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Tag: economic indicators

  • Yet another key economic report is showing inflation pressures are easing | CNN Business

    Yet another key economic report is showing inflation pressures are easing | CNN Business

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    Minneapolis
    CNN Business
     — 

    A key measure of inflation, wholesale prices, rose by 8% in October from a year before, according to the latest report from the Bureau of Labor Statistics.

    While still historically high, it was the smallest increase since July of last year and significantly better than forecasts. It’s the second inflation report this month to show signs of cooling in the rising prices that have plagued the economy.

    Economists expected the Producer Price Index, which measures prices paid for goods and services before they reach consumers, to show an annual increase of 8.3%, down from September’s revised 8.4%.

    On a monthly basis, producer prices rose 0.2%, below expectations and even with the revised 0.2% increase seen in September.

    Year-over-year, core PPI — which excludes food and energy, components whose pricing is more prone to market volatility — measured 6.7%, down from September’s revised annual increase of 7.1%.

    Month-over-month, core PPI prices were flat, the lowest monthly reading since November 2020. In September, core PPI increased by a revised 0.2% from the month before.

    Economists had expected annual and monthly core PPI to measure 7.2% and 0.3%, respectively, according to estimates on Refinitiv.

    President Joe Biden heralded October’s PPI report Tuesday calling it “more good news for our economy this morning, and more indications that we are starting to see inflation moderate.”

    “Today’s news – that prices paid by businesses moderated last month – comes a week after news that prices paid by consumers have also moderated,” Biden wrote Tuesday. “And, today’s report also showed that food inflation slowed – a welcome sign for family’s grocery bills as we head into the holidays.”

    For much of this year, the Federal Reserve has sought to tamp down decades-high inflation by tightening monetary policy, including issuing an unprecedented four consecutive rate hikes of 75 basis points, or three-quarters of a percentage point.

    The better-than-expected PPI data reflects an economy that has slowed, with supply moving more into balance, said Jeffrey Roach, chief economist for LPL Financial.

    Costs associated with transportation and warehousing, for example, declined for the fourth consecutive month, a likely result of the improved global shipping climate, he said. Producer costs for new cars fell the most since May 2017, he added.

    “Barring geopolitical or financial crises, inflation should continue its deceleration into 2023,” he said in a statement.

    Since PPI captures price changes happening further upstream, the report is considered by some to be a leading indicator for broader inflationary trends and a predictor of what consumers will eventually see at the store level.

    “The PPI read certainly adds more fuel to the fire for those who feel we may finally be on a downward inflation trend,” Mike Loewengart, Morgan Stanley’s head of model portfolio construction, said in a statement.

    Last week’s Consumer Price Index showed inflation slowed to 7.7% from 8.2% year-over-year for consumer goods, surprising investors and giving Wall Street its biggest boost since 2020.

    The CPI data was “reassuring,” Fed vice chair Lael Brainard said on Monday, signaling that the rate hikes appear to be taking hold, and if the economic data continues to show inflation on the decline, then the central bank could scale back the extent of its future rate hikes.

    “When you look at the inflation numbers, there’s some evidence that we’ve peaked, but are we coming down quickly?” Steven Ricchiuto, chief economist for Mizuho Americas told CNN Business.

    Ricchiuto noted that the October figures are only a couple steps lower than what was seen in September.

    “These aren’t the types of things that tell the Fed to stop tightening rates,” he said. However, “they may tell you [that] you don’t need 75 basis points.”

    CNN’s DJ Judd and Matt Egan contributed to this report.

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  • Degrowth: A dangerous idea or the answer to the world’s biggest crisis? | CNN Business

    Degrowth: A dangerous idea or the answer to the world’s biggest crisis? | CNN Business

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    London
    CNN Business
     — 

    Conventional economic logic hinges on a core assumption: Bigger economies are better, and finding ways to maintain or boost growth is paramount to improving society.

    But what if growth is at best doing little to fix the world’s problems, and at worst fostering the destruction of the planet and jeopardizing its future?

    That’s the radical message from the “degrowth” movement, which has spent decades on the political fringes with its warning that limitless growth needs to end. Now, after the pandemic gave people in some parts of the world a chance to rethink what makes them happy, and as the scale of change necessary to address the climate crisis becomes clearer, its ideas are gaining more mainstream recognition — even as anxiety builds over what could be a painful global recession.

    For economists and politicians of all stripes, growth has long served as a North Star. It’s a vehicle for creating jobs and generating taxes for public services, increasing prosperity in rich countries and reducing poverty and hunger in poorer ones.

    But degrowthers argue that an endless desire for more — bigger national economies, greater consumption, heftier corporate profits — is myopic, misguided and ultimately harmful. Gross domestic product, or GDP, is a poor metric for social wellbeing, they stress.

    Plus, they see expanding a global economy that’s already doubled in size since 2005 — and, at 2% growth annually, would be more than seven times bigger in a century — putting the emissions goals necessary to save the world out of reach.

    “An innocent 2 or 3% per year, it’s an enormous amount of growth — cumulative growth, compound growth — over time,” said Giorgos Kallis, a top degrowth scholar based at the Universitat Autònoma de Barcelona. “I don’t see it being compatible with the physical reality of the planet.”  

    The solution, according to the degrowth movement, is to limit the production of unnecessary goods, and to try to reduce demand for items that aren’t needed.

    This unorthodox school of thought has no shortage of critics. Bill Gates has called degrowthers unrealistic, emphasizing that asking people to consume less for the sake of the climate is a losing battle. And even believers acknowledge their framework can be a political nonstarter, given how difficult it is to imagine what weaning off growth would look like in practice.

    “The fact that it’s an uncomfortable concept, it’s both a strength and a weakness,” said Gabriela Cabaña, a degrowth advocate from Chile and doctoral candidate at the London School of Economics.

    Yet in some corners, it’s becoming less taboo, especially as governments and industry fall behind in their efforts to stop the planet from warming beyond 1.5 degrees Celsius, after which some effects of climate change will become irreversible.

    Climate activists, including degrowth supporters, gathered in Munich on November 12, 2021.

    The UN’s Intergovernmental Panel on Climate Change recently cited degrowth in a major report. The European Research Council just allocated roughly $10 million to Kallis and two peers to explore practical “post-growth” policies. And the European Parliament is planning a conference called “Beyond Growth” next spring. European Commission President Ursula von der Leyen is expected to attend.

    Even some on Wall Street are beginning to pay closer attention. Investment bank Jefferies said investors should consider what happens if degrowth gathers steam, noting “climate-anxious” younger generations have different consumer values.

    In the debate over how to avoid climate catastrophe, there’s a key point of consensus: If the worst effects of global warming are to be averted, the world needs to slash annual carbon emissions by 45% by 2030. After that, they need to decline steeply, and fast.

    Most roadmaps laying out a plan to achieve this involve a dramatic reconfiguration of economies around clean energy and other emissions-reducing solutions, while promoting new technologies and market innovations that make them more affordable. This would allow the global economy to keep growing, but in a way that’s “green.”

    Yet proponents of degrowth are skeptical that the world can reduce emissions in time — and protect delicate, interconnected ecological systems — while pursuing infinite economic expansion, which they argue will inevitably require the use of more energy.

    A construction site in Belgrade, Serbia in heavy smog on Nov. 1, 2022.

    “More growth means more energy use, and more energy use makes it more difficult to decarbonize the energy system in the short time we have left,” said Jason Hickel, a degrowth expert who is part of the team that received funding from the European Research Council. “It’s like trying to run down an escalator that is accelerating upward against you.”

    Even if energy can become green, growth also requires natural resources like water, minerals and timber.

    It’s a concern that’s been echoed by Greta Thunberg, arguably the most famous climate activist. She’s criticized “fairy tales about non-existent technological solutions” and “eternal economic growth.” And she’s touched on another point degrowthers raise: Is our current system, which has produced rampant inequality, even working for us?

    This question resonates in the Global South, where there are fears the green energy revolution could simply replicate existing patterns of exploitation and excessive resource extraction, but with minerals like nickel or cobalt — key components of batteries — instead of oil.

    The “love for growth,” said Felipe Milanez, a professor and degrowth advocate based in the Brazilian state of Bahia, is “extremely violent and racist, and it’s just been reproducing local forms of colonialism.”

    Degrowth can be hard to talk about, especially as fears grow about a global recession, with all the pain of lost jobs and shattered businesses that implies.

    But advocates, which often speak about recessions as symptoms of a broken system, make clear they aren’t promoting austerity, or telling developing countries that are eager to raise living standards they shouldn’t reap the benefits of economic development.

    Instead, they talk about sharing more goods, reducing food waste, moving away from privatized transportation or health care and making products last longer, so they don’t need to be purchased at such regular intervals. It’s about “thinking in terms of sufficiency,” Cabaña put it.

    Cars make their way in New Jersey on April 22, 2022. The United States is the second-largest contributor of CO2 emissions.

    Adopting degrowth would require a dramatic rethink of the market capitalism that has been embraced by just about every society on the planet in recent decades.

    Yet some proposals could exist within the current system. A universal basic income — in which everyone receives a lump sum payment regardless of employment status, allowing the economy to reduce its reliance on polluting industries — is often mentioned. So is a four-day work week.

    “When people have more economic security and have more economic freedoms, they make better decisions,” Cabaña said.

    The latest report from the IPCC — the UN authority on global warming — noted that “addressing inequality and many forms of status consumption and focusing on wellbeing supports climate change mitigation efforts,” a nod to one of degrowth’s biggest objectives. The movement was name-checked, too.

    But degrowth is also the subject of significant opposition, even from climate scholars and activists with similar goals.

    “The degrowth people are living a fantasy where they assume that if you bake a smaller cake, then for some reason, the poorest will get a bigger share of it,” said Per Espen Stoknes, director of the Center for Green Growth at the BI Norwegian Business School. “That has never happened in history.”

    Steam and smoke rises from the coal-powered Belchatow Power Station in Rogowiec, Poland. The station emits approximately 30 million metric tons of carbon dioxide per year.

    Backers of green growth are convinced their strategy can work. They cite promising examples of decoupling GDP gains from emissions, from the United Kingdom to Costa Rica, and to the rapid rise in the affordability of renewable energy.

    Gates, the Microsoft co-founder who’s prioritized investing in climate innovations, admits that overhauling global energy systems is a Herculean task. But he thinks boosting the accessibility of the right technologies can still get there.

    Degrowthers know their critiques are controversial, though in some ways, that’s the intent. They think a starker, more revolutionary approach is necessary given the UN estimate that global warming is due to rise to between 2.1 and 2.9 degrees Celsius, based on the world’s current climate pledges.

    “The less time [that] is left now, the more radical change is needed,” said Kohei Saito, a professor at the University of Tokyo.

    Could a growing cohort agree? In 2020, his book on degrowth from a Marxist perspective became a surprise hit in Japan, where concerns about the consequences of stagnant growth has inflected the country’s politics for decades. “Capital in the Anthropocene” has sold nearly 500,000 copies.

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  • Facebook parent company Meta will lay off 11,000 employees | CNN Business

    Facebook parent company Meta will lay off 11,000 employees | CNN Business

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    New York
    CNN Business
     — 

    Facebook parent company Meta on Wednesday said it is laying off 11,000 employees, marking the most significant job cuts in the tech giant’s history.

    The job cuts come as Meta confronts a range of challenges to its core business and makes an uncertain and costly bet on pivoting to the metaverse. It also comes amid a spate of layoffs at other tech firms in recent months as the high-flying sector reacts to high inflation, rising interest rates and fears of a looming recession.

    “Today I’m sharing some of the most difficult changes we’ve made in Meta’s history,” CEO Mark Zuckerberg wrote in a blog post to employees. “I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go.”

    The job cuts will impact many corners of the company, but Meta’s recruiting team will be hit particularly hard as “we’re planning to hire fewer people next year,” Zuckerberg said in the post. He added that a hiring freeze would be extended until the first quarter, with few exceptions.

    In September, Meta had a headcount of more than 87,000, per a September SEC filing.

    Meta’s core ad sales business has been hit by privacy changes implemented by Apple, advertisers tightening budgets and heightened competition from newer rivals like TikTok. Meanwhile, Meta has been spending billions to build a future version of the internet, dubbed the metaverse, that likely remains years away from widespread acceptance.

    Last month, the company posted its second quarterly revenue decline and said that its profit was cut in half from the prior year. Once valued at more than $1 trillion last year, Meta’s market value has since plunged to around $250 billion.

    “I want to take accountability for these decisions and for how we got here,” Zuckerberg wrote in his post Wednesday. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

    Shares of Meta rose 5% in trading Wednesday following the announcement.

    Meta is not alone in feeling the pain of a market downturn. The tech sector has been facing a dizzying reality check as inflation, rising interest rates and more macroeconomic headwinds have led to a stunning shift in spending for an industry that only grew more dominant as consumers shifted more of their lives online during the pandemic.

    “At the start of Covid, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth,” Zuckerberg wrote Wednesday. “Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected.”

    “I got this wrong, and I take responsibility for that,” he added.

    Meta’s headcount in September was nearly twice the 48,268 staffers it had at the start of the pandemic in March of 2020.

    A handful of tech companies have announced hiring freezes or job cuts in recent months, often after having seen rapid growth during the pandemic. Last week, rideshare company Lyft said it was axing 13% of employees, and payment-processing firm Stripe said it was cutting 14% of its staff. The same day, e-commerce giant Amazon said it was implementing a pause on corporate hiring.

    Also last week, Facebook-rival Twitter announced mass layoffs impacting roles across the company as its new owner, Elon Musk, took the helm.

    In addition to the layoffs, Zuckerberg said the company expects to “roll out more cost-cutting changes” in the coming months. Meta, which like other tech giants is known for its vast, perk-filled offices, is rethinking its real estate needs, he said, and “transitioning to desk sharing for people who already spend most of their time outside the office.”

    “Overall,” he said, “this will add up to a meaningful cultural shift in how we operate.”

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  • What midterm elections could mean for the US economy | CNN Business

    What midterm elections could mean for the US economy | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    Tuesday’s midterm elections come at a time of economic vulnerability for the United States. Recession predictions have largely turned to “when” not “if” and inflation remains stubbornly elevated. Americans are feeling the pain of rising interest rates and are facing a winter filled with geopolitical tension.

    The results of Tuesday’s election will determine the makeup of a Congressional body that holds the potential to enact policies that will fundamentally change the fiscal landscape.

    Here’s a look at what policy issues investors will pay particular attention to as they digest election results.

    Tax changes: Last week, President Joe Biden suggested he may impose a windfall tax on Big Oil companies after they recorded record profits on high gas prices. Republicans would be less likely to approve that windfall tax on oil company profits and also are generally not in favor of tax hikes on the wealthy, reports my colleague Paul R. La Monica.

    “What do midterms mean for the markets? If Republicans get the House, tax hikes are dead in the water,” said David Wagner, a portfolio manager with Aptus Capital Advisors.

    What about tax cuts? If Republicans do take control of Congress, it would be difficult to enact any major tax reductions without some backing from Democrats or President Biden, meaning there could be grandstanding without much action.

    Debt limit: The federal debt ceiling was last lifted in December 2021 and will likely be hit by the Treasury at some point next year. That means it will need to be raised again in order to ensure that America can borrow the money it needs to run its government and ensure the smooth operation of the market for US Treasuries, totaling roughly $24 trillion.

    A fight seems to be brewing between Democrats and Republicans. House Republicans indicate that they may ask for steep spending cuts in exchange for boosting the ceiling.

    If the government ends up divided and brinkmanship continues, there could be bad news for markets. The last time such gridlock occurred, under the Obama administration in 2011, the United States lost its perfect AAA credit rating from Standard & Poor and stocks dropped more than 5%.

    Spending: Democrats have indicated that they intend to focus on parts of the fiscal agenda proposed by President Biden in 2021 that have not yet become law, including expanding health coverage and child care tax credits. A Republican win or gridlock could table that. Goldman Sachs economists also note that a Democratic victory could likely increase the federal fiscal response in the event of recession, while Republicans would be more likely to avoid costly relief packages.

    Social Security: Popular programs like Social Security and Medicare face solvency issues long-term and the topic has become a hot-button issue on both sides of the aisle. The topic is so closely watched that even debating changes could impact consumer confidence, say analysts.

    Democratic Senator Joe Manchin said last week that spending changes must be made to shore up Social Security and other programs which he said were “going bankrupt.” He said at a Fortune CEO conference that he was in favor of bipartisan legislation within the next two years to confront entitlement programs that are facing “tremendous problems.” Republican Senator Rick Scott has proposed subjecting almost all federal spending programs to a renewal vote every five years. Analysts say that could make Social Security and Medicare more vulnerable to cuts.

    The Federal Reserve: Lawmakers have been increasingly speaking out against the pace of the Federal Reserve’s interest rate hikes meant to fight inflation. Democratic Senators Elizabeth Warren, alongside Banking Chair Sherrod Brown, John Hickenlooper and others have called on Fed Chair Jerome Powell to slow the pace of hikes.

    Now, Republicans are getting involved. Senator Pat Toomey, the top Republican on the Banking Committee, asked Powell last week to resist buying government debt if market conditions remain subdued. Expect more scrutiny from both parties after the elections.

    The stock market under President Biden started with a boom, but as we head into midterm elections, markets are going bust, reports my colleague Matt Egan.

    As of Monday, the S&P 500 has fallen by 1.2% since Biden took office in January 2021. That marks the second-worst performance during a president’s first 656 calendar days in office since former President Jimmy Carter, according to CFRA Research.

    Out of the 13 presidents since 1953, Biden ranks ninth in terms of stock market performance through this point in office, besting only former Presidents George W. Bush (-32.8%), Carter (-8.9%), Richard Nixon (-17.2%) and John F. Kennedy (-2.1%), according to CFRA.

    By contrast, Biden’s two immediate predecessors headed into their first midterm election with stock markets surging. The S&P 500 climbed 52.2% during the first 656 calendar days in office for former President Barack Obama and 23.9% under former President Donald Trump, according to CFRA.

    American consumers borrowed another $25 billion in September, according to newly released Federal Reserve data, as higher costs led to further dependence on credit cards and other loans, reports my colleague Alicia Wallace.

    In normal economic times, that would be a concerningly large jump, said Matthew Schulz, chief credit analyst for LendingTree, wrote in a tweet. “However, it is actually the second-smallest increase in the past year.” Economists were anticipating monthly growth of $30 billion, according to Refinitiv consensus estimates.

    The data is not adjusted for inflation, which is at decade highs and weighing heavily on Americans, outpacing wage gains and forcing consumers to rely more heavily on credit cards and their savings.

    In the second quarter of this year, credit card balances saw their largest year-over-year increases in more than two decades, according to separate data from the New York Federal Reserve. The third-quarter household debt and credit report is set to be released Nov. 15.

    Correction: A previous version of this article incorrectly stated the number of calendar days in the analysis as well as the stock market performance under various US presidents during that period.

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  • Democrats confront their nightmare scenario on election eve as economic concerns overshadow abortion and democracy worries | CNN Politics

    Democrats confront their nightmare scenario on election eve as economic concerns overshadow abortion and democracy worries | CNN Politics

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    CNN
     — 

    Democrats close their midterm election campaign Monday facing the nightmare scenario they always feared – with Republicans staging a gleeful referendum on Joe Biden’s struggling presidency and failure to tame inflation.

    Hopes that Democrats could use the Supreme Court’s overturning of the right to an abortion and a flurry of legislative wins to stave off the classic midterm election rout of a party in power are now a memory. Biden faces a dark political environment because of the 40-year-high in the cost of living – and his hopes of a swift rebound next year are clouded by growing fears of a recession.

    On the eve of the election, Democrats risk losing control of the House of Representatives and Republicans are increasingly hopeful of a Senate majority that would leave Biden under siege as he begins his reelection bid and with ex-President Donald Trump apparently set to announce his own campaign for a White House return within days.

    It’s too early for postmortems. Forty million Americans have already voted. And the uncertainty baked into modern polling means no one can be sure a red wave is coming. Democrats could still cling onto the Senate even if the House falls.

    But the way each side is talking on election eve, and the swathe of blue territory – from New York to Washington state – that Democrats are defending offer a clear picture of GOP momentum.

    A nation split down the middle politically, which is united only by a sense of dissatisfaction with its trajectory, is getting into a habit of repeatedly using elections to punish the party with the most power.

    That means Democrats are most exposed this time.

    If the president’s party takes a drubbing, there will be much Democratic finger-pointing over Biden’s messaging strategy on inflation – a pernicious force that has punched holes in millions of family budgets.

    Just as in last year’s losing off-year gubernatorial race in Virginia, which the president won by 10 points in 2020, Democrats are closing the campaign warning about democracy and Trump’s influence while Republicans believe they are addressing the issue voters care about most.

    “Here’s where the Democrats are: they’re inflation deniers, they are crime deniers, they’re education deniers,” Republican National Committee Chair Ronna McDaniel said on CNN’s “State of the Union” on Sunday.

    Hilary Rosen, a longtime Democratic consultant, said on the same show that her party had misjudged the mood of the electorate.

    “I’m a loyal Democrat, but I am not happy. I just think that we are – we did not listen to voters in this election. And I think we’re going to have a bad night,” Rosen told CNN’s Dana Bash.

    “And this conversation is not going to have much impact on Tuesday, but I hope it has an impact going forward, because when voters tell you over and over and over again that they care mostly about the economy, listen to them. Stop talking about democracy being at stake.”

    Rosen is not the only key figure on the left uneasy with the midterm strategy. Former Democratic presidential candidate Bernie Sanders, an independent senator from Vermont, urged the White House to do more to stress economic concerns in recent weeks even while acknowledging the crisis of democracy and the importance of abortion rights. In retrospect, it appears Democrats were slow to recognize that a favorable period over the summer, spurred by falling gasoline prices and a hot streak for the president in passing legislation, wouldn’t last long enough to compensate for a ruinous political environment caused by the economy.

    In effect, Biden’s stress on the threat to US political institutions posed by Trump essentially asks voters to prioritize the historic foundation of America’s political system over their own more immediate economic fears.

    It’s a message that resonates strongly in Washington, DC, where the scars of the US Capitol insurrection are keenly felt. And it is undeniably important because the survival of the world’s most important democracy is at stake. After all, Trump incited an insurrection that tried to thwart the unbroken tradition of peaceful transfers of power between presidents.

    But outside the Beltway bubble of politicians and journalists, democracy feels like a far more distant, esoteric concept than the daily struggle to feed a family and to be able to afford to commute to work. From Pennsylvania to Arizona, the return to normality after the Covid-19 nightmare that Biden promised remains elusive to many as the economic after effects of the once-in-a century health emergency linger.

    The impossibility of the political environment for Democrats was laid bare in a CNN/SSRS poll released last week. Some 51% of likely voters said the economy was the key issue in determining their vote. Only 15% named abortion – a finding that explains how the election battleground has tilted toward the GOP. Among voters for whom the economy is their top concern, 71% plan to vote Republican in their House district. And 75% of voters think the economy is already in a recession, meaning that Biden’s efforts to stress undeniably strong economic areas – including the strikingly low unemployment rate – are likely to fall on deaf ears.

    It’s too simple to say that Biden has ignored the impact of inflation, or doesn’t understand the pain it’s bringing to the country.

    The premise of his domestic presidency and his entire political career has been based on restoring the balance of the economy and restoring a measure of security to working and middle class Americans. His legislative successes could bring down the cost of health care for seniors and create a diversified green economy that shields Americans from future high energy prices amid global turmoil. But the benefits from such measures will take years to arrive. And millions of voters are hurting now and haven’t heard a viable plan from the president to quickly ease prices in the short-term.

    There is no guarantee that plans by Republicans to extend Trump-era tax cuts and mandate new energy drilling would have much impact on the inflation crisis either. And divided government would likely mean a stalemate between two dueling economic visions. But the election has turned into a vehicle for voters to stress their frustration, with no imminent hope that things will get better soon.

    Biden has resorted to highlighting bright spots of the economy – claiming to have reignited manufacturing, high job creation and a robust effort to compete with China. He’s now warning that Republicans would gut Social Security and Medicare on which many Americans rely in retirement.

    And in practice, there is not much a president can do to quickly lower inflation on their own. The Federal Reserve is in the lead and the central bank’s strategy of rising interest rates could trigger a recession that could further haunt Biden’s presidency.

    Inflation and high gas prices are also a global issue and have been worsened by factors beyond Biden’s control, including the war in Ukraine and supply chain issues brought on by the pandemic. At the same time, however, economists are debating the wisdom of Biden’s high-spending bills that sent billions of dollars into an overheating economy. And the White House’s repeated downplaying of the soaring cost of living as “transitory” badly misjudged the situation and was another thing that battered Biden’s credibility – on top of the confidence some voters lost in him during the US withdrawal from Afghanistan last year.

    The Republican Party also got exactly what it wanted as Trump has delayed his expected campaign announcement until after the midterms, depriving Biden of the opportunity to shape this election as a direct clash with an insurrectionist predecessor whom he beat in 2020 and who remains broadly unpopular. Such a confrontation might have enabled the president to dampen the impact of his own low approval ratings and win over voters who still disdain the twice-impeached former president.

    Ironically, Biden’s struggles in framing a believable economic message could bring about the very crisis of democracy that he is warning about.

    Any incoming GOP majority would be dominated by pro-Trump radicals. Prospective committee chairs have already signaled they will do their best to deflect from Trump’s culpability on the January 6, 2021, insurrection and go after the Justice Department as it presses on with several criminal investigations into the ex-President’s conduct. And Tuesday’s election could usher in scores of election deniers in state offices who could end up controlling the 2024 presidential election in some key battlegrounds. GOP dominance of state legislatures could further curtail voting rights.

    High inflation has also always been a toxic force that brews political extremism and tempts some voters to be drawn to demagogues and radicals whose political creed is based on stoking resentment and stigmatizing outsiders.

    If Democrats do lose big on Tuesday night, Trump will be a beneficiary.

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  • Polling shows that most voters say economic concerns are top of mind | CNN Politics

    Polling shows that most voters say economic concerns are top of mind | CNN Politics

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    CNN
     — 

    Economic issues remain a top concern for most voters ahead of the 2022 election, a review of recent polling finds, with many also worried about America’s democratic process itself. But voters’ highest priorities are divided along partisan lines, with abortion rights continuing to resonate strongly for Democrats, while Republicans remain sharply focused on inflation. Concerns about other issues, from gun policy to immigration, are often similarly polarized. And some topics that drew attention in previous elections – like the coronavirus pandemic – are relatively muted this year.

    Recent polling provides a good general sense of which issues have become the focal points of this year’s elections, and for whom. But what voters truly consider important, and how those concerns influence their decisions, is too complicated to be fully captured in a single poll question.

    As we’ve noted previously, voters tend to say they care about a lot of different issues. That, however, doesn’t necessarily mean any of those issues will be decisive in a specific race, either by motivating people to vote when they wouldn’t have otherwise, or by convincing them to vote for a different candidate than they would have otherwise.

    In practice, few campaigns revolve around a single issue, with voters left to weigh the merits of entire platforms. In a recent NBC News poll, for instance, voters were close to evenly split on whether they placed more importance on “a candidate’s position on crime, the situation at the border, and addressing the cost of living by cutting government spending,” or on “a candidate’s position on abortion, threats to democracy and voting, and addressing the cost of living by raising taxes on corporations.”

    And in some cases, voters’ primary focus may not be on the issues at all. In CNN’s recent polls of Pennsylvania and Wisconsin, a majority of likely voters in both states said that candidates’ character or party control of the Senate played more of a role in their decision-making than did issue positions.

    Here’s a recap of what the polls are showing now.

    CNN’s most recent polls have examined voters’ priorities from two different angles. A survey conducted in September and early October asked voters to rate a series of different issues on a scale from “extremely important” to “not that important,” while a second survey conducted in late October asked them to select a single top priority. On both measures, the economy emerged as a top concern.

    In the first poll, nine in 10 registered voters said they considered the economy at least very important to their vote for Congress, with 59% calling it extremely important. And in the second poll, 51% of likely voters said the economy and inflation would be most important to them in their congressional vote, far outpacing any other issue.

    While economic concerns rank highly among both parties, the CNN surveys found a pronounced partisan divide. Among registered voters in the first poll, 75% of Republicans called the economy extremely important to their vote, compared with about half of independents (51%) and Democrats (50%). And in the second, 71% of Republican likely voters called the economy and inflation their top issue, while 53% of independents and 27% of Democrats said the same.

    The Republican Party also holds an advantage on economic issues. In a Fox News poll, voters said by a 13-point margin that the GOP would do a better job than the Democratic Party of handling inflation and higher prices. And in a mid-October CBS News/YouGov poll, voters were nine points likelier to say that GOP control of Congress would help the economy than to say it would hurt. Voters also said, by a 19-point margin, that Democratic economic policies during the last two years in Congress have hurt, rather than helped.

    At the same time, voters express concerns beyond pocketbook issues. In that CBS News/YouGov survey, 85% of likely voters said that their “personal rights and freedoms” will be very important in their 2022 vote, while a smaller 68% said the same of their “own household’s finances.”

    Following the Supreme Court’s overturn of Roe v. Wade, abortion has taken far higher precedence in this midterm than in recent past elections, particularly among Democrats.

    In CNN’s September/October poll, nearly three-quarters (72%) of registered voters called abortion at least very important to their vote, with 52% calling it extremely important. The share of voters calling abortion extremely important to their vote varied along both partisan and gender lines: 72% of Democratic women, 54% of independent women and 53% of Republican women rated it that highly, compared with fewer than half of men of any partisan affiliation.

    And in CNN’s latest poll, 15% of likely voters called abortion their top issue, placing it second – by some distance – to economic concerns. Democratic voters were about split between the two issues, with 27% prioritizing the economy and inflation, and 29% placing more importance on abortion.

    Abortion policy does stand out in some surveys as particularly likely to serve as a litmus test. In the Fox News poll, 21% of voters named abortion or women’s rights as an issue “so important to them that they must agree with a candidate on it, or they will NOT vote for them,” outpacing issues including the economy and immigration, and far greater than the 7% who named abortion when asked the same question in a 2019 survey.

    To the extent that abortion serves as a voting issue, it’s more of a factor for abortion rights supporters – something that was not necessarily the case in the past. In the mid-October CBS News/YouGov poll, just 17% of likely voters say they view their congressional vote this year as a vote to oppose abortion rights, while 45% say it’s in support of abortion rights, with the rest saying abortion is not a factor. In a recent AP-NORC survey, the Democrats hold a 23-point lead over Republicans on trust to handle abortion policy, their best showing across a range of issues; in a recent NPR/PBS NewsHour/Marist poll, the Democrats lead by 12 points.

    Immigration’s role as an electoral issue has grown increasingly polarized. In CNN’s September/October poll, 44% of registered voters called immigration extremely important, on par with concerns ahead of the 2018 midterms. But Republican voters were 35 percentage points likelier than Democratic voters to call immigration extremely important, up from a 17-point gap four years ago.

    That partisan dynamic also plays out in which party is more trusted to handle immigration-related topics: In the NPR/PBS NewsHour/Marist poll, voters say by a 14-point margin that the GOP would do a better job than the Democratic Party on dealing with immigration. In the Fox poll, voters say by a 21-point margin that they trust the GOP over the Democrats to handle border security, making it by far the Republicans’ strongest issue by that metric.

    But with Republicans overwhelmingly focused on the economy, immigration isn’t at the forefront of many voters’ minds this year. In the latest CNN poll, just 9% of Republican voters and 4% of Democratic voters called it their top issue.

    This year also finds voters concerned about the electoral process. An 85% majority of registered voters in CNN’s September/October poll called “voting rights and election integrity” at least very important to their vote, with 61% calling those topics extremely important. Both 70% of Democrats and 64% of Republicans said the issue was extremely important, in comparison with a smaller 47% of independents. Seven in 10 registered voters in a Pew Research survey out in October said that “the future of democracy in the country” will be very important to their vote this year, with 58% saying the same about “policies about how elections and voting work in the country” – in each case, that included a majority of both voters supporting Democratic candidates and those supporting Republicans.

    But levels of concern can vary depending on how the issue is framed. In the NPR/PBS NewsHour/Marist poll, 28% of registered voters, including 42% of Democrats, picked “preserving democracy” as the issue that’s top of mind for them in this election. In CNN’s latest poll, just 9% of likely voters, including 15% of Democrats, called “voting rights and election integrity” their top issue.

    The driving factors behind voters’ worries also vary significantly. In the Fox News poll, 37% of voters said they were extremely concerned about candidates and their supporters not accepting election results, while 32% were extremely concerned about voter fraud. In an October New York Times/Siena poll, about three-quarters (74%) of likely voters said they believed American democracy was currently under threat, but in a follow-up questioning asking them to summarize the threat they were envisioning, they diverged. Some cited specific politicians, most notably former President Donald Trump (10%) or President Joe Biden (6%), while others offered broad concerns about corruption or the government as a whole (13%).

    In CNN’s September/October poll, 43% of registered voters said that the phrase “working to protect democracy” better described the Democratic congressional candidates in their area, while 36% thought it better fit their local Republican candidates. In the NPR/PBS NewsHour/Marist poll, voters said, 44% to 37%, that the Democratic Party would do a better job than the Republican Party of “dealing with preserving democracy.”

    Most voters in this year’s elections express concerns about guns and violent crime, but relatively few voters call either their top issue. There’s also a notable partisan divide depending on the framing, with Republicans more concerned about crime, and Democrats more attentive to gun policy.

    In a late October CBS News/YouGov poll, 65% of likely voters said crime would be very important to their vote, and 62% said gun policy would be very important. An 85% majority of Republican likely voters, compared with 47% of Democratic likely voters, called crime very important. By contrast, while 74% of Democratic likely voters called gun policy very important, a smaller 53% of Republican likely voters said the same.

    According to Gallup, voters’ prioritization of gun policy spiked this summer following a wave of high-profile mass shootings, before fading as a concern in the fall; the Pew Research Center polling found less significant changes in voters’ priorities over that time.

    Neither issue is currently widespread as a top concern. In the latest CNN poll, 7% of likely voters called gun policy their top issue, and just 3% said the same of crime.

    In an October Wall Street Journal poll, 43% of registered voters said they trusted Republicans in Congress more to handle reducing crime, compared with the 29% who said they trust Democrats in Congress. Voters who were instead asked about reducing “gun violence” gave Democrats a 7-point edge.

    The polling also reveals a few issues that aren’t receiving similarly widespread public attention this year. Among them is coronavirus, which just 27% of likely voters in the latest CBS News/YouGov poll called very important to their vote, rising to 44% among Democrats. Despite this year’s major climate change legislation, that issue ranked last among the seven issues CNN asked about in the September/October poll, with only 38% of registered voters calling it extremely important to their vote – although the issue had far more resonance among Democrats (60% of whom called it extremely important) and voters younger than age 35 (46% of whom did). And relatively few in the electorate are substantially focused on the war in Ukraine: in Fox’s polling, just 34% of registered voters said they were extremely concerned about Russia’s invasion of the country.

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  • Interest rates will keep rising. How high will they go? | CNN Business

    Interest rates will keep rising. How high will they go? | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN Business
     — 

    What will the Federal Reserve do at its meeting in December? Analysts can speculate all they want, but Fed officials say they will be using hard economic data to make their next decision.

    That means key housing, labor, and inflation reports will likely have outsized effects on the market as investors speculate about what they might mean for the future of interest rates.

    What’s happening: No one can move markets like Federal Reserve Chair Jerome Powell — with just a few words on Wednesday he crushed investors’ hopes of an interest rate pivot and sent stocks plunging. “We have a ways to go,” said Powell of the Fed’s current hiking regime meant to fight persistent inflation. “It’s very premature, in my view, to think about or be talking about pausing.”

    But Powell did add an important caveat. The Fed could start to slow the pace of those painful hikes as soon as December. “Our decisions will depend on the totality of incoming data and their implications for the outlook for economic activity and inflation,” Powell said on Wednesday.

    So what will the Fed be looking at between today and its next policy decision on December 14?

    The labor market: The Fed’s biggest worry is the super-tight US labor market, and Friday’s jobs report isn’t likely to soothe any nerves.

    The government report is expected to show the economy added another 200,000 positions in October — down from last month, but still a very solid number as demand for employment continues to outpace the supply of labor.

    That means more inflation. Businesses have to pay higher wages to attract employees and are able to charge more for their goods and services. The Fed will be looking closely at hourly wage growth in the report. In September, wages rose by 5% from a year ago.

    There is a possible upside: Another jobs report in December is expected ahead of the Fed meeting. If both reports show a downward trajectory in employment, that could be enough to placate Fed officials, even if the unemployment rate remains historically low.

    Inflation data: Expect new data from two major indexes that measure the pace of inflation ahead of the next Federal Reserve meeting.

    The Consumer Price Index (CPI) for October, which tracks changes in the prices of a fixed set of goods and services, is out on November 10.

    Core CPI prices, which exclude oil and food, rose 0.6% in September month-over-month, matching August’s pace and coming in well above expectations of a 0.4% increase, not a great sign for the Fed. And analysts expect to see another large 0.5% increase in October.

    The Fed will also get to see October data from its favored measure of inflation, Personal Consumption Expenditures (PCE), on December 1.

    PCE reflects changes in the prices of goods and services purchased by consumers in the United States. The Fed believes the measure is more accurate than CPI because it accounts for a wider range of purchases from a broader range of buyers.

    Core PCE climbed by 5.1% on an annual basis in September, higher than the August rate of 4.9% but below the consensus estimate of 5.2%, per Refinitiv.

    Housing: The housing market has been deeply impacted by the Fed’s efforts to fight inflation, and is one of the first areas of the economy to show signs of cooling.

    The 30-year fixed-rate mortgage averaged 6.95% last week, up from 3.09% just a year ago, and elevated borrowing costs are leading to a decline in demand.

    “The housing market was very overheated for the couple of years after the pandemic as demand increased and rates were low,” said Powell on Wednesday. “We do understand that that’s really where a very big effect of our policies is.”

    October’s new and existing home sales numbers, due on November 18 and 23, will show the continued impact of that policy ahead of the next meeting.

    The US economy is still standing strong in the face of rising interest rates, but things are softening much more quickly across the pond.

    The United Kingdom will face hard economic times and elevated interest rates well into next year, officials warned this week.

    The Bank of England raised interest rates by three-quarters of a percentage point on Thursday, the biggest hike in 33 years, as it attempts to fight soaring inflation.

    But the bank also issued a stark warning. It said that economic output is already contracting and that it expects a recession to continue through the first half of 2024 “as high energy prices and materially tighter financial conditions weigh on spending.”

    A two-year recession would be longer than the one that followed the 2008 global financial crisis, though the Bank of England said that any declines in GDP heading into 2024 would likely be relatively small.

    The central bank also doesn’t think inflation will start to fall back until next year. That will require more interest rate hikes in the coming months, warned policymakers.

    Elon Musk has been busy over at Twitter HQ. Aside from tweeting and deleting a conspiracy theory, he’s talked about implementing some big changes at his $44 billion acquisition. Here’s what’s happened so far:

    Layoffs begin: Elon Musk began laying off Twitter employees on Friday morning, according to a memo sent to staff. The email sent Thursday evening notified employees that they will receive a notice by 12 p.m. ET Friday that informs them of their employment status.

    The email added that “to help ensure the safety” of employees and Twitter’s systems, the company’s offices “will be temporarily closed and all badge access will be suspended.”

    Twitter had around 7,500 employees prior to Musk’s takeover.

    Several Twitter employees have already filed a class action lawsuit claiming that the layoffs violate the federal Worker Adjustment and Retraining Notification Act.

    The WARN Act requires any company with over 100 employees to give 60 days’ written notice if it intends to cut 50 jobs or more at a “single site of employment.”

    Consolidating strength: In less than a week since Musk acquired Twitter, the company’s C-suite appears to have almost entirely cleared out, through a mix of firings and resignations.

    Twitter’s board of directors was also dissolved last week, according to a securities filing.

    The company filing states that all previous members of Twitter’s board, including recently ousted CEO Parag Agrawal and chairman Bret Taylor, are no longer directors “in accordance with the terms of the merger agreement.” That makes Musk, according to the filing, “the sole director of Twitter.”

    Cashing blue checks’ checks: Musk on Tuesday said he planned to charge $8 a month for Twitter’s subscription service, called “Twitter Blue,” with the promise to let anyone pay to receive a coveted blue check mark to verify their account. That’s a steep haircut from his original plan to charge users $19.99 a month to get or keep a verified account.

    In a tweet, the world’s richest man used an expletive to describe his assessment of “Twitter’s current lords & peasants system for who has or doesn’t have a blue checkmark.” He added: “Power to the people! Blue for $8/month.”

    Advertisers hit pause: Elon Musk wrote an open letter to advertisers just hours before cementing his acquisition of Twitter, explaining that he didn’t want the platform to become a “free-for-all hellscape.” But that attempt at reassuring the advertising industry, which makes up the vast majority of Twitter’s business, doesn’t appear to be working.

    General Mills

    (GIS)    , Mondelez International

    (MDLZ)    , Pfizer

    (PFE)     and Audi

    (AUDVF)     have reportedly joined a growing list of companies hitting pause on their Twitter advertising in the wake of Musk’s acquisition.

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  • Inflation data shows US prices were still uncomfortably high last month | CNN Business

    Inflation data shows US prices were still uncomfortably high last month | CNN Business

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    Minneapolis
    CNN Business
     — 

    New inflation data shows that US prices were still uncomfortably high last month, despite aggressive action from the Federal Reserve to rein in decades-high inflation.

    The Personal Consumption Expenditures Index, which measures prices paid by consumers for goods and services, climbed by by 0.3% from August to September but remained unchanged at 6.2% for the year.

    Core PCE, which strips out volatile food and energy prices and is the Fed’s preferred measure of inflation, climbed by 5.1% on an annual basis, higher than the August rate of 4.9% but below the consensus estimate of 5.2%, per Refinitiv.

    From August to September, the core index rose by 0.5%, matching estimates. The prior month’s jump was revised down to 0.5% from 0.6%.

    The latest PCE numbers come just days before the central bank meets to discuss another rate hike — and as Americans hit the polls to vote in midterm elections.

    This story is developing and will be updated.

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  • Health insurance premiums at work didn’t rise in 2022 amid soaring inflation, but the good times won’t last | CNN Politics

    Health insurance premiums at work didn’t rise in 2022 amid soaring inflation, but the good times won’t last | CNN Politics

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    CNN
     — 

    Even though the price of gas, groceries and other essentials shot up in 2022, health care premiums for employer-sponsored coverage remained essentially flat, according to a survey released Thursday.

    Job-based policies for families cost an average of roughly $22,500 in 2022, with workers contributing an average of about $6,100, the Kaiser Family Foundation Employer Health Benefit Survey found. That is basically the same as last year.

    The average cost of single policies was just over $7,900 for this year, with employees responsible for about $1,350.

    Unlike in previous years, premium growth trailed behind the increases in inflation and workers’ wages, which came in at 8% and 6.7%, respectively. That’s because the cost of coverage is typically set months in advance – before inflation really took off.

    Also, utilization of health care services remained low in 2021, so employers that fund their own health plans didn’t spend as much as anticipated, which allowed them to keep premiums steady this year, said Matthew Rae, associate director for the Program on the Health Care Marketplace at Kaiser.

    But workers can expect to feel the sting of inflation when they enroll in coverage for next year, which is happening now at many companies.

    “Employers are already concerned about what they pay for health premiums, but this could be the calm before the storm, as recent inflation suggests that larger increases are imminent,” said Drew Altman, Kaiser’s chief executive officer.

    Other surveys show that premiums and out-of-pocket costs are expected to increase in 2023 at a faster rate than in recent years due to inflation. Hospitals, doctors and other providers are feeling the pricing pressure. Their costs for labor, particularly nurses and service staff, and supplies have increased sharply due to inflation and demand. So they are pushing insurers to raise their reimbursement rates when contracts are up for renewal.

    Nearly 159 million non-elderly people are covered by employer-sponsored health insurance, according to Kaiser.

    For this year, deductibles only inched up. The average annual deductible stands at roughly $1,760 among workers who face a deductible for single coverage. That compares with about $1,670 last year.

    Employers, particularly large ones, see a growing need for mental health services, the Kaiser survey found.

    Nearly half of big companies saw an increase in the share of workers using mental health services, and more than a quarter say that more employees are asking for family leave because of mental health issues.

    But many employers don’t feel they have enough providers in their networks to provide timely access to mental health care, Rae said.

    While 82% of firms said they have a sufficient number of primary care providers, only 44% said the same of behavioral health providers.

    Telehealth remains important, with three-quarters of firms saying telemedicine matters “somewhat” or “a great deal” in providing access to mental health services.

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  • Soaring inflation is throwing retirees’ budgets into chaos | CNN Business

    Soaring inflation is throwing retirees’ budgets into chaos | CNN Business

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    CNN
     — 

    At the Senior Friendship Center in Sarasota, Florida, talking about inflation really strikes a chord.

    At a card table there, CNN met with a group of seniors, all on fixed incomes, who spoke about feeling the squeeze from steep price hikes over the past year.

    Katherine Janes, 81, said she had to turn to her son for financial help.

    “It makes things a little easier,” Janes said. “Everything is expensive.”

    Ron Longhurst cut back on evening socializing, which has been difficult as a single 79-year-old.

    “Day-to-day, I stay home more,” he said. “You think twice about the big night out… I’m taking maybe a week or two longer between haircuts.”

    Ann Smith, 82, cut down on her favorite “simple pleasure” — drinking soda.

    “I used to enjoy a Coke or two a day,” she said. “I now do one a day, maybe one every other day instead.”

    Seniors on a fixed income have been hit particularly hard by inflation, with September prices up 8.2% from a year ago. The price hikes are even steeper in areas like Tampa, Florida, where the housing market has exploded.

    Sharon Johnson, 67, said her family’s monthly rent in Tampa jumped $350 this year, rising to roughly $3,100 per month. And with other bills surging, like her utilities, it has thrown her budget into chaos.

    “The cost of living is not working well right now for us. It’s hard,” Johnson said. “I’ve never had to feel a worry about how we were going to eat, but today, we’re only doing light foods, sandwiches.”

    Sharon Johnson, 67, said her rent jumped by $350 a month this year, throwing her budget into chaos.

    They already have some boxes packed, expecting another rent hike when their lease ends early next year.

    Johnson, a retired university counselor, and her husband, a retired engineer and teacher, moved to Florida from Michigan three years ago, bringing along her sister and nephew to live with them.

    The family would like to buy a home, but the draining price hikes and red-hot housing market are making that more difficult. Johnson says they may have to downsize as a result.

    “We are middle income, but with less to work with than when we worked full time,” Johnson said. “We have worked hard. And we’ve been honest. Then why is it going in reverse?”

    Next year, Social Security recipients will receive an annual cost-of-living adjustment of 8.7%, the largest increase since 1981.

    But for now, many seniors are feeling little relief.

    Barbara Smith, 70, is a caretaker and also volunteers at Trinity Cafe in Tampa, a restaurant that serves free meals to the less fortunate. But she said she has come to rely on the take-home meal she gets after her shift and it is often the only one she eats all day.

    “Then I don’t have to go and purchase it, because I don’t have the money to do that,” Smith said.

    As she weathers price hikes on food, gas, and personal items, she’s stopped buying puzzles, her favorite hobby. The strain of inflation can be isolating, she said.

    “If it wasn’t for volunteering, I’d probably be insane by now,” she said.

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  • Stock picking isn’t dead. But for most investors it might as well be | CNN Business

    Stock picking isn’t dead. But for most investors it might as well be | CNN Business

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    New York
    CNN Business
     — 

    What’s the best way to invest? Plenty of active traders are out there trying to make a quick buck on meme stocks like AMC and GameStop, fads like Snap and Peloton or bitcoin and other cryptocurrencies. Professional money managers try to identify stocks that can beat the broader market over the long haul.

    But for most individual investors, a strategy of buying and holding so-called passive funds that track top indexes like the S&P 500 and Nasdaq 100 makes the most sense if you want to accumulate wealth for retirement. It’s like that popular old rotisserie chicken infomercial slogan: Set it and forget it.

    Index funds tend to be cheaper. New data from S&P Dow Jones Indices showed that investors saved more than $400 billion in fees with index funds over the past quarter of a century.

    Obviously, index provider S&P Global

    (SPGI)     has a vested interest in promoting passive funds backed to various benchmark indexes.

    The company, along with competitors like iShares owner BlackRock

    (BLK)     and index provider MSCI

    (MSCI)    , offers many options for investors looking to get exposure to the broader market without trying to pick individual winners and losers.

    Even legendary investing guru Warren Buffett of Berkshire Hathaway

    (BRKB)     has extolled the virtues of index funds for average investors. That’s because Buffett, despite being one of the most successful stock pickers ever, doesn’t believe most active investment managers can beat the broader market.

    The 92-year-old Oracle of Omaha famously wrote in Berkshire’s 2014 annual shareholder letter that his advice for the trustee of his estate is to “put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund” for his wife. (Buffett suggested one from Vanguard.)

    “I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers,” he wrote.

    And given how some high-profile active investors have lagged the market lately, there is something to be said for conservative investors with a long-term horizon betting on the S&P 500 over a handful of stocks.

    Just look at Cathie Wood at Ark, who has made big, high profile bets on companies like Tesla

    (TSLA)    , Zoom

    (ZM)    , Roku

    (ROKU)     and Teladoc

    (TDOC)    . Ark’s flagship Innovation ETF has plunged 60% this year, compared to “just” a 20% drop for the S&P 500.

    “Actively managed funds have failed to survive and beat their benchmarks, especially over longer time horizons,” said Bryan Armour, director of passive strategies research for North America at Morningstar, in a report last month. He noted that just one of every four active funds beat their passive benchmarks over the ten years ending in June.

    Of course, buying index funds is no guarantee of investing success either…especially not in the short-term. After all, the S&P 500 has plunged this year, too.

    “Diversified portfolios do okay usually, but they’ve been hit hard lately by the rise in rates,” said Shamik Dhar, chief economist at BNY Mellon Investment Management, in an interview with CNN Business.

    Even the vaunted 60/40 asset allocation recommendation for investors, i.e. owning 60% stocks and 40% bonds, has so far failed to beat the market in 2022.

    “This year, it seems like there has been a broad-based source of fear. It’s shock therapy. There is slowing growth and inflation. That is disorienting investors,” said Adam Hetts, global head of portfolio construction and strategy at Janus Henderson Investors, in an interview with CNN Business.

    Along those lines, any investor with decent exposure to bonds, hoping that they’d hold up better as stocks tanked, has gotten a rude awakening. The iShares 20+ Year Treasury Bond ETF

    (TLT)    , a top proxy for long-term bonds, has done even worse than the stock market, plunging more than 35% this year.

    That’s why some investors aren’t singing a funeral dirge for active stock picking – just yet.

    “A 10-year ‘secular bear market’ is underway,” said Stifel chief equity strategist Barry Bannister in a recent report, who predicts that the market may be stuck in a narrow range throughout the rest of the decade.

    “We believe this environment favors the following approach: active (not broad passive) management,” he said.

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  • Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

    Hong Kong stocks plunge 6% as fears about Xi’s third term trump China GDP data | CNN Business

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    Hong Kong
    CNN Business
     — 

    Hong Kong stocks had their worst day since the 2008 global financial crisis, just a day after Chinese leader Xi Jinping secured his iron grip on power at a major political gathering.

    Foreign investors spooked by the outcome of the Communist Party’s leadership reshuffle dumped Chinese equities and the yuan despite the release of stronger-than-expected GDP data. They’re worried that Xi’s tightening grip on power will lead to the continuation of Beijing’s existing policies and further dent the economy.

    Hong Kong’s benchmark Hang Seng

    (HSI)     Index plunged 6.4% on Monday, marking its biggest daily drop since November 2008. The index closed at its lowest level since April 2009.

    The Chinese yuan weakened sharply, hitting a fresh 14-year low against the US dollar on the onshore market. On the offshore market, where it can trade more freely, the currency tumbled 0.8%, hovering near its weakest level on record, even as the Chinese economy grew 3.9% in the third quarter from a year ago, according to the National Bureau of Statistics. Economists polled by Reuters had expected growth of 3.4%.

    The sharp sell-off came one day after the ruling Communist Party unveiled its new leadership for the next five years. In addition to securing an unprecedented third term as party chief, Xi packed his new leadership team with staunch loyalists.

    A number of senior officials who have backed market reforms and opening up the economy were missing from the new top team, stirring concerns about the future direction of the country and its relations with the United States. Those pushed aside included Premier Li Keqiang, Vice Premier Liu He, and central bank governor Yi Gang.

    “It appears that the leadership reshuffle spooked foreign investors to offload their Chinese investment, sparking heavy sell-offs in Hong Kong-listed Chinese equities,” said Ken Cheung, chief Asian forex strategist at Mizuho bank.

    The GDP data marked a pick-up from the 0.4% increase in the second quarter, when China’s economy was battered by widespread Covid lockdowns. Shanghai, the nation’s financial center and a key global trade hub, was shut down for two months in April and May. But the growth rate was still below the annual official target that the government set earlier this year.

    “The outlook remains gloomy,” said Julian Evans-Pritchard, senior China economist for Capital Economics, in a research report on Monday.

    “There is no prospect of China lifting its zero-Covid policy in the near future, and we don’t expect any meaningful relaxation before 2024,” he added.

    Coupled with a further weakening in the global economy and a persistent slump in China’s real estate, all the headwinds will continue to pressure the Chinese economy, he said.

    Evans-Pritchard expected China’s official GDP to grow by only 2.5% this year and by 3.5% in 2023.

    Monday’s GDP data were initially scheduled for release on October 18 during the Chinese Communist Party’s congress, but were postponed without explanation.

    The possibility that policies such as zero-Covid, which has resulted in sweeping lockdowns to contain the virus, and “Common Prosperity” — Xi’s bid to redistribute wealth — could be escalated was causing concern, Cheung said.

    “With the Politburo Standing Committee composed of President Xi’s close allies, market participants read the implications as President Xi’s power consolidation and the policy continuation,” he added.

    Mitul Kotecha, head of emerging markets strategy at TD Securities, also pointed out that the disappearance of pro-reform officials from the new leadership bodes ill for the future of China’s private sector.

    “The departure of perceived pro-stimulus officials and reformers from the Politburo Standing Committee and replacement with allies of Xi, suggests that ‘Common Prosperity’ will be the overriding push of officials,” Kotecha said.

    Under the banner of the “Common Prosperity” campaign, Beijing launched a sweeping crackdown on the country’s private enterprise, which shook almost every industry to its core.

    “The [market] reaction in our view is consistent with the reduced prospects of significant stimulus or changes to zero-Covid policy. Overall, prospects of a re-acceleration of growth are limited,” Kotecha said.

    On the tightly controlled domestic market in China, the benchmark Shanghai Composite Index dropped 2%. The tech-heavy Shenzhen Component Index lost 2.1%.

    The Hang Seng Tech Index, which tracks the 30 largest technology firms listed in Hong Kong, plunged 9.7%.

    Shares of Alibaba

    (BABA)     and Tencent

    (TCEHY)     — the crown jewels of China’s technology sector — both plummeted more than 11%, wiping a combined $54 billion off their stock market value.

    The sell-off spilled over into the United States as well. Shares of Alibaba and several other leading Chinese stocks trading in New York, such as EV companies Nio

    (NIO)     and Xpeng, Alibaba rivals JD.com

    (JD)     and Pinduoduo

    (PDD)     and search engine Baidu

    (BIDU)    , were all down sharply Thursday afternoon.

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  • 3 things that will help reduce the sting of high inflation | CNN Business

    3 things that will help reduce the sting of high inflation | CNN Business

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    There’s really nothing nice to say about inflation when it comes to your bottom line.

    It’s hard on your wallet. It’s hard on your savings because it reduces the buying power of the dollars you socked away. And it’s hard on your paycheck, because chances are your last raise did not keep pace with headline inflation, which the latest reading puts at 8.2%.

    But that same high inflation has led to a couple of changes that might offer you a little relief. And every little bit helps.

    Starting next year, your paycheck could be a little bigger thanks to inflation adjustments that the Internal Revenue Service will make to 2023 federal income tax brackets and other provisions.

    The net effect of those adjustments is this: More of your 2023 wages will be subject to lower tax rates than they were this year. And you may be able to deduct higher amounts of income.

    Here’s the skinny on that.

    When you save money in a tax-deferred workplace retirement plan like a 401(k) or 403(b), you can reduce your taxable income because you get a deduction for your contribution the year you make it. The more you save, the more you cut your tax bill.

    Starting next year, you will be allowed to contribute up to $22,500 into your 401(k), 403(b), most 457 plans or the Thrift Savings Plan for federal employees.

    That’s $2,000 – or roughly 9.8% – more than the current $20,500 federal contribution limit, a direct result of higher inflation. Those are the biggest adjustments made to the contribution limit in decades.

    More about those changes and changes to IRA contribution limits can be found here.

    Social Security recipients will receive an annual cost-of-living adjustment of 8.7% next year, the largest increase since 1981.

    The spike will boost retirees’ monthly payments by $146 to an estimated average of $1,827 for 2023.

    No one will be living large on that amount, but the extra cash will offset some of the higher prices for everyday expenses that seniors incur.

    Here’s more on the coming boost to Social Security checks, along with welcome news that there will be a drop in Medicare Part B premiums next year.

    – CNN’s Tami Luhby contributed to this report

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  • The Fed isn’t about to back down from its inflation fight | CNN Business

    The Fed isn’t about to back down from its inflation fight | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    London
    CNN Business
     — 

    Twelve days from now, the Federal Reserve will meet again, and expectations for the central bank’s next moves are firming up. The consensus among investors: Persistently hot inflation means the Fed will need to continue with its string of aggressive interest rate hikes, which is unprecedented in the modern era.

    What’s happening: Markets see a 99% probability that rates will rise by another three-quarters of a percentage point, reaching a range of 3.75% to 4%.

    A hike of that magnitude is now “a given,” Quincy Krosby, chief global strategist for LPL Financial, told clients on Wednesday. “Concern is now focused on December, and whether the Fed is prepared to transition to smaller rate hikes.”

    That’s up from a 60% probability one month ago. So what changed?

    Inflation, mainly. The US Consumer Price Index rose 8.2% in the year to September after rising 8.3% annually in August. While CPI peaked at 9.1% in June, that reading was still uncomfortably elevated and higher than economists had expected.

    The 6.6% annual uptick in shelter costs was of particular concern. It takes longer for housing expenses to come back down than some other categories, since renters tend to sign leases for 12-month periods. The monthly rise in core services costs (excluding energy) was the largest gain in three decades.

    The data underscored the need for the Federal Reserve to stay tough — while a strong jobs report for September will deliver confidence the central bank can do so without causing undue harm to the US economy.

    Fed officials have said as much. In an interview with Reuters on Friday, St. Louis Fed President James Bullard said inflation had become “pernicious,” which means that “frontloading” larger rate hikes is logical.

    The market impact: The S&P 500 kicked off the week with a 3.8% rally before dropping 0.7% on Wednesday. It’s still plodding along in a bear market, about 23% below its January peak. So long as the Fed signals its intention to keep the pressure on, boosting the odds of a US recession, volatility is expected to persist.

    Even relatively solid corporate earnings may not be sufficient to change the direction.

    “So far, the results are decent, but they’re being compared to consensus estimates that have been persistently lowered since early summer,” noted strategists at Charles Schwab.

    Tesla

    (TSLA)     posted a solid quarter of earnings and record revenue, but now says it will likely fall short of its target for a 50% growth in the number of cars it sells this year.

    Quick rewind: As recently as July, the company said it was still aiming for a target of 50% growth from the 936,000 cars it delivered in 2021.

    But with two quarters of disappointing deliveries caused by supply chain issues and Covid-related shutdowns in China, that goal has looked increasingly out of reach, my CNN Business colleague Chris Isidore reports.

    CEO Elon Musk said that the electric carmaker is not struggling with demand.

    “We expect to sell every car that we make, for as far in the future as we can see,” he said on a call with analysts on Wednesday.

    Instead, the company said it would “just” miss its target due to complications with delivery of cars from its factories to customers at the end of the year.

    Shares are down 5% in premarket trading on Thursday. They’ve dropped 37% year-to-date, compared to a 22.5% fall in the S&P 500.

    “This quarter was not roses and rainbows,” said Dan Ives, tech analyst for Wedbush Securities. “Competition is increasing. There are some logistical challenges.”

    America’s business leaders are becoming more pessimistic. The Conference Board recently reported a slide in its CEO confidence index, which it said had hit levels not seen “since the depths of the Great Recession.”

    Of the 136 CEOs who were surveyed, 98% said they were preparing for a US recession over the next 12 to 18 months — and 99% said they were bracing for a recession in Europe.

    Notably, the business community is not being quiet about its concerns.

    Amazon founder Jeff Bezos tweeted Tuesday that “the probabilities in this economy tell you to batten down the hatches.”

    He was responding to a clip of an interview with Goldman Sachs CEO David Solomon, who told CNBC that “it’s a time to be cautious.”

    “You have to expect that there’s more volatility on the horizon now,” Solomon said. “That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”

    American Airlines

    (AAL)    , AT&T

    (T)    , Dow, Nucor

    (NUE)     and Quest Diagnostics

    (DGX)     report results before US markets open. CSX

    (CSX)    , Snap

    (SNAP)     and Whirlpool

    (WHR)     follow after the close.

    Also today:

    • Initial US jobless claims for last week post at 8:30 a.m. ET.
    • Existing home sales for September follow at 10 a.m. ET.

    Coming tomorrow: Earnings from American Express and Verizon.

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  • Four takeaways from the Georgia governor’s debate | CNN Politics

    Four takeaways from the Georgia governor’s debate | CNN Politics

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    CNN
     — 

    Republican Gov. Brian Kemp and Democrat Stacey Abrams sparred over health care, crime and punishment, and voting rights in a Monday debate as they made their closing arguments to voters in a reprise of their fiercely contested 2018 race for the same job.

    The stakes for this night were arguably higher for Abrams, who has trailed in most recent polling of the race. Kemp, one of the few prominent Republicans to resist former President Donald Trump’s lies about a stolen election in 2020, has positioned himself as a more traditional, pro-business conservative – a tack that his gentle resistance to Trump reinforced with swing voters. Abrams has argued that Kemp shouldn’t get any special credit for doing his job and not breaking the law.

    Kemp and Abrams were joined by Libertarian nominee Shane Hazel, who took shots at both his opponents and plainly stated his desire to send the election to a run-off. (If no one receives a clear majority on Election Day, the top two finishers advance to a one-on-one contest.) But it was the two major party candidates, who ran tight campaigns four years ago with Kemp emerging the narrow victor, who dominated the debate stage. Their disagreements were pointed, as they were in 2018, their attacks and rebuttals well-rehearsed and, to a large degree, predictable.

    Here are the four main takeaways from the Georgia governor’s debate:

    Like Republican Senate candidate Herschel Walker did in his debate with Democratic Sen. Raphael Warnock last week, Kemp took every opportunity – and when they weren’t there, tried anyway – to connect Abrams to Biden, who, despite winning the state in 2020, is a deeply unpopular figure there now.

    “I would remind you that Stacey Abrams campaigned to be Joe Biden’s running mate,” Kemp said, referring to the chatter around Abrams potentially being chosen as his running mate two years ago.

    During an exchange with the moderators about abortion, Kemp pivoted to the economy – and again, invoked Biden and Democrats on Capitol Hill.

    “Georgians should know that my desire is to continue to help them fight through 40-year high inflation and high gas prices and other things that our Georgia families are facing right now, quite honestly, because of bad policies in Washington, DC, from President Biden and the Democrats that have complete control,” he said.

    Abrams, unlike so many other Democrats running this year, has not sought to distance herself from the President and recently said publicly that she would welcome him in Georgia. First lady Jill Biden visited last week for an Abrams fundraiser, where she criticized Kemp over his position on abortion as well as his refusal to expand Medicaid and voting rights.

    Early on in the night, Kemp was questioned about remarks he made – taped without his knowledge – at a tailgate with University of Georgia College Republicans in which he expressed some openness to a push to ban contraceptive drugs like “Plan B.”

    Asked if he would pursue such legislation if reelected, Kemp said, “No, I would not” and that “it’s not my desire to” push further abortion restrictions, before pivoting to an attack on Biden, national Democrats and more talk about his economic record.

    Pressed on the remarks, Kemp suggested he was just humoring a group of people he didn’t know.

    On the tape, Kemp, though he didn’t seem enthusiastic, said, “You could take up pretty much everything, but you’ve got to be in legislative session to do that.”

    When asked if it was something he could do, Kemp said, “It just depends on where the legislators are,” and that he’d “have to check and see because there are a lot of legalities.”

    Georgia in 2019 passed and Kemp signed a so-called “heartbeat” bill, which bans abortions at around six weeks, and went into effect soon after the Supreme Court overturned Roe. v. Wade. Before the ruling, abortion was legal in the state until 20 weeks into pregnancy.

    Abrams has promised to work to “reverse” the law, though she would face significant headwinds in the GOP-controlled state legislature, and called the state law “cruel.”

    One of the first questions posed to Abrams centered on her speech effectively – but not with the precise language – conceding the 2018 election to Kemp.

    In those remarks, Abrams made a symbolic point in arguing that she was not conceding the contest, because Kemp, as the state’s top elections official, and his allies had unfairly worked to suppress the vote. Instead, Abrams said then, she would only “acknowledge” him as the winner.

    Some Republicans have tried to make hay over the speech, in a measure of whataboutism usually attached to Trump’s refusal to accept the 2020 results. Abrams, apart from a court challenge, never tried to overturn the outcome of her race.

    Still, she was asked on Monday night whether she would accept the results of the coming election – and said yes – before again accusing Kemp of, through the state’s new restrictive voting law, SB 202, seeking to make it more difficult for people to cast ballots.

    “Brian Kemp was the secretary of state,” Abrams said, recalling her opponent’s old job. “He has assiduously denied access to the right to vote.”

    Kemp countered by pointing to high turnout numbers over the past few elections and, as he’s said before, insisted the law made it “easy to vote and hard to cheat.”

    When the candidates were given the chance to question one another, Kemp asked Abrams to name all the sheriffs who had endorsed her campaign.

    The answer, of course, was that most law enforcement groups in the state are behind the Republican – a point he returned to throughout the debate.

    “Mr. Kemp, what you are trying to do is continue the lie that you’ve told so many times I think you believe it’s true. I support law enforcement and did so for 11 years (in state government),” Abrams said. “I worked closely with the sheriff’s association.”

    Abrams also accused Kemp of cynically trying to weaponize criminal justice and public safety issues by pitting her against police. The reality, she said, was less cut-and-dry.

    “Like most Georgians, I lead a complicated life where we need access to help but we also need to know we are safe from racial violence,” she said, before turning to Kemp. “While you might not have had that experience, too many people I know, have.”

    Kemp, though, kept the message simple. “I support safety and justice,” he said, often pointing to his anti-gang initiatives – especially when he was pressed on the effect of his loosening gun laws on crime.

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  • China delays the release of GDP and other economic data without explanation amid Party Congress | CNN Business

    China delays the release of GDP and other economic data without explanation amid Party Congress | CNN Business

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    Hong Kong
    CNN Business
     — 

    China has abruptly delayed the publication of key economic data, one day before its scheduled release, as the ruling Communist Party gathers at a major political meeting against the backdrop of a faltering economy.

    The country’s National Bureau of Statistics updated its schedule on Monday, with the dates for a series of economic indicators – including the closely-watched GDP growth – marked as “delayed.” The indicators, which had been scheduled for release on Tuesday, also include quarterly retail sales, industrial production and monthly unemployment rates.

    The bureau did not give a reason for the delay or set a new publication date.

    Separately, the country’s customs authority also postponed the release of monthly trade data, which were initially scheduled to come out on Friday.

    The delay of the highly anticipated data coincides with the week-long 20th Communist Party National Congress in Beijing, where Chinese leader Xi Jinping is expected to secure a norm-breaking third term in power. Priorities presented at the gathering will also set China’s trajectory for at least the next five years.

    “The delay suggests that the government believes that the 20th Party Congress is the most important thing happening in China right now and would like to avoid other information flows that could create mixed messages,” said Iris Pang, chief economist for Greater China at ING Group, in a research note on Tuesday.

    Other analysts believe it could be because the data sets are not pretty.

    “My forecast is for a further decline of 1.2% [on a quarterly basis for China’s GDP]. This would mean China had joined the US in a technical recession,” said Clifford Bennett, Chief Economist at ACY Securities.

    The delay would make sense “from an image management perspective,” he said. Some economists call two consecutive quarters of contraction a technical recession.

    China’s GDP declined 2.6% in the second quarter from the previous one, reversing a 1.4% growth in the January-to-March period. On a year-on-year basis, the economy expanded 0.4% in the second quarter.

    Analysts have widely expected third-quarter growth to remain weak, as strict Covid curbs, an intensifying crisis in real estate, and slowing global demand continue to pressure the economy.

    Economists polled by Reuters have expected China’s GDP to expand by 3.4% in the third quarter from a year earlier. That would fall far short of the government’s full-year growth target of around 5.5%.

    Many international organizations, including the IMF and World Bank, have recently downgraded China’s GDP growth forecasts for this year.

    Bennett expected the third-quarter GDP data to be released after the Party Congress.

    “Whenever the release occurs, we should all be prepared for some global financial market reaction if the world’s two largest economies are both in recession this year, ” he said.

    China’s economy is facing mounting challenges. Growth has stalled, youth unemployment is at a record high, and the housing market is in shambles. Constant Covid lockdowns have not only wreaked havoc on the economy, but also sparked rising social discontent.

    In the 20th Party Congress report released on Sunday, Xi renewed his pledge to grow China into a “medium developed country” by 2035.

    That would mean China needs to grow at an average growth rate of around 4.7% a year from 2021 to 2035, according to Larry Hu, chief China economist for Macquarie Group.

    Hu added that the target might be hard to meet, as the economy faces several structural headwinds, such as the property downturn, an aging population, and rising US-China tensions.

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  • White House economic adviser says US is ‘better positioned than most other countries’ to mitigate inflation | CNN Politics

    White House economic adviser says US is ‘better positioned than most other countries’ to mitigate inflation | CNN Politics

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    CNN
     — 

    White House economic adviser Cecilia Rouse on Sunday defended the limited progress the Biden administration has had on tamping down inflation, responding to comments from President Joe Biden last week that tried to put a positive spin on the high rate.

    “We’re starting to see signs that the actions they are taking is having an effect,” Rouse said of the Federal Reserve, which she said is focused on bringing down inflation.

    Rouse pointed to data from last month that employers are posting fewer job openings and the housing market is tapering off during an interview with CNN’s Dana Bash on “State of the Union.”

    “So we’re starting to see signs that our red-hot economy is starting to cool. And so we know that because of that strength … we’re better positioned than most other countries for the Fed to achieve its goals,” Rouse said.

    Data from the Bureau of Labor Statistics released earlier this week showed that annual inflation rose by 8.2% in September, a slower increase than the 8.3% rise seen in August. Economists had projected that the pace of price increases would slow to 8.1% last month, CNN reported last week. On a monthly basis, overall consumer prices increased by 0.4% from August.

    Asked by Bash about the high prices of food Americans are paying, Rouse pointed to the Inflation Reduction Act’s ability to lessen costs for Americans for prescription medicine – though she acknowledged it does nothing for food prices.

    But pushed on when it would start lowering inflation, Rouse said, “Many parts of the bill will start to take effect next year.”

    Rouse spoke about the energy tax credits in the law as having one of the most immediate tangible impact in lowering costs.

    “There are tax credits for energy to help people weatherize their homes and also bring down other forms of energy costs. So, we are focused on helping to make that transition to clean energy in a way that brings down energy costs for families,” Rouse said.

    “This is tough. There’s no question about it. This is a challenge,” she added about bringing down inflation generally.

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  • FCC could ban all new purchases of Huawei and ZTE telecom gear | CNN Business

    FCC could ban all new purchases of Huawei and ZTE telecom gear | CNN Business

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    Washington
    CNN Business
     — 

    The US government is poised to ban all future telecom equipment produced by Huawei and ZTE, two Chinese technology giants, from the American market in an expanding crackdown against perceived national security risks from China, according to a person familiar with the matter.

    The restrictions, outlined in a draft order by the Federal Communications Commission, would also target video surveillance gear by three other Chinese firms: Hytera, Hikvision and Dahua, the person said, adding that the ban would only apply to new products by the companies that have not already received FCC equipment authorization.

    A vote to approve the measure is expected before mid-November, the person added. The draft order was first reported by Axios.

    Asked for comment, an FCC official confirmed the proposal’s existence and told CNN that, if approved, it would update agency rules surrounding its list of providers deemed to be unacceptable national security risks — and fulfill the agency’s congressional mandate under the Secure Equipment Act of 2021.

    That bipartisan legislation, signed by President Joe Biden last November, required the FCC to develop rules within one year to stop reviewing or approving devices made by the covered companies.

    All electronics that can emit radio frequencies must undergo an FCC authorization process before they can be sold in the United States. The long-established process is intended to keep devices out of the US market that may produce harmful signal interference. But under the draft order the FCC would, for the first time, apply a national security interest to the equipment authorization process, the person said.

    “The FCC remains committed to protecting our national security by ensuring that untrustworthy communications equipment is not authorized for use within our borders, and we are continuing that work here,” FCC Chairwoman Jessica Rosenworcel said in a statement provided to CNN Business on Thursday.

    In a separate statement, Republican commissioner Brendan Carr said: “The FCC has determined that Huawei, ZTE, and similar gear pose an unacceptable risk to our national security. That is why I have urged the FCC to stop reviewing and approving that equipment for use in the U.S. I look forward to achieving that result.”

    Spokespeople for the companies didn’t immediately respond to requests for comment.

    The proposed ban would go further than prior steps the FCC has taken against Huawei and ZTE, whose networking equipment US officials have said could be used to intercept or monitor US communications.

    Previously, the FCC restricted US telecom carriers from using federal funding to purchase products from Huawei and ZTE, as well as from other providers on the agency’s so-called “covered list.” Later, officials such as Carr highlighted how the products were still available to carriers through the use of non-federal funding, and said the FCC should use its equipment authorization powers to effectively block them from the United States entirely.

    Biden’s subsequent signing of the Secure Equipment Act started a one-year clock for the FCC to put those restrictions into place.

    The FCC has also established a program to help carriers “rip and replace” Huawei and ZTE gear from their networks, though the program’s estimated cost has ballooned to $5.6 billion, up from initial estimates of around $2 billion.

    The top US wireless carriers have said they do not use Chinese-made equipment; telecom policy experts have said it is almost exclusively found in the networks of small providers seeking to minimize costs.

    Separately, in 2019, the Trump administration added Huawei to the Commerce Department’s so-called Entity List, which restricts exports to people and organizations named on the list without a US government license. The following year, the US government expanded on those restrictions by seeking to cut Huawei off from its chip suppliers that use US-made technology.

    The policies have contributed to sharp declines in Huawei’s telecom and handset businesses as the company has sought to shift focus to cars, cloud computing and its own mobile operating system.

    Huawei’s founder and CEO has previously claimed the company would never hand data over to the Chinese government, but western security experts have said the country’s national security and intelligence laws require Chinese companies to comply with demands for information.

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  • Food prices are still surging — here’s what’s getting more expensive | CNN Business

    Food prices are still surging — here’s what’s getting more expensive | CNN Business

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    New York
    CNN Business
     — 

    Prices at the grocery store continued to soar last month, adding even more pressure to shoppers’ wallets.

    The food at home index, a proxy for grocery store prices, increased 0.7% in September from the month prior and a stunning 13% over the last year, according to new government data released Thursday.

    Just about everything got more expensive in September.

    Fruits and vegetables surged 1.6% for the month, while cereals and bakery products rose 0.9%. Other groceries increased 0.5% in September, following a 1.1% increase in August.

    Meats, poultry, fish and eggs rose 0.4% over the month and beverages increased 0.6%.

    Prices on many of these items are up double digits annually.

    A number of factors have contributed to the surge in prices. Producers say they’re paying more for labor and packaging materials. Extreme weather, including droughts and flooding, and disease, such as the deadly avian flu, have been hurting crops and killing egg-laying hens, squeezing supplies.

    “The environment clearly is still very inflationary with a lot of supply chain challenges across the industry,” Pepsi

    (PEP)    CEO Ramon Laguarta said on an earnings call Wednesday. The company’s prices increased 17% annually.

    Meanwhile, demand is high. Consumers may be able to pull back on some discretionary items, but they have to eat. Many people are still working from home and consuming more of their meals there than they did before the pandemic.

    This imbalance between supply and demand means companies can pass along higher prices to shoppers without sales plunging.

    But higher prices at the grocery store are forcing customers to make some trade offs.

    Many shoppers are buying fewer products, switching to cheaper private-label brands and pulling back on discretionary items.

    More than one million new households have shopped at discount grocery chain Aldi for the first in the past year, according to the company.

    Walmart

    (WMT)     said recently that high levels of food inflation are impacting customers’ ability to purchase discretionary goods such as clothing and furniture.

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  • TikTok wants to open warehouses | CNN Business

    TikTok wants to open warehouses | CNN Business

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    CNN
     — 

    While seemingly every social media app is copying TikTok, TikTok now appears to be copying Amazon’s playbook.

    TikTok appears to be looking to create a new logistics and warehousing network in the United States to support its e-commerce efforts, according to several job openings recently posted to its hiring site and LinkedIn page.

    Like other social networks, TikTok has expanded into e-commerce to add revenue opportunities. TikTok currently offers a shopping option called TikTok Shop in select markets, including the UK and Indonesia, which lets creators and merchants sell products through the platform. It has also partnered with Shopify to enable shopping on the platform.

    But with the latest job postings, which were first reported by Axios, TikTok seems to want to go even further. Instead of simply serving as a platform to reach customers, TikTok may be looking to provide logistical support to build what it calls “a brand new and better e-commerce experience.”

    “By providing warehousing, delivery, and customer service returns, our mission is to help sellers improve their operational capability and efficiency, provide buyers a satisfying shopping experience and ensure fast and sustainable growth of TikTok Shop,” the company said in a job posting.

    In one job posting, for example, the company says it’s looking for someone to “build the new fulfillment service from scratch” and be “responsible for the business development of fulfillment service of TikTok e-commerce logistics in US.”

    Many of the roles are posted based out of Seattle, which is also home to Amazon’s first corporate headquarters. Amazon’s sprawling logistics and delivery network turned it into a central tool for numerous merchants and ensured it could offer a vast range of products with expedited deliveries.

    A TikTok spokesperson declined to elaborate on the latest roles. In a statement to CNN, the spokesperson said the company is “focused on providing a valuable shopping experience in countries where TikTok Shop is currently offered across Southeast Asia and the UK, which includes providing merchants with a range of product features and delivery options.”

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