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Tag: spending

  • Why Republicans Can’t Keep the Government Open

    Why Republicans Can’t Keep the Government Open

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    Yesterday was not a good day for House Republicans or for their struggling leader, Speaker Kevin McCarthy. In the morning, McCarthy was forced to scrap a procedural vote on a GOP proposal to avert a government shutdown that will commence at the end of this month if Congress doesn’t act. In the afternoon, a handful of conservatives tanked McCarthy’s bid to advance legislation funding the Pentagon.

    The failure of the proposal to prevent a shutdown was the more ominous defeat, both for Republicans and for the country. Yet even if McCarthy manages to pass a version of this, it will almost certainly be an exercise in futility. For starters, it would fund the government for a mere 30 additional days. And its basic provisions—cutting spending by 8 percent for all but the Defense and Veterans Affairs Departments, restarting construction of the southern border wall, cutting off pathways for asylum seekers—will likely be stripped out by Senate Democrats.

    Despite the GOP’s evident dysfunction, Representative Kelly Armstrong of North Dakota was in a chipper mood when he called me from the Capitol. The McCarthy ally was scurrying between meetings in an effort to help resolve the latest crisis threatening the speaker. “We’re a long way from landing the plane, but there are really productive conversations going on,” Armstrong told me. If the plane represents, in Armstrong’s metaphor, a functioning federal government, then House Republicans are still hovering at about 30,000 feet, with the runway coming rapidly into view.

    Watch: The Republicans threatening to shut down the government

    The Democrats who run the Senate aren’t involved in the “productive conversations” Armstrong was referencing. If they were, McCarthy might already have lost his job. Before he can negotiate with the Democrats, the speaker must broker a peace among the warring factions of his own party, who cannot even agree on an opening offer. Groups representing the conservative Freedom Caucus and the more pragmatic Main Street Caucus announced a deal on Sunday to support the 30-day extension, with spending cuts and border restrictions attached. But almost immediately, hard-liners rejected the proposal as insufficiently austere. Led by Representative Matt Gaetz of Florida, several of these Republicans are threatening to oust McCarthy if he caves to Democrats on spending, and a few of them are openly itching for a government shutdown.

    Any five Republicans can torpedo proposals that don’t have Democratic support—as five GOP lawmakers did yesterday in blocking the defense bill—and any five could topple McCarthy by voting along with Democrats for a procedural tool known as a motion to vacate the chair. This has effectively made him a hostage of his caucus, with precious little room to maneuver.

    Even the relatively optimistic Armstrong acknowledged the difficulty of McCarthy’s position. “It’s a pretty untenable argument to say you don’t have enough Republican votes to pass anything and you can’t negotiate with Democrats on anything,” Armstrong told me.

    McCarthy has tried many times to shake off threats to his speakership, alternately daring members like Gaetz to make a bid to oust him and pointing out that with such a narrow majority, any other Republican replacement would find themselves in the same unenviable position. I asked Armstrong whether McCarthy should simply ignore the hard-liners in his conference and strike a deal with Democrats to keep the government open, come what may. “I’m not sure he should yet,” he said.

    House Republicans have received hardly any backing from their brethren in the Senate, who have shown no appetite for a shutdown fight and have been more willing to uphold the budget deal that McCarthy struck with President Joe Biden in the spring. By bowing to conservative demands for deeper spending cuts, the speaker is reneging on the same agreement, which allowed Congress to raise the debt ceiling and avoid a catastrophic default. “I’m not a fan of government shutdowns,” Senate Minority Leader Mitch McConnell told reporters yesterday. “I’ve seen a few of them over the years. They have never produced a policy change, and they’ve always been a loser for Republicans.”

    For now, McCarthy allies such as Armstrong are adamant that this spending battle must result in a change in administration policy. They have zeroed in on the border, seeing an opportunity to force Biden’s hand and take advantage of an issue on which even some Democrats, such as New York City Mayor Eric Adams, have been critical of the president. “If we can’t use this fight to deal with the single most pressing national-security issue and humanitarian issue of our time, then shame on us,” Armstrong said.

    Read: Kevin McCarthy is a hostage

    Yet House Republicans have found themselves isolated, and bickering over legislation that—like most of their proposals this year—stands no chance of becoming law. A bipartisan majority in the Senate is likely to simply return a temporary spending bill to the House without the conservative priorities, perhaps with additional funding to aid Ukraine in its war with Russia. What then? I asked Armstrong. “I would shut it down,” he replied.

    Democrats in the House, meanwhile, have watched the unfolding GOP drama with a mix of schadenfreude and growing horror. The Republican infighting could help Democrats win back a House majority next year. But a shutdown would not reflect well on either party, and voters could end up blaming Biden as well as the GOP for the fallout. Hundreds of thousands of federal workers would be furloughed, and millions of Americans might have to wait longer for Social Security checks and other needed benefits. “The rest of the world looks at us like we’re incompetent and dysfunctional,” Representative Gerry Connolly, a Democrat whose Northern Virginia district includes thousands of federal workers, told me. “How do you explain to our European allies that we can’t fund our government?”

    Connolly is in his eighth term and, like America’s allies, has seen this brinkmanship play out several times before. He told me that whereas earlier in the month he thought Congress had a 50–50 chance of keeping the government open, he now puts the odds of a shutdown at 90 percent. “Sometimes you feel like we’re going to avert this cliff, and then there are times that you go, ‘No, we’re going off this cliff,’” Connolly said. “This one feels like we’re going off the cliff.”

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    Russell Berman

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  • U.S. consumer confidence retreats markedly in August, close to levels signaling recession

    U.S. consumer confidence retreats markedly in August, close to levels signaling recession

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    The numbers: The index of U.S. consumer confidence dipped to 106.1 in August from a revised 114 in the prior month, the Conference Board said Tuesday.

    Economists polled by The Wall Street Journal had forecast a modest pullback to 116 from the initial reading of 117, which was the highest level in two years.

    The revised July reading was the highest since December 2021.

    Key details: Part of the survey that tracks how consumers feel about current economic conditions fell to 114.8 this month from 153 in July. 

    A gauge that assesses what Americans expect over the next six months dropped to 80.2 from 88. The August reading is just above to 80 level that historically signals a recession within the next year.

    Big picture: The tight labor market had bolstered confidence in June and July. The decline in August reverses all of those gains. The index is still 10.8 points above the recent cycle low in July 2022.

    Economists think that higher gasoline prices were behind some of the decline in August. The price of a gallon of unleaded gasoline is up 19.6% from the start of the year and over 2% from last month.

    What the Conference Board said: The organization said it still expects a recession before the end of the year.

    “Write-in responses showed that consumers were once again preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, chief economist at The Conference Board.

    What are they saying?  “The August drop does not definitively end the upward trend in place since last summer, and the expectations index still points to faster growth in real consumption spending. We are not convinced, however, in part because some of the strength in July retail sales was due to boost from Amazon Prime Day, which won’t continue, and because near-real-time indicators of discretionary services spending paint a much less upbeat picture,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

    Robert Frick, corporate economist with Navy Federal Credit Union, said he didn’t think confidence would rise significantly until inflation falls further.

    Market reaction: Stocks
    DJIA

    SPX
    were trading higher on Tuesday. The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    fell to 4.16%.

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  • Consumers seeing substantial improvement in U.S. economy over past 3 months: University of Michigan survey

    Consumers seeing substantial improvement in U.S. economy over past 3 months: University of Michigan survey

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    The numbers: The University of Michigan’s gauge of consumer sentiment inched down to a preliminary August reading of 71.2 after hitting a 22-month high of 71.6 in the prior month.

    Economists polled by the Wall Street Journal had expected sentiment to inch up to a 71.7 reading in August.

    Another key part of the report is the U. of M. measure of inflation expectations.

    According to the report, Americans’ expectations for overall inflation over the next year slipped to 3.3% in August from 3.4% in the prior month, while expectations for inflation over the next 5 years inched down to 2.9% from 3%.

    Key details: According to the Michigan report, a gauge of U.S. consumers’ views on current conditions rose to to 77.4 in August from 76.6 in the prior month, while a barometer of their future expectations fell to 67.3 from 68.3.

    Big picture: Sentiment has been boosted by waning recession fears and disinflation in grocery store prices.

    What the University of Michigan said: “Consumer sentiment was essentially unchanged from July, with small offsetting increases and decreases within the index.  In general, consumers perceived few material differences in the economic environment from last month, but they saw substantial improvements relative to just three months ago,” said Joanne Hsu, the director of University of Michigan consumer surveys.

    Market reaction: Stocks
    DJIA

    SPX
    were mixed in early trading Friday while the yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose to 4.12%, the highest level since the spike last week after Fitch Ratings downgraded the U.S. credit rating.

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  • U.S. consumer sentiment soars in July to highest level since September 2021

    U.S. consumer sentiment soars in July to highest level since September 2021

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    The numbers: The University of Michigan’s gauge of consumer sentiment rose to a preliminary July reading of 72.6 from a June reading of 64.4. It is the largest gain since December 2005. Sentiment is at its highest level since September 2021.

    Economists polled by the Wall Street Journal had expected a June reading of 65.5.

    However, Americans’ expectations for overall inflation over the next year rose to 3.4% in July from 3.3% in the prior month. Expectations for inflation over the next 5 years ticked up to 3.1% from 3% in June.

    Key details: According to the UMich report, a gauge of consumers’ views on current conditions jumped to 77.5 in July from 69 in the prior month, while a barometer of their expectations rose to 69.4 from 61.5.

    Big picture: Sentiment is improving as gasoline prices have held steady this summer. Low unemployment is also playing a role.

    What are they saying? “The good news is that sentiment has roughly retraced half of its fall from pre-pandemic levels. For most Americans, a modest gain in income is expected. Still, durable goods buying conditions remain far off their recent levels. The rise in confidence seems restrained, and clouds concern about the forecasted economic downturn which continues to linger,” said Scott Murray, economist at Nationwide, in a note to clients.

    Market reaction: Stocks
    DJIA,
    +0.33%

    SPX,
    +0.10%
    opened higher on Friday while the yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.805%
    rose to 3.81%.

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  • A breakfast-cereal giant’s grumbles about prices could be music to the Fed’s ears

    A breakfast-cereal giant’s grumbles about prices could be music to the Fed’s ears

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    General Mills the megamanufacturer behind your morning Cheerios, reported a drop in earnings that might make it question whether continuing to raise prices is worth it. 

    General Mills
    GIS,
    +0.52%
    CEO Jeff Harmening acknowledged during the company’s fourth-fiscal-quarter earnings call this week that consumers responded to higher prices by making fewer purchases. “As you look at the last 12 weeks, it’s pretty clear that elasticity — volume elasticities have increased,” which may suggest consumer demand is more sensitive to price increases than it had been previously.

    In business and economics, price elasticity refers to the degree to which individuals, consumers or producers change their demand or the amount supplied in response to price or income changes.

    “ ‘Companies have been raising prices pretty aggressively. We’re seeing that trend definitely subside.’ ”


    — Richard Moody, Regions Financial Corp.

    The manufacturer of the Häagen-Dazs, Pillsbury and Betty Crocker product lineups, as well as its famed breakfast cereals, felt the impact of this phenomenon as it reported a decline in profits and sales volume for its fourth quarter. 

    Read: General Mills’ stock slides 5% as sales fall short. North American retailers are reducing inventory.

    Richard Moody, chief economist at Regions Financial Corp., said higher prices are posing an issue for companies more broadly. “Companies have been raising prices pretty aggressively. We’re seeing that trend definitely subside. Sellers of goods just don’t have as much pricing power as they had for most of last year and the prior year,” Moody told MarketWatch.

    This could be music to the ears of Federal Reserve officials, who are trying to get inflation back down to their 2% target.

    St. Louis Fed President James Bullard, during the early days of the fight against inflation in 2022, said inflation would return to the Fed’s target once companies find out that raising prices is harmful to their bottom lines.

    In an interview last May with Fox Business Network he observed that “a lot of CEOs have come on TV and said, ‘Oh, I have lots of pricing power, and I can do whatever I want and make a lot of money … but I think some of them are going to get punched in the face here with the fact that consumers have to react.”

    Context: Fed-preferred PCE gauge shows lowest U.S. inflation rate since April 2021, but stickiness at core hints at persistent price pressure

    Also see: U.S. consumer sentiment climbs to 4-month high on slower inflation and end of debt-ceiling fight

    Though General Mills’ drop in earnings might not be the punch in the face Bullard warned of, its recent quarterly update could be a sign that continuing to raise prices is now looking harmful to financial results.

    A statement from the company attributed the drop in earnings to a trend among retailers toward lower inventory levels. During the pandemic, grocery stores stocked up on Nature Valley snack bars and CoCo Puffs due to concerns about supply-chain complications. General Mills says retailers are holding less inventory now, so there is less on the shelves for consumers to purchase.

    CEO Harmening said the majority of General Mills’ price increases are in the marketplace already. Though conditions can change, “we feel good about what we see right now with our pricing and the inflationary environment that we see,” he said, a possible indication that the company might back off of flexing price muscle. 

    Other economists were uncertain about reading too much into lower earnings for companies like General Mills.

    Will Compernolle, macro strategist at FHN Financial, said he detected a bit of a culture change due to grocery-store inflation over the past two years. “People are buying less stuff to eat at home. And that is, you know, a kind of mysterious trend in the sense that this is always considered a necessity,” he said.

    As pandemic-era stay-at-home recommendations and other public health measures were eased, there’s been “a temporary surge in food-services spending” as people have chosen to go out to restaurants rather than cook at home, he said. 

    He said it is unclear how companies like General Mills will respond to consumer spending. In order to determine demand, they will have to see what “the new normal looks like when the dust settles” and ask whether “people going to go back to their old composition of food at home versus food away.” 

    Read: Shopping at Kroger can be up to four times cheaper than eating out, CEO says

    Robert Frick, corporate economist with Navy Federal Credit Union, said he has observed “consumers are saving more and spending less, perhaps out of caution, as most believe a recession is either here or imminent.”

    Lower-income Americans have become particularly sensitive to price increases, Frick said. He shared his “hunch” that there is “kind of a drag on spending because lower-income Americans are being hurt so badly.”

    “It seems likely most of the effects of spending plateauing overall has to do with that lower third of Americans [having] really started to, you know, pinch their pennies and run up their debt, and they don’t want to run it up any more,” Frick said.

    Income and spending data released by the government on Friday showed people may have more money to spend but are not spending quite as much.

    U.S. consumer spending slowed in May, rising just 0.1%, compared with 0.6% growth in consumer spending in the prior month. Consumers saved 4.3% of their disposable income, an increase from April’s 3.4% savings rate. 

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  • What Is ‘Revenge Spending’? How Does it Impact The Economy? | Entrepreneur

    What Is ‘Revenge Spending’? How Does it Impact The Economy? | Entrepreneur

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    The pandemic upended our day-to-day norms (and spending habits). As the lockdowns swept the country, people saved money on categories that were closed or restricted, such as dining out, traveling, or going to the movies.

    However, when restrictions cooled and the world opened up again, so did millions of wallets — enter: “revenge spending.”

    Typically used by economists, revenge spending happens after an “unprecedented economic event” (like the pandemic), which in turn causes an increase in consumer spending beyond normal levels as individuals feel an urgency to spend to “make up for lost time,” according to the Corporate Finance Institute.

    When vaccine mandates were lifted and the lockdown ended, a spike in recreational and travel spending ensued, which in turn caused an increase in demand and, of course, prices (notice higher than normal airfare lately?).

    While there has been a confluence of factors that contributed to the rampant level of inflation of the past year, revenge spending didn’t exactly help keep it in check.

    “People want to get back out and do things they haven’t done for the past two years,” Garrett Melson, a portfolio strategist at Natixis Investment Managers, told CNN in April of 2022 when revenge spending was running rampant. “They will complain about prices but they are still going out to spend.”

    Related: What Causes Inflation? Everything You Need To Know.

    Is ‘Revenge Spending’ Slowing Down?

    However, as recession fears loom and the economy remains uncertain, revenge spending is cooling, and so might inflation, the New York Times reported. If the slowdown of revenge spending continues, it could help bring down inflation in the same way it contributed to an uptick in prices for certain services.

    “We see some slowing in so-called revenge categories,” Yelena Shulyatyeva, senior U.S. economist at BNP Paribas, told the outlet.

    Omair Sharif, the founder of Inflation Insights, added that he doesn’t anticipate the same surge in prices for airfare and hotels compared to last year.

    “We’re just not getting the same kind of pop any longer,” he told The Times. “Airfares have pretty much stalled out.”

    In May, average airfare dropped by nearly 13% compared to the same period in 2022, and hotel prices rose at a significantly lower rate (3%) year-over-year, as compared to the nearly 19% year-over-year increase from 2021 to 2022.

    Related: ‘We’re All Worse Off’: Top Economist Says People Need to Accept That Everyone Is Poorer in Today’s Economy

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    Madeline Garfinkle

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  • Consumer sentiment tumbles to six-month low in May on renewed fears about U.S. economy

    Consumer sentiment tumbles to six-month low in May on renewed fears about U.S. economy

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    The numbers: The University of Michigan’s gauge of consumer sentiment fell to a preliminary May reading of 57.7 from an April reading of 63.5. That is the lowest level since November last year.

    Economists polled by the Wall Street Journal had expected a May reading of 63.

    Americans view on near-term inflation moderated slightly in May. They now expect the inflation rate in the next year to average about 4.5%. Inflation expectations had surged to 4.6% in April from 3.6 in March.

    Inflation expectations over the next five years rose to 3.2% from 3% in April. That’s the highest reading since 2011.

    Key details: A gauge that measures what consumers think about their financial situation — and the current health of the economy — fell to 64.5 from 68.2 in April.

    Another measure that asks about expectations for the next six months moved down to 53.4 in May from 60.5 in the prior month.

    Big picture: Consumer spending is the engine of the economy. If households grow concerned about the outlook and pull back, it could push the economy into recession.

    And Federal Reserve officials won’t be pleased to see expectations of inflation over the long-term increase. They view expectations as a key source of future inflation pressure.

    What UMich said: “Consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff,” the press release said. In the most serious debt-ceiling standoff in 2011 consumer sentiment plummeted to recession levels but recovered quickly when the crisis was averted.

    What are they saying? “While we don’t place too much weight on the relationship, if sustained, the latest plunge in consumer sentiment would be consistent with falling consumption in the second quarter. That would be alongside the probable hit to consumption from tightening credit conditions,” said Olivia Cross, assistant economist at Capital Economics.

    Market reaction: Stocks
    DJIA,
    -0.18%

    SPX,
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    were lower in volatile trading on Friday while the yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.437%
    rose to 3.41%.

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  • Credit cards outstanding up a record 29.6% in FY23 till end-Jan

    Credit cards outstanding up a record 29.6% in FY23 till end-Jan

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    The total credit card outstanding in the current financial year so far, has increased significantly, at 29.6 per cent, compared with last year, according to Reserve Bank of India (RBI) data.

    The credit card outstanding stood at ₹1,86,783 crore as on January 27, 2023, (first 10 months of FY23) as against ₹1,44,162 crore in the year-ago period. In the comparable period of FY22, credit card outstanding grew by 9.3 per cent compared with the previous financial year (FY21).

    “Credit card usage has recently surged due to an increased discretionary spending on vacation, travel, entertainment and consumer durables,” BIbekananda Panda, Senior Economist, State Bank of India, told businessline.

    ‘Dramatic shift’

    “Following the pandemic, the credit card space has undergone a dramatic shift as ease of payments, mass acceptance of credit cards without additional fee. An analysis of the RBI data shows that the spurt in credit card outstanding is primarily driven by positive factors,’‘ Panda added.

    According to Krishnan Sitaraman, Senior Director and Deputy Chief Ratings Officer, Crisil Ratings, this is “clearly a reflection of the economy bouncing back’‘ and rebounding well after the pandemic.

    “We see a spurt in card usage in hospitality, travel/leisure, utility bill payments, healthcare, education, consumer durables, and e-commerce in general. More than 60 per cent of the card spends are now for online transactions. There has been a growth in incremental spends as well as spend per card. Cards in force have also gone up. From an asset quality perspective, we are not seeing any material increase in delinquencies as of now but that is what will be important to monitor and manage if NPAs are to be kept under control,” he added.

    The incremental credit card spend in the current financial year so far (till January end) has gone up by 50 per cent along with an increase in spend per card. The current data should be read in the context of low credit card penetration in India, said Prasanna Tantri, Executive Director, Centre for Analytical Finance, Indian School of Business (ISB).

    “The total outstanding credit card balance is less than 2 per cent of bank credit and 2.5 per cent of our annual savings,’‘ he added.

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  • Layoffs Don’t Have To Be Inevitable If You Reevaluate Your Spending in These Areas | Entrepreneur

    Layoffs Don’t Have To Be Inevitable If You Reevaluate Your Spending in These Areas | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    The fact is, the global growth profile of 2023 is showing a downward trend. According to the IMF forecast, this year the economy will grow only 2.7%, compared to 3.2% in 2022.

    In fact, the projected data for advanced economies look even more discouraging, with the World Bank predicting 0.5% economic growth in the U.S. in 2023, which is almost 2% lower than the previous iterations. This leaves experts scratching their heads on whether we’re imminently running towards yet another big recession, or not just yet.

    Team cuts are imminent, aren’t they?

    Supposedly driven by the lingering downward economic spiral, thousands of businesses across various market verticals (mostly tech, media, finance and healthcare) announced huge staff cuts back in 2022, and this neverending firing streak continues.

    Here are just some of the most stunning numbers.

    In January 2023, Sundar Pichai, the CEO of Google and Alphabet, announced the company’s plans to lay off 12,000 team members. Disney is planning to cut back its workforce by at least 7,000 jobs. Amazon will be letting go of 18,000 employees. Goldman Sachs will say goodbye to over 3,000 employees, Philips will be cutting over 6,000 jobs worldwide, and news of mass layoffs just keep coming. Overall, over 125,000 people were already laid off in 2023 by the tech companies alone, per layoffs.fyi.

    However, is the global market slow-down actually the key factor, influencing the massive workforce cuts? While the need to cut spending may be the common ground, in a more nuanced context — not so much.

    Namely, a lot of the companies in the tech sector, like Peloton or Zoom are facing overstaffing challenges, fueled by their exponential growth dynamics during the Covid-19 pandemic, which has turned out virtually impossible to sustain upon its decline.

    Meanwhile, in the real sectors, like the automotive industry, some companies, like Jeep Cherokee explained their plant is idling amid rising electronic vehicle (EV) costs.

    Related: Layoffs Abound Across Industries — But These Major Companies Are Still Hiring

    But most surprisingly, some commenters presume many companies are just “following the herd” in their market niche. In plain words, their assumption is, while the widely-predicted recession forces businesses to tie their belts in one way or another, laying off employees is just their go-to solution, which is seemingly working for their competitors. As business professor Jeffrey Pfeffer told Stanford News, “They are doing it because other companies are doing it.”

    And the truth is, a massive workforce cut doesn’t actually save money in a short-term perspective (imagine the severance pay volumes), and can even flatten the business development in the case of mid-sized companies and small startups.

    How to cut spending without laying off your team

    In view of the tracked decline in economic activities, in some ways fueled by the lingering supply chain disruptions, and the sharp increase of inflation rates, cutting operational spending seems to be a reasonable idea. Not only can it remove extra pressure from business owners’ shoulders amid uncertain times, but also free up extra resources to fund the growth areas.

    And, as mentioned above, letting go of your team members is hardly the best choice (in case you’re not overstaffed, of course), so it’s crucial that you eliminate the latter risks from the equation right away.

    So, how do you determine that you’re overstaffed?

    Essentially speaking, you need to analyze the average manager’s span of control in your company, or in plain words, how many people are reporting to each of them. This number can be different depending on the type of firm or industry. Anyway, the common ground is that if it’s lower than 5-6, the organizational structure most likely has too many levels, with the average optimum management-to-employee ratio currently ranging from 1:15 to 1:20(25).

    Suppose, you don’t have apparent issues with the tall span of control, and the overstaffing risks are not your business case. Consider the following checklist for evaluating possibilities to lower the overall company’s spending without taking a toll on your business processes and cutting the team:

    SaaS spending

    Quite predictably, even small startups with limited funding usually use a bulk of paid SaaS solutions in their business routine (e.g. from a CRM and task management tools to a mere G Suite and accounting software).

    And while the importance of such tools is hardly questionable, their actual selection, as well as the pricing, sometimes is. What I’m saying is that even though the high-quality product does cost money, negotiating a discount happens to be a far more rarely utilized option than one might imagine, which is a huge miss.

    And if you’re paying for two similar management tools, with minor differences, perhaps, the use of a more advanced version of one of these instead will be actually cheaper, especially in the long run.

    Office space rent

    Even though the end of the acute period of the Covid-19 pandemic has stimulated many businesses to return to offices, chances are opting for a hybrid office may help reduce spending costs quite a lot.

    Let’s do some quick math. Imagine you had 10 people in the office on a permanent basis, and consider rearranging the office space to a commonly-used area, which can fit 5 people at a time. This will cut the desk space in half, as well as reduce the required office space for the communal areas (like kitchens, breakout rooms and meeting rooms) by at least 20%.

    Given that the average space per employee was estimated at 75 – 150 sq feet in the pre-pandemic times, as per JLL research (50% deskspace and 50% commonly used areas), the change of the office type from an offline to a hybrid one in the example herein can help to reduce the required office space by at least 200 sq feet.

    In plain money, this could potentially save you around $7,000 monthly in office rent in Seattle, for instance.

    Related: Looking for a New Office for Your Team in 2023? Here’s What to Take into Account.

    Human resources

    While keeping your optimal team as is will definitely help streamline operational processes, you might consider limiting the hiring process for new employees, potentially needed for your newly-developed business projects.

    That is, if you’re hoping to launch two new products in 2023, perhaps, a wise idea would be to select and prioritize the release of just one during a downturn, in order to spare financial resources. Another way to cut spending on human resources would be to readjust the rewards and recognition programs for employees, i.e. making them more tailored to particular business KPIs. In such a way you’ll be able to keep your team motivated, without overspending money on yearly bonuses across the board.

    Ultimately, it’s up to each business owner to make their decision on how to prioritize spending and whether to cut their staff, or not during a downturn, but navigating a company amid uncertain times usually requires a strong team, so why risk losing it, having invested time and resources into building it? That is the question.

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    Anton Liaskovskyi

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  • U.S. consumer sentiment strengthens in final January reading

    U.S. consumer sentiment strengthens in final January reading

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    The numbers: U.S. consumer sentiment improved in late January to 64.9, according to the University of Michigan’s gauge of consumer attitudes.

    This added 5.2 index points from 59.7 in December and was up from the initial January reading of 64.6.

    Economists surveyed by The Wall Street Journal had forecast an unchanged reading of 64.6.

    Key details: A  gauge of consumer’s views of current conditions rose to a final reading of 68.4 in January from 59.4 in the prior month.

    The indicator of expectations for the next six months rose to 62.7 from 59.9 in December.

    Americans viewed that inflation was moderating in January. They expected the inflation rate in the next year to average about 3.9%, down from 4.4% in December. This is the lowest level since April 2021.

    In the longer run, inflation expectations held steady at 2.9%.

    Big picture: Consumer confidence rose for the second straight month on lower energy prices and better financial market conditions. Assessments of personal finances are improving, supported by higher income and easing price pressures.

    But sentiment remains well below the pre-pandemic level of 101 hit in February 2020 and the more recent high of 88.3 hit in April 2021.

    Market reaction: Stocks
    DJIA,
    -0.20%

    SPX,
    -0.17%
    opened higher on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.534%
    rose to 3.54%.

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  • You Might Reconsider That Team Meeting When You Find Out How Much it Really Costs

    You Might Reconsider That Team Meeting When You Find Out How Much it Really Costs

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    Opinions expressed by Entrepreneur contributors are their own.

    A few weeks ago, I got into an interesting discussion on LinkedIn about the value of meetings. The exchange started with this post, wherein I broke down the cost of a 90-minute meeting I’d just sat through. By prorating the salaries of everyone involved, I calculated that the hour and a half we spent cost our company $1,826. Then, I asked the person who ran it if he thought it was worth the money.

    We didn’t have that meeting again.

    In the post’s numerous comments, some people agreed with me and proposed things like including the cost of a meeting in each invite. Others mentioned how they’d made similar calculations while consulting, and quoted some astronomical annual costs for their companies. A notable comment cohort wasn’t quite as big on my cost-counting idea, however, and pointed out that putting a dollar amount on everything we do was a “1950s way of thinking,” and that you can’t really put a price on collective intelligence. That’s fair enough because meetings do offer a chance for some cooperative and hard-to-measure learning.

    In any case, the conversation got me thinking about how productive I’d been before our constant-meetings era. Think back to high school, or even college, when you’d go to the library to research, read and maybe write a whole paper. With no distractions, you had heads-down time to accomplish. And when you biked away from the library, you felt stress-free knowing you’d actually completed a task.

    Related: How to Collaborate Without Wasting Time

    In the business world, often our most productive times are those that recreate that magic library experience — stretches when we’re not constantly refreshing inboxes or going to meetings. Some people come in at 5 a.m. to get it, while others use the week between Christmas and the new year for that purpose (since most people have it off).

    So, I wondered, “How do we make heads-down time an enduring part of our business?” To find out, we conducted an engagement survey of employees, and the majority of them expressed interest — wanted a chance to focus on their to-dos without the distractions of regular gatherings. So, we came up with the idea of a “Quiet Week,” one with no meetings, no scheduled “all-hands,” no one-on-ones and no “lunch and learns.” It would be uninterrupted GSD (“get stuff done”) time, with part of the managerial motivation the chance to determine how it affected productivity.

    We had our first Quiet Week at the beginning of July. I found that, with about 13 weeks per quarter, we could take 12 of them to run the business as usual and reserve one for this new purpose.

    Related: The Key to Having More Effective 1-on-1 Meetings With Your Employees

    The comments we got afterward were stunning. Employees were thrilled to apply themselves in an environment notably absent of stress or FOMO — to get caught up on small-ticket items and/or clear out back-burner backlogs. One staff member said the week offered a chance to study for a web accessibility certification, another observed that a week uninterrupted by meetings engendered a constant flow state that made it easier to knock out long-standing and often more complicated projects.

    In short, the response from the team was overwhelmingly positive and drove home the idea that taking such a break can truly drive productivity. We’ve now made Quiet Week a quarterly staple, giving the entire team time to catch up, plan the next quarter, take time off and just generally recharge and refocus.

    If this seems applicable to your company, here are a few tips to fuel a good start:

    • Check your calendar: Look for a period when heads-down time makes sense (you obviously don’t want to schedule it during the busiest time of the season). Weeks that start with a Monday holiday are generally good candidates.
    • Give the team advance notice: A heads-up two to three months in advance is ideal. That way, people know to finish any collaboration-heavy campaigns before Quiet Week starts, and delay any new projects until after.
    • A soft start (if needed): If you’re not sure the business can run smoothly during a full Quiet Week, try a Quiet Day, or even a few hours. That way, employees can still get the benefit of some focus time, and you/managers can measure results incrementally.
    • Get feedback: Be proactive in soliciting thoughts and suggestions. If the responses turn out to be anything like ours, they will reflect real appreciation, a recognition of both less stress and more energy to move forward, during the week as well as afterwards.

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    Chris Ronzio

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  • U.S. consumer sentiment improves in December as inflation worries ease

    U.S. consumer sentiment improves in December as inflation worries ease

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    The numbers: The University of Michigan’s gauge of consumer sentiment rose to a preliminary December reading of 59.1 from a November reading of 56.8.

    Economists polled by the Wall Street Journal had expected a December reading of 56.5.

    Inflation expectations over the next year fell to 4.6% from 4.9% last month. It is the lowest since September 2021. Five-year inflation expectations remained steady at 3%.

    Key details: A gauge of consumer’s views of current conditions rose to 60.2 in December from 58.8 in November, while an indicator of expectations for the next six months rose to 58.4 from 55.6 last month.

    Big picture: Economists think falling gasoline prices are behind the improvement in confidence.

    The national average retail price for a gallon of gas is now $3.33, down $1.69 from June, according to White House data.

    Still, high inflation has consumers remain in a relatively dour mood. The index is only marginally above the record low of 50 in June. By comparison, the consumer sentiment index was 101 in February of 2020.

    Looking ahead: “High prices coupled with ongoing aggressive rate hikes will be a headwind for consumers and sentiment going forward,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

    Market reaction: Stocks
    DJIA,
    -0.90%
     
    SPX,
    -0.73%
    were higher on Friday on the back of hotter-than-expected wholesale inflation in November. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.583%
    rose to 3.54%.

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  • Halloween spending expected to increase by $500 million — as candy prices soar at the highest rate on record

    Halloween spending expected to increase by $500 million — as candy prices soar at the highest rate on record

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    It’s going to be a big year for Halloween, despite millions of Americans feeling under financial pressure due to inflation.

    Total spending is expected to hit $10.6 billion, an increase of 5% or $500 million on last year, the National Retail Federation estimates. That’s up $2 billion or 20% on the $8.8 billion Halloween expenditure in 2019 before the COVID-19 pandemic. 

    Spending on costumes expect to reach $3.6 billion this year, the NRF survey finds, the highest since 2017. Adult costume spending could reach $1.7 billion this year, $200 million more than last year.

    More than half (57%) of Americans said that inflation did impact their Halloween spending, according to a separate LendingTree Halloween spending survey. In fact, nearly a quarter of this group said they were buying less candy.

    Inflation was 8.2% in September compared to last year, according to Bureau of Labor Statistics data. It was among the highest level in the past four decades.

    Candy and chewing gum rose 13.1% year-on-year in September, the highest increase on record, the BLS said. To put that in context: Candy and chewing gum increased 13% from December 1997 to December 2006.

    “Candy and chewing gum rose 13.1% year-on-year in September, the highest increase on record.”

    For those who haven’t started, the competition was already on. In July, Home Depot
    HD,
    +2.13%
    announced that its popular 12-foot skeleton was sold out, three months before the celebration. 

    A Home Depot spokesperson confirmed the initial sellout of the skeleton in summer, and said the company has been releasing more of these items periodically since then.

    Supply-chain disruptions could also complicate the competition. During Hershey’s
    HSY,
    +0.57%
    second-quarter earnings call in July, Chief Executive Officer Michele Buck said the candy manufacturer had to prioritize the everyday candy packaging over the Halloween ones. She said that decision was “critical to enable us to increase advertising and merchandising levels.”

    In an email to MarketWatch, however, a Hershey’s spokesperson said this decision was not a sign of shortage, adding that the brand had produced more candies for the season than they had in previous years, as Halloween demand remains high. 

    “Like every season over the past few years, sell-through at retail remains high with people purchasing candy, décor and other seasonal items earlier and more often. As a result, seasonally packaged candy may be more limited on the shelf as we get to the final week of the season. Fortunately, the same great brands in snack sizes are available to help fill trick-or-treat bags and buckets,” she said.  

    “On average, Americans plan to spend between $100 and $169 on Halloween candy, décor, cards and costumes.”

    On average, Americans plan to spend $100 on average for Halloween candy, décor, cards and costumes, the National Retail Federation said. LendingTree estimates that households will spend $169 this year, with six-figure salary earners and parents with young children planning to spend the most — $340 and $309 respectively.

    More than a third of the consumers surveyed admit they plan to spend more than they can afford this year. Generation Z — those aged 18 to 24 — and parents with younger children are the most likely to admit to overspending.

    “With the worst of the pandemic further in the rearview mirror, people are excited to get back to spending on the things they love most —, particularly the things they maybe couldn’t fully enjoy over the last few years,” LendingTree chief credit analyst Matt Schulz said.

    The most common reason for overspending: 44% of respondents said they spent more than they had expected, while 34% said they were making their children happy.

    The NRF concluded that 40% of people are shopping at discount stores this Halloween, 36% at specialty Halloween costume stores, and 31% online. Another 11% said they will shop at thrift stores and resale shops.

    “Social media is playing an increasingly important role in consumer behavior, and Halloween is no different,” Phil Rist, executive vice-president of strategy at Prosper Insights & Analytics, said. “Younger consumers, particularly those under the age of 25, will look to platforms like Instagram and TikTok for costume inspiration this year.”

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