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Tag: Government policy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    How the Fed influences credit card rates

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

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

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

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

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

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

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

    When do rate hikes stop?

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

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

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

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

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

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

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

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

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

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  • UK leader reverses decision not to attend UN climate talks

    UK leader reverses decision not to attend UN climate talks

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    LONDON — U.K. Prime Minister Rishi Sunak on Wednesday said he will attend this month’s U.N. climate summit in Egypt, reversing a decision to skip it that had drawn criticism at home and abroad.

    Sunak’s office previously said he had to skip the gathering, known as COP27, which start on Sunday. It cited “pressing domestic commitments,” including preparations for a major government budget statement scheduled for Nov. 17.

    But Sunak tweeted Wednesday that he would attend the two-week gathering because “there is no long-term prosperity without action on climate change.”

    “There is no energy security without investing in renewables,” he wrote.

    Sunak’s earlier decision to skip the talks were criticized by many, including British government climate adviser Alok Sharma, who will hand over presidency of the Conference of the Parties, or COP, at the summit in the Egyptian resort of Sharm el-Sheikh. The U.K. hosted last year’s COP26 climate summit in Glasgow, Scotland.

    Sunak’s about-face came the day after former Prime Minister Boris Johnson confirmed he will be going to the climate talks at the invitation of the host country. Under Johnson, who left office in September, the U.K. committed to reach net-zero carbon emissions by 2050 and to eliminate coal from its energy mix by 2024.

    Environmentalists worry there could be backsliding on those commitments because of the energy crisis triggered by Russia’s invasion of Ukraine.

    The opposition Labour Party’s climate spokesman, Ed Miliband, said Sunak had been “shamed into going to COP27.”

    “His initial instinct tells us about all about him: he just doesn’t get it when it comes to the energy bills and climate crisis,” Miliband said.

    Green Party lawmaker Caroline Lucas said Sunak’s initial decision and subsequent U-turn was “an embarrassing misstep on the world stage.”

    “Let this be a lesson to him — climate leadership matters,” she tweeted.

    ———

    Follow AP’s climate and environment coverage at https://apnews.com/hub/climate-and-environment

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  • 20 dividend stocks that may be safest if the Federal Reserve causes a recession

    20 dividend stocks that may be safest if the Federal Reserve causes a recession

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    Investors cheered when a report last week showed the economy expanded in the third quarter after back-to-back contractions.

    But it’s too early to get excited, because the Federal Reserve hasn’t given any sign yet that it is about to stop raising interest rates at the fastest pace in decades.

    Below is a list of dividend stocks that have had low price volatility over the past 12 months, culled from three large exchange traded funds that screen for high yields and quality in different ways.

    In a year when the S&P 500
    SPX,
    -0.40%
    is down 18%, the three ETFs have widely outperformed, with the best of the group falling only 1%.

    Read: GDP looked great for the U.S. economy, but it really wasn’t

    That said, last week was a very good one for U.S. stocks, with the S&P 500 returning 4% and the Dow Jones Industrial Average
    DJIA,
    -0.32%
    having its best October ever.

    This week, investors’ eyes turn back to the Federal Reserve. Following a two-day policy meeting, the Federal Open Market Committee is expected to make its fourth consecutive increase of 0.75% to the federal funds rate on Wednesday.

    The inverted yield curve, with yields on two-year U.S. Treasury notes
    TMUBMUSD02Y,
    4.540%
    exceeding yields on 10-year notes
    TMUBMUSD10Y,
    4.064%    ,
    indicates investors in the bond market expect a recession. Meanwhile, this has been a difficult earnings season for many companies and analysts have reacted by lowering their earnings estimates.

    The weighted rolling consensus 12-month earning estimate for the S&P 500, based on estimates of analysts polled by FactSet, has declined 2% over the past month to $230.60. In a healthy economy, investors expect this number to rise every quarter, at least slightly.

    Low-volatility stocks are working in 2022

    Take a look at this chart, showing year-to-date total returns for the three ETFs against the S&P 500 through October:


    FactSet

    The three dividend-stock ETFs take different approaches:

    • The $40.6 billion Schwab U.S. Dividend Equity ETF
      SCHD,
      +0.15%
      tracks the Dow Jones U.S. Dividend 100 Indexed quarterly. This approach incorporates 10-year screens for cash flow, debt, return on equity and dividend growth for quality and safety. It excludes real estate investment trusts (REITs). The ETF’s 30-day SEC yield was 3.79% as of Sept. 30.

    • The iShares Select Dividend ETF
      DVY,
      +0.45%
      has $21.7 billion in assets. It tracks the Dow Jones U.S. Select Dividend Index, which is weighted by dividend yield and “skews toward smaller firms paying consistent dividends,” according to FactSet. It holds about 100 stocks, includes REITs and looks back five years for dividend growth and payout ratios. The ETF’s 30-day yield was 4.07% as of Sept. 30.

    • The SPDR Portfolio S&P 500 High Dividend ETF
      SPYD,
      +0.60%
      has $7.8 billion in assets and holds 80 stocks, taking an equal-weighted approach to investing in the top-yielding stocks among the S&P 500. It’s 30-day yield was 4.07% as of Sept. 30.

    All three ETFs have fared well this year relative to the S&P 500. The funds’ beta — a measure of price volatility against that of the S&P 500 (in this case) — have ranged this year from 0.75 to 0.76, according to FactSet. A beta of 1 would indicate volatility matching that of the index, while a beta above 1 would indicate higher volatility.

    Now look at this five-year total return chart showing the three ETFs against the S&P 500 over the past five years:


    FactSet

    The Schwab U.S. Dividend Equity ETF ranks highest for five-year total return with dividends reinvested — it is the only one of the three to beat the index for this period.

    Screening for the least volatile dividend stocks

    Together, the three ETFs hold 194 stocks. Here are the 20 with the lowest 12-month beta. The list is sorted by beta, ascending, and dividend yields range from 2.45% to 8.13%:

    Company

    		 Ticker

    		 12-month beta

    		 Dividend yield

    		 2022 total return
    Newmont Corp.

    		 NEM,
    -0.78%         		0.17

    		 5.20%

    		 -30%
    Verizon Communications Inc.

    		 VZ,
    -0.07%         		0.22

    		 6.98%

    		 -24%
    General Mills Inc.

    		 GIS,
    -1.47%         		0.27

    		 2.65%

    		 25%
    Kellogg Co.

    		 K,
    -0.93%         		0.27

    		 3.07%

    		 22%
    Merck & Co. Inc.

    		 MRK,
    -1.73%         		0.29

    		 2.73%

    		 35%
    Kraft Heinz Co.

    		 KHC,
    -0.56%         		0.35

    		 4.16%

    		 11%
    City Holding Co.

    		 CHCO,
    -1.45%         		0.38

    		 2.58%

    		 27%
    CVB Financial Corp.

    		 CVBF,
    -1.24%         		0.38

    		 2.79%

    		 37%
    First Horizon Corp.

    		 FHN,
    -0.18%         		0.39

    		 2.45%

    		 53%
    Avista Corp.

    		 AVA,
    -7.82%         		0.41

    		 4.29%

    		 0%
    NorthWestern Corp.

    		 NWE,
    -0.21%         		0.42

    		 4.77%

    		 -4%
    Altria Group Inc

    		 MO,
    -0.18%         		0.43

    		 8.13%

    		 4%
    Northwest Bancshares Inc.

    		 NWBI,
    +0.10%         		0.45

    		 5.31%

    		 11%
    AT&T Inc.

    		 T,
    +0.63%         		0.47

    		 6.09%

    		 5%
    Flowers Foods Inc.

    		 FLO,
    -0.44%         		0.48

    		 3.07%

    		 7%
    Mercury General Corp.

    		 MCY,
    +0.07%         		0.48

    		 4.38%

    		 -43%
    Conagra Brands Inc.

    		 CAG,
    -0.82%         		0.48

    		 3.60%

    		 10%
    Amgen Inc.

    		 AMGN,
    +0.41%         		0.49

    		 2.87%

    		 23%
    Safety Insurance Group Inc.

    		 SAFT,
    -1.70%         		0.49

    		 4.14%

    		 5%
    Tyson Foods Inc. Class A

    		 TSN,
    -0.40%         		0.50

    		 2.69%

    		 -20%
    Source: FactSet

    Any list of stocks will have its dogs, but 16 of these 20 have outperformed the S&P 500 so far in 2022, and 14 have had positive total returns.

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    Don’t miss: Municipal bond yields are attractive now — here’s how to figure out if they are right for you

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  • Family: Egypt activist in prison starts ‘full hunger strike’

    Family: Egypt activist in prison starts ‘full hunger strike’

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    LONDON — Egypt’s most prominent imprisoned activist went on “full hunger strike”’ on Tuesday and plans to stop drinking water on the first day of the global climate summit next week, his family said.

    Alaa Abdel-Fattah, an outspoken dissident and a U.K. citizen, rose to prominence with the 2011 pro-democracy uprisings that swept the Middle East and in Egypt toppled long-time President Hosni Mubarak. The 40-year old activist spent most of the past decade behind bars and his detention has become a symbol of Egypt’s return to autocratic rule.

    As international spotlight focuses on Egypt ahead of the climate summit — or COP27 — in the Red Sea town of Sharm el-Sheikh, Abdel-Fattah’s family has been lobbying for his release. His sister, Sanaa Seif, has been staging a sit-in at the headquarters of Britain’s foreign ministry to push the U.K. to take action in his case.

    Abdel-Fattah said in a letter to his family that he would start the “full hunger strike,” his other sister, Mona Seif, tweeted Monday.

    For months, Abdel-Fattah has been on a partial hunger strike, consuming only 100 calories a day and his family is concerned for his health. He wrote that on Nov. 6, the first day of the COP27, he will also give up water.

    The family, which communicates with Abdel-Fattah through weekly letters and during rare visits, says it fears that if Abdel-Fattah is not released during the climate conference, he would die without water. The family’s next visit is Nov. 17.

    An Egyptian government media officer did not immediately respond to a request for comment on Tuesday. Authorities have previously denied that Abdel-Fattah is on a hunger strike.

    He was first sentenced in 2014 after being convicted of taking part in an unauthorized protest and allegedly assaulting a police officer. He was released in 2019 after serving a five-year term but was rearrested later that year in a crackdown that followed rare anti-government protests.

    In December 2021, he was sentenced to another five-year term on charges of spreading false news. He also faces separate charges of misusing social medial and joining a terrorist group — a reference to the banned Muslim Brotherhood, which authorities declared a terrorist organization in 2013.

    In April, the family announced he had obtained British citizenship through his mother, Laila Soueif, a math professor at Cairo University who was born in London. The family said then that they sought a British passport for Abdel-Fattah as a way out of his “impossible ordeal.”

    The government of President Abdel Fattah el-Sissi, a U.S. ally with deep economic ties to European countries, has been relentlessly silencing dissenters and clamping down on independent organizations for years with arrests and restrictions. Many of the top activists involved in the 2011 uprising are now in prison, most under a draconian law passed in 2013 that effectively banned all street protests.

    Ahead of the global climate conference, Egypt’s human rights record has come under increasing scrutiny, though many activists fear that the attention to Abdel-Fattah’s case will wane as soon as the conference draws to a close and world leaders return home.

    “He decided that if they’re determined to keep him in prison forever, or until he dies, then at least he will decide the terms of the battle and lead the charge,” his sister Mona Seif said in a video statement posted on social media. “I can’t ask him to stop what he’s doing,”

    An influential blogger, Abdel-Fattah hails from a family of political activists, lawyers and writers. His late father was one of Egypt’s most tireless rights lawyers. His sisters — also British citizens — are also political activists, and his aunt is the award-winning novelist Ahdaf Soueif.

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  • New omicron subvariants accounted for more cases in New York region in latest week than BA.5, CDC data shows

    New omicron subvariants accounted for more cases in New York region in latest week than BA.5, CDC data shows

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    The omicron sublineages named BQ.1 and BQ.1.1 continued to spread in the U.S. in the week through Oct. 29, accounting for 27.1% of new cases nationwide, according to Centers for Disease Control and Prevention data.

    The two accounted for 42.5% of all cases in the New York region, which includes New Jersey, Puerto Rico and the Virgin Islands, up from 37% the previous week. That was more than the BA.5 omicron subvariant, which accounted for 35.7% of new cases in the New York area in the latest week.

    The BA.5 omicron subvariant accounted for 49.6% of all U.S. cases, the data show.

    BQ.1 and BQ.1.1 were included in BA.5 variant data as recently as three weeks ago, because their numbers were too small to break out. BQ.1 was first identified by researchers in early September and has been found in the U.K. and Germany, among other places.

    Last week, the World Health Organization said that BQ.1 and another sublineage dubbed XBB do not appear to have immune-escape mutations that warrant being designated as variants of concern. However, BA.5 is still a variant of concern that is being closely monitored, said a statement from the WHO’s Technical Advisory Group on SARS-CoV-2 Virus Evolution.

    Workers in a manufacturing facility that assemble Apple Inc.’s
    AAPL,
    -1.66%
    iPhone in the Chinese city of Zhengzhou appear to have left to avoid COVID-19 curbs, with many traveling on foot for days after an unknown number of employees were quarantined in the facility after a virus outbreak, the Associated Press reported. 

    Videos circulating on Chinese social media platforms showed people who are allegedly Foxconn workers climbing over fences and carrying their belongings down a road.

    Separately, visitors to Shanghai Disneyland were left stranded at the park on Monday after the resort halted operations to comply with COVID-19 restrictions amid a new outbreak of the virus.

    In the U.S., known cases of COVID are continuing to ease and now stand at their lowest level since mid-April, although the true tally is likely higher given how many people overall are testing at home, where data are not being collected.

    The daily average for new cases stood at 36,869 on Sunday, according to a New York Times tracker, down 2% from two weeks ago. The daily average for hospitalizations was up 3% to 27,415, while the daily average for deaths was down 6% to 352. 

    Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

    Other COVID-19 news you should know about:

    • With a downcast earnings season passing the halfway mark, results from financial-technology companies and vaccine makers will arrive this week amid questions about consumer spending as well as demand for COVID drugs, MarketWatch’s Bill Peters reported. Pfizer Inc.
    PFE,
    -1.82%
    will report earnings on Tuesday, followed by Moderna Inc.
    MRNA,
    -0.47%
    on Thursday. Analysts will have their eye on the state of COVID-19 vaccine and treatment sales and on what executives are anticipating for the full year, as they prepare for a private market for COVID medications and as more people shrug off the pandemic. Pfizer executives, during a call last week, said they intended to charge between $110 and $130 for a single-dose vial of the vaccine for U.S. adults when government purchases end. But they said they believe anyone who has health insurance shouldn’t have to pay anything out of pocket.

    The FDA authorized newly modified COVID-19 boosters to target the latest versions of the omicron variant. But as WSJ’s Daniela Hernandez explains, a key part of the decision-making process was changed with these new shots. Photo: Laura Kammermann

    • A number of young children are being hospitalized because of respiratory syncytial virus, or RSV, and it’s happening at an unusual time of year and among older children than in years past, MarketWatch’s Jaimy Lee reported. COVID may be a contributing factor, in part because many children were not exposed to RSV last season and also because a prior COVID infection or exposure may change the way a baby’s immune system responds to RSV and may lead to more severe illness from an RSV infection, according to Asuncion Mejias, a principal investigator with the Center for Vaccines and Immunity at the Research Institute at Nationwide Children’s Hospital in Columbus, Ohio.

    • On Saturday, more than 3,000 people took part in the first Pride march in South Africa since the COVID pandemic , celebrating the LGBT community and defying a U.S. warning of a possible terror attack in the area, the AP reported. The U.S. government this week warned of a possible attack in the Sandton part of Johannesburg, where the march took place. The South African government expressed concern that the U.S. had not shared enough information to give credibility to the alleged threat. Police said all measures had been taken to ensure safety in the area.

    Here’s what the numbers say:

    The global tally of confirmed cases of COVID-19 topped 630.2 million on Monday, while the death toll rose above 6.58 million, according to data aggregated by Johns Hopkins University.

    The U.S. leads the world with 97.5 million cases and 1,070,266 fatalities.

    The Centers for Disease Control and Prevention’s tracker shows that 226.9 million people living in the U.S., equal to 68.4% of the total population, are fully vaccinated, meaning they have had their primary shots.

    So far, just 22.8 million Americans have had the updated COVID booster that targets the original virus and the omicron variants, equal to 7.3% of the overall population.

     

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  • Brazil’s Lula to reclaim presidency after beating Bolsonaro

    Brazil’s Lula to reclaim presidency after beating Bolsonaro

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    RIO DE JANEIRO — Brazilians delivered a very tight victory to Luiz Inácio Lula da Silva in a bitter presidential election, giving the leftist former president another shot at power in a rejection of incumbent Jair Bolsonaro’s far-right politics.

    Da Silva received 50.9% of the vote and Bolsonaro 49.1%, according to the country’s election authority. Yet the morning after the results came in — and congratulations had poured in from world leaders — Bolsonaro still had yet to publicly concede or react in any way, even as truckers blockaded some roads across the country in protest.

    Bolsonaro’s campaign had made repeated — unproven — claims of possible electoral manipulation before the vote, raising fears that, if he lost, he would not accept defeat and try to challenge the results.

    For da Silva, the high-stakes election was a stunning comeback. His imprisonment for corruption sidelined him from the 2018 election won by Bolsonaro, who has used the presidency to promote conservative social values while also delivering incendiary speeches and testing democratic institutions.

    “Today the only winner is the Brazilian people,” da Silva said in a speech Sunday evening at a hotel in downtown Sao Paulo. “It’s the victory of a democratic movement that formed above political parties, personal interests and ideologies so that democracy came out victorious.”

    Da Silva is promising to govern beyond his party. He says he wants to bring in centrists and even some leaning to the right, and to restore the kind of prosperity the country enjoyed when he last served as president from 2003-2010. Yet he faces headwinds in a politically polarized society.

    Bolsonaro’s four years in office have been marked by proclaimed conservatism and defense of traditional Christian values. He claimed that his rival’s return to power would usher in communism, legalized drugs, abortion and the persecution of churches – things that didn’t happen during da Silva’s earlier eight years in office.

    This was the country’s tightest election since its return to democracy in 1985, and the first time that a sitting president failed to win reelection. Just over 2 million votes separated the two candidates; the previous closest race, in 2014, was decided by a margin of roughly 3.5 million votes.

    Some of Bolsonaro’s supporters outside his home in Rio on Sunday night screamed about electoral fraud. And overnight, truck drivers who backed Bolsonaro blocked several roads across the country, including a stretch of the Rio de Janeiro-Sao Paulo highway, local media reported. Videos posted on social media early Monday morning showed traffic at a complete halt. Similar reports popped up in several other states.

    Da Silva’s win extended a wave of recent leftist triumphs across the region, including Chile, Colombia and Argentina.

    The president-elect will inherit a nation straining against itself after he is inaugurated on Jan. 1, said Thomas Traumann, an independent political analyst who compared Sunday’s results to Biden’s 2020 victory.

    “The huge challenge that Lula has will be to pacify the country,” he said. “People are not only polarized on political matters, but also have different values, identity and opinions. What’s more, they don’t care what the other side’s values, identities and opinions are.”

    Among world leaders offering congratulations on Sunday night was U.S. President Joe Biden, who in a statement highlighted the country’s “free, fair, and credible elections.” The European Union also commended the electoral authority for its effectiveness and transparency throughout the campaign.

    Bolsonaro had been leading throughout the first half of the count and, as soon as da Silva overtook him, cars in the streets of downtown Sao Paulo began honking their horns. People in the streets of Rio de Janeiro’s Ipanema neighborhood could be heard shouting, “It turned!”

    Da Silva’s headquarters in downtown Sao Paulo hotel only erupted once the final result was announced, underscoring the tension that was a hallmark of this race.

    “Four years waiting for this,” said Gabriela Souto, one of the few supporters allowed in due to heavy security.

    Outside Bolsonaro’s home in Rio, ground-zero for his support base, a woman atop a truck delivered a prayer over a speaker, then sang excitedly, trying to generate some energy as the tally grew for da Silva. But supporters decked out in green and yellow barely responded. Many perked up when the national anthem played, singing along loudly with hands over their hearts.

    For months, it appeared that da Silva was headed for easy victory as he kindled nostalgia for his presidency, when Brazil’s economy was booming.

    Bolsonaro’s administration has been widely criticized for its handling of the COVID-19 pandemic and the worst deforestation in the Amazon rainforest in 15 years. But he has built a devoted base by presenting himself as protection from leftist policies that he says infringe on personal liberties while producing economic turmoil and moral rot. He sought to shore up support in an election year with vast government spending.

    “We did not face an opponent, a candidate. We faced the machine of the Brazilian state put at his service so we could not win the election,” da Silva told the crowd in Sao Paulo.

    Da Silva built an extensive social welfare program during his tenure at president that helped lift tens of millions into the middle class. The man universally known as Lula left office with an approval rating above 80%, prompting then U.S. President Barack Obama to call him “the most popular politician on Earth.”

    But he is also remembered for his administration’s involvement in vast corruption revealed by sprawling investigations.

    Da Silva was jailed for 580 days for corruption and money laundering. His convictions were later annulled by Brazil’s top court, which ruled the presiding judge had been biased and colluded with prosecutors. That enabled da Silva to run for president for the sixth time.

    Da Silva has pledged to boost spending on the poor, reestablish relationships with foreign governments and take bold action to eliminate illegal clear-cutting in the Amazon rainforest.

    “We will once again monitor and do surveillance in the Amazon. We will fight every illegal activity,” da Silva said in his speech. “At the same time, we will promote sustainable development of communities in the Amazon.”

    The president-elect has pledged to install a ministry for Brazil’s original peoples, which will be run by an Indigenous person.

    But as da Silva tries to achieve these and other goals, he will be confronted by strong opposition from conservative lawmakers.

    Unemployment this year has fallen to its lowest level since 2015 and, although overall inflation slowed during the campaign, food prices are increasing at a double-digit rate. Bolsonaro’s welfare payments helped many Brazilians get by, but da Silva has been presenting himself as the candidate more willing to sustain aid going forward and raise the minimum wage.

    In April, he tapped center-right Geraldo Alckmin, a former rival, to be his running mate. It was another key part of an effort to create a broad, pro-democracy front to not just unseat Bolsonaro, but to make it easier to govern.

    Building bridges among a diverse — and divided — country will be key to his success, said Carlos Melo, a political science professor at Insper University in Sao Paulo.

    “If Lula manages to talk to voters who didn’t vote for him, which Bolsonaro never tried, and seeks negotiated solutions to the economic, social and political crisis we have,” Melo said, “then he could reconnect Brazil to a time in which people could disagree and still get some things done.”

    ———

    Carla Bridi contributed to this report from Brasilia.

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  • WHO panel says no evidence yet that new omicron subvariants are more dangerous than others that are circulating

    WHO panel says no evidence yet that new omicron subvariants are more dangerous than others that are circulating

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    The omicron sublineages named BQ.1 and XBB do not appear to have immune escape mutations that warrant being designated as variants of concern, a World Health Organization advisory panel said Friday.

    The decision will be reassessed regularly to ensure there is no change that might warrant a new designation, said the statement.

    As of Oct. 25, the XBB and XBB.1 lineages had been detected in 35 countries, according to a WHO weekly update from Thursday. The two are BA.2.10.1 and BA.2.75 recombinants, which were found in 26 countries in the previous week.

    “There has been a broad increase in prevalence of XBB in regional genomic surveillance, but it has not yet been consistently associated with an increase in new infections,” the panel wrote. However, early evidence does suggest a higher reinfection risk compared with other circulating omicron variants.

    BQ.1 is a sublineage of BA.5, which remains dominant globally, accounting for 77.1% of sequences forwarded to a centralized database in the week through Oct. 23. BQ.1 has been found in 65 countries.

    “While there are no data on severity or immune escape from studies in humans, BQ.1* is showing a significant growth advantage over other circulating Omicron sublineages in many settings, including Europe and the US, and therefore warrants close monitoring,” said the panel.

    The real risk of the variants depends on the level of immunity in a given region, it added. And with waning immune response from initial waves of omicron infection, and further evolution of omicron variants, “it is likely that reinfections may rise further,” said the statement.

    Read now: COVID-19 may be to blame for the surge in RSV illness among children. Here’s why.

    In the U.S., known cases of COVID are continuing to ease and now stand at their lowest level since mid-April, although the true tally is likely higher given how many people overall are testing at home, where the data are not being collected.

    The daily average for new cases stood at 37,412 on Thursday, according to a New York Times tracker, down 3% from two weeks ago. The daily average for hospitalizations was up 1% at 27,002, while the daily average for deaths is down 5% to 358. 

    Coronavirus Update: MarketWatch’s daily roundup has been curating and reporting all the latest developments every weekday since the coronavirus pandemic began

    Other COVID-19 news you should know about:

    • Gilead Sciences Inc.
    GILD,
    +12.92%
    said sales of its COVID treatment Veklury, formerly known as remdesivir, fell 52% to $925 million in the third quarter, driven by lower rates of COVID-19-related hospitalizations compared to the third quarter of 2021.” Last month, Gilead said the World Health Organization expanded its guidance to recommend remdesivir for treatment of patients with severe symptoms.

    • The pandemic devastated poor children’s well-being, not just by closing their schools, but also by taking away their parents’ jobs, sickening their families and teachers, and adding chaos and fear to their daily lives, the Associated Press reported, citing an analysis of test scores that was shared on an exclusive basis. The analysis found the average student lost more than half a school year of learning in math and nearly a quarter of a school year in reading—with some district averages slipping by more than double those amounts, or worse. Online learning played a major role, but students lost significant ground even where they returned quickly to schoolhouses, especially in math scores in low-income communities.

    • Optimism among U.S. companies in China has hit record low levels, an annual survey showed on Friday, as competitive, economic, and regulatory challenges compound the stresses already imposed by Beijing’s ongoing zero-COVID policies, Reuters reported. Just 55% of 307 companies surveyed by the American Chamber of Commerce in Shanghai and consulting firm PwC China described themselves as optimistic about the five-year business outlook. The reading is the lowest in the survey’s 23-year history and worse than in 2020, when COVID first surfaced, and during the trade standoff between Beijing and Washington in 2019.

    • The Chinese city of Shanghai has ordered mass testing on all 1.3 million residents of its downtown Yangpu district and is confining them to their homes at least until results are known, the AP reported. The demand is an echo of measures ordered over the summer that led to a two-month lockdown of the entire city of 25 million that devastated the local economy, prompting food shortages and rare confrontations between residents and the authorities.

    Here’s what the numbers say:

    The global tally of confirmed cases of COVID-19 topped 629.6 million on Friday, while the death toll rose above 6.58 million, according to data aggregated by Johns Hopkins University.

    The U.S. leads the world with 97.4 million cases and 1,070,064fatalities.

    The Centers for Disease Control and Prevention’s tracker shows that 226.9 million people living in the U.S., equal to 68.4% of the total population, are fully vaccinated, meaning they have had their primary shots.

    So far, just 22.8 million Americans have had the updated COVID booster that targets the original virus and the omicron variants, equal to 7.3% of the overall population.

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  • Wall Street heads for first weekly win streak since summer

    Wall Street heads for first weekly win streak since summer

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    NEW YORK — Wall Street is rallying Friday, led by Apple, Exxon Mobil and other companies that made even bigger profits during the summer than expected.

    The S&P 500 was 1.2% higher in early trading and on pace to close out its first back-to-back weekly gains since August. The Dow Jones Industrial Average was up 533 points, or 1.7%, to 32,576, as of 10:30 a.m. Eastern time, and the Nasdaq composite was 1.1% higher.

    Stocks have revived recently in part on hopes that the big hikes to interest rates shaking the market may be set to dial down later this year. Some investors are even talking again about a “pivot” by the Federal Reserve away from a focus solely on beating down inflation through rate hikes, even if many analysts say such hopes may be overstretched. More recently, many big U.S. companies have been reporting stronger earnings than expected, though the bag remains decidedly mixed.

    Apple rose 5% and was the strongest force lifting the S&P 500 in its first trading after reporting fatter revenue and profit than expected for the latest quarter. Oil producers were also strong after delivering record earnings on the back of rising crude prices. Exxon Mobil climbed 2.8%, and Chevron rose 2%.

    They helped to offset a 10.8% drop for Amazon, which offered a weaker-than-expected forecast for upcoming revenue. It was the latest in a lengthening list of discouraging trends for some of the Big Tech companies that have dominated Wall Street for years with their seemingly unstoppable growth.

    Earlier in the week, Meta Platforms lost nearly a quarter of its value after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok. Microsoft and Google’s parent company also reported weaker trends than Wall Street expected.

    Rising interest rates have hit Big Tech stock prices harder than the rest of the market, and the pressure increased Friday as yields climbed.

    Data released in the morning showed the raises that U.S. workers got in wages and other compensation during the summer was in line with economists’ expectations. That should keep the Fed on track to keep hiking rates sharply in hopes of weakening the job market enough to undercut the nation’s high inflation.

    The yield on the two-year Treasury, which tends to track expectations for Fed action, rose to 4.38% from 4.28% late Thursady.

    The 10-year yield, which helps set rates for mortgages and many other loans, climbed to 3.98% from 3.93% and was briefly back above 4%.

    Trading in Twitter’s stock has ended, after Elon Musk has taken control of the company following a lengthy legal battle.

    In Europe, stock indexes were mixed in relatively muted trading.

    Shares fell 0.9% in Tokyo even as the government approved a massive stimulus spending package to help the world’s No. 3 economy cope with inflation. As expected, the Bank of Japan wrapped up a policy meeting by keeping its ultra-lax monetary policy unchanged even as it forecast higher inflation.

    ———

    Associated Press writers Elaine Kurtenbach, Matt Ott and Mari Yamaguchi contributed.

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  • A key US inflation gauge stayed at a high 6.2% in September

    A key US inflation gauge stayed at a high 6.2% in September

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    WASHINGTON — A measure of inflation that is closely monitored by the Federal Reserve remained painfully high last month, the latest sign that prices for most goods and services in the United States are still rising steadily.

    Friday’s report from the Commerce Department showed that prices rose 6.2% in September from 12 months earlier, the same year-over-year rate as in August.

    Excluding volatile food and energy costs, so-called core prices rose 5.1% last month from a year earlier. That’s also faster than the 4.9% annual increase in August, though below a four-decade high of 5.4% reached in February.

    The report also showed that consumers spent more last month, even after adjusting for inflation, a sign of Americans’ willingness to keep spending in the face of high prices. Consumer spending increased 0.6% from August to September, or 0.3% after accounting for price increases.

    The latest figures come just as Americans have begun voting in midterm elections in which Democrats’ control of Congress is at stake and inflation has shot to the top of voters’ concerns. Republicans have heaped blame on President Joe Biden and congressional Democrats for the skyrocketing prices that have buffeted households across the country.

    The persistence of high inflation, near the worst in four decades, has intensified pressure on the Federal Reserve to keep aggressively raising its key short-term interest rate to try to wrestle rising prices under control. Last month, the Fed raised its key rate by a substantial three-quarters of a point for a third straight time, and next week it’s expected to do so for a fourth time.

    The central bank’s latest rate hikes far exceed the quarter-point increases that it typically used in the past when it sought to tighten credit to fight inflation. But after being caught off guard beginning late last year, when prices accelerated far more than the Fed’s policymakers had anticipated, the officials have been raising their benchmark rate at the fastest pace in four decades. In doing so, they are raising the risk of a recession — something that many economists expect to occur sometime next year as a result.

    The Fed’s hikes have led to much higher loan rates for businesses and consumers, particularly for mortgages. The average 30-year fixed mortgage rate surged past 7% this week, according to Freddie Mac, the highest level in two decades and more than twice what it was a year ago.

    The rapid run-up in borrowing costs has crushed the housing market. Sales of existing homes have dropped for eight straight months and are down nearly 25% in the past year. New-home sales and construction are also falling.

    A weaker housing market has slowed the economy, as fewer home purchases also drag down sales of furniture, appliances, and home improvement gear.

    Home prices, which rocketed during the pandemic, have started to fall as a result. The S&P Case-Shiller home price index fell from July to August for a second straight month, according to the latest data available,

    But those declines have yet to show up in the government’s measures of housing costs, which include rents, which are still rising for many people as they renew their leases. It could take until late spring or summer before falling home prices work their way into the government’s inflation indexes. That delay could keep official measures of inflation from falling much over the next few months.

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  • UK says new PM Rishi Sunak won’t go to UN climate conference

    UK says new PM Rishi Sunak won’t go to UN climate conference

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    Britain’s Prime Minister Rishi Sunak leaves 10 Downing Street for the House of Commons for his first Prime Minister’s Questions in London, Wednesday, Oct. 26, 2022. Sunak was elected by the ruling Conservative party to replace Liz Truss who resigned. (AP Photo/Frank Augstein)

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  • EXPLAINER: How will we know if the U.S. is in recession?

    EXPLAINER: How will we know if the U.S. is in recession?

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    WASHINGTON — The U.S. economy grew faster than expected in the July-September quarter, the government reported Thursday, underscoring that the United States is not in a recession despite distressingly high inflation and interest rate hikes by the Federal Reserve.

    But the economy is hardly in the clear, and the solid growth reported for the third quarter did little to alter the growing conviction among economists that a recession is very likely next year.

    Higher borrowing rates and chronic inflation will almost certainly continue to weaken consumer and business spending. And likely recessions in the United Kingdom and Europe and slower growth in China will erode the revenue and profits of American corporations. Such trends are expected to cause a U.S. recession sometime in 2023.

    Still, there are reasons to hope that a recession, if it comes, will prove a relatively mild one. Many employers, having struggled to find workers to hire after huge layoffs during the pandemic, may decide to maintain most of their existing workforces even in a shrinking economy.

    In the July-September quarter, the economy accelerated to a 2.6% annual pace, after two quarters of contraction. Consumers spent more and exports jumped, offsetting a sharp slowdown in home sales and construction.

    Six months of economic decline is a long-held informal definition of a recession. Yet nothing is simple in a post-pandemic economy in which growth was negative in the first half of the year but the job market remained robust, with ultra-low unemployment and healthy levels of hiring. The economy’s direction has confounded the Fed’s policymakers and many private economists ever since growth screeched to a halt in March 2020, when COVID-19 struck and 22 million Americans were suddenly thrown out of work.

    By far the biggest threat to the economy remains inflation, which is still near its highest level in four decades. Even for workers who received sizable raises, their pay has dropped once it’s adjusted for inflation. The pain is being felt disproportionately by lower-income and Black and Hispanic households, many of whom are struggling to pay for essentials like food, clothes, and rent.

    High inflation has also become a central issue in Republican attacks on President Joe Biden and his fellow Democrats, who have been thrown on the defensive as they seek to maintain control of Congress in the midterm elections.

    So what is the likelihood of a recession? Here are some questions and answers:

    ————

    WHY DO MANY ECONOMISTS FORESEE A RECESSION?

    They expect the Fed’s aggressive rate hikes and persistently high inflation to overwhelm consumers and businesses, forcing them to slow their spending and investment. Businesses will likely also have to cut jobs, causing spending to fall further.

    The Fed is poised to keep raising its benchmark interest rate after having already hiked it five times this year, from near zero to a range of 3% to 3.25%. Fed officials have projected that their short-term rate, which affects borrowing costs for consumers and businesses, will reach about 4.6% next year, which would be the highest level since late 2007.

    Consumers have been remarkably resilient so far this year. Still, there are signs that high inflation and borrowing costs have begun taking a toll. Last quarter, consumer spending grew at just a 1.4% annual rate, according to Thursday’s government report, down from 2% in the second quarter and less than half its pace of a year ago.

    Thursday’s figures also showed that businesses are cutting back on investment in buildings and factories, and the housing market has been hammered by rising mortgage costs. Those trends are expected to intensify, leading to a likely recession.

    ———

    WHAT ARE SOME SIGNS THAT A RECESSION MAY HAVE BEGUN?

    The clearest signal, economists say, would be a steady rise in job losses and a surge in unemployment. Claudia Sahm, an economist and former Fed staff member, has noted that since World War II, an increase in the unemployment rate of a half-percentage point over several months has always resulted in a recession.

    Many economists monitor the number of people who seek unemployment benefits each week, which indicates whether layoffs are worsening. Weekly applications for jobless aid have increased in recent months, but not by very much. Instead, employers have added a robust average of 370,000 jobs in the past three months.

    ———

    ANY OTHER SIGNALS TO WATCH FOR?

    Many economists monitor changes in the interest payments, or yields, on different bonds for a recession signal known as an “inverted yield curve.” This occurs when the yield on the 10-year Treasury falls below the yield on a short-term Treasury, such as the 3-month T-bill. That is unusual. Normally, longer-term bonds pay investors a richer yield in exchange for tying up their money for a longer period.

    Inverted yield curves generally mean that investors foresee a recession that will compel the Fed to slash rates. Inverted curves often predate recessions. Still, it can take 18 to 24 months for a downturn to arrive after the yield curve inverts.

    Ever since July, the yield on the two-year Treasury note has exceeded the 10-year yield, suggesting that markets expect a recession soon. And just this week, the three-month yield also temporarily rose above the 10-year, an inversion that has an even better track record at predicting recessions.

    ———

    WHO DECIDES WHEN A RECESSION HAS STARTED?

    Recessions are officially declared by the obscure-sounding National Bureau of Economic Research, a group of economists whose Business Cycle Dating Committee defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.”

    The committee considers trends in hiring as a key measure in determining recessions. It also assesses many other data points, including gauges of income, employment, inflation-adjusted spending, retail sales and factory output. It puts heavy weight on jobs and a measure of inflation-adjusted income that excludes government support payments like Social Security.

    Yet the NBER typically doesn’t declare a recession until well after one has begun, sometimes for up to a year.

    ———

    DON’T A LOT OF PEOPLE THINK WE”RE ALREADY IN A RECESSION?

    Yes, because many people now feel much more financially burdened. With wage gains trailing inflation for most people, higher prices have eroded Americans’ spending power.

    And the Fed’s rate hikes have helped send the average 30-year fixed mortgage rate surging above 7% this week, the highest level in two decades. It has more than doubled from about 3% a year ago, thereby making homebuying increasingly unaffordable.

    ———

    DOES HIGH INFLATION TYPICALLY LEAD TO A RECESSION?

    Not always. Inflation reached 4.7% in 2006, at that point the highest in 15 years, without causing a downturn. (The 2008-2009 recession that followed was caused by the bursting of the housing bubble).

    But when it gets as high as it has this year — it reached a 40-year peak of 9.1% in June — a downturn becomes increasingly likely.

    That’s for two reasons: First, the Fed will inevitably sharply raise borrowing costs when inflation gets that high. Higher rates then drag down the economy as consumers are less able to afford homes, cars, and other major purchases.

    High inflation also distorts the economy on its own. Consumer spending, adjusted for inflation, weakens. And businesses grow uncertain about the future economic outlook. Many of them pull back on their expansion plans and stop hiring, which can lead to higher unemployment as some people choose to leave jobs and aren’t replaced.

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  • US stock indexes are mixed as Facebook parent company slumps

    US stock indexes are mixed as Facebook parent company slumps

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    NEW YORK — Stock indexes are mixed on Wall Street in afternoon trading Thursday as more big companies report quarterly results.

    The S&P 500 fell 0.5% as of 2:11 p.m. Eastern. Roughly 70% of stocks within the benchmark index gained ground, but slides in several big technology stocks more than offset hose gains.

    The tech-heavy Nasdaq fell 1.5%. Facebook’s parent company, Meta Platforms, plummeted 23.7% after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok. It joins other tech and communications stocks, such as Google’s parent company, Alphabet, and Microsoft, in reporting weak results and worrisome forecasts over advertising demand.

    The Dow Jones Industrial Average rose 263 points, or 0.8%, to 32,099. Construction equipment maker Caterpillar jumped 8.2% and contributed greatly to the index’s gains after it handily beat analysts’ third-quarter profit forecasts.

    Long-term Treasury yields fell. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.95% from 4.01% late Wednesday. The two-year yield fell to 4.34% from 4.42%.

    “What you’re seeing is a little bit of relief,” said Megan Horneman, chief investment officer at Verdence Capital Advisors. “Earnings are not great but they’re not awful either.”

    The benchmark S&P 500 is still holding on to weekly gains and remains solidly on track to end October in the green.

    Earnings have been the big focus for Wall Street this week, but markets got some encouraging economic news Thursday as the government reported the U.S. economy returned to growth last quarter, expanding 2.6%. That marks a turnaround after the economy contracted during the first half of the year.

    The economy has been under pressure from stubbornly hot inflation and the Federal Reserve’s efforts to raise interest rates in order to cool prices. The central bank is trying to slow economic growth through rate increases, but the strategy risks going too far and brining on a recession.

    The rising interest rates have made borrowing more difficult, particularly with mortgage rates. Average long-term U.S. mortgage rates topped 7% for the first time in more than two decades this week.

    The latest economic data is being closely watched for any signs of a slowdown or that inflation might be easing as Wall Street tries to determine if and when the Fed might pull back on its interest rate increases.

    The central bank is expected to raise interest rates another three-quarters of a percentage point at its upcoming meeting in November. But traders have grown more confident that it will dial down to a more modest increase of 0.50 percentage points in December, according to CME Group.

    Central banks around the world have also been raising interest rates in an effort to tame inflation. The European Central Bank piled on another outsized interest rate hike on Thursday. Markets in Europe were mixed.

    Wall Street has more earnings to review later Thursday. Internet retail giant Amazon and iPhone maker Apple report results after the market closes. Exxon Mobil will report its latest financial results on Friday.

    ———

    Joe McDonald and Matt Ott contributed to this report.

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  • European Central Bank makes another large interest rate hike

    European Central Bank makes another large interest rate hike

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    FRANKFURT, Germany — The European Central Bank piled on another outsized interest rate hike aimed at squelching out-of-control inflation, increasing rates Thursday at the fastest pace in the euro currency’s history and raising questions about how far the bank intends to go with a recession looming over the economy.

    The 25-member governing council raised its interest rate benchmarks by three-quarters of a percentage point at a meeting in Frankfurt, matching its record increase from last month and joining the U.S. Federal Reserve in making a series of rapid hikes to tackle soaring consumer prices.

    The ECB has now raised rates for the 19-country euro area by a full 2 percentage points in just three months, distance that took 18 months to cover during its last extended hiking phase in 2005-2007 and 17 months in 1999-2000.

    Central banks around the world are rapidly raising interest rates that steer the cost of credit for businesses and consumers. Their goal is to halt galloping inflation fueled by high energy prices, post-pandemic supply bottlenecks, and reviving demand for goods and services after COVID-19 restrictions eased. The Fed raised rates by three-quarters of a point for the third straight time last month.

    Quarter-point increases have usually been the norm for central banks. But that was before inflation spiked to 9.9% in the eurozone, fueled by higher prices for natural gas and electricity after Russia cut off most of its gas supplies during the war in Ukraine. Inflation in the U.S. is near 40-year highs of 8.2%, fueled in part by stronger growth and more pandemic support spending than in Europe.

    Inflation robs consumers of purchasing power, leading many economists to pencil in a recession for the end of this year and the beginning of next year in both the U.S. and the 19 countries that use the euro as their currency.

    Markets will be watching ECB President Christine Lagarde’s news conference for clues about how far the bank intends to go.

    Analysts at UniCredit said Lagarde was not likely to provide clues about the peak level of rates but “we suspect that she will drop hints pointing to an increasing likelihood that rates will have to be raised into restrictive territory, and a slower pace of hikes following today’s bold move.”

    At the last meeting in September, she indicated that three-quarters of a point was not the “norm” but added that decisions are being taking on a meeting-to-meeting basis. Some analysts foresee a half-point increase at the last rate-setting meeting of the year in December and think the bank may pause after that.

    The ECB foresees inflation falling to 2.3% by the end of 2024.

    Higher rates can control inflation by making it more expensive to borrow, spend and invest, lowering demand for goods. But the concerted effort to raise rates has also raised concerns about their impact on growth and on markets for stocks and bonds. Years of low rates on conservative investments have pushed investors toward riskier holdings such as stocks, a process that is now going into reverse, while rising rates can lower the value of existing bond holdings.

    The head of the International Monetary Fund, Kristalina Georgieva, has warned that tightening monetary policy “too much and too fast” raises the risk of prolonged recessions in many economies. The IMF forecasts that global economic growth will slow from 3.2% this year to 2.7% next year.

    The ECB’s benchmark for short-term lending to banks now stands at 2%, a level last seen in March 2009.

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  • US economy likely returned to growth last quarter

    US economy likely returned to growth last quarter

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    WASHINGTON — The problems have hardly gone away. Inflation, still near a 40-year high, is punishing households. Rising interest rates have derailed the housing market and threaten to inflict broader damage. And the outlook for the world economy grows bleaker the longer that Russia’s war against Ukraine drags on.

    But for now anyway, the U.S. economy has likely returned to growth after having shrunk in each of the first two quarters of 2022.

    At least that’s what economists expect to see Thursday when the Commerce Department issues its first of three estimates of gross domestic product — the broadest measure of economic output — for the July-September period.

    Economists surveyed by the data firm FactSet have predicted, on average, that GDP grew at a 2% annual rate in the third quarter. That would reverse annual declines of 1.6% from January through March and 0.6% from April through June.

    Consecutive quarters of declining economic output are one informal definition of a recession. But most economists say they believe the economy has so far skirted a recession, noting the still-resilient job market and steady spending by consumers. Most of them have expressed concern, though, that a recession is likely next year as the Federal Reserve continues to steadily ratchet up interest rates to fight inflation.

    Preston Caldwell, head of U.S. economics for the financial services firm Morningstar, notes that the economy’s contraction in the first half of the year was caused largely by factors that don’t reflect its underlying health and so “very likely did not constitute a genuine economic slowdown.” He pointed, for example, to a drop in business inventories, a cyclical event that tends to reverse itself and generally doesn’t reflect the state of the economy.

    By contrast, consumer spending, fueled by a healthy job market, and stronger U.S. exports likely restored the world’s biggest economy to growth last quarter.

    Thursday’s report from the government comes as Americans, worried about high prices and recession risks, are preparing to vote in midterm elections that will determine whether President Joe Biden’s Democratic Party retains control of Congress. Inflation has become a signature issue for Republican attacks on the Democrats’ stewardship of the economy.

    The risk of an economic downturn next year remains elevated as the Fed keeps raising rates aggressively to try to tame stubbornly high consumer prices. The central bank has raised its benchmark short-term rate five times this year, and it’s expected to announce further hikes next week and again in December. Chair Jerome Powell has warned bluntly that taming inflation will “bring some pain’’ — namely, higher unemployment and, possibly, a recession.

    Higher borrowing costs have already hammered the home market. The average rate on a 30-year fixed-rate mortgage, just 3.09% a year ago, is approaching 7%. Sales of existing homes have fallen for eight straight months. Construction of new homes is down nearly 8% from a year ago.

    Still, the economy retains pockets of strength. One is the vitally important job market. Employers have added an average of 420,000 jobs a month this year, putting 2022 on track to be the second-best year for job creation (behind 2021) in Labor Department records going back to 1940. The unemployment rate was 3.5% last month, matching a half-century low.

    But hiring has been decelerating. In September, the economy added 263,000 jobs — solid but the lowest total since April 2021.

    International events are causing further concerns. Russia’s invasion of Ukraine has disrupted trade and raised prices of energy and food, creating a crisis for poor countries. The International Monetary Fund, citing the war, this month downgraded its outlook for the world economy in 2023.

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  • COP27’s Coke sponsorship leaves bad taste with green groups

    COP27’s Coke sponsorship leaves bad taste with green groups

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    LONDON — This year’s United Nations climate summit is brought to you by Coke.

    Soft drink giant Coca-Cola Co.’s sponsorship of the flagship U.N. climate conference, known as COP27, sparked an online backlash and highlighted broader concerns about corporate lobbying and influence.

    The COP27 negotiations aimed at limiting global temperature increases are set to kick off next month in the Red Sea resort town of Sharm el-Sheikh. The Egyptian organizers cited Coca-Cola’s efforts to reduce greenhouse gas emissions and key focus on climate when they announced the sponsorship deal in September, which triggered immediate outrage on social media.

    Activists slammed the company for its outsized role contributing to plastic pollution and pointed to the deal as an example of corporate “greenwash” — exaggerating climate credentials to mask polluting behaviors. An online petition calling for Coke to be removed as a sponsor has garnered more than 228,000 signatures, while hundreds of civil society groups signed an open letter demanding polluting companies be banned from bankrolling or being involved in climate talks.

    Coca-Cola said its participation underscores its ambitious plans to cut its emissions and clean up plastic ocean trash.

    Critics say corporate involvement goes against the spirit of the meetings, where tens of thousands of delegates from around the world gather to hammer out global agreements on combating climate change to stop the earth from warming to dangerous levels. This year, the focus is on how to implement promises made at previous conferences, according to the Egyptian presidency.

    At COP meetings, “the corporate presence is huge, of course, and it’s a slick marketing campaign for them,” said Bobby Banerjee, a management professor at City University of London’s Bayes Business School, who has attended three times since 2011.

    Over the years, the meetings have evolved to resemble trade fairs, with big corporations, startups and industry groups setting up stalls and pavilions on the sidelines to lobby and schmooze — underscoring how a growing number of companies want to engage with the event, sensing commercial opportunities as climate change becomes a bigger global priority.

    IBM, Microsoft, Boston Consulting Group and Vodafone also have signed up as sponsors or partners but have drawn less flak for their participation than Coca-Cola.

    The United Nations Climate Change press office referred media inquiries to the organizers, saying it was a matter between Egypt and the company. The Egyptian presidency didn’t respond to email requests for comment. U.N. Climate Change’s website says it “seeks to engage in mutually beneficial partnerships with non-Party stakeholders.”

    Georgia Elliott-Smith, a sustainability consultant and environmental activist who set up the online petition, said she’s calling on the U.N. “to stop accepting corporate sponsorship for these events, which simply isn’t necessary, and stop enabling these major polluters to greenwash their brands, piggybacking on these really critical climate talks.”

    Environmental groups slammed the decision to let Coca-Cola be a sponsor, saying it’s one of the world’s biggest plastic producers and top polluters. They say manufacturing plastic with petroleum emits carbon dioxide and many of the single-use bottles are sold in countries with low recycling rates, where they either end up littering oceans or are incinerated, adding more carbon emissions to the atmosphere.

    In a statement, Coca-Cola said it shares “the goal of eliminating waste from the ocean” and appreciates “efforts to raise awareness about this challenge.” Packaging accounts for about a third of Coke’s carbon footprint, and the company said it has “ambitious goals,” including helping collect a bottle or can for every one it sells, regardless of maker, by 2030.

    Coca-Cola said it will partner with other businesses, civil society organizations and governments “to support cooperative action” on plastic waste and noted that it signed joint statements in 2020 and 2022 urging U.N. member states to adopt a global treaty to tackle the problem “through a holistic, circular economy approach.”

    “Our support for COP27 is in line with our science-based target to reduce absolute carbon emissions 25% by 2030, and our ambition for net zero carbon emissions by 2050,” the company said by email.

    Experts say sponsorships overshadow a bigger problem behind the scenes: fossil fuel companies lobbying and influencing the talks in backroom negotiations.

    “The real deals are handled indoors, you know, in closed rooms,” said Banerjee, the management professor. At the first one he attended — COP17 in Durban, South Africa, in 2011 — he tried to get into a session on carbon emissions in the mining industry, a topic he was researching.

    “But guess what? They turned me away, and who walks into the room to discuss, to develop global climate policy? CEOs of Rio Tinto, Shell, BP, followed by the ministers,” Banerjee said, adding that a Greenpeace member behind him was also blocked. “This group of people — mining companies and politicians — are deciding on carbon emissions.”

    Elliott-Smith, the environmental activist, attended last year’s COP26 in Glasgow, Scotland, as a legal observer to the negotiations. While she’s not naive about corporate-political lobbying, she was “really shocked at the amount of corporates attending the conference, (and) of the open participation between CEOs and climate negotiating delegations in these conversations.”

    In Glasgow, retailers, tech companies and consumer goods brands were signed up as partners, but fossil fuel companies were reportedly banned by the British organizers. Still, more than 500 lobbyists linked to the industry attended, according to researchers from a group of NGOs who combed through the official accreditation list.

    This year, oil and gas companies might feel more welcome because Egypt is expected to spotlight the region and attract a big contingent from Middle Eastern and North African countries, whose economies and government revenue depend on pumping oil and gas.

    Egypt historically sided with developing countries resisting pressure to cut emissions further, which say they shouldn’t have to pay the price for rich countries’ historical carbon dioxide emissions.

    Ahead of the meeting, U.N. human rights experts and international rights groups criticized the Egyptian government’s human rights track record, accusing authorities of covering up a decade of violations, including a clampdown on dissent, mass incarcerations and rollback of personal freedoms, in an attempt to burnish its international image. The country’s foreign minister told The Associated Press earlier this year that there would be space for protests.

    Against this backdrop, “it will be that much easier to censor, prohibit or silence attempts by civil society seeking to hold the process accountable to delivering the needed outcomes,” said Rachel Rose Jackson, director of climate research and policy at watchdog group Corporate Accountability. “It will also make the polluter PR and greenwashing surrounding the talks that much more effective.”

    ———

    Follow all AP stories on climate change at https://apnews.com/hub/climate-and-environment

    ———

    Associated Press climate and environmental coverage receives support from several private foundations. See more about AP’s climate initiative here. The AP is solely responsible for all content.

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  • France to Pay Part of Companies’ Electricity Bills

    France to Pay Part of Companies’ Electricity Bills

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    By Joshua Kirby

    The French government will cover a part of companies’ electricity bills, with big energy firms asked to contribute to the cost, a minister told TV station BFM Business late Sunday.
    

    An “electricity guarantee” for 2023 will be finalized soon, and will cover part of any amount paid above a reference price fixed by the government, according to Energy Transition Minister Agnes Pannier-Runacher.
    

    

    Energy companies making large profits will be asked to provide a contribution in relation to the reference price, the minister said, adding that the relevant legal proposition will be made very soon.
    

    The move comes amid surging energy prices across Europe following a stoppage of natural-gas flows from Russia. In France, supply has also been threatened by strikes at nuclear reactors owned by national utility Electricite de France SA.
    

    Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
    

    

    

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  • 
		
		
    
			
    China’s economic growth accelerates but weak amid shutdowns
    
			
    China’s economic growth accelerates but weak amid shutdowns
    
			
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    BEIJING — China’s economic growth picked up in the latest quarter but still was among the weakest in decades as the ruling Communist Party tries to reverse a slump while enforcing anti-virus controls and a crackdown on debt in its vast real estate industry.
    

    The world’s second-largest economy grew by 3.9% over a year earlier in the three months ending in September, up from the previous quarter’s 0.4%, official data showed Monday. 
    

    The announcement was planned for last week but postponed while the ruling         Communist Party met to award President Xi Jinping a new term as leader. 
    

    Xi, the most powerful leader in decades, wants a bigger party role in business and technology development. That has prompted warnings         tighter control of entrepreneurs who generate jobs and wealth will depress growth that already was in long-term decline.
    

    The party gave Xi a free hand by installing a         seven-member ruling Standing Committee made up of his allies. Supporters of free enterprise including         Premier Li Keqiang, the party’s No. 2 until last week, were dropped from the leadership.
    

    Chinese stock markets closed lower Monday despite the unexpectedly strong data, suggesting investors still are uneasy about the country’s growth prospects.
    

    The country’s market benchmark, the Shanghai Composite Index, lost more than 2%. The Hang Seng index in Hong Kong plunged by an unusually wide daily margin of 6.4%. Tokyo and other Asian markets gained.
    

    The International Monetary Fund and private sector forecasters say the economy will expand by as little as 3% this year. That would be the second weakest since the 1980s after 2020, when growth plunged to 2.4% at the start of the coronavirus pandemic.
    

    Investors and the public watched the congress for initiatives to stimulate the economy or reduce the impact of “Zero COVID” controls that shut down cities and disrupt business, but none were announced.
    

    The latest slide in growth that began in mid-2021 hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.
    

    The improvement is “mainly a result of more flexible” anti-virus controls that isolate individual buildings or neighborhoods instead of cities, said Iris Pang of ING in a report. But she said more lockdowns are “still a big uncertainty.”
    

    “This uncertainty means the effectiveness of pro-growth policy would be undermined,” Pang said.
    

    Growth slid after controls on debt that regulators worry is dangerously high caused a slump in real estate sales and construction, one of China’s biggest economic engines. Economic growth fell to 4% over a year earlier in the final quarter.
    

    Beijing has         eased mortgage lending and local governments have taken over some unfinished projects to make sure buyers get apartments. But regulators are sticking to debt limits have forced small developers into bankruptcy and caused some bigger competitors to miss payments to bondholders.
    

    The ruling party is enforcing “Zero COVID” despite rising costs and public frustration after Shanghai and other industrial centers were temporarily shut down. That has boiled over into protests in some areas at a time when other countries are easing anti-virus controls.
    

    For the first nine months of 2022, growth was 3% over a year earlier, up from 2.5% in the first six months but barely half the ruling party’s official 5.5% target. Leaders have stopped talking about that goal but promised easier lending and other measures to boost growth.
    

    Growth is “highly uneven” and supported by government spending on building roads and other public works while consumer spending is weakening, said Larry Hu and Yuxiao Zhang of Macquarie in a report.
    

    In September, retail sales growth fell to 2.5% over a year earlier from the previous month’s 5.4%. Growth in factory output accelerated to 6.3% from 4.2%.
    

    Also Monday, trade data showed export growth declined to 5.7% compared with a year earlier in September from the previous month’s 7%. Imports crept up 0.3%.
    

    “Most of the economy lost momentum last month,” said Julian Evans-Pritchard of Capital Economics in a report. “The situation looks to have worsened in October.”
    

    Investment in infrastructure, mostly government money, rose 16% in September compared with the previous month’s 15%.
    

    Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs. Small retailers and restaurants have closed. Others say they are struggling to stay afloat.
    

    Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results, economists say. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt.
    

    ———
    

    National Bureau of Statistics (in Chinese): www.stats.gov.cn
    

    

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  • 
		
		
    
			
    China’s economic growth accelerates but weak amid shutdowns
    
			
    China’s economic growth accelerates but weak amid shutdowns
    
			
     [ad_1]
    

    

    BEIJING — China’s economic growth picked up in the latest quarter but still was among the weakest in decades as the ruling Communist Party tries to reverse a slump while enforcing anti-virus controls and a crackdown on debt in its vast real estate industry.
    

    The world’s second-largest economy grew by 3.9% over a year earlier in the three months ending in September, up from the previous quarter’s 0.4%, official data showed Monday. 
    

    The announcement was planned for last week but postponed while the ruling         Communist Party met to award President Xi Jinping a new term as leader. 
    

    Xi, the most powerful leader in decades, wants a bigger party role in business and technology development. That has prompted warnings         tighter control of entrepreneurs who generate jobs and wealth will depress growth that already was in long-term decline.
    

    The party gave Xi a free hand by installing a         seven-member ruling Standing Committee made up of his allies. Supporters of free enterprise including         Premier Li Keqiang, the party’s No. 2 until last week, were dropped from the leadership.
    

    The International Monetary Fund and private sector forecasters say the economy will expand by as little as 3% this year. That would be the second weakest since the 1980s after 2020, when growth plunged to 2.4% at the start of the coronavirus pandemic.
    

    Investors and the public watched the congress for initiatives to stimulate the economy or reduce the impact of “Zero COVID” controls that shut down cities and disrupt business, but none were announced.
    

    The latest slide in growth that began in mid-2021 hurts China’s trading partners by depressing demand for imported oil, food and consumer goods.
    

    The improvement is “mainly a result of more flexible” anti-virus controls that isolate individual buildings or neighborhoods instead of cities, said Iris Pang of ING in a report. But she said more lockdowns are “still a big uncertainty.”
    

    “This uncertainty means the effectiveness of pro-growth policy would be undermined,” Pang said.
    

    Growth slid after controls on debt that regulators worry is dangerously high caused a slump in real estate sales and construction, one of China’s biggest economic engines. Economic growth fell to 4% over a year earlier in the final quarter.
    

    Beijing has         eased mortgage lending and local governments have taken over some unfinished projects to make sure buyers get apartments. But regulators are sticking to debt limits have forced small developers into bankruptcy and caused some bigger competitors to miss payments to bondholders.
    

    The ruling party is enforcing “Zero COVID” despite rising costs and public frustration after Shanghai and other industrial centers were temporarily shut down. That has boiled over into protests in some areas at a time when other countries are easing anti-virus controls.
    

    For the first nine months of 2022, growth was 3% over a year earlier, up from 2.5% in the first six months but barely half the ruling party’s official 5.5% target. Leaders have stopped talking about that goal but promised easier lending and other measures to boost growth.
    

    Growth is “highly uneven” and supported by government spending on building roads and other public works while consumer spending is weakening, said Larry Hu and Yuxiao Zhang of Macquarie in a report.
    

    In September, retail sales growth fell to 2.5% over a year earlier from the previous month’s 5.4%. Growth in factory output accelerated to 6.3% from 4.2%.
    

    Also Monday, trade data showed export growth declined to 5.7% compared with a year earlier in September from the previous month’s 7%. Imports crept up 0.3%.
    

    “Most of the economy lost momentum last month,” said Julian Evans-Pritchard of Capital Economics in a report. “The situation looks to have worsened in October.”
    

    Investment in infrastructure, mostly government money, rose 16% in September compared with the previous month’s 15%.
    

    Repeated shutdowns and uncertainty about business conditions have devastated entrepreneurs. Small retailers and restaurants have closed. Others say they are struggling to stay afloat.
    

    Beijing is using cautious, targeted stimulus instead of across-the-board spending, a strategy that will take longer to show results, economists say. Chinese leaders worry too much spending might push up politically sensitive housing costs or corporate debt.
    

    ———
    

    National Bureau of Statistics (in Chinese): www.stats.gov.cn
    

    

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  • 
		
		
    
			
    China reaffirms Xi’s dominance, removes No. 2 Li Keqiang
    
			
    China reaffirms Xi’s dominance, removes No. 2 Li Keqiang
    
			
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    BEIJING — China’s ruling Communist Party reaffirmed President Xi Jinping’s continued dominance in running the nation Saturday, one day ahead of giving him a widely expected third five-year term as leader.
    

    A         party congress effectively removed Premier Li Keqiang from senior leadership. Li, the nation’s No. 2 official, is a proponent of market-oriented reforms, which are in contrast to Xi’s moves to expand state control over the economy. 
    

    The weeklong meeting, as it wrapped up Saturday, also wrote Xi’s major policy initiatives on the economy and the military into the party’s constitution, as well as his push to rebuild and strengthen the party’s position by declaring it absolutely central to China’s development and future.
    

    Analysts were watching for signs of any weakening of or challenge to Xi’s position, but none was apparent. The removal of Li, while not unexpected, signaled Xi’s continuing tight hold on power in the world’s second-largest economy.
    

    “The congress calls on all party members to acquire a deep understanding of the decisive significance of establishing comrade Xi Jinping’s core position on the party Central Committee and in the party as a whole and establishing the guiding role of Xi Jinping Thought,” said a resolution on the constitution approved at Saturday’s closing session.
    

    “Xi Jinping Thought” refers to his ideology, which was enshrined in the party charter at the previous congress in 2017. 
    

    In brief closing remarks, Xi said the revision to the constitution “sets out clear requirements for upholding and strengthening the party’s overall leadership.”
    

    Li was among four of the seven members of the party’s all-powerful Politburo Standing Committee who were missing from its new 205-member Central Committee, which was formally elected at the closing session. 
    

    That means they won’t be reappointed to the Standing Committee in         a leadership shuffle that will be unveiled Sunday. Xi is widely expected to retain the top spot, getting a third term as general secretary. 
    

    The three others who were dropped were Vice Premier Han Zheng, party advisory body head Wang Yang, and Li Zhanshu, a longtime Xi ally and the head of the largely ceremonial legislature.
    

    Li Keqiang will remain as premier for about six more months until a new slate of government ministers is named. 
    

    If he had stayed on the Standing Committee, it would have indicated some possible pushback within the leadership against Xi, particularly on economic policy. Li had already been largely sidelined, though, as Xi has taken control of most aspects of government. 
    

    The more than 2,300 delegates to the party congress — wearing blue surgical masks under China’s         strict “zero-COVID” policy — met in the Great Hall of the People in central Beijing.
    

    Most media, including all foreign journalists, were not allowed into the first part of the meeting when the voting took place.
    

    Former Chinese President Hu Jintao, Xi’s predecessor as party leader, was helped off the stage a little more than two hours into the 3.5-hour meeting without explanation.
    

    Hu, 79, spoke briefly with Xi, whom he had been sitting next to in the front row, before walking off with an assistant holding him by the arm. Jiang Zemin, 96, who was president before Hu, did not appear at this congress.
    

    As speculation swirled in some Western media about the reason for Hu’s departure, China’s official Xinhua News Agency tweeted late Saturday that he was not feeling well and had been accompanied to a nearby room for a rest.
    

    Only 11 women were among the 205 people named to the Central Committee, or about 5% of the total. Members of minority groups made up 4%. Those percentages were roughly the same as in the last Central Committee.
    

    At least one committee member, Wang Junzheng, the Communist Party leader in Tibet, has been sanctioned by the U.S. for human rights abuses. 
    

    Police were stationed along major roads, with bright-red-clad neighborhood watch workers at regular intervals in between, to keep an eye out for any potential disruptions.
    

    An individual caught authorities by surprise last week by         unfurling banners from an overpass in Beijing that called for Xi’s removal and attacked his government’s tough pandemic restrictions.
    

    A report read by Xi at the opening session of the congress a week ago showed a determination         to stay on the current path in the face of domestic and         international challenges.
    

    Xi has emerged during his first decade in power as one of China’s         most powerful leaders in modern times, rivaling Mao Zedong, who founded the communist state in 1949 and led the country for a quarter-century. 
    

    A third five-year term as party leader would break an unofficial two-term limit that was instituted to try to prevent the excesses of Mao’s one-person rule, notably the tumultuous 1966-76 Cultural Revolution, under which Xi suffered as a youth.
    

    Xi has put loyalists in key positions and taken personal charge of policy working groups. In contrast, factions within the party discussed ideas internally under Hu and Jiang, his two immediate predecessors, said Ho-fung Hung, a professor of political economy at Johns Hopkins University.
    

    “Right now, you don’t really see a lot of internal party debates about these different policies and there is only one voice there,” he said.
    

    Xi has emphasized the central role of the Communist Party, expanding state control over society as well as the economy. In his remarks, he said the party, which marked its 100th anniversary last year, is still in its prime.
    

    “The Communist Party of China is once again embarking on a new journey on which it will face new tests,” he said. 
    

    The congress concluded by playing the communist anthem, “The Internationale.” 
    

    ———
    

    Associated Press writer Kanis Leung in Hong Kong contributed to this report.
    

    ———
    

    The title for Standing Committee member Han Zheng has been corrected to vice premier, not Shanghai party chief, his former position.
    

    

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  • 
		
		
    
			
    IRS releases new federal tax brackets and standard deductions. Here’s how they affect your family’s tax bill.
    
			
    IRS releases new federal tax brackets and standard deductions. Here’s how they affect your family’s tax bill.
    
			
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    America’s high inflation rate will produce a 7% increase in the size of the standard deduction when workers file their taxes on their 2023 income, according to new inflation adjustments from the Internal Revenue Service.
    

    It’s also going to pump up tax brackets by 7% as well, according to the annual inflation adjustments the IRS announced this week.
    

    

    Many tax code provisions — but not all — are indexed for inflation, so the announcements are a recurring event. But when inflation is persistently clinging to four-decade highs, these annual adjustments carry extra significance.
    

    

    

    
        “When inflation is persistently clinging to four-decade highs, these annual adjustments of approximately 7% for the standard deduction carry extra significance.”
      
    

    

    

    Start with the standard deduction, which is what most people use instead of itemizing deductions. 
    

    The standard deduction for individuals and married people filing separately will be $13,850 for the 2023 tax year. That’s a $900 increase from the $12,950 standard deduction for the upcoming tax season.
    

    For married couples filing jointly, the payout climbs to $27,700 for the 2023 tax year. That’s a $1,800 increase from the $25,900 standard deduction set for the upcoming tax year.
    

    The increases in the marginal tax rates reflect the same 7% rise. For example, the 22% tax bracket for this year is over $41,775 for single filers and over $83,550 for married couples filing jointly. Next year, the same 22% bracket applies to incomes over $44,725 and over $89,450 for married couples filing jointly.
    

    

    

    

    MarketWatch/IRS
    

    

    

    “The changes seem to be much larger than previous years because inflation is running much higher than it has in previous decades,” said Alex Durante, economist at the Tax Foundation, a right-leaning tax think tank.
    

    The IRS arrives at its inflation adjustments by averaging a slightly different inflation gauge, the so-called “chained Consumer Price Index” instead of the widely-watched Consumer Price Index, Durante noted. That’s an outcome of the Trump-era Tax Cuts and Jobs Act of 2017, he added.
    

    “The reason they do this is because the regular CPI is thought to overstate inflation because it doesn’t take into account the substitution that shoppers can make as cost rise,” Durante said. Shoppers substitute when they swap a more expensive item for cheaper one, and research shows many Americans are using the tactic.
    

    The IRS inflation adjustments come after September CPI data last week showed inflation of 8.2% year-over-year, slightly off from 8.3% in August. Also last week, the Social Security Administration said next year’s payments would include an 8.7% cost of living adjustment.
    

    

    

    
        “The payout on the earned income tax credit —  geared at low- and moderate-income working families who have been hit hard by red-hot inflation — is also increasing. ”
      
    

    

    

    The payout on the earned income tax credit is also increasing. The maximum payout for a qualifying taxpayer with at least three qualifying children climbs to $7,430, up from $6,935 for this tax year. The longstanding credit is geared at low- and moderate-income working families who have been hit hard by red-hot inflation.
    

    More than 60 provisions are slated for an increase inline with inflation, but many portions of the tax code are not indexed for inflation. Depending on the circumstances, the taxes or the tax breaks kick in sooner.
    

    Capital gains tax rules one example. The IRS lets a taxpayer use capital losses to offset capital gains taxes. If losses exceed gains, the IRS allows a taxpayer to deduct up to $3,000 in excess loses. They can then carry the remainder of the capital loses to future tax years. It’s been more than four decades since lawmakers last set the limit, according to Durante.
    

    

    

    
        “While more than 60 provisions are slated for an increase inline with inflation, many portions of the tax code are not indexed for inflation. They include capital gains tax. ”
      
    

    

    

    Given the stock market’s rocky downward slide this year, many investors might welcome a fast-approaching tax break — even if it only enables a $3,000 deduction.
    

    At the same time, a married couple selling their home can exclude the first $500,000 of the sale from capital gains taxation, and it’s $250,000 for a single filer. It’s been that way since the exclusion’s 1997 establishment.
    

    The once white-hot housing market may be cooling, but many sellers may still be facing the point when taxes kick in. The median home listing was over $367,000 as of early October, according to Redfin
    
        RDFN,
    
        +2.29%    .
      
    

    The child tax credit is another example. After the payout to parents last year jumped to $3,600 for children under age 6 and $3,000 per child age 6 to 17, it’s back to a maximum $2,000. The credit’s refundable portion climbs from $1,500 to $1,600 during tax year 2023, the IRS notes.
    

    Proponents of the boosted payouts and some Congressional Democrats want to revive the larger payments in negotiations tied to corporate taxes. The high costs of living are a strong reason to bring back the boosted credit, they say.
    

    Related:
    

    What smart strategies can lower your tax bill as year-end approaches? Read this before making any tax moves.
    

    Three things the best 401(k)s offer that can help you save a lot more
    

    Enhanced child tax credit helped reduce poverty for families before it ended last year. But there’s one way Republicans and Democrats could agree on reinstating it.
    

    

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