Raphael Stevens

More stories

  • 200 Shares159 Views

    in Finance

    China faces a nearly $1 trillion funding gap. It will need more debt to fill it.

    The Chinese government faces a growing shortfall of cash, analysts say, as they predict an increase of debt to fill the gap.
    The analysts did not share specific figures on how much additional debt might be needed. But they pointed to growing pressure on growth that would require more support from debt.
    Nomura estimates a funding gap of about 6 trillion yuan ($895.52 billion) — roughly 2.5 trillion yuan in decreased revenue due to tax refunds and weaker economic production, and another 3.5 trillion yuan of lost land sales revenue.

    During the first four months of the year, investment in real estate development fell by 2.7% from a year ago. Pictured here is a project in Qingzhou, Shandong province, on May 15, 2022.
    CFOTO | Future Publishing | Getty Images

    BEIJING — The Chinese government faces a growing shortfall of cash, analysts say, as they predict an increase of debt to fill the gap.
    “The latest wave of Omicron and the widespread lockdowns in place since mid-March have resulted in a sharp contraction in government revenue, including land sales revenue,” Ting Lu, chief China economist at Nomura, and a team said in a report last week.

    They estimate a funding gap of about 6 trillion yuan ($895.52 billion) — roughly 2.5 trillion yuan in decreased revenue due to tax refunds and weaker economic production, and another 3.5 trillion yuan of lost land sales revenue.
    “Much of the incoming ‘stimulus measures’, be it special government bonds or incremental lending by policy banks, will be merely used to fill this funding gap,” the Nomura analysts said.
    It’s that 3.5 trillion yuan figure they expect will be hard to fill, and they listed several measures, from using fiscal deposits to increasing borrowing, that could be used to make up the shortfall.
    Economic data for April showed weakening growth as Covid controls took a toll. Premier Li Keqiang said during a rare nationwide meeting last week that in some respects, the difficulties were greater than in 2020.

    Even before the latest Covid outbreak, land sales, a significant source of local government revenue, have plunged following Beijing’s crackdown on real estate developers’ high reliance on debt. Local governments are also responsible for implementing tax cuts and refunds that Beijing has announced to support growth.

    The Japanese bank and analysts from other firms did not share specific figures on how much additional debt might be needed. But they pointed to growing pressure on growth that would require more support from debt.
    Excluding tax cuts and refunds, the Ministry of Finance said local fiscal revenue grew by 5.4% during the first four months of the year from a year ago. Eight of China’s 31 province-level regions saw a drop in fiscal revenue during that time, the ministry said, without naming them.
    Incomplete data for the period from Wind Information showed the regions of Qinghai, Shandong, Liaoning, Hebei, Guizhou, Hubei, Hunan and Tianjin posted year-on-year declines in fiscal revenue for the first four months of the year. Tianjin was the worst with a 27% decline.
    In 2021, Tibet was the only province-level region to see a decline in fiscal revenue, according to Wind.
    It’s “important to notice that the decline of fiscal revenue happened not only in cities under lockdown,” said Zhiwei Zhang, president and chief economist, Pinpoint Asset Management.
    “Many cities without Omicron outbreaks also suffered, as their economies are linked to those currently under lockdown,” Zhang said in an email in mid-May. “The economic costs are not limited to a small number of cities, it is a national problem.”

    Shenzhen sees fiscal revenue plunge

    Since March, mainland China has sought to control its worst Covid outbreak in two years with stay-home orders and travel restrictions in many parts of the country, notably Shanghai and the surrounding region.
    Although financial data isn’t readily available for many Chinese cities, the southern tech hub of Shenzhen released figures showing a 44% year-on-year drop in fiscal revenue in April to 25.53 billion yuan. That followed a 7% year-on-year decline in March to 22.95 billion yuan.
    “The local governments face mounting fiscal pressure. Their expenditure is rising but revenue dropping,” Zhang said. “Land sales are down sharply as well. I think the central government may have to revise the fiscal budget and issue more debt to help the local governments.”
    Beijing in March already announced an increase in transfer of funds from the central to local governments. When asked in May whether that would be expanded, the Ministry of Finance noted some funding for next year would be transferred ahead of time to help local governments with tax refunds and cuts this year.

    Pressure to spend on infrastructure

    To Susan Chu, senior director at S&P Global Ratings, she’s more concerned about the deficit, the decline in revenue versus spending. Land sales don’t create deficit pressure, she said, noting that “more pressure will come from infrastructure spending, tax cut allocation.”
    A “widening deficit means there’s a chance of more borrowing or debt burden in the future,” Chu said in a phone interview earlier this month. While she doesn’t expect off-budget borrowing will come back, she said it is an important signal to watch for assessing risk.
    In late April, Chinese President Xi Jinping called for a nationwide push to develop infrastructure ranging from waterways to cloud computing infrastructure. It was not clear at what scale or timeframe the projects would be constructed.

    Read more about China from CNBC Pro

    “This year, one consequence will be that there will be less money left over for infrastructure expenditure,” Jack Yuan, VP and senior analyst at Moody’s Investors Service, said in a phone interview earlier this month.
    He said since land sales have been an important source for local government spending on infrastructure, a drop in land sales and limited increase in special purpose bonds would restrict financing options for infrastructure spending.
    “We expect the debt to continue to climb this year as a result of these economic pressures,” Yuan said, noting it remains to be seen how Beijing decides to balance economic growth with debt levels this year.

    WATCH LIVEWATCH IN THE APP More

  • 100 Shares189 Views

    in Business

    S&P 500 futures rise following last week's bounce

    Traders on the floor of the NYSE, May 23, 2022.
    Source: NYSE

    S&P 500 futures rose on Monday night, as Wall Street tried to build on last week’s momentum.
    Dow Jones Industrial Average futures gained 36 points, or 0.1%. S&P 500 and Nasdaq 100 futures climbed 0.3% and 0.8%, respectively. The U.S. stock market didn’t open Monday due to the Memorial Day holiday.

    Those moves follow the best weekly gains for the Dow and S&P 500 since November 2020.
    The Dow closed up 6.2% for the week, ending an eight-week losing streak. The S&P 500 gained 6.5%, and the Nasdaq gained 6.8% on the week, ending positive after seven continual weeks of losses. Solid earnings from the retail sector, as well as an inflation report that showed prices could be easing, lifted investor sentiment.
    A chunk of last week’s gains came Friday, when the Dow rallied more than 550 points, and the S&P 500 popped 2.5%. The Nasdaq, meanwhile, rallied 3.3%, boosted by solid reports from tech companies, as well as a dip in the 10-year Treasury yield.
    Still, traders continue to deliberate whether the bounce marks a bottom as stocks remain well off their highs. The Dow is 10.1% below its 52-week high, the S&P 500 is down 13.7%, and the Nasdaq is off by about 25.2%.
    “We could get some sharp snapbacks in stocks that won’t represent a true turning point for the market,” Strategas investment strategist Ryan Grabinski said in a Friday report. “The building of a bear market is a process, and we could still decline further.”
    Traders will look through more corporate quarterly earnings during a holiday-shortened week. Salesforce, HP and Victoria’s Secret are expected to report earnings on Tuesday after the bell.

    WATCH LIVEWATCH IN THE APP More

  • 200 Shares139 Views

    in Business

    WHO can’t rule out monkeypox pandemic risk, says there’s a window of opportunity to stop outbreak

    The WHO said Monday it is too soon to tell whether a recent monkeypox outbreak could lead to a global pandemic, but noted that there is a “window” of opportunity to curb rising cases.
    The public health body said there are “still many unknowns” related to the spike in cases in non-endemic countries, but said the risks to the general public remain low.
    “We don’t want people to panic or be afraid and think that it’s like Covid,” the WHO’s Sylvie Briand said during a briefing.

    The World Health Organization has said that there is a “window” of opportunity to contain a recent monkeypox outbreak which has seen cases spread across Europe, the U.S. and Australia.
    Nurphoto | Nurphoto | Getty Images

    The World Health Organization said Monday that it is too soon to tell whether a recent monkeypox outbreak could lead to a global pandemic, but noted that there is currently a window of opportunity to curb rising cases.
    The public health body said there are “still many unknowns” related to the spike in cases in non-endemic countries outside of Africa. The WHO said the virus should not be mistaken for Covid-19 and that the risks to the general public remain low.

    “We don’t want people to panic or be afraid and think that it’s like Covid or maybe worse,” Sylvie Briand, the WHO’s director of epidemic and pandemic preparedness and prevention, said during a briefing on the outbreak.
    “This monkeypox disease is not Covid-19, it is a different virus,” she added.
    Monkeypox is a rare but generally mild viral infection that can cause flu-like symptoms including rashes, fever, headaches, muscle ache, swelling and backpain. Typically it is transmitted through lesions, bodily fluids or materials that have been in contact with an infected person or animal.
    Though sporadic monkeypox outbreaks are not unusual in Central and West African countries where the virus is endemic, health experts have been puzzled by a recent surge in cases across Europe, North America and Australia, raising fears of community spread.
    As of Sunday, there were 435 confirmed and suspected cases in 24 countries outside of Africa, according to Our World in Data. There have not yet been any recorded fatalities from the current outbreak.

    A ‘window’ of opportunity for containment

    Asked Monday whether the recent outbreak could escalate into a pandemic, the WHO’s technical lead for monkeypox, Rosamund Lewis, said: “The answer is we don’t know, but we don’t think so.”
    Monkeypox is a DNA virus, meaning it contains DNA in its genetic material. Health experts don’t yet know a lot more about its genetic makeup, but current data suggests that it doesn’t transmit or mutate as easily as other viruses like Covid-19, an RNA virus.
    “At the moment, we are not concerned about a global pandemic,” Lewis said.
    However, she noted that rising individual cases were a cause for concern as it could allow the virus to “exploit a niche” and transmit more easily between people.

    Collectively, the world has an opportunity to stop this outbreak. There is a window.

    Rosamund Lewis
    Technical lead for monkeypox at the WHO

    Lewis urged individuals and health professionals to be alive to the rising risks of the virus and keep an eye out for symptoms. She added that gay and bisexual men should be especially aware of the virus, which has so far demonstrated a particular concentration among men who have sex with other men, though it is not defined as a sexually transmitted disease.
    “Collectively, the world has an opportunity to stop this outbreak. There is a window,” Lewis said.
    Alongside the U.S. Centers for Disease Control and Prevention and the U.K.’s National Health Service, the WHO has outlined a number of ways people can protect themselves against the virus, including practicing good hygiene and safe sex.
    Once a suspected case has been identified, they should be isolated until their lesions have crusted and scabs fallen off, and contact tracing should be initiated. Contacts of infected patients should be monitored for the onset of symptoms for a period of 21 days and should not donate blood, cells, tissue, organs, breast milk or semen while under symptom surveillance, the WHO said.
    “Any one case should be manageable through contact tracing and isolation,” Lewis added.

    WATCH LIVEWATCH IN THE APP More

  • 175 Shares149 Views

    in Business

    Egypt set for world's sixth largest high-speed rail system with backing from Germany's Siemens

    Sustainable Energy

    Sustainable Energy
    TV Shows

    Siemens Mobility has signed a contract to develop a new high-speed rail line in Egypt, linking 60 cities across the country.
    The fully-electrified line will see trains with a top speed of 230 kilometers per hour travel from the from the Red Sea to the Mediterranean, among other destinations.
    According to Siemens Mobility, the electrification of the network will reduce carbon emissions by 70% when compared to trips by bus or car.

    A train passes through a station in Egypt. The project involving Siemens Mobility will use trains that can reach a top speed of 230 kilometers per hour, and the line will be fully electrified.
    Paulvinten | Istock | Getty Images

    A new high-speed rail line is coming to Egypt, with developer Siemens Mobility saying it will link 60 cities across the country.
    The fully-electrified lines will see trains with a top speed of 230 kilometers per hour and travel from the Red Sea to the Mediterranean, among other destinations.

    According to Siemens Mobility, the electrification of the network will reduce carbon emissions by 70% when compared to making trips by bus or car. It added that the project would result in the world’s “sixth largest high-speed rail system.”
    Siemens Mobility — a separately managed company of industrial giant Siemens — signed the contract to develop the rail line with the Egyptian National Authority for Tunnels, as well as consortium partners The Arab Contractors and Orascom Construction.
    In a statement Saturday, Siemens Mobility said its share of the combined contract would amount to 8.1 billion euros, or around $8.7 billion. This figure includes a 2.7 billion euro contract signed in Sept. 2021 for the project’s initial line.

    Loading chart…

    The new network in Egypt will be made up of three parts: a previously announced 660-kilometer line linking Ain Sokhna, on the Red Sea, to Alexandria and Marsa Matrouh on Egypt’s Mediterranean coast; a roughly 1,100 kilometer line between Cairo and Abu Simbel, close to the border with Sudan; and a 225 kilometer stretch between Luxor and Hurghada on the Red Sea.
    “Together with our partners, we will develop from scratch a complete and state of the art rail network that will offer a blueprint for the region on how to install an integrated, sustainable, and modern transportation system,” Michael Peter, the CEO of Siemens Mobility, said.

    Read more about energy from CNBC Pro

    The International Energy Agency has described rail as being “one of the most energy-efficient transport modes.” It is responsible for 9% of worldwide motorized passenger movement and 7% of freight, the IEA says, but only accounts for 3% of transport energy use.
    It does, however, rely heavily on oil, which represented 55% of the sector’s total energy consumption in 2020. Under the IEA’s scenario for a net-zero energy system by the year 2050, oil use in rail would have to drop to “almost zero” by the middle of the century, being replaced by electricity — for the vast majority of rail energy needs — and hydrogen.
    On the hydrogen front, Siemens Mobility is one of several companies that has been working on hydrogen trains. Others include East Japan Railway and European railway manufacturer Alstom, which has already carried passengers in Germany and Austria on hydrogen trains. More

  • 225 Shares99 Views

    in Business

    The Hamptons summer rental market is facing an unexpected chill as inventory piles up and prices come down

    After two years of strong demand and soaring prices, the supply of rentals in the Hamptons is surging, leading to a wave of last-minute price cuts.
    Brokers say weaker demand is partly the result of increased travel elsewhere.
    The Hamptons may also be feeling the flipside of recent price increases and a strong home sales market.

    The rental market in the Hamptons is facing an unexpected chill this summer.
    After two years of strong demand and soaring prices, the supply of rentals in the Hamptons is surging, leading to a wave of last-minute price cuts. Median rental prices in the first quarter fell 26%, according to Jonathan Miller, CEO of Miller Samuel. Brokers say some owners are slashing prices by 30% or more just to fill their properties.

    “There is a tremendous amount of inventory and people are not renting it,” said Enzo Morabito of Douglas Elliman. “And it’s across all segments, from the very low to the very top of the market.”
    The weakness marks a dramatic and rapid reversal for one of the country’s highest-priced and most sought-after real-estate markets. In 2020 and 2021, renters were scrambling to find summer rentals and paying record prices months before the season for fear of missing out. Now, brokers say there are hundreds of rentals still available for the summer.
    Morabito said he represented one waterfront rental that was asking $70,000 a month, but a potential renter offered just $45,000.
    “We were hoping the renter would split the difference, but it’s a different market right now,” he said.

    Living Room, 277 Surfside Dr., Bridgehampton, NY.
    Source: 277 Surfside LLC Bridgehampton 11932

    Brokers say weaker demand is partly the result of increased travel. Wealthy New Yorkers who spent the past two summers cloistered in the Hamptons are planning to travel to European and other countries this summer as Covid recedes. Europeans and other international renters, however, have not returned to the Hamptons.

    The war in Ukraine, rising inflation and a falling stock market may also be weighing on the summer spending plans of the elite — especially since the Hamptons market is so closely tied to the fortunes of Wall Street.
    “There are a lot of questions in the air, about the economy, both locally and nationally,” said Harald Grant with Sotheby’s International Realty. “It all effects the market.”
    The Hamptons may also be feeling the flipside of recent price increases: Median rents for May were up 46% from May of 2019, before the pandemic. While the wealthy still have plenty of money to spend, they may be balking at the high rental prices, especially given the economic outlook.
    “The assumption that rents would be sustainable at these elevated levels has been proven to be false,” Miller said.

    Pool, 277 Surfside Dr., Bridgehampton, NY.
    Source: 277 Surfside LLC Bridgehampton 11932

    And, strong home sales in the Hamptons during the pandemic may now be hurting rentals.
    Vacationers who used to rent in the Hamptons wound up buying in 2020 and 2021 to have a more permanent getaway. The average sales price topped $2.6 million in the first quarter of this year, up 25% over the same quarter last year, according to Miller Samuel and Douglas Elliman. More buyers means fewer renters.
    “The buyers removed themselves from the rental market,” Morabito said. “Now, all of the sudden the people who bought want to rent it and the renters aren’t there. So you have this huge surplus.”
    Some brokers say they have seen signs of a pickup, as more last-minute renters start looking for deals.
    “We had a lull from February to April, but now it’s picking up again,” said Gary DePersia of Corcoran. “The inventory we had is going.”
    One of DePersia’s top rentals, however, is still on the market. The ultra-modern, 11,000-square-foot beachside property on Surfside Drive in Bridgehampton has nine bedrooms, a Gunite pool and spa, outdoor living room pavilion, pool house, gym and media room.

    View from roof, 277 Surfside Dr., Bridgehampton, NY.
    Source: 277 Surfside LLC Bridgehampton 11932

    The roof deck features couches, a hot tub and retractable pergola. The rental price: $300,000 per week, or $1.25 million for the month of August.
    “It’s a great house,” DePersia said. “We already have it rented for a week in June and we got what we needed to get.”

    WATCH LIVEWATCH IN THE APP More

  • 175 Shares159 Views

    in Finance

    The luna cryptocurrency has been resurrected after its $40 billion collapse. It's already crashing

    Terra has launched a new version of its failed luna cryptocurrency, which plunged to $0 this month.
    At its height, the old luna — now known as “luna classic” — had a circulating supply of over $40 billion.
    The revived luna token is already trading on exchanges. But its price is crashing.

    Cryptocurrency markets have seen a steep sell-off after the collapse of controversial blockchain project Terra.
    Dan Kitwood | Getty Images

    A new version of the collapsed luna cryptocurrency is already live on major exchanges — and it’s gotten off to a bad start.
    Last week, supporters of the Terra blockchain project voted to revive luna but not terraUSD, a so-called “stablecoin” that plunged below its intended peg to the dollar, causing panic in the crypto market.

    TerraUSD, or UST, is what’s known as an algorithmic stablecoin. It relied on code and a sister token, luna, to maintain a $1 value. But as digital currency prices fell, investors fled the stablecoin, sending UST tumbling — and taking luna down with it.
    At its height, the old luna — now known as “luna classic” — had a circulating supply of over $40 billion.
    Now, luna has a new iteration, which investors are calling Terra 2.0. It is already trading on exchanges including Bybit, Kucoin and Huobi. Binance, the world’s largest crypto exchange, says it will list luna on Tuesday.
    Its launch has not gone well.
    After reaching a peak of $19.53 on Saturday, luna dropped as low as $4.39 just hours later, according to CoinGecko data. It has since settled at a price of around $5.90.

    Analysts are deeply skeptical about the chances of Terra’s revived blockchain being a success. It will have to compete with a host of other so-called “Layer 1” networks — the infrastructure that underpins cryptocurrencies like ethereum, solana and cardano.
    Terra is distributing luna tokens through what’s called an “airdrop.” Most will go to those who held luna classic and UST before their collapse, in an effort to compensate investors.
    But many investors burned by the debacle are unlikely to trust Terra a second time, experts say. Vijay Ayyar, head of international at crypto exchange Luno, said there’s been a “massive loss in confidence” in the project.

    WATCH LIVEWATCH IN THE APP More

  • 125 Shares119 Views

    in Business

    Flight cancellations ease after rocky start to Memorial Day weekend

    Airlines cancelled hundreds of flights at the start of Memorial Day weekend.
    Bad weather contributed to many of the delays, with Delta posting the most disruptions as of Sunday morning.
    Airfare has jumped as bookings rise and airlines offer limited options to travelers.

    A Delta Airlines commercial aircraft approaches to land at John Wayne Airport in Santa Ana, California January 18, 2022.
    Mike Blake | Reuters

    Flight disruptions continued Sunday but eased from the rocky start to Memorial Day weekend, a test for carriers as they gear up for a busy summer travel season after more than two years of the Covid pandemic.
    Delta Air Lines led cancellations, disruptions it attributed to bad weather and “air traffic control actions” on Saturday. Hundreds of flights operated by Republic Airways, United Airlines, JetBlue Airways and American Airlines were also delayed Saturday.

    Delta canceled 254 mainline flights, or 9% of its Saturday schedule, and 530 were delayed, almost a fifth of its schedule, according to flight-tracking site FlightAware. On Sunday, it canceled 159 flights, or 6%, while its delayed flights totaled 203, or 7% of the schedule.
    Delta said that 87% of customers were rebooked on flights that departed within around 11 hours of their original time.
    The Atlanta-based carrier last week said it would trim its schedule by 100 flights a day between July 1 through Aug. 7, around 2%, to give itself more wiggle room to handle disruptions.
    Other carriers, including Alaska Airlines, JetBlue Airways and Spirit Airlines have also pared back schedules to better handle disruptions like bad weather and staffing shortages.
    Getting the balance right is key for carriers as bookings recently jumped despite airfares that have surpassed pre-pandemic levels.

    WATCH LIVEWATCH IN THE APP More

  • 50 Shares129 Views

    in Finance

    The changing American consumer

    Asked recently about Amazon’s sprawling network of warehouses Brian Olsavsky, the firm’s finance chief, did not mince words. “We have too much space right now.” Faced with a surge in demand during the pandemic, the online retailer doubled its capacity from 193m square feet (18m square metres) at the end of 2019 to 387m square feet two years later. Today it has a glut, which the company says is costing it tens of millions of dollars a day. Retailers are bracing themselves for a slowdown, or even a recession, as the Federal Reserve raises interest rates. But Amazon’s troubles reflect another crucial factor for the American economy: a shift in spending from goods back to services which could lower inflation, making the Fed’s job easier. Target, another retailer, reported a 52% drop in net income in the three months to April, compared with the previous year, which it blamed in part on a rapid slowdown in demand for appliances, furniture and televisions. “We [expected] the consumer to continue refocusing their spending away from goods and into services,” Brian Cornell, the firm’s boss, said, but “we didn’t anticipate the magnitude of that shift.” Overall, the switch should ease pressure on global supply chains and lower inflation. But it has been slow and uneven. Confined to their homes during the worst of the pandemic, Americans splurged on appliances, cars and furniture. Fiscal largesse, including three rounds of “stimmy” cheques, helped fuel the buying binge. People bought substitutes for the services they could no longer avail themselves of—an exercise bike, say, to make up for closed gyms. Perhaps as a result of having a little extra cash, they also treated themselves to things like watches and luxury products. A year into the pandemic the composition of consumer spending had changed dramatically. By spring 2021, goods accounted for 42% of household spending, up from 36% before the pandemic; services accounted for 58%, down from 64%, a drop worth more than $900bn per year. Several other Western countries experienced a similar rise in goods consumption, though few witnessed a bigger boost than America. Daan Struyven and Dan Milo of Goldman Sachs, a bank, compare the evolution of real goods spending across 23 oecd countries and find that only Chile and Norway outperformed America. In Japan, goods purchases in the last three months of 2021 were 7% below pre-pandemic trends. America’s spending spree helped lift the economy out of recession, but it also contributed to an inflation headache. The deluge of new orders overwhelmed global supply chains, which were already suffering from pandemic-related disruptions, leading to clogged ports and shipping delays. With demand outstripping supply, goods prices rose. The Bureau of Labour Statistics reckons that goods prices boosted consumer-price inflation by 4.9 percentage points in the year to April 2022, having reduced it by 0.1 points in the 12 months before the pandemic. Now spending is starting to shift in the other direction. Data published on May 27th by the Bureau of Economic Analysis show that spending on goods fell in the year to April, and is now 9% above its pre-pandemic trend, down from a high of 16% last year. Spending on services is up by 7% in the same period, and is just 3% below pre-pandemic trends. But some services have been quicker to recover than others. Messrs Struyven and Milo of Goldman Sachs note that while “fun” spending categories with pent-up demand such as food services, air travel and hotels have rebounded over the past year, others have lagged behind. Services that cater to white-collar professionals have also been slow to recover. Mass transit spending is about 50% down from what it would have been, absent the pandemic; laundry and dry-cleaning revenues are 20% below trend. Even some essential services have been slow to bounce back. Spending on doctors’ and dentists’ services is roughly 15% below the pre-pandemic trend; child care is down by 22%. Appetite for many non-essential goods, meanwhile, shows little sign of abating. Spending on jewellery and recreational vehicles are 53% and 43% above trend, respectively. Spending on pets is up by 23%.One question is whether the composition of consumer spending will return to pre-pandemic norms. The hope is that this eases supply-chain bottlenecks and helps bring down inflation. Yet several uncertainties lie ahead. The process looks likely to be slow. Although Target was wrong-footed by the force of the shift towards services, if recent trends continue, goods and services spending would only return to pre-pandemic levels by perhaps the third quarter of next year. And some habits could well stick: the rise of remote work, say, may have permanently changed the consumption mix, keeping the relative demand for goods higher than it was before the pandemic. Hovering over all this, though, is a potentially souring economic environment. Consumer-price inflation is outpacing wage growth, and households are getting gloomier about their personal finances. American consumers powered an extraordinary goods boom over the past couple of years. What they do next is much less certain. ■ More