U.S. debt default would cause borrowing costs to jump.
getty
A default on the nation’s debt, if Congress is unable to raise the federal debt ceiling in coming weeks, would boost mortgage rates by at least two percentage points and cause a slump in home sales as costlier financing puts real estate beyond the reach of more Americans, according to Jeff Tucker, a Zillow senior economist.
While it’s still unlikely the federal government will fail to pay its bills, the chances have increased in recent weeks because of an ongoing stalemate in Congress, Moody’s Analytics said last week. The chance of a debt default now stands at 10%, up from a previous estimate of 5%, the research firm said.
“Any major disruption to the economy and debt markets will have major repercussions for the housing market, chilling sales and raising borrowing costs, just when the market was beginning to stabilize and recover from the major cooldown of late 2022,” said Zillow’s Tucker.
The average U.S. rate for a 30-year fixed home loan likely would rise to 8.4% in coming months, he said, from last week’s 6.35%, as measured by Freddie Mac. That increase in borrowing costs would cause home sales to slump by 23%, while the U.S. unemployment rate likely would balloon to 8.3% from last month’s 3.4% as the economy entered a recession, Tucker said.
It would be a “self-inflicted disaster,” Tucker said.
Jaret Seiberg, the housing policy analyst for Cowen Washington Research Group, views Tucker’s estimates as possibly too conservative.
“Our view is that the Zillow report may be a best-case scenario as our concern is that credit markets will freeze up if there is a default,” Seiberg said.
Comments made by former President Donald Trump during a CNN “Town Hall” last week increased the chances of a debt disaster, Seiberg said. Trump told CNN’s Kaitlan Collins a debt default “could be nothing” and might be just “a bad week or a bad day.”
That stands in stark contrast to remarks he made while he was in the White House. On July 19, 2019, Trump described the nation’s obligation to pay its bills as “a very, very sacred thing in our country” and added, “I can’t imagine anybody ever even thinking of using the debt ceiling as a negotiating wedge.”
With a razor-thin Republican majority in the House of Representatives, even a few hold-outs inspired by Trump’s remarks could doom a chance to come to an agreement about raising the debt cap, Seiberg said. Negotiations over the debt ceiling aren’t about how much to spend – they’re about paying bills already incurred.
“We continue to view a default as unlikely, but that is premised on our belief that politicians realize how dangerous a default would be for the economy,” Seiberg said. “The problem is that unlike in prior fights, not every political leader agrees, as we heard this week from former President Donald Trump. It is why we cannot rule out a default.”
While economists agree that a failure of the U.S. government to pay its bills would be a recession-inducing catastrophe, they don’t agree on the “X date,” meaning the day a default would begin. Treasury Secretary Janet Yellen puts the month as June, and the earliest potential day as June 1. The U.S. Treasury said in January it would use “extraordinary measures” to move money around to delay a default as long as possible.
Goldman Sachs economists estimate the U.S. “will likely exhaust its cash and borrowing capacity by late July.” Zillow puts the default date as “almost certainly by August, depending on the flow of income tax receipts this spring.”
“It is impossible to predict with certainty the exact date when Treasury will be unable to pay all of the government’s bills,” Yellen told the Independent Community Bankers of America on Tuesday. “Every single day that Congress does not act, we are experiencing increased economic costs that could slow down the U.S. economy.”
The mortgage market is already showing signs of investor fear. Last month, the spread between 30-year fixed mortgage rates and 10-year Treasury yields reached the widest in almost 40 years. When spreads are wide, the mortgage rates that track the 10-year Treasury yield are higher than they normally would be as investors demand a risk premium.
In May’s first week, the spread was 2.95 percentage points, close to the 3.07 in mid-March that marked the widest margin since 1987, and beating the 2.96 in late December 2008 that was the biggest spread of the Great Recession, comparing Freddie Mac’s weekly rate average with 10-year Treasury data from the Federal Reserve.
“We are already seeing the impacts of brinksmanship,” Yellen said. “The U.S. economy hangs in the balance.”
Aaron Smith, CEO of the National Cannabis Industry Association, speaks during a news conference on the Safe Banking Act outside the U.S. Capitol in Washington, Sept. 14, 2022.
Ting Shen | Bloomberg | Getty Images
The Senate banking committee is holding its first-ever hearing Thursday on a bipartisan bill that would allow the cannabis industry to access traditional banking services, which marijuana businesses see as critical to their survival.
The meeting, titled Examining Cannabis Banking Challenges of Small Businesses and Workers, will hear testimony from lawmakers on both sides of the aisle, including Sens. Jeff Merkley, D-Ore., and Steve Daines, R-Mont., who reintroduced the stand-alone bill last week. The committee will also hear from witnesses including the Cannabis Regulators of Color Coalition, Drug Policy Alliance and the United Food and Commercial Workers International Union.
Thursday’s hearing will determine next steps in getting the bill to the Senate floor for a vote, as Senate Majority Leader Chuck Schumer and other key lawmakers express support for it. It comes as the marijuana industry, which is facing a downturn even as more states approve legal markets, has pushed Congress to take action on the issue.
“Without full access to the banking and payments system, legal cannabis businesses are forced to operate in the shadows,” said Sen. Sherrod Brown, D-Ohio, who is also chair of the committee.
Many business owners also rely on funds from friends and family in lieu…
Rohit Chopra, FDIC Board of Directors member, joins ‘Closing Bell Overtime’ to discuss the special assessment fee for large banks, the state of regional banks, and more.
“Consumer spending represents more than half of the economy,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions. “So if consumer spending is strong, that alone is, generally speaking, enough to keep the economy from slipping into a recession.”
In the first quarter of 2023, gross domestic product grew at a 1.1% rate compared to the previous quarter. This modest level of growth is an improvement from mid-2022 GDP figures, which initially brought recession fears to light.
The end of this tightening cycle may be coming into focus as consumers reach their breaking point. As the pandemic fades, historic levels of personal saving have taken a nosedive. Deposits at banks have crested as consumers keep spending amid continually rising prices.
Moderate-income Americans also are facing the significant headwind of less tax-refund money. The average refund this year is $2,777 through April 28, down 8% from the same period last year, according to IRS data.
“Because this is the same household that rely more on the tax refund to finance their spending, a lower refund really has some negative impact on their spending,” said Anna Zhou, an economist at the Bank of America Institute.
Still economists see the chance for a soft landing. “We don’t think … the slowdown process will be as dramatic as some people have feared,” said Zhou. “And it will be a gradual process.”
Watch the video above to learn how U.S. consumer spending has so far fended off a recession.
The artificial intelligence trade may be leaving investors vulnerable to significant losses.
Evercore ISI’s Julian Emanuel warns Big Tech concentration in the S&P 500 is at extreme levels.
“The AI revolution is likely quite real, quite significant. But… these things unfold in waves. And, you get a little too much enthusiasm and the stocks sell off,” the firm’s senior managing director told CNBC’s “Fast Money” on Monday.
In a research note out this week, Emanuel listed Microsoft, Apple, Amazon, Nvidia and Alphabet as concerns due to clustering in the names.
“Two-thirds [of the S&P 500 are] driven by those top five names,” he told host Melissa Lee. “The public continues to be disproportionately exposed.”
Emanuel reflected on “odd conversations” he had over the past several days with people viewing Big Tech stocks as hiding places.
“[They] actually look at T-bills and wonder whether they’re safe. [They] look at bank deposits over $250,000 and wonder whether they’re safe and are putting money into the top five large-cap tech names,” said Emanuel. “It’s extraordinary.”
It’s particularly concerning because the bullish activity comes as small caps are getting slammed, according to Emanuel. The Russell 2000, which has exposure to regional bank pressures, is trading closer to the October low.
“You want to stay in the more defensive sectors. Interestingly enough with all of this AI talk, health care and consumer staples have outperformed since April 1,” Emanuel said. “They’re going to continue outperforming.”
The World Travel & Tourism Council says the global travel and tourism sector won’t fully recover this year — but it will get close.
The sector is forecast to reach $9.5 trillion in 2023, just 5% shy of its gross domestic product contribution in 2019, according to the WTTC’s 2023 Economic Impact Research.
After a sharp drop in 2020, the global travel sector grew nearly 25% year on year in 2021, followed by a further 22% increase in 2022, according to WTTC’s annual report, produced in partnership with Oxford Economics.
Global recovery will occur in 2024, fueled by the slow but steady return of Chinese tourists, according to the report. From there, the sector will continue to grow.
“We expect 2024 to exceed 2019,” said Julia Simpson, WTTC’s president and CEO.
By the end of 2022, tourism levels in 34 countries — out of 185 that were analyzed — rebounded to pre-pandemic levels in terms of GDP contribution, according to the research.
“Countries leading the charge include the U.S. and Dominican Republic,” Simpson told CNBC.
WTTC’s research predicts at least 50 more countries will meet — or be within 95% of reaching — this target by the end of this year.
“Our Economic Impact Research forecasts that North America and Latin America will recover to pre-pandemic levels by the end of 2023,” she said. “We forecast that Europe, the Middle East, Africa, and Asia-Pacific will recover in 2024 and finally, the Caribbean is expected to recover by 2025.”
But in that context, recovery does not mean the same number of trips are being taken compared with before the pandemic, since inflation and rising travel costs have made it more expensive to travel.
Higher airfares and hotel rates will severely limit travel in 2023, according to Riskline’s report. Travel disruptions, geopolitical turmoil and corporate sustainability practices will also take a toll, it said.
The report, published last week, shows that while willingness to travel varies around the globe, overall intent is trending up, bolstered by demand in South Korea and Western Europe, as shown below.
Share of adults who plan to travel in the next 12 months, based on a three-month moving average.
Source: Morning Consult “The State of Travel & Hospitality: H1 2023”
According to the report:
Travelers still prefer cutting travel costs to canceling their plans.
Bleisure travel is on the rise — particularly for trips that are primarily related to work.
Domestic travel demand is cooling in the United States this year, but Americans are planning to travel internationally more often.
Big city travel is rebounding, as concerns about Covid-19 are not “materially influencing travel behaviors” in the U.S.
Yet lingering Covid hesitations aren’t gone for everyone, particularly in parts of Asia.
Some 30% of respondents from the Philippines say they’re highly concerned about Covid safety —the highest in Southeast Asia, according to a report published Thursday by the market research company Milieu Insight.
Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization (WHO), speaks during a news conference in Geneva, Switzerland, December 20, 2021.
Denis Balibouse | Reuters
The spread of Covid-19 is no longer a global public health emergency, the World Health Organization declared Friday.
“For more than a year, the pandemic has been on a downward trend with population immunity increasing from vaccination and infection, mortality decreasing, and the pressure on health systems easing,” WHO Director-General Tedros Adhanom Ghebreyesus said at a news conference in Geneva.
“This trend has allowed most countries to return to life as we knew it before Covid-19,” Tedros said. “It is therefore with great hope that I declare Covid-19 over as a global health emergency.”
Nearly 7 million people have died from the virus worldwide since the WHO first declared the emergency on Jan. 30, 2020, according to the U.N. organization’s official data. Tedros said the true death toll is at least 20 million.
The WHO’s decision comes as the U.S. is set to end its national public health emergency on Thursday.
Tedros said there is still a risk that a new variant could emerge and cause another surge in cases. He warned national governments against dismantling the systems they have built to fight the virus.
“This virus is here to stay. It’s still killing and it’s still changing,” he said.
But the WHO chief said the time has come for countries to transition from an emergency response to managing Covid like other infectious diseases.
Covid was first observed in Wuhan, China, in December 2019, when several patients began to experience pneumonia symptoms with unknown cause.
Covid moved rapidly around the globe in early 2020 leading to an unprecedented shutdown of international travel and border closures as countries unsuccessfully tried to prevent the spread of the virus.
Covid devastated the elderly and other vulnerable populations and ravaged hospitals that didn’t have the bed capacity or supplies to manage the sudden surge of suffering and death.
Many national governments shut down public life in a desperate effort to stop the death, leading to a severe economic downturn and social disruption, the long-term consequences of which likely won’t be fully understood for years to come.
“Covid-19 has been so much more than health crisis,” Tedros said. “It has caused severe economic upheaval, erasing trillions from GDP, disrupting travel and trade, shattering businesses and plunging millions into poverty,” he said.
“It has caused severe social upheaval with borders closed, movement restricted, schools shut and millions of people experiencing loneliness, isolation, anxiety and depression,” Tedros said.
CNBC Health & Science
Read CNBC’s latest global health coverage:
China has faced fierce criticism for not alerting the world earlier, an allegation Beijing denies. Critics have also accused the WHO of relying too much on information from Beijing at the outset of the pandemic.
More than three years later, the origins of the virus are still a hotly contested mystery. Scientists, government officials and the general public continue to debate whether Covid spilled over to humans from an infected animal, or leaked from a lab in China.
The U.S. intelligence community is divided in its assessment of Covid’s origins.
The U.S. government, allied nations and the WHO have criticized the Chinese government for not providing transparent access to data that could help determine how the pandemic started.
A shopper carries a bag of Nike merchandise along the Magnificent Mile shopping district on December 21, 2022 in Chicago, Illinois.
Scott Olson | Getty Images
WASHINGTON — A House committee examining the U.S. government’s economic relationship with China is asking some of the world’s largest clothing companies for information about the use of forced labor during production — a potential violation of U.S. trade law.
Lawmakers asked retailers Temu, Shein, Nike and Adidas North America about the use of materials and labor sourced from the Xinjiang Uyghur Autonomous region of China, according to letters sent to company leaders on Tuesday. Such practices would constitute violations of the 2021 Uyghur Forced Labor Prevention Act, according to the lawmakers.
Congress passed the UFLPA with bipartisan support after the State Department determined China is “committing genocide against Uyghurs and other minority groups in Xinjiang.”
The letters were sent to Rupert Campbell, president of Adidas North America; Qin Sun, president of Temu; Chris Xu, CEO of Shein and John Donahoe, president and CEO of Nike, Inc. They were signed by Reps. Mike Gallagher, R-Wisc., chair of the House Select Committee on the Chinese Communist Party, and Ranking Member Raja Krishnamoorthi, D-Ill.
“Using forced labor has been illegal for almost a hundred years—but despite knowing that their industries are implicated, too many companies look the other way hoping they don’t get caught, rather than cleaning up their supply chains. This is unacceptable,” Gallagher in a statement. “American businesses and companies selling in the American market have a moral and legal obligation to ensure they are not implicating themselves, their customers, or their shareholders in slave labor.”
The inquiries also follow a March hearing of the committee that included an expert assessment finding that U.S. companies finance “state-sponsored forced labor programs in the Uyghur region.”
The lawmakers requested responses to their questions, including the identity of materials suppliers, supply chain policies and audit measures for suppliers, by May 16.
Representatives for the companies did not immediately respond to requests for comment from CNBC.
The latest inquiries follow a separate bipartisan effort earlier this week urging the Securities and Exchange Commission to require Shein to certify it does not use Uyghur labor before the company can expand into the U.S. market. Shein has denied the accusation.
Chinese brands Shein and Temu, which is owned by Chinese parent company PDD Holdings, are also accused of capitalizing on a 90-year-old loophole to avoid tariffs on many goods sold directly to U.S. consumers, the lawmakers said Tuesday.
The lawmakers say Shein and Temu rely heavily on the de minimus provision of Section 321 of the Tariff Act of 1930 to waive import tariffs if the fair retail value of in the country of shipment does not exceed $800.
The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and saving rates they see every day.
This rate hike will correspond with a rise in the prime rate and immediately send financing costs higher for many forms of consumer borrowing. On the flip side, higher interest rates also mean savers will earn more money on their deposits.
Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, as well, and your credit card rate follows suit within one or two billing cycles.
Credit card annual percentage rates are now over 20%, on average, an all-time high. With most people feeling strained by higher prices, more cardholders carry debt from month to month.
“Now people are racking up debt and borrowing at high rates and that’s troublesome,” said Tomas Philipson, University of Chicago economist and a former chair of the White House Council of Economic Advisers.
With this rate increase, consumers with credit card debt will spend an additional $1.7 billion on interest, according to an analysis by WalletHub. Factoring in the hikes between March 2022 and March 2023, credit card users will wind up paying at least $31.7 billion in extra interest charges over the next 12 months, WalletHub found.
Home loans
Boonchai Wedmakawand | Moment | Getty Images
Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
Rates are now off their recent peak, but not by much. The average rate for a 30-year, fixed-rate mortgage currently sits at 6.48%, according to Bankrate, down slightly from November’s peak but still much higher than it was a year ago.
“This goes to show just how hard it is for many buyers to overcome today’s persistently high home prices and mortgage rates,” said Jacob Channel, senior economic analyst at LendingTree.
Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. Already, the average rate for a HELOC is up to 7.99%, according to Bankrate.
Auto loans
Even though auto loans are fixed, payments are getting bigger because the prices for all cars are rising along with the interest rates on new loans. So if you are planning to buy a car, you’ll shell out more in the months ahead.
The average rate on a five-year new car loan is now 6.58%,according to Bankrate.
The Fed’s latest move could push up the average interest rate even higher, right at a time when borrowers are already struggling to keep up with bigger monthly loan payments.
Student loans
Kameleon007 | Istock | Getty Images
Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, and any loans disbursed after July 1 will likely be even higher. Interest rates for the upcoming school year will be based on an auction of 10-year Treasury notes later this month.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the U.S. Department of Education expects to happen sometime this year.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.
Savings accounts and CDs
While the Fed has no direct influence on deposit rates, those tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom for years, are currently up to 0.39%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 4.5%, much higher than the average rate from a traditional, brick-and-mortar bank, according to Bankrate.
Rates on one-year certificates of deposit at online banks are closer to 5%, according to DepositAccounts.com.
With more economic uncertainty ahead, consumers should be taking aggressive steps to secure their finances — including paying down high-interest debt and boosting savings, McBride advised.
“Grabbing a 0% credit card balance transfer offer or putting your emergency fund in a high-yield online savings account are good first steps.”
Rupert Thompson, chief economist at Kingswood Group, assess the outlook for the economy and says that further turmoil is likely ahead for regional banks, but that the Fed has taken measures to contain risks to the broader economy.
Workers are seen inside of a First Republic Bank office on May 01, 2023 in San Francisco, California.
Justin Sullivan | Getty Images
JPMorgan Chase CEO Jamie Dimon’s assertion that recent turmoil in the banking sector was effectively ended by the resolution of First Republic may be premature, one analyst suggested.
The Wall Street giant won a weekend auction for the embattled regional lender after it was seized by the California Department of Financial Protection and Innovation, and will acquire nearly all of its deposits and a majority of assets.
First Republic’s demise marked the third of its kind among midsized banks since the sudden collapse of Silicon Valley Bank and Signature Bank in early March. This triggered a global crisis of confidence that eventually pushed Swiss stalwart Credit Suisse to the brink, prompting an emergency rescue by domestic rival UBS.
“There are only so many banks that were offsides this way,” Dimon told analysts in a call shortly after the First Republic deal was announced.
“There may be another smaller one, but this pretty much resolves them all,” Dimon said. “This part of the crisis is over.”
The recent financial instability has added another troubling consideration for central banks, which have been hiking interest rates aggressively to curb inflation, exposing some of the mismanaged positions held by certain banks that did not expect financial conditions to tighten so sharply.
The U.S. Federal Reserve will announce its latest monetary policy decision on Wednesday, and several of the central bank’s policymakers have reiterated their focus on dragging inflation back down to Earth even if it means tipping the economy into recession.
David Pierce, director of strategic initiatives at Utah-based GPS Capital Markets, told CNBC Tuesday that the financial sector’s frailties may be more profound than the messaging from bankers and policymakers suggests.
“If you listen to the political side of this, you would have them tell you that it really is a non-issue because it’s all covered through the FDIC insurance but money has to go into that and they’re insuring deposits well above what the insurance covers, and on the flipside of that you look at the deal that Jamie Dimon made, and they got a great deal in their purchase,” he told CNBC’s “Squawk Box Europe.”
The FDIC has estimated that the cost to its Deposit Insurance Fund of the First Republic collapse will be around $13 billion, considerably higher than the estimated $2.5 billion for Signature Bank but beneath the $20 billion estimate of resolving Silicon Valley Bank.
Pierce suggested that the sudden nature of the U.S. collapses and bailouts would indicate that the central bank and regulators may not have their fingers on the pulse with regards to ensuring smaller lenders have access to adequate money supply.
“It should not be happening in a vacuum like this and it makes me question a little bit why did they have to take them over and sell them over a weekend? Could they have funded them and given them additional capital, provided loans that would have gotten them through this hard time?” he said.
“Jamie Dimon comes out and says ‘this is it, this is the end of it, we’re all good now’ — I don’t think we can really say that yet, because we don’t know what other problems might be lurking, and obviously there are some things that are hidden, and a lot of this also comes down to there’s been some mismanagement of these banks.”
He added that the fallen banks have largely catered specifically to the tech sector, leaving them uniquely exposed to increases in interest rates having provided riskier loans to “pre-profit” companies.
However, recent Wall Street earnings showed that deposits in the aftermath have flowed heavily from smaller and mid-sized banks to the big, systemically large lenders, and Pierce suggested the two months of turmoil has “really reduced the capital in the marketplace, especially available to high-debt companies.”
The World Economic Forum’s Chief Economists Outlook, published Monday, showed chief economists by and large do not currently see large-scale systemic risk from the recent banking chaos, but they do think it will have some economic impact.
“Although the chief economists are broadly sanguine about the systemic implications of the recent financial disruption – 69% characterize it as isolated episodes rather than signs of systemic vulnerability – they point to potentially damaging knock-on effects,” the report said.
“These include a squeeze on the flow of credit to businesses and the prospect of significant disruption in property markets in particular.”
This assessment was echoed Monday by strategists at DBRS Morningstar.
“Overall, we expect limited immediate fallout from this failure, as the market was well aware of the issues adversely impacting First Republic Bank, who reported very weak results after the market closed on April 24th,” said John Mackerey, senior vice president of the Global Financial Institutions Group at DBRS Morningstar.
“Longer term, we expect further asset quality pressure as the rapid interest rate hikes cool the economy and negatively impact asset values, particularly in commercial real estate where retail and office properties are under pressure.”
Travelers wearing protective masks receive nasal swabs from nurses at a COVID-19 test site inside Terminal B at Los Angeles International Airport (LAX), on Sunday, Nov. 22, 2020.
Bing Guan | Bloomberg | Getty Images
The Biden administration will end its Covid-19 vaccine mandates for federal employees, contractors and international air travelers next week.
The White House said in a statement Monday that those vaccine requirements will end on May 11, the same day the Covid public health emergency expires.
“While vaccination remains one of the most important tools in advancing the health and safety of employees and promoting the efficiency of workplaces, we are now in a different phase of our response when these measures are no longer necessary,” the White House said.
Although Covid cases, hospitalizations and deaths have declined dramatically this year, the virus is still killing more than 1,000 people per week.
The Health and Human Services Department also will start phasing out its vaccine mandate for health-care facilities that participate in Medicare and Medicaid, the White House said. In addition, it will end vaccination requirements for Head Start programs.
And the Department of Homeland Security will lift vaccination requirements for people entering the U.S via its land borders with Canada and Mexico, according to the Biden administration. U.S. citizens, nationals and permanent residents were never subject to those requirements.
CNBC Health & Science
Read CNBC’s latest global health coverage:
HHS and DHS will provide more details on the end of these vaccine requirements in the coming days, the White House said.
The Biden administration implemented the vaccine requirements for health workers, federal employees, contractors, and international air travelers as part of its drive to boost lackluster vaccination rates and slow the spread of the virus as the delta variant surged in late 2021 followed by omicron in the winter of 2022.
The mandates faced fierce opposition and lawsuits from critics who decried the requirements as government overreach, while the White House stressed they were essential to protect public health.
Seniors with early Alzheimer’s disease will face major hurdles to get treated even if promising new drugs roll out more broadly in the coming years, putting them at risk of developing more severe disease as they wait months or perhaps years for a diagnosis.
The U.S. health-care system is not currently prepared to meet the needs of an aging population in which a growing number of people will need to undergo evaluation forAlzheimer’s, according to neurologists, health policy experts and the companies developing the drugs.
related investing news
There are not enough dementia specialists or the needed testing capacity in the U.S. to diagnose everyone who may benefit from a new treatment like Eisai and Biogen‘s Leqembi. After patients are diagnosed, the capacity may not exist — at least initially — to provide the twice monthly intravenous infusions for everyone who is eligible.
Researchers estimate that the wait time from the initial evaluation to the confirmatory diagnostic tests to the infusions could range anywhere from a year and a half to four years or longer. Those months are critical for people with Alzheimer’s.
“The whole process from that time of the family physician conversation to the point of infusion, I worry how long it will take and the complexities of the patient navigating through all of that to successfully get to the end,” Anne White, president of neuroscience at Eli Lilly, which is developing its own Alzheimer’s treatment, told CNBC.
There are promising innovations in development, such as blood tests and injections that patients would take at home, which could make it significantly easier to get diagnosed and treated in the future.
White also said Lilly is confident that more doctors will get into the field and help to alleviate capacity issues, as awareness grows that medicines are entering the market to treat Alzheimer’s.
But time spent waiting robs early patients of their memory and ability to live independently. Alzheimer’s gets worse with time, and as patients deteriorate into more advanced stages of the disease, they no longer benefit from treatments like Leqembi that are designed to slow cognitive decline early.
More than 2,000 seniors transition from mild to moderate dementia from the disease a day, according to estimates from the Alzheimer’s Association. At that stage, they become ineligible for Leqembi.
The central challenge is that a large and rapidly growing group of people have early memory loss and other thinking problems known as mild cognitive impairment. This condition is often, though not always, a sign of early Alzheimer’s disease.
An estimated 13 million people in the U.S. had mild cognitive impairment last year, according to a study published in the Alzheimer’s and Dementia Journal. As the U.S. population ages, the number of people with this condition is expected to reach 21 million by 2060, the study projected.
The U.S. health-care system will deal with major logistical challenges in diagnosing the growing population of people with early Alzheimer’s — even before patients face potential issues with accessing treatment.
“There’s a very large population of undiagnosed cognitive impairments that need to be evaluated in order to determine if people are eligible for treatment,” said Jodi Liu, an expert on health policy at the Rand Corporation.
CNBC Health & Science
Read CNBC’s latest global health coverage:
Access to drugs like Leqembi is severely restricted because Medicare for nowwill only cover the $26,500-per-year treatment for people participating in clinical trials. Medicare has promised to provide broader coverage if Leqembi receives full approval from the Food and Drug Administration, which Eisai expects to happen in July.
Eisai has estimated that 100,000 people in the U.S. will be diagnosed and eligible for Leqembi by the third year of the treatment’s rollout. The sum is a fraction of the total population that could benefit.
Those patients could have other options if new treatments emerge from trials with positive marks.
Eli Lilly will publish clinical trial data on its antibody infusion donanemab in the second quarter of this year. If the data is positive, the company will ask the FDA to approve the drug.
Eisai’s U.S. CEO Ivan Cheung and Lilly’s White said during the companies’ respective earnings calls in February that they are focused on working with the U.S. health system to address the challenges of rolling out of Alzheimer’s treatments.
“The primary goal right now during this launch phase […] is really get the market ready in terms of the diagnostic pathway, the infusion capacity, the education on how to monitor for this therapy, get all the hospitals and clinics ready,” Cheung said.
Long lines are expected at the offices of geriatricians, neurologists and radiologists as millions of people with mild cognitive impairment undergo evaluation to diagnose whether they have Alzheimer’s disease.
Demand for geriatricians — doctors who are experts in diseases that affect the elderly — is expected to outstrip the number of specialists available in the field through at least 2035, according to projections from the federal Health Resources and Services Administration.
The American Academy of Neurology told Medicare in a February letter that increased demand for Alzheimer’s treatments will put substantial pressure on neurologists, who will need additional resources. The federal data predicts a substantial shortage of these specialists in rural areas through at least 2035.
“You just look at the neurologists, look at geriatricians — there are fewer and fewer geriatricians per person in the U.S.,” Rand’s Liu said. “It’s just a few number of specialists to do this kind of work.”
White said Lilly has heard stories of patients waiting six to 12 months to see a neurologist or other doctors who treat dementia due to current capacity issues.
The number of radiologists — who also play a role in diagnosing the disease — is expected to decline in the U.S. through 2035 even as demand increases, the data shows.
In a study published in 2017, Liu and other Rand researchers estimated an initial wait of 18 months for patients to get evaluated by a dementia specialist, tested to confirm a diagnosis, and then treated in the first year that an Alzheimer’s antibody treatment becomes available. The wait would decrease to 1.3 months by 2030 as the patient backlog is cleared, they estimated at the time.
But more recent research found that the wait would actually increase as demand created by an aging U.S. population outstrips the supply of specialists.
Patients seeking a first specialist visit could face an initial wait of 20 months, according to a study by researchers at the University of Southern California published in the journal Alzheimer’s and Dementia in 2021. The delay could increase to about four years as early as 2028 and grow longer through 2050, the study found.
The journal is published by the Alzheimer’s Association.
Both studies are based on assumptions made before Leqembi received expedited approval from the FDA in January. Actual wait times could differ from the studies’ projections.
Two types of tests can diagnosis Alzheimer’s disease: PET scans and spinal taps. PET scans are accurate and safe diagnostic tools, but they are also cumbersome and expensive, said Dr. David Russell, a neurologist.
Patients are injected with a tracer that makes brain abnormalities visible to the machine that does the imaging. Tracers have to be made for each patient and used on the same day.
“We don’t have the infrastructure to roll out PET scanning on a major scale,” said Russell, director of clinical research at the Institute for Neurodegenerative Disorders in New Haven, Connecticut. He is the principal investigator on the clinical trials of Leqembi and donanemab at the institute.
Medicare coverage of PET scans for Alzheimer’s patients is also limited right now. The insurance program for seniors will only cover one scan per lifetime, and only when the patient is participating in a clinical trail approved by the federal Centers for for Medicare and Medicaid Services.
“That’s concerning because people may actually test negative at one point but then obviously as they age, they may need to get tested again,” White said.
Early Alzheimer’s disease can also be diagnosed with a spinal tap, in which fluid around the spinal cord is extracted with a catheter and tested. While there’s plenty of capacity to do spinal taps, this option isn’t attractive to many patients due to unfounded fears that it’s painful and dangerous, Russell said.
Though “there’s a lot of resistance” to the procedure, it is well tolerated and safe, he noted.
“There are certainly areas that don’t have a PET scanner, rural areas, so people would need to travel to a health center that has a PET scanner,” Liu said.
In a large, sparsely populated rural state like New Mexico, many patients would have to drive three to five hours to get a PET scan in a city such as Albuquerque, said Dr. Gary Rosenberg, a neurologist and director of the New Mexico Alzheimer’s Disease Research Center.
“It’s not California or the East Coast where everything’s very compressed and people can travel and get to a center pretty easily and go through these kinds of treatments,” Rosenberg said.
The state has an estimated population of 43,000 people with dementia, and there are very few neurologists outside of the Albuquerque area, Rosenberg said. The New Mexico Alzheimer’s Disease Research Center in Albuquerque is one of only three such facilities funded by the federal National Institute of Aging in a vast region stretching west from Texas to Arizona.
To do a PET scan, a tracer has to be made for each patient off-site in Phoenix, flown on a private plane to Albuquerque and used within hours because the tracers have a short shelf life, according to Rosenberg. The whole process costs more than $12,000 per patient, he added.
“It’s logistically going to be very challenging,” Rosenberg said.
After spending months or possibly years waiting to get diagnosed with early Alzheimer’s, patients would then be eligible for intravenous infusions of Leqembi. But the U.S. doesn’t currently have the capacity to give infusions twice monthly for everyone who likely has the disease, Russell said.
“Having an IV infusion every two weeks would sort of ration people to availability and that’s a problem,” Russell said.
The University of New Mexico Hospital is already maxed out with demand for infusion therapies for cancer, rheumatoid arthritis and autoimmune diseases, and could have a “problem” adding new capacity, said Rosenberg.
Intravenous infusions of monoclonal antibodies like Leqembi aren’t difficult to administer, Russell said.
The infrastructure to offer infusions should expand rapidly once industry sees there’s demand for treatments like Leqembi. But the process of building out capacity could still take a couple years, Russell said. He believes big players like CVS will provide infusions for Alzheimer’s disease on a major scale if they see there’s a large and stable market.
“In one sense, capitalism works, and if it looks like that’s going to be the future, I think infusion centers will explode onto the scene,” the neurologist said.
Eisai and Biogen hope to move early Alzheimer’s patients to a single monthly dose of Leqembi after they’ve completed their initial course of twice monthly infusions, which could help alleviate some of the capacity issues with infusions over time. They plan to ask the FDA to approve this plan in early 2024.
Eli Lilly’s Alzheimer’s candidate antibody treatment donanemab is a single monthly dose, potentially making the logistics of administration easier if the drug gets approved. Dr. Dan Skovronsky, Lilly’s chief medical officer, told analysts during the company’s first-quarter earnings call that he expects many patients will be able to stop taking donanemab at 12 months.
Though the projected wait times to get diagnosed and treated are sobering, innovations on the horizon promise to significantly improve access to Alzheimer’s drugs over time.
Blood tests for Alzheimer’s are in development and some are already on the market. Primary-care doctors could administer the tests, which would ease the burden on patients, especially those in rural communities where the closest PET scan machine is hours away.
These tests detect proteins in the blood associated with Alzheimer’s. They promise to help diagnose the disease before people display cognitive symptoms, potentially giving patients the chance to get treated before they suffer irreparable brain damage, according to the National Institutes of Health.
At least three blood tests made by C2N Diagnostics, Quest Diagnostics and Qaunterix are currently on the market. But they are used to evaluate people who are already presenting symptoms and aren’t available on the mass scale needed for the expected increase in Alzheimer’s patients.
C2N’s PrecivityAD test costs $1,250 and is not covered by insurance — though the company has a financial assistance program. Quest Diagnostics’ AD-Detect test costs $650. Quest’s test is covered by some insurance plans but not Medicare at the moment. The company also has a financial assistance program. Quanterix wouldn’t disclose the price of its test, which insurance does not cover.
Right now, these are not stand-alone tests that can definitively diagnose Alzheimer’s. But the tests could help identify the patients who likely have the disease, which would narrow the population that needs further evaluation and reduce wait times for dementia specialists or confirmatory PET scans.
A study in the journal Alzheimer’s and Dementia estimated that a cognitive test combined with a blood test could slash wait times for dementia specialists from 50 months down to 12 months.
Eisai believes that inexpensive blood tests could completely replace PET scans and spinal taps by the fourth year of Leqembi’s rollout. The quicker diagnosiscould increase the number of people eligible for treatment.
Rosenberg said widespread availability of blood tests will allow mobile clinics to go into rural communities and identify who has markers associated with Alzheimer’s. This would allow patients in remote towns avoid the hours-long drive to cities with PET scan machines, Rosenberg said.
“It’s a game changer,” the neurologist said.
Lilly is developing at least two blood tests. The company is already using one test in clinical trials and hopes to commercialize it sometime this year. It is developing a second test through a collaboration with Roche. White said it is reasonable to expect that in a few years blood tests could replace more burdensome PET scans.
Biogen and Eisai are also developing an injectable form of Leqembi which patients could administer themselves with an autoinjector similar to insulin pens, saving the trip to a site that provides intravenous infusions. They plan to ask the FDA to approve these so-called subcutaneous injections in early 2024.
Eli Lilly is also conducting clinical trials on an antibody treatment called remternetug as a self-administered injection. But the promise of injections that can be administered at home could make companies reluctant to invest in building out intravenous infusion capacity, Russell said.
In the future, Alzheimer’s diagnosis and treatment could be folded into routine checkups with a family doctor, Russell said. When people turn 50 and head in to get a colonoscopy or a cholesterol check, the doctor could also run a blood test for Alzheimer’s.
If the test comes back positive, the doctor could then schedule patients for an MRI and get them started on an autoinjector treatment, Russell said.
“That’s going to be the way that we’re looking at it in the not too distant future,” he said.
The recent rapid rise of accessible artificial intelligence tools has the potential to upend dozens of industries. Tools like Chat-GPT and Dall-E 2 by OpenAI can be used to create written content and visual outputs that in previous years required skilled workers who had years of training in art or writing.
“For myself as both an economist and an engineer, I’m absolutely shocked at the rate at which some of these generative content mechanisms are improving,” said J. Scott Marcus, a senior fellow at Bruegel, a Brussels-based think tank. “There’s also been a long-standing debate, what’s the impact likely to be on the workforce?”
A recent report by Goldman Sachs laid out some stark possibilities when it comes to AI and the economy. The report estimates two-thirds of jobs in the U.S. and Europe, and around 300 million positions worldwide could be exposed to automation from new AI advances. The report also notes that one-fourth of all work being done could be replaced by generative AI.
“The interaction between humans and AI will become more and more prevalent as we move forward,” said Georgios Petropoulos, a researcher at the Massachusetts Institute of Technology Initiative on the Digital Economy. “Then we will see that they can be really good because they can increase our productivity or efficiency, we can be much more productive in the tasks we are doing.”
Watch the video above to find out more about how AI could change the future of work
The U.S. personal savings rate remains below its historical average, according to the U.S. Bureau of Economic Analysis.
The seasonally adjusted annual rate of personal saving was 4.6% in February. That’s well below the average annual rate of more than 8%, according to the data, which traces back to 1959. In June 2022, the rate had dipped to 2.7%, a 15-year low.
This was a large fall from periods of the pandemic when households across the country were saving as much as 30% of their monthly income.
“Something like $2 [trillion] to $2.5 trillion above what we would have otherwise expected were saved by American households,” said Curt Long, chief economist at the National Association of Federally-Insured Credit Unions.
Collectively, Americans have trillions in excess savings compared with expectations leading up to the pandemic, according to Federal Reserve economists.
“That really has helped to buoy the economy,” said Shelley Stewart, a senior partner at McKinsey & Company, “particularly in a place like the U.S., where consumption is such a big part of GDP.”
Federal Reserve economists note that the lion’s share of excess savings is concentrated in the top half of households by income.
But the lower half built up savings in this time, too, according to the central bank’s October note. They noted at the time that the lower half of earners had roughly $5,500 in excess savings per household. Experts believe these stockpiles of cash will begin to dwindle in 2023.
In the months since, headline inflation stayed stubbornly high, at an annual rate of 5% in March. This weighs on consumer spending, while devaluing savings held in low return positions such as cash.
Watch the video above to learn about how the personal savings rate affects you and the wider economy.
Americans started the 2020s with a personal savings boom. The trillions in excess personal savings built up in the pandemic are beginning to vanish amid high inflation, according to Federal Reserve economists. The annual savings rate fell to a 15-year low in 2022. It started a recovery in 2023, but remains well below long-term trends. Despite this slowdown in saving, consumer spending has remained robust, keeping the U.S. from recession.
Market participants are contending with the risk of persistently higher inflation and a bleak economic outlook, which strategists say is stoking a heady mix of confusion and pessimism.
It comes as investors monitor a fresh batch of U.S. economic data that will provide further clues as to whether inflation is cooling, and whether the Federal Reserve is likely to announce another interest rate hike at its next meeting in early May.
Bob Parker, senior advisor at International Capital Markets Association, said investor confusion appeared to be emerging as a big theme in financial markets.
“If you look at the surveys of investor positioning and investor thinking, there is a huge amount of confusion at the moment,” Parker told CNBC’s “Squawk Box Europe” on Wednesday.
“Is inflation coming down rapidly or not? To what extent is the U.S. economy and for that matter, the European economy slowing down? And what are the recession risks?” Parker said.
“And so, given those uncertainties, I think investors are reducing risk at the moment and booking, frankly, what are decent profits year-to-date.”
Parker said many investors were profit-taking on the “good returns” seen year-to-date in both the U.S. and Europe, as “clearly, the first quarter earnings are going to be very negative.”
Traders work on the floor of the New York Stock Exchange on April 21, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
Looking ahead, Parker said that the theme for May and June was likely to be a rotation into underperforming stocks year-to-date, “which is into value and defensive sectors and taking profits on cyclical and growth sectors.”
Value stocks are those thought to be trading below their true value, while defensive stocks typically provide stable earnings regardless of the state of the stock market.
Cyclical stocks, seen as the opposite of defensive stocks, generally follow economic cycles. Growth stocks refer to firms that are expected to outperform the overall market.
Fears about an upcoming recession appear to be growing, while many economists have predicted a period of contraction in 2023.
Earlier this month, the International Monetary Fund published its weakest global growth expectations over the medium term for more than 30 years.
The Washington, D.C.-based institution said that global growth was likely to be around 3%, meaning the global economy is not on track to return over the medium term to the rates that prevailed before the onset of the coronavirus pandemic.
Gita Gopinath, the IMF’s first deputy managing director, has since said that the risks of a so-called “hard landing” remain, even while the U.S. economy could avoid a recession.
Asked whether a downward trend in oil prices could be interpreted as a gloomy economic barometer, Giles Keating, director at Bitcoin Suisse, told CNBC’s “Squawk Box Europe” on Thursday, “I think there is a general pessimism now about where the world economy is going.”
He added, “I don’t think things are that bad. There is too much worry about a problem with one bank now — and that’s not the same as a problem across the banking sector so I think oil is overdoing the pessimism here.”
Signs explaining Federal Deposit Insurance Corporation (FDIC) and other banking policies on the counter of a bank in Westminster, Colorado November 3, 2009.
Rick Wilking | Reuters
If there wasn’t enough banking jargon to blind you, it’s time to learn a new piece of it: Welcome to the industry’s era of the “criticized loan.”
It’s a loan that’s not gone bust, or even missed a payment. But in a time when Wall Street is vibrating to any sign of recession risk, especially from banks, it’s gaining new currency. Criticized loans are those that show preliminary signs of higher risk, such as a developer who’s making payments but is otherwise having financial trouble, or an office building that recently lost a big tenant and needs to replace it.
And they’re rising, which sets off the kind of bells that have sent bank stocks down roughly 20% since early March, even as earnings from the sector are coming in healthier than expected. Wall Street is watching stats on commercial real estate loans almost as closely as for signs that depositors are fleeing for higher interest rates paid by money-market funds (the No. 1 question on recent earnings calls).
Banks are being asked more about criticized loans partly because other credit quality metrics look so good, despite the failures of Silicon Valley Bank and Signature Bank last month, according to David George, a banking analyst with Robert W. Baird & Co. Watching these loans is a way to gain at least limited insight into a real estate downturn many analysts expect to get worse before it gets better, as a combination of recession fears and the slow return of workers to post-Covid offices drives expectations of rising office vacancy rates.
“It’s more subjective, but there are regulators at every bank,” he said. “Criticized loans could be paying or performing but a loan could be singled out because of its collateral.”
Not all banks disclose criticized loan growth in earnings reports, and the definition of a criticized asset is more fluid than classifications of whether a loan has missed payments or is otherwise “non-performing,” meaning it has missed payments or violated some other term of the loan deal. A bank’s quarter-end list of criticized assets is developed by a bank itself, under the supervision of bank examiners, according to David Fanger, senior vice president at the bond-rating agency Moody’s Investor Service.
The Federal Deposit Insurance Corp.’s guidelines for such loans say they should be singled out if “well-defined weaknesses are present which jeopardize the orderly liquidation of the debt, [including] a project’s lack of marketability, inadequate cash flow or … the project’s failure to fulfill economic expectations. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.”
Bank earnings show modest growth in ‘criticized loans’
So far, reports for the first quarter show only slight growth in criticized loans, even as they move into the spotlight at regional banks and national-level commercial banks like Bank of America and Wells Fargo.
At Bank of America, criticized loans to office building projects rose to $3.7 billion out of $19 billion in office loans. But office buildings represent only a quarter of the bank’s commercial real estate loans, and all CRE is just 7% of the bank’s total loans and leases. So even that ominous-sounding number — 20% of office loans look at least potentially shaky — works out to less than 1% of the bank’s total loans and leases. Bank of America set aside $900 million for potential loan losses in all categories, a truer indication of short-term vulnerability.
“They’re over-reserved,” George said. “It’s almost impossible for us to see office [losses] more than 4 or 5 percent of office loans. They already have reserves for that.”
Wells Fargo, the nation’s biggest commercial real estate lender, according to American Banker, did not disclose its level of criticized loans in its earnings report. A spokeswoman said in an e-mail that the number will be in the bank’s quarterly Securities and Exchange Commission filing. Wells Fargo previously said its criticized loan levels in commercial real estate fell during 2022, but ticked upward in the fourth quarter to $12.4 billion out of $155.8 billion in loans.
Among the most detailed disclosures are those from Huntington Bancshares, a Columbus, Ohio-based regional with $169 billion in assets. Its criticized loans, which include all commercial lending and not just real estate, rose 5% to $3.89 billion. That included upgrades of $323 million in loans to a higher risk rating, and paydowns of $483 million, offset by $893 million in loans newly placed in the “criticized” category. Criticized loans are only 3.5% of Huntington’s total loans and 13 times more than the total of commercial loans that are 30 days past due.
Of Huntington’s $16 billion-plus in commercial real estate loans, none are 90 days past due and only 0.25% of balances are 30 days past due or more. But the 30-days-late category is up from close to zero in late 2022. How big a problem is this? If all of the 30-days-late loans went unpaid and had to be written off, Huntington’s quarterly earnings of $602 million would have dropped by about 7%, or $41 million. The total of all criticized loans compares to 2022 net income of $2.13 billion.
“Our credit quality remains top-tier,” Huntington CEO Stephen Steinour told analysts on its recent earnings call. “Huntington is built to thrive during times like this.”
The story is similar among regional banks generally. PNC, the second-largest regional bank, said criticized real estate loans are now 20% of office loans, because multi-tenant buildings it has lent to are about 25% empty, and 60% of the loans are up for refinancing or repayment by the end of 2024. But only 0.2% of office loans are actually delinquent. “In the near term, this (multi-tenant office) is our primary concern area,” CFO Robert Reilly told analysts. PNC has loan loss reserves of 9.4% of total multi-tenant office loans.
At Cincinnati-based Fifth Third Bancorp, 8.2% of office loans are now criticized, but that represents about 0.1% of the bank’s total loans. Cleveland-based Keycorp said its criticized loans were about 2.8% of its total, up from 2.5% late last year, but that only 0.2% of loans aren’t being paid on time.
“Credit quality remains strong,” Keycorp CEO Christopher Gorman said after its earnings, adding that the company has reduced risk for a decade, including by eliminating most construction loans to office building developers. “We have limited exposure to high-risk areas, such as office, lodging and retail,” he told analysts on the quarterly earnings call.
There is an estimated $1.5 trillion in the commercial real estate refinancing pipeline over the next three years, but Moody’s research shows the portfolios to be well diversified across bank types, and according to a recent analysis from CNBC Pro using Deutsche Bank data, the concentration of CRE risk is smallest at the largest banks, where office loans make up less than 5% of total loans, and are less than 2% on average.
For investors, the key is to look at all the metrics together to manage their own risk, Fanger said. Many, even most, criticized loans will never go bad, he said, since they can be restructured or refinanced, or the office building collateral can be sold to repay some loans. But the newly prominent metric, which he said has been around for years, is the place to look for one version of what could happen down the road.
“There’s a qualitative aspect to any rating,” Fanger said. “We find it a useful measure for the likely direction of risk.”
Eager to boost sales, relieve workers from mundane tasks and respond to the ongoing labor shortage, retailers and supermarkets are adding robots to their store aisles.
Outfitted with cameras and sensors, autonomous inventory robots that can verify price signs and look for out-of-stock items are being deployed at big box stores like BJ’s Wholesale and Walmart-owned Sam’s Club.
related investing news
Inventory is one of the biggest challenges retailers face. Missed sales from empty shelves and out-of-stock items cost U.S. retailers $82 billion in 2021, according to NielsenIQ.
“Retailers are spending a lot of money to know what’s coming into their stores through their inventory systems and through their point of sale systems,” said Jarad Cannon, chief technology officer at inventory robot maker Brain Corp. “But in their stores on a daily basis, they don’t have a very good model of what’s actually happening on their shelves.”
Other companies in the space include Simbe Robotics and Bossa Nova Robotics.
So what impact will inventory robots have on U.S. retailers and the livelihood of its workers? CNBC got a behind-the-scenes look at Brain Corp. to find out.
