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Tag: economic indicators

  • Mortgage rates rise to just short of 7% | CNN Business

    Mortgage rates rise to just short of 7% | CNN Business

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    Washington, DC
    CNN
     — 

    US mortgage rates remained elevated this week, rising for the third week in a row, but stayed just under the market’s 7% threshold.

    The 30-year fixed-rate mortgage averaged 6.96% in the week ending August 10, up from 6.90% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.22%.

    “There is no doubt continued high rates will prolong affordability challenges longer than expected,” said Sam Khater, Freddie Mac’s chief economist. “However, upward pressure on rates is the product of a resilient economy with low unemployment and strong wage growth, which historically has kept purchase demand solid.”

    The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.

    The rate stayed elevated this week after the Federal Reserve highlighted its reliance on data on jobs and inflation in its July monetary policy meeting and in recent comments.

    Markets had been waiting for July’s inflation report, released Thursday morning, which showed consumer price hikes rose 3.2% annually, the first increase in 12 months. The data also showed that shelter costs contributed 90% of total inflation last month.

    “July’s Consumer Price Index holds significant importance for the Fed’s upcoming decisions,” said Jiayi Xu, an economist at Realtor.com.

    Since inflation rose, it could support the Fed’s concern that the battle is not over, Xu said. The Fed also will consider the forthcoming August employment and inflation data prior to the next policy meeting, in September.

    In addition, the most recent jobs report offered some mixed signals about the labor market, Xu said, including a smaller number of net new jobs added and a dipping unemployment rate.

    “While July’s jobs report itself is very unlikely to have a direct impact on the Fed’s upcoming decision, the decline to a 3.5% unemployment rate may imply that more significant slowing is needed to align with the Fed’s projected year-end rate of 4.1%,” she said.

    This story is developing and will be updated.

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  • Fact check: Biden makes false claims about the debt and deficit in jobs speech | CNN Politics

    Fact check: Biden makes false claims about the debt and deficit in jobs speech | CNN Politics

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    Washington
    CNN
     — 

    During a Friday speech about the September jobs report, President Joe Biden delivered a rapid-fire series of three false or misleading claims – falsely saying that he has cut the debt, falsely crediting a tax policy that didn’t take effect until 2023 for improving the budget situation in 2021 and 2022, and misleadingly saying that he has presided over an “actual surplus.”

    At a separate moment of the speech, Biden used outdated figures to boast of setting record lows in the unemployment rates for African Americans, Hispanics and people with disabilities. While the rates for these three groups hit record lows earlier in his presidency, he didn’t acknowledge that they have all since increased to non-record levels – and, in fact, are now higher than they were during parts of Donald Trump’s presidency.

    Here’s a fact check.

    Biden said in the Friday speech that Republicans want to “cut taxes for the very wealthy and big corporations,” which would add to the deficit. That’s fair game.

    But then he added: “I was able to cut the federal debt by $1.7 trillion over the first two-and-a – two years. Well remember what we talked about. Those 50 corporations that made $40 billion, weren’t paying a penny in taxes? Well guess what – we made them pay 30%. Uh, 15% in taxes – 15%. Nowhere near what they should pay. And guess what? We were able to pay for everything, and we end up with an actual surplus.”

    Facts First: Biden’s claims were thoroughly inaccurate. First, he has not cut the federal debt, which has increased by more than $5.7 trillion during his presidency so far after rising about $7.8 trillion during Trump’s full four-year tenure; it is the budget deficit (the one-year difference between spending and revenues), not the national debt (the accumulation of federal borrowing plus interest owed), that fell by $1.7 trillion over his first two fiscal years in office. Second, Biden’s 15% corporate minimum tax on certain large profitable corporations did not take effect until the first day of 2023, so it could not possibly have been responsible for the deficit reduction in fiscal 2021 and 2022. Third, there is no “actual surplus”; the federal government continues to run a budget deficit well over $1 trillion.

    CNN has previously debunked Biden’s false claims about supposedly having cut the “debt” and about the new corporate minimum tax supposedly being responsible for deficit reduction in 2021 and 2022. The White House, which declined to comment on the record for this article, has corrected previous official transcripts when Biden has claimed that the debt fell by $1.7 trillion, acknowledging that he should have said deficit.

    As for Biden’s vague additional claim that “we end up with an actual surplus,” a White House official said Friday that the president was referring to how the particular law in which the new minimum tax was contained, the Inflation Reduction Act of 2022, is projected to reduce the deficit. But Biden did not explain this unusual-at-best use of “surplus” – and since he had just been talking about the overall budget picture, he certainly made it sound like he was claiming to have presided over a surplus in the overall budget. He has not done so.

    Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a liberal think tank, said in response to the White House explanation: “Well he didn’t say ‘budget surplus’ I suppose. But in federal budget conversations, the word surplus has a very specific meaning. It doesn’t mean ‘additional,’ it means revenues exceed spending.” He noted earlier Friday that there hasn’t been a federal budget surplus since 2001.

    It’s worth noting, as we have before, that Biden’s Friday comments would be missing key context even if he had not inaccurately replaced the word “deficit” with “debt.” It’s highly questionable how much credit Biden himself deserves for the decline in the deficit in 2021 and 2022. Independent analysts say it occurred largely because emergency Covid-19 relief spending from fiscal 2020 expired as scheduled – and that Biden’s own new laws and executive actions have significantly added to current and projected future deficits. In addition, the 2023 deficit is widely expected to be higher than the 2022 deficit.

    More on the corporate minimum tax

    When Biden spoke Friday about “those 50 corporations that made $40 billion, weren’t paying a penny in taxes,” he was referring, as he has in the past, to an Institute on Taxation and Economic Policy analysis published in 2021 that listed 55 companies the think tank found had paid no federal corporate income taxes in their most recent fiscal year.

    But it was imprecise, at best, for Biden to say Friday that we made “them” pay 15% in taxes. That’s because the new 15% minimum tax applies only to companies that have an average annual financial statement income of $1 billion or more – there are lots of nuances involved; you can read more details here – and only 14 of the 55 companies on the think tank’s list reported having US pre-tax income of at least $1 billion. In other words, some large and profitable companies will not be hit with the tax.

    The federal government’s nonpartisan Joint Committee on Taxation projected last year that the tax would shrink deficits by about $222 billion through 2031, with positive impacts beginning in 2023. Gardner said Friday that he fully expects the tax to play a role in reducing deficits going forward, but he said its deficit-reducing impact “might be lower than expected” in 2023 because the Treasury Department – which has been the subject of intense lobbying from corporations that could be affected – has taken so long to implement the details of the law that the Internal Revenue Service ended up waiving penalties on companies that don’t make estimated tax payments on it this year.

    Regardless, Gardner said, “The minimum tax did not reduce the deficit at all in fiscal years 2021 or 2022 because it didn’t exist during those years.”

    Early in the Friday speech, Biden boasted of statistics from the September jobs report that was released earlier in the day. But then he said, “We’ve achieved a 70-year low in unemployment rate for women, record lows in unemployment for African Americans and Hispanic workers, and people with disabilities – folks who’ve been left behind in previous recoveries and left behind for too long.”

    Facts First: Three of these four Biden unemployment boasts are misleading because they are out of date. Only his claim about a 70-year low for women’s unemployment remains current. While the unemployment rates for African Americans, Hispanics and people with disabilities did fall to record lows earlier in Biden’s presidency, they have since increased – to rates higher than the rates during various periods of the Trump administration.

    Women: The seasonally adjusted women’s unemployment rate was 3.4% in September. That’s a tick upward from the 3.3% rate during two previous months of 2023, but it’s still tied – with two months of the Trump administration – for the lowest for this group since 1953, 70 years ago.

    African Americans: The seasonally adjusted Black or African American unemployment rate was 5.7% in September, up from the record low of 4.7% in April. The current 5.7% rate is higher than this group’s rates during four months of 2019, under Trump.

    Hispanics: The seasonally adjusted Hispanic unemployment rate was 4.6% in September, up from the record low of 3.9% from September 2022. The current 4.6% rate is higher than this group’s rates for every month from April 2019 through February 2020 under Trump, plus a smattering of prior Trump-era months.

    People with disabilities: The unemployment rate for people with disabilities, ages 16 and up, was 7.3% in September, up from a record low of 5.0% in December 2022. (The figures only go back to 2008, so the record was for a period of less than two decades.) The current 7.3% rate is higher than this group’s rates during eight months of the Trump presidency, seven of them in 2019.

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  • Watchdog agency increases its pandemic unemployment benefits fraud estimate to as much as $135 billion | CNN Politics

    Watchdog agency increases its pandemic unemployment benefits fraud estimate to as much as $135 billion | CNN Politics

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    Washington
    CNN
     — 

    As much as $135 billion in fraudulent Covid-19 pandemic unemployment insurance claims were likely paid out, according to a report released Tuesday by the US Government Accountability Office.

    The whopping figure, which equates to as much as 15% of total unemployment benefits distributed during the pandemic, is a notable bump up from the $60 billion the watchdog agency had previously estimated in January.

    In comments on a draft of the GAO report, the Department of Labor said the office is likely overestimating the actual amount of fraud. However, the department’s Office of Inspector General in February said in testimony before a House committee that at least $191 billion in pandemic unemployment benefits payments could have been improper, with “a significant portion attributable to fraud.”

    The GAO pushed back on the department’s assertions in its report and stood by the methodology used.

    “Given that not all potential fraud will be investigated and adjudicated through judicial or other systems, the full extent of UI fraud during the pandemic will likely never be known with certainty,” the GAO report said. “Therefore, it is appropriate to rely on estimates, such as ours, to make more comprehensive conclusions about the extent of fraud in the UI programs during the pandemic.”

    The findings released on Tuesday shed light on the numerous schemes to steal money from a range of hastily implemented pandemic relief programs, which have drawn the attention of congressional lawmakers and prompted legislative action. Last year, President Joe Biden signed two bipartisan bills into law aimed at holding individuals who commit fraud under pandemic relief programs accountable.

    “My message to those cheats out there is this: You can’t hide. We’re going to find you. We’re going to make you pay back what you stole and hold you accountable under the law,” the president said at the time.

    The House of Representatives also passed a bill in May that would help recover fraudulent unemployment insurance benefits paid out during the pandemic. The bill, however, has not been brought to a vote in the Senate.

    Fraud within the nation’s unemployment system skyrocketed after Congress enacted a historic expansion of the program in March 2020. State unemployment agencies were overwhelmed with record numbers of claims and relaxed some requirements in an effort to get the money out the door quickly to those who had lost their jobs.

    But the enhanced payments and lax controls quickly attracted criminals from around the world. States and Congress subsequently tightened their verification requirements in an attempt to combat the fraud, particularly in the Pandemic Unemployment Assistance program, which allowed freelancers, gig workers and others to collect benefits for the first time.

    More than $888 billion in federal and state unemployment benefits were paid from the end of March 2020 through early September 2021, when all the pandemic enhancements ended nationwide, according to the Labor Department Office of Inspector General.

    The GAO report said the “unprecedented demand for benefits and need to quickly implement the new programs increased the risk of fraud.”

    Other pandemic relief programs were also the target of criminals. The GAO in May flagged 3.7 million recipients of Small Business Administration funds as having “warning signs consistent with potential fraud.” The SBA doled out $1 trillion to help small businesses during the pandemic through measures including the Paycheck Protection Program and Covid-19 Economic Injury Disaster Loan program. More than 10 million small businesses were assisted.

    Some of the fraudulent claims have been recouped. States identified $5.3 billion in fraudulent unemployment benefits overpayments and has recovered $1.2 billion, according to the GAO.

    A Justice Department spokesperson told CNN on Tuesday that as of August 30, the department has charged more than 3,000 people for pandemic related fraud.

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  • How Biden’s SAVE student loan repayment plan can lower your bill | CNN Politics

    How Biden’s SAVE student loan repayment plan can lower your bill | CNN Politics

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    Washington
    CNN
     — 

    While the Supreme Court struck down President Joe Biden’s student loan forgiveness program in late June, a separate and significant change to the federal student loan system is moving ahead.

    Eligible borrowers can now enroll in a new income-driven repayment plan that could lower their monthly bills and reduce the amount they pay back over the lifetime of their loans.

    If borrowers apply this summer, the changes to their bills would take effect before payments resume in October after the yearslong pandemic pause.

    Once the plan, which Biden is calling SAVE (Saving on a Valuable Education), is fully phased in next year, some people will see their monthly bills cut in half and remaining debt canceled after making at least 10 years of payments.

    Unlike Biden’s blocked one-time forgiveness program, the new repayment plan will provide benefits for both current and future borrowers who sign up for it.

    But the benefits will come at a cost to the government. Estimates vary, depending on how many borrowers end up enrolling in the plan, ranging from $138 billion to $475 billion over 10 years. As a comparison, Biden’s student loan forgiveness program was expected to cost about $400 billion.

    The SAVE repayment plan has gone through a formal rulemaking process at the Department of Education. The agency has previously created several other income-driven repayment plans in the same manner without facing a successful legal challenge.

    Some parts of the SAVE plan will be implemented this summer and others will take effect in July 2024. Here’s what borrowers need to know.

    Currently, there are several different kinds of income-driven repayment plans for borrowers with federal student loans. The new SAVE plan will essentially replace one of those, known as REPAYE (Revised Pay As You Earn), while the others are phased out for new borrowers.

    Under these plans, payments are based on a borrower’s income and family size, regardless of how much outstanding student debt is owed.

    There is also a forgiveness component. After making at least 10 years of payments, a borrower’s remaining balance is wiped away.

    Borrowers must have federally held student loans to qualify for the SAVE repayment plan. These include Direct subsidized, unsubsidized and consolidated loans, as well as PLUS loans made to graduate students.

    Parents who took out a federal PLUS loan to help their child pay for college are not eligible for the new repayment plan.

    Borrowers with Federal Family Education Loans, known as FFEL, or Perkins Loans that are held by a commercial lender rather than the government will need to consolidate into a Direct loan in order to qualify.

    Private student loans do not qualify for the new SAVE repayment plan or any other federal repayment plan.

    Borrowers can apply for the SAVE plan by submitting a recently updated application for income-driven repayment plans found here.

    The application may be available intermittently during an initial beta testing period, according to the Department of Education. If the application is not available, try again later.

    Applications submitted during the beta period will not need to be resubmitted once a full website launches later this summer.

    Borrowers can expect to receive an email confirmation after applying.

    People who are already enrolled in the REPAYE repayment plan will be automatically switched to the SAVE plan.

    Borrowers can log in to StudentAid.gov and go to their My Aid page to see what repayment plan they are enrolled in.

    The Department of Education says that it will process applications submitted this summer before payments resume in October.

    “It may take your servicer a few weeks to process your request, because they will need to obtain documentation of your income and family size,” according to the department’s website.

    Under the SAVE plan, monthly payments can be as small as $0.

    Other income-driven repayment plans already offer a $0 monthly payment for some borrowers. But the new SAVE plan lowers the qualifying threshold.

    A single borrower earning $32,800 or less or a borrower with a family of four earning $67,500 or less will see their payments set at $0 if enrolled in SAVE.

    Increase in protected income threshold: Like in existing income-driven repayment plans, a borrower’s discretionary income, generally what’s left after paying for necessities like housing, food and clothing, will be shielded from student loan payments.

    The new SAVE plan recalculates discretionary income so that it’s equal to the difference between a borrower’s adjusted gross income and 225% of the poverty level. Existing income-driven plans calculate discretionary income as the difference between income and 150% of the poverty level.

    This change will result in lower payments for borrowers.

    Interest limit: Under the new payment plan, unpaid interest will not accrue if a borrower makes a full monthly payment.

    That means that a borrower’s balance won’t increase even if the monthly payment doesn’t cover the monthly interest. For example: If $50 in interest accumulates each month and a borrower has a $30 payment, the remaining $20 would not be charged.

    Lower payments for married borrowers: Married borrowers who file their taxes separately will no longer be required to include their spouse’s income in their payment calculation for SAVE. This could lower monthly payments for two-income households.

    Automatic recertification: Borrowers will now be able to allow the Department of Education to access their latest tax return. This will make the application process easier because borrowers won’t have to manually provide income or family size information. It will also allow the department to automatically recertify borrowers for the payment plan on an annual basis.

    Cut payments in half: Payments on loans borrowed for undergraduate school will be reduced from 10% to 5% of discretionary income.

    Borrowers who have loans from both undergraduate and graduate school will pay a weighted average of between 5% and 10% of their income based upon the original principal balances of their loans.

    For example, a borrower with $20,000 from their undergraduate education and $60,000 from graduate school will pay 8.75% of their income, according to a fact sheet provided by the Biden administration.

    Shorter time to forgiveness: Currently, borrowers who pay for 20 or 25 years under an income-driven repayment plan will see their remaining balance wiped away.

    Under the new SAVE plan, those who borrowed $12,000 or less will see their debt forgiven after paying for just 10 years. Every additional $1,000 borrowed above that amount would add one year of monthly payments to the required time a borrower must pay.

    Borrowers who consolidate their loans will receive partial credit for their previous payments toward forgiveness.

    Borrowers will also automatically receive credit toward forgiveness for certain periods of deferment and forbearance, as well be given the option to make additional “catch-up” payments to get credit for all other periods of deferment or forbearance.

    Automatically enroll struggling borrowers: Borrowers who are 75 days late on their payments will be automatically enrolled in the best income-driven plan for them, as long as they have agreed to allow the Department of Education to securely access their tax information.

    This story has been updated with additional information.

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  • TikTok Shop is now open for business | CNN Business

    TikTok Shop is now open for business | CNN Business

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    New York
    CNN
     — 

    TikTok is officially kicking off its US e-commerce efforts with the launch of TikTok Shop.

    The short-form video platform launched an in-app shopping experience in the United States on Tuesday, according to a company blog post, after months of testing. TikTok Shop allows users to find and directly purchase products used in live videos, tagged in content shown on their algorithm-driven For You page, pinned on brand profiles or marketed in a new “Shop” tab.

    For creators, the feature could bring new streams of income by connecting them with brands for commission-based marketing partnerships. TikTok is also offering “Fulfilled by TikTok,” a program that handles all of the logistics for sellers, including storing, packing and shipping.

    “With community-driven trends like #TikTokMadeMeBuyIt inspiring people to discover and share the products they love, TikTok is creating a new shopping culture,” the company wrote. “With TikTok Shop, we’re giving people a place to experience the joy of discovering and purchasing new products without leaving the app.”

    TikTok is looking to quadruple its merchandise sales by the end of the year to hit $20 billion, according to Bloomberg.

    The app’s push into live e-commerce comes as other platforms have struggled with online shopping initiatives.

    Meta-owned Instagram killed livestream product tagging and shopping in March and got rid of the shopping tab on the app’s navigation bar. Facebook also axed live shopping in October. Meanwhile,YouTube partnered with Shopify in 2022 to help creators sell products.

    Amazon has been offering Amazon Live since 2019, a streaming hub that sells items through live videos. Amazon Storefront, launched in 2018, also allows creators to build pages that bring together content and product recommendations to sell to followers, for a commission.

    TikTok Shop is already available throughout parts of Asia and the United Kingdom. Southeast Asia, a region with a collective population of 630 million – half of them under 30 – is one of TikTok’s biggest markets in terms of user numbers, generating more than 325 million visitors to the app every month, according to Reuters.

    But the platform has yet to translate its large user base into a major e-commerce revenue source in the region as it faces fierce competition from bigger rivals of Sea’s Shopee, Alibaba’s Lazada and GoTo’s Tokopedia.

    E-commerce transactions across the region reached nearly $100 billion last year, with Indonesia alone accounting for $52 billion, according to data from consultancy Momentum Works.

    TikTok facilitated $4.4 billion of transactions across Southeast Asia last year, up from $600 million in 2021, but it still trailed far behind Shopee’s $48 billion of regional merchandise sales in 2022, Momentum Works told Reuters in June.

    Cracking the United States has proven even harder. TikTok Shop, as launched Tuesday, has been in testing since November.

    The platform has previously backed down from efforts to push e-commerce. TikTok piloted a shopping experience in partnership with Shopify in 2021 that did not stick, and reports circulated in 2022 that TikTok was giving up altogether on live shopping in the United States and Europe after struggling to connect with consumers.

    The move to once again revitalize e-retail efforts in the United States comes as the app faces increasing scrutiny from lawmakers. Some critics and a growing number of US lawmakers on both sides of the aisle view TikTok as a national security threat, since it is owned by China-based company ByteDance. Some US officials have expressed fears that the Chinese government could spy on US data via TikTok, though there is so far no evidence that the Chinese government has ever accessed personal information of US-based TikTok users.

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  • Plunging sales of new homes show China’s real estate crisis isn’t over | CNN Business

    Plunging sales of new homes show China’s real estate crisis isn’t over | CNN Business

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    Hong Kong
    CNN
     — 

    Plunging sales of new homes and the reported cancellation of a share placement by China’s biggest property developer on Tuesday underscored the depth of the country’s real estate crisis.

    Reports that Country Garden had abruptly pulled an attempt to raise $300 million by issuing new shares in Hong Kong coincided with the release of data late Monday showing new home sales by China’s 100 biggest developers dropped by 33% in July from a year ago.

    “No definitive agreement has been entered into with respect to the proposed transaction and the company is not considering the proposed transaction at this stage,” Country Garden said in a statement. Its shares fell as much as 11% on the Hong Kong stock exchange. They were last down 7%.

    The drop in new home sales in China is the steepest monthly decline since July 2022. For the first seven months of this year, new home sales by the 100 developers fell 4.7% from a year earlier.

    “Overall, the current market demand and purchasing power are overdrawn, and industry confidence is still at a low level,” the China Real Estate Information Corp. — a leading industry data provider — said in a statement.

    China’s huge property industry was long an important engine of economic growth, accounting for as much as 30% of the country’s GDP. Investors see the revival of the sector as crucial to the recovery of the world’s second largest economy following three years of self-imposed coronavirus pandemic isolation.

    “Recent signals from top policymakers… suggest Beijing is getting increasingly worried about growth and have clearly recognized the need to bolster the faltering property sector,” said Nomura analysts on Monday.

    “They are starting a new round [of] property easing, and may introduce some stimulus to redevelop old districts of large cities.”

    Premier Li Qiang pledged Monday to “adjust and optimize” policies to ensure the healthy and stable development of the property market, according to a readout from a State Council meeting. Cities should roll out measures that meet their own needs, he added, without elaborating on the details.

    Four of the biggest cities in China said they would introduce measures to boost local property markets, also without announcing specific new policies.

    Shanghai’s housing regulator said Monday it would implement the pledges of the top policymakers. Guangzhou, Shenzhen, and Beijing also made similar statements over the weekend.

    “So far these steps are still far from enough to stem the downward spiral of the property sector, in our view,” Nomura analysts said, adding that there is no clear policy roadmap to boost the sector at a time of slow growth in household income, weak confidence about the future and a shrinking population.

    Chinese households have grown reluctant to purchase new homes, as the now-defunct Covid curbs, falling home prices and rising unemployment have discouraged would-be buyers.

    A series of major defaults by property giants in 2021 also undermined confidence in the sector and led to many home buyers paying for apartments they never received, sparking protests.

    As a result China’s property industry has been mired in a historic downturn in the past two years.

    New home prices had fallen for 16 straight months through last December. They stabilized earlier this year, but then resumed their decline in June, highlighting the challenges of reviving demand.

    Last month, the People’s Bank of China said it would give developers another 12 months to repay their outstanding loans due this year.

    And late last year Beijing unveiled a 16-point plan to ease a liquidity crisis in the real estate sector. Key measures include allowing banks to extend maturing loans to developers and boosting other funding channels for property firms.

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  • China tries to boost consumer spending as factory sector contracts for fourth month | CNN Business

    China tries to boost consumer spending as factory sector contracts for fourth month | CNN Business

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    Hong Kong
    CNN
     — 

    China unveiled a series of measures to boost domestic consumption Monday after more gloomy data about the health of the economy. But it stopped short of announcing a major package of new spending or tax cuts.

    The official Purchasing Managers’ Index (PMI), which measures activity in the manufacturing sector at mainly larger business and state-owned firms, came in at 49.3 in July, according to data released by the National Bureau of Statistics on Monday.

    That result was slightly up compared with 49 in June but the industry has now contracted each month since April. A PMI reading above 50 indicates expansion, while anything below that level shows contraction.

    The official non-manufacturing PMI, which looks at activities in services and construction, also fell, to 51.5. That is the lowest rate since December, when the index hit its weakest level since February 2020 at the start of the coronavirus pandemic.

    By the end of last year, Covid infections were sweeping through China after Beijing abruptly ended nearly three years of draconian pandemic restrictions that initially kept the virus at bay while hammering local businesses and isolating the world’s second largest economy.

    “Boosting consumption is the key in stimulating recovery and expanding demand,” said Li Chunlin, deputy director of the National Development and Reform Commission (NDRC), the country’s top economic planner, at a press conference in Beijing.

    The NDRC on Monday released a policy document containing 20 measures to restore and expand consumption.

    “China’s official PMI data provides little encouragement that the economy is turning the corner,” said Robert Carnell, regional head of research for Asia-Pacific at ING Group.

    Monday’s manufacturing and service sector figures are just latest data points that show how China’s economy is struggling.

    China’s GDP grew just 0.8% in the second quarter of this year, down significantly from tepid 2.2% growth it registered in the first three months of 2023. Consumer spending has weakened, the housing market has slumped, and the youth unemployment rate has soared to a fresh record of 21.3%.

    Much like many other parts of the world this summer, extreme weather has also posed a threat to economic growth.

    In recent weeks parts of China have been hit by a double whammy of heat waves and torrential rain, threatening to strain power supplies and disrupt factory production as well as crop yields.

    The frail data has prompted Beijing to increase efforts to shore up growth, with a series of announcements in recent weeks.

    The measures announced by the NDRC on Monday cover a wide range of industries, including automobile, real estate, electronic products, and services industry.

    Officials from four other central agencies, including the Ministry of Industry and Information Technology and the Ministry of Culture and Tourism, also said at the press conference that they would roll out specific measures to support their respective industries.

    They include increasing consumer loans to encourage car purchases, building more EV charging facilities, building more affordable homes for young people, supporting the consumption of wearable devices and smart products, and encouraging local governments to hold food, music, and sports festivals to attract tourists.

    On Friday, China unveiled a two-year plan to boost so-called “light industry,” which includes consumer packaged goods, consumer durables, sports and leisure equipment, and light industrial machinery, according to a statement jointly published by the NDRC, MIIT, and the Ministry of Commerce.

    The goal is to speed up the industry’s growth to 4% for 2023 and 2024, after it only registered a 0.4% expansion in the first half of the year, the statement said.

    In the past weeks, authorities have tried to appear more proactive in supporting the private sector, a key growth driver that has been hammered by Covid restrictions as well as a sweeping regulatory crackdown under Chinese leader Xi Jinping that targeted sectors from technology to private education.

    However, these micro measures have not translated into the sort of “sizable fiscal policy stimulus” many have expected, Carnell said.

    “Looking forward, policy support is needed to prevent China’s economy from slipping into a recession,” said analysts from Capital Economics.

    “Unless concrete support is rolled out soon, the recent downturn in demand risks becoming self-reinforcing.”

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  • Germany’s central bank says the economy apparently returned to growth in the 2nd quarter

    Germany’s central bank says the economy apparently returned to growth in the 2nd quarter

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    Germany’s central bank says the country’s economy appears to have returned to slight growth in the April-June period after shrinking for two consecutive quarters

    BERLIN — The German economy appears to have returned to slight growth in the April-June period after shrinking for two consecutive quarters, the country’s central bank said Monday.

    Germany’s national statistics office said in late May that Europe’s biggest economy contracted by 0.3% in the first three months of this year, marking the second consecutive decline that is one definition of a recession. Gross domestic product declined by 0.5% in last year’s fourth quarter.

    In its monthly report, the Bundesbank said economic output appears to have “increased slightly” in the second quarter, without quantifying the expected gain.

    It said private consumption apparently stabilized, thanks to a solid labor market, pay increases and the lack of a further significant increase in inflation. It added that supply bottlenecks declined, which together with a solid cushion of orders prevented a worse showing in the industry and construction sectors.

    The central bank did, however, point to declining demand from foreign customers, higher costs for financing investments at home and a decline in business confidence. It said the economic recovery over the rest of this year could be “somewhat more hesitant” than it forecast last month.

    A month ago, the Bundesbank forecast that Germany’s GDP would shrink by 0.3% this year before recovering to grow by 1.2% next year and 1.3% in 2025.

    The national statistics office is due to release preliminary second-quarter GDP figures on July 31.

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  • Americans’ wages are finally outpacing inflation. But could it last? | CNN Business

    Americans’ wages are finally outpacing inflation. But could it last? | CNN Business

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    Minneapolis
    CNN
     — 

    US wages have been on the rise, but it sure hasn’t felt like it. For more than two years, persistent and pervasive inflation has taken big bites out of Americans’ paychecks.

    That’s finally starting to change now that inflation is waning.

    In June, for the first time in 26 months, US workers’ real weekly earnings (a week’s worth of wages adjusted for inflation) grew on an annual basis, according to data released this week from the Bureau of Labor Statistics. Annual real weekly wages were up 0.6% last month, a rate that’s a tick below the 0.7% gain seen in February 2020.

    June also marked the second consecutive month of year-over-year real hourly wage growth — the first back-to-back months of gains since early 2021.

    “The big problem for most consumers is when wage increases do not keep pace with inflation, then we lose real purchasing power,” said William Ferguson, the Gertrude B. Austin professor of economics at Grinnell College in Iowa. “And that’s actually what hurts people.”

    Although long overdue, this development is landing at a sticky time in the economy and the Federal Reserve’s knock-down-drag-out fight to tame inflation. The Fed has been laser-focused on dampening demand, and central bankers have frequently noted they’re keeping close watch on how much wage growth could stoke that demand and, in turn, inflation.

    Alternatively, if a cooling labor market turns frigid, that could also make this recent growth short-lived.

    “If inflation is moderate and the labor market is very strong, it’s a reason for vigilance, but it’s not a reason on its own to continue hiking,” said Alex Pelle, Mizuho Securities US economist. “It’s one of those things that you need to watch, because there’s the argument that will add to inflationary pressures.”

    The Fed is in the midst of a wait-and-see period. After 10 consecutive rate hikes in 15 months, the Fed’s policymakers in June voted to hold the benchmark rate steady so they could evaluate the effects of the tightening to date, as well as the activity within the banking sector and broader economy.

    Although the major economic reports of the past two weeks did show key data was moving in the preferred direction — slowing job growth, a slight slackening within the labor market, cooling consumer price inflation and practically flat producer prices — markets largely expect the Fed to continue with a well-telegraphed quarter-point increase when it meets later this month.

    “The Fed does not want to repeat the mistake of the 1970s, when they stopped the tightening and inflation bounced back up,” said Sung Won Sohn, professor of finance and economics at Loyola Marymount University and chief economist at SS Economics.

    Fears of a dreaded “wage-price spiral” — when rising wages and prices feed into each other — have made a bogeyman out of wage growth. However, recent economic research from the likes of the San Francisco Fed and former Fed chair Ben Bernanke noted that wages gains have had little, and certainly not overwhelming, effects on this inflationary cycle.

    Wage gains “will fuel spending, and I do think it will be something that keeps a floor on inflation that’s above [the Fed’s target of] 2%, but let’s see how it evolves over time,” Pelle said. “I don’t want to jump the gun and say absolutely that this is something that the Fed needs crushed.”

    If a data point from the June jobs report proves to be a trend and not a one-month blip, the wage gains seen now could be short-lived.

    In June, the number of people employed part-time for economic reasons grew by 452,000 to 4.2 million, an increase that was partially reflective of people “whose hours were cut due to slack work for business conditions,” the BLS noted.

    Still, the broader labor market trends, including hiring activity, labor movements and businesses’ budgets are favorable to workers maintaining these real wage gains, said Julia Pollak, chief economist with ZipRecruiter.

    Job growth is slowing somewhat, but the gains are still above pre-pandemic averages as companies continue to backfill shortfalls left by the pandemic and respond to continued demand. Also, some workers who have felt they’ve been given short shrift or are discouraged about two years of negative real wages are responding with labor strikes, she noted.

    And finally, supply-side inflation has drastically cooled to the point where annual inflation is practically flat — which, ideally, gives firms more wiggle room to pay workers, she said.

    “For the most part, this is still a tight labor market, still very low unemployment, still healthy business activity in lots and lots of industries where businesses have little choice but to staff up or at least maintain the staff they have,” she said.

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  • Key US inflation gauge cooled last month to the lowest level in nearly three years | CNN Business

    Key US inflation gauge cooled last month to the lowest level in nearly three years | CNN Business

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    Minneapolis
    CNN
     — 

    Wholesale inflation continued its yearlong slowdown last month, rising by just 0.1% for the 12 months ended in June, according to the Bureau of Labor Statistics’ Producer Price Index released Thursday.

    The PPI index, a key inflation gauge that tracks the average change in prices that businesses pay to suppliers, has cooled significantly since peaking at 11.2% in June 2022 and has now declined for 12 consecutive months. Annual producer price inflation is at its lowest level since August 2020, BLS data shows.

    Economists were expecting an annual increase of 0.4%, according to Refinitiv.

    On a monthly basis, prices increased by 0.1%.

    Goods prices held steady for the month, after tumbling 1.6% in May, according to the BLS report. As such, prices for services — which increased 0.2% from May — were the primary driver behind June’s slight increase.

    PPI is a closely watched inflation gauge since it captures average price shifts before they reach consumers and is a proxy for potential price changes in stores.

    While the PPI doesn’t directly correlate into exactly what will come from the following month’s Consumer Price Index — a major inflation gauge that tracks price shifts for a basket of goods and services — it provides a look at whole economy inflation, minus rents, said Alex Pelle, Mizuho Securities US economist.

    And that picture right now is looking pretty sharp.

    “It’s definitely a good month for inflation,” Pelle told CNN. “You saw that in CPI, and now you’re seeing it in PPI.”

    In June, inflation as measured by the CPI cooled to 3% annually, its lowest rate since March 2021, the BLS reported Wednesday.

    Both the CPI and PPI have declined monthly since their peaks in June 2022, when record-high energy and gas prices fueled the spikes to 9.1% and 11.2%, respectively.

    As such, the base effects of year-over-year comparisons are playing a part in the indexes’ sharp retreats.

    Still, underlying inflation is showing a cooling trend as well — albeit more muted.

    In the case of PPI, when stripping out the more volatile categories of food and energy, this “core” index rose 2.4% for the 12 months ended in June. That’s a step back from the 2.6% increase seen in May and economists’ expectations of 2.6%.

    Core PPI, which ticked up 0.1% on a monthly basis, is at its lowest annual level since February 2021.

    Inflation is looking a heck of a lot better than last year, when the Federal Reserve embarked on a campaign to combat price hikes with rate hikes, but economists don’t expect the latest CPI and PPI prints will dissuade central bankers from giving another crank to tighten monetary policy.

    Starting in March 2022, the central bank rolled out 10 consecutive interest rate hikes to tame inflation, finally hitting pause last month. The Fed is widely expected to raise rates by another quarter point when it meets later this month.

    “[The June data] means that the doves are going to have a little bit better of an argument to hold sooner rather than later, so that does reduce the probability of a second hike this year,” Pelle said, noting the commonly used terms to describe Fed members’ differing monetary policy approaches.

    Doves tend to favor looser monetary policy and issues like low unemployment over low inflation, while hawks favor robust rate hikes and keeping inflation low above all else.

    But just how long a hold could last is another matter, said Pelle.

    The job market is cooling from a scorching state, but it remains historically hot and tight. Considering ongoing demographic shifts (including the massive Baby Boomer generation aging out of the workforce), that tightness could continue, Pelle said.

    “Do we really need to be cutting rates if you have GDP running around trend and the labor market still very tight,” he said. “Inflation is coming down, but the economy is maybe growing a little bit into these higher rate levels. So the hold could be longer than people expect. But we might have some of the sting out on getting even higher.”

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  • Will cooling inflation help sell Bidenomics? | CNN Politics

    Will cooling inflation help sell Bidenomics? | CNN Politics

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    A version of this story appears in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.



    CNN
     — 

    The unofficial rulebook of American politics includes these general guidelines:

    • Elections follow the economy.
    • Presidents try to claim too much credit when things are good.
    • They get too much blame when things are bad.

    But this weird post-pandemic, inflation-addled economy has been scrambling preconceived notions for years. And it is with that background that anyone should read this decidedly good economic news: Inflation is unquestionably cooling.

    What we don’t know: Will cooling inflation neutralize Republicans’ potent argument that massive amounts of government spending on everything from infrastructure to fighting climate change helped cause inflation?

    Will it help President Joe Biden with selling “Bidenomics,” the idea he’s pushing to support the economy from the middle and bottom up rather than the top down?

    Inflation is cooling. From CNN Business’ report by Alicia Wallace: “US annual inflation slowed to 3% last month, according to the latest Consumer Price Index released Wednesday by the Bureau of Labor Statistics.”

    What that means: Prices generally aren’t rising as fast. There have been 12 straight months in which inflation has cooled, and the annual rate has fallen from historic highs of above 9% last June.

    What that does not necessarily mean: The sour feeling so many Americans have about the economy will suddenly end. Most prices aren’t going down, so anyone feeling the pinch of higher prices is still going to be feeling it.

    Elements of the economy are good – extremely low unemployment suggests that if an American wants a job, that person can have it. But investors actually gave a thumbs down to unexpectedly large job gains because it was read as a sign the Federal Reserve would continue to raise interest rates to further contain inflation. Its target inflation rate is 2% annually.

    Inflation has made everyday life feel much more expensive since the pandemic ended. Interest rates have shot up. But prices of big-ticket items like houses have not fallen, meaning some trappings of economic stability, like home ownership, feel farther away for many Americans.

    RELATED: Grocery prices held steady in June, offering some relief

    Meanwhile, perceptions of the economy are that people have been left behind.

    CNN’s Krystal Hur and Bryan Mena talked earlier this month to Americans who feel like a recession has already hit – like Al Brown, laid off from his job at a software company in North Carolina, and trying now to figure out how to support his fiancee and their two children. His gym membership is gone. They’re selling things from around the house. It’s a far different story at Brown’s kitchen table than the one told by government spreadsheets. Read the full story.

    Even the Fed acknowledges that raising rates should ultimately make the unemployment rate rise too. Part of the medicine for inflation is bound to put some Americans out of work.

    Inflation is also not being felt evenly. CNN reported this month about how Florida has become the nation’s inflation hotpost, largely due to housing costs.

    People don’t feel financially secure. As CNN’s Jeanne Sahadi recently wrote: “More than 2,500 US adults said they would need to earn, on average, $233,000 a year to feel financially secure and $483,000 annually to feel rich or to attain financial freedom, according to a new survey from Bankrate. Just for comparison’s sake, the median earnings for a full-time, year-round worker in 2021 was $56,473, according to the US Census Bureau.”

    A CNN poll conducted by SSRS in May found the vast majority of Americans – just over three-quarters – think the economy is in bad shape and two-thirds disapprove of Biden’s handling of it.

    Selling ‘Bidenomics.’ All of this will affect how Americans view Biden’s pitch to rewire how the government supports the economy and do a U-turn away from the low-tax ethos of Reaganomics, named for former President Ronald Reagan. The idea was that allowing corporations and the wealthy to pay lower taxes would let money “trickle down” into society.

    At a speech in Chicago in late June to frame his economic outlook, Biden said it was the media that coined the term Bidenomics. But much like former President Barack Obama eventually embraced the term Obamacare as shorthand for the Affordable Care Act, Biden is leaning into branding his plans for the economy.

    “That’s Bidenomics in action,” the president bragged in a statement after Wednesday’s inflation report.

    CNN’s Tami Luhby explained the concept: “Growing the economy from the middle out and the bottom up – not the top down – is Biden’s mantra.”

    So look for the economic portion of the coming presidential campaign to be framed around how much the government should spend to help build up infrastructure and education as opposed to whether it should be keeping taxes as low as possible to foster corporate growth and wealth.

    That policy debate will take place as people continue to grapple with the new cost of American life. Taming inflation, even though it is very good news, probably will not give most people a sense of ease about the economy.

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  • Could the June CPI report change the Fed’s rate trajectory? | CNN Business

    Could the June CPI report change the Fed’s rate trajectory? | 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.



    CNN
     — 

    After the June jobs report showed a cooling but still-hot picture of the labor market, investors are looking to a key inflation report due Wednesday for more clues on the economy’s health. But some investors say the results will likely do little to sway the Federal Reserve’s interest rate trajectory.

    What happened: The labor market added just 209,000 jobs in June, below economists’ expectations for a net gain of 225,000 jobs. That’s the smallest monthly gain since a decline in December 2020.

    But beneath the surface, the jobs market remains hot. Average hourly earnings growth remained steady at 0.4% from May and also unchanged at 4.4% year-over-year, suggesting that wage inflation remains sticky. The unemployment rate also fell to 3.6% from 3.7%, though jobless rates for Black and Hispanic workers rose sharply.

    There is “nothing in the release that would change our expectation that the Fed has more work to do,” said Joseph Davis, global chief economist at Vanguard.

    Accordingly, traders continued to overwhelmingly expect a quarter-point rate hike at the Fed’s July meeting. Traders saw a roughly 92% chance of such a decision as of the market close on Friday, according to the CME FedWatch Tool.

    What’s next: The June Consumer Price Index report, a key inflation reading, is due on Wednesday.

    Economists expect a 3.1% increase in consumer prices for the year ended in June, which would be a cooldown from a 4% annual increase in May, according to Refinitiv.

    Recent data has suggested that inflation is coming down, though it remains above the Fed’s 2% target. The Personal Consumption Expenditures price index, the Fed’s favorite inflation gauge, rose 3.8% for the 12 months ended in May. That’s down from the revised 4.3% annual rise seen in April.

    But it’s unlikely that the June CPI report will change the Fed’s interest rate trajectory, barring a huge upside or downside surprise, especially considering that Fed officials in recent weeks have been vocal that more rate hikes are likely coming, said James Ragan, director of wealth management research at DA Davidson.

    Still, that doesn’t mean investors should expect infinite rate hikes from the Fed.

    “We continue to expect that [the] Fed will soon reach its terminal rate, bringing it closer toward the end of its most aggressive tightening campaign in generations,” said Candice Tse, global head of strategic advisory solutions at Goldman Sachs Asset Management.

    The Producer Price Index report for June is due on Thursday.

    UPS and the Teamsters union are in contract negotiations. Without a deal, 340,000 Teamsters could go on strike on August 1.

    Such an event could be damaging to the US economy, reports my colleague Chris Isidore.

    UPS carries 6% of the country’s gross domestic product in its trucks. The company carried an average of 20.8 million US packages a day through last year, and that number is down only slightly this year.

    In other words, the company’s services are critical to keeping the gears moving seamlessly in supply chains that saw massive snarls during the height of the Covid pandemic. A strike could potentially bring back the problems that were so prominent just a couple years ago, including shipping delays and higher prices.

    The Biden administration is keeping an eye on negotiations between both parties in “recognition of the role UPS plays in our economy and of the important work that UPS workers did through the pandemic and continue to do today,” acting labor secretary Julie Su told CNN on Friday.

    But the company and union broke off last week, with both sides claiming the other walked away from the bargaining table.

    Read more here.

    Monday: Consumer credit for May and NY Federal Reserve’s Survey of Consumer Expectations for June.

    Tuesday: NFIB small business optimism survey for June.

    Wednesday: Consumer Price Index report and housing starts for June.

    Thursday: Producer Price Index report for June.

    Friday: University of Michigan consumer sentiment and inflation expectations for July.

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  • In world’s most expensive property market, homes for the dead can cost more than for the living | CNN

    In world’s most expensive property market, homes for the dead can cost more than for the living | CNN

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    Hong Kong
    CNN
     — 

    Starting at $53,000 for a space not much larger than a shoebox, it is a pricey place to stay, even in a city famed for the world’s most expensive property market.

    But then the ornate white marble interiors of the 12 story Shan Sum tower in Hong Kong are not aimed at your average sort of buyer. They are meant for a more discerning type of customer altogether, one seeking that little something extra: a resting spot for the afterlife.

    This privately run high-rise columbarium, housed in a wavy, fan-shaped building designed by a German architect, is meant to store the cremated remains of 23,000 people. And it doesn’t come cheap.

    In addition to its single urn entry units, niches that can store two urns can go for up to $76,000 (HK$598,000), while family units that can house the ashes of up to eight people reach as much as $430,000 (HK$3.38 million).

    With standard niches measuring about one cubic square foot, it could be argued that a spot in this tower is relatively more costly than the city’s most expensive property for the living – a mansion in the ultra exclusive area of The Peak that in March attracted a bid of US$32,000 per square foot.

    But Shan Sum, which is tucked away in an old industrial district of Kwai Chung is not even Hong Kong’s most expensive place for the dead.

    According to Hong Kong’s Consumer Council, the most expensive niche of all is at a temple-like complex in the northern outskirts of Fanling. That auspicious resting spot goes for $660,000 (HK$5.2 million) – and that figure doesn’t even include the management fees of at least $25,000 (HK$200,000) to cover the upkeep and surcharges.

    Such an investment might still not seem too bad, given the long-term horizon of the afterlife, but private columbariums like Shan Sum are not offering a resting place for eternity. Ashes can be stored there only for the duration of the facility’s private license, which is issued by Hong Kong government. These licenses have a limit of 10 years and can take years of inspections to obtain. Shan Sum’s runs through 2033.

    Even so, at Shan Sum – whose name translates to “benevolent heart” – it’s more than just the urn space you pay for.

    Its architect Ulrich Kirchhoff told CNN there is an accessible rooftop and winding balconies lined with pocket gardens for families visiting their ancestors, while about a fifth of the building’s area is open space.

    The wavy exterior of Shan Sum, a private columbarium tower in the Kwai Chung district of Hong Kong on June 2.

    It has also been designed with aesthetics in mind, with its wavy, high-rise profile intended to mimic traditional Chinese graveyards and their preferred location on mountainsides to attract good Feng Shui.

    There are hints of modernity, too, such as dehumidifiers and air-conditioning systems and even an app through which families pre-book a time slot to bring offerings to deceased ancestors.

    The tower is the brainchild of Margaret Zee, a septuagenarian businesswoman who made her fortune in the jewelry and real estate businesses and now runs a charitable foundation in her name.

    Paying respect to the dead is important in Chinese culture, Zee told CNN, and many people are willing to go all out to honor the tradition.

    “Our loved ones’ last journey is not just so they can cross over to the afterlife, but it’s also for us who are left here on Earth to bid them farewell,” Zee said. “It’s not only to lay them to rest, but to give peace to those they’ve departed from.”

    Zee realized there was a shortage of homes to honor the dead when she struggled to find a place to hold a memorial for and bury her late husband in 2007 and she felt compelled to act.

    Architect Ulrich Kirchhoff at Shan Sum, a private columbarium tower in the Kwai Chung district of Hong Kong on June 2.

    In Hong Kong, the same mismatch of supply and demand that has driven up real estate prices to nosebleed levels also affects columbariums.

    Essentially, in a city home to more than 7 million people and some of the world’s most densely populated neighborhoods, competition for space is heating up – for both the living and the dead.

    While Hong Kong is not a small place – its area of 1,110 square kilometers is about 1.4 times the size of New York City – its mountainous terrain makes much of its land unsuitable for development.

    With space at a premium, property developers have traditionally favored high-rise towers that – not unlike the Shan Sum building – can pack in as many plots as possible. As a consequence, the average home size is just 430 square feet, according to the 2021 census, among the tiniest in the world, even though average home prices are north of a million dollars.

    This squeeze on space continues in the afterlife, exacerbated by Hong Kong’s rapidly aging population. More than one in five Hong Kongers is over 65, according to census data, and that number is projected to jump to more than one in three by 2069.

    Cemeteries in Hong Kong are running out of space.

    Even though more than 90% of Hong Kongers opt for cremation, space to store their remains is running out. This is partly because, rather than scattering the ashes, traditionally minded Chinese prefer a physical place where they can pay respects and give offerings to the dead.

    With the city’s death rate running at about 46,000 per year (roughly double the capacity of Shun Sum) in the past decade urn capacity has at times struggled to keep up.

    There are currently just under 135,000 public niches available in government-run facilities, where a 20-year lease goes for about $300, but competition for these is fierce and in recent years some families have reported waiting years to get a spot.

    The response by the government has been two-fold, boosting the number of public facilities while also approving the licenses of 14 privately-run columbarium operators, including Shan Sum, since 2017.

    The entrance of Shan Sum, a private columbarium tower in the Kwai Chung district of Hong Kong on June 2.

    A spokesperson for the Food and Environmental Hygiene Department told CNN that between 2020 and 2022, around 77,000 urns had been allocated a niche “without the need to wait.” Another four new locations to be completed by 2025 would provide a further 167,000 units.

    “There is a marked improvement in the supply of public niches over the past few years. As of now, the supply of public niches is adequate,” the spokesperson said.

    Still, as with many things in this commercially-minded city, where the median monthly wage is just US$2,400 but there are plenty of billionaires (more than 100, according to Wealth X, a company that tracks high-net-worth individuals), there are options for those eager to splash out on something a little more distinguished.

    And that’s where places like Shan Sum really come in to their own.

    Niche compartments to store urns at Shan Sum, a private columbarium tower in the Kwai Chung district of Hong Kong on June 2.

    At the tower in Kwai Chung different floors are dedicated to different religions to suit a range of death customs, said Pan Tong, Zee’s son and the operational director of the building.

    For instance, he says, there are light and bright airy nooks designed to appeal to Buddhists and a section for followers of Guanyin, the Chinese goddess of mercy, whose image adorns the doors of the small compartments.

    There is even a separate secular floor, where each compartment has a Chinese-style “roof” and double doors decorated with gold coins to symbolize a prosperous afterlife.

    “I really had to imagine myself as someone ‘living’ inside one of these niches, and think about what kind of home I wanted to stay at when I’m gone,” Tong said.

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  • Expect more rate hikes from the Fed after the latest jobs report | CNN Business

    Expect more rate hikes from the Fed after the latest jobs report | CNN Business

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    Washington, DC
    CNN
     — 

    An interest rate hike later this month was already in the cards for the Federal Reserve. But after the June jobs report, the timing of a second hike remains unclear.

    Job gains remain robust, wage growth is still going strong, and unemployment continues to hover near historic lows. That means the job market is still fueling demand in the economy, which the Fed has been trying to slow through rate hikes. And Fed officials have made it clear they think the central bank still has more work to do to bring down inflation, which is still running well above the 2% goal.

    Federal Reserve Bank of Chicago President Austan Goolsbee, a voting member of the Fed committee that decides interest rates, said in an interview Friday that he sees “a decent chance of further tightening down the pipeline” and that inflation “needs to come down more.”

    Other Fed officials have struck a similarly hawkish tone on inflation, hinting strongly at a hike in July.

    “I remain very concerned about whether inflation will return to target in a sustainable and timely way,” said Federal Reserve Bank of Dallas President Lorie Logan on Thursday during a meeting hosted by the Central Bank Research Association. “I think more restrictive monetary policy will be needed to achieve the Federal Open Market Committee’s goals of stable prices and maximum employment.”

    Fed officials voted last month to hold the key federal funds rate steady at a range of 5-5.25% to reassess the economy after a string of 10 consecutive rate hikes and to monitor the effects of bank stresses in the spring, according to minutes from that meeting released Wednesday.

    “We can take some time and assess and collect more information and then be able to act, knowing that we also communicated through our projections that we don’t think we’re done, based on what we know,” said New York Fed President John Williams Wednesday during a moderated discussion in New York. “And obviously we’re absolutely committed to achieving our 2% inflation goal.”

    And Fed Chair Jerome Powell himself has doubled down on the need for more rate increases in recent speeches, not ruling out back-to-back hikes, despite economic indicators showing slight progress on inflation.

    Financial markets are pricing in a more than a 90% chance of a rate hike later this month, according to the CME FedWatch Tool.

    The Fed wants to see the labor market slow down broadly, bringing it into “better balance,” as Powell has frequently described it. That means wage growth would need to cool consistently, monthly payroll growth would need to be close to a range of 70,000 and 100,000 — the smallest job gain needed to keep up with population growth — and unemployment would need to rise, according to economists. Job market conditions don’t resemble that just yet.

    “This is clearly a very tight labor market, so I expect the Fed to look at this data and say there is justification here for continued small rate increases because the labor market is not cooling enough,” Dave Gilbertson, labor economist at payroll software company UKG, told CNN.

    Labor costs are higher because of a persistent difficulty in hiring, weighing on labor-intensive service providers such as hospitals and restaurants, which has put upward pressure on consumer prices since businesses typically raise wages to address hiring challenges.

    Powell homed in on that dynamic in recent remarks, and research from top economists argues the Fed will have to slow the economy further to fully address the labor market’s stubborn impact on inflation. Whether that means a full-blown recession or a so-called soft landing remains to be seen, but some Fed officials are optimistic.

    “I feel like we are on a golden path of avoiding recession,” Goolsbee told CNBC Friday.

    And there has been some progress on bringing the job market back into better balance while inflation has come down. Job openings fell to 9.82 million in May, down from a peak of 12 million in March 2022, though they still greatly exceed the number of unemployed people seeking work. And June’s jobs total of 209,000 is still robust by historical standards.

    But Gilbertson said labor shortages have been largely driven by demographic shifts, which might keep the job market tight for the foreseeable future.

    Beyond the expected hike in July, the Fed is going to remain laser-focused on wage growth to inform its decision-making later in the year. Central bank officials will pay particular attention to the Employment Cost Index, which recently showed that pay gains picked up in the first three months of the year. The index for the second quarter will be released in late July — after the Fed meets.

    “The focus is on the path of wage inflation because of its pass-through to services inflation,” said Sonia Meskin, head of US Macro at BNY Mellon IM.

    The June jobs report showed that average hourly earnings growth was unchanged at 0.4% from the month before and also unchanged at 4.4% year-over-year — not a welcome development.

    Core inflation hasn’t decelerated as fast as the headline measure because of the tightness in the labor market. The Personal Consumption Expenditures price index, the Fed’s preferred inflation gauge, rose 3.8% in May from a year earlier, down from April’s 4.3% rise; while the core measure edged lower to 4.6% from 4.7% during the same period.

    Within the core measure, services inflation also remains sticky and Powell said in last month’s post-meeting news conference that “we see only the earliest signs of disinflation there” and that the services sector’s “largest cost would be wage cost.”

    The Fed’s strategy to address services inflation is simply by curbing demand through more rate hikes. So, in addition to the labor market, the Fed is highly attentive to consumer spending, which has cooled in the past several months, according to figures from the Commerce Department.

    Other headwinds are expected to weigh on consumers in the months ahead, such as the resumption of student loan payments and the Supreme Court blocking President Joe Biden’s student loan forgiveness program. Americans are also running down their savings accounts while racking up debt, so US consumers may need to start cutting back soon.

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  • Inflation in Europe falls again in June | CNN Business

    Inflation in Europe falls again in June | CNN Business

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    London
    CNN
     — 

    Inflation in Europe slowed for the second straight month in June.

    Consumer prices in the 20 countries that use the euro rose 5.5% this month compared with a year ago, according to a preliminary estimate released by the European Union’s statistics agency Friday. That’s down from 6.1% in May.

    Economists polled by Reuters had expected inflation to ease to 5.6%.

    — This is a developing story and will be updated.

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  • IMF says that without reforms, Lebanon faces ballooning inflation and public debt

    IMF says that without reforms, Lebanon faces ballooning inflation and public debt

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    BEIRUT — Without reforms, Lebanon will continue to see triple-digit inflation, and public debt in the small, crisis-ridden country could reach nearly 550% of GDP by 2027, the International Monetary Fund warned in a report Thursday.

    The report came as a follow-up to a nine-day visit by IMF officials in March.

    Progress toward finalizing a sorely needed IMF bailout package for the struggling country has largely stalled.

    Since reaching a preliminary agreement with the IMF more than a year ago, Lebanese officials have made limited progress on reforms required to clinch the deal. They include restructuring the country’s debts and its ailing banking system, revamping its barely functioning public electricity system and improving governance.

    Since the country fell into an economic crisis in 2019, the country’s “GDP has declined by about 40 percent, the (currency) has lost 98 percent of its value, inflation is at triple-digits, and the central bank has lost two thirds of its foreign currency reserves,” the IMF report noted.

    The economic situation stabilized somewhat by the end of 2022, it said, due to “the end of COVID restrictions, a rebound in tourism, strong inflow of remittances, and a gradual decline in international energy and food prices in the second half of 2022.”

    The delay in restructuring the country’s financial system and stabilizing its collapsing currency has benefited borrowers while harming those who deposited their savings in the banks, the report noted.

    While some in the private sector have been able to leverage the currency crisis to their advantage by repaying loans taken out before the crisis at “below-market exchange rates,” this left the country with less dollar reserves that can be used to pay depositors whose savings are trapped in the banks.

    The central bank’s reserves have declined to about $10 billion, compared to a pre-crisis peak of $36 billion, the report noted.

    Ernesto Ramirez Rigo, the head of the IMF mission to Lebanon, warned that if the country’s leaders do not undertake reforms, and instead allow the “disorderly adjustment” of the country’s economy to continue, Lebanon will be left “dependent on the handouts from the international community.”

    “Very little investment will come to the economy and to the new sectors that Lebanon needs to develop,” he said.

    In principle, he said, “there is no deadline” for Lebanon to complete the reforms needed to clinch a bailout program, but delays could come “at a tremendous cost” to the country.

    Lebanon’s caretaker Deputy Prime Minister Saade Chami, the official leading the talks with the IMF, said that given the delays in reaching a final deal with the IMF, revisions will have to be made to the economic figures and other aspects of the plan. But, he added, “the main pillars of the program (will) remain the same.”

    The IMF deal “hasn’t been declared dead yet, and I don’t think it will any time soon,” he said. “We are in a deep economic crisis, but we can put the country on the right path and recover quickly — if there is political will.”

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  • Turkey hikes interest rates to 15% as Erdogan reverses policy on fighting inflation | CNN Business

    Turkey hikes interest rates to 15% as Erdogan reverses policy on fighting inflation | CNN Business

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    London
    CNN
     — 

    Turkey’s central bank almost doubled interest rates to 15% Thursday in a dramatic reversal of its unorthodox policy of cutting the cost of borrowing to tame painfully high inflation.

    Annual consumer price inflation has come down from a two-decade high of 85.5% in October but was still 39.6% in May.

    The central bank said that there were indications that underlying inflation in Turkey was increasing, even as inflation in many other countries trends downwards.

    “The strong course of domestic demand, cost pressures and the stickiness of services inflation have been the main drivers,” the central bank said in a statement.

    This is the first rate decision by Turkey’s central bank since last month’s reelection of President Recep Tayyip Erdogan.

    It is also the first rate increase in more than two years, and the central bank’s first decision since the appointment earlier this month of new governor Hafize Gaye Erkan, a former Goldman Sachs banker and the first woman to hold the position.

    In its statement, the central bank said it hiked rates to bring down inflation “as soon as possible,” and that it would continue to do so gradually “until a significant improvement in the inflation outlook is achieved.”

    Liam Peach, senior emerging markets economist at Capital Economics, wrote in a Thursday note that there were “encouraging signs” from the central bank that further rate hikes were ahead.

    The London-based research firm expects Turkish interest rates to rise as high as 30% later this year.

    Erdogan had ordered his central bank to cut rates nine times since late 2021, taking them to 8.5%, even as inflation around the world started to accelerate and most economies were doing the opposite. In that time, the value of the Turkish lira crashed 170% to a record low against the US dollar.

    A weaker lira has aggravated Turkey’s cost-of-living crisis by making foreign imports more expensive, and pushed the government to use up billions of its foreign currency reserves in an attempt to boost the currency’s value.

    Erdogan — who has fired four central bank governors in as many years — has since tried to reassure investors that he intends to normalize Turkish economic policy by filling key posts with more orthodox figures such as Erkan.

    This month, Erdogan also appointed Mehmet Simsek, Turkey’s former deputy prime minister and finance minister, and a former economist for US wealth management firm Merrill Lynch, as his finance minister.

    But the lira weakened further after Thursday’s rate hike news, dropping more than 2% to a new record low of 24 to the US dollar.

    Craig Erlam, senior market analyst at Oanda, noted that the rate hike had come in at the lower end of market forecasts, and investors couldn’t afford to relax too soon.

    “Erdogan hasn’t really hesitated to sack [central bank] governors that raise rates in the past, so investors will never feel fully at ease as long as he’s president,” he wrote in a note.

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  • Credit conditions expected to remain poor this year, bank economists say

    Credit conditions expected to remain poor this year, bank economists say

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    The American Bankers Association’s headline credit index came in more than almost 43 points below the 50-point threshold that marks the line between improving and deteriorating credit conditions.

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    Bank economists predict that lenders will remain quite cautious in the coming six months amid soaring interest rates and ongoing worries over the economic outlook.

    The American Bankers Association’s headline credit index, which measures sentiment about both consumer lending and commercial lending, remained near an all-time low despite a slight improvement in the most recent quarter.

    The index, which is based on a survey of chief economists at 15 of the nation’s largest banks, came in more than almost 43 points below the 50-point threshold that marks the line between improving and deteriorating credit conditions.

    The economists expressed greater pessimism about business credit availability than consumer credit availability, but they expect both to keep worsening. 

    The consumer credit index rose by 2.6 points in the third quarter to 8.3, but none of the surveyed economists expected consumer credit quality and availability to improve later this year. The business credit index ticked up by 0.5 points but remained quite low at 6.3. 

    Bank credit availability has been strong over the past few years, but the Federal Reserve’s rate hikes over the past 15 months have contributed to lower demand for credit. 

    The recent turmoil in the banking industry has also led banks to adopt tighter lending standards. That has been especially true among midsize banks, which have expressed more concern about liquidity and funding costs. 

    “This is more or less in the context of what was expected to be a challenging economy,” said Richard Moody, who is the chief economist at Regions Financial and was one of the economists surveyed by the ABA. “We’re all this kind of bracing for some normalization — getting back to where we were prior to the pandemic.”

    Tighter lending standards are generally expected to follow worsening credit market conditions, but household financial household conditions remain healthy, and delinquency rates are still relatively low.

    During the first quarter of 2023, delinquency rates on credit cards and auto loans ticked up, according to the Federal Reserve Bank of New York’s quarterly report on household debt and credit in May. But those numbers had previously been near historic lows.

    Consumers still appear capable of meeting their debt obligations. Debt made up roughly 5% of disposable income in the first quarter, more than three-tenths of a percentage point below pre-pandemic levels, according to the ABA report. 

    Businesses also appear prepared to manage their debt. Commercial and industrial loan delinquencies fell to a near-historic low of below 1% in the first quarter, while charge-off rates rose slightly but remained below pre-pandemic levels, according to the ABA report.

    But with slower growth now expected, businesses may need to grapple with weakened consumer demand and fewer prospects for investment, which figures to hurt commercial loan demand.

    Banks have also begun to tighten their standards.

    In the Federal Reserve’s most recent senior loan officer survey, the net percentage of banks that raised standards for commercial and industrial loans was 46%. That survey, conducted between late March and early April, included responses from 84 banks.

    Similar to the ABA’s findings, the Fed’s survey of bankers showed that the industry expects further tightening across all loan categories for the remainder of the year.

    “Banks are going to be really mindful of what’s happening in a particular market,” said ABA Chief Economist Sayee Srinivasan.

    Starting in 2022, the Fed hiked interest rates several times to counter rising inflation. On Wednesday, it held its key interest rate steady –– at roughly 5% –– for the first time in more than a year.

    “Even if rates don’t change, the cumulative effect of everything that the Fed has done will slow economic activity,” Srinivasan said.

    The U.S. job market has remained strong, with the unemployment rate increasing only slightly in May to 3.7%, according to the U.S. Bureau of Labor Statistics. Meanwhile, wages have risen roughly 4% over the past year, with pay growth highest among lower-wage workers.

    Maintaining a strong labor market will be critical to how loan demand and credit quality evolve as lenders become more guarded, Srinivasan said.

    “If the labor market remains strong, that means people will be spending, so demand will remain strong,” he said. “Even if households continue to borrow money… they will continue to make payments on their loans. Credit quality will remain good.”

    Srinivasan said that Wall Street appears to be betting on a soft landing for the U.S. economy, but he noted that there has been a recent uptick in unemployment and a downtick in gross domestic product.

    “The question is: How bad is it going to be?” Srinivasan said.

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  • Why do businesses keep raising their prices? | CNN Business

    Why do businesses keep raising their prices? | CNN Business

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    Los Angeles
    CNN
     — 

    After two years of surging prices, economists still can’t agree on what has caused the world’s worst inflation crisis in decades.

    While the usual culprits cited by economists include pandemic-era supply chain bottlenecks, the war in Ukraine and various US economic policies, others say it’s due to “greedflation,” the idea that companies use higher inflation rates as an excuse to jack up prices and grow their margins.

    However, according to preliminary findings in a New York Federal Reserve survey, there might be something else at play.

    The survey of 700 businesses across New York, Atlanta and Cleveland found that strength of customer demand outranked all other factors that companies weigh when setting prices, including steady profit margins and overall inflation.

    That means a business can essentially set prices as high as it wants, as long as they aren’t so high that they drive away the customer base. In other words, it’s Econ 101: Good, old-fashioned supply and demand.

    More than 82% of businesses surveyed said demand factored into their pricing decisions, while only 52% of businesses said they take the overall rate of inflation into account when setting prices.

    Customers have become trained to tolerate price hikes, said John Zheng, a professor of marketing at the Wharton School at the University of Pennsylvania.

    “As a consumer during inflation, you know the costs for companies are increasing, so, therefore, you become more receptive to a higher price,” he said.

    Approval of price increases could fuel even higher pricing in the future — a cycle that can be hard to break, said Zheng.

    Mr. Mac’s mac and cheese restaurant in Manchester, New Hampshire tried boosting prices a little at a time to keep up with inflation in 2021, but it wasn’t enough to cover the cost increases to the business, vice president of operations Mark Murphy told CNN. Fearing customer backlash, the restaurant accepted smaller margins instead of pricing out their diners.

    When the business finally hiked prices, Murphy said the decision was “painful.”

    “We were looking at our sales and our orders daily, and we were checking every review to see what people were saying,” Murphy said. “It was very scary.”

    Despite those fears, Mr. Mac’s elevated prices did not cut into business.

    “What we ended up finding was customers may not have been happy about it, but they were not surprised. I think they kind of understood that prices are increasing. They see it everywhere they go,” he said.

    Murphy said the restaurant has since raised prices more than once to keep up with inflation.

    Multinational companies Colgate, Procter & Gamble and PepsiCo have raised prices by double-digit percentages over the past year, according to their first-quarter earnings reports, outpacing the US inflation rate.

    However, as the Federal Reserve hikes interest rates and the economy slows down, customers may soon be less keen to pay through the nose for goods and services, Zheng said.

    Businesses may already be in tune with the change: Those surveyed by the New York Fed said they expect lower cost and price pressures in the coming year.

    Emily Netti, a wedding photographer in Syracuse, New York, said she has raised prices by a few hundred dollars multiple times over the past two years to pay competitive rates to the additional photographers and editors she hires. However, she said she is mindful that her local customer base may soon want to cut back on expenses.

    “I’ve started to slow down in my own market within Syracuse,” she said.

    “I do see myself raising by $100 rather than $300 for now, so I can match the market.”

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  • Why one popular shoe brand is lowering prices in the face of inflation | CNN Business

    Why one popular shoe brand is lowering prices in the face of inflation | CNN Business

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    New York
    CNN
     — 

    As inflation continues to strain family budgets, forcing people to prioritize purchasing daily necessities over discretionary buys, one maker of popular footwear is lowering prices on its products to provide some relief to weary consumers.

    Oregon-based Keen, which makes walking shoes, boots and water sandals for toddlers to adults in addition to work boots, is moving in the opposite direction of most of its industry, It’s lowering prices as many of its customers start cutting out their shoe budget.

    According to a survey in January by market research firm Circana (formerly IRI and The NPD Group), 56% of consumers (up from 52% in July 2022) said they had delayed or skipped a footwear purchase or chosen a less expensive option in the past six months due to price increases on either footwear or other goods.

    Circana also noted that households with kids are pulling back on footwear spending more so than those without, as parents are forgoing footwear purchases for themselves.

    “Families are obviously feeling the pressure from inflation,” Beth Goldstein, footwear and accessories analyst at Circana, said in the report. “Without the government assistance that many households with children had previously received, they are now prioritizing their kids’ footwear replacement needs over their own.”

    The company said it’s started reducing prices across its portfolio of products, which range from $36 for kids’ shoes to about $250 for adult shoes.

    “On average, we are bringing prices down by 5% across the board,” John Evons, president of Keen said Friday in an interview with CNN. The company announced the move on its website on Thursday.

    “We believe we are doing the right thing to help people in this inflationary environment. We want people to continue to enjoy the outdoors and be able to go to work with safe shoes,” he said.

    Keen, which employs around 350 people in the US, makes its footwear in Portland and in factories in the Dominican Republic and Thailand. While Evons declined to disclose the company’s annual sales, he said the business sells millions of pairs of shoes annually in the US and globally.

    But being a vertically integrated business is what has allowed Keen to lower prices, he said. Keen owns 40% of its supply chain, from raw material sourcing to manufacturing plants to distribution centers.

    “This helped us as we went into 2020 and faced supply chain challenges, mounting freight costs and disruptions because of the pandemic,” said Evons. “We were able to respond quickly to the evolving marketplace in 2021 and 2022.”

    As supply chain and shipping costs have eased post-pandemic, Evons said the company wanted to also pass on some savings to its customers.

    Keen is lowering prices by about 5% across its products.

    “We expect to stand behind this for the foreseeable future,” Evons said.

    Given these trends, Goldstein said Keen’s move is noteworthy.

    “Most brands are reacting to consumers pulling back by offering increased promotions and not bringing the original product price down,” she said to CNN. “This is unique, and it will be interesting to see if other companies follow suit.”

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