35 and another 15% or 20% for a tip? Sure. But he has good financial boundaries. I applaud him.

    The real issue here may go back to your respective upbringings, and could explain your dramatic — and I would argue disproportionate reaction — to your friend asking for a separate $22 check. You’ve worked hard, and maybe your friend had an easier start in life, but that doesn’t mean he’s not entitled to pay for what he ate, and watch every dollar. Divorce is like a recession. You can end up struggling to get back on your financial feet for years.

    Perhaps your friend had always intended to pay $22 for his gluten-free dish, and tip the server 50%, or perhaps he has a well-trained side eye and caught your reaction to his paying for his own order, and he decided to pay closer to what everyone else had paid. But ordering separate checks, I suspect, will become more common as prices continue to rise, even at a slower pace, and people feel uncertain about spending money in restaurants. 

    You believe in equality of bill splitting. I suggest you apply that equality to all dinner guests, regardless of upbringing and dietary restrictions, and allow them to make their own choices about what they pay for at dinner. People often have problems — financial or otherwise — that we are not aware of, so try to leave space for that. And if your friend did see your eye-rolling and under-the-table antics? I’d like to think he made space for your behavior too.

    Readers write to me with all sorts of dilemmas. 

    By emailing your questions, you agree to have them published anonymously on MarketWatch. By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.

    The Moneyist regrets he cannot reply to questions individually.

    More from Quentin Fottrell:

    I had a date with a great guy. I didn’t drink, but his wine added $36 to our bill. We split the check evenly. Should I have spoken up?

    ‘I’m living paycheck to paycheck and I feel drained’: My fiancé said he would pay half of the mortgage. Guess what happened next?

    ‘We live in purgatory’: My wife has a multimillion-dollar trust fund, but my mother-in-law controls it. We earn $400,000 and spend beyond our means.

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  • S&P 500 ends above 4,500 level for first time in 15 months as stocks gain ahead of bank earnings

    S&P 500 ends above 4,500 level for first time in 15 months as stocks gain ahead of bank earnings

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    Stocks rose for a fourth day in a row on Thursday, a day ahead of second-quarter earnings from America’s biggest lenders. The Dow Jones Industrial Average
    DJIA,
    +0.14%

    rose about 46 points, or 0.1%, ending near 34,394, according to preliminary data from FactSet. But the S&P 500 index
    SPX,
    +0.85%

    gained 0.9% to end at 4,509, clearing the 4,500 mark for the first time since April 5, 2022 when it ended at 4,545.86, according to Dow Jones Market Data. The Nasdaq Composite Index
    COMP,
    +1.58%

    scored another blockbuster day, up 1.6%. Investors have been optimistic as inflation pressures ease and as perhaps the best-telegraphed U.S. economic recession in recent history has yet to materialize. The S&P 500 and Nasdaq have been charging higher on buzz about AI technology, with much of this year’s stock-market gains fueled by a small group of stocks. The risk-on tone ahead of earnings from JPMorgan Chase and Co.,
    JPM,
    +0.49%

    Wells Fargo
    WFC,
    +1.04%

    and Citigroup
    C,
    +0.63%
    ,
    had the U.S. dollar
    DXY,
    -0.74%

    earlier on pace to end at its lowest level since early April 2022. Treasury yields also continued to fall, with the 10-year
    TMUBMUSD10Y,
    3.768%

    rate back down to 3.759%, after topping 4% in recent weeks. The six biggest banks are expected to issue a deluge of fresh debt after earnings, despite the Federal Reserve having sharply increased rates and borrowing costs for businesses and households to tame inflation.

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