Evelyn Reynolds

More stories

  • 238 Shares109 Views

    in Economy

    The market thinks the Fed is going to start cutting rates aggressively. Investors could be in for a letdown

    The most recent indications on the CME Group’s FedWatch gauge point to a full percentage point of interest rate cuts by the end of 2024.
    This week has featured two important reports, one showing that consumer prices were unchanged and wholesale prices actually declined half a percent in October.
    “They’re not going to want to signal that now is the time to start talking about decreases in interest rates, even if fed funds futures already has that incorporated,” former Boston Fed President Eric Rosengren told CNBC.

    Traders work on the floor of the New York Stock Exchange (NYSE) on November 15, 2023 in New York City. 
    Spencer Platt | Getty Images News | Getty Images

    Markets seem to have taken this week’s positive economic data as the all-clear signal for the Federal Reserve to start cutting interest rates aggressively next year.
    Indications that both consumer and wholesale inflation rates have eased considerably from their mid-2022 peaks sent traders into a frenzy, with the most recent indications on the CME Group’s FedWatch gauge pointing to a full percentage point of cuts by the end of 2024.

    That may be at least a tad optimistic, particularly considering the cautious approach central bank officials have taken during their campaign to bring down prices.
    “The case isn’t conclusively made yet,” said Lou Crandall, chief economist at Wrightson ICAP. “We’re making progress in that direction, but we haven’t gotten to the point where they’re going to say that the risk of leveling out at a level too far above target has gone away.”
    This week has featured two important Labor Department reports, one showing that consumer prices in aggregate were unchanged in October, while another indicated that wholesale prices actually declined half a percent last month.
    While the 12-month reading of the producer price index sank to 1.3%, the consumer price index was still at 3.2%. Core CPI also is still running at a 12-month rate of 4%. Moreover, the Atlanta Fed’s measure of “sticky” prices that don’t change as often as items such as gas, groceries and vehicle prices, showed inflation still climbing at a 4.9% yearly clip.
    “We’re getting closer,” Crandall said. “The data we’ve gotten this week are consistent with what you would want to see as you move in that direction. But we haven’t reached the destination yet.”

    In search of 2% inflation

    The Fed’s “destination” is a place where inflation isn’t necessarily at its 2% annual goal but is showing “convincing” progress that it’s getting there.
    “What we decided to do is maintain a policy rate and await further data. We want to see convincing evidence, really, that we have reached the appropriate level,” Fed Chair Jerome Powell said at his post-meeting news conference in September.
    While Fed officials haven’t indicated how many months in a row it will take of easing inflation data to reach that conclusion, 12-month core CPI has fallen each month since April. The Fed prefers core inflation measures as a better gauge of long-run inflation trends.
    Traders appear to have more certainty than Fed officials at this point.
    Futures pricing Wednesday indicated no chance of additional hikes this cycle and the first quarter percentage point cut coming in May, followed by another in July, and likely two more before the end of 2024, according to the CME Group’s gauge of pricing in the fed funds futures market.
    If correct, that would take the benchmark rate down to a target range of 4.25%-4.5% and would be twice as aggressive as the pace Fed officials penciled in back in September.
    Markets, then, will watch with extra fervor how officials react at their next policy meeting on Dec. 12-13. In addition to a rate call, the meeting will see officials make quarterly updates to their “dot plot” of rate expectations, as well as forecasts for gross domestic product, unemployment and inflation.
    But pricing of Fed actions can be volatile, and there are two more inflation reports ahead before that meeting. Wall Street could find it self disappointed in how the Fed views the near-term policy course.
    “They’re not going to want to signal that now is the time to start talking about decreases in interest rates, even if fed funds futures already has that incorporated,” former Boston Fed President Eric Rosengren said Wednesday on CNBC’s “Squawk Box.”

    ‘Soft landing’ sightings

    Market enthusiasm this week was built on two basic supports: the belief that the Fed could start cutting rates soon, and the notion that the central bank could achieve its vaunted “soft landing” for the economy.
    However, the two points are hard to square, considering that such aggressive easing of monetary policy historically has only accompanied downturns in the economy. Fed officials also seem reticent to get too dovish, with Chicago Fed President Austan Goolsbee saying Tuesday that he sees “a way to go” before reaching the inflation target even as he holds open a possible “golden path” to avoiding a recession.
    “A slower economy rather than a recession is the most likely outcome,” Rosengren said. “But I would say there’s certainly downside risks.”
    The stock market rally plus the recent drop in Treasury yields also pose another challenge for a Fed looking to tighten financial conditions.
    “Financial conditions have eased considerably as markets project the end of Fed rate hikes, perhaps not the perfect underpinning for a Fed that professes to keeping rates higher for longer,” said Quincy Krosby, chief global strategist at LPL Financial.
    Indeed, the higher-for-longer mantra has been a cornerstone of recent Fed communication, even from those members who have said they are against additional hikes.
    It’s part of a broader feeling at the central bank that it doesn’t want to repeat the mistakes of the past by quitting the inflation fight as soon as the economy shows any signs of wobbling, as it has done lately. Consumer spending, for instance, fell in October for the first time since March.
    For Fed officials, it adds up to a difficult calculus in which officials are loathe to express overconfidence that the final mile is within sight.
    “Part of the problem the Fed always has to deal with is this illusion of control,” said Crandall, the economist who started at Wrightson ICAP in 1982. “They can influence things, but they can’t control them. There are just too many exogenous factors feeding into the complex dynamics of the modern global economy. So I’m moderately optimistic [the Fed can achieve its inflation goals]. That’s a little different than being confident.” More

  • 163 Shares109 Views

    in Economy

    Wholesale prices fell 0.5% in October for biggest monthly drop since April 2020

    The producer price index declined 0.5% for the month, the biggest monthly decline since April 2020. Wall Street had been expecting a 0.1% increase.
    The Commerce Department’s advance retail sales report for the month showed a decline of 0.1%. Wall Street had been looking for a decline of 0.2%.
    The Empire State Manufacturing Survey, which gauges conditions in the New York area, posted an unexpected increase of 14 points to 9.1.

    Wholesale prices in October posted their biggest decline in 3½ years, providing another indication that the worst of the inflation surge may have passed.
    The producer price index, which measures final-demand costs for businesses, declined 0.5% for the month, against expectations for a 0.1% increase from the Dow Jones consensus, the Labor Department reported Wednesday. The department said that was the biggest monthly decline since April 2020.

    On a yearly basis, headline PPI posted a 1.3% increase, down from 2.2% in September.
    Excluding food and energy, core PPI was unchanged, also below the forecast for a 0.3% increase. Excluding food, energy and trade services, the index increased 0.1%.
    The report comes a day after the Labor Department said the consumer price index, which measures prices for goods and services at the consumer level, was unchanged in October from the previous month. That set off an aggressive rally on Wall Street, where sentiment is rising that the Federal Reserve is done raising interest rates and could in fact start cutting in the first half of 2024.
    However, consumers in October displayed some sensitivity to prices.
    The Commerce Department’s advance retail sales report for the month showed a decline of 0.1%, according to a number that is adjusted for seasonal factors but not inflation. Wall Street had been looking for a drop of 0.2%. Excluding autos, sales rose 0.1%, compared with expectations for an unchanged number.

    Price declines came primarily from the goods side, as the index slid 1.4%, according to the PPI report. Final demand services prices were unchanged. A spike in goods prices caused by outsized demand for big-ticket items in the early days of the Covid pandemic helped fuel the inflation surge.
    Some 80% of the drop in goods prices came from a 15.3% tumble in gasoline prices, the Labor Department said.
    On the services side, transportation and warehousing costs increased 1.5%, while trade services declined 0.7%. Airline passenger services prices increased 3.1%.
    From the consumer standpoint, sales also were held back by the decrease in gasoline prices, with sales at service stations down 0.3%, the Commerce Department reported. Motor vehicles and parts dealers saw a decline of 1% while furniture and home furnishing stores reported a 2% drop. Both food and beverage and electronics and appliance stores showed increases of 0.6%.
    The control group of retail sales that the Commerce Department uses to compute gross domestic product showed a 0.2% gain. Sales overall increased 2.5% from a year ago.
    Stocks were positive following the report while Treasury yields also were higher.
    In other economic news, the Empire State Manufacturing Survey, which gauges conditions in the New York area, posted an unexpected increase of 14 points to 9.1, better than the estimate for a -3 reading. The number represents the percentage of companies seeing expansion against contraction, so any positive number indicates growth.
    The report, from the New York Federal Reserve, showed gains in inventories and shipments, while the indexes for employment, prices and unfilled orders fell.
    Correction: Wholesale prices in October posted their biggest decline in 3½ years. An earlier version misstated the time frame. More

  • 175 Shares199 Views

    in Economy

    Inflation was flat in October from the prior month, core CPI hits two-year low

    The consumer price index was flat in October from the previous month but increased 3.2% from a year ago. Both were below Wall Street estimates, sparking a major rally on Wall Street.
    Excluding volatile food and energy prices, the core CPI rose 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual rate was the smallest increase since September 2021.
    The flat reading on the headline CPI came as energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index.
    Following the report, traders took any potential Fed rate hikes almost completely off the table, according to CME Group data.

    Inflation was flat in October from the previous month, providing a hopeful sign that stubbornly high prices are easing their grip on the U.S. economy and giving a potential green light to the Federal Reserve to stop raising interest rates.
    The consumer price index, which measures a broad basket of commonly used goods and services, increased 3.2% from a year ago despite being unchanged for the month, according to seasonally adjusted numbers from the Labor Department on Tuesday. Economists surveyed by Dow Jones had been looking for respective readings of 0.1% and 3.3%.

    The headline CPI had increased 0.4% in September.

    Excluding volatile food and energy prices, the core CPI increased 0.2% and 4%, against the forecast of 0.3% and 4.1%. The annual level was the lowest in two years, down from 4.1% in September, though still well above the Federal Reserve’s 2% target. However, Fed officials have stressed that they want to see a series of declines in core readings, which has been the case since April.
    Markets spiked following the news. The Dow Jones Industrial Average roared higher by nearly 500 points as Treasury yields fell sharply. Traders also took any potential Fed rate hikes almost completely off the table, according to CME Group data.
    “The Fed looks smart for effectively ending its tightening cycle as inflation continues to slow. Yields are down significantly as the last of investors not convinced the Fed is done are likely throwing in the towel,” said Bryce Doty, portfolio manager at Sit Fixed Income Advisors.
    The flat reading on the headline CPI came as energy prices declined 2.5% for the month, offsetting a 0.3% increase in the food index. It was the slowest monthly pace since July 2022.

    Shelter costs, a key component in the index, rose 0.3% in October, half the gain in September as the year-over-year increase eased to 6.7%. Within the category, owners equivalent rent, which gauges what property owners could command for rent, increased 0.4%. A subcategory that includes hotel and motel pricing dropped 2.9%.
    “This is a game changer,” Paul McCulley, former chief economist at Pimco and now an adjunct professor at Georgetown University, said on CNBC’s “Squawk on the Street.” “We’re having a day of rational exuberance, because the data clearly show what we’ve been waiting for for a long time, which is a crack in the shelter component.”
    Chicago Fed President Austan Goolsbee called the report “slow but clear progress” on getting inflation back to healthy levels.
    Vehicle costs, which had been a key inflation component during the spike in 2021-22, fell on the month. New vehicle prices declined 0.1%, while used vehicle prices were off 0.8% and were down 7.1% from a year ago.
    Airfares, another closely watched component, declined 0.9% and are off 13.2% annually. Motor vehicle insurance, however, saw a 1.9% increase and was up 19.2% from a year ago.
    The report comes as markets are closely watching the Fed for its next steps in a battle against persistent inflation that began in March 2022. The central bank ultimately increased its key borrowing rate 11 times for a total of 5.25 percentage points.
    While markets overwhelmingly believe the Fed is done tightening monetary policy, the data of late has sent conflicting signals.
    Nonfarm payrolls in October increased by just 150,000, indicating the labor market finally is showing signs that it is reacting to Fed efforts to correct a supply-demand imbalance that has been a contributing inflation factor.
    Labor costs have been increasing at a much slower pace over the past year and a half as productivity has been on the rise this year.
    Real average hourly earnings — adjusted for inflation — increased 0.2% on a monthly basis in October but were up just 0.8% from a year ago, according to a separate Labor Department release.
    More broadly speaking, gross domestic product surged in the third quarter, rising at a 4.9% annualized pace, though most economists expect the growth rate to slow considerably.
    However, other indicators show that consumer inflation expectations are still rising, the likely product of a spike in gasoline prices and uncertainty caused by the wars in Ukraine and Gaza.
    Fed Chair Jerome Powell last week added to market anxiety when he said he and his fellow policymakers remain unconvinced that they’ve done enough to get inflation back down to a 2% annual rate and won’t hesitate to raise rates if more progress isn’t made.
    “Despite the deceleration, the Fed will likely continue to speak hawkishly and will keep warning investors not to be complacent about the Fed’s resolve to get inflation down to the long-run 2% target,” said Jeffrey Roach, chief economist at LPL Financial.
    Even if the Fed is done hiking, there’s more uncertainty over how long it will keep benchmark rates at their highest level in some 22 years.
    Don’t miss these stories from CNBC PRO: More

  • 88 Shares109 Views

    in Economy

    Sharp Drop in Airfares Cheers Inflation-Weary Travelers

    Airfares to many popular destinations have recently fallen to their lowest levels in months, and even holiday travel is far cheaper than it was last year, providing some welcome relief to consumers who have been frustrated for months by high prices for all manner of goods and services.The glut of deals suggests that the airline industry’s supercharged pandemic recovery may finally be slowing as the supply of tickets catches up and, on some routes, overtakes demand, which appears relatively robust.Consider the fares that Denise Diorio, a retired teacher in Tampa, Fla., recently scored. She spent less than $40 on flights to and from Chicago and paid just $230 for a round-trip ticket from New York to Paris and back, a trip she plans to take this month.“I’ve been telling all my friends, ‘If you want to go somewhere, get your tickets now,’” she said.The bargains she found may be exceptional, but Ms. Diorio is right that deals abound.Early this month, the average price for a domestic flight around Thanksgiving was down about 9 percent from a year ago. And flights around Christmas were about 18 percent cheaper, according to Hopper, a booking and price-tracking app. Kayak, the travel search engine, looked at a wider range of dates around the holidays and found that domestic flight prices were down about 18 percent around Thanksgiving and 23 percent around Christmas.“In a lot of cases, we’re seeing some of the lowest fares that we’ve seen really since travel started coming back after the drop-off in 2020,” said Kyle Potter, executive editor of Thrifty Traveler, a travel blog and deal-watching service.Domestic ticket prices fell over the summer, Mr. Potter said, and deals on international travel, particularly to Europe, have become more common recently.Airlines lower their fares when they are trying to get more people to book tickets as demand is slowing or they are facing stiffer competition. There’s little question that competition has intensified on some routes, but travel experts say it’s not clear whether demand is waning.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers forecast, according to Airlines for America, an industry group. That would be about 9 percent more than last year and 6 percent more than in 2019, before the pandemic.But some airlines say demand is slowing outside of holiday and other peak travel periods. In addition, some airports have been so flooded with flights that carriers have been forced to cut fares to fill planes.That hadn’t been much of a problem for most of the recovery from the pandemic. Weather and other disruptions limited the supply of flights last year and in 2021, as did shortages of trained pilots, parts and planes, among other factors. That drove up ticket prices, kept planes full and helped airlines take in strong profits.Thanksgiving this year is expected to set a record for air travel, with nearly 30 million passengers anticipated.Stefani Reynolds for The New York Times“The airline industry has never delivered the types of profit margins and return on capital that it has done over the last 2.5 years,” said John Grant, chief analyst with OAG, an aviation advisory and data firm. “We’re getting back to a more normal industry.”For the largest U.S. airlines, the good times have continued, fueled in particular by thriving demand for international travel. But smaller and low-fare carriers have started to suffer. Several reported disappointing financial results for the three months that ended in September. Executives at those airlines have said demand is weakening, fares are falling and costs remain high. They also say bad weather and a shortage of air traffic controllers have made flying more difficult.JetBlue Airways, for example, lost $153 million in the third quarter, compared with a $57 million profit in the same period last year. The company said recently that it was moving flights away from crowded markets, such as New York, to those where it expected stronger performance, such as the Caribbean. The budget carriers Spirit Airlines and Frontier Airlines recently told investors that they were looking to cut costs by tens of millions of dollars.Competition has been fierce in some important markets, driving down fares and profits.In Denver, where Frontier is based, about 14 percent more seats were available on flights this summer than in the summer of 2019, according to Cirium, an aviation data provider. Miami and Orlando, Fla., two popular destinations served by many budget carriers, saw even larger increases in capacity.But while airlines added flights in popular markets as they chased passengers, airports in other cities, including Los Angeles, a hub for several major airlines, had large declines in capacity from the summer of 2019.“You’ll find that there’s a large correlation between the airlines that are doing well and the ones that are struggling, margin-wise, when you compare where their concentrations are,” Barry Biffle, Frontier’s chief executive, said last month on a conference call to discuss the airline’s third-quarter results.When it comes to international routes, analysts are less certain of why fares are falling and whether they will remain low. The kinds of deals that Ms. Diorio got for her Paris trip could mean that larger airlines soon find themselves facing a financial squeeze or merely that the industry is returning to a prepandemic normal.“Historically, demand to Europe softens in the winter,” said Steve Hafner, Kayak’s chief executive. “So I think that reflects normal trends.”But demand for international travel could face challenges, partly because of the wars in the Middle East and Ukraine. Analysts also warn that many consumers may be less willing or able to splurge on travel than they were in the last couple of years, when they had pandemic savings to draw from. Even if demand remains strong, airlines risk offering too many seats on popular overseas routes.Whatever the cause of the recent drop in fares, the deals are a welcome break to travelers from years of high prices, Mr. Potter said.“Either way the recipe is there for cheap flights,” he said. “If it’s just a little bit of overcapacity, that’s a win for consumers. If travel demand is dropping, in some ways that’s an even bigger win for people who are never going to give up on travel.” More

  • 125 Shares199 Views

    in Economy

    Biden’s Pacific Trade Pact Suffers Setback After Criticism From Congress

    The administration will no longer try to announce the completion of the trade terms this week, after prominent Democrats objected to some provisions.The Biden administration has pulled back on plans to announce the conclusion of substantial portions of a new Asian-Pacific trade pact at an international meeting in San Francisco this week, after several top Democratic lawmakers threatened to oppose the deal, people familiar with the matter said.The White House had been aiming to announce that the United States and its trading partners had largely settled the terms of its Indo-Pacific Economic Framework for Prosperity, an agreement that aims to strengthen alliances and economic ties among the United States and its allies in East and South Asia.But Senator Sherrod Brown, Democrat of Ohio, and other prominent lawmakers have criticized the pact, saying it lacks adequate protections for workers in the countries it covers, among other shortcomings.The Biden administration, facing the possibility of additional critical public statements, has decided not to push to conclude the trade portion of the agreement this week, and has been briefing members of Congress and foreign trading partners in recent days on its decision, the people said.The agreement has been a key element of the Biden administration’s strategy to counter China’s growing influence in Asia by strengthening relations with allies. The framework’s partners include Australia, Indonesia, Japan, South Korea and Singapore and together account for 40 percent of the global economy.The Indo-Pacific Economic Framework for Prosperity has four main parts, or “pillars.” The first portion, which the administration completed in May, aims to knit together the countries’ supply chains.The Biden administration still appears likely to announce the substantial conclusion this week of two other big portions of the agreement, one on clean energy and decarbonization and another on taxation and anticorruption. The Commerce Department negotiated those two pillars, as well as the supply chain agreement.But the thorniest part of the framework has been the trade pillar, which is being overseen by Katherine Tai, the U.S. trade representative, and her office. The trade negotiations cover issues such as regulatory practices, procedures for importing and exporting goods, agriculture, and standards for protecting workers and the environment.Congressional Democrats, including Senator Ron Wyden of Oregon, who leads the Senate Finance Committee, have expressed concern over the labor and environmental standards. Lawmakers of both parties have criticized the administration for not closely consulting Congress during the negotiations, while others have been dismayed by the administration’s recent clash with big tech firms over U.S. negotiating positions on digital trade.Katherine Tai, the U.S. trade representative, second from left, has pledged to include tough labor standards in the agreement.Jason Henry/Agence France-Presse — Getty ImagesIn a statement last week, Mr. Brown, who is facing a tough re-election fight next year, called for cutting the entire trade pillar from the agreement, saying it did not contain strong enough protections to ensure workers aren’t exploited.“As the administration works to finalize the Indo-Pacific Economic Framework, they should not include the trade pillar,” Mr. Brown said. “Any trade deal that does not include enforceable labor standards is unacceptable.”Members of Congress and their staffs had communicated concerns about a lack of enforceable provisions in meetings for several months, one Senate aide said.In a meeting with White House officials this fall, officials from the Office of the United States Trade Representative proposed waiting until next year to announce the completed trade pillar, at which point all of the agreement’s contents, including the labor provisions, would be settled, according to a person familiar with the deliberations, who was not authorized to speak publicly.But White House officials were eager to have developments for President Biden to announce during the meetings in San Francisco. U.S. trade officials pushed their partners in foreign countries in recent weeks to complete a package of agreements that did not include the labor provisions, intending to finish them in 2024.After Mr. Brown’s public objections, the White House and the National Security Council asked to pull back on the announcement, the person who is familiar with the deliberations said.A spokesman for the National Security Council said in a statement that the Biden administration had focused on promoting workers’ rights and raising standards throughout the negotiations, and that the parties were on track to achieve meaningful progress.A spokesperson for Ms. Tai’s office said it had held 70 consultations with Congress while developing and negotiating the Indo-Pacific framework and would continue to work with Congress to negotiate a high-standard agreement.The decision to push back final trade measures until next year at the earliest is a setback for the Biden administration’s strategic plans for Asia. It’s also a demonstration of the tricky politics of trade, particularly for Democrats, who have frequently criticized trade agreements for failing to protect workers and the environment.Ms. Tai worked with Mr. Wyden, Mr. Brown and others during the Trump administration, when she was the chief trade counsel for the House Committee on Ways and Means, to insert tougher protections for workers and the environment into the renegotiated North American Free Trade Agreement.Ms. Tai has pledged to include tough labor standards in the Indo-Pacific agreement, which covers some countries — such as Malaysia and Vietnam — that labor groups say have low standards for protecting workers and unions. But critics say the power of the United States to demand concessions from other countries is limited because the deal does not involve lowering any tariff rates to give trading partners more access.While doing so would promote trade, the Biden administration and other trade skeptics argue that lower barriers could hurt American workers by encouraging companies to move jobs overseas. A previous Pacific trade pact that proposed cutting tariffs, the Trans-Pacific Partnership negotiated by the Obama administration, fizzled after losing support from both Republicans and Democrats.In a statement, Mr. Wyden said senators had warned Ms. Tai’s office for months “that the United States cannot enter into a trade agreement without leveling the playing field for American workers, tackling pressing environmental challenges and bulldozing trade barriers for small businesses and creators.”“It should not have taken this long for the administration to listen to our warnings,” Mr. Wyden said. “Ambassador Tai must come home and work with Congress to find an agreement that will support American jobs and garner congressional support.” More

  • 175 Shares149 Views

    in Economy

    Consumer spending fell in October, according to new CNBC/NRF Retail Monitor tracking card transactions

    October retail sales, excluding autos and gas, fell by 0.08%, according to the new CNBC/NRF Retail Monitor.
    The Retail Monitor is a joint product of CNBC and the National Retail Federation based on 9 billion annual credit and debit card transactions collected and anonymized by Affinity Solutions.
    The October data, accounting for more than $500 billion in sales, showed weakness in gas station sales, electronics and appliances and furniture and home stores.

    A customer shops at a Costco store in San Francisco on Oct. 2, 2023.
    Justin Sullivan | Getty Images

    The consumer took a spending break ahead of the holiday season, with October retail sales, excluding autos and gas, falling by 0.08%, and core retail, which also removes restaurants, declining by 0.03%, according to the new CNBC/NRF Retail Monitor.
    The new Retail Monitor, debuting Monday, is a joint product of CNBC and the National Retail Federation based on data from Affinity Solutions, a leading consumer purchase insights company. The data is sourced from more than 9 billion annual credit and debit card transactions collected and anonymized by Affinity and accounting for more than $500 billion in sales. The cards are issued by more than 1,400 financial institutions.

    The data differs from the Census Bureau’s Retail Sales report as it is the result of actual consumer purchases, while the Census relies on survey data. The government data is frequently revised as additional survey data become available. The CNBC/NRF Retail monitor is not revised as it’s calculated from actual transactions during the month. It is, however, seasonally adjusted, using the same program employed by Census.

    Arrows pointing outwards

    “The CNBC/NRF Retail Monitor will modernize how retail sales are tracked and measured, and Affinity Solutions’ vast dataset of how, what and where the consumer is spending will identify how key demographics and channels are performing for the industry generally and for specific retail sectors,” said NRF President and CEO Matthew Shay.
    “Our audience, investors and executives alike, will now be armed with dynamic insights that go beyond headline numbers to show emerging trends and critical detail,” CNBC Senior Vice President of Business News Dan Colarusso said.

    Weakness in electronics and furniture

    The October data shows a cooling of consumer spending, in line with the consensus of Wall Street forecasts. Year over year, overall retail and core retail sales are both up 2.6%.
    The October data showed weakness in gas station sales, electronics and appliances and furniture and home stores. There was strength in sporting goods and hobby stores and non-store retails, or internet sales, along with health and personal care.

    Starting modestly before the pandemic, and accelerating amid the outbreak, economists turned to real and high-frequency private sector data to gauge the economy. In some cases, it was due to the absence of government data, with some agencies unable to gather information and others finding response rates limited. In other cases, economists looked to data that was not readily available from government sources, like subway ridership data or how much consumer spending occurred “with card not present” to gauge whether Americans continued to shun shopping in person.
    While the pandemic passed, the move toward actual, high frequency and private sector data has continued to expand.
    “The Retail Monitor heralds a new era of retail intelligence, where data isn’t just a resource – it’s a roadmap to understanding and engaging with the modern consumer,” Affinity Solutions CEO and founder Jonathan Silver said. Affinity is also a leading provider of data to Wall Street.
    In coming months, the Retail Monitor will provide demographic breakdowns of spending by age, income and geography. More

  • 138 Shares179 Views

    in Economy

    Polluting Industries Say the Cost of Cleaner Air Is Too High

    As the Biden administration prepares to toughen air quality standards, health benefits are weighed against the cost of compliance.The U.S. Environmental Protection Agency is about to announce new regulations governing soot — the particles that trucks, farms, factories, wildfires, power plants and dusty roads generate. By law, the agency isn’t supposed to consider the impact on polluting industries. In practice, it does — and those industries are warning of dire economic consequences.Under the Clean Air Act, every five years the E.P.A. re-examines the science around several harmful pollutants. Fine particulate matter is extremely dangerous when it percolates into human lungs, and the law has driven a vast decline in concentrations in areas like Los Angeles and the Ohio Valley.But technically there is no safe level of particulate matter, and ever-spreading wildfire smoke driven by a changing climate and decades of forest mismanagement has reversed recent progress. The Biden administration decided to short-circuit the review cycle after the E.P.A. in the Trump administration concluded that no change was needed. As the decision nears, business groups are ramping up resistance.Last month, a coalition of major industries, including mining, oil and gas, manufacturing, and timber, sent a letter to the White House chief of staff, Jeffrey D. Zients, warning that “no room would be left for new economic development” in many areas if the E.P.A. went ahead with a standard as tough as it was contemplating, endangering the manufacturing recovery that President Biden had pushed with laws funding climate action and infrastructure investment.Twenty years ago, generating electric power caused far higher soot emissions, so “there was room” to tighten air quality standards, said Chad Whiteman, vice president of environment and regulatory affairs at the Chamber of Commerce’s Global Energy Institute, in an interview. “Now we’re down to the point where the costs are extremely high,” he said, “and you start bumping into unintended consequences.”Research shows that in the first decades after the passage of the Clean Air Act in 1967, the rules lowered output and employment, as well as productivity, in pollution-intensive industries. That’s why the cost of those rules has often drawn industry protests. This time, steel and aluminum producers have voiced particularly strong objections, with one company predicting that a tighter standard would “greatly diminish the possibility” that it could restart a smelter in Kentucky that it idled in 2022 because of high energy prices.Technically, there is no safe level of particulate matter, and ever-spreading wildfire smoke driven by a changing climate and decades of forest mismanagement has reversed recent progress.Max Whittaker for The New York TimesNew factories, however, tend to have much more effective pollution control systems. That’s especially true for two advanced manufacturing industries that the Biden administration has specifically encouraged: semiconductors and solar panel manufacturing. Trade associations for those industries said by email that a lower standard for particulate matter wasn’t a significant concern.Regardless, public health advocates argue that the averted deaths, illnesses and lost productivity that air pollution caused far outweigh the cost. The E.P.A. pegs the potential benefits at as much as $55 billion by 2032 if it drops the limit to nine micrograms per cubic meter, from the current 12 micrograms. That is far more than the $500 million it estimates the proposal would cost in 2032.So how are communities weighing the potential trade-offs?On a state level, it depends to a large degree on politics: Seventeen Democratic attorneys general wrote a joint comment letter in support of stricter rules, while 17 Republican attorneys general wrote one in favor of the status quo.But it also depends on the mix of industries prevalent in a local area. Ohio offers an illuminating contrast.Take Columbus, a longstanding hub of headquarters for consumer brands that in recent years has leaned more into professional services like banking and insurance. The Mid-Ohio Regional Planning Commission, a coalition of metropolitan-area governments, called for the E.P.A. to impose the nine-microgram standard.“There may be some economic costs to major polluting industries, but there’s real health and environmental costs if we do nothing,” said Brandi Whetstone, a sustainability officer at the commission.Columbus would incur fewer costs from tighter regulation, having enjoyed strong job growth in recent years driven by white-collar industries. But local leaders also think that clean air is a competitive advantage, with the power to draw both new residents and new businesses that value it.Jim Schimmer is the director of economic development for Franklin County, which includes Columbus. He has been pushing a plan to turn an old airport the county owns into a low-emissions, power-generating transportation and logistics hub, complete with solar arrays and electrified short-haul trucks, and he thinks stronger rules on particulate matter could help.“This is such a great opportunity for us,” Mr. Schimmer said.The E.P.A. is about to announce new regulations governing soot — the particles that trucks, factories, wildfires, power plants and dusty roads generate.Mikayla Whitmore for The New York TimesThe Cleveland area is a different story, with a high concentration of steel, chemical, aviation and machinery production. Its regional planning council declined to comment on the prospect of stricter air quality rules. Chris Ronayne, the Democratic executive of Cuyahoga County, was cautious in discussing the subject, emphasizing the need for financial assistance to help companies upgrade to lower their emissions.“I think there is an attitude of ‘work with us, with carrot approaches, not just the big stick,’” Mr. Ronayne said. “Come at us, in a manufacturing town, with both incentives to help us get there as well as the regulation.”Ohio has an entity to help with that. The Ohio Air Quality Development Authority was created 50 years ago to clean up the brown clouds that came out of smokestacks, using a combination of grants and low-cost revenue bond financing to help businesses fund upgrades like solar panels and scrubbers that filter exhaust from industrial facilities like incinerators and concentrated animal feeding operations.Now, more funding than ever is available — through the Inflation Reduction Act, which set up a $27 billion “green bank” at the E.P.A. to finance clean energy projects. Christina O’Keeffe, the executive director of the Ohio agency, said she hoped that would allow her to get into direct lending as well when more companies needed her help to meet a stricter air standard. There are also billions in the offing to help heavy industries retrofit to lower their carbon emissions, which tends to help with particulate matter as well.Public health advocates argue that the E.P.A. should set its standard regardless of the assistance available to cover the cost of compliance.California, for example, has spent more than $10 billion to help factories and farmers pollute less. The state’s Central Valley is still the only area that is in “serious” violation of meeting the set standard of 12 micrograms per cubic meter of particulate matter. The country’s six most polluted counties, which include the cities of Fresno and Bakersfield, have annual readings above 16 micrograms.The Central Valley Air Quality Coalition, an advocacy group, has been pushing for more aggressive enforcement for decades. The group’s executive director, Catherine Garoupa, points out that despite the persistent air problems, the federal government has not imposed strict curbs, like holding back highway funding.“One of the huge imbalances in our region is that the trend has been to cater to industry, treat them with kid gloves, give them billions of dollars in incentive money for them to continue their practices,” Dr. Garoupa said. “They’re generating wealth, but not for the people that actually live in the valley and are breathing the air.”California has spent more than $10 billion to help factories and farmers pollute less.Max Whittaker for The New York TimesThe San Joaquin Valley Air Pollution Control District, which includes four of the country’s six most polluted counties, has a different take. It filed a comment letter warning of “devastating federal sanctions,” including financial penalties, if the standard was toughened further.The chair of that air district is Vito Chiesa, a Stanislaus County commissioner who grows walnuts and almonds and used to lead the local farm bureau. His operation has to comply with any limitations on agriculture that might be imposed, like the prohibition on open-air burning of farm waste that the air district adopted after years of demands from public health advocates. He fears that further curbs without adequate support for smaller farmers would jeopardize his employees’ jobs.“I have like 15 employees out here, and I feel completely responsible for their families,” Mr. Chiesa said. “So how is it going to affect them? Our charge here on the air board is not to do death by a thousand cuts.”One point of agreement between proponents and many foes of a stronger standard: If the E.P.A. moves forward with tougher rules, it should also crack down on pollution sources, including railroads, ships and airplanes, under its sole jurisdiction. (The agency has proposed a stronger standard for heavy-duty trucks, around which a similar fight is playing out.)Rebecca Maurer is a City Council member representing a Cleveland neighborhood that has some of the area’s worst pollution. Her office frequently hears from constituents seeking help with housing that is safer for children with asthma, which occurs at alarming rates. The district encompasses an industrial cluster that includes two steel plants, an asphalt plant, a recycling depot, rail yards and assorted small factories.That’s the most visible source of emissions, but Ms. Maurer thinks her district’s many highways — and the diesel-powered trucks driving on them — offer the greatest opportunity for cleaning up the air, which requires state and federal action. And light manufacturing jobs are needed to employ the two-thirds of the county’s residents who lack college degrees, she said.“What we don’t want is another asphalt plant, and we don’t want e-commerce,” Ms. Maurer said. “We want something in between. We’re trying to thread this needle between these hugely polluting plants and low density, low-wage warehouse jobs.” More

  • 125 Shares149 Views

    in Economy

    Chile, Known for Its Wines and Piscos, Turns to Gin

    Last Hope Distillery is one of the only real cocktail bars in Puerto Natales, a horseshoe of a city that wraps around a windy inlet in Chilean Patagonia. To enter, visitors buzz, speakeasy-style, then hang up their coats and settle in at the bar. A server sets a glass down.“Hi,” the server says. “Have you ever tried gin?”The question can surprise international visitors, most of whom, familiar with the juniper-flavored spirit, have come for a hike in nearby Torres del Paine National Park. But gin is new to some Chileans, so Last Hope’s servers don’t make assumptions.The approach started out of necessity, said Kiera Shiels, who moved to Chile from Australia with her partner, Matt Oberg, and opened the bar. Guests would turn up, unsure of what to expect. “They hadn’t had gin,” Ms. Shiels said. “They’d barely had cocktails.”Last Hope, which began selling gin in 2017, was one of the first gin distillers in Chile. But in the past few years, the country’s gin industry has exploded. From Last Hope (in the south) to Gin Nativo (in the north), there are now about 100 gin brands across the country. And many are winning international recognition.Botanicals prepped for use at Gin Elemental’s distillery on the outskirts of Santiago.Tomas Munita for The New York TimesJust last year, a gin made by Gin Elemental, distilled on the outskirts of Santiago, was awarded a gold medal at the SIP awards, an international, consumer-judged spirits competition, among others. Gin Provincia, made in Chilean wine country, earned the second-highest score at the London Spirits Competition, just one of its honors. And Tepaluma Gin, in the Patagonian highlands and rainforests, won a gold at the International Wine and Spirit Competition, one of several awards.“You will see a lot more coming from Chile,” said Andrea Zavala Peña, who founded Tepaluma Gin — one of Chile’s first distilleries — with her husband, Mark Abernethy, in 2017.“Whether the world knows it or not,” she said, “we’re coming.”Camila Aguirre Aburto, a brand ambassador for Gin Provincia, prepares cocktails at a bar in Santiago.Tomas Munita for The New York Times‘The wild has a particular taste’Fifty years after a coup established a brutal 17-year dictatorship, and just four years after an eruption of mass protests, Chile continues to struggle with deep social divisions. But the country is also working hard to remake its international reputation.Long known for its wine, Chile is now an established destination for adventure travelers after it expanded its natural parks and enticed more visitors to Patagonia. Chilean gin, its makers say, can act as a bridge between these two marketing pitches, building on Chile’s reputation for producing distinctive alcohol and effectively bottling its wilderness.“We have one of the last wild areas of the world,” Ms. Zavala Peña explained. “And the wild has a particular taste.”Capped by the Atacama Desert, shod by Patagonia, and squeezed between the Andes and the Pacific, Chile has no shortage of natural diversity. The country’s gin distillers aren’t only interested in making the best London Dry, said Teresa Undurraga, the director of the Chilean Gin Association. Instead, they are also trying to make gins that taste like Chile.“This is why we are using native herbs,” said Ms. Undurraga, a founder of the distiller Destilados Quintal. “We want to spread our flavors.”A tray of botanicals used to prepare gin at Destilados Quintal, in Santiago.Tomas Munita for The New York TimesGin is an ideal base; the neutral, juniper-based alcohol takes on the flavors of added ingredients. Chile’s distillers hope that the herbs and berries they infuse can serve as a passport — an invitation to visit, taste and see. In fact, many Chilean distillers import the alcohol. It’s easier and cheaper. The add-ins, they say, are what counts.“It’s like a painting,” said Gustavo Carvallo, the co-founder of Gin Provincia, looking out at the famous Colchagua Valley, which surrounds his distillery. The corn alcohol, which he imports from the United States, serves as the canvas. “All the botanicals are the colors.”Beyond the ‘Ginaissance’Chile’s booming gin industry comes at what might be the tail-end of a global revival, sometimes called the “Ginaissance,” which began in Britain over a decade ago, partially under the influence of the American craft distilling movement.The spirit was once seen as fuddy-duddy — a relic of colonial Brits trying to dodge malaria. But international experiments have aired out its reputation. There are distillers in Spain, India, South Africa, Australia, Brazil and Vietnam, among a slew of other countries. And gin is now seen as sophisticated, even worldly. The old-world quinine chaser has been reinvigorated by its new cosmopolitan devotees.Like many alcohols, gin can “capture a sense of place,” said David T. Smith, the chair of the World Gin Awards and the author of several books about gin, including “The Gin Dictionary.” But it’s often easier — and cheaper — to make gin than it is to make many other spirits, Mr. Smith said, which is partly why the industry in Chile grew so quickly.Jorge Sepulveda, who created the recipe for Gin Elemental, at his distillery on the outskirts of Santiago.Tomas Munita for The New York TimesJorge Sepulveda, who created the recipe for Gin Elemental, which also won gold at the London Spirits Competition this year, learned the basics on YouTube in just a few hours, he said. He started in the early days of the coronavirus pandemic after being encouraged by a friend, Ariel Jeria, who works in advertising and noticed the rising interest in Chilean gin.Mr. Sepulveda was already a talented cook, he suggested. Why not give gin a try?But Mr. Sepulveda had barely tried gin before. So, in lockdown, he began experimenting in a tiny countertop still. “I studied for two days,” Mr. Sepulveda said, standing near the still in his distillery. “I said: ‘OK, I can make it.’”The first few tests, he admits, weren’t perfect. So Mr. Sepulveda reassessed, settling on a method that uses the Fibonacci sequence to determine the ratios of his ingredients.“That is the number of God,” said Mr. Sepulveda, a geophysicist, who has since made other gin recipes using a similar philosophy. “Nature is physics. So it has to work.”Gin vs. pisco, whiskey and wineChilean gin faces stiff competition with the country’s three most beloved alcohols: pisco, whiskey and wine. But the production of gin has practical advantages.The first is accessibility. Pisco comes from specific regions of Chile and Peru. (In that way, it’s a little bit like Champagne or Parmesan.) Gin doesn’t. It is an everywhere alcohol, which makes it an anywhere alcohol. Anyone can make it.“The recipe for gin is endlessly adaptable, so you can do whatever you like,” said Henry Jeffreys, a British drinks writer.The second is time. Whiskey, which is considered the most high-end alcohol by many Chileans, takes years to mature in barrels. But gin can be ready days after it’s made.Visitors to Last Hope Distillery, for example, can sip Last Hope gin cocktails while bending over oak barrels out back to sniff the first batch of Last Hope whiskey — which has years to go before it’s on the market.The third is a lack of pretension. Wine, like whiskey, demands refinement. Only a drinker with a certain training can tease out the differences in origin from a single sip. Not so for gin. The botanicals are hi-hats, neons, easy to recognize and understand. Even the most unstudied reporter, drinking a gin and tonic after a days-long Patagonian backpacking trip, can taste the different flavors — many of which come from ingredients that were grown near the distillers’ homes.Mr. Carvallo, of Provincia, harvests boldo from a shrub mere steps from the distillery. (Chileans use tea made from boldo leaves as a folk medicine to soothe a range of ailments, including stomach aches.)“This is what moves us,” he said, rubbing a leaf between his fingers. “We’re trying to show what Chile has in botanicals and in its culture.”The botanicals used to make gin at Zunda.Tomas Munita for The New York TimesUrban flavorsIn the heart of Santiago, Eduardo Labra Barriga is trying to make a gin that tastes like the city itself: “A Santiago gin,” he said. “An urban gin.” He called it Pajarillo, named for a little bird that flies everywhere in the city. And he relies heavily on lavender, rosemary, pink pepper and cedron leaves, which grow in bushes across the capital. He and his wife have set up a trade program: Neighbors exchange leaves for a cheaper refill.Elsewhere in the capital, artisanal gins are still just starting to catch on in the hottest bars. Even among the city’s social elite, many prefer to stick with the familiarity of a high-end pisco or an imported whiskey.As a result, some distilleries are hiring representatives to help promote their products.Camila Aguirre Aburto works as a brand ambassador for Gin Provincia. Before she designs a custom cocktail for a bar, Ms. Aguirre starts with a lesson; she knows that for Chilean gins to catch on, bartenders need to teach people about the gin’s terroir.First, she shares samples of dried juniper, to explain the gin’s base flavors. Then she shows off the botanicals, like boldo, that give the gin flavor. Only then does she allow her clients to taste the spirit.“Close your eyes, smell the gin,” says Ms. Aguirre, who learned English by watching the “Scream” movies and speaking to friends. “Feel the forest after the rain.”At first the invitation feels like a tease. But then, just maybe — is that a lush valley at the roof of one’s mouth? Or, maybe, in the tickle of a nostril, the winds of Patagonia? Is that Chile on the tip of a tongue?Follow New York Times Travel on Instagram and sign up for our weekly Travel Dispatch newsletter to get expert tips on traveling smarter and inspiration for your next vacation. Dreaming up a future getaway or just armchair traveling? Check out our 52 Places to Go in 2023. More