ReportWire

Tag: Inflation

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

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

    [ad_1]

    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.

    [ad_2]

    Source link

  • Mortgage rates blow past 7% for first time in two decades

    Mortgage rates blow past 7% for first time in two decades

    [ad_1]

    The average long-term U.S. mortgage rate topped 7% for the first time in more than two decades this week, a result of the Federal Reserve’s aggressive rate hikes intended to tame inflation not seen in some 40 years.

    Mortgage buyer Freddie Mac reported Thursday that the average on the key 30-year rate jumped to 7.08% from 6.94% last week. The last time the average rate was above 7% was April 2002, a time when the U.S. was still reeling from the Sept. 11 terrorist attacks, but six years away from the 2008 housing market collapse that triggered the Great Recession.

    Other measures put borrowing costs for a home loan even higher. The Mortgage Bankers Association said Wednesday that the rate on a conventional 30-year mortgage rose this week to 7.16%. Last year at this time, rates on a 30-year mortgage averaged 3.14%.

    “As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month,” Freddie Mac Chief Economist Sam Khater said in a statement. “In fact, many potential homebuyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.”

    The Fed has raised its key benchmark lending rate five times this year, including three consecutive 0.75 percentage point increases that have brought its key short-term borrowing rate to a range of 3% to 3.25%, the highest level since 2008. At their last meeting in late September, Fed officials projected that by early next year they would raise their key rate to roughly 4.5%.

    Mortgage rates don’t necessarily mirror the Fed’s rate increases, but tend to track the yield on the 10-year Treasury note. That’s influenced by a variety of factors, including investors’ expectations for future inflation and global demand for U.S. Treasurys.


    30-year fixed-rate mortgage average reaches highest level since 2001

    03:05

    Many potential homebuyers have moved to the sidelines as mortgage rates have more than doubled this year. Sales of existing homes have declined for eight straight months as borrowing costs have become too high a hurdle for many Americans already paying more for food, gas and other necessities. 

    Higher rates translate into very real costs for homebuyers. Take a home that sells for the U.S. median price of $384,800 and that is purchased with a 20% down payment. At the current mortgage rate of 7.16%, a homebuyer would pay roughly $750 more per month than with a loan at 3.2%, the rate in early 2022.

    Meanwhile, some homeowners have held off putting their homes on the market because they don’t want to jump into a higher rate on their next mortgage.

    Home prices expected to fall

    Housing prices rose roughly 40% during the pandemic, according to Freddie Mac. But the picture next year is likely to be different.

    “As the labor market cools off, housing demand will remain weak in 2023, potentially resulting in declines in prices next year,” the lender said in a recent report. “However, home price forecast uncertainty is wide due to interest rate volatility and the potential of a recession on the horizon.”

    The Fed is expected to raise its benchmark rate another three-quarters of a point when it meets next week. Despite the rate increases, inflation has hardly budged from 40-year highs, above 8% at both the consumer and wholesale level.

    The Fed rate increases have shown some signs of cooling the economy. But the rate increases have seemed to have little effect on the job market yet, which remains strong with the unemployment rate matching a 50-year low of 3.5% and layoffs still historically low.

    [ad_2]

    Source link

  • Inflation, gas prices looming over sports biz, concessions

    Inflation, gas prices looming over sports biz, concessions

    [ad_1]

    CHICAGO — Dan Coyne makes an annual trip from his Pennsylvania home to watch the Chicago Bears with his brother, Dave, who has season tickets.

    The brothers got something to eat a couple hours before the game. Dave Coyne, 47, normally stays away from the concessions at Soldier Field, but “I only had to pay for myself tonight,” he said. “I didn’t have a kid or my wife with me.”

    That’s the calculus in play as fans balance their favorite sporting events — the games they missed desperately during the COVID-19 pandemic — with persistently high inflation and gas prices that loom over everything these days.

    U.S. inflation jumped 8.2% in September from a year ago, the government reported this month. That’s not far from a four-decade high of 9.1% in June. Higher prices for housing, food and medical care were among the largest contributors to the rise.

    Given the industry’s reliance on disposable income, the inflation numbers are a troubling sign for sports business leaders.

    “What’s historically accurate for teams is that they tend to try to take less on the ticketing side because once somebody comes in they typically will make up for it once they are inside,” said Ron Li, a senior vice president at Navigate, a data-driven consulting firm in sports and entertainment. “But with costs rising pretty much across the board after the turnstile, I think they have some decisions they need to make.”

    According to Team Marketing Report, the average cost for a family of four to attend a 2022 Major League Baseball game was $256.41, an increase of $3.04 from the previous season. The main engine behind the rise was the cost of tickets, with the average general ticket price increasing 3.6% to $35.93.

    Despite the jump in prices, Americans have largely kept up their spending, particularly on entertainment and other services like travel that they missed out on during the pandemic. Still, there are signs the solid spending won’t last: Credit card debt is rising and savings have declined as consumers, particularly low-income ones, have taken hits to their finances from the spike in inflation.

    Sitting on a bench in front of Soldier Field, about to watch his beloved Bears play in person, money wasn’t exactly a big concern for Corey Metzger.

    Or any concern, really.

    “This trip has been a long time in the making, and I’m splurging whatever I got to spend to make it happen,” said the 45-year-old Metzger, who works in law enforcement in Fargo, North Dakota.

    Casey Lynn, 43, a low-voltage technician from Minneapolis, and his wife, Lori, 44, a commercial lender, aren’t big football fans, but they decided to check out the Bears on a trip to Chicago. While Casey Lynn said he is bothered by the ticket surcharges, the couple didn’t want to pass on the opportunity to see the game.

    “The gas is a necessity. Electric’s a necessity. The sports isn’t a necessity,” he said. “But when in Rome, why not?”

    Of course, the cost of games often includes a trip to the concessions stands for a hot dog or a beer. Concessions typically have a higher profit margin for sports teams and providers, but increased costs for goods, transportation and labor have cut into those margins.

    The changes come after concessions companies were already profoundly impacted by the pandemic.

    “The whole model has been kind of disrupted in a pretty big way as we’re dealing with inflation of 10, 15, 20, 25, 30% when we have typically underwritten 2 or 3%,” said Jamie Obletz, president of Delaware North Sportservice. “And you can imagine the impact that that’s had on us and what it’s forced us to think about and do over the past six to 12 months, like a lot of companies.”

    Paul Pettas, a vice president with Sodexo Live!, estimated overall costs are up 10% to 15% over the past 12 to 24 months.

    “In reality, costs are up across the board, but we certainly try to do as much as we can to keep that down and not have that affect the average fan or guest who comes to our events,” he said.

    Concessions companies also are experiencing lingering issues with their supply chains, which have improved recently but remain a factor. Obletz recalled his company running out of peanuts midway through the 2021 World Series in Atlanta, so two workers drove a truck to another venue, loaded up and then drove through the night to get back to Truist Park.

    “Things are not great,” Obletz said. “They’re better than they were, it feels like, three to six months ago, and our hope is that it continues to improve.”

    The issues have forced concession companies to get creative in an effort to address the rising costs with minimal effect on consumers in terms of culinary options and price.

    Chefs are redesigning menus to replace items that face significant cost increases and consolidating other options. They are using analytics to examine portion sizes — do consumers need six chicken fingers or will five work instead? — and taking a closer look at their vendors.

    “There’s dozens of things like this that we’ve tried to do and are doing as we speak, trying very desperately to offset those pricing increases that we’re seeing,” Obletz said.

    Alison Birdwell, the president and CEO of Aramark Sports + Entertainment, said the company is leaning on analytics and its data science team “more than ever” when it comes to menu strategies and new concessions items.

    “With that guidance, we are working to give fans the items they’re looking for while simultaneously being efficient with our product and mitigating significant increases in cost,” Birdwell said in a statement to AP.

    ———

    AP Economics Writer Christopher Rugaber contributed to this report.

    ———

    For more AP coverage of the impact of inflation: https://apnews.com/hub/inflation And for more AP sports coverage: https://apnews.com/hub/sports and https://twitter.com/AP—Sports

    [ad_2]

    Source link

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

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

    [ad_1]



    CNN
     — 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    [ad_2]

    Source link

  • A Restless Christmas Ahead As UK Consumers Plan To Cut Spending

    A Restless Christmas Ahead As UK Consumers Plan To Cut Spending

    [ad_1]

    As new UK Prime Minister Rishi Sunak attempts to pick up the pieces from outgoing PM Liz Truss’s budget chaos which announced tax rises and major public spending cuts, the scene is set for yet another unusual Christmas buying period in the UK.

    2020 was the Christmas of Isolation as families remained apart from loved ones and the UK plunged into another lockdown.

    2021 was the Christmas of Confusion. Despite people making big plans to undo the sorrow of the year before and travel generally making a comeback, the Omicron variant saw many cut back on their plans.

    Households vowed on New Years Eve 2021 that 2022 would be different. It has been, but it has not proved to be the year that we expected.

    February of this year marked the major escalation of the Russia’s continuing war on the Ukraine ; the International Monetary Fund foresaw a ‘gloomy’ economic situation by July. As we edge towards November, millions of households are considering how to pay basic bills after fuel, food, rent and mortgages have seen record increases and the value of savings and pensions have plummeted.

    Retailers were hoping for a celebratory mood in consumers wanting to spend, spend, spend after years of constant challenge. The reality is the indication that consumers will cutting back significantly on Christmas spend, simply to be able to survive what many cite as the most challenging year yet.

    Research from YouGov indicates 60% of shoppers will spend less than usual on Christmas this year, which compares starkly to the mere 2% who stated they will spend more.

    Less than a third (28%) are predicting that they will enjoy a ‘normal’ Christmas, rising to 36% amongst the over 65’s.

    The numbers also make for stark reading when considering the country’s deepening isolation crisis. One third of adults say they’ll cut back on family gatherings, trips to theatres and Christmas markets (33%). 21% will step back from travel plans to family and friends.

    It isn’t just the social aspect of Christmas that may be different this year. A third of Britons (33%) say they will reduce food expenditure, and half (51%) of Britons are planning to cut the amount they spend on gifts.

    Sadly even gifting for children looks to be also an area that will be impacted as 55% of parents with children under 10 confirm that they will have to spend less on presents.

    The impact of reduced spend could be felt by charities too as the survey predicts that more than a fifth of adults (22%) will limit the amount they donate to charities as they continue to battle the rising cost of living.

    2022 may prove to be the Christmas of Desperate Times for many and the focus will be fixed on 10 Downing Street and the new UK Prime Minister’s next moves. Can a Christmas miracle be delivered reassuring households that this year might not be as bleak as feared? And what will be the reality of Christmas Future? Will December 2023 see the nation enjoying a festive holiday just like the ones they used to know?

    [ad_2]

    Kate Hardcastle, Contributor

    Source link

  • European Central Bank makes another large interest rate hike

    European Central Bank makes another large interest rate hike

    [ad_1]

    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.

    [ad_2]

    Source link

  • Powell again is facing political pressure as worries mount over the economy

    Powell again is facing political pressure as worries mount over the economy

    [ad_1]

    Jerome Powell, chairman of the US Federal Reserve, speaks during a Fed Listens event in Washington, D.C., US, on Friday, Sept. 23, 2022.

    Al Drago | Bloomberg | Getty Images

    Political questioning of Federal Reserve Chair Jerome Powell about the central bank’s policy moves is intensifying, this time from the other side of the aisle.

    No stranger to political pressure, the Fed chief this week found himself the focus of concern in a letter from Sen. Sherrod Brown. The Ohio Democrat warned in the letter about potential job losses from the Fed’s rate hikes that it is using to combat inflation.

    “It is your job to combat inflation, but at the same time you must not lose sight of your responsibility to ensure that we have full employment,” Brown wrote. He added that “potential job losses brought about by monetary over-tightening will only worsen these matters for the working class.”

    The letter comes with the Fed less than a week away from its two-day policy meeting that is widely expected to conclude Nov. 2 with a fourth consecutive 0.75 percentage point interest rate increase. That would take the central bank’s benchmark funds rate to a range of 3.75% to 4%, its highest level since early 2008 and represents the fastest pace of policy tightening since the early 1980s.

    Without recommending a specific course of action, Brown asked Powell to remember the Fed has a two-pronged mandate — low inflation as well as full employment — and requested that “the decisions you make at the next FOMC meeting reflect your commitment to the dual mandate.”

    Stock picks and investing trends from CNBC Pro:

    The last time the Fed raised interest rates, from 2016 to December 2018, Powell faced withering criticism from former President Donald Trump, who on one occasion called the central bankers “boneheads” and seemed to compare Powell unfavorably with Chinese President Xi Jinping when he asked in a tweet, “Who is our bigger enemy?”

    Democrats, including then-presidential hopeful Joe Biden, criticized Trump for his Fed comments, insisting the central bank be free of political pressure when formulating monetary policy.

    Standing firm

    Brown’s stance was considerably more nuanced than Trump’s — though equally unlikely to move the dial on monetary policy.

    “Chair Powell has made it pretty clear that the necessary conditions for the Fed to achieve its full employment objective is low and stable inflation. Without low and stable inflation, there’s no way to achieve full employment,” said Mark Zandi, chief economist for Moody’s Analytics. “He’ll stick to his guns on this. I don’t see this as having any material impact on decision making at the Fed.”

    To be sure, while it’s most likely a reaction to a changing tone from some Fed officials and a slight shift in the economic data, market expectations for monetary policy have altered a bit.

    Traders have made peace with the three-quarter point hike next week. But they now see just a 36% chance for another such move at December’s Federal Open Market Committee meeting, after earlier rating it a near 80% probability, according to CME Group data.

    That change in sentiment has come following cautionary remarks about overly aggressive policies from several Fed officials, including Vice Chairman Lael Brainard and San Francisco regional President Mary Daly. In remarks late last week, Daly said she’s looking for a “step-down” point where the Fed can slow the pace of its rate moves.

    “The democratization of the Fed is the issue for the market, how much power the other members have versus the chairman. It’s difficult to know,” said Quincy Krosby, chief equity strategist at LPL Financial. Regarding Brown’s letter, Krosby said, “I don’t think it’s going to affect him. … It’s not the pressure coming from the politicians, which is to be expected.”

    A Fed spokesman acknowledged that Powell received the Brown letter and said normal policy is to respond to such communication directly. In the past, Powell has been generally dismissive when asked if political pressure can factor into decision making.

    Employment data will be key

    Along with the nudging from Brown, Powell also has faced criticism from others on Capitol Hill.

    Sen. Elizabeth Warren, the ultra-progressive Massachusetts Democrat and former presidential contender, has called Powell dangerous and recently also warned about the impact rate hikes could have on employment. Also, Sen. Joe Manchin, D-W. Va., last year criticized Powell for what was seen as the Fed’s flat-footed response to the early rise of inflation.

    “I don’t necessarily think that Powell will buckle to the political pressure, but I’m wondering whether some of his colleagues start to, some of the doves who have become hawkish,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Employment’s fine now, but as months go on and growth continues to slow and layoffs begin to increase at a more notable pace, I have to believe that the level of pressure is going to grow.”

    Payroll gains have been strong all years, but a number of companies have said they are either putting a freeze on hiring or cutting back as economic conditions soften. A slowing economy and stubbornly high inflation is making the backdrop difficult for the November elections, where Democrats are expected to lose control of the House and possibly the Senate.

    With the high stakes in mind, both markets and lawmakers will be listening closely to Powell’s post-meeting news conference next Wednesday, which will come six days before the election.

    “He knows the pressure. He knows that the politicians are increasingly nervous about losing their seats,” Krosby said. “There’s very little he could do at this point, by the way, to help either party.”

    Jim Cramer says consumers are undeterred by higher prices in the reopening economy

    [ad_2]

    Source link

  • Emmanuel Macron calls for ‘Buy European Act’ to protect regional carmakers

    Emmanuel Macron calls for ‘Buy European Act’ to protect regional carmakers

    [ad_1]

    PARIS — Emmanuel Macron called for a “Buy European Act” on Wednesday to protect carmakers on the Continent in the face of competition from China and in response to the United States’ own controversial scheme to incentivize domestic production.

    Speaking on TV channel France 2, the French president criticized the European Union as being “too open” on the topic of state subsidies for electric cars as it seeks to accelerate its transition to greener energy sources.

    “We need a Buy European Act like the Americans, we need to reserve [our subsidies] for our European manufacturers,” Macron said. “You have China that is protecting its industry, the U.S. that is protecting its industry and Europe that is an open house.”

    France has been leading the charge against Washington’s recent Inflation Reduction Act, which includes tax incentives for U.S. consumers to “Buy American” when it comes to choosing an electric car. The European Union, South Korea, Japan, China and Russia have all complained at the World Trade Organization that this measure violates international trade rules by unfairly discriminating against foreign manufacturers.

    French Finance Minister Bruno Le Maire also recently slammed the U.S. scheme as “jeopardizing the level playing field” and raising the risk of a “new trade war.”

    Macron said in the TV interview he had discussed an EU response to U.S. trade barriers during a lunch with German Chancellor Olaf Scholz at the Elysée Palace earlier on Wednesday. However, it was unclear whether the two leaders share the same view on exactly what steps to take.

    “[Scholz and I] have a real convergence to move forward on the topic, we had a very good conversation,” Macron said.

    Relations between the French president and his German counterpart have been fraught amid disagreements over energy, defense and the economy. But discontent over the U.S. legislation appears to be an area where they converge, given both their countries host major carmakers like Renault and Mercedes-Benz.

    According to an adviser to the French presidency, the two leaders agreed to push the European Commission to prepare a response to the U.S. Inflation Reduction Act.  

    Giorgio Leali contributed reporting.

    This article is part of POLITICO Pro

    The one-stop-shop solution for policy professionals fusing the depth of POLITICO journalism with the power of technology

    Exclusive, breaking scoops and insights

    Customized policy intelligence platform

    A high-level public affairs network

    [ad_2]

    Clea Caulcutt

    Source link

  • Skittles, Reese’s and other popular Halloween candies see price hike

    Skittles, Reese’s and other popular Halloween candies see price hike

    [ad_1]

    Americans have felt the effects of high inflation on groceries, gas, rent and now, as Halloween approaches, candy. According to the National Retail Federation, people are estimated to spend more than $3 billion on Halloween candy this year.

    The 10 most popular candy brands, plus assortment bags, have seen an average price increase of 13% since 2021— with some sweets jumping more than 30%, according to the Datasembly Grocery Price Index.

    The highest price increases were Skittles at 42% and Starburst at 35%. Other candies with high price hikes included M&M’s, with an increase of 14%, and Reese’s, with an increase of 13%, Datasembly found.

    “If you have a busy house with lots of people trick-or-treating, you’re definitely going to spend more,” smart shopping expert Trae Bodge told CBS Los Angeles.

    She said Halloween will be one of the most expensive holidays this year as families also deal with shrinkflation — the process where consumer items shrink in size while prices remain the same or even increase. 

    However, when it came to the lowest percent change, Nestle Crunch and Butterfinger came in at 6% and 7%, according to Datasembly. 

    Here is Datasembly’s full list of major candies’ price increases from 2021 to 2022:

    • Skittles: $3.13 to $4.43, a 42% increase
    • Starburst: $2.98 to $4.01, a 35% increase
    • M&M’s: $4.07 to $4.63, a 14% increase
    • Snickers: $6.18 to $7.07, a 14% increase
    • Twix: $5.01 to $5.65, a 13% increase
    • Reese’s: $6.01 to $6.81, a 13% increase
    • Sour Patch Kids: $4.23 to $4.75, a 12% increase
    • Kit Kat: $4.86 to $5.42, an 11% increase
    • Assorted: $11.63 to $12.59, an 8% increase
    • Butterfinger: $3.57 to $3.83, a 7% increase
    • Nestle Crunch: $4.53 to $4.82, a 6% increase

    Greg Cannella


    greg-cannella.png

    Greg Cannella is a social media producer and writer for CBS News, focused on trending stories.

    [ad_2]

    Source link

  • Cost overruns lead to an unexpected deep loss for Boeing

    Cost overruns lead to an unexpected deep loss for Boeing

    [ad_1]

    The planemaker is trying to emerge from the overlapping crises of COVID-19 and the grounding of its best-selling model.

    Boeing Co has unexpectedly reported a deeper loss in the third quarter of 2022 as cost overruns led to heavy losses at its ailing defence business, underscoring the challenge the company faces in turning around its fortunes.

    The planemaker, based in Virginia in the United States, is trying to emerge from overlapping crises: the COVID-19 pandemic and the grounding of its best-selling model after fatal crashes, which have left it with a pile of debt.

    However, a run-up in costs in Boeing’s defence contracts along with persistent supply-chain constraints and regulatory hurdles have made it tougher to shore up its fortunes.

    In the quarter through September, the company reported on Wednesday a $2.8bn charge on its Air Force One and refueling tanker programme, among others.

    The latest write-down came a day after Reuters reported Boeing has appointed senior troubleshooter Steve Parker to help turn around loss-making programmes in its defence unit.

    Rising cost pressures over the last few months have hampered fixed-price contracts for US aerospace and defence firms, prompting an industry body to ask the US Congress for inflationary relief.

    Since these contracts tend to have fixed prices, Boeing is required to absorb cost increases. Agency Partners estimates the company’s various fixed-price defence contracts have already resulted in $8.8bn of charges.

    “Every quarter, one hopes that the program specific bad news has come to an end, but then we get another installment – maybe this is It? Probably not,” analysts at Agency Partners said in a note.

    Boeing’s shares were down 1.7 percent at $144.55 in morning trading.

    Supply-chain delays

    The company further cut estimates for 737 MAX deliveries this year. It now expects to deliver 375 planes this year, lower than an earlier target of the “low 400s”.

    Chief Executive Dave Calhoun said he is confident the planemaker will get an extension from the US Congress of a key deadline to get the MAX 7 and MAX 10 certified.

    The company said while demand for commercial planes remains strong, supply-chain constraints continue to challenge the industry.

    It singled out delays in jet engine deliveries as the primary constraint in stabilising and increasing production rates for 737 jets. It called the supply chain “a key watch item” in the near term for the production and deliveries of 787 jets.

    Boeing expects its supply chain to remain challenged over the course of 2023. To ramp up production, the company said it has added more than 10,000 employees this year and is investing in training and development to improve productivity.

    It retained its forecast of generating cash this year after reporting a free cash flow of $2.9bn in the September quarter, higher than the $1.02bn expected by analysts in a Refinitiv survey.

    Adjusted loss per share in the third quarter widened to $6.18 from $0.60 a year ago. Quarterly revenue rose 4 percent to $15.96bn.

    Demand at the global services business that provides spare parts and services such as jet conversions was a bright spot in the quarter through September, with revenue rising 5 percent.

    [ad_2]

    Source link

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

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

    [ad_1]



    CNN
     — 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    But for now, many seniors are feeling little relief.

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

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

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

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

    [ad_2]

    Source link

  • Markets look for answers from the European Central Bank as it preps for a jumbo rate hike

    Markets look for answers from the European Central Bank as it preps for a jumbo rate hike

    [ad_1]

    Christine Lagarde, president of the European Central Bank, is expected to announce another 75 basis points hike.

    Bloomberg | Bloomberg | Getty Images

    While the European Central Bank is largely expected to announce another rate hike Thursday, market players are seemingly more concentrated on two other policy tools as the region edges toward a recession.

    The central bank has been contemplating inflation being at record highs but an economy that is slowing, with many economists predicting a recession before the end of the year. If the ECB takes a very aggressive stance in increasing rates to deal with inflation, there are risks that it tips the economy into further trouble.

    Amid this context, the ECB is widely seen raising rates by 75 basis points later this week. This would be the second consecutive jumbo hike and the third increase this year.

    “The ECB will likely raise its three policy rates by 75 basis points and suggest that it will go further at its next few policy meetings without providing a clear guidance on the size and number of steps to come,” Holger Schmieding, chief economist at Berenberg, said in a note Tuesday.

    Given the inflationary pressures — the September inflation rate came in at 10% — analysts are pricing in at least another 50 basis point hike in December. The bank’s main rate is currently at 0.75%.

    “A growing consensus seems to be in favour of having the deposit rate at 2% by the end of the year, implying a 50 basis point hike in December, with a reassessment of the economic and inflation outlook in early 2023,” Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management, said in a note Friday.

    Two big questions

    Rates aside, there are two questions on the minds of market players that need answering: When will the ECB start unwinding its balance sheet, in a process known as quantitative tightening, and what will happen to the lending conditions for banks in the near future. The ECB has undertaken years of quantitative easing, where it buys assets like government bonds to simulate demand, following the euro crisis of 2011 and the Covid-19 outbreak in 2020.

    “When it comes to QT, boring is beautiful,” Ducrozet said, adding that he expects the process to start in the second quarter of 2023. QT is expected “to be predictable, gradual, and passive, starting with the end of reinvestments under the Asset Purchase Programme (APP) but not actively selling bonds any time soon,” he said.

    Camille De Courcel, head of European rates strategy at BNP Paribas, said in a note Monday that the central bank might wait until the December meeting to provide details on QT but that it is likely to start reducing its balance sheet by about 28 billion euros on average per month when it does happen.

    But perhaps the biggest uncertainty at this stage is whether lending conditions will change for European banks.

    “We think Thursday [the ECB] will unveil a decision on the TLTRO, either its remuneration, or its cost. We think the new measure will only come into effect, in December,” De Courcel said.

    The targeted longer-term refinancing operations, or TLTROs, is a tool that provides European banks with attractive borrowing conditions — hopefully giving these institutions more incentives to lend to the real economy.

    Because the ECB has been increasing rates faster than the central bank initially expected, European lenders are benefiting from the attractive loan rates via TLTROs while also making more money from the higher interest rates.

    “The optics are bad against the backdrop of a historical shock to households’ income, and political pressure cannot be ignored,” Ducrozet said.

    The euro traded marginally higher against the U.S. dollar on Wednesday at $0.997. The weakness of the common currency has been a concern for the central bank though it repeatedly states that it does not target the exchange rate.

    [ad_2]

    Source link

  • Australia’s inflation soars to 32-year high

    Australia’s inflation soars to 32-year high

    [ad_1]

    Annual price growth hit 7.3 percent in the July-September period, the highest since 1990.

    Australian inflation raced to a 32-year high last quarter as the cost of home building and gas surged, a shock result that stoked pressure for a return to more aggressive rate hikes by the country’s central bank.

    Data from the Australian Bureau of Statistics (ABS) on Wednesday showed the consumer price index (CPI) jumped 1.8 percent in the September quarter, topping market forecasts of 1.6 percent.

    The annual rate shot up to 7.3 percent, from 6.1 percent, the highest since 1990 and almost three times the pace of wage growth.

    A closely watched measure of core inflation, the trimmed mean, also climbed 1.8 percent in the quarter, lifting the annual pace to 6.1 percent and again far above forecasts of 5.6 percent.

    That would be unwelcome news to the Reserve Bank of Australia (RBA) which had thought core inflation would peak at 6 percent in the December quarter, with CPI topping at 7.75 percent.

    Instead, analysts were warning that both core and headline inflation were certain to spike even further this quarter with the ABS’s new monthly CPI accelerating in September.

    “The upshot is that CPI inflation will approach 8 percent in Q4,” said Marcel Thieliant, a senior economist at Capital Economics.

    “The stronger-than-expected rise in consumer prices is consistent with our forecast that the RBA will hike rates more aggressively than most anticipate.”

    It is particularly ill-timed for the RBA since it surprised many this month by downshifting to a quarter-point rate hike, following four moves of 50 basis points.

    Rates have already risen by a massive 250 basis points since May and the RBA had wanted to go slower to see how the drastic tightening was impacting consumer spending.

    Investors now suspected the central bank may have to reconsider, perhaps not at its policy meeting next week but rather in December.

    Futures still imply a quarter-point move on November 1 to 2.85 percent, but now show some chance of a half-point hike in December and a peak for rates of approximately 4.20 percent in July.

    The European Central Bank and the Bank of Canada are both expected to hike rates by 75 basis points this week, while the United States Federal Reserve should match that at its meeting on November 2.

    Australia’s Labor government bowed to inflation concerns this week by restraining spending in its 2022-23 Budget, despite calls for more cost-of-living support amid soaring prices.

    There are also fears recent flooding across eastern Australia will lift food prices even higher, with supermarket chain Coles warning of declining volumes in fresh food where prices were up 8.8 percent on a year earlier.

    Wednesday’s CPI report showed food prices were already climbing at an annual pace of 9 percent, with the third quarter alone, seeing a surge of 3.2 percent.

    The ABS noted that annual inflation for essential goods and services leapt to 8.4 percent in the September quarter, highlighting the extent of cost-of-living pressures.

    [ad_2]

    Source link

  • Why Gold Isn’t the Ideal Hedge Against Inflation in 2022

    Why Gold Isn’t the Ideal Hedge Against Inflation in 2022

    [ad_1]

    Opinions expressed by Entrepreneur contributors are their own.

    Gold has long been regarded as one of the most effective investments for protecting one’s wealth from various possible adverse financial effects. A plummeting stock market and an increase in inflation are two examples of these hazards. Currently, inflation is at extremely high levels, yet gold prices have not been doing particularly well. In terms of the U.S. dollar, it has decreased by over 10% so far this year, which contradicts the overarching perception of gold as an inflation hedge.

    Uncovering the appeal of gold as a traditional inflation hedge

    To reduce their risk exposure, traders and investors in the financial markets often use a strategy known as hedging. In most cases, this is accomplished by creating an opposite position in the market to compensate for any loss that may have been made in their primary position. Hedging may be thought of in a straightforward manner by comparing it to purchasing an insurance policy. When we speak about hedging against inflation, we are referring to the process of preserving your capital from the depreciating effects of inflation. Therefore, to hedge against inflation, investors want assets that are unaffected by growing inflation.

    Gold has always been seen as a hedge against inflation throughout time. As a result, it is the asset of choice for investors who want to ensure that their money will continue to have the same buying power in the future while minimizing the amount of risk they are exposed to. When there is an uptick in inflation that is being kept under control, central banks will not necessarily vote to raise their key interest rates automatically. This indicates that the real interest rates, calculated by subtracting the nominal interest rate from the inflation rate, will be negative for assets such as government bonds.

    When interest rates are at historically low levels, gold’s ability to shift in the opposite way of real interest rates makes it an efficient hedge against inflation. Because of this, investors can protect the value of their funds from experiencing a significant decline.

    Related: Gold Stocks That Might Be Worth A Look As Inflation Continues To Run Hot

    Gold’s decline over 2022

    In March 2022, as a direct consequence of the conflict between Ukraine and Russia, the price of gold reached an all-time high of more than $2,000 per ounce. Although inflation has reached record highs, gold prices have been falling for the last few months.

    As interest rates continue to climb, some investors are considering selling gold, which does not pay interest, to purchase assets that do pay interest. Temptations come in the form of greater returns, which are now accessible in bonds, property or even shares of stock. Other temptations come in the form of higher interest rates on cash.

    Gold’s position in comparison to other asset classes — such as stocks, currencies and bonds — has recently seen significant shifts due to these developments. All asset classes function independently of one another for various reasons, including changes in how the economy operates, modifications to monetary and fiscal policy and many other factors. Because each of these asset classes experiences a different price action dependent on a variety of factors, including supply and demand, the prevailing interest rate regime, inflation, gross domestic product and other factors, investors should view each of these asset classes as having equal importance.

    Nowadays, the reputation of gold as a trustworthy hedge against inflation is in jeopardy as investors go to other parts of the market in which they might seek refuge from increasing costs.

    Related: Here’s How Inflation Might Impact Your Portfolio

    Why isn’t gold performing better?

    Some analysts consider that gold is a good method to protect oneself against inflation before it occurs. However, the situation changes drastically whenever there is significant price inflation — assuming that the Fed successfully brings inflation under control. Once inflation has reached a high level, it is essentially too late to “hedge” against the inflation that has already occurred, and the gold prices often suffer when the dollar is stronger as well. The price of bullion is expressed in terms of the U.S. dollar, and a strong dollar has the effect of dampening excitement.

    “Gold seems to protect purchasing power over a long period — say, 100-plus years — but provides very little protection against inflation in the short term,” according to Kevin Lum, a CFP and founder of Foundry Financial.

    [ad_2]

    Ron Bauer

    Source link

  • Sunak to become UK leader at meeting with King Charles III

    Sunak to become UK leader at meeting with King Charles III

    [ad_1]

    LONDON — Rishi Sunak is due to be installed as Britain’s third prime minister of the year by King Charles III on Tuesday, before appointing a Cabinet that will have to wrestle with the U.K.’s economic and political crises.

    Sunak, the U.K.’s first leader of color, was selected as leader of the governing Conservative Party on Monday as it tries to stabilize the economy, and its own plunging popularity, after the brief, disastrous term of Liz Truss.

    Truss will depart after making a brief public statement outside 10 Downing St., seven weeks to the day after she was appointed prime minister by Queen Elizabeth II. The queen died two days later. Now her son will take over the ceremonial role of accepting Truss’ resignation at Buckingham Palace before asking Sunak to form a government.

    Sunak — at 42 the youngest British leader for more than 200 years — must try to shore up an economy sliding toward recession and reeling after his predecessor’s experiment in libertarian economics, while also attempting to unite a demoralized and divided party that trails far behind the opposition in opinion polls.

    His top priorities will be appointing Cabinet ministers, and preparing for a budget statement that will set out how the government plans to come up with billions of pounds (dollars) to fill a fiscal hole created by soaring inflation and a sluggish economy, and exacerbated by Truss’ destabilizing economic experiments.

    The statement, set to feature tax increases and spending cuts, is currently due to be made in Parliament on Monday by Treasury chief Jeremy Hunt — if Sunak keeps him in the job.

    Sunak, who was Treasury chief himself for two years until July, said Monday that Britain faces “a profound economic challenge.”

    Sunak becomes prime minister in a remarkable reversal of fortune just weeks after he lost to Truss in a Conservative election to replace former Prime Minister Boris Johnson. Party members in the summer chose her tax-cutting boosterism over his warnings that inflation must be tamed.

    Truss conceded last week that she could not deliver on her plans — but only after her attempts triggered market chaos and worsened inflation at a time when millions of Britons were already struggling with soaring borrowing costs and rising energy and food prices.

    The party is now desperate for someone to right the ship after months of chaos under Truss and Johnson, who quit in July after becoming mired in ethics scandals.

    Sunak was chosen as Conservative leader after becoming the only candidate to clear the hurdle of 100 nominations from fellow lawmakers to run in the party election. Sunak defeated rival Penny Mordaunt, who may get a job in his government, and the ousted Johnson, who dashed back from a Caribbean vacation to rally support for a comeback bid but failed to get enough backing to run.

    As well as stabilizing the U.K. economy, Sunak must try to unite a governing party that has descended into acrimony as its poll ratings have plunged.

    Conservative lawmaker Victoria Atkins, a Sunak ally, said the party would “settle down” under Sunak.

    “We all understand that we’ve now really got to get behind Rishi — and, in fairness, that’s exactly what the party has done,” she told radio station LBC.

    ———

    Follow all AP’s reporting on British politics at https://apnews.com/hub/british-politics

    [ad_2]

    Source link

  • Eye on America: Locally sourced water revives town, money saving tips amid inflation, and more

    Eye on America: Locally sourced water revives town, money saving tips amid inflation, and more

    [ad_1]

    Eye on America: Locally sourced water revives town, money saving tips amid inflation, and more – CBS News


    Watch CBS News



    We see the ripple effect of a locally sourced water company reviving an Idaho mining town. And we learn some small tips to save big at the grocery store amid rising inflation. Watch these stories and more on “Eye on America” with host Michelle Miller.

    Be the first to know

    Get browser notifications for breaking news, live events, and exclusive reporting.


    [ad_2]

    Source link

  • Australia to reveal economic plan for deteriorating outlook

    Australia to reveal economic plan for deteriorating outlook

    [ad_1]

    CANBERRA, Australia — Australia’s new government on Tuesday will propose an economic plan to steer the nation through rising inflation and interest rates while reigning in debt.

    Treasurer Jim Chalmers will deliver his center-left Labor Party’s first annual budget for the fiscal year that began in July.

    It will be the first budget by a Labor government in nine years and must contend with unprecedented levels of debt as a result of the COVID-19 pandemic.

    Chalmers said rising inflation was the primary influence on how he drafted his economic blueprint.

    “The budget will be solid, sensible and suited for the times. It will recognize that in a time of extreme global uncertainty, our best defense is a responsible budget at home,” Chalmers told reporters.

    “The budget has three objectives: responsible cost-of-living relief, strengthening the economy and beginning the hard yards of budget repair,” he added.

    The previous conservative government had forecast in its last budget in March a 78 billion Australian dollar ($49 billion) deficit in the current fiscal year.

    The new government’s forecast more than halves that deficit to AU$36.9 billion ($23.3 billion) thanks mainly to higher prices for commodities including iron ore and coal.

    However, slowing economic growth was expected to add to the longer-term difficulty of repaying debt.

    The March budget forecast that gross debt as a share of the economic growth would peak in mid-2025 at 44.9%, or AU$1.117 trilllion ($709 billion).

    The budget will help families by increasing child care subsidies and gradually increasing paid parental leave entitlements from 18 to 26 weeks, the government said.

    Prime Minister Anthony Albanese said the budget would provide cost-of-living relief for families without fueling inflation.

    “The priority will be on measures that boost the economy, that boost productivity. Cheaper child care does just that. So does paid parental leave,” Albanese said.

    The government will need to get its budget measures through the Parliament, where compromises may need to be made.

    [ad_2]

    Source link

  • Halloween Candy Is More Expensive This Year

    Halloween Candy Is More Expensive This Year

    [ad_1]

    This is not a trick. The cost of Halloween treats is way up in 2022.

    For example, the price of Skittles has increased 42% from last year, according to analysis from Datasembly

    And if you want a juicy Starburst blast, be prepared to pay 32% more.

    Related: Your Halloween Candy Will Be Smaller This Year (And Not Just Because of Inflation)

    Rising candy costs for consumers

    Americans will spend $3.1 billion on candy this Halloween. But thanks to soaring inflation, candy — like pretty much everything else these days — is more expensive. Take a look at these price increases, courtesy of Axios:

    Candy isn’t even being spared from the supply chain woes. Starburst, which is made by Mars Wrigley, gets its sugar from the Caribbean, but hurricane season caused delays in the transport of goods.

    But despite the surge in candy cost, American consumers still plan on taking a big sugary bite. According to a survey from the National Confectioners Association, 82% of Americans will celebrate Halloween this year, and they’re expected to shell out 48% more for candy.

    Anticipating the surge, companies such as Walmart and Lowes prepared for Halloween by ordering more products and stocking the shelves early.

    Inflation be darned. Trick-or-treaters are sweet on candy.

    [ad_2]

    Jonathan Small

    Source link

  • So Rishi Sunak is the UK’s next prime minister. What happens now?

    So Rishi Sunak is the UK’s next prime minister. What happens now?

    [ad_1]

    LONDON — It took one bruising campaign defeat and six weeks of exile — but on Tuesday, Rishi Sunak will finally become U.K. prime minister.

    He faces the toughest in-tray of any British leader since World War II, entering No. 10 Downing Street as the country hurtles into winter with energy bills, hospital waiting lists, borrowing costs and inflation all soaring.

    The challenge has been magnified by Liz Truss’ brief crash-and-burn premiership. As a result of her now-infamous mini-budget, which was scrapped almost in its entirety after causing chaos in financial markets, the Conservatives are trailing the opposition Labour Party by over 30 percentage points in opinion polls.

    On Monday, Sunak told MPs he was ready to hit the ground running as he addressed them for the first time since becoming Tory leader. Over the days and months ahead, he will need to carry out his first ministerial reshuffle without further fracturing his party; oversee the first budget since the last one wreaked havoc on the economy; and determine what support to offer voters with their energy bills past this spring.

    Prime ministers tend to think of their first 100 days as a way to set the tone for their premierships. For Sunak, who has just over two years to govern before he is required to face a general election, that first impression is going to be particularly important.  

    October 25 — Meeting with the king and first speech outside No. 10 Downing Street

    Sunak will become the prime minister Tuesday after an audience with King Charles III, where he will ask the monarch for permission to form a government.

    Sunak will then address the country for the first time as prime minister from the steps outside No. 10 Downing Street at around 11.35 a.m.

    To much of the British public, the former chancellor is a familiar face who announced the wildly-popular furlough scheme during the coronavirus pandemic in 2020.

    His task now will be to reassure people that the government will support them during another difficult economic period — only this time he is in a much tougher position. The popularity he gained during the pandemic has waned, and he is taking over after a major government crisis — the third Tory prime minister to hold office within three months.  

    October 25 — First reshuffle

    The first big political test for Sunak will be his Cabinet reshuffle. Tory MPs believe he will learn the lesson from Truss’ first and only one, where she divvied up roles between her allies and left almost everyone who didn’t back her out in the cold.

    “I think his reshuffle will be more unifying, bringing in people from all wings and will not be as destabilizing as Liz’s,” an MP who did not back Sunak predicted.

    Sunak’s leadership rival Penny Mordaunt is expected to be handed a major Cabinet position | Dan Kitwood/Getty Images

    Sunak is likely to make at least his major Cabinet appointments Tuesday afternoon, so they are in place to line up alongside him on the House of Commons’ front bench when MPs grill him during so-called prime minister’s questions (PMQs) on Wednesday.

    His biggest decision will be whether to keep Jeremy Hunt — who was drafted in by Truss in a last-ditch effort to save her premiership — as chancellor. He is also likely to hand a big job to his leadership rival Penny Mordaunt.

    Close Sunak allies who are likely to get promotions include Mel Stride, the current chairman of the Treasury select committee, Craig Williams, Claire Coutinho and Laura Trott. Tory big beast Michael Gove could see a return to Cabinet.

    October 26 — First PMQs

    Sunak will go head-to-head as prime minister with Keir Starmer, the Labour leader, for the first time on Wednesday.

    Unlike his predecessor, Sunak won’t have much to worry about from his own side — Tory MPs have largely rowed behind him since he became their leader on Monday, with many expressing relief that the perpetual state of crisis of the Truss government has ended.

    But MPs will want him to demonstrate that he can land blows against Starmer at a time when Labour is streets ahead in the polls. Sunak told Tory MPs on Tuesday that their party faced an “existential threat” as a result of its low poll ratings.

    October 28 — Deadline to form a government in Belfast

    If a power-sharing arrangement is not in place at Stormont by Friday, a fresh set of elections to the Northern Irish assembly will have to be triggered.

    Calling these elections — the second set in seven months — could be one of the Sunak government’s first acts and an indication of successive Tory prime ministers’ failure to deal with the political crisis in Northern Ireland.

    The Democratic Unionist Party issued a fresh warning on Monday night that it would not participate in the assembly unless Sunak takes action on the post-Brexit Northern Ireland protocol agreed with the EU.

    October 31 — First budget

    The next budget was penciled in for October 31 by Kwasi Kwarteng, the Truss-era chancellor who wanted to use it to reassure financial markets still reeling from his last one.

    The timing of the budget — widely derided by Tory MPs because of the optics of holding it on Halloween — was intended to give the Bank of England time to react before its own key meeting on November 3, where it will set interest rate levels for the weeks ahead.

    In its biggest test so far, Sunak’s government will have to decide whether to stick with that date; what actions to take to reassure the markets; and how to fill the enormous hole in the U.K. public finances.

    Carl Emmerson, deputy director of the Institute for Fiscal Studies, said: “If his chancellor is Jeremy Hunt and Sunak is comfortable with the way things are proceeding for next Monday, then going ahead has lots of advantages.

    “You get the announcement out before the Bank of England makes its next inflation figure, and you get the Office for Budgetary Responsibility forecasts out there, which helps show the markets you are serious about them.

    “The case for changing that date is much stronger if Sunak says, ‘Actually, I want to do something different to what Jeremy Hunt has been planning, and I need more time,’” Emmerson added.

    November 3 — Bank of England rates meeting

    The Bank of England’s monetary policy committee is expected to raise interest rates at its meeting on November 3, triggering a fresh hike in people’s mortgages.

    This is the point when many people will realize for the first time that they will have to make much larger mortgage repayments once their current fixed-rate deals come to an end.

    Sunak made combating inflation and keeping mortgages low a central theme of his leadership campaign over the summer. Reacting to the rates decision and ensuring the government works closely with the Bank of England to combat inflation will be a key test of his premiership.

    November 6 — COP27 summit in Egypt

    Sunak made a point of telling Tory MPs on Tuesday that he is committed to the U.K.’s goal of achieving net-zero carbon emissions by 2050.

    The question now is whether he attends the COP27 climate summit in Sharm El Sheikh, Egypt. Truss reportedly planned to go, despite her skepticism of aspects of the net-zero agenda.

    If Sunak does go to Egypt, it could be his first foreign trip in office (unless he decides to make a quick visit to Ukraine beforehand) and his first opportunity to present himself on the world stage.

    November 8 — Boundary changes

    The Boundary Commission for England will publish its new constituency map on November 8.

    At this point, some Tory MPs will know with near certainty that their constituencies are being carved up between neighboring areas, with some forced to jostle with colleagues over who will get to stand where.

    It will be a political headache for Sunak to deal with, and any MPs whose safe seats become marginal will sense their political careers coming to an end — and will have less of an incentive to support him in key votes in the months ahead.

    November 13 — G20 meeting in Indonesia

    The next big foreign trip coming down the track is the G20 summit in Bali, Indonesia.

    The meeting will be an opportunity for Western powers to present a united front against Russia following its invasion of Ukraine and against China’s increased aggression toward Taiwan, but also to hold talks behind closed doors. There have been reports that both China’s Xi Jinping and Russian Vladimir Putin will attend.

    Sophia Gaston, the head of foreign policy at the Policy Exchange think tank, said this was shaping up to be “one of the most extraordinary summits of modern history, with a violent war raging in Ukraine and the leading protagonist, Vladimir Putin, on the guest list alongside other autocratic leaders and outraged democratic allies.”

    “As well as promoting free trade and the rules-based international order, Sunak would likely see the G20 as an opportunity to build support for his proposed ‘NATO-style’ technology alliance,” Gaston said. “He may well also debut a new U.K. message on the net-zero transition.”

    Late November or early December — Chester by-election

    Labour whips are preparing to trigger a by-election in the city of Chester in late November or December.

    The by-election is taking place because the city’s MP Christian Matheson resigned after a parliamentary watchdog recommended he be suspended for sexual misconduct.

    Matheson sits on a 6,164-vote majority, and the seat has traditionally been a swing seat flipping between the Tories and Labour. It was Conservative up until 2010.

    Based on current polling figures, Labour should win a significantly larger majority than it currently has, though by-elections do suffer from small turnouts and so unexpected results are not uncommon. A dramatic Tory defeat would set alarm bells ringing in the party.

    Another by-election could be triggered in the coming months if, as expected, Boris Johnson elevates his ally and MP Nadine Dorries to the House of Lords in his resignation honors. That would likely be the first by-election in a Tory-held seat fought with Sunak as party leader.

    December 31 — U.K. deadline for joining trans-Pacific trade bloc

    The U.K. government has said it hopes to conclude negotiations on joining the CPTPP — a trade agreement signed by 11 countries including Australia and New Zealand — by the end of the year.

    Securing this deal was one of Truss’ priorities. For Sunak it would represent both a concrete foreign policy achievement and an indication that the U.K. is successfully building closer diplomatic ties with countries in the Indo-Pacific after Brexit.

    Talks around the partnership have thrown up some diplomatic obstacles, with China reacting angrily to U.K. trade officials meeting Taiwanese counterparts. Both China and Taiwan have applied to join the CPTPP.

    December or January — Johnson’s probe concludes

    The Commons privilege committee’s probe into whether Johnson misled parliament over the so-called Partygate scandal will begin taking evidence in November and is expected to conclude in December or January — though it could drag on longer.

    There have been suggestions that the evidence against him is so damning that Johnson could face temporary suspension from parliament or even be kicked out as an MP. The inquiry may have formed part of Johnson’s decision not to stand for the Tory leadership contest.

    If the privileges committee says Johnson should be sanctioned once it concludes its inquiry, Sunak will have to judge his response and decide whether to whip Tory MPs to back its recommendations even if that provokes Johnson’s ire. There is also the risk that Sunak himself will be dragged into the probe, given he too was fined over the Partygate scandal.

    Early January — COVID inquiry takes evidence

    The independent inquiry into the government’s handling of the coronavirus pandemic could begin gathering evidence at the start of next year.

    Among other things, the probe will examine the impact of the economic policies that Sunak designed as chancellor during the pandemic, putting his decisions under scrutiny.

    His “Eat Out to Help Out” scheme — which encouraged people to dine in restaurants during the post-lockdown summer of 2020 — could become a focus, with critics claiming it drove up coronavirus-related infections and deaths.

    February — Energy support nears its end

    By the time Sunak’s first 100 days are up, there will be pressure on the government to explain how it will support people with their energy bills past the spring if wholesale gas prices haven’t drastically fallen. Hunt has already rolled back the Truss government’s two-year guarantee and instead capped people’s energy bills at an average of £2,500 for just six months. That policy ends in April.

    The Institute for Fiscal Studies’ Emmerson said: “We’ve got a big generous offer from the government through this winter — although prices are still a lot higher than they were last year, they will be nowhere near as high as they would have otherwise been.

    “The prime minister and chancellor will spend a lot of time thinking about how they replace that scheme. In some ways, it’s very similar to the kind of furlough scheme that Sunak had during the pandemic — very generous, big scheme with lots of crude edges to it,” he said.

    “It’s understandable wanting to get in place quickly to support people, but how do you get out of it? Do it too quickly and that’s too much pain for too many people — keep it in place for too long, and that’s very expensive to the government.”

    It’s just one of so many enormous decisions the new PM faces in his first 100 days.

    [ad_2]

    Eleni Courea

    Source link

  • Why Is Halloween Candy So Much Smaller This Year?

    Why Is Halloween Candy So Much Smaller This Year?

    [ad_1]

    Retailers began stocking Halloween candy in August, and ever since, shoppers have been confronted with an indisputable fact: Portion sizes aren’t what they once were.


    Tanja Ivanova | Getty Images

    Part of the shrinkage is due to inflation, The Washington Post reported, but it’s also the result of a years-long campaign to reduce the calories in Americans’ treats.

    Related: 4 Ways to Protect Your Business From Inflation

    Also known as “shrinkflation,” the phenomenon of goods getting smaller (but not cheaper) isn’t new, per CNBC, but it has surged in recent months, impacting the cost of everything from gas to food — and now, Halloween candy.

    Food prices have risen 11.4% over the last year, the largest 12-month jump since 1979, but “shrinkflation” isn’t the whole story.

    Five years ago, major candy companies including Mars Chocolate North America LLC, Nestle USA, WM Wrigley Jr Co, and Lindt & Spruengli joined forces to reduce the calories in their products, Reuters reported, as part of a larger effort to combat the U.S.’s significant rates of obesity, diabetes and heart disease.

    Today, 85% of chocolate and candy sold comes in packaging that holds 200 calories or fewer per pack, according to The National Confectioners Association.

    Related: Is This $100,000 Candy Testing Job for Real?

    Commerce data platform Klover, which gathers spending and pricing data using receipts from 4 million users, revealed that a king-size pack of Reese’s Peanut Butter Cups cost 14% more in 2022, and a regular 1.55-ounce Hershey’s milk chocolate bar cost 15% more, per The Post.

    [ad_2]

    Amanda Breen

    Source link