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Tag: Consumer affairs

  • Inflation is easing, but the prices of these groceries are expected to soar in 2023 — including one whose price rose nearly 60% in December

    Inflation is easing, but the prices of these groceries are expected to soar in 2023 — including one whose price rose nearly 60% in December

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    General inflation is easing, but the prices of some food items are not going down anytime soon. And the reasons are largely out of the Federal Reserve’s control.

    The consumer price index cooled in December, falling to an annualized 6.5% from the 7.1% annual rate recorded in November, according to government data. Still, the annualized inflation rate in food was 10.4% in December, significantly higher than the overall inflation rate even as it represented a slower rate of increase than November, when food prices were 12% higher than in November 2021.

    Inflation running at nearly 40-year highs over the past year has put a squeeze on American wallets. Through a series of jumbo rate hikes, the Federal Reserve has sought to tamp down inflation. Its target interest rate was lifted from a negligible level to a range of 4.25% to 4.50% by the end of 2022.

    But a few factors impacting food prices are not going away. War is still ongoing in Ukraine, which affected the prices of fertilizers and animal feeds; the avian flu continues to impact the egg supply; and extreme weather conditions are adding complexities to food production. 

    The following is a look at how a few popular food items are affected.

    Eggs

    The price of eggs surged 59.9% on the year in December, up from 49% in November, according to the most government data. That means a carton of Grade A large eggs on average more than doubled in cost with prices reaching $4.25 in December 2022, compared to $1.79 a year earlier. In some parts of the country, consumers could pay up to $8 for a carton of organic eggs. 

    Avian flu, which has forced millions of chickens to be culled and caused a shortage of eggs, is the main reason behind the price increase. In a change from previous breakouts that faded as summer ended, this time the avian flu lingered into winter. 

    The holiday season is usually the peak for consumer egg demand, which means that we could see egg prices tick down a little in the new year, experts said. 

    But it will not be a significant drop given the ongoing flu and high cost of feed. If input costs continue to increase and the bird flu continues to kill large quantities of hens, the costs will most likely be passed on to consumers, said Curt Covington, senior director of partner relations at AgAmerica Lending, a financial services company providing agriculture loans. 

    Experts, including the biggest egg producer in the country, Cal-Maine, said the avian flu will be hitting egg supplies for the long term. “More than 43 million of the 58 million birds slaughtered over the past year to control the virus have been egg-laying chickens, including some farms with more than a million birds apiece in major egg-producing states like Iowa,” the Associated Press reported this week.

    Read more: Cal-Maine says avian flu could continue to hit egg supplies after this year

    “I suspect it will take much additional effort to ‘stamp-out’ HPAI this time around and we may very well be dealing with the reality that this will be a year-round issue,” said Brian Earnest, lead economist for animal protein at CoBank, a national cooperative bank serving industries across rural America, in an email to MarketWatch. 

    The weekly supplies of eggs on hand has also reached a historic low, he told MarketWatch. For the week ended Dec. 19, cases on hand reported by the USDA totaled 1.176 million. That’s a 20% drop year-over-year, and the lowest level for the same week since 2014, he said. 

    Also see: Why egg prices are sizzling — up 38% on last year

    Butter

    Butter prices rose by 31.4% on the year in December, up from 27% in November, making the average price for a pound of butter $4.81 nationally. It was $3.47 a year earlier. 

    Extreme heat and smaller cow herds are the main reasons behind that, experts told MarketWatch. Cows eat less and produce less milk in the heat, and the cost of maintaining milk production skyrocketed last year, making farmers unwilling to expand their herds. 

    Going forward into 2023, the price of butter could soften, but year-over-year price increases could still stay high, said Tanner Ehmke, lead economist of dairy and specialty crops at CoBank. 

    Cows are approaching their prime milk-producing season, which usually runs from March through May, although customer demand usually peaks during the recently completed holiday season, he said.

    But the increase of supply will not be much, Ehmke said, because costs are staying at record highs for farmers to maintain and expand their herds. Drought in the Western part of the country and the war in Ukraine continue to impact the supply and costs of feed. 

    “It’s [going to be] a very modest increase,” said Ehmke. 

    About 58% of the U.S. is at least “abnormally dry,” according to the National Integrated Drought Information System. It’s likely this year will see more drought-inducing La Niña weather conditions, according to National Weather Service’s Climate Prediction Center.

    “If so, the third dry year in a row would signal the worst drought since at least 2011- 2013,” said Rob Fox, director of CoBank’s knowledge-exchange division in a 2023 preview released in December. “But this time it is more concentrated in the Western states, and it would be even more devastating to their already precarious water supplies and desiccated pastures,” he added.

    At the same time, butter production is competing with the growing production of and appetite for cheese in the U.S., Ehmke told MarketWatch last September. U.S. cheese consumption per capita is growing around 1% to 2% each year, according to the USDA. U.S. cheese exports also increased, particularly to countries like South Korea and Japan.

    Read more: Butter prices hit an all-time high — partly because extreme heat is taking a toll on dairy cows

    Vegetable oil and margarine

    Margarine, which is largely made of vegetable oil, is also seeing a huge price increase. The price of margarine, the substitute for butter in the old days, rose by 43.8 % in December, down slightly from 47.4% in November compared to a year before. 

    While soybeans, corn and sunflower oil are among the food items that have been hugely impacted by the war in Ukraine, another dynamic is at play here, analysts suggested: A large quantity of vegetable oil is being used for the production of renewable diesel.

    In 2021/2022, 38.4% of soybean-oil supplies were used for biofuel production — biofuel is a broader category than renewable diesel — up from 35.6% the year before, according to USDA data updated in October 2022. 

    Transitioning to a green economy laid out in the Inflation Reduction Act will require more soybean supply. The expected growth in soybean oil-based renewable diesel will require considerably more soybean bushels for domestic production, wrote Kenneth Scott Zuckerberg, CoBank’s lead economist for grain and farm supply, in a report in September. 

    At the moment, global grain and oilseed supplies are tight, and the combined global stocks of corn, wheat and soybeans are forecast to decline for the fifth straight year in 2023, according to the CoBank report.

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  • Southwest Airlines flight cancellations continue to snowball

    Southwest Airlines flight cancellations continue to snowball

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    DALLAS — Travelers who counted on Southwest Airlines to get them home suffered another wave of canceled flights Wednesday, and pressure grew on the federal government to help customers get reimbursed for unexpected expenses they incurred because of the airline’s meltdown.

    Exhausted Southwest
    LUV,
    -5.16%
    travelers tried finding seats on other airlines or renting cars to get to their destination, but many remained stranded. The airline’s CEO said it could be next week before the flight schedule returns to normal.

    Adontis Barber, a 34-year-old jazz pianist from Kansas City, Missouri, had camped out in the city’s airport since his Southwest flight was canceled Saturday and wondered if he would ever get to a New Year’s gig in Washington, D.C.

    “I give up,” he said. “I’m starting to feel homeless.”

    By early afternoon on the East Coast, about 90% of all canceled flights Wednesday in the U.S. were on Southwest, according to the FlightAware tracking service.

    Other airlines recovered from ferocious winter storms that hit large swaths of the country over the weekend, but not Southwest, which scrubbed 2,500 flights Wednesday and 2,300 more on Thursday.

    The Dallas airline was undone by a combination of factors including an antiquated crew-scheduling system and a network design that allows cancellations in one region to cascade throughout the country rapidly. Those weaknesses are not new — they helped cause a similar failure by Southwest in October 2021.

    The federal government is now investigating what happened at Southwest, which carries more passengers within the United States than any other airline.

    In a video that Southwest posted late Tuesday, CEO Robert Jordan said Southwest would operate a reduced schedule for several days but hoped to be “back on track before next week.”

    Jordan blamed the winter storm for snarling the airline’s “highly complex” network. He said Southwest’s tools for recovering from disruptions work “99% of the time, but clearly we need to double down” on upgrading systems to avoid a repeat of this week.

    “We have some real work to do in making this right,” said Jordan, a 34-year Southwest veteran who became CEO in February. “For now, I want you to know that we are committed to that.”

    Transportation Secretary Pete Buttigieg, who has criticized airlines for previous disruptions, said that “meltdown” was the only word he could think of to describe this week’s events at Southwest. He noted that while cancellations across the rest of the industry declined to about 4% of scheduled flights, they remained above 60% at Southwest.

    From the high rate of cancellations to customers’ inability to reach Southwest on the phone, the airline’s performance has been unacceptable, Buttigieg said. He vowed to hold the airline accountable and push it to reimburse travelers.

    “They need to make sure that those stranded passengers get to where they need to go and that they are provided adequate compensation,” including for missed flights, hotels and meals, he said Wednesday on ABC’s “Good Morning America.”

    On its website, Southwest told customers affected by canceled or delayed flights between Dec. 24 and Jan. 2 to submit receipts. The airline said, “We will honor reasonable requests for reimbursement for meals, hotel, and alternate transportation.”

    Navy physician Lt. Cmdr. Manoj Mathew said after spending hours on hold over two days Southwest reimbursed him for the first leg of his family’s trip from Washington to Houston — they drove through terrible weather after the Dec. 23 flight was canceled. Now he is worried whether Southwest will operate the return flight Sunday.

    “I’m trying to reach other airlines,” he said. “There are no flights, plus it’s very expensive for us.”

    Leaders of Southwest’s labor unions have warned for years that the airline’s crew-scheduling system, which dates to the 1990s, was inadequate, and the CEO acknowledged this week that the technology needs to be upgraded.

    The other large U.S. airlines use “hub and spoke” networks in which flights radiate out from a few major or hub airports. That helps limit the reach of disruptions caused by bad weather in part of the country.

    Southwest, however, has a “point to point” network in which planes crisscross the country during the day. This can increase the utilization and efficiency of each plane, but problems in one place can ripple across the country and leave crews trapped out of position.

    Those issues don’t explain all the complaints that stranded travelers made about Southwest, including no ability to reach the airline on the phone and a lack of help with hotels and meals.

    Teal Williams, a 48-year-old active-duty Army reservist from Utah, was stuck at the Denver airport with her husband and two teenage kids on Christmas Day after their flight to Des Moines, Iowa, was canceled. She said Southwest employees had no information about flights and didn’t offer food vouchers while elderly passengers sat in wheelchairs for hours and mothers ran out of formula for their infants.

    “It was just imploding, and no one could tell you anything,” Williams said. The airline employees “were desperately trying to help, but you could tell they were just as clueless as everybody else … it was scary.”

    Unable to find plane, train or bus seats, Williams and her family felt lucky to score a rental car. They drove 12 hours to Iowa.

    Barber, the musician from Kansas City, already missed a performance Sunday in Dallas but had hoped to make it to Washington in time for a New Year’s performance near the National Mall.

    “I’m missing out on money,” he lamented.

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  • Here are MarketWatch’s most popular Moneyist advice columns of 2022

    Here are MarketWatch’s most popular Moneyist advice columns of 2022

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    What fresh shenanigans and money dilemmas enthralled readers in 2022?

    Another year of broken promises, dodgy dealings and moving letters about how to get back on one’s feet after divorce, unemployment and even a 15-year abusive relationship. 

    The most widely-read Moneyist of 2022, however, was actually one of the shortest letters from someone called ‘Surprised Sister.” The answer, as is often the case, was not so simple, nor so short.

    Here is the No. 1 Moneyist column of the year: ‘We are surprised and bewildered’: My brother passed away and left his house, cash and possessions to charity. Can his siblings contest his will?

    My response: There are times to contest a will: a parent who was being controlled by a new friend or greedy child, and/or someone who was forced to change their will when they were not of sound mind.

    But her own legal advice notwithstanding, I suggested she should accept your brother’s wishes. Feeling aggrieved that she did not inherit his estate is not enough to break his will. 

    Separate the emotions from the finance, and the answer often reveals itself. But there were others that ran the gamut from romance to stocks. They other most-read columns are an eclectic bunch:

    Here are the 5 runner-ups:

    1. 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?

    It would be nice to offer to take the booze off the check, you were a non-drinker, would you speak up at one drink or two or three, if your date split the entire bill 50/50? 

    The financial intricacies of dating are like an onion that can be peeled ad infinitum. We’ve had plenty to chew over. Paying for one of your date’s drinks is OK, paying for two is pushing it.

    1. My father offered his 3 kids equal monetary gifts. My siblings took cash. I took stock. It’s soared in value — now they’re crying foul

    “The Other Brother” wrote that his father offered three children a choice: stocks or cash. The other two siblings took the cash. He took the cash. The stock soared. Dems are the breaks.

    Her siblings could have chosen stocks over cash, but they wanted immediate gratification. That was their decision, and they are going to have to take ownership of their choice and live with it.

    1. I’m an unmarried stay-at-home mother in a 20-year relationship, but my boyfriend won’t put my name on the deed of our house. Am I unreasonable?

    They have been in a 20-year relationship and have a 10-year-old child. “Not on the Deed” said she and her partner have had several tense “discussions” about adding me to the deed.

    I told her that her contribution to your partnership is valuable, her sense of worth is valuable, and her role as a homemaker and a mother is also valuable. Yes, he should add her.

    1. My friend got us free theater tickets. When I got home, she texted me, ‘Can you get our next meal or activity?’ Am I obliged to treat her?

    Even amidst the fights over inheritances, some breaches of social and financial etiquette seem so bizarre some people might think, ‘That behavior is too outrageous to be believable.” 

    The letter writer received free theater tickets, they split the bill 50/50 even though her friend had a cocktail, and she paid $10 for parking. Is he obliged to take her out again? No-can-do.

    1. My date chose an exclusive L.A. restaurant. After dinner, he accepted my credit card — and we split a $600 bill. Shouldn’t he have paid?

    Another dating story, this time where the guy chose a fancy restaurant and, as the date wore on, things took a turn for the worst, at least in the letter writer’s eyes: She was asked to split the bill.

    What if they didn’t get along? What if he was an abortion-rights supporter and she was anti-abortion? What if he was a Republican and she was a Democrat? Or vice-versa?  Always be prepared to pay.

    Follow Quentin Fottrell on Twitter.

    You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    More from Quentin Fottrell:

    ‘I’m left with a $100 Bûche de Noël for 10 people — and no place to go’: My friends canceled Christmas dinner. Should I end the 30-year friendship?

    I met my wife in 2019 and we married in 2020. I put her name on the deed of my $998,000 California home. Now I want a divorce. What can I do?

    I want to meet someone rich. Is that so wrong?’ I’m 46, earn $210,000, and own a $700,000 home. I’m tired of dating ‘losers.’

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  • 5 things not to buy in 2023

    5 things not to buy in 2023

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    It’s been a year of contradictions.

    The recession drum beats on, interest rates are rising, and the stock market has taken a tumble, and yet retail sales have risen 6.5% in the last 12 months, trailing a 7.1% increase in the cost of living.

    There are other reasons people should consider cutting back on spending in 2023. The personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — hit 2.4% in the third quarter from 3.4% in the prior quarter, the Bureau of Economic Analysis said.

    “There are signs that people are pulling back on certain expenditures. ”

    That is the lowest level since the Great Recession and the eighth-lowest quarterly rate on record (since 1947). Adjusted for inflation, savings are down 88% from their 2020 peak and 61% lower than before the pandemic, according to government data. The personal saving rate hit 2.4% in November vs. 2.2% in October. 

    Are people buying stocks during a bearish market, and/or have they run out of their pandemic-era savings? Whatever the reasons, more judicious investing and spending decisions seem to be the most prudent approach — especially given the uncertain economic outlook for 2023.

    There are signs that people are already pulling back on certain expenditures. Although retail sales are up on the year, they did decline 0.6% month-on-month in November to mark their biggest decline in almost a year, largely because of weak car sales.

    About those new cars: New-vehicle total sales for 2022 are projected to reach 13,687,000 units, down 8.4% on the year, according to a joint forecast from J.D. Power and LMC Automotive. MarketWatch reporter Philip van Doorn explains all the reasons why you may wish to skip buying a new car in 2023, in addition to their rising prices.

    So what else should you save your money on in 2023? MarketWatch writers give their verdict below.

    SPACs

    During the pandemic, people loved to buy special purpose acquisitions companies, known as SPACs. In 2021, 613 SPACs listed on U.S. stock exchanges through initial public offerings, according to SPAC Insider. The year before, there were 248 SPAC IPOs. There had never been more than 100 of these before in a single year. There were SPACs associated with Donald Trump and Serena Williams. There were so many, that one was called Just Another Acquisition Corp. 

    SPACs exist as a means to take private companies public, and theoretically give these shell companies a faster and less regulatory burdensome means to access public capital. The U.S. Securities and Exchange Commission warned investors last April that so-called advantages of the SPAC process, such as reduced legal liability, may not prove to be so solid if tested in court.

    The SPACs raised money even though they had no commercial operations or business, and tried to use the cash to buy something that did exist. But investors who bought SPACs that merged with private companies since 2015 have suffered losses of 37%, on average, a year after the merger, according to a recent study.  The SPAC and New Issue ETF 
    SPCX,
    +0.37%
    has slipped 12% this year. The frenzy for SPACs has predictably gone bust. But if you see one, just stay away from it.

    — Nathan Vardi

    Crypto 

    There are two main reasons not to invest in cryptocurrency in 2023, and neither has to do with the precipitous drop in value for most of the major coins in the last year, including but not limited to bitcoin
    BTCUSD,
    -1.11%    ,
    ethereum
    ETHE,
    -2.71%
    and tether
    USDTUSD,
    -0.02%    .
    Investors have long been conditioned to buy the dip and find value where others fear to tread, and then make money on the upswing. 

    Crypto is different because there’s no correlation to long-held market theories, and buying it amounts more to speculation than to investing. That might seem semantic, but if you look at financial planning holistically, then you treat investing as an exercise in risk tolerance — and crypto is all risk. 

    Which leads to the other main reason to avoid crypto in the next year: If you do buy it, there’s really no safe way to store it. There’s no federal insurance covering exchange failures and little cyber-theft protection for individuals. That leaves you on your own, which is not a good place to be with your money.

    — Beth Pinsker

    Meta Quest headsets

    On the consumer front, if you’re really into virtual reality, there is nothing wrong with jumping on the new Meta Quest two and Meta Quest Pro headsets that were introduced in 2022 by Meta Platforms Inc. 
    META,
    -0.78%    .

    The problem is that you might feel like you bought a BlackBerry
    BB,
    -3.42%
    phone in early 2007. Apple Inc.
    AAPL,
    -1.40%
    is expected to finally show off what engineers at the Silicon Valley giant have been cooking up in a years-long project to jump into augmented and virtual reality, and consumers are expected to at least get a glimpse at Apple’s attempt this year, if not a chance to buy whatever the company produces. 

    The headsets don’t come cheap: Meta said earlier this year it was raising the price of Meta Quest 2 headsets by $100 to $399.99 (128GB) and $499.99 (256GB). The iPhone’s introduction 15 years ago changed the way people look at smartphones, and Apple’s expected jump into this field in 2023 could leave anyone who spent their money on a Meta Quest headset wishing for a new reality.

    — Jeremy Owens

    Meme stocks 

    Struggling companies with business models that appear to some to be dying and/or struggling do not generally perform well in the stock market. But during the pandemic these companies often had stocks that soared. What drove them was social media sentiment, driven on platforms like Reddit, by a swarm of retail investors. 

    There was video game retailer GameStop
    GME,
    -7.42%    ,
    movie theater chain AMC
    AMC,
    -8.43%    ,
    and smartphone dinosaur Blackberry. AMC recently announced the sale of another $110 million in stock, adding to a total that has already exceeded $2 billion since the theater chain got swept up into meme-stock madness. CEO Adam Aron wrote on Twitter that the move put the company “in a much stronger cash position.”

    GameStop recently reported its seventh consecutive quarterly loss and reiterated its goal of returning to profitability in the near term, but analysts have signaled that many challenges lie ahead. During the company’s recent third-quarter conference call, Chief Executive Officer Matt Furlong said that GameStop would be open to exploring acquisitions of a strategic asset or complimentary business if they were available “in the right price range.”

    Buying meme companies like this worked for some in a booming stock market fueled by ultra-low interest rates. But we are now in a bear market with interest rates that are elevated. Corporate fundamentals are back in vogue. So are quaint investment ideas like cashflow. More likely than not, the days of buying meme stocks are over.

    — Nathan Vardi

    Tesla cars

    In recent years, Tesla Inc.
    TSLA,
    -8.25%
    has stood alone as the best option for electric vehicles, while other manufacturers struggled to get production running. But in 2023, there should be many more types of electric cars available, at prices that are expected to trend downward as the year goes along. Teslas range in price from $46,990 for the Tesla Model 3 to $138,880 for the Tesla Model X Plaid. 

    With major manufacturers such as General Motors Co.
    GM,
    -0.73%    ,
    Ford Motor Co.
    FORD,
    -2.68%    ,
    Toyota Corp. and Volkswagen
    VOW,
    -0.77%
    VLKAF,
    -1.15%
    jumping into the fray, and young Tesla wannabes like Rivian Automotive Inc.
    RIVN,
    -7.11%    ,
    Lucid Group Inc.
    LCID,
    -7.24%
    and FIsker Inc.
    FSR,
    -6.19%
     expected to start producing cars, consumers will have many more options for EVs. 

    Meanwhile, Tesla has done little to update the Model 3 since it was introduced in 2017, and has increased prices at a level that Chief Executive Elon Musk has admitted is “embarrassing” for a company that claimed to have a goal of mass-market pricing for EVs. 

    The average price of a new EV is $64,249, while a new gas car is $48,281, according to​​ Liz Najman, a climate scientist and communications and research manager at Recurrent Auto, an EV research and analytics firm focused on the used-vehicle market. After years of not having much choice beyond Tesla for EVs, 2023 appears to be the year that changes.

    — Jeremy Owens

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  • Vanguard sees a recession in 2023 — and one ‘silver lining’ for investors

    Vanguard sees a recession in 2023 — and one ‘silver lining’ for investors

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    The last 12 months was a year of fast-rising inflation, fast-rising interest rates and fast-rising questions about a future recession.

    Prices went up while stock markets and savings account balances went down, leaving consumers and investors dizzy and their wallets hurting.

    There may be more financial pain, that’s pretty sure — but it might not be as bad as feared, according to Vanguard’s look ahead to 2023.

    The likely recession will not send jobless rates charging sharply higher, sticker shock will fade for the price of goods, and the rise in rent and mortgages will also ease, Vanguard said.

    “On Tuesday, inflation data for November showed prices are continuing to cool. Analysts say that makes a 50-basis point increase, rather than a 75-basis-point increase, more likely.”

    The good news: This opens up chances for stocks to rebound, the asset-manager added.

    The outlook, released this week, comes as Americans are trying to guess what 2023 holds for their finances while they manage their holiday shopping budgets, and 2022 investments.

    On Tuesday, inflation data for November showed prices are continuing to cool. From October to November, the cost of living nudged up 0.1%, lower than the 0.3% forecast, the Consumer Price Index showed. Year over year, the inflation rate receded to 7.1% from 7.7% in October, according to the CPI data.

    On Wednesday, the Federal Reserve will announce its latest decision on interest rate increases. A 50-basis point increase is widely expected after four jumbo-sized 75-basis point hikes from the central bank.

    Here’s one roadmap for what’s next, as far as Vanguard’s researchers and experts can see.

    Hot inflation will cool

    Inflation rates during 2022 climbed to four-decade highs. There have been signs of easing, such as smaller-than-expected price increases in October.

    “As we step into 2023, early signs of a recovery in goods supply and softening demand could help balance supply and demand for consumption goods and bring prices lower,” the authors noted ahead of Tuesday’s CPI numbers.

    But the cost and demand of services are going to prevent a quick fall, they noted. Signs of slowing price increases are already emerging in rents and mortgages, but they will take longer to ease than prices of consumer goods, the authors said.

    That echoes the view from Treasury Secretary Janet Yellen, who said Sunday there will be “much lower inflation,” absent any unanticipated shocks to the economy.

    But while hot inflation will cool, it will still be warm to the touch. The Fed says 2% inflation is its target goal; Vanguard sees 3% inflation by the end of 2023.

    A recession is very much on the cards

    As “generationally high inflation” slowed economies across the world, the Fed and other central banks have countered with interest-rate increases to tame price increases. That “will ultimately succeed, but at a cost of a global recession in 2023,” according to Vanguard’s report. Vanguard sees a 90% chance of a recession in the United States by the end of next year.

    Vanguard is hardly alone in the recession call, so the question is how bad could the big picture look?

    In Vanguard’s view, it’s not so bad. “Households, businesses, and financial institutions are in a much better position to handle the eventual downturn, such that drawing parallels with the 1970s, 1980s, 2008, or 2020 seems misplaced,” the authors wrote.

    Job losses may be clustered

    For now, the jobless rate in a tight labor market is 3.7%, which is just a little above the lowest levels in five decades. That stands against the headline-grabbing list of companies where layoffs are mounting, notably in the tech sector.

    When a recession, in all likelihood, lands next year, “unemployment may peak around 5%, a historically low rate for a recession,” the Vanguard outlook said. As interest rates climb, the job losses “should be most concentrated in the technology and real estate sectors, which were among the strongest beneficiaries of the zero-rate environment.”

    The unemployment rate going from 3.7% to the 5% vicinity is “a sizable move,” Roger Aliaga-Díaz, Americas chief economist for Vanguard, said in a Monday press conference on the report. “But it is less dramatic of a rise than compared to past recessions perhaps.”

    Spotting the opportunities

    When interest rates go up, bond prices go down. So it’s been difficult for bonds with lower returns and “near-term pain” for investors this year, the Vanguard outlook said.

    “However the bright side of higher rates is higher interest payments. These have led our return expectations for U.S. and international bonds to increase by more than twofold,” the report said.

    Vanguard said U.S. bond return projections could be 4.1% – 5.1% annually over the next year versus its 1.4% – 2.4% return estimate last year. For U.S. stocks, the forecast could be 4.7% – 6.7% annually, while returns in emerging market equities could be between 7% and 9%.

    On Tuesday morning, stock markets are soaring higher on the cooler than expected inflation data, igniting hopes of an end of year Santa Claus rally.

    “‘There’s one silver lining of our outlook for a modest global recession. And it’s the clear silver lining of higher expected returns for investors.’”


    — Joseph Davis, Vanguard’s chief global economist

    Still, the Dow Jones Industrial Average
    DJIA,
    +0.30%
    is down nearly 5% year to date. The S&P 500
    SPX,
    +0.73%
    is off 14% in that time and for the Nasdaq Composite
    COMP,
    +0.38%
    is down more than 26%.

    When the market hits bottom is impossible to know, the outlook said — but it noted “valuations and yields are clearly more attractive than they were a year ago.”

    “There’s one silver lining of our outlook for a modest global recession. And it’s the clear silver lining of higher expected returns for investors,” said Joseph Davis, Vanguard’s chief global economist.

    “We’re long concerned that the low rate environment was both unsustainable and ultimately a tax and a headwind for savers and long term investors,” Davis said.

    But even with all the turbulence this year, “we certainly are starting to see the dividends to higher real interest rates around the world in the higher projected returns that we anticipate for investors over the coming decade.”

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  • ‘Gaslighters have two signature moves’: Are you being gaslighted at work? Here’s how to recognize the signs.

    ‘Gaslighters have two signature moves’: Are you being gaslighted at work? Here’s how to recognize the signs.

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    Are you less happy at work since you befriended that new recruit? Have they told you stories about how colleagues have constantly undermined them? Or do you have a boss who excludes you from key meetings — and then asks why you did not attend a meeting even though you are pretty sure you were not invited to begin with? If so, you may be working with a gaslighter.

    Gaslighters, as the name suggests, cast themselves in a positive light — friend or confidante who is here to help — but actually operate much more effectively in the shadows. Merriam-Webster named “gaslighting” the word of the year. Searches for the word on merriam-webster.com surged 1,740% in 2022 over the prior year year, despite there not being an event that the publisher — known for its dictionaries — could point to as a cause of the spike.

    It defines gaslighting as “psychological manipulation of a person usually over an extended period of time that causes the victim to question the validity of their own thoughts, perception of reality, or memories and typically leads to confusion, loss of confidence and self-esteem, uncertainty of one’s emotional or mental stability, and a dependency on the perpetrator.”

    Perhaps the reasons were more personal — or professional — than political. My social media feed is now full of thought pieces on how to spot one of these saboteurs. The comments sections read like the show notes of a True Crime podcast — gruesome yet hard to turn away from. 

    The term was coined in a 1938 play, “Gas Light,” a psychological thriller set in Victorian London and written by Patrick Hamilton.

    The term was further popularized after George Cukor’s 1944 film, “Gaslight,” based on the play, in which Gregory (Charles Boyer) tries to convince his wife Paula (Ingrid Bergman) that she has lost her reason. While he turns on the lights in the attic while searching for hidden jewels, the gaslight flickers in the rest of the house. He tells Paula that she is merely imagining the dimming of the lights.

    The workplace is fertile ground for such behavior, given what’s at stake: money, power, status, promotion, rivalry and the intrigue that often comes with office politics. 

    I’m in the business of helping people work out their conflicts at work. None of this surprises me. In fact, I dedicated a whole chapter in my book, “Jerks at Work,” to gaslighters. 

    “‘For gaslighters, slow and steady wins the race, and the best ones make friends with their victims first.’”

    What has surprised me is how wide-ranging the definition of “gaslighting” has become. Everything from “not respecting personal boundaries” to “talking so much shit about me I couldn’t get hired for two years” seems to fall under the umbrella. 

    What I’ve learned from my doom scrolling is that the word “gaslighter” — probably the worst name to bestow on a colleague or boss — seems to refer to anyone who’s done a whole bunch of bad things to us at work, especially things that involve humiliation. 

    So what really is a gaslighter, and why is it important to distinguish one from, say, a demeaning boss with a chip on their shoulder and a penchant for public shaming?

    If we stick to the clinical definition, gaslighters have two signature moves: They lie with the intent of creating a false reality, and they cut off their victims socially. 

    They position themselves as both savior and underminer, creating a negative and fearful atmosphere, spreading gossip and taking credit for other people’s work. They are often jealous and resentful, and aim to undercut others in order to further their own position.

    You may also be an unwitting pawn in the gaslighting of another colleague. The gaslighter might try to convince you that Johnny is trying to steal your leadership role on a project, and encourage you to freeze him out in the cafeteria at lunch time, or simply be extra wary about sharing important information.

    For gaslighters, slow and steady wins the race, and the best ones make friends with their victims first. For this reason, it could also be considered a form of workplace harassment.

    They often flatter them, make them feel special. Others create a fear of speaking up in their victims by making their position at work seem more precarious than it is. And the lies are complex, coming at you in layers. It takes a long time to realize your status as a victim of gaslighting, and social isolation is a necessary part of this process. 

    “‘It takes a long time to realize your status as a victim of gaslighting, and social isolation is a necessary part of this process.’”

    But there’s a difference between an annoying coworker or micromanaging boss, and a gaslighter, who lies and conspires to undermine your position. “The gaslighter doesn’t want you to improve or succeed — they’re out to sabotage you,” according to the careers website Monster.com. “They will accuse you of being confused or mistaken, or that you took something they said the wrong way because you are insecure. They might even manipulate paper trails to “prove” they are right.”

    Examples cited by Monster.com: “You know you turned in a project, but the gaslighter insists you never gave it to them. You can tell someone has been in your space, moving things around, or even on your computer, but you don’t have proof. You are the only one not included in a team email or meeting invite, or intentionally kept out of the loop. Then when you don’t respond or show up, you are reprimanded.”

    Knowing this, what can you do to prevent yourself from becoming a target? First, recognize that gaslighters don’t wear their strategy on their sleeve. Flattery, making you feel like you’re a part of a special club, or questioning your expertise are not things that raise gaslighting alarm bells. 

    Rather than looking out for mean behavior by a boss or coworker, look out for signs of social isolation. A boss who wants to cut you off from coworkers and other leaders should raise red flags, even if the reason is that “you’re better than them.” 

    Second, recognize that lie detection is a precarious — and from a scientific perspective, almost impossible — business. Don’t try to become a lie detector, instead take notes, so you can put your “gaslighter” on notice that you are wise to their tactics. You can also use the notes as evidence if you decide to later raise the situation with Human Resources. 

    Here are some ways to beat the gaslighter: Send emails with “a summary of today’s meeting” so you can document the origin of ideas and make sure they don’t steal credit from you. Furthermore, document things that happened in person, and share it with your would-be gaslighter. And speak up at meetings. Don’t allow yourself to be browbeaten into submission. 

    The more you document, the more difficult it will be to be victimized. But a word of warning: Don’t try to confront gaslighters — instead, go to your social network to build your reality back up. Trying to beat these folks at their own game is a losing strategy. But these small things, done early in a working relationship, can work wonders. 

    Tessa West is a New York University social psychology professor with a particular interest in workplace behavior, and author of “Jerks at Work: Toxic Coworkers and What to Do About Them.“

    Related stories:

    ‘We’re like rats in a cage’: Sick and tired of their jobs, American workers strive to regain their agency, their time — and their sanity‘

    People are seeking a genuine connection with their colleagues’ — one that goes beyond ‘Hollywood Squares’ Zoom meetings. Not all workers are happy with remote work.‘

    The backlash to quiet quitting smacks of another attempt by the ruling class to get workers back under their thumbs:’ Am I wrong?

    We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.

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  • ‘We’re headed for a family feud’: My father offered his 3 kids equal monetary gifts. My siblings took cash. I took stock. It’s soared in value — now they’re crying foul

    ‘We’re headed for a family feud’: My father offered his 3 kids equal monetary gifts. My siblings took cash. I took stock. It’s soared in value — now they’re crying foul

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    Dear Quentin,

    Several years before my father’s death, he offered me and my two siblings each an early “cash gift” from his estate in the amount of whatever the maximum non-taxable amount was at the time. He was an active investor and offered the gift in the form of the stock instead of cash. My siblings took the cash and I decided to take it in stock valued the same as the cash amount.  

    Fast forward five years: My father just passed away and my siblings bought expensive toys and luxury automobiles with their cash, while my stock is worth many times what it was when it was given to me. His will states that the three of us should share in equal parts of his estate, but my siblings are arguing that my now very valuable stock should be included as an asset to be split among the estate.

    Legally, they have no leg to stand on, but both are insistent that I’m taking money that is morally theirs. There’s no changing their mind and I’m convinced that we’re headed for a family feud. I’m not sure what I should do. Had the stock value gone to zero in that time, they wouldn’t be arguing that I should get extra to compensate for my “bad gamble.”

    The Other Brother

    Dear Other Brother,

    Them’s the breaks — in this case, the sudden screeching of car brakes.

    Your siblings could have chosen stocks over cash, but they wanted immediate gratification. That was their decision, and they are going to have to take ownership of their choice and live with it. Buying stocks are more likely to pay off if you hold on to them over the long term. You did just that. Instead of buying a Ferrari or a Tesla
    TSLA,
    -0.19%    ,
    you effectively chose to invest your gift.

    Show the same certainty now, and don’t cave to your siblings’ demands. Don’t allow them to bully you into selling.

    Investing is all about delaying your gratification — the ability to live for today and save for a more comfortable tomorrow, as opposed to having everything today and to hell with tomorrow. The gamification of stock trading with apps such as Robinhood
    HOOD,
    -0.74%    ,
    which has extended its trading hours beyond the market’s official hours, is in part about getting that dopamine hit. (However, trading after hours comes with risks — chief among them warped stock prices.)

    This dispute is about choice. If you had taken the cash, those stocks would still be part of your father’s estate, but you made the choice to take the stock. Your siblings had the same option and chose not to exercise it. Tell them, “I know it must be frustrating for you, but we all had the same opportunity. I took it. You took the cash.”

    There is only one reason they missed out — and if they look in the rearview mirror of their respective luxury cars, they will see that reason staring right back at them.

    You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, 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.

    More from Quentin Fottrell:

    • My girlfriend says I should tip in restaurants. I say waitstaff are just like construction and fast-food workers. Who’s right?
    • ‘He was infatuated with her’: My brother had a drinking problem and took his own life. He left $6 million to his former girlfriend who used to buy him alcohol
    • ‘She had a will, but it was null and void’: My friend and her sister are fighting over their mother’s life-insurance policy and bank account. Who should win out?

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  • ‘There are plenty of storm clouds on the horizon’: 5 things not to buy on Black Friday

    ‘There are plenty of storm clouds on the horizon’: 5 things not to buy on Black Friday

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    It’s a year for shopping prudently.

    Americans will spend between $942.6 billion and $960.4 billion this holiday season, according to projections from the National Retail Federation. That’s up from last year when holiday sales hit a record $889.3 billion, the trade association said.

    However, people are not willing to go as crazy this Black Friday compared to previous years: that 6% to 8% year-over-year growth expectation is slower than the 13.5% annual increase in holiday season spending in 2021 when consumers had pandemic-era government benefits to spend.

    Once again, millions of people will also be shopping from the comfort of their home and avoiding the Black Friday crowds. Online and other non-store sales are predicted to rise 10% to 12% (to between $262.8 billion and $267.6 billion).

    “People have reason to be concerned about their spending. ”

    “The economy is probably doing better than it feels right now, but that’s not true for everyone of course,” said Ted Rossman, senior industry analyst at Bankrate.com. “There are plenty of storm clouds on the horizon.” He cited rising interest rates, 40-year high inflation and tech layoffs. 

    People have reason to be concerned about their spending. The personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — fell to 3.3% in the third quarter from 3.4% in the prior quarter, the government said last month. 

    Despite a strong labor market and unemployment hovering at 3.7% in October, Rossman said, “it still seems like a recession is likely in 2023, although the best guess is that it will be a mild one.”

    So what should you not buy this Black Friday? Quite a lot, if you don’t believe in living large. Here are 5 things to think about avoiding:

    — Quentin Fottrell

    Tech accessories

    For tech accessories — like earbuds and headphones — waiting until December may be a better way to score better deals, added Ryan McGonagill, director, industry research at Savings.com, another site that aggregates discounts.

    The most popular electronic products like Apple AAPL iPads, MacBooks and iPhones have scant Black Friday deals. “For a limited time, get an Apple Gift Card to use on a later purchase when you buy an eligible iPhone, Apple Watch, Mac, AirPods, and more,” according to Apple’s Black Friday offer.

    Computer makers and retailers, however, are coming off the work-from-home boom and may have inventory they need to thin before year’s end. Holiday discounts on computers, at least through October, were at 10% off the base price, according to analysis from Adobe
    ADBE,
    +2.92%    .
     

    The software and analytics provider said computer discounts could go much steeper, up to 32% off the base price before the end of the year. Cyber Monday could be the best day for bargains on computers, Adobe said, but computer deals may stick around for the rest of 2022.

    Pay attention to early deals, if you desperately need a new laptop. “Many retailers offer the same pricing on Black Friday and Cyber Monday,” said Kristin McGrath, editor at RetailMeNot.com, a site that promotes deals. “So start looking on Black Friday and use Cyber Monday as a second chance to snag what you missed.”

    — Andrew Keshner

    Seasonal items

    Winter wear is usually not going to be on sale before Christmas, so it’s best to shop for your puffy jackets and snow boots in the New Year, if you can. The same goes for white linen, tools and holiday decorations, said Charles Lindsey, associate professor in the Marketing School of Management at the University at Buffalo.

    Most stores put their coats, hats, scarves and flannel pajamas on sale — with discounts on big-name brands of 50% or more in January — to make room for their spring collections. Similarly, buy summer clothes in the fall and winter. 

    “The best time to buy holiday decor is immediately after said holidays,” according to DealNews, a site offering shopping advice. “After Christmas sales are generally your best bet for snagging deeply discounted ornaments, lights, and inflatables in order to be well prepared for next year.” 

    Fashion-conscious shoppers inclined to snap up discounted items may want to practice patience on Black Friday. Apparel may have even deeper discounts after the holidays. If you feel compelled to buy something new to wear to the office party, invest in quality pieces. Fast fashion has a cost: It has contributed to a waste crisis, in part because such items are not meant to last very long in your closet.

    But that does not mean you should not keep your eyes peeled for some seasonal goods on Black Friday. Walmart
    WMT,
    +0.34%    ,
    for instance, is pushing out the boat early with some discounts on toys, including hoverboards, bicycles, remote-control cars, and karaoke machines. Similarly, Kohl’s
    KSS,
    +4.17%
    has discounts on a range of doll’s houses.

    — Quentin Fottrell and Emma Ockerman

    Appliances and white goods

    There might be tempting Black Friday deals on appliances, mattresses and furniture. Discounts on appliances may reach up to an 18% from the base price, Adobe said. Still, “you’re going to get another shot at them during New Year’s Eve sales and again during Presidents Day sales in February,” McGrath said.

    If Black Friday is “too chaotic …you’ll have plenty of opportunities to save,” she added. Department stores usually run very attractive discounts on houseware in the days following Christmas. “Stores know they’ll be getting a lot of traffic with so many people returning gifts — and hope to convince shoppers to make an impulse self-gifting purchase or two,” McGrath said.

    If you can’t wait, Costco
    COST,
    +1.64%
    is already rolling out deals on white goods and appliances, including $70 off a Sonos
    SONO,
    +1.87%
    WiFi speaker. However, Consumer Reports cautions consumers against falling for big deals without checking out the reliability of the brand first, as you could end up paying more in repairs down the road. 

    You might be tempted by offers and rebates on matching kitchen suites — typically a refrigerator, range, dishwasher, and microwave — from the same maker,” Consumer Reports said. “But price is only part of the equation when you’re purchasing appliances. Reliability is key, and it can vary within a brand’s offerings.”

    — Andrew Keshner

    Fitness equipment

    One of the best times to buy exercise equipment is around the New Year, when people are making resolutions to improve their health, said Regina Conway, who researches sales and promotions for Slickdeals, a site that tracks retail discounts.

    When you make your purchase, think twice before buying equipment that runs on proprietary technology, like Peloton
    PTON,
    -1.13%
    or Lululemon’s
    LULU,
    +1.79%
    Mirror exercise products, mainly because the at-home fitness boom faces an uncertain future post-pandemic, Conway noted.

    However, this Black Friday is a little different than previous years, and there are some deals in categories that traditionally don’t have good Black Friday discounts, including exercise equipment. “This year we’re seeing strong Black Friday deals from industry stalwarts like NordicTrack,” Conway said.

    Peloton Interactive, which is facing a challenging time since people are no longer stuck at home due to the pandemic, is currently offering $600 off this fitness bike package. However, consumers will still have to fork over $2,195 for the machine and exercise regime.

    “We think consumers are likely to continue to prefer out-of-home experiences in the near-term and believe Peloton is still working through pandemic pull-forward,” Cowen & Co. analyst John Blackledge wrote in an analyst note on Tuesday, citing “limited visibility” on Peloton’s fiscal 2023 performance.

    — Leslie Albrecht and Quentin Fottrell

    Big-ticket items like TVs 

    Does Amazon
    AMZN,
    +0.80%
    founder Jeff Bezos have a point about the dangers of splurging this year? In something of a Black Friday surprise, Bezos offered some shocking spending tips as Americans gear up for the holiday shopping season — amid four-decade-high inflation. Or, to be more accurate, he offered tips on what not to spend your money on.

    ‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table,” Bezos said in a recent interview on CNN
    WBD,
    +2.27%    .
    The remarks drew a significant amount of scorn on social media, with some critics advising people to avoid shopping on Amazon too.

    About those TVs: “They’re normally not going to be a high-end TV brand,” Lindsey said. “It will be a lower to mid-tier brand. Companies utilize these TVS as doorbusters to get people in the store and people clicking on their website. You’re probably better off shopping around the Superbowl in late January.”

    Rossman said consumers are becoming more judicious about their Black Friday splurging. “People seem to be pulling back on some big-ticket purchases,” he told MarketWatch. “For example, sellers of appliances, electronics and furniture all posted disappointing results in the most recent retail sales report.”

    “Yet discretionary sectors such as travel and dining are seeing sharp increases in spending,” he added. “I think the main explanation is pent-up demand. People are prioritizing experiences over things right now, largely due to the pandemic. There was also a pull-forward in demand for many physical goods the past couple of years as many out-of-home activities were curtailed.”

    — Quentin Fottrell

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  • Taylor Swift tickets breakdown probed by attorneys general

    Taylor Swift tickets breakdown probed by attorneys general

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    NASHVILLE, Tenn. — The breakdown in Ticketmaster’s sales of Taylor Swift tickets is a mess some attorneys general aren’t shaking off.

    With fans sharing outrage and heartache over the fruitless hours they spent trying for seats for Swift’s upcoming concert tour, top legal chiefs in Nevada, Tennessee and Pennsylvania have launched investigations into the fiasco.

    “Trouble, trouble, trouble,” tweeted Pennsylvania Attorney General Josh Shapiro in a reference to Swift’s 2012 hit song ‘I Knew You Were Trouble’ as he asked the public to file complaints about using Ticketmaster with his office.

    Shapiro, a Democrat who recently won Pennsylvania’s governor race, has since thanked people for their “swift response” while noting his office had received “a lot of complaints” to look into.

    Over in Tennessee, Attorney General Jonathan Skrmetti said he wants to ensure consumers have a fair shot at buying tickets.

    “There are no allegations at this time of any misconduct, but as the attorney general it’s my job to ensure that the consumer protection laws and antitrust laws in Tennessee are being honored,” Skrmetti told reporters.

    In 2008, Tennessee enacted a so-called “anti-bot” law that prohibits using certain computer programs to buy large amounts of tickets to concerts and sporting events. However, like most states that have passed similar bans, the law has rarely been enforced.

    Meanwhile, in Nevada, the attorney general’s office said it was investigating Ticketmaster for “alleged deceptive or unfair trade practices.”

    The trouble began when registered fans given codes for a pre-sale on Tuesday tried to secure tickets for Swift’s 52-date The Eras tour next year. They were quickly met with long delays and error messages that Ticketmaster blamed on bots and historically unprecedented demand. The company then canceled Friday’s sales to the general public.

    Swift vented anger and frustration in a lengthy statement, saying she had been assured by Ticketmaster that they could handle the demand.

    “It’s really difficult for me to trust an outside entity with these relationships and loyalties, and excruciating for me to just watch mistakes happen with no recourse,” Swift said.

    Ticketmaster said more than 2 million tickets were sold despite the troubles, setting a new single-day record for artists on the platform, and that only 15% of would-be buyers had issues with the process.

    “We want to apologize to Taylor and all of her fans – especially those who had a terrible experience trying to purchase tickets,” the company said.

    Multiple lawmakers have accused Ticketmaster of abusing its power as the dominant ticket-seller for consumers.

    U.S. Sen. Amy Klobuchar, who chairs the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, wrote an open letter to Ticketmaster’s President and CEO Michael Rapino, saying that she’s been skeptical of his company ever since they merged with LiveNation in 2011. Her letter included several questions about Ticketmaster’s business practices that she asked Rapino answer by next week.

    Asked about reports that the Justice Department would investigate Live Nation, White House press secretary Karine Jean-Pierre declined to comment on specifics, but said President Joe Biden has worked to increase competition and limit the power of large corporations, believing that a “lack of competition leads to higher prices, and worse service.”

    ———

    Associated Press writer Aamer Madhani contributed to this report from Washington D.C.

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  • Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.

    Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.

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    Billionaire Jeff Bezos, who founded the e-retail behemoth Amazon, has some spending tips as Americans gear up for a holiday shopping season — amid four-decade high inflation and recession worries.

    Here’s what he said:

    “‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table.’”

    Bezos made the comments in a CNN
    WBD,
    +0.46%
    interview that aired this week, the same interview where he pledged to give away most of his fortune in his lifetime.

    Why did Bezos offer the tip for consumers and small business to go easy on big-ticket items? He gave one big reason.

    “If we’re not in a recession right now, we’re likely to be in one very soon,” he said in the interview, picking up on his cautionary tweet last month that “the probabilities in this economy tell you to batten down the hatches.”

    Bezos is currently executive chair at Amazon
    AMZN,
    -2.34%    ,
    transitioning to the role last year as Andy Jassy took the reins as CEO.

    Later this week, Amazon confirmed it was laying off some of its staff in its device and services business — joining a growing list of tech companies, including Facebook parent Meta
    META,
    -1.57%
    — that is laying people off. Amazon’s job cuts could number around 10,000, according to the Wall Street Journal.

    “Critics have taken aim at these words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza.”

    To be sure, Bezos is not alone is his worries about a potential recession as the Federal Reserve and other central banks fight higher costs by hiking interest rates.

    But his advice prompted some guffaws on social media. In a nutshell, critics say these are words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza that lets consumers seamlessly spend money.

    As Joshua Becker, a proponent of minimalism wrote on Twitter: “I didn’t hear him mention refraining from Amazon’s Prime Day deals or Black Friday offers, but I recommend adding those items to your list as well.”

    Regardless of how anyone feels about hearing spending advice, particularly from one of the world’s richest people, there are some things to consider as events like Black Friday and Cyber Monday approach.

    For one thing, maybe there are discretionary expenses where people can cut back. Many Americans are still spending briskly, as Walmart
    WMT,
    -0.34%
    third-quarter earnings and October’s retail-sales numbers recently affirmed. Holiday-spending projections paint the same picture.

    Americans will spend between $942.6 billion and $960.4 billion on holiday-season sales this year, according to projections from the National Retail Federation. Last year’s holiday sales totaled $889.3 billion, the trade association said.

    “During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to the National Retail Federation.”

    But Americans are planning for the holidays while credit-card balances are increasing — likely because credit cards are helping them keep up with rising costs.

    During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to Federal Reserve Bank of New York data.

    While balances grow, so do credit-card interest rates. The annual percentage rate (APR) on new credit-card offers averaged 19.14% in mid-November, according to Bankrate.com. That beats the old record on APRs for new cards, set at 19% three decades ago.

    The holiday shopping season is typically when Americans accumulate credit-card debt, pay the debts in the early part of the coming year and repeat the holiday-season debt the following year.

    This year, the stakes could be higher if high credit-card bills arrive and a recession-induced job loss follows.

    “It’s not the time to overspend and have a problem with paying your bills later,” Michele Raneri, vice president of financial services research and consulting at TransUnion
    TRU,
    -4.94%    ,
    one of the country’s three major credit bureaus, previously told MarketWatch. “We know the economy is sending mixed messages.”

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  • ‘Zombie Debt’: Homeowners face foreclosure on old mortgages

    ‘Zombie Debt’: Homeowners face foreclosure on old mortgages

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    Rose Prophete thought the second mortgage loan on her Brooklyn home was resolved about a decade ago — until she received paperwork claiming she owed more than $130,000.

    “I was shocked,” said Prophete, who refinanced her two-family home in 2006, six years after arriving from Haiti. “I don’t even know these people because they never contacted me. They never called me.”

    Prophete is part of a wave of homeowners who say they were blindsided by the start of foreclosure actions on their homes over second loans that were taken out more than a decade ago. The trusts and mortgage loan servicers behind the actions say the loans were defaulted on years ago.

    Some of these homeowners say they weren’t even aware they had a second mortgage because of confusing loan structures. Others believed their second loans were rolled in with their first mortgage payments or forgiven. Typically, they say they had not received statements on their second loans for years as they paid down their first mortgages.

    Now they’re being told the loans weren’t dead after all. Instead, they’re what critics call “zombie debt” — old loans with new collection actions.

    While no federal government agency tracks the number of foreclosure actions on second mortgages, attorneys aiding homeowners say they have surged in recent years. The attorneys say many of the loans are owned by purchasers of troubled mortgages and are being pursued now because home values have increased and there’s more equity in them.

    “They’ve been holding them, having no communication with the borrowers,” said Andrea Bopp Stark, an attorney with the Boston-based National Consumer Law Center. “And then all of a sudden they’re coming out of the woodwork and are threatening to foreclose because now there is value in the property. They can foreclose on the property and actually get something after the first mortgages are paid off.”

    Attorneys for owners of the loans and the companies that service them argue that they are pursuing legitimately owed debt, no matter what the borrower believed. And they say they are acting legally to claim it.

    How did this happen?

    Court actions now can be traced to the tail end of the housing boom earlier this century. Some involve home equity lines of credit. Others stem from “80/20” loans, in which homebuyers could take out a first loan covering about 80% of the purchase price, and a second loan covering the remaining 20%.

    Splitting loans allowed borrowers to avoid large down payments. But the second loans could carry interest rates of 9% or more and balloon payments. Consumer advocates say the loans — many originating with since-discredited lenders — included predatory terms and were marketed in communities of color and lower-income neighborhoods.

    The surge in people falling behind on mortgage payments after the Great Recession began included homeowners with second loans. They were among the people who took advantage of federal loan modification programs, refinanced or declared bankruptcy to help keep their homes.

    In some cases, the first loans were modified but the second ones weren’t.

    Some second mortgages at that time were “charged off,” meaning the creditor had stopped seeking payment. That doesn’t mean the loan was forgiven. But that was the impression of many homeowners, some of whom apparently misunderstood the 80/20 loan structure.

    Other borrowers say they had difficulty getting answers about their second loans.

    In the Miami area, Pastor Carlos Mendez and his wife, Lisset Garcia, signed a modification on their first mortgage in 2012, after financial hardships resulted in missed payments and a bankruptcy filing. The couple had bought the home in Hialeah in 2006, two years after arriving from Cuba, and raised their two daughters there.

    Mendez said they were unable to get answers about the status of their second mortgage from the bank and were eventually told that the debt was canceled, or would be canceled.

    Then in 2020, they received foreclosure paperwork from a different debt owner.

    Their attorney, Ricardo M. Corona, said they are being told they owe $70,000 in past due payments plus $47,000 in principal. But he said records show the loan was charged off in 2013 and that the loan holders are not entitled to interest payments stemming from the years when the couple did not receive periodic statements. The case is pending.

    “Despite everything, we are fighting and trusting justice, keeping our faith in God, so we can solve this and keep the house,” Mendez said in Spanish.

    Second loans were packaged and sold, some multiple times. The parties behind the court actions that have been launched to collect the money now are often investors who buy so-called distressed mortgage loans at deep discounts, advocates say. Many of the debt buyers are limited liability companies that are not regulated in the way that big banks are.

    The plaintiff in the action on the Mendez and Garcia home is listed as Wilmington Savings Fund Society, FSB, “not in its individual capacity but solely as a Trustee for BCMB1 Trust.”

    A spokeswoman for Wilmington said it acts as a trustee on behalf of many trusts and has “no authority with respect to the management of the real estate in the portfolio.” Efforts to find someone associated with BCMB1 Trust to respond to questions were not successful.

    Some people facing foreclosure have filed their own lawsuits citing federal requirements related to periodic statements or other consumer protection laws. In Georgia, a woman facing foreclosure claimed in federal court that she never received periodic notices about her second mortgage or notices when it was transferred to new owners, as required by federal law. The case was settled in June under confidential terms, according to court filings.

    In New York, Prophete is one of 13 plaintiffs in a federal lawsuit claiming that mortgage debt is being sought beyond New York’s six-year statute of limitations, resulting in violations of federal and state law.

    “I think what makes it so pernicious is these are homeowners who worked very hard to become current on their loans,” said Rachel Geballe, a deputy director at Brooklyn Legal Services, which is litigating the case with The Legal Aid Society. “They thought they were taking care of their debt.”

    The defendants in that case are the loan servicer SN Servicing and the law firm Richland and Falkowski, which represented mortgage trusts involved in the court actions, including BCMB1 Trust, according to the complaint. In court filings, the defendants dispute the plaintiff’s interpretation of the statute of limitations, say they acted properly and are seeking to dismiss the lawsuit.

    “The allegations in the various mortgage foreclosure actions are truthful and not misleading or deceptive,” Attorney Daniel Richland wrote in a letter to the judge. “Plaintiff’s allegations, by contrast, are implausible and thus warrant dismissal.”

    ———

    Associated Press writer Claudia Torrens and researcher Jennifer Farrar in New York contributed to this report.

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  • ‘Zombie Debt’: Homeowners face foreclosure on old mortgages

    ‘Zombie Debt’: Homeowners face foreclosure on old mortgages

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    Rose Prophete thought the second mortgage loan on her Brooklyn home was resolved about a decade ago — until she received paperwork claiming she owed more than $130,000.

    “I was shocked,” said Prophete, who refinanced her two-family home in 2006, six years after arriving from Haiti. “I don’t even know these people because they never contacted me. They never called me.”

    Prophete is part of a wave of homeowners who say they were blindsided by the start of foreclosure actions on their homes over second loans that were taken out more than a decade ago. The trusts and mortgage loan servicers behind the actions say the loans were defaulted on years ago.

    Some of these homeowners say they weren’t even aware they had a second mortgage because of confusing loan structures. Others believed their second loans were rolled in with their first mortgage payments or forgiven. Typically, they say they had not received statements on their second loans for years as they paid down their first mortgages.

    Now they’re being told the loans weren’t dead after all. Instead, they’re what critics call “zombie debt” — old loans with new collection actions.

    While no federal government agency tracks the number of foreclosure actions on second mortgages, attorneys aiding homeowners say they have surged in recent years. The attorneys say many of the loans are owned by purchasers of troubled mortgages and are being pursued now because home values have increased and there’s more equity in them.

    “They’ve been holding them, having no communication with the borrowers,” said Andrea Bopp Stark, an attorney with the Boston-based National Consumer Law Center. “And then all of a sudden they’re coming out of the woodwork and are threatening to foreclose because now there is value in the property. They can foreclose on the property and actually get something after the first mortgages are paid off.”

    Attorneys for owners of the loans and the companies that service them argue that they are pursuing legitimately owed debt, no matter what the borrower believed. And they say they are acting legally to claim it.

    How did this happen?

    Court actions now can be traced to the tail end of the housing boom earlier this century. Some involve home equity lines of credit. Others stem from “80/20” loans, in which homebuyers could take out a first loan covering about 80% of the purchase price, and a second loan covering the remaining 20%.

    Splitting loans allowed borrowers to avoid large down payments. But the second loans could carry interest rates of 9% or more and balloon payments. Consumer advocates say the loans — many originating with since-discredited lenders — included predatory terms and were marketed in communities of color and lower-income neighborhoods.

    The surge in people falling behind on mortgage payments after the Great Recession began included homeowners with second loans. They were among the people who took advantage of federal loan modification programs, refinanced or declared bankruptcy to help keep their homes.

    In some cases, the first loans were modified but the second ones weren’t.

    Some second mortgages at that time were “charged off,” meaning the creditor had stopped seeking payment. That doesn’t mean the loan was forgiven. But that was the impression of many homeowners, some of whom apparently misunderstood the 80/20 loan structure.

    Other borrowers say they had difficulty getting answers about their second loans.

    In the Miami area, Pastor Carlos Mendez and his wife, Lisset Garcia, signed a modification on their first mortgage in 2012, after financial hardships resulted in missed payments and a bankruptcy filing. The couple had bought the home in Hialeah in 2006, two years after arriving from Cuba, and raised their two daughters there.

    Mendez said they were unable to get answers about the status of their second mortgage from the bank and were eventually told that the debt was canceled, or would be canceled.

    Then in 2020, they received foreclosure paperwork from a different debt owner.

    Their attorney, Ricardo M. Corona, said they are being told they owe $70,000 in past due payments plus $47,000 in principal. But he said records show the loan was charged off in 2013 and that the loan holders are not entitled to interest payments stemming from the years when the couple did not receive periodic statements. The case is pending.

    “Despite everything, we are fighting and trusting justice, keeping our faith in God, so we can solve this and keep the house,” Mendez said in Spanish.

    Second loans were packaged and sold, some multiple times. The parties behind the court actions that have been launched to collect the money now are often investors who buy so-called distressed mortgage loans at deep discounts, advocates say. Many of the debt buyers are limited liability companies that are not regulated in the way that big banks are.

    The plaintiff in the action on the Mendez and Garcia home is listed as Wilmington Savings Fund Society, FSB, “not in its individual capacity but solely as a Trustee for BCMB1 Trust.”

    A spokeswoman for Wilmington said it acts as a trustee on behalf of many trusts and has “no authority with respect to the management of the real estate in the portfolio.” Efforts to find someone associated with BCMB1 Trust to respond to questions were not successful.

    Some people facing foreclosure have filed their own lawsuits citing federal requirements related to periodic statements or other consumer protection laws. In Georgia, a woman facing foreclosure claimed in federal court that she never received periodic notices about her second mortgage or notices when it was transferred to new owners, as required by federal law. The case was settled in June under confidential terms, according to court filings.

    In New York, Prophete is one of 13 plaintiffs in a federal lawsuit claiming that mortgage debt is being sought beyond New York’s six-year statute of limitations, resulting in violations of federal and state law.

    “I think what makes it so pernicious is these are homeowners who worked very hard to become current on their loans,” said Rachel Geballe, a deputy director at Brooklyn Legal Services, which is litigating the case with The Legal Aid Society. “They thought they were taking care of their debt.”

    The defendants in that case are the loan servicer SN Servicing and the law firm Richland and Falkowski, which represented mortgage trusts involved in the court actions, including BCMB1 Trust, according to the complaint. In court filings, the defendants dispute the plaintiff’s interpretation of the statute of limitations, say they acted properly and are seeking to dismiss the lawsuit.

    “The allegations in the various mortgage foreclosure actions are truthful and not misleading or deceptive,” Attorney Daniel Richland wrote in a letter to the judge. “Plaintiff’s allegations, by contrast, are implausible and thus warrant dismissal.”

    ———

    Associated Press writer Claudia Torrens and researcher Jennifer Farrar in New York contributed to this report.

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  • Investors may be whistling past the graveyard of a recession with latest rally in stocks

    Investors may be whistling past the graveyard of a recession with latest rally in stocks

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    Investors feeling giddy about last week’s sharp rally for stocks might want to give a listen to Tom Waits’ song, “Whistlin’ Past the Graveyard” from 1978, to sober up for the dangers that still lurk ahead.

    The surge in stocks catapulted the S&P 500 index
    SPX,
    +0.92%
    almost back to the 4,000 mark on Friday, also lifting it to the biggest weekly gain in roughly five months, according to Dow Jones Market Data.

    Investors showed courage on signs of a slight slowing of inflation, but the fortitude also comes as a drearier backdrop for investors has been unfolding in plain sight. Massive layoffs at big technology companies, the dramatic implosion of crypto-exchange FTX, and the day-to-day pain of high inflation and skyrocketing borrowing on businesses and households are all taking a toll.

    “We are not convinced this is the beginning of a new bull market,” said Sam Stovall, chief investment strategist at CRFA Research. “We believe that we are headed for recession. That has not been factored into earnings estimates and, therefore, share prices.”

    Stovall also said the stock market has yet to see the “traditional shakeout of confidence capitulation that we typically see that marks the end of the bear markets.”

    From Meta Platforms Inc.
    META,
    +1.03%
    to Lyft Inc.
    LYFT,
    +12.59%
    to Netflix Inc.
    NFLX,
    +5.51%
    there is a wave of major technology companies resorting to layoffs this fall, a threat that could sweep other sectors of the economy if a recession materializes.

    Yet, information technology stocks in the S&P 500 jumped 10% for the week, while financials, which stand to benefit from higher interest rates, rose 5.7%, according to FactSet.

    That could reflect optimism about the odds of a slower pace of Federal Reserve rate hikes in the months ahead, after sharp rate rises helped to undermine valuations and pull tech stocks dramatically lower in the past year. However, Loretta Mester, president of the Cleveland Fed, and other Fed officials since the October inflation reading on Thursday have reiterated the need to keep rates high, until 7.7% annual rate finds a clearer path to the central bank’s 2% target.

    The stock-market rally also might suggest that investors view continued mayhem in the crypto sector as contained, despite bitcoin
    BTCUSD,
    +0.42%
    trading near its lowest level in two years and the shocking collapse in recent days of FTX, once the world’s third-largest cryptocurrency exchange.

    Read: FTX’s fall: ‘This is the worst’ moment for crypto this year. Here’s what you should know.

    What happens to stocks in recessions

    Blows to the American economy rarely have been good for stocks. A look at seven past recessions, starting in 1969, shows declines for the S&P 500 as more typical than gains, with its most violent drop occurring in the 2007-2009 recession.

    The more than 37% drop of the S&P 500 from 2007 to 2009 was the worst of its kind in a recession since the late 1960s.


    Refinitiv data, London Stock Exchange Group

    While a looming U.S. recession isn’t a foregone conclusion, CEOs of America’s biggest banks have been warning about the risks for months. JP Morgan Chase’s Jamie Dimon said in October that a “tough recession” could drag the S&P 500 down another 20%, even though he also said consumers were doing fine, for now.

    Still, the steady stream of warnings about the recession odds have left many Americans confused and wondering if one can even happen without an increase in job losses.

    Big moves lately in stocks also have been hard to decode, given the economy was shocked back to life in the pandemic by trillions of dollars in fiscal stimulus and easy-money policies from the Fed that are now being reversed.

    “What I think goes unnoticed, certainly by the average person, is that these moves are not normal,” said Thomas Martin, senior portfolio manager at Globalt Investments, about stock swings this week.

    “It’s all about who is positioned how — and for what — and how much leverage they’re employing,” Martin told MarketWatch. “You get these outsized moves when people are offside.”

    Here’s a view of the sharp trajectory upward of the S&P 500 since 2010, but also its dramatic drop this year.

    Sharp rise of S&P 500 since 2010, but recent fall


    Refinitiv Datastream

    While Martin isn’t ruling out the potential for a seasonal “Santa Claus” rally heading into year-end, he worries about a potential leg lower for stocks next year, particularly with the Fed likely to keep interest rates high.

    “Certainly what’s being priced in now is either no recession or a very, very mild recession,” he said .

    However, Kristina Hooper, Invesco’s chief global market strategist, said the overarching story might be one of stocks sniffing out the first steps in a path to economic recovery, and the Fed potentially stopping its rate hikes at a lower “terminal” rate than expected.

    The Fed increased its benchmark interest rate to a 3.75% to 4% range in November, the highest in 15 years, but also has signaled it could top out near 4.5% to 4.75%.

    “If often happens that you can see stocks do well, in a less-than-good economic environment,” she said.

    The S&P 500 rose 4.2% for the week, while the Dow Jones Industrial Average
    DJIA,
    +0.10%
    gained 5.9%, posting its best weekly gain since late June, according to Dow Jones Market Data. The Nasdaq Composite Index shot up 8.1% for the week, its best weekly stretch in seven months.

    In U.S. economic data, investors will get an update on household debt on Tuesday, retail sales and homebuilder data on Wednesday, followed by jobless claims and housing starts data Thursday. Friday brings existing home sales.

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  • Is the stock market open? Veterans Day is a regular day for U.S. stocks, but the bond market is closed.

    Is the stock market open? Veterans Day is a regular day for U.S. stocks, but the bond market is closed.

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    The stock market remains open Friday, Nov. 11, the Veterans Day holiday in the U.S., even through it counts as a holiday for the $53 trillion American bond market.

    That means a full day of trading for stocks, which appear poised to book a robust week of gains, despite continued fears of a potential U.S. economic recession as the Federal Reserve works to tame stubbornly high costs of living.

    Signs of a potential cooling off on the inflation front led the Dow Jones Industrial Average
    DJIA,
    +3.70%
    to advance 1,200 points on Thursday, with it, the S&P 500 index
    SPX,
    +5.54%
    and Nasdaq Composite Index
    COMP,
    +31.35%
    all booking their best daily gains since 2020.

    Don’t miss: Veterans Day: Are banks open? Does USPS deliver mail?

    While Friday marks the start of a three-day weekend for the bond market, Treasury yields already have climbed dramatically this year with the Fed’s sharp rate hikes. The central bank aims to temper demand for goods and services by making borrowing costs more restrictive.

    Consumers may feel certain effects of inflation in their everyday lives, like when they go to the grocery store. But it can also impact our savings and investments. Here’s what to know.

    The benchmark 10-year Treasury rate
    TMUBMUSD10Y,
    3.819%
    fell to about 3.8% on Thursday, but was up from a 1.3% low last December. Bond yields move in the opposite direction of prices.

    The fresh rally on Wall Street followed the consumer-price index reading for October showing a 7.7% annual rate, down from a 9.1% high in June. The Dow remains down more than 8% from its January peak, the S&P 500 is 17.5% lower and the Nasdaq is 31% below its last record close, according to Dow Jones Market Data.

    Veterans Day was born out of the wreckage of World War I, with Nov. 11 recognized as a legal holiday in the U.S. in 1938, two decades after an armistice between the Allied nations and Germany went into effect at the 11th hour of the 11th day of the 11th month.

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  • California settles with firm in Volkswagen emissions scandal

    California settles with firm in Volkswagen emissions scandal

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    SACRAMENTO, Calif. — California on Monday settled a lawsuit against a German company stemming from the emissions scandal that tarred Volkswagen in 2015 and Fiat Chrysler two years later.

    German auto supplier Bosch will pay $25 million to settle allegations by the state and California Air Resources Board under a court complaint and settlement agreement, both filed Monday. A judge will need to sign off on the settlement.

    Volkswagen and Fiat Chrysler installed “defeat devices” in nearly 100,000 diesel passenger vehicles sold in California, the state said previously. The devices made it seem like the vehicles were meeting emissions requirements as they were undergoing testing, but on the road they actually polluted at many times the legal limit.

    The settlement stems from some Volkswagen and Fiat Chrysler diesel vehicles sold in the U.S. from model year 2016 and earlier.

    The complaint filed Monday said Bosch knew or should have known that the automakers were violating environmental and consumer protection laws, and that Bosch broke consumer protection laws through its marketing of Volkswagen and Fiat Chrysler vehicles and its own diesel components.

    “Bosch violated consumer trust when it gave Volkswagen and Fiat Chrysler the technology they needed to skirt state and federal emissions tests,” Attorney General Rob Bonta said in announcing the settlement.

    The Air Resources Board’s executive officer, Steven Cliff, said the company’s technology “was at the heart of the automobile emissions cheating scandals at Volkswagen and Fiat Chrysler and that has led directly to increased emissions and unhealthful air, especially in neighborhoods suffering from persistent air pollution.”

    Bosch said in a statement that it “neither acknowledges the validity of the claims … nor does it concede any liability.” But it said its “robust compliance systems, as well as its full cooperation” aided the settlement. It also said that since 2015, the company’s “already existing extensive compliance policies and procedures have been substantially enhanced.”

    Aside from the $25 million, the settlement requires Bosch to make changes in its policies and procedures and to tell state officials if it discovers that a manufacturer will use or has used cheating technology.

    California previously settled with Volkswagen for nearly $1.5 billion in environmental mitigation payments, investments in zero-emissions technology and other damages. The company also was required to buy back at least 85% of affected vehicles or make emissions modifications on those vehicles.

    Fiat Chrysler paid more than $78 million and similarly was required to bring at least 85% of the affected vehicles into compliance.

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  • California settles with firm in Volkswagen emissions scandal

    California settles with firm in Volkswagen emissions scandal

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    SACRAMENTO, Calif. — California on Monday settled a lawsuit against a German company stemming from the emissions scandal that tarred Volkswagen in 2015 and Fiat Chrysler two years later.

    German auto supplier Bosch will pay $25 million to settle allegations by the state and California Air Resources Board under a court complaint and settlement agreement, both filed Monday. A judge will need to sign off on the settlement.

    Volkswagen and Fiat Chrysler installed “defeat devices” in nearly 100,000 diesel passenger vehicles sold in California, the state said previously. The devices made it seem like the vehicles were meeting emissions requirements as they were undergoing testing, but on the road they actually polluted at many times the legal limit.

    The settlement stems from some Volkswagen and Fiat Chrysler diesel vehicles sold in the U.S. from model year 2016 and earlier.

    The complaint filed Monday said Bosch knew or should have known that the automakers were violating environmental and consumer protection laws, and that Bosch broke consumer protection laws through its marketing of Volkswagen and Fiat Chrysler vehicles and its own diesel components.

    “Bosch violated consumer trust when it gave Volkswagen and Fiat Chrysler the technology they needed to skirt state and federal emissions tests,” Attorney General Rob Bonta said in announcing the settlement.

    The Air Resources Board’s executive officer, Steven Cliff, said the company’s technology “was at the heart of the automobile emissions cheating scandals at Volkswagen and Fiat Chrysler and that has led directly to increased emissions and unhealthful air, especially in neighborhoods suffering from persistent air pollution.”

    Bosch said in a statement that it “neither acknowledges the validity of the claims … nor does it concede any liability.” But it said its “robust compliance systems, as well as its full cooperation” aided the settlement. It also said that since 2015, the company’s “already existing extensive compliance policies and procedures have been substantially enhanced.”

    Aside from the $25 million, the settlement requires Bosch to make changes in its policies and procedures and to tell state officials if it discovers that a manufacturer will use or has used cheating technology.

    California previously settled with Volkswagen for nearly $1.5 billion in environmental mitigation payments, investments in zero-emissions technology and other damages. The company also was required to buy back at least 85% of affected vehicles or make emissions modifications on those vehicles.

    Fiat Chrysler paid more than $78 million and similarly was required to bring at least 85% of the affected vehicles into compliance.

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  • How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

    How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

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    It is three weeks before Black Friday, but the Federal Reserve is about to make the post-holiday debt hangover a little more intense.

    By the time the latest rate hikes filter through the very rate-sensitive credit card industry and pump up customers’ annual percentage rates a little more, experts say it will be some point in December 2022 or January 2023. Right in time for many holiday gifts and expenses to post on credit cards bills — and there to make the costs of a carried balance a little extra expensive.

    Every year, many people accumulate credit card debt through the holiday season, pay it off in the early part of the following year and then repeat the process.

    What’s different now is the presence of four-decade high inflation, coupled with fast-rising interest rates that the Fed hopes will ultimately cool those rising prices, although without sending the economy to a recessionary thud.

    Wednesday’s rate move is the fourth straight 75-basis-point rate hike to the federal funds rate, taking it to the 3.75% -4% range, when it was near zero last year’s holiday season. By now, Americans are all too acquainted with 2022’s fast-rising interest rates. They just haven’t gone through a Christmas and Hanakkuh with it yet.

    “It’s not the time to overspend and have a problem with paying your bills later. We know the economy is sending mixed messages,” said Michele Raneri, vice president of financial services research and consulting at TransUnion
    TRU,
    -4.31%    ,
    one of the country’s three major credit reporting companies.

    It’s extra important to think through a holiday budget and how much relies on credit, she said. “People need to think about how much they can afford to repay and how long it will take to repay it.”

    Holiday spending could be the same as 2021 for many people — but not everyone

    Last month, third-quarter earnings from major banks like JPMorgan Chase & Co.
    JPM,
    -0.92%    ,
    Wells Fargo
    WFC,
    -0.15%    ,
    Citibank
    C,
    -1.45%
    and Bank of America
    BAC,
    -0.30%
    indicated consumer finances, on the whole, are not yet showing cracks under inflation’s strains. (Other numbers show the strain, like the personal savings rate that’s been dwindling.)

    Now, two forecasts suggest many people ready to spend the same amount for this year’s holiday cheer as they did last year.

    People are planning to spend an average $1,430 on gifts, travel and entertainment this year, which is around the $1,447 spent last year, according to PwC researchers. Three-quarters of people said they were planning to spend the same or more than last year and respondents said credit cards were one of their top ways to pay.

    “ Compared to last year, credit card balances are getting bigger, more people are sitting on balances and debt costs are getting pricier.”

    By another measure, Americans will pay an average $1,455 on holiday-related gifts and experiences, essentially flat from last year, say Deloitte researchers.

    More than one-third of surveyed consumers say their financial outlook is worse than the same point last year. Nearly one-quarter of people were concerned about credit card debt as of late September, Deloitte’s numbers show in an ongoing tracking of consumer mood.

    It’s understandable to see the concern with households amassing a collective $890 billion in credit card debt through the second quarter. Compared to last year, balances are getting bigger, more people are sitting on balances and debt costs are getting pricier because the interest rates applied to those balances are rising.

    When people were carrying a credit card balance month to month, the sum was $5,474 on average, according to Raneri. That’s through the end of September and it’s a nearly 13% rise year over year, she said. The 164 million people carrying a balance is a 5% increase from last year, she noted.

    Credit cards carrying a balance during the third quarter had an average 18.43% APR, Federal Reserve data shows. That’s up from 16.65% in the second quarter and up from 17.13% in 2021’s third quarter.

    How the Fed influences credit card rates

    Credit card issuers typically determine their rates by applying a “prime rate” — typically three percentage points on top of the federal funds rate — and the issuer’s profit margin, said Ted Rossman, senior industry analyst at Bankrate.com.

    By late October, the rate on new card offers was 18.73%, according to Bankrate data. At this point last year, it was 16.31%, Rossman said. In a few weeks, the rates on new offers should beat the all-time record of an average 19% APR, exclusive to new offers, he added.

    While it can take a billing cycle or two for a higher APR to make its way to an existing credit card account, Rossman noted the APRs on new offers could rise in a matter of days.

    Here’s a hypothetical to show how much more expensive credit card debt becomes with every extra hike. Suppose the $5,474 balance is on a credit card with the current 18.73% average. If a person has to resort to minimum payments, Rossman said, they’d be paying $7,118 just in interest to pay off the debt.

    “ In a few weeks, the rates on new credit card offers should beat the all-time record of an average 19% APR.”

    What if the 18.73% APR gets kicked up 75 basis points to 19.48%? If that same borrower has to pay minimums, they are now paying $7,417 in interest to snuff the principal debt of $5,474, Rossman said.

    The example has its limits because people may pay more than the minimum and they may incur more credit card debt as they pay off the old one. But it shows a bigger point: “Unfortunately, anybody dealing with credit card debt is a loser from the series of rate hikes. It was already expensive. It’s getting more so,” Rossman said.

    When do rate hikes stop?

    While decisions during the Fed’s November meeting can have a ripple effect on holiday-time borrowing costs, observers say the real question about Wednesday is the clues Federal Reserve Chairman Jerome Powell drops for what’s next. The central bank’s committee voting on interest rate increases reconvenes in mid-December.

    On Wednesday, the Fed said in a statement it expected further rate increases, but also said it would be watching to see if there were lag effects with its tightening policies, which could slow or limit the total amount of increases.

    “People, when they hear lags, they think about a pause. It’s very premature, in my view, to think about or be talking about pausing our rate hike. We have a ways to  go,” Powell told reporters at a Wednesday afternoon press conference.

    The economy is strong enough to handle higher rates, Powell said. For one thing, households have “strong balance sheets” and “strong spending power,” he noted.

    Stock markets first jumped higher after the latest interest rate announcement. But they gave up the gains — and then some — by the end of the day. The Dow Jones Industrial Average
    DJIA,
    -1.55%
    was down more than 500 points, or 1.6% while the S&P 500
    SPX,
    -2.50%
    was down 2.5% and the Nasdaq Composite
    COMP,
    -3.36%
    closed 3.4% lower.

    Top economists in major North American-based banks forecasted the Fed will keep raising interest rates “until the first quarter of next year before potentially lowering rates through the end of 2023,” Sayee Srinivasan, chief economist at the American Bankers Association, the banking sector’s trade association, said ahead of Wednesday’s latest rate hike.

    “Top economists polled as part of a banking industry panel expect Fed rate increases through at least the first quarter of 2023.”

    The forecast, coming through an ABA advisory committee, is no sure thing. “Everything depends on the ability of the Fed to bring inflation down, so that will remain their clear priority,” said Srinivasan.

    Meanwhile, rising costs may cause more people to put the holiday cheer on plastic, even their decorations. The majority of Christmas tree growers in one poll are expecting wholesale prices to climb 5% to 15% for this season.

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  • Dominion, AG reach proposed agreement in offshore wind case

    Dominion, AG reach proposed agreement in offshore wind case

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    RICHMOND, Va. — Dominion Energy has agreed to implement several consumer protections in connection with its massive offshore wind project under a proposed agreement with the office of the Virginia attorney general and other parties released Friday.

    The proposed agreement, which includes performance reporting requirements and provisions laying out a degree of construction cost sharing, is still subject to final approval by the State Corporation Commission.

    Attorney General Jason Miyares, a Republican whose office represents the interests of consumers in utility regulation proceedings, said the agreement would provide “first-of-its-kind” protections for ratepayers while ensuring the 176-turbine project with an estimated $9.8 billion capital cost moves forward in a fiscally responsible way.

    “I am pleased that we have achieved consumer protections never seen before in modern Virginia history,” Miyares said in a statement. “For the first time Dominion has significant skin in the game to ensure that the project is delivered on budget. Should the project run materially over budget, it will come out of Dominion’s pocket, not consumers,” he said.

    Dominion filed its application to build and recover the costs of the project with the State Corporation Commission nearly a year ago. That kicked off a lengthy process before the regulatory agency, one that has included voluminous filings and an evidentiary hearing in May.

    The commission in August signed off on the project, but it included a consumer protection provision — a performance guarantee — that Dominion strenuously objected to, saying it would kill the project.

    The parties to Friday’s proposal said they had conferred since then and reached the terms of the proposed agreement. It calls for a cost-sharing arrangement for any overruns beyond the estimated $9.8 billion price tag. The company would cover 50% of construction costs between the range of $10.3-$11.3 billion and 100% of costs between $11.3-$13.7 billion. If construction costs were to exceed $13.7 billion, the issue would go back to the commission.

    The proposal would not require the company to guarantee certain energy production levels, like the SCC had initially ordered. Rather, Dominion will have to report average net capacity factors annually and “provide a detailed explanation of the factors contributing to any deficiency.” Capacity factor is a measure of how often a generating facility runs during a period of time.

    Richmond-based Dominion said in a news release that the deal would provide “significant customer benefits.”

    “I appreciate the thoughtful effort of all parties in reaching a constructive agreement to allow the project to continue moving forward,” said Bob Blue, Dominion’s chair, president and and chief executive officer.

    Also parties to the agreement are Walmart, Virginia’s largest private employer, and two conservation groups: Appalachian Voices and the Southern Environmental Law Center.

    Will Cleveland, an attorney for SELC, emphasized in a statement that the primary issue in the case was “never about offshore wind’s value but the risks created by the ownership structure.”

    No other offshore wind project under development in the U.S. is funded by captive ratepayers, and no other project has a monopoly utility owner acting as its own general contractor, the law center said.

    The project, which will be located about 27 miles off the coast of Virginia Beach, has drawn broad support from local officials, policymakers, business groups and trade unions, who say it will help fight climate change and create jobs.

    The company already has a two-turbine pilot project up and running. The 2.6-gigawatt, utility-scale project’s schedule calls for construction to be complete in late 2026. Dominion expects the project to generate enough clean energy to power up to 660,000 homes.

    Clean Virginia, an environmental and rate reform advocacy group that is a party to the proceeding, did not oppose the agreement, which it said in a statement represented a “vast improvement” for consumers.

    “Absent pressure from environmental advocates, the Office of the Attorney General, regulatory staff, and Walmart, Dominion would have proceeded with one of the most expensive energy projects to date in Virginia with few consumer protections and would have faced little performance expectations to actually generate consistent clean energy,” Laura Gonzalez, the group’s energy policy manager, said in a statement.

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  • ‘He’s not willing to live in my house because it has fewer amenities’: My boyfriend wants me to move in and pay half his monthly costs. Is that fair?

    ‘He’s not willing to live in my house because it has fewer amenities’: My boyfriend wants me to move in and pay half his monthly costs. Is that fair?

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    Dear Quentin,

    My boyfriend owns a house with a 30-year mortgage balance of $150,000 on a 4% interest rate. He has $275,000 in cash and retirement accounts. He is retired.

    My house is paid off. I have $50,000 in cash and retirement accounts. I would like to retire within one to two years.

    We wish to cohabitate but have not been able to agree on a fair “rent” to pay. He is not willing to live in my house because it has fewer amenities. 

    “‘He believes I should pay half of his monthly cost at his nicer, more expensive house. He could pay off his mortgage and save $600 a month, but he likes to have cash. ‘”

    He believes I should pay half of his monthly cost at his nicer, more expensive house. He could pay off his mortgage and save $600 a month, but he likes to have cash. 

    I have forgone that luxury and paid off my mortgage. I am now working on building my savings. I don’t feel it is fair for me to pay half of the mortgage interest expense. 

    I don’t know what repair and maintenance costs should be expected from me, if I have no equity in his house. There are many points of view, none of which feels fair.

    These are the options he set forth:

    · I live in his house and thus get to rent mine out. Pay him half of what I net from that rental.

    · Pay half of the actual costs of living expenses and upkeep on his house while I live there.

    · Pay him what I pay to live in my current home for taxes, insurance, and utilities: $800/month.

    What say you, Moneyist?

    House Owner & Girlfriend 

    Dear House Owner,

    I’m sure your house is just as nice. And just because he believes you should pay half his costs, does not make it so. If you are paying no mortgage on your own home, I don’t believe you should pay one red cent more to live in his home. 

    That is to say, you should not come out of this arrangement paying more, just because (a) he would like you to live in his home and (b) he would like you to help him pay off his mortgage, or his tax and maintenance.

    You both made different choices: Yours was to have a home that’s free-and-clear of a mortgage, so you can spend this time building up your savings for retirement and/or a rainy day. 

    You have worked hard to pay off your mortgage, and you have $50,000 in savings, less than 20% of your boyfriend’s savings. He has $150,000 left on his mortgage, and that’s his choice.

    “If his aim is to find help to pay off half of his mortgage, he can find a tenant to do that for him. ”

    You are not the answer to his long-term financial plans, you are his partner in life. If his aim is to find help to pay off half of his mortgage, he can find a tenant to do that for him. What do you expect of you? Forget what he expects.

    By the way he is approaching this arrangement, it seems like he wants the equivalent of a detergent and a fabric softener — a girlfriend and a tenant in one handy bottle to keep his financial plans smooth and clean.

    Bottom line: You should not compromise any plans to build your nest egg. The lady’s not for turning. Only acquiesce to his plan if — with the help of an actual tenant in your home — it helps you too. 

    In other words, the desired outcome for you is more important than the suggestions he has put forward. He could save $600 a month! That’s his business. Not yours. What do you want to have in your pocket every month?

    Figure out what you want, and then work your way backwards based on that goal. For instance, if you can pay him $800 a month, charge $1,600 rent for your home, and put $800 towards your savings, do that.

    You’ve come a long way. Don’t let these negotiations scupper that.

    Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

    The Moneyist regrets he cannot reply to questions individually.

    By emailing your questions, you agree to having 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.

    Also read:

    I built a property portfolio with 23 units while we were dating. How much should I give to my fiancé in our prenup?

    ‘We will not outlive our money’: How can we give $10,000 to our nieces and nephews without offending the rest of the family?

    ‘S‘I hate to be cheap’: Is it still acceptable to arrive at a friend’s house for dinner with just one bottle of wine?

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  • Drizly agrees to tighten data security after alleged breach

    Drizly agrees to tighten data security after alleged breach

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    WASHINGTON — Alcohol delivery app Drizly has agreed to tighten its data security and limit data collection to resolve federal regulators’ allegations that its security failures exposed the personal information of some 2.5 million customers.

    The Federal Trade Commission announced the action Monday against Drizly, a Boston-based subsidiary of Uber that delivers beer, wine and spirits in states where it’s legal, and partners with retailers in hundreds of cities around the US. The proposed consent agreement with the FTC also names Drizly CEO James Cory Rellas. The regulators allege that the company and Rellas were alerted to security problems two years before the 2020 breach yet failed to act to protect consumers’ data.

    Drizly agreed to put in a comprehensive data security program and establish security safeguards, and to limit future data collection or storage to that which is necessary for specific purposes. It will also destroy unnecessary data.

    “Our proposed order against Drizly not only restricts what the company can retain and collect going forward but also ensures the CEO faces consequences for the company’s carelessness,” Samuel Levine, director of the FTC’s bureau of consumer protection, said in a statement. “CEOs who take shortcuts on security should take note.”

    Drizly collects and stores on Amazon Web Services cloud-computing service a wide range of personal data from customers such as email and postal addresses, phone numbers, geolocation information and data purchased from third parties, according to the FTC.

    “We take consumer privacy and security very seriously at Drizly, and are happy to put this 2020 event behind us,” the company said in a statement.

    The proposed consent agreement will be opened to public comment for 30 days, after which the FTC will decide whether to make it final.

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