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    Biden Administration Chooses Military Supplier for First CHIPS Act Grant

    The award, which will go to BAE Systems, is part of a new government program aimed at creating a more secure supply of semiconductors.The Biden administration will announce on Monday that BAE Systems, a defense contractor, will receive the first federal grant from a new program aimed at shoring up American manufacturing of critical semiconductors.The company is expected to receive a $35 million grant to quadruple its domestic production of a type of chip used in F-15 and F-35 fighter jets, administration officials said. The grant is intended to help ensure a more secure supply of a component that is critical for the United States and its allies.The award is the first of several expected in the coming months, as the Commerce Department begins distributing the $39 billion in federal funding that Congress authorized under the 2022 CHIPS and Science Act. The money is intended to incentivize the construction of chip factories in the United States and lure back a key type of manufacturing that has slipped offshore in recent decades.Gina Raimondo, the commerce secretary, said on Sunday that the decision to select a defense contractor for the first award, rather than a commercial semiconductor facility, was meant to emphasize the administration’s focus on national security.“We can’t gamble with our national security by depending solely on one part of the world or even one country for crucial advanced technologies,” she said.Semiconductors originated in the United States, but the country now manufactures only about one-tenth of chips made globally. While American chip companies still design the world’s most cutting-edge products, much of the world’s manufacturing has migrated to Asia in recent decades as companies sought lower costs.Chips power not only computers and cars but also missiles, satellites and fighter jets, which has prompted officials in Washington to consider the lack of domestic manufacturing capacity a serious national security vulnerability.A global shortage of chips during the pandemic shuttered car factories and dented the U.S. economy, highlighting the risks of supply chains that are outside of America’s control. The chip industry’s incredible reliance on Taiwan, a geopolitical flashpoint, is also considered an untenable security threat given that China sees the island as a breakaway part of its territory and has talked of reclaiming it.The BAE chips that the program would help fund are produced in the United States, but administration officials said the money would allow the company to upgrade aging machinery that poses a risk to the facility’s continuing operations. Like other grants under the program, the funding would be doled out to the company over time, after the Commerce Department carries out due diligence on the project and as the company reaches certain milestones.“When we talk about supply chain resilience, this investment is about shoring up that resilience and ensuring that the chips are delivered when our military needs them,” said Jake Sullivan, President Biden’s national security adviser.BAE, partly through operations purchased from Lockheed Martin, specializes in chips called monolithic microwave integrated circuits that generate high-frequency radio signals and are used in electronic warfare and aircraft-to-aircraft communications.The award will be formally announced at the company’s Nashua, N.H., factory on Monday. The facility is part of the Pentagon’s “trusted foundry” program, which fabricates chips for defense-related needs under tight security restrictions.In the coming months, the Biden administration is expected to announce much larger grants for major semiconductor manufacturing facilities run by companies like Intel, Samsung or Taiwan Semiconductor Manufacturing Company, known as TSMC.Speaking to reporters on Sunday, Ms. Raimondo said the grant was “the first of many announcements” and that the pace of those awards would accelerate in the first half of next year.The Biden administration is hoping to create a thriving chip industry in the United States, which would encompass the industry’s most cutting-edge manufacturing and research, as well as factories pumping out older types of chips and various types of suppliers to make the chemicals and other raw materials that chip facilities need.Part of the program’s focus has been establishing a secure source of chips to feed into products needed by the American military. The supply chains that feed into weapons systems, fighter jets and other technology are opaque and complex. Chip industry executives say that some military contractors have surprisingly little understanding of where some of the semiconductors in their products come from. At least some of the chip supply chains that feed into American military goods run through China, where companies manufacture and test semiconductors.Since Mr. Biden signed the CHIPS act into law, companies have announced plans to invest more than $160 billion in new U.S. manufacturing facilities in hopes of winning some portion of the federal money. The law also offers a 25 percent tax credit for funds that chip companies spend on new U.S. factories.The funding will be a test of the Biden administration’s industrial policy and its ability to pick the most viable projects while ensuring that taxpayer money is not wasted. The Commerce Department has spun up a special team of roughly 200 people who are now reviewing company applications for the funds.Tech experts expect the law to help reverse a three-decade-long decline in the U.S. share of global chip manufacturing, but it remains uncertain just how much of the industry the program can reclaim.While the amount of money available under the new law is large in historical proportions, it could go fast. Chip factories are packed with some of the world’s most advanced machinery and are thus incredibly expensive, with the most advanced facilities costing tens of billions of dollars each.Industry executives say the cost of operating a chip factory and paying workers in the United States is higher than many other parts of the world. East Asian countries are still offering lucrative subsidies for new chip facilities, as well as a large supply of skilled engineers and technicians.Chris Miller, a professor of Tufts University who is the author of “Chip War,” a history of the industry, said there was “clear evidence” of a major increase in investment across the semiconductor supply chain in the United States as a result of the law.“I think the huge question that remains is how enduring will these investments be over time,” he said. “Are they one-offs or will they be followed by second and third rounds for the companies involved?”Don Clark More

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    What’s Next for Interest Rates? An Era of ‘Peak Uncertainty.’

    Federal Reserve officials could keep all options on the table at their meeting this week, even as data shape up according to plan.When Jerome H. Powell, the Federal Reserve chair, takes the stage at his postmeeting news conference on Wednesday, investors and many Americans will be keenly focused on one question: When will the Fed start cutting interest rates?Policymakers raised borrowing costs sharply between March 2022 and July, to a 22-year high of 5.25 to 5.5 percent, in a bid to wrestle rapid inflation under control by cooling the economy. They have paused since then, waiting to see how the economy reacted.But with inflation moderating and the job market growing at a more modest pace, Wall Street increasingly expects that the Fed could start cutting interest rates soon — perhaps even within the first three months of 2024.Fed officials have been hesitant to say when that might happen, or to even promise that they are done raising interest rates. That’s because they are still worried that the economy could pick back up or that progress taming inflation could stall. Policymakers do not want to declare victory only to have to walk that back.Mr. Powell is likely to strike a noncommittal tone this week given all the uncertainty, economists said. After their decision on Wednesday, Fed officials will release a fresh quarterly Summary of Economic Projections showing where they think rates will be at the end of 2024, which will indicate how many rate cuts they expect to make, if any. But the projections will offer few hints about when, exactly, any moves might come.And both the Fed’s forecasts and Wall Street’s expectations could mask a stark reality: There is a wide range of possible outcomes for interest rates next year, depending on what happens in the economy over the next couple of months.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    Corporate America Is Testing the Limits of Its Pricing Power

    Alexander MacKay coleads the Pricing Lab at Harvard Business School, a research center devoted to studying how companies set prices. Since the pandemic, he has watched how businesses have become more willing to experiment with what they charge their customers.Big companies that had previously pushed through one standard price increase per year are now raising prices more frequently. Retailers increasingly use digital price displays, which they can change with the touch of a button. Across the economy, executives trying to maximize profits are effectively running tests to see what prices consumers will bear before they stop buying.Huge disruptions to supply chains pushed up corporate costs during the pandemic and forced many companies to think more creatively about their pricing strategies, Mr. MacKay said. That supercharged a trend toward more rigorous pricing, and showed many companies that they could more boldly play with prices without chasing shoppers away. The experimentation continues even as costs ease.“We may have prices changing more quickly than they have before,” he said. That could mean up or down, though companies are generally more eager to raise prices than cut them. Firms are trying to figure out how to protect the profits they have built since the pandemic. For big companies in the S&P 500 index, the average profit margin — the percentage of profit relative to revenue — soared in late 2020 and into 2021, as government stimulus and the Federal Reserve’s emergency interventions stoked consumer demand. At the same time, companies raised their prices so much that they more than covered higher costs for energy, transportation, labor and other inputs, which have recently started to come down.Corporations as varied as Apple and Williams-Sonoma recently reported their highest-ever margins for the third quarter, while Delta Air Lines said its international routes generated record profitability over the summer.Margins eased somewhat last year, but have recently recovered to levels that would have set records before the pandemic. Average margins in nearly every sector in the S&P 500 are running near or above 10-year highs, according to Goldman Sachs.“Companies are maintaining or even expanding margins because they are not passing these cost cuts onto consumers,” said Albert Edwards, a strategist at Société Générale, who called recent moves in margins “obscene.”

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    Quarterly net profit margin of S&P 500 companies
    Source: FactSetBy The New York TimesNow, companies are trying to figure out how to set prices to protect profits at what could prove to be a turning point. High interest rates and waning savings are making some — though by no means all — shoppers more price sensitive.Many companies may be able to protect profits just by holding prices steady as their own costs come down. But some are still thinking about whether they can push prices up further as demand cools and overall inflation abates.“I don’t think companies have the monopoly power to just willy-nilly raise prices,” said Ed Yardeni, president of the research firm Yardeni Research.There’s a focus on margins over market share.Many corporations are talking on earnings calls about how they are prioritizing profit margins — even when that translates into less growth.Take Sysco, the food wholesaler. Its local market business has turned slower recently, Kevin Hourican, the company’s chief executive, said on an October earnings call.But “Sysco is not reacting by leading with price to win share,” he said, referring to the tactic of cutting prices to gain more customers, which is commonly used during downturns. “Instead, we are focused on profitable growth.”Lennox, a heating and air-conditioning company, is working to perfect its pricing strategy based on years of data, Alok Maskara, the firm’s chief executive, said at an investor event this summer.People in the industry are “margin-dollar focused versus revenue-dollar focused,” he said, implying that fewer, more-profitable sales are preferred to many, less-profitable ones.That’s a shift from post-2009 practice.The focus on higher margins — even if it means selling less — is in some cases a shift away from the conventional wisdom in the years during and after the 2009 recession. Back then, some executives felt compelled to compete on price for cost-sensitive shoppers. For hotels, that meant a focus on filling every room.“If you remember back in the Great Recession, there was this view of let’s just drop rates until we get people to heads in beds,” Leeny Oberg, Marriott’s chief financial officer, said in a September meeting with investors. She added that “it wasn’t necessarily the right strategy all the time.”Now “the industry has clearly learned some lessons,” she said. Over the past few years, the company has aimed for more of a balance between maximizing revenue and profit, she noted.Retailers, which have been caught out by shifting consumer tastes in recent years, are talking more lately about “inventory discipline,” or keeping less product in stock, so that they can avoid selling things at clearance prices. The logic is that it’s better to sacrifice a few sales by running out of products than being forced to slash prices in a way that hits the bottom line.The clothing chain American Eagle Outfitters has been expanding its margins by “maintaining tight inventory and promotional discipline,” Jay Schottenstein, the company’s chief executive, said on a November earnings call.Companies learned they can charge more than they thought.While consumers are pulling back from some purchases as prices rise, that is not universally true — hence the value of experimentation. Robert J. Gamgort, the chief executive of Keurig Dr Pepper, said recently that consumers have shown little reaction to higher costs for carbonated drinks.That suggests “it was too good of a value at the start at this,” he said at an investor conference in September, referring to the recent inflationary period. “It was underpriced.”The company, which raised prices at its U.S. beverage unit by 7 percent last quarter, highlighted “strong gross margin expansion” at the top of its latest earnings report.Some executives also find that they can charge more by branding something as a luxury product or experience.“Despite the current economic environment, we continue to see consumers trade up to premium amenities,” Melissa Thomas, chief financial officer at the movie theater chain Cinemark, said on a November earnings call.But price sensitivity may return.Kellogg, the cereal company, had been passing through substantial price increases without losing customers — a situation economists call low price elasticity. It’s like if you snap a rubber band (raise prices) but it doesn’t react (shoppers keep buying).But recently, consumers are beginning to pull back in response to sticker shock.“Price elasticity has hit the market pretty meaningfully,” Gary Pilnick, Kellogg’s chief executive, said on a call with analysts last month. “You might recall that there’s been about 35 percent of price increases over the last couple of years for us, and the elasticities were fairly benign for quite some time.”Price sensitivity is also showing up at brands that cater to lower-income consumers, like Walmart and McDonald’s, which have seen business expand as wealthier people look for deals.“We continue to gain share with both the middle- and higher-income consumers,” Ian Borden, chief financial officer of McDonald’s, said on an October earnings call, although he noted that the company was seeing its lower-income customers struggle.The ability to raise prices — or keep them high — may not last.Even as companies are getting creative to protect their margins, the economy has also held up better than many expected. Overall growth has remained rapid, consumer spending has expanded, and a long-warned-about recession has remained at bay.The question is whether companies will be able to protect profits in an environment where that momentum slows.“Customers are rebelling,” said Paul Donovan, chief economist at UBS Global Wealth Management. “We have reached that point of resistance.” More

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    Starbucks Tells Union It Wants to Resume Contract Talks

    After the coffeehouse chain proposed terms for contract negotiations, Workers United, which represents 9,000 employees, said it was open to productive steps.Starbucks said Friday that it wanted to get back to the bargaining table after a deadlock of more than six months with the union that represents more than 9,000 of its workers.The company is proposing that bargaining continue with a set of organized stores in January, Sara Kelly, Starbucks’s vice president and chief partner officer, said in a letter to Lynne Fox, president of Workers United, the parent union of Starbucks Workers United.“We collectively agree, the current impasse should not be acceptable to either of us,” Ms. Kelly said in the letter. “It has not helped Starbucks, Workers United or, most importantly, our partners. In this spirit, we are asking for your support and agreement to restart bargaining.”Starbucks said it would like to conduct these meetings without audio or video recording “so that all participants are comfortable with open, honest discussions.” The union has previously fought for the negotiations to be conducted by videoconference so that more members could take part.Ms. Fox said in a statement that the union was reviewing the letter and still determining how to respond. “We’ve never said no to meeting with Starbucks,” she said. “Anything that moves bargaining forward in a positive way is most welcome.”Starbucks workers began organizing in 2021 with three Buffalo-area stores. Now more than 350 of the company’s roughly 9,300 corporate-owned stores in the United States are organized.In those two years, the coffee giant and its workers have sparred over issues ranging from Pride Month décor to accusations of company retaliation. The two sides have blamed each other for stalled talks since their last meeting on May 23.Most recently, workers at more than 200 stores walked out on Nov. 16, which fell on Starbucks’ promotional Red Cup Day.The union has filed hundreds of charges with the National Labor Relations Board complaining of unfair labor practices, with accusations including unjust firings and withholding certain health care benefits for organized workers. The agency itself has sided with workers in many of those disputes.The company has also sued the union over allegations of using the company’s intellectual property in pro-Palestinian messaging. More

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    The runway is getting clearer, but the U.S. economy still isn’t assured of a soft landing

    The U.S. economy can take another win with a small “W” as it looks to navigate through what had been the highest inflation level in more than 40 years.
    Despite a high level of anxiety heading into the Labor Department’s nonfarm payrolls report, the details were fairly benign.
    Still, the solid report couldn’t dispense the lingering feeling that the economy isn’t out of the woods yet.
    Key to whether the so-called landing is soft or hard will be the consumer, which collectively accounts for nearly 70% of all U.S. economic activity and has been pressured by inflation.

    A UPS seasonal worker delivers packages on Cyber Monday in New York on Nov. 27, 2023.
    Stephanie Keith | Bloomberg | Getty Images

    November’s solid jobs report did not assure that the economy will come in for a soft landing, but it did help to clear the runway a little more.
    After all, there’s nothing about a 3.7% unemployment rate and another 199,000 jobs that even whispers “recession,” let alone screams it.

    At least for now, then, the U.S. economy can take another win with a small “W” as it looks to navigate through what had been the highest inflation level in more than 40 years — and a still-uncertain path ahead.
    “Overall, the jobs market is doing its part to get us to a soft landing,” said Daniel Zhao, lead economist at jobs rating site Glassdoor. “It’s boring in all the right ways. That’s a welcome change after a few years of less-boring reports.”
    Indeed, despite a high level of anxiety heading into the Labor Department’s nonfarm payrolls report, the details were fairly benign.
    The level of job creation was just above the Wall Street estimate of 190,000. Average hourly earnings rose 4% from a year ago, exactly in line with expectations. The unemployment rate unexpectedly declined to 3.7%, easing worries that it could trigger a historically dead-on signal known as the Sahm Rule, which coordinates increases of the unemployment rate by half a percentage point to recessions.

    Still, the solid report couldn’t dispense the lingering feeling that the economy isn’t out of the woods yet. The fear primarily comes from worries that the Federal Reserve’s aggressive interest rate increases haven’t exacted their full toll and still could trigger a painful downturn.

    “The key uncertainty for the labor market in 2024 is whether job growth slows to a more sustainable pace, or whether the economy moves from monthly job gains to monthly job losses. The former would be consistent with the Fed’s soft-landing scenario, while the latter would mean recession,” said Gus Faucher, chief economist at PNC Financial Services. “PNC still thinks recession is the more likely outcome in 2024, but it is a close call.”

    All about consumers and inflation

    Key to whether the so-called landing is soft or hard will be the consumer, who collectively accounts for nearly 70% of all U.S. economic activity.
    On that front, there was another round of good news Friday: The University of Michigan’s closely watched consumer sentiment survey showed that inflation expectations, a key economic variable for prices, plummeted in December. Respondents put one-year inflation expectations at 3.1%, a stunning 1.4 percentage point drop.
    However, such gauges can be “fluky” and are not in line with some other signals coming from consumers, said Liz Ann Sonders, chief investment strategist at Charles Schwab. Debates over soft landings and inflation expectations and interest rate outlooks tend to miss bigger points, Sonders added.

    Prior to 2023, Sanders and Schwab had been stressing the notion of “rolling recessions,” meaning that contractions could hit certain sectors individually while not dragging down the economy as a whole. The distinction may still apply heading into 2024.
    “The recession versus soft landing debate sort of misses the necessary nuances of this unique cycle,” Sonders said. “A best-case scenario is not so much a soft landing, because that ship has already sailed for [some] segments. It’s that we continue to roll through such that if and when services gets hit more than the brief ding so far and it takes the labor market with it, you’re already in stabilization or recovery mode in areas that already took their big hits.”
    Getting to the soft landing, then, likely will require navigating some of those peaks and valleys, none more so than establishing confidence that inflation really has been vanquished and the Fed can take its foot off the brake. Inflation, according to the Fed’s preferred gauge, is running at 3.5% annually, well above the central bank’s 2% goal, though is consistently falling.

    Still nervous about rates

    There was one other good piece of inflation news Friday: Rental costs nationally declined 0.57% in November and were down 2.1% year over year, the latter being the biggest slide in more than 3½ years, according to Rent.com.
    However, one interesting development from the latest economic data was a bit less market confidence that the Fed will be cutting interest rates quite as aggressively as traders previously believed.
    While the traders in the fed funds futures space still roundly expect that the Fed is done hiking, it now expects only about a 45% chance of a previously expected cut in March, according to CME Group data. Traders previously had been expecting 1.25 percentage points worth of cuts in 2024 but lowered that outlook as well to a toss-up with just a full point of decreases following the data releases.
    That may in itself seem like only a nuanced change, but the move in pricing reflects uncertainty over whether the Fed keeps talking tough on inflation, or concedes that policy no longer needs to be as tight. The fed funds rate is targeted in a range between 5.25% and 5.5%, its highest level in more than 22 years.

    “The key thing though, from a broader perspective, is that they can cut if the economy were to see more of a slowdown than we expect. Then the Fed could cut, could provide some support,” Jan Hatzius, chief economist at Goldman Sachs, said Friday on CNBC’s “Squawk on the Street.” “That means the risk of recession is in my view quite low.”
    Goldman Sachs thinks there’s about a 15% chance of a recession next year.
    If that forecast, which is about the standard probability given normal economic conditions, holds up, it will require continued strength in the labor market and for consumers.
    Periods of labor unrest this year indicate, though, that not all may be well on Main Street.
    “If things were going great, then people would not be marching in the cold and rain because they want more pay because the cost of living is going up,” said Giacomo Santangelo, an economist at job search site Monster.
    Workers won’t need economists to tell them when the economy has landed, he added.
    “The alleged definition of a soft landing is to bring inflation down to 2% to 2½% and have unemployment go up to that full employment level. That’s really what we’re looking for, and we’re not there yet,” Santangelo said. “When you’re on an airplane, you know what it feels like when a plane lands. You don’t need the person in the cockpit to come on and go, ‘Alright, we’re going to be landing now.”Don’t miss these stories from CNBC PRO: More

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    U.S. Job Growth Holds Up as Economy Gradually Cools

    Interest rate increases have taken the edge off labor demand, but unemployment dipped in November, and wages rose more than expected.The U.S. economy continued to pump out jobs in November, suggesting there is still juice left in a labor market that has been slowing almost imperceptibly since last year’s pandemic rebound.Employers added 199,000 jobs last month, the Labor Department reported Friday, while the unemployment rate dropped to 3.7 percent, from 3.9 percent. The increase in employment includes tens of thousands of autoworkers and actors who returned to their jobs after strikes, and others in related businesses that had been stalled by the walkouts, meaning underlying job growth is slightly weaker.Even so, the report signals that the economy remains far from recession territory despite a year and a half of interest rate increases that have weighed on consumer spending and business investment. Reinforcing the picture of energetic labor demand, wages jumped 0.4 percent over the month, more than expected, and the workweek lengthened slightly.Wage growth held steady in NovemberYear-over-year percentage change in earnings vs. inflation More

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    Retail Group Retracts Startling Claim About ‘Organized’ Shoplifting

    The National Retail Federation had said that nearly half of the industry’s $94.5 billion in missing merchandise in 2021 was the result of organized theft. It was likely closer to 5 percent, experts say.A national lobbying group has retracted its startling estimate that “organized retail crime” was responsible for nearly half the $94.5 billion in store merchandise that disappeared in 2021, a figure that helped amplify claims that the United States was experiencing a nationwide wave of shoplifting.The group, the National Retail Federation, edited that claim last week from a widely cited report issued in April, after the trade publication Retail Dive revealed that faulty data had been used to arrive at the inaccurate figure.The retraction comes as retail chains like Target continue to claim that they are the victims of large shoplifting operations that have cut into profits, forcing them to close stores or inconvenience customers by locking products away.The claims have been fueled by widely shared videos of a few instances of brazen shoplifters, including images of masked groups smashing windows and grabbing high-end purses and cellphones. But the data show this impression of rampant criminality was a mirage.In fact, retail theft has been lower this year in most of the country than it was a few years ago, according to police data. Some exceptions, including New York City, exist. But in most major cities, shoplifting incidents have fallen 7 percent since 2019.Organized retail crime, in which multiple individuals steal products from several stores to later sell on the black market, is a real phenomenon, said Trevor Wagener, the chief economist at the Computer & Communications Industry Association, who has conducted research on retail data. But he said organized groups were likely responsible for just about 5 percent of the store merchandise that disappeared from 2016 to 2020.He emphasized that there’s “a lot of uncertainty and imprecision” in measuring losses, because it is difficult to parse out what is shoplifting and what is organized crime.Mr. Wagener testified in Congress in June about the discrepancy in the National Retail Federation’s report.Even as it retracted the figure and revised the report, the federation, which has more than 17,000 member companies, insisted in an emailed statement that its focus on the problem was appropriate.“We stand behind the widely understood fact that organized retail crime is a serious problem impacting retailers of all sizes and communities across our nation,” the statement said. “At the same time, we recognize the challenges the retail industry and law enforcement have with gathering and analyzing an accurate and agreed-upon set of data.”At issue is “total annual shrink” — the industry term for the value of merchandise that disappears from stores without being paid for, through theft, damage and inventory tracking mistakes.Mary McGinty, a spokeswoman for the federation, said the error was caused by an analyst from K2 Integrity, an advisory firm that helped produce the report.The analyst, who was not named, linked a 2021 National Retail Federation survey with a quote from Ben Dugan, the former president of the advocacy group Coalition of Law Enforcement and Retail, who said in Senate testimony in 2021 that organized retail crime “accounts for $45 billion in annual losses for retailers.”Mr. Dugan was citing the federation’s 2016 National Retail Security Survey, which was actually referring to the overall cost of shrink in 2015 — not the amount lost to just organized retail crime, Ms. McGinty said.Alec Karakatsanis, a civil rights lawyer who has studied and critiqued how the media has covered organized retail crime, said that the retraction underscored how some news organizations, which have extensively covered the issue of shoplifting, were “used as a tool by certain vested interests to gin up a lot of fear about this issue when, in fact, it was pretty clear all along that the facts didn’t add up.”One of the most prominent examples came in October 2021, when Walgreens said it would close five stores in San Francisco, citing repeated instances of organized shoplifting. The company’s decision had come months after a video seen millions of times showed a man, garbage bag in hand, openly stealing products from a Walgreens as others watched.But an October 2021 analysis by The San Francisco Chronicle showed that Police Department data on shoplifting did not support Walgreen’s explanation for the store closings.Eventually, Walgreens retreated from its claims. In January, an executive at the company said that Walgreens might have overstated the effects on its business, saying: “Maybe we cried too much last year.”Mr. Karakatsanis said the exaggerated narrative of widespread shoplifting was weaponized by the retail industry as it lobbied Congress to pass bills that would regulate online retailers, which they claim is where much of the stolen product ends up.Commentators and politicians have seized on the issue. Earlier this year, Gov. Gavin Newsom, Democrat of California, responded to reports of large-scale thefts in the state with a call for tough prosecution of shoplifters and a plan to invest millions of dollars to fight “organized retail theft.” Gov. Ron DeSantis, Republican of Florida, signed a bill last year aimed at retail theft, and former President Donald J. Trump called for violence, telling Republican activists in California this year that the police should shoot shoplifters as they are leaving a store.Mr. Wagener, the chief economist at the Computer & Communications Industry Association, said that the National Retail Federation’s report in April immediately stuck out to him as wrong. The error was troubling, he said, because the federation has long been viewed as a trusted provider of data for the industry.What made the federation’s mistake even more surprising, Mr. Wagener said, was how starkly the figure contrasted to the group’s own previous findings.In 2020, the federation said in a report that organized retail crime cost retailers an average of $719,548 per $1 billion in sales — a number that would point nowhere near the roughly 50 percent claim made in the April report.Another National Retail Federation survey showed that all external theft — including thefts unrelated to organized retail crime — accounted for 37 percent of shrink, a figure that would still be billions of dollars less than the incorrect estimate of 50 percent made in April.“It would be a bit like the census claiming that nearly half of the U.S. population lives in the state of Rhode Island,” Mr. Wagener said. More

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    Unemployment among Asian workers and Black men rises in November while the overall rate declines

    The overall unemployment rate declined 0.2% to 3.7% last month, against a forecast that it would hold steady at 3.9%.
    On the other hand, Asian Americans saw a 0.4 percentage-point jump in the unemployment rate to 3.5%.
    The unemployment rate for Black Americans — the demographic with the highest jobless percentage in the U.S. — held steady last month at 5.8%.

    Commuters arrive at the Oculus Center in Manhattan, New York City, on Nov. 17, 2022.
    Spencer Platt | Getty Images

    The labor market deteriorated for both Asian and Black workers in November, according to data released Friday by the U.S. Department of Labor.
    The overall unemployment rate declined 0.2% to 3.7% last month, against a forecast that it would hold steady at 3.9%. Overall, the labor force participation rate ticked up to 62.8% alongside a surge of 532,000 workers into the labor force.

    For white Americans, the jobless rate fell 0.2 percentage points to 3.3%. Hispanic Americans also saw their unemployment rate slip 0.2 percentage points to 4.6%.

    On the other hand, Asian Americans saw a 0.4 percentage-point jump in the unemployment rate to 3.5%. This was accompanied by a decline in the participation rate for Asian workers to 65% from 65.3% in October.
    “That uptick in unemployment is not because more Asian workers are flooding into the labor market, feeling optimistic about getting jobs. It’s actually accompanied by a fall in participation as well as a fall in employment,” Elise Gould, senior economist at the Economic Policy Institute, told CNBC.

    The unemployment rate for Black Americans — the demographic with the highest jobless percentage in the U.S. — held steady last month at 5.8%. The jobless rate for Black men age 20 or older spiked more than 1 percentage point to 6.4% from October’s 5.3%. That said, those gains came as the participation rate for this cohort increased to 69.2% from 67.5%.
    “The rise in unemployment is because more workers are optimistic, coming back in or entering the labor market for the first time, and many of them are finding jobs. And many of them are not, which is why the unemployment rate went up,” Gould added.

    Black Americans were hit harder by business shutdowns during the Covid-19 pandemic. The unemployment rate for Black workers peaked at 16.8% in 2020, versus the overall unemployment rate’s April 2020 high of 14.7%.
    Gould added the caveat that the Asian workers in the survey made up a relatively smaller demographic group, and that both of these series are incredibly volatile from month to month.Don’t miss these stories from CNBC PRO: More