ReportWire

Tag: Recessions and depressions

  • Lebanon signs gas exploration deal with international consortium amid economic crisis

    BEIRUT — BEIRUT (AP) — Lebanon ’s government on Friday signed a deal with an international consortium to explore gas in an offshore area bordering Israel.

    The deal for exploration at the so-called Block 8 off the coast of southern Lebanon comes after Lebanon and Israel signed a 2022 agreement over their maritime border. The new deal is the latest to be granted by Lebanon to international companies to search for gas in its territorial waters.

    Cash-strapped Lebanon hopes that future gas discoveries will help the small Mideast nation pull itself out of the worst economic and financial crisis in its modern history.

    The deal was signed at the government’s headquarters in downtown Beirut by Energy Minister Joe Saddi from the Lebanese side and officials from the international consortium consisting of France’s TotalEnergies, Italy’s ENI, and state-owned oil and gas company Qatar Energy.

    TotalEnergies said in a statement that the consortium plans to start with a 1,200-square kilometer (463 square mile) 3D seismic survey to assess the area’s exploration potential.

    In 2017, Lebanon approved licenses for France’s TotalEnergies, Italy’s ENI and Russia’s Novatek to move forward with offshore oil and gas development for two of 10 blocks in the Mediterranean Sea, including one that was at the time in a disputed part with neighboring Israel.

    The companies did not find viable amounts of oil and gas in one of the blocks north of Beirut, and drilling in another in the south was repeatedly postponed because of the maritime border dispute with Israel. Lebanon and Israel later signed a deal over their maritime border in 2022.

    In August 2023, an offshore drilling rig began operations in the Mediterranean Sea off Lebanon’s coast.

    That did not give positive results, but Patrick Pouyanné, Chairman and CEO of TotalEnergies, said in a statement that they will keep trying in other areas.

    “We remain committed to pursue our exploration activities in Lebanon,” said Pouyanné. ” We will now focus our efforts on Block 8, together with our partners Eni and QatarEnergy and in close cooperation with Lebanese authorities.”

    On Oct. 8, 2023 Lebanon’s Hezbollah started firing rockets toward Israeli posts along the border to back its Hamas allies a day after the Palestinian group attacked southern Israel. The war lasted 14 months during which Hezbollah was severely weakened.

    In January 2023, Lebanon, ENI, TotalEnergies and state-owned oil and gas company Qatar Energy signed an agreement in which the Qatari firm replaced Novatek. Under the deal, Qatar Energy takes Novatek’s 20% stake in addition to 5% each from ENI and TotalEnergies, leaving the Arab company with a total stake of 30%. TotalEnergies and ENI will each have 35% stakes.

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  • Consumer confidence slides in December to lowest level since US tariffs rolled out

    WASHINGTON — Consumers confidence in the economy was shaken in December as Americans grow anxious about high prices and the impact of President Donald Trump’s sweeping tariffs.

    The Conference Board said Tuesday that its consumer confidence index fell 3.8 points to 89.1 in December from November’s upwardly revised reading of 92.9. That is close to the 85.7 reading from April, when Trump rolled out his import taxes on U.S. trading partners.

    A measure of Americans’ short-term expectations for their income, business conditions and the job market remained stable at 70.7, but still well below 80, the marker that can signal a recession ahead. It was the 11th consecutive month that reading has come in under 80.

    Consumers’ assessments of their current economic situation tumbled 9.5 points to 116.8.

    Write-in responses to the survey showed that prices and inflation remained consumers’ biggest concern, along with tariffs, despite repeated claims by President Trump that inflation is a hoax.

    Perceptions of the job market also declined this month.

    The conference board’s survey reported that 26.7% of consumers said jobs were “plentiful,” down from 28.2% in November. Also, 20.8% of consumers said jobs were “hard to get,” up from 20.1% last month.

    Last week, the government reported that the U.S. economy gained a healthy 64,000 jobs in November but lost 105,000 in October. Notably, the unemployment rate rose to 4.6% last month, the highest since 2021.

    The country’s labor market has been stuck in a “low hire, low fire” state, economists say, as businesses stand pat due to uncertainty over Trump’s tariffs and the lingering effects of elevated interest rates. Since March, job creation has fallen to an average 35,000 a month, compared to 71,000 in the year ended in March. Fed Chair Jerome Powell said recently that he suspects those numbers will be revised even lower.

    Despite the broad pessimism, the proportion of those surveyed who think a recession in the next year is is unlikely grew.

    The December survey showed that respondents’ views of their family’s current financial situation sank into negative territory for the first time in close to four years. On the flip side, expectations about their future financial situation were the most positive since January.

    Also Tuesday, the government reported that the economy expanded at a 4.3% annual rate in the third quarter, though economists expect a much more sluggish fourth quarter.

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  • Wall Street climbs to more records on hopes for cuts to interest rates

    NEW YORK — U.S. stocks are rising further into record heights on Friday after the latest disappointing signal on the job market bolstered expectations that the Federal Reserve will have to cut interest rates soon to help the economy.

    The S&P 500 climbed 0.4% and added to its all-time high set the day before. The Dow Jones Industrial Average was up 115 points, or 0.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.6% higher.

    The action was much stronger in the bond market, where Treasury yields tumbled after the report from the U.S. Labor Department said employers across the country hired far fewer workers in August than economists expected. The U.S. government also said that earlier estimates for June and July overstated hiring by 21,000 jobs.

    The disappointing numbers followed last month’s weaker-than-expected update, along with other lackluster reports in the intervening weeks, and traders now are betting on a 100% probability that the Fed will cut its main interest rate at its next meeting on Sept. 17, according to data from CME Group. Such cuts can give a kickstart to the economy and job market, but the Fed has held off on them so far this year because they can also give inflation more fuel.

    Until now, the Fed has been more worried about the potential of inflation worsening because of President Donald Trump’s tariffs than about the job market. But Friday’s job numbers were weak enough that they could even push the Fed to consider cutting by a deeper-than-usual half of a percentage point in two weeks, said Brian Jacobsen, chief economist at Annex Wealth Management.

    “This week has been a story of a slowing labor market, and today’s data was the exclamation point,” according to Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.

    While the data on the job market is disappointing, it’s still not so weak that it’s screaming a recession is here. The hope for investors is that the job market can remain in a balanced state where it’s not so strong that it prevents cuts to interest rates but also not so weak that profits for companies disappear.

    On Wall Street, Broadcom leaped 13.8% and helped pull tech stocks higher after it reported better profit and revenue for the latest quarter than analysts expected. CEO Hock Tan said customers are continuing to invest strongly in chips used for artificial-intelligence technology, and the company expects revenue from them to accelerate to $5.2 billion in the current quarter.

    Tesla rose 3.1% after proposing a payout package that could reach $1 trillion for CEO Elon Musk if the electric vehicle company meets a series of extremely aggressive targets over the next 10 years.

    Those gains helped offset a 16.4% drop for Lululemon. The yoga and athletic gear maker tumbled after it fell short of analysts’ expectations for revenue in the latest quarter, even though its profit topped forecasts. CEO Calvin McDonald pointed to disappointing results from its U.S. operation, as its international results saw positive momentum. CFO Meghan Frank said Lululemon is facing “industry-wide challenges, including higher tariff rates.”

    In stock markets abroad, indexes rose across much of Europe and Asia.

    In Tokyo, the Nikkei 225 rallied 1% after data showed accelerating growth in earnings for Japanese workers in July.

    Chinese markets rebounded after three days of decline. Indexes jumped 1.4% in Hong Kong and 1.2% in Shanghai.

    In the bond market, the yield on the 10-year Treasury tumbled to 4.07% from 4.17% late Thursday and from 4.28% on Tuesday. That’s a notable move for the bond market.

    The two-year Treasury yield, which more closely tracks expectations for Fed action, fell even more. It dropped to 3.47% from 3.59% late Thursday.

    ___

    AP Writers Matt Ott and Teresa Cerojano contributed.

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  • Average rate on a 30-year mortgage slips to 10-month low

    MCLEAN, Va. — The average rate on a 30-year U.S. mortgage slipped this week to its lowest level in 10 months, but remains close to where it’s been in recent weeks.

    The long-term rate eased to 6.56% from 6.58% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.35%.

    Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loans, were unchanged from last week. The average rate held steady at 5.69%. A year ago, it was 5.51%, Freddie Mac said.

    Elevated mortgage rates have added to a slump in the U.S. housing market that began in early 2022, when rates began climbing from pandemic lows.

    For much of the year, the average rate on a 30-year mortgage has hovered relatively close to its 2025 high of just above 7%, set in mid-January. It’s has mostly trended lower six weeks in a row and is now at the lowest level since Oct. 24, when it averaged 6.54%.

    The recent downward trend in mortgage rates bodes well for prospective homebuyers who have been held back by stubbornly high home financing costs. But it has yet to translate into a turnaround for home sales, which have remained sluggish this year after sinking in 2024 to their lowest level in nearly 30 years.

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  • What to know about the delisting of property developer China Evergrande’s shares in Hong Kong

    BANGKOK — Shares in China Evergrande were removed from the Hong Kong Stock Exchange on Monday, marking another step in the retreat of the giant real estate developer whose downfall contributed to a prolonged crisis in China’s property market.

    Evergrande’s creditors are still working to wind up debts that amounted to more than $340 billion. Once China’s second-largest developer, it ran into trouble when Chinese regulators cracked down several years ago on what they deemed to be excess borrowing by developers.

    That caused dozens of property companies to default on their debts, triggering a downturn in the property market that is still dragging on the world’s second-largest economy.

    Here’s what to know about Evergrande:

    The Hong Kong Exchange said Monday that Evergrande’s shares were delisted as of Monday morning, as expected. The shares were last traded on January 29, 2024, and then suspended after a court in Hong Kong ordered liquidation of the company when it failed to provide a viable debt restructuring plan.

    Rules of the exchange stipulate that a company’s share listing may be canceled if trading in its securities is suspended for 18 straight months.

    After years of warnings that led to global rating agencies cutting the Chinese government’s credit rating in 2017, the ruling communist party cracked down on real estate debt in 2020. It imposed controls known as “three red lines” that prohibited heavily indebted developers like Evergrande from borrowing more to pay off bonds and bank loans as they matured.

    Fears of a possible Evergrande default in 2021 rattled global markets, but they eased after the Chinese central bank said its problems were contained and Beijing would keep credit markets functioning. Evergrande was one of the biggest of many developers that failed to repay their creditors.

    Chinese home buyers often pay up front for apartments before they’re even built. The credit crunch for Evergrande and other developers led them to suspend construction, leaving many projects in limbo. The slowing of home purchases and building rippled throughout the economy, hitting demand for construction materials, appliances and even vehicles at a time when China was also contending with disruptions caused by the COVID-19 pandemic.

    Since most Chinese families have their wealth tied up in property, the anemic housing market has been a major factor crimping consumer spending.

    There has been some recovery in the housing sector, but home prices and investment have continued to fall.

    Before the crackdown on borrowing, real estate accounted for some 20% of China’s economy. When spending on steel and copper for construction, furniture and other related purchases was added in, estimates of its share of the economy rose to about a third.

    China’s leaders have sought to get developers to finish projects and deliver apartments that already were paid for, providing billions in lending and subsidies. They’ve encouraged local governments to buy up excess apartments to serve as affordable housing, and relaxed down payment and mortgage requirements.

    They’ve also lifted many restrictions on purchases of homes for investment purposes in major cities, a move that analysts at HSBC Global Investment Research described as “surprising” as they came earlier than expected.

    Sales and home prices were expected to fall further in August, they said in a recent report.

    “We think it’s a positive change showing government’s enhanced proactiveness in rolling out measures, which will help strengthen market confidence and address the concern on stimulus being too late,” it said.

    Evergrande, headquartered in southern China’s Shenzhen, near Hong Kong, was founded by entrepreneur Hui Ka Yan, who is also known as Xu Jiayin, in 1996. Its ascent and decline have mirrored the boom and bust in China’s property market after housing reforms allotted apartments built by state-owned industries to employees, creating a nation of home owners.

    The company’s shares were listed in Hong Kong in 2009.

    Evergrande filed for Chapter 15 bankruptcy protection in New York City in 2023, but that case was later withdrawn. Although a Hong Kong court ordered a winding up of the company’s debts, more than 90 percent of its assets are on the Chinese mainland, making it difficult to enforce repayment to its creditors.

    Its liquidators said in a recent progress report that they had received debt claims totaling $45 billion as of Jul. 31, much higher than the some $27.5 billion of liabilities disclosed in December 2022, and that the new figure was not final. They also had taken control of more then 100 companies within the group with collective assets valued at $3.5 billion as of Jan. 29, 2024.

    So far, about $255 million worth of assets have been sold, the liquidators said, calling the realization “modest.”

    ___

    AP reporter Kanis Leung in Hong Kong contributed.

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  • Who will buy Infowars? Both supporters and opponents of Alex Jones interested in bankruptcy auction

    Conspiracy theorist Alex Jones’ Infowars broadcasts could end next week as he faces a court-ordered auction of his company’s assets to help pay the more than $1 billion defamation judgment he owes families of victims of the Sandy Hook Elementary School shooting.

    Or maybe not.

    Both opponents and supporters of the bombastic internet show and radio host have expressed interest in bidding on the Infowars properties he has built over the past 25 years. They include Roger Stone, an ally of Jones and Donald Trump, and anti-Jones progressive media groups. If Jones supporters buy the assets, he could end up staying on Infowars.

    Up for sale are everything from Jones’ studio desk to Infowars’ name, video archive, social media accounts and product trademarks. Buyers can even purchase an armored truck and video cameras. For now, Jones’ personal social media, including his account on X, formerly known as Twitter, with 3 million followers, are not up for sale, but court proceedings on whether they should be auctioned are pending.

    The auctions resulted from Jones’ personal bankruptcy case, which he filed in late 2022 after the Sandy Hook families were awarded nearly $1.5 billion in damages in lawsuits in Connecticut and Texas over his claims that the school shooting was a hoax. Many of Jones’ personal assets also are being liquidated to help pay the judgment.

    The deadline to submit bids and nondisclosure agreements on the Infowars assets is Friday afternoon. After the bids are reviewed, prospective buyers deemed qualified will be invited to a live auction that could see multiple bidding rounds next Wednesday. Any items not sold will be put up at another auction on Dec. 10.

    Jones has expressed confidence that supporters — whom he did not name — will buy the assets of Infowars and its parent company, Free Speech Systems, allowing him to continue using its platforms. He also appears to be preparing for losing the brand because he has set up new websites and social media accounts and has been directing his audience to them.

    “There’s a lot of buyers, people that are patriots that want it and will come in,” Jones said on his show in August. “If not … we’ll work with somebody else, fire something up. And it’ll be a little bit of a hiccup for the crew, and things. But that will just make us bigger.”

    Email messages to Infowars and Jones’ bankruptcy lawyer were not returned.

    It’s not clear how much money the auctions might bring in. In court documents, Free Speech Systems listed the total value of its properties and holdings at $18 million. Proceeds from the sales will go to creditors including the Sandy Hook families, who have not yet received any money from Jones and his company.

    Confidentiality agreements and sealed bids generally are used in auctions to maximize bid amounts while preventing bidders from talking to each other and driving down the offers. The trustee in Jones’ bankruptcy case said in court documents that the procedures for the Infowars auction were designed to attract the highest possible bids.

    Christopher Mattei, a Connecticut lawyer representing the Sandy Hook families, called the auctions an important milestone in their yearslong fight to hold Jones accountable. He also said the families will be seeking a portion of all Jones’ future income.

    “From the beginning, the Connecticut families have sought to hold Jones fully accountable for his lies and to protect other families from him,” Mattei said. “Stripping Jones of the corrupt business he used to attack the families while poisoning the minds of his listeners is an important measure of justice.”

    The families sued Jones and his company for defamation and emotional distress for repeatedly saying on his show that the 2012 shooting that killed 20 first graders and six educators in Newtown, Connecticut, was a hoax staged by crisis actors to spur more gun control.

    Parents and children of many of the victims testified that they were traumatized by Jones’ hoax conspiracies and threats by his followers.

    Jones, who has since acknowledged that the shooting did happen, is appealing the judgments.

    Jones has made millions of dollars from his internet and radio shows, primarily through sales of nutritional supplements, survival gear, clothing and other merchandise.

    Stone, the Jones and Trump ally and a conservative commentator, said on his X account and on Jones’ show that he would like to put together a group of investors to buy Infowars. He did not return email and social media messages on Thursday.

    “I understand the importance of Infowars as a beacon of the truth, as a beacon of truthful information. And therefore, I would like to do whatever I possibly can to ensure, if possible, that Infowars survives,” Stone said on Jones’ show in September.

    People on social media also have urged billionaire Elon Musk, owner of Tesla and X, to buy Infowars, an idea Jones has backed but Musk has not publicly responded to.

    On the other side, Jones’ detractors have shown interest in buying Infowars, kicking Jones out and turning it into something else, such as a news site that debunks conspiracy theories or even a parody site. They include officials at two progressive media sites, The Barbed Wire and Media Matters for America.

    An opinion piece by The Barbed Wire in September by publisher Jeff Rotkoff had a headline that read, “Let’s Buy Infowars. Alex Jones used these exact materials to exploit his viewers, peddle conspiracy theories, and damage the lives of grieving parents. We want revenge.”

    Rotkoff urged readers to donate money to help put in bids, but he said Thursday that The Barbed Wire, based in Jones’ home state of Texas, was now unlikely to make any offers.

    “But we have talked to a number of similarly ideologically aligned bidders and we are certain we will be outbid,” Rotkoff said in an email. “We’re thrilled that there appear to be multiple well-resourced bidders who share our interest in undoing much of the damage to our country done by Alex Jones. We’ll be rooting for those folks to be successful.”

    He declined to say who the other potential bidders were.

    Who exactly has submitted bids so far has not been disclosed. Jeff Tanenbaum, president of ThreeSixty Asset Advisors, which is helping to run the auction along with Tranzon Asset Advisors, would only say there have been a large number of inquiries.

    If detractors buy up Infowars’ properties and Jones gets the boot, he should be able to build new platforms fairly quickly, said Melissa Zimdars, an associate professor of communication and media at Merrimack College in Massachusetts.

    “As long as there is an audience hungry for his content — and there is — he’ll be able to utilize X and various fringe social media platforms,” she said in an email.

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  • Court approves Tupperware’s sale to lenders, paving way for brand’s exit from bankruptcy

    Court approves Tupperware’s sale to lenders, paving way for brand’s exit from bankruptcy

    NEW YORK (AP) — A U.S. bankruptcy judge approved a sale of Tupperware Brands on Tuesday, paving the way for the iconic food storage company to soon exit Chapter 11 protection and continue offering its products while undergoing a hoped-for revitalization.

    The sale given the court’s green light in Delaware still is subject to closing conditions. Under terms of the deal, a group of lenders is buying Tupperware’s brand name and various operating assets for $23.5 million in cash and more than $63 million in debt relief.

    Tupperware agreed to the lender takeover last week, pivoting from a previously planned asset auction. The brand said it expects to operate as The New Tupperware Co. upon completion of the deal.

    Going forward, customers in “global core markets” will be able to purchase Tupperware products online and through the brand’s decades-old network of independent sales consultants, but the new company is set to be “rebuilt with a start-up mentality,” Tupperware said.

    AP correspondent Lisa Dwyer reports a U.S. bankruptcy judge has approved a sale of Tupperware Brands.

    The specifics of how that will look are unclear. Tupperware did not immediately respond to The Associated Press’ requests for further comment Tuesday.

    Tupperware once revolutionized food storage, with the brand’s roots dating back to a post-World War II mission of helping families save money on food waste with an airtight lid seal. The plastic kitchenware saw explosive growth in the mid-20th century, notably with the rise of direct sales through “Tupperware parties.”

    First held in 1948, the parties were promoted as a way for women in particular to earn supplemental income by selling the containers to friends and neighbors. The system worked so well that Tupperware eventually removed its products from stores.

    In the following decades, the Tupperware line expanded to include canisters, beakers, cake dishes and all manner of implements, and became a staple in kitchens across America and eventually abroad. But the brand struggled to keep up in more recent years.

    An outdated business model and rising competition contributed to some of the company’s challenges. When filing for bankruptcy last month, Florida-based Tupperware noted that consumers were shifting away from direct sales, which made up the vast majority of the brand’s sales, and increasingly favoring glass containers over plastic.

    While sales improved some during the height of the COVID-19 pandemic, when consumers cooked and ate at home more, Tupperware saw an overall steady decline over the years. Rubbermaid, OXO and even recycled takeout food containers snagged customers — as well as home storage lines at major retailers like Target, Walmart and Amazon.

    Financial troubles piled up in the meantime. In September’s bankruptcy petition, Tupperware reported more than $1.2 billion in debts and $679.5 million in assets.

    “This is a situation that was in urgent need of a vast global resolution,” Spencer Winters, an attorney representing Tupperware, said during a U.S. Bankruptcy Court hearing Tuesday. Winters called the sale agreement a “great outcome” that he said preserves Tupperware’s business, customer relationships and jobs.

    The sale agreements calls for Tupperware to become a privately held company under supportive ownership of the purchasing lender group, which includes investment firms Stonehill Capital Management and Alden Global Capital.

    Last week, Tupperware said the new company’s “initial focus” would be in the U.S., Canada, Mexico, Brazil, China, South Korea, India and Malaysia, followed by European and additional Asian markets.

    Other closing conditions that must be met before the transaction is completed include an issue with a Swiss entity that still needs to be resolved, according to statements made in court Tuesday.

    _______

    AP Business Reporter Haleluya Hadero contributed to this report.

    ___

    This story was first published on Oct. 29, 2024. It was updated on Oct. 31, 2024 to correct that Stonehill Capital Management and Alden Global Capital are investment firms, not hedge fund managers.

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  • Today in History: October 29, ‘Black Tuesday’ signals start of Great Depression

    Today in History: October 29, ‘Black Tuesday’ signals start of Great Depression

    Today is Tuesday, Oct. 29, the 303rd day of 2024. There are 63 days left in the year.

    Today in history:

    On Oct. 29, 1929, “Black Tuesday’ descended on the New York Stock Exchange. Prices collapsed amid panicked selling and thousands of investors were wiped out as America’s Great Depression began.

    Also on this date:

    In 1618, Sir Walter Raleigh, the English courtier, military adventurer and poet, was executed in London for treason.

    In 1940, a blindfolded Secretary of War Henry L. Stimson drew the first number — 158 — from a glass bowl in America’s first peacetime military draft.

    In 1960, a chartered plane carrying the California Polytechnic State University football team crashed on takeoff from Toledo, Ohio, killing 22 of the 48 people on board.

    In 1987, following the confirmation defeat of Robert H. Bork to serve on the U.S. Supreme Court, President Ronald Reagan announced his next choice of Douglas H. Ginsburg, a nomination that fell apart over revelations of Ginsburg’s previous marijuana use.

    In 1998, Sen. John Glenn, at age 77, returned to space aboard the shuttle Discovery, retracing the trail he had blazed as the first American to orbit the Earth 36 years earlier.

    In 2012, Superstorm Sandy slammed ashore in New Jersey and slowly marched inland, devastating coastal communities and causing widespread power outages; the storm and its aftermath were blamed for at least 182 deaths in the U.S.

    In 2015, China announced plans to abolish its one-child policy, allowing all families to have two children for the first time in more than 35 years.

    In 2017, all but 10 members of the Houston Texans took a knee during the national anthem, reacting to a remark from team owner Bob McNair to other NFL owners that “we can’t have the inmates running the prison.”

    In 2018, a Boeing jet operated by the Indonesian airline Lion Air crashed in the Java Sea minutes after takeoff from Jakarta, killing all 189 people on board.

    In 2022, more than 150 people were killed and dozens more injured in South Korea after being crushed by a large crowd pushing forward on a narrow street during Halloween festivities in Seoul.

    Today’s Birthdays: Former Liberian President Ellen Johnson Sirleaf is 86. Actor Richard Dreyfuss is 77. Actor Kate Jackson is 76. Hockey Hall of Famer Denis Potvin is 71. Actor Dan Castellaneta (TV: “The Simpsons”) is 67. Actors Joely Fisher and Rufus Sewell are 57. Actor Winona Ryder is 53. Actors Tracee Ellis Ross and Gabrielle Union are 52. Olympic gold medal bobsledder Vonetta Flowers is 51. Actor Ben Foster is 44. Olympic gold medal swimmer Amanda Beard is 43.

    Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.

    By The Associated Press

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  • Jobs report is likely to show another month of modest but steady hiring gains

    Jobs report is likely to show another month of modest but steady hiring gains

    WASHINGTON — The U.S. labor market is still reliably cranking out jobs each month, enough to give Americans the confidence and paychecks to keep spending and sustaining the economy. Yet the pace of hiring has lost momentum over the past several months, evidence that employers have become more cautious.

    September likely brought more of the same. The Labor Department is expected to report Friday that employers added a decent but hardly spectacular 140,000 jobs last month, roughly matching August’s 142,000 gain, according to forecasters surveyed by the data firm FactSet.

    “We’ll get modest employment gains, not all that great, but enough to keep the economy moving forward,’’ said Brian Bethune, an economist at Boston College.

    The economy’s resilience has come as a relief. Economists had expected that the Federal Reserve’s aggressive campaign to subdue inflation — it jacked up interest rates 11 times in 2022 and 2023 — would cause a recession. It didn’t. The economy kept growing even in the face of ever-higher borrowing costs for consumers and businesses.

    Last month, the Fed began cutting rates, in part to try to bolster the slowing job market. And, as Bethune noted, the once unlikely prospect of a “soft landing’’ — in which high interest rates help vanquish inflation without triggering a recession — “is already secure.’’

    The economy is weighing heavily on voters as the Nov. 5 presidential election nears. Many Americans are unimpressed by the job market’s durability and are still frustrated by high prices, which remain on average 19% above where they were in February 2021. That was when inflation began surging as the economy rebounded with unexpected speed and strength from the pandemic recession, causing severe shortages of goods and labor.

    Across the economy, most indicators look solid. The U.S. economy, the world’s largest, grew at a vigorous 3% annual pace from April through June, boosted by consumer spending and business investment. A forecasting tool from the Federal Reserve Bank of Atlanta points to slower but still healthy 2.5% annual growth in the just-ended July-September quarter.

    On Thursday, the Institute for Supply Management, an association of purchasing managers, reported that America’s services businesses grew for a third straight month in September and at an unexpectedly fast pace. The economy’s service sector is closely watched because it represents more than 70% of U.S. jobs.

    Last month, the nation’s households increased their spending at retailers. And even with hiring having slowed, Americans are enjoying extraordinary job security. Layoffs are near a record low as a percentage of employment. The number of people filing for unemployment benefits also remains near historically low levels.

    Companies seem generally reluctant to let workers go even though they are also hesitant to expand their payrolls. That unusual dynamic may stem from many employers having been caught flat-footed and short of staff after the economy began roaring back from the pandemic recession.

    Employers added an average of just 116,000 jobs a month from June through August, including a dismal 89,000 in July. That marked the weakest three months of hiring since mid-2020. Hiring has plummeted from a record average of 604,000 a month in 2021 at the end of COVID recession and 377,000 in 2022.

    Posted job openings, too, have declined steadily, to 8 million in August, after having peaked at 12.2 million in March 2022.

    Workers have noticed the chillier environment for jobseekers. Far fewer feel confident enough to leave their jobs to seek a better position. The Labor Department reported this week that the number of Americans who are quitting their jobs fell to its lowest level since August 2020, when the economy was still reeling from COVID.

    Job-hopping isn’t as lucrative as it had been, either. Last month, those who changed jobs were earning 6.6% more than they had earned a year earlier — a 1.9 percentage point premium over the 4.7% median pay gain of those who stayed put. The job-hopping premium used to be far higher — a peak of 8.8 percentage points in April 2022, according to Liv Wang, lead data scientist at ADP Research.

    Two and a half years of high interest rates, it seems, have taken a toll on the job market. But relief might be coming.

    The Fed last month slashed its benchmark interest rate by a hefty half-percentage point — its first and biggest rate cut since the 2020 recession. The central bank said it was encouraged by progress in its fight against inflation. Consumer prices were up 2.5% from a year earlier in August, barely above the Fed’s 2% inflation target and down dramatically from a year-over-year peak of 9.1% in June 2022.

    Friday’s jobs report may bring more good news on inflation. Diane Swonk, chief economist at the tax and consulting firm KPMG, said she expects that average hourly wages rose 0.2% last month, down from a 0.4% increase in August. That would translate, she says, into a 3.7% gain from a year earlier. That’s close to the 3.5% that many economists regard as consistent with the Fed’s inflation target. Such a drop would ease pressure on employers to pass along the cost of higher wages by raising their prices and thereby feeding inflation.

    The Fed’s focus shifted to supporting the job market as hiring slowed this summer and unemployment rose, even while remaining relatively low. The central bank has signaled that it expects to cut its key rate twice more this year — likely by modest quarter-points — and four additional times in 2025.

    The expectation of lower borrowing costs could encourage employers to pick up the pace of hiring.

    “They see light at the end of the tunnel of this monetary tightening that’s been going on a couple of years,’’ Bethune said.

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  • Collapse of national security elites’ cyber firm leaves bitter wake

    Collapse of national security elites’ cyber firm leaves bitter wake

    WASHINGTON — The future was once dazzling for IronNet.

    Founded by a former director of the National Security Agency and stacked with elite members of the U.S. intelligence establishment, IronNet promised it was going to revolutionize the way governments and corporations combat cyberattacks.

    Its pitch — combining the prowess of ex-government hackers with cutting-edge software – was initially a hit. Shortly after going public in 2021, the company’s value shot past $3 billion.

    Yet, as blazing as IronNet started, it burned out.

    Last September the never-profitable company announced it was shutting down and firing its employees after running out of money, providing yet another example of a tech firm that faltered after failing to deliver on overhyped promises.

    The firm’s crash has left behind a trail of bitter investors and former employees who remain angry at the company and believe it misled them about its financial health.

    IronNet’s rise and fall also raises questions about the judgment of its well-credentialed leaders, a who’s who of the national security establishment. National security experts, former employees and analysts told The Associated Press that the firm collapsed, in part, because it engaged in questionable business practices, produced subpar products and services, and entered into associations that could have left the firm vulnerable to meddling by the Kremlin.

    “I’m honestly ashamed that I was ever an executive at that company,” said Mark Berly, a former IronNet vice president. He said the company’s top leaders cultivated a culture of deceit “just like Theranos,” the once highly touted blood-testing firm that became a symbol of corporate fraud.

    IronNet’s collapse ranks as one of the most high-profile flameouts in the history of cybersecurity, said Richard Stiennon, a longtime industry analyst. The main reason for its fall, he said: “hubris.”

    “The company got what was coming to” it, Stiennon said.

    IronNet and top former company officials either declined to comment or did not respond to requests for comment.

    IronNet’s founder and former CEO Keith Alexander is a West Point graduate who retired as a four-star Army general and was once one of the most powerful figures in U.S. intelligence. He oversaw an unprecedented expansion of the NSA’s digital spying around the world when he led the U.S.’s largest intelligence agency for nearly a decade.

    Alexander, who retired from the government in 2014, remains a prominent voice on cybersecurity and intelligence matters and sits on the board of the tech giant Amazon. Alexander did not respond to requests for comment.

    IronNet’s board has included Mike McConnell, a former director of both the NSA and national intelligence; Jack Keane, a retired four-star general and Army vice chief of staff, and Mike Rogers, the former Republican chairman of the House Intelligence Committee who is running for the U.S. Senate in Michigan. One of IronNet’s first presidents and co-founders was Matt Olsen, who left the company in 2018 and leads the Justice Department’s National Security Division.

    Alexander’s reputation and the company’s all-star lineup ensured IronNet stood out in a competitive market as it sought contracts in the finance and energy sectors, as well as with the U.S. government and others in Asia and the Middle East.

    IronNet marketed itself as a kind of private version of the NSA. By scanning the networks of multiple customers, the company claimed, IronNet’s advanced software and skilled staff could spot signals and patterns of sophisticated hackers that a single company couldn’t do alone. The company dubbed the approach the “Collective Defense Platform.”

    Venture capital firms were eager to invest. Among IronNet’s biggest early boosters was C5 Capital, an investment firm started and run by Andre Pienaar, a South African who had spent years serving the needs of the ultra-rich while cultivating business relationships with former top national security officials.

    C5’s operating partners – essentially expert advisers — include former Chairman of the U.S. Joint Chiefs of Staff Mike Mullen and Sir Iain Lobban, who used to lead the U.K.’s signals intelligence agency equivalent to the NSA. Former C5 operating partners include National Cyber Director Harry Coker Jr. and Ronald Moultrie, who resigned earlier this year as undersecretary of defense for intelligence and security.

    Prior to going into venture capital, Pienaar was a private investigator and started a firm called G3 Good Governance Group whose clients included blue chip companies, wealthy individuals and the British royal family. Pienaar also worked at the time to help Russian oligarch Viktor Vekselberg cement relationships with London’s rich and famous, according to William Lofgren, a former CIA officer and G3 co-founder.

    “The relationship was steady and frequent because both Andre and Vekselberg saw merit in it,” said Lofgren.

    Pienaar also helped Vekselberg win a share of a South African manganese mine in 2005 and then later served as one of the oligarch’s representatives on the mine’s board of directors until early 2018, internal G3 records and South African business records show.

    Vekselberg has been sanctioned twice by the U.S. government, first in April 2018 and again in March 2022. The U.S. Treasury Department has accused him of taking part in “soft power activities on behalf of the Kremlin.”

    In 2014, the FBI publicly warned in an op-ed that a Vekselberg-led foundation may be “a means for the Russian government to access our nation’s sensitive or classified research.”

    Pienaar’s long association with Vekselberg should have disqualified him from investing in IronNet, which was seeking highly sensitive U.S. defense contracts, former intelligence officials said.

    The company’s leaders “absolutely should have known better,” said Bob Baer, a former CIA officer.

    He added that Russian intelligence services would have had a strong interest in a company like IronNet and have a history of using oligarchs like Vekselberg to do their bidding, either directly or through witting or unwitting proxies.

    Pienaar also sponsored a swanky Russian music festival that Vekselberg and a close associate, Vladimir Kuznetsov, put on in Switzerland. Kuznetsov, who served as a key investment adviser to Vekselberg, was also an investor in Pienaar’s investment firm.

    Alexander and others at IronNet either did not know the details of Pienaar’s relationships with Vekselberg or did not find them troubling: A month after Vekselberg was first sanctioned in 2018, Pienaar joined IronNet’s board and C5 announced it was putting in a $35 million investment.

    C5’s investment would grow to $60 million by the time IronNet went public, giving the investment firm around a 7% stake in the company.

    Vekselberg did not respond to requests for comment. Kuznetsov told the AP he stopped speaking to Pienaar about five years ago but did not say why.

    “I’m not commenting on that,” Kuznetsov said.

    Pienaar’s attorneys said he has never had a relationship with Vekselberg. The lawyers said the mine’s filings with the South African government’s regulatory agency that listed Pienaar as a director were incorrect and should be “viewed as suspect” because news reports indicated the agency has been hacked.

    Pienaar filed a defamation lawsuit last year against an Associated Press reporter who sought interviews with Pienaar’s former associates. The AP said the suit, which remains pending, was meritless and an attempt to stifle legitimate reporting.

    Not long after Alexander rang the opening bell at the New York Stock Exchange in September 2021, IronNet’s stock price soared, making its founders and early investors extremely wealthy on paper.

    Top officials were prohibited from unloading their stock for several months, but Alexander was allowed to sell a small amount of his shares. He made about $5 million in early stock sales and bought a Florida mansion worth the same amount.

    IronNet was projecting exponential growth that required the company to land a handful of major contracts, according to confidential board documents obtained by the AP.

    Those prospective deals included one valued at up to $10 million to provide cybersecurity for the U.S. Navy’s contractors and a more than $22 million deal with the government of Kuwait.

    It did not take long for IronNet’s promises to slam into a tough reality as it failed to land large deals and meet revenue projections. Its products simply didn’t live up to the hype, according to former employees, experts and analysts.

    Stiennon, the cybersecurity investing expert, said IronNet’s ideas about gathering threat data from multiple clients were not unique and the company’s biggest draw was Alexander’s “aura” as a former NSA director.

    The AP interviewed several former IronNet employees who said the company hired well-qualified technicians to design products that showed promise, but executives did not invest the time or resources to fully develop the technology.

    When IronNet tried to land contracts with the NSA, officials dismissed the company’s offerings as unserious, according to a former member of U.S. Cyber Command who was at the meeting but not authorized to discuss government procurement proceedings publicly.

    The failure to win large contracts quickly derailed IronNet’s growth plans. In December 2021, just a few months after going public, IronNet downgraded its annual recurring revenue projections by 60%.

    Another sign that things were not well: IronNet and C5 were engaging in a questionable business practice in an apparent effort to juice the cybersecurity firm’s revenues, according to C5 records and interviews with former employees at both firms.

    In addition to being a major investor, C5 was also one of IronNet’s biggest customers, accounting for a significant part of the cybersecurity firm’s revenue when it went public.

    C5 had signed two multi-year customer contracts with IronNet for $5.2 million, according to internal C5 records.

    Contracts of that size were typical for large clients with thousands of employees, not a small investment firm like C5 that had a couple dozen employees and partners, former IronNet employees said.

    “That’s an inflated number,” said Eddie Potter, a former top sales executive at IronNet, when told by the AP of the size of C5’s contracts with IronNet. He added there was “no way” that C5 required services “worth $5 million.”

    Indeed, one C5 internal record obtained by the AP shows it budgeted only about $50,000 a year for IronNet’s services.

    Pienaar’s attorneys said C5’s contracts with IronNet were to help protect the U.K. government’s hospitals and other entities against “escalating cyberattacks during the COVID-19 pandemic.” His attorneys said the work was coordinated through a charity Pienaar and C5 created in 2020.

    Securities and Exchange Commission filings and C5 records show C5’s contracts with IronNet were signed in the summer and fall of 2019 — several months before the onset of the coronavirus pandemic. Pienaar’s attorneys said Alexander and Pienaar were “briefed on the shocking scale of hostile nation-state cyberattacks on hospitals” in 2019, which created the “foundation” for IronNet’s work with C5.

    Pienaar’s charity never registered with the IRS, as one of Pienaar’s companies claimed in U.K. business filings, and former C5 and IronNet officials said they did not see it do any substantive work.

    “It was marketing, fluffy crap,” said Rob Mathieson, a former IronNet vice president.

    Pienaar’s attorneys said his charity was successful but there was “insufficient time” for it to register with the IRS.

    After reporting millions in revenue from C5 from 2020 to 2023, IronNet wrote off $1.3 million from C5 in what the cybersecurity firm claimed was “bad debt,” IronNet’s filings with the SEC show. Pienaar’s attorneys said the write-off represented a reduction in the cost of providing services to his charity and denied that C5 had not fulfilled its financial obligations to IronNet.

    IronNet was not alone in having trouble getting money from Pienaar and his firms.

    A group of nuns sued C5 in 2022, court records show, alleging it failed to return their $2.5 million investment in a tech incubator that Pienaar had promoted as a way to boost socially conscious start-ups. C5 agreed to refund the nuns’ investment, plus attorney fees and expenses, to settle the lawsuit, records show. The nuns’ financial adviser, Carolyn LaRocco, told the AP that Pienaar used the nuns’ investment to pay expenses she believed were unwarranted.

    An affiliate of the United States Institute of Peace, a nonprofit established by Congress, sued Pienaar in 2020 after he failed to pay a promised $1.5 million personal donation, federal court records show. The nonprofit’s affiliate then took Pienaar back to court after he failed to make payments on time as part of a settlement. Pienaar used $500,000 from a C5 bank account to meet a court-ordered deadline for payment, court records show. C5 staff were concerned about Pienaar’s use of the firm’s funds to cover his personal debt, according to C5 records.

    In the last year, Pienaar-controlled entities have been sued by a top former CIA executive who alleged C5 owed him back wages and a Washington landlord who accused Pienaar’s firms of failing to pay more than $140,000 in rent and associated costs. The suits were dismissed soon after they were filed, indicating the parties likely settled, court records show. A lawsuit recently filed by a financial services firm alleges C5 owes it more than $1 million in unpaid debts.

    After slashing revenue projections in December 2021, Alexander tried to project confidence and said IronNet was still on track to see its revenue rise.

    It didn’t work. IronNet’s stock went into a prolonged skid and the company underwent multiple rounds of layoffs.

    In April 2022, the company was hit with a class-action lawsuit from investors who alleged IronNet had fraudulently inflated its revenue projections to boost its stock price.

    The company has denied any wrongdoing but recently agreed to pay $6.6 million to settle the lawsuit, according to a proposed settlement filed in federal court. Alexander told Bloomberg News this past January that IronNet’s troubles stemmed in part from his naivety about how the business world worked.

    C5 began loaning money to IronNet to keep it afloat starting at the end of 2022 while Pienaar continued to try and boost the company’s brand.

    In September of last year, IronNet announced it had run out of money and was closing its doors.

    A Pienaar-controlled entity stepped in shortly afterwards with $10 million in loans to allow the company to restructure via bankruptcy.

    A dramatically scaled-down version of IronNet led by Pienaar’s allies went private in February and announced Alexander had stepped down as chairman of the board.

    Pienaar remains bullish on the company, which he said continues to successfully protect clients in the U.S. and Europe from cyber threats. IronNet’s more recent activities have included looking to partner with the government of Ukraine.

    “Any accusation that IronNet has been anything other than successful is categorically false,” his attorneys told the AP.

    Many of C5’s investors and former employees are baffled by Pienaar’s continued heavy bets on IronNet after it has been soundly rejected by the market.

    During bankruptcy proceedings earlier this year, an investment bank approached 114 prospective buyers for IronNet, federal court records show. None of them made an offer.

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  • Carmaker Stellantis slashes forecasts as it faces industry slump and Chinese competition

    Carmaker Stellantis slashes forecasts as it faces industry slump and Chinese competition

    MILAN — Carmaker Stellantis, the world’s fourth largest carmaker, slashed its earnings forecast on Monday, citing investments to turn around its U.S. operations amid a wider industry slump and increased Chinese competition.

    Stellantis said it was accelerating efforts to turn around North America, including bringing dealer inventory levels to no more than 300,000 vehicles by the end of the year, instead of the first quarter of 2025 as previously planned.

    The action is in the back of a decrease in shipments of 200,000 vehicles in the second half of this year compared with a year earlier, twice as many as the company had forecast. The company will offer higher incentives on 2024 and older models.

    In its profit warning, Stellantis said it expected to finish the year with a negative cash flow of 5 billion euros to 10 billion euros, ($5.6 billion to 11.2 billion) instead of positive.

    The carmaker, which was created in 2021 from the merger of PSA Peugeot with Fiat Chrysler Automobiles, also dropped its operating profit margin guidance to 5.5% to 7.0%, instead of double digits.

    The struggling maker of Jeep and Ram is looking for a new CEO to succeed Carlos Taveres, who is under fire from U.S. dealers and the United Auto Workers union after a dismal first-half financial performance. The company has portrayed the search as a normal leadership succession plan.

    Stellantis is also under pressure in Italy, home to one of the main shareholders, due to production cuts. Autoworkers announced a one-day strike on Oct. 18.

    The company reported that first-half net profits were down 48% compared with the same period last year. First-half sales in the United States were down nearly 16%, even though overall new vehicle sales rose 2.4%.

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  • NTSB engineer says carbon fiber hull from submersible showed signs of flaws

    NTSB engineer says carbon fiber hull from submersible showed signs of flaws

    The carbon fiber hull of the experimental submersible that imploded en route to the wreckage of the Titanic had imperfections dating to the manufacturing process and behaved differently after a loud bang was heard on one of the dives the year before the tragedy, an engineer with the National Transportation Safety Board said Wednesday.

    Engineer Don Kramer told a Coast Guard panel there were wrinkles, porosity and voids in the carbon fiber used for the pressure hull of OceanGate’s Titan submersible. Two different types of sensors on Titan recorded the “loud acoustic event” that earlier witnesses testified about hearing on a dive on July 15, 2022, he said.

    Hull pieces recovered after the tragedy showed substantial delamination of the layers of carbon fiber, which were bonded to create the hull of the experimental submersible, he said.

    OceanGate co-founder Stockton Rush was among the five people who died when the Titan submersible imploded in June 2023.

    Kramer’s statements were followed by testimony from William Kohnen, a longtime submersibles expert and key member of the Marine Technology Society. Kohnen emerged as a critic of OceanGate in the aftermath of the implosion and has described the disaster as preventable.

    On Wednesday, Kohnen pushed back at the idea the Titan could not have been thoroughly tested before use because of its experimental nature. He also said OceanGate’s operations raised concerns among many people in the industry.

    Kohnen said “I don’t think many people ever told Stockton no.” He described Rush as not receptive to outside scrutiny.

    “This is not something where we don’t want you to do it. We want you to do it right,” Kohnen said.

    The Coast Guard opened a public hearing earlier this month that is part of a high level investigation into the cause of the implosion. Some of the testimony has focused on the submersible’s carbon fiber construction, which was unusual. Other testimony focused on the troubled nature of the company.

    Another Wednesday witness, Bart Kemper of Kemper Engineering Services of Baton Rouge, Louisiana, testified about his review of the OceanGate submersible’s development. He expressed particular concern about the sub’s window.

    “This is consistent with something on the path of failure,” Kemper said.

    Coast Guard officials noted at the start of the hearing that the submersible had not been independently reviewed, as is standard practice. That and Titan’s unusual design subjected it to scrutiny in the undersea exploration community.

    Earlier in the hearing, former OceanGate operations director David Lochridge said he frequently clashed with Rush and felt the company was committed only to making money.

    Lochridge and other previous witnesses painted a picture of a company that was impatient to get its unconventionally designed craft into the water. The accident set off a worldwide debate about the future of private undersea exploration.

    The hearing is expected to run through Friday and include several more witnesses, some of whom were closely connected to the company.

    The co-founder of the company told the Coast Guard panel Monday that he hoped a silver lining of the disaster is that it will inspire a renewed interest in exploration, including the deepest waters of the world’s oceans. Businessman Guillermo Sohnlein, who helped found OceanGate with Rush, ultimately left the company before the Titan disaster.

    OceanGate, based in Washington state, suspended its operations after the implosion. The company has no full-time employees currently, but has been represented by an attorney during the hearing.

    During the submersible’s final dive on June 18, 2023, the crew lost contact after an exchange of texts about Titan’s depth and weight as it descended. The support ship Polar Prince then sent repeated messages asking if Titan could still see the ship on its onboard display.

    One of the last messages from Titan’s crew to Polar Prince before the submersible imploded stated, “all good here,” according to a visual re-creation presented earlier in the hearing.

    When the submersible was reported overdue, rescuers rushed ships, planes and other equipment to an area about 435 miles (700 kilometers) south of St. John’s, Newfoundland. Wreckage of the Titan was subsequently found on the ocean floor about 330 yards (300 meters) off the bow of the Titanic, Coast Guard officials said. No one on board survived.

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  • OceanGate co-founder says he hopes submersible tragedy yields renewed interest in exploration

    OceanGate co-founder says he hopes submersible tragedy yields renewed interest in exploration

    The co-founder of the company that owned the experimental submersible that imploded en route to the wreckage of the Titanic told a Coast Guard panel Monday that he hoped that the silver lining of the disaster will inspire a renewed interest in exploration, including the deepest waters of the world’s oceans.

    “This can’t be the end of deep ocean exploration. This can’t be the end of deep-diving submersibles and I don’t believe that it will be,” said businessman Guillermo Sohnlein, who helped found OceanGate with Stockton Rush.

    Sohnlein ultimately left the company before the Titan disaster in June 2023. Rush was among the five people who died when the submersible imploded. Though Sohnlein left the Washington company years ago, he spoke in defense of its efforts in the aftermath of the submersible’s implosion.

    On Monday, he testified that the company wanted to create a fleet of four or five deep-diving submersibles capable of carrying five people to 6,000 meters (6,500 yards) deep. The plan for the company was to have no dedicated mothership — which would’ve lowered costs substantially, he said.

    “We wanted to give humanity greater access to the ocean, specifically the deep ocean,” Sohnlein said.

    Sohnlein testified that the company zeroed in on the use of carbon fiber for the doomed vessel because the company wanted a lightweight, less costly submersible that did not need to be tethered to a specific mother ship. He testified that the use of carbon fiber as “not a novel idea” and said “people have looked at that before.”

    No existing submersible builders could meet the company’s requirements, necessitating the pivot to building its own subs, Sohnlein said. And he said the company worked closely with the Coast Guard during development.

    Sohnlein said he had the opportunity to dive in Titan “many times” and he declined. He said his reasons included not wanting to take space away from potential customers. He said when Rush reached a point when it was “time to put a human in there,” he wanted to do it himself. Rush felt it was his design and said “if anything happens, I want it to impact me,” Sohnlein said.

    The Coast Guard opened a public hearing earlier this month that is part of a high level investigation into the cause of the implosion. Some of the testimony has focused on the troubled nature of the company.

    Earlier in the hearing, former OceanGate operations director David Lochridge said he frequently clashed with Rush and felt the company was committed only to making money. “The whole idea behind the company was to make money,” Lochridge testified. “There was very little in the way of science.”

    But Sohnlein said Monday that neither he nor Rush was ever “driven by tourism” and the idea of visiting the Titanic, which had already been explored by others, was not exciting to either of them.

    Sohlein also testified Monday that he left the company in 2013 as the company transitioned to engineering, which he described as a bigger strength of Rush’s than his. He said it was a “fairly easy decision” for Rush to take over the company, but it was more difficult to decide whether to stay on at all.

    Ultimately, Sohnlein said, he didn’t feel it made sense for the company to continue paying him a salary of $120,000 for a reduced role. He said he maintained a minority stake in the company that still exists.

    The hearing is expected to run through Friday and include more witnesses. Roy Thomas of the American Bureau of Shipping also testified Monday and detailed the challenges associated with carbon fiber as a material for submersibles. He said carbon fiber is “susceptible to fatigue failure under repeated external pressurization.”

    Phil Brooks, a former OceanGate engineering director, said he was the first person to analyze data after the company’s dives. He said the final authority on whether the Titan’s hull was fit to dive again after analysis was Rush.

    An earlier engineering director with the company testified last week that he felt pressured to get the vessel ready to dive and refused to pilot it for a journey several years earlier. Tony Nissen said Rush could be difficult to work for and was often very concerned with costs and project schedules.

    Lochridge and other previous witnesses painted a picture of a troubled company that was impatient to get its unconventionally designed craft into the water. The accident set off a worldwide debate about the future of private undersea exploration.

    Coast Guard officials noted at the start of the hearing that the submersible had not been independently reviewed, as is standard practice. That and Titan’s unusual design subjected it to scrutiny in the undersea exploration community.

    OceanGate, based in Washington state, suspended its operations after the implosion. The company has no full-time employees currently, but has been represented by an attorney during the hearing.

    During the submersible’s final dive on June 18, 2023, the crew lost contact after an exchange of texts about Titan’s depth and weight as it descended. The support ship Polar Prince then sent repeated messages asking if Titan could still see the ship on its onboard display.

    One of the last messages from Titan’s crew to Polar Prince before the submersible imploded stated, “all good here,” according to a visual re-creation presented earlier in the hearing.

    When the submersible was reported overdue, rescuers rushed ships, planes and other equipment to an area about 435 miles (700 kilometers) south of St. John’s, Newfoundland. Wreckage of the Titan was subsequently found on the ocean floor about 330 yards (300 meters) off the bow of the Titanic, Coast Guard officials said. No one on board survived.

    OceanGate said it has been fully cooperating with the Coast Guard and NTSB investigations since they began. Titan had been making voyages to the Titanic wreckage site going back to 2021.

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  • Stock market today: Wall Street romps toward records as jubilation sweeps markets worldwide

    Stock market today: Wall Street romps toward records as jubilation sweeps markets worldwide

    NEW YORK — Wall Street is romping toward records Thursday as a delayed jubilation sweeps markets worldwide following the Federal Reserve’s big cut to interest rates.

    The S&P 500 was up by 1.9% in late trading and above its all-time closing high set in July. The Dow Jones Industrial Average was up 580 points, or 1.4%, and on track to top its record set on Monday. The Nasdaq composite was 2.8% higher with an hour left in trading.

    The rally was widespread, and the company behind Olive Garden and Ruth’s Chris, Darden Restaurants, helped lead the way with a jump of 7.8%. It said sales trends have been improving since a sharp step down in July, and it announced a delivery partnership with Uber.

    Nvidia, meanwhile, barreled 4.6% higher and was once again the strongest force lifting the S&P 500. Lower interest rates weaken criticism by a bit that its shares and those of other influential Big Tech companies look too expensive following the frenzy around artificial-intelligence technology.

    Wall Street’s gains followed rallies for markets across Europe and Asia after the Federal Reserve delivered the first cut to interest rates in more than four years late on Wednesday.

    It was a momentous move, closing the door on a run where the Fed kept its main interest rate at a two-decade high in hopes of slowing the U.S. economy enough to stamp out high inflation. Now that inflation has come down from its peak two summers ago, Chair Jerome Powell said the Fed can focus more on keeping the job market solid and the economy out of a recession.

    Wall Street’s initial reaction to Wednesday’s cut was a yawn, after markets had already run up for months on expectations for coming reductions to rates. Stocks ended up edging lower after swinging a few times.

    “Yet we come in today and have a reversal of the reversal,” said Jonathan Krinsky, chief market technician at BTIG. He said he did not anticipate such a big jump for stocks on Thursday.

    Some analysts said the market could be relieved that the Fed’s Powell was able to thread the needle in his press conference and suggest the deeper-than-usual cut was just a “recalibration” of policy and not an urgent move it had to take to prevent a recession.

    That bolstered hopes that the Federal Reserve can successfully walk its tightrope and get inflation down to its 2% target without a recession. So too did a couple reports on the economy released Thursday. One showed fewer workers applied for unemployment benefits last week, another signal that layoffs across the country remain low.

    The pressure is nevertheless still on the Fed because the job market and hiring have begun to slow under the weight of higher interest rates. Some critics say the central bank waited too long to cut rates and may have damaged the economy.

    Powell, though, said Fed officials are not in “a rush to get this done” and would make decisions on policy at each successive meeting depending on what the incoming data says.

    Some investment banks raised their forecasts for how much the Federal Reserve will ultimately cut interest rates, anticipating even deeper reductions than Fed officials. Forecasts released Wednesday show Fed officials expect to cut interest rates by potentially another half of a percentage point in 2024 and another full point in 2025. The federal funds rate is currently sitting in a range of 4.75% to 5%.

    Lower interest rates help financial markets in two big ways. They ease the brakes off the economy by making it easier for U.S. households and businesses to borrow money, which can accelerate spending and investment. They also give a boost to prices of all kinds of investments, from gold to bonds to cryptocurrencies. Bitcoin rose above $63,500 Thursday, up from about $27,000 a year ago.

    An adage suggests investors should not “fight the Fed” and instead ride the rising tide when the central bank is cutting interest rates. Wall Street was certainly doing that Thursday. But this economic cycle has continued to break conventional wisdoms after the COVID-19 pandemic created an instant recession that gave way to the worst inflation in generations.

    Wall Street is worried that inflation could remain tougher to fully subdue than in the past. And while lower rates can help goose the economy, they can also give inflation more fuel.

    The upcoming U.S. presidential election could also keep uncertainty reigning in the market. A fear is that both the Democrats and Republicans could push for policies that add to the U.S. government’s debt, which could keep upward pressure on interest rates regardless of the Fed’s moves.

    History may also offer few clues about how things may progress given how unusual the conditions are. This looks to have higher expectations for rate cuts than past easing cycles, according to strategists at Bank of America.

    The economic conditions of this cycle one may resemble 1995 a bit, but unfortunately “no great analogs exist,” the strategists led by Alex Cohen wrote in a BofA Global Research report.

    In the bond market, the yield on the 10-year Treasury edged up to 3.73% from 3.71% late Wednesday. The two-year Treasury yield, which more closely tracks expectations for Fed action, fell to 3.60% from 3.63%.

    In stock markets aboard, indexes jumped even more across the Atlantic and Pacific oceans. They rose 2.3% in France, 2.1% in Japan and 2% in Hong Kong.

    The FTSE 100 climbed 0.9% in London after the Bank of England kept interest rates there on hold. The next big move for a central bank arrives Friday, when the Bank of Japan will announce its latest decision on interest rates.

    ___

    AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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  • Tupperware lifts the lid on its financial problems with bankruptcy filing

    Tupperware lifts the lid on its financial problems with bankruptcy filing

    NEW YORK (AP) — The company behind Tupperware, the plastic kitchenware that revolutionized food storage after World War II and became inextricably linked to the parties where women seeking a measure of financial independence and fun in midcentury America sold the colorful products, has filed for bankruptcy.

    Tupperware Brands, the Orlando, Florida-based consumer goods company that produces the iconic line of containers, said it was seeking Chapter 11 bankruptcy protection after struggling to revitalize its core business and failing to secure a tenable takeover offer.

    Despite enjoying the same cultural ubiquity as Kleenex, Teflon and other brands whose trademarked names are eponymous with entire product categories, Tupperware has suffered from waning sales, rising competition and the limitations of the direct-to-consumer marketing model that once defined its success.

    The company said Tuesday in its bankruptcy filing that consumers shifting away from direct sales, which make up the vast majority of its sales more than a quarter-century after the first Tupperware parties, has hit the storied business hard.

    The company also cited growing public health and environmental concerns about plastic, internal inefficiencies that made it challenging to operate globally, and the “challenging microeconomic environment” of the last several years for its financial straits.

    Tupperware said it planned to continue operating during the bankruptcy proceedings and would seek court approval for a sale “in order to protect” the brand.

    Tupperware’s roots date to 1946. As the company tells it, chemist Earl Tupper found inspiration while creating molds at a plastics factory. He set out on a mission to create an airtight lid seal — similar to the one on a paint can — for a plastic container to help families save money on food waste.

    The brand experienced explosive growth in the mid-20th century, particularly with the rise of direct sales through Tupperware parties. First held in 1948, the parties were promoted as a way for women to earn supplemental income by selling their friends and neighbors the lidded bowls for holding leftovers.

    The system worked so well that Tupperware eventually removed its products from stores. It also led Tupper to appoint Brownie Wise, who came up with the house party idea, as a company executive, a position that was rare for a woman at the time.

    In the decades that followed, the brand expanded to include canisters, beakers, cake dishes and all manner of implements, and became a staple in kitchens across America and eventually, abroad as well. A newspaper reporter who went undercover to work as a footman in Buckingham Palace captured pictures of the royal Tupperware on the breakfast table of Queen Elizabeth II.

    The story behind the company also showed up on TV screens and on stage, with depictions in PBS’ 2004 film “Tupperware!” and the play “Sealed for Freshness.”

    “For more than 70 years, Tupperware Brands has centered on a core purpose – to inspire women to cultivate the confidence they need to enrich their lives, nourish their families, and fuel communities around the world,” Tricia Stitzel, the company’s first female CEO, wrote as recently as 2018. “And we continue to make decisions, from our innovative products to our strategic growth strategy, which reflect this purpose.”

    In the 2000s, Tupperware also diversified beyond its containers by acquiring beauty and personal care companies, most of them direct-selling brands like Avroy Shlain, Fuller Cosmetics, NaturCare, Nutrimetics and Nuvo.

    Financial analysts, however, criticized Tupperware in recent years for sticking with the direct sales model and failing to evolve with the times, most notably the large number of women who work outside the home.

    “The reality is that the decline at Tupperware is not new,” Neil Saunders, managing director of GlobalData, said in Wednesday commentary. “It is very difficult to see how the brand can get back to its glory days.”

    The company’s sales improved some during the early days of the COVID-19 pandemic, when Americans were cooking and eating more at home. But overall sales have been in steady decline over the years due to rising competition from Rubbermaid, OXO and even takeout food containers that consumers recycle. Vintage Tupperware also remains in demand as a collectible.

    Overall, sales for food storage supplies are up 18% compared to before the pandemic, according to figures from market research firm Circana. But despite that growth – and the ongoing popularity of food storage videos on social media – the troubles for Tupperware remained.

    Saunders explained that many consumers have migrated to less expensive home storage brands they can find at Target and Walmart. Amazon, the king of online retailers, also has its own line.

    Historically, Tupperware marketed its products as higher-quality durable items. But consumers who are looking for durability are interested in more sustainable materials, such as glass and stainless steel, said Jennifer Christ, manager of consumer and commercial research for the Freedonia Group, a market research company.

    “There’s less brand loyalty than there used to be,” Christ said.

    In the past few years, Tupperware tried a few things to expand its reach and attract new customers. It started selling its products on Amazon as well as in stores at Target and Macy’s. In 2019, the brand also launched a line made with sustainable materials and expanded it two years later.

    But financial troubles continued to pile up.

    Last year, the company sought additional financing as it warned investors about its ability to stay in business and its risk of being delisted from the New York Stock Exchange.

    The company received an additional non-compliance notice from the NYSE for failing to file its annual results with the Securities and Exchange Commission earlier this year. Tupperware continued to warn about its ability to stay afloat in more recent months, with an August securities filing pointing to “significant liquidity challenges.”

    Shares for the company have fallen 75% this year.

    In Tuesday’s bankruptcy petition, Tupperware reported more than $1.2 billion in total debts and $679.5 million in total assets. It said Tupperware currently employs more than 5,450 employees across 41 countries and partners with over 465,000 consultants who sell products on a freelance basis in nearly 70 countries. Particularly in India, Tupperware was introduced as a way for women to own their own businesses.

    Many Tupperware sellers market the products online, but many also make their sales during Tupperware parties at their homes or neighborhood gatherings. In the announcement of the filing, the company maintained that there were no current changes to Tupperware’s independent sales consultant agreements.

    Tupperware also pointed to aims to “further advance Tupperware’s transformation into a digital-first, technology-led company,” possibly signaling a move toward increased reliance of sales on the brand’s website or perhaps more online-focused marketing, although the company did not provide exact specifics.

    In a statement, Tupperware President and CEO Laurie Ann Goldman acknowledged Tupperware’s recent financial struggles and said that the bankruptcy process is meant to provide “essential flexibility” as the company pursues this transformation. The brand, she maintains, isn’t going anywhere.

    “Whether you are a dedicated member of our Tupperware team, sell, cook with, or simply love our Tupperware products, you are a part of our Tupperware family,” Goldman said in a statement. “We plan to continue serving our valued customers with the high-quality products they love and trust throughout this process.”

    The company’s bankruptcy filing, though, faces opposition from Tupperware’s new lenders, who want the petition dismissed or converted it to a Chapter 7 case, which would liquidate the company. Alternatively, they’re asking the court for permission to take action against the company, which could allow them to collect debt they’re owed.

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  • A key employee who called the Titan unsafe will testify before the Coast Guard

    A key employee who called the Titan unsafe will testify before the Coast Guard

    A key employee who labeled an experimental submersible unsafe prior to its last, fatal voyage was set to testify Tuesday before U.S. Coast Guard investigators.

    David Lochridge is one of the most anticipated witnesses to appear before a commission trying to determine what caused the Titan to implode en route to the wreckage of the Titanic last year, killing all five on board.

    Lochridge is former operations director for OceanGate, the company that owned the Titan and brought it on several dives to the Titanic going back to 2021.

    His testimony will come a day after other witnesses painted a picture of a troubled company that was impatient to get its unconventionally designed craft into the water. The accident set off a worldwide debate about the future of private undersea exploration.

    Among those killed was Stockton Rush, co-founder of OceanGate. The company, based in Washington state, suspended its operations after the implosion.

    OceanGate’s former engineering director, Tony Nissen, kicked off Monday’s testimony, telling investigators that he felt pressured to get the vessel ready to dive and refused to pilot it for a journey several years before Titan’s last trip.

    “‘I’m not getting in it,’” Nissen said he told Rush.

    When asked if there was pressure to get Titan into the water, Nissen responded, “100%.”

    But asked if he felt that the pressure compromised safety decisions and testing, Nissen paused, then replied, “No. And that’s a difficult question to answer, because given infinite time and infinite budget, you could do infinite testing.”

    OceanGate’s former finance and human resources director, Bonnie Carl, testified Monday that Lochridge had characterized the Titan as “unsafe.” Lochridge is expected to provide more perspective on what caused the implosion.

    Coast Guard officials noted at the start of the hearing that the submersible had not been independently reviewed, as is standard practice. That and Titan’s unusual design subjected it to scrutiny in the undersea exploration community.

    During the submersible’s final dive on June 18, 2023, the crew lost contact after an exchange of texts about the Titan’s depth and weight as it descended. The support ship Polar Prince then sent repeated messages asking if the Titan could still see the ship on its onboard display.

    One of the last messages from Titan’s crew to Polar Prince before the submersible imploded stated, “all good here,” according to a visual re-creation presented earlier in the hearing.

    When the submersible was reported overdue, rescuers rushed ships, planes and other equipment to an area about 435 miles (700 kilometers) south of St. John’s, Newfoundland. Wreckage of the Titan was subsequently found on the ocean floor about 330 yards (300 meters) off the bow of the Titanic, Coast Guard officials said.

    Scheduled to appear later in the hearing are OceanGate co-founder Guillermo Sohnlein and former scientific director, Steven Ross, according to a list compiled by the Coast Guard. Numerous guard officials, scientists, and government and industry officials are also expected to testify. The U.S. Coast Guard subpoenaed witnesses who were not government employees, said Coast Guard spokesperson Melissa Leake.

    Among those not on the hearing witness list is Rush’s widow, Wendy Rush, the company’s communications director. Asked about her absence, Leake said the Coast Guard does not comment on the reasons for not calling specific individuals to a particular hearing during ongoing investigations. She said it’s common for a Marine Board of Investigation to “hold multiple hearing sessions or conduct additional witness depositions for complex cases.”

    OceanGate has no full-time employees at this time but will be represented by an attorney during the hearing, the company said in a statement. The company said it has been fully cooperating with the Coast Guard and NTSB investigations since they began.

    The time frame for the investigation was initially a year, but the inquiry has taken longer. The ongoing Marine Board of Investigation is the highest level of marine casualty investigation conducted by the Coast Guard. When the hearing concludes, recommendations will be submitted to the Coast Guard’s commandant. The National Transportation Safety Board is also conducting an investigation.

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  • 59% of Americans wrongly think the U.S. is in a recession, report finds

    59% of Americans wrongly think the U.S. is in a recession, report finds

    We are not in a recession

    “Right now we have a ‘Goldilocks’ economy,” said Gene Goldman, chief investment officer at Cetera Financial Group in El Segundo, California.

    The country’s economy has continued to expand since the Covid-19 pandemic, sidestepping earlier recessionary forecasts.

    Officially, the National Bureau of Economic Research defines a recession as “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time that happened was early in 2020, when the economy came to an abrupt halt.

    In the last century, there have been more than a dozen recessions, some lasting as long as a year and a half.

    Still, regardless of the country’s economic standing, many Americans are struggling in the face of sky-high prices for everyday items, and most have exhausted their savings and are now leaning on credit cards to make ends meet.

    “Money is top of mind,” said Vishal Kapoor, senior vice president of product at Affirm. “Consumers are resilient but they’re feeling the pinch of higher prices.”

    Economists have wrestled with the growing disconnect between how the economy is doing and how people feel about their financial standing.

    We’re in a ‘vibecession’

    We’re in a “vibecession,” Joyce Chang, JPMorgan’s chair of global research, said at the CNBC Financial Advisor Summit in May.

    Over the last few years “the wealth creation was concentrated amongst homeowners and upper-income brackets,” Chang said, “but you probably have about one-third of the population that’s been left out of that — that’s why there’s such a disconnect.”

    Rising rents coupled with high borrowing costs and low wage growth have hit some especially hard. “Lower income households are not keeping up,” Goldman said. “Everything looks great but when you look beneath the surface, the disparity between the wealthy and nonwealthy is widening dramatically.”

    It’s not only a “vibe,” however.

    As more consumers stretch to cover increased prices and higher interest rates, there are new indications of financial strain.

    A growing number of borrowers are falling behind on their monthly credit card payments. Over the last year, roughly 9.1% of credit card balances transitioned into delinquency, the New York Fed reported for the second quarter of 2024. And more middle-income households anticipate struggling with debt payments in the coming months.  

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  • Jamie Dimon says he still sees a recession on the horizon

    Jamie Dimon says he still sees a recession on the horizon

    JPMorgan Chase CEO Jamie Dimon said Wednesday he still believes that the odds of a “soft landing” for the U.S. economy are around 35% to 40%, making recession the most likely scenario in his mind.

    When CNBC’s Leslie Picker asked Dimon if he had changed his view from February that markets were too optimistic on recession risks, he said the odds were “about the same” as his earlier call.

    “There’s a lot of uncertainty out there,” Dimon said. “I’ve always pointed to geopolitics, housing, the deficits, the spending, the quantitative tightening, the elections, all these things cause some consternation in markets.”

    Dimon, leader of the biggest U.S. bank by assets and one of the most respected voices on Wall Street, has warned of an economic “hurricane” since 2022. But the economy has held up better than he expected, and Dimon said Wednesday that while credit-card borrower defaults are rising, America is not in a recession right now.

    Dimon added he is “a little bit of a skeptic” that the Federal Reserve can bring inflation down to its 2% target because of future spending on the green economy and military.

    “There’s always a large range of outcomes,” Dimon said. “I’m fully optimistic that if we have a mild recession, even a harder one, we would be okay. Of course, I’m very sympathetic to people who lose their jobs. You don’t want a hard landing.”

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  • What are carry trades and how did they contribute to this week’s global market mayhem?

    What are carry trades and how did they contribute to this week’s global market mayhem?

    BANGKOK — The mayhem that swept across world markets this week was partly caused by a market strategy known as the “carry trade.”

    Japan’s benchmark Nikkei 225 plunged 12.4% on Monday and markets in Europe and North America suffered outsized losses as traders sold stocks to help cover rising risks from investments made using cheaply financed funds borrowed mostly in Japanese yen.

    Markets recovered much of their losses on Tuesday. But the damage lingers.

    They were jolted by a combination of factors, including dread of a possible recession in the United States, the world’s largest economy, and worries that technology shares have shot way too high this year.

    But the scale of the declines was exaggerated by the rush to sell U.S. dollars due to carry trade deals that had helped drive markets to record levels.

    Carry trades involve borrowing at low cost in one currency to achieve higher returns from investments in another currency. One of the most recent examples has been to borrow Japanese yen, expecting the currency to remain cheap against the U.S. dollar and for Japanese interest rates to remain low. The borrowed funds would then be invested in U.S. stocks and Treasury bonds in anticipation of a higher return.

    The key factor behind a carry trade is a difference in interest rates. The Bank of Japan has kept interest rates at or near zero for years, trying to encourage more spending and spur economic growth. Last week, it raised its main interest rate from nearly zero. Higher interest rates tend to boost the value of a nation’s currency, and the Japanese yen surged against the U.S. dollar. Traders scrambled to sell higher risk, dollar-denominated assets to cover suddenly higher borrowing costs, plus losses from foreign exchange rate changes and losses in asset values as share prices plunged. Also, hedge funds that conduct carry trades use computer models to help maximize their returns versus their risks. They needed to sell shares to maintain acceptable risk profiles.

    Carry trades tend to make the most sense when foreign exchange rates are relatively stable and investors can tap into higher yielding market opportunities, like the recent runups of stock prices in places like the United States. The recent market upheavals obliged traders to cover their debts by buying yen and other carry trade currencies and selling relatively more of the higher risk assets they bought under more favorable conditions. Also, carry trades are very lucrative when stocks or other investments are rising, but losses can snowball when thousands of traders are pressured to sell stocks or other assets all at once. “A massive global carry trade unwind was the spark that lit the fuse for this market Armageddon,” Stephen Innes of SPI Asset Management said. “One defining characteristic of these self-perpetuating market melts is the vicious cycle where a sell-off increases realized volatility.”

    The gap between the main interest rate in Japan, now at 0.25%, and the Federal Reserve’s benchmark rate of 5%-5.25% is still wide but is likely to narrow as the Fed cuts rates and Japan raises its rates. Financial markets appeared to have calmed Tuesday, with Japan’s Nikkei 225 index gaining 10.2% and other markets mostly higher. Analysts are divided over whether this bout of volatility in the markets has passed or if there is more to come. Regardless, carry trades have been used for decades. They contributed to a meltdown in Iceland’s financial sector in 2007-2008 where investors borrowed in yen or Swiss francs to take advantage of high Icelandic interest rates. During this latest market upset, Mexico, another focus of the yen carry trade, has seen its peso fall more than 6%. The popular but potentially complicated trading strategy is likely to remain a wild card for investors, especially in times of high market volatility.

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  • Spirit Airlines is going upscale. In a break from its history, it will offer fares with extra perks

    Spirit Airlines is going upscale. In a break from its history, it will offer fares with extra perks

    Spirit Airlines is moving farther away from its history as a fee-happy budget airline and will start selling tickets that include some of its most popular extras in bundles.

    The Florida-based airline said Tuesday the top ticket will be a “Go Big” package that includes priority check-in, a roomier seat, snacks and drinks, a checked bag, a carry-on bag and free WiFi.

    CEO Ted Christie said the changes are “taking low-fare travel to new heights.” They also indicate the deep trouble with Spirit’s longtime business model.

    The airline with bright yellow planes hasn’t made a full-year profit since 2019 — it has lost nearly $2.4 billion since — leading industry analysts to mull whether a bankruptcy filing could be in Spirit’s future.

    Full-service carriers Delta and United account for an outsized share of the U.S. airline industry’s profit, and they are doing it by focusing on premium flyers while also selling bare-bones “basic economy” fares that compete with Spirit, Frontier and Allegiant for travelers on tight budgets.

    The budget carriers have suffered more than the giants from a glut of flights within the United States, which has led to price-cutting. Delta, United and American have a booming business right now in long-haul international flights that can offset weak pricing power at home. Spirit does not.

    The budget carriers are trying to adapt. Frontier Airlines — which, like Spirit, has been losing money for more than four years — matched a pandemic-era move by the bigger airlines and dropped flight-change and cancellation fees for many customers this spring. Spirit quickly copied the move.

    Spirit has other problems, including a looming debt payment of more than $1 billion and a shortage of planes because some of its jets are grounded for inspections and repairs of Pratt & Whitney engines. Spirit expects compensation of up to $200 million from the engine maker, but its condition is dire enough that Spirit announced in April it would furlough some pilots and delay delivery of new jets.

    TD Cowen analysts downgraded Spirit shares to “Sell” this month and said if Spirit can’t renegotiate its debt or return leased planes to lessors, a pre-packaged bankruptcy filing is possible.

    Spirit’s announcement Tuesday targets travelers who might not consider a budget airline.

    It said customers will be able to book any of the four new ticket bundles starting Aug. 16. That means they won’t be available during the height of summer-vacation travel but will be in use over the busy Labor Day holiday.

    “We listened to our guests and are excited to deliver what they want: choices for an elevated experience that are affordable and provide unparalleled value,” Christie said in a statement issued by Spirit.

    Spirit shares gained 5% in afternoon trading but are down more than 80% this year.

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