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Unexpectedly strong spending data this week bolstered hopes that Americans would keep shopping in the face of economic pressures, but earnings from some of the country’s largest retailers suggest that cracks are starting to show in the picture of consumer resilience.The Census Bureau said on Wednesday that retail sales fell 0.1 per cent last month, less than the 0.3 per cent decline economists expected.  That extended a trend this year in which Americans have looked past sky-high inflation, soaring interest rates and regional bank failures, continuing to open their wallets not only for everyday purchases but also travel, entertainment and big-ticket items.Now, though, with the labour market cooling more notably, wage growth moderating, and savings stockpiled since the pandemic beginning to run out, the question dogging officials is how long can the US consumer retain this resilience?Announcing their latest quarterly earnings following a big summer spending season, retailers this week noted that spending on discretionary items such as furniture, apparel and appliances remained weak, as shoppers prioritise groceries and health and wellness products.“Overall, the theme is that the consumer has been resilient but we are starting to see a little bit of stretching,” said Corey Tarlowe, an analyst at Jefferies. “Trends are starting to become a little bit more concerning.”Home Depot pointed to customers delaying big home improvement projects and focusing on smaller ones. William Bastek, the retailer’s executive vice-president of merchandising, told analysts that transactions over $1,000 were down 5.2 per cent year on year as fewer consumers invested in new floors, countertops and cabinets.Walmart, the largest US retailer, cautioned that top-line growth would moderate in its holiday quarter, after it saw sales softening in the second half of October, including slower than expected growth in sales of Halloween-themed items.The Arkansas-based group’s general merchandise sales declined modestly in the third quarter, even as demand strengthened in grocery and health and wellness categories.John David Rainey, Walmart’s chief financial officer, pointed to the role discounts are playing, telling the Financial Times that sales during periods between promotions had been slower. “The consumer is being discerning; they’re making sure they’re waiting until these promotional events to go out and buy these big-ticket items,” he said.Morgan Stanley economist Sarah Wolfe said the discrepancy between the official spending data and the message from retailers stemmed from the disproportionate effect the richest 20 per cent of the population have on overall spending.Those high earners had increased their share of consumer spending from 39 per cent to 45 per cent over the past two years, when they built up “a tremendous amount of excess savings”, Wolfe noted.Retailers reliant on a broader range of income groups pointed to a weakening of discretionary spending, with Target, Macy’s and Home Depot all reporting comparable sales declines in their latest quarter.“Consumers are still spending, but pressures like higher interest rates, the resumption of student loan repayments, increased credit card debt and reduced savings rates have left them with less discretionary income, forcing them to make trade-offs in their family budgets,” said Target chief executive Brian Cornell. Retailers known for offering value pricing or other bargains have meanwhile benefited from the pressure inflation has put on consumers with tighter budgets. Walmart, and discount retailers TJX and Ross Stores, all reported an uptick in customer traffic and comparable sales growth. US consumers have started to focus spending around discounted events such as Walmart’s deal days and Amazon Prime days, Tarlowe at Jefferies said, and have become less likely to visit a store to purchase full-priced items.“The market for perceived discounts remains strong,” said Greg Portell, a lead partner at the consultancy Kearney. “If you have middle-class consumers moving into [the discount channel], that’s fresh money that changes the competitive dynamic.”Analysts at Bank of America identified some generational differences behind the headline spending figures, finding that wealthy “boomers” and “traditionalists” have increased their consumption, while spending has fallen and credit card delinquency has risen among younger generations, who have seen bigger obstacles from higher rates.“Bank of America card data showed that boomers are accelerating their spending while all the other groups are spending less in dollar terms,” said Ohsung Kwon, equity strategist at BofA, adding that the boom in the services sectors, such as travel and hospitality, was beginning to normalise. “You’re seeing a bifurcation of consumers,” Portell at Kearney added. “Consumers at the higher end of the income spectrum continue to be very strong. On the other end . . . [you have] consumers that are much more sensitive to price, and are looking for the right price-value combination.”Luxury retailers, meanwhile, have reported a slowdown as aspirational customers cut back on spending. Though US luxury houses Tapestry and Ralph Lauren reported revenue growth in the most recent quarter, both cited softer demand in North America.“Higher-income households will not be falling off a cliff, but they will start to become more cautious,” said Morgan Stanley’s Wolfe. Spending until this year has been driven largely by pent up demand but now that demand has been met, even higher earners will pull back their spending, she predicted: “I can’t see any upside for consumers next year.” More

Most analysts had expected the agency to leave both Italy’s rating and outlook unchanged.Moody’s had put the euro zone’s third-largest economy on a negative outlook in August last year following a government collapse and in the midst of an energy crisis.”The decision to change the outlook to stable from negative reflects a stabilisation of prospects for the country’s economic strength, the health of its banking sector and the government’s debt dynamics,” Moody’s said.Moody’s was the fourth agency to review Italy in the last month. S&P Global, DBRS and Fitch all left their ratings and outlooks unchanged.Economy Minister Giancarlo Giorgetti welcomed the announcement.”It’s a confirmation that despite many difficulties we are working well for the future of Italy,” he said in a statement.”So in the light of the judgment expressed by Moody’s and the other rating agencies, we hope that the prudent, responsible and serious budget policies of the government…will be confirmed by parliament,” he added.The government’s budget for 2024 is currently going through the Italian parliament.The Italian economy stagnated in the third quarter compared with the previous three months, preliminary data showed last month, after contracting by 0.4% between April and June. Analysts forecast that activity will remain weak in the coming quarters. The European Commission forecast on Wednesday that Italy’s debt, proportionally the second-highest in the euro zone, would rise marginally from a projected 140% of national output this year to 141% in 2025.The gap between yields on Italian 10-year bonds and their German equivalent is significantly wider than the spread of any other euro zone country versus Germany. It has however narrowed to below 1.75 percentage points (175 basis points) from a recent peak of 209 basis points on Oct. 9. More

The objective of this law is to make Germany more attractive for entrepreneurs and to help drive the economy of Europe’s industrial powerhouse.In the future, companies will be allowed to go public with a minimum market capitalization of one million euros instead of the previous 1.25 million. In addition, an underwriter such as a bank is no longer required. “Global technology leaders must not only grow up in Silicon Valley, they must also have a home here,” Germany’s Finance Minister Christian Lindner said.The law includes tax allowances for shareholders in a bid to encourage more startups. According to earlier statements by the government, the law will lead to annual tax revenue losses of almost one billion euros from 2026.New companies struggle to retain workers and share ownership is seen as a good option to attract talent when they are not able to offer high salaries. The Future of Financing Act increases the tax allowance for employee share ownership to 2,000 euros from 1,440 euros. “This will make employee participation in the company much more attractive for start-ups,” said Lennard Oehl, member of parliament of the SPD party. Germany’s lower house of parliament also passed on Friday a multibillion-dollar tax relief package for small and medium-sized companies, aimed at unleashing new investment amid weak foreign demand and high interest rates.The package, called the Growth Opportunities Act, provides for tax relief of around 7 billion euros ($7.6 billion) a year from 2024, and a total of over 32 billion euros until 2028. More

Chinese leaders are trying to revive the economy and fend off potential financial risks from a property slump and 92 trillion yuan ($12.77 trillion) in local government debt.Financial institutions will meet reasonable financing needs of property firms and refrain from withdrawing or cutting off loans to them, the securities regulator said on Friday, after a meeting held by the central bank and financial regulators.Recent efforts to stabilise financing for the real estate sector via bank credit, bonds, and equity are gaining traction, the China Securities Regulatory Commission said.China will promote stable credit expansion to support its economic growth, and financial institutions should work with local governments to resolve debt risks, by extending, swapping or rolling over debt, the regulator added.($1 = 7.2050 Chinese yuan renminbi) More

(Reuters) -The board of the company behind ChatGPT late on Friday fired OpenAI CEO Sam Altman – to many, the human face of generative AI – sending shock waves across the tech industry.OpenAI’s Chief Technology Officer Mira Murati will serve as interim CEO, the company said, adding that it will conduct a formal search for a permanent CEO.The announcement blindsided many employees who discovered the abrupt management shuffle from an internal announcement and the company’s public facing blog. “Altman’s departure follows a deliberative review process by the board, which concluded that he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities,” OpenAI said in the blog without elaborating.Greg Brockman, OpenAI president and co-founder, who stepped down from the board as chairman as part of the management shuffle, quit the company, he announced on messaging platform X late on Friday. “Based on today’s news, i quit,” he wrote.Backed by billions of dollars from Microsoft (NASDAQ:MSFT), OpenAI kicked off the generative AI craze last November by releasing its ChatGPT chatbot, which became one of the world’s fastest-growing software applications.Trained on reams of data, generative AI can create brand-new human-like content, helping users spin up term papers, complete science homework and even write entire novels. After ChatGPT’s launch, regulators scrambled to catch up: the European Union revised its AI Act undefined and the U.S. kicked off AI regulation efforts.Altman, who ran Y Combinator, is a serial entrepreneur and investor. He was the face of OpenAI and the wildly popular generative AI technology as he toured the world this year.Altman posted on X shortly after OpenAI published its blog: “i loved my time at openai. it was transformative for me personally, and hopefully the world a little bit. most of all i loved working with such talented people. will have more to say about what’s next later.”Altman did not return requests for comment. OpenAI was not reachable for further comment.Murati, who has worked for Tesla (NASDAQ:TSLA) previously, joined OpenAI in 2018 and later became the company’s chief technology officer. She oversaw products launches including ChatGPT.At an emergency all-hands meeting on Friday afternoon after the announcement, Murati sought to calm employees and said OpenAI’s partnership with Microsoft is stable and its backer’s executives, including CEO Satya Nadella, continue to express confidence in the startup, a person familiar with the matter told Reuters.The Information previously reported details of the meeting.”Microsoft remains committed to Mira and their team as we bring this next era of AI to our customers,” a spokesperson for the software maker told Reuters on Friday.In a statement published on Microsoft’s website Nadella added: “We have a long-term agreement with OpenAI …  Together, we will continue to deliver the meaningful benefits of this technology to the world.”EARTHQUAKEWell wishers and critics piled onto digital forums as the news spread.On X, former Google (NASDAQ:GOOGL) CEO Eric Schmidt called Altman “a hero of mine,” adding “He built a company from nothing to $90 Billion in value, and changed our collective world forever. I can’t wait to see what he does next. I, and billions of people, will benefit from his future work- it’s going to be simply incredible.””This is a shocker and Altman was a key ingredient in the recipe for success of OpenAI,” Daniel Ives, analyst at Wedbush Securities said. “That said, we believe Microsoft and Nadella will exert more control at OpenAI going forward with Altman gone.”The full impact of the OpenAI surprise will unfold over time, but its fundraising prospects were an immediate concern. Altman was considered a master fundraiser who managed to negotiate billions of dollars in investment from Microsoft as well as having led the company’s tender offer transactions this year that fueled OpenAI’s valuation from $29 billion to over $80 billion.”In the short term it will impair OpenAI’s ability to raise more capital. In the intermediate term it will be a non-issue,” said Thomas Hayes, chairman at hedge fund Great Hill Capital.Other analysts said Altman’s departure, while disruptive, would not derail generative AI’s popularity or OpenAI or Microsoft’s competitive advantage.”The innovation created by OpenAI is bigger than any one or two people, and there is no reason to think this would cause OpenAI to cede its leadership position,” said D.A. Davidson analyst Gil Luria. “If nothing else, Microsoft’s stake and significant interest in OpenAI’s progress ensure the appropriate leadership changes are being implemented.”As late as Thursday evening, Altman showed no signs of concern at two public events. He joined colleagues in a panel on the sidelines of the Asia-Pacific Economic Cooperation (APEC) conference in San Francisco, describing his commitment and vision for AI.Later he spoke at a Burning Man-related event in Oakland, California, engaging in an hour-long conversation on the topic of art and AI. Altman seemed relaxed and gave no indication anything was wrong, but left right after his talk was over at 7:30 p.m.The event organizer said at the event that Altman had another meeting to attend. More

BOSTON (Reuters) – Boston Federal Reserve President Susan Collins said on Friday she remained optimistic the U.S. central bank can lower inflation without doing substantial damage to the job market by taking a “patient” approach to any further interest rate moves.Collins said that while she is not taking the possibility of further rate increases off the table, “by being very patient right now, to me that helps to support my realistic optimism” of returning inflation to 2% without a substantial rise in unemployment.The slowing in the economy so far, she said, has been “orderly” and not dramatic, with households still “resilient.”Collins joins a growing set of Fed officials who have started preaching patience in considering any further rate hikes. Many analysts now believe the Fed is likely finished raising rates.Like her colleagues, Collins said she was not yet ready to declare victory over inflation, which at 3.4% as of September remained well above the Fed’s target.But, she said, “there’s been some promising evidence of inflation coming down,” with goods price increases moderating, and shelter inflation likely to ease as well. There has been less progress on services inflation, Collins said, adding “I don’t take off the table the possibility” that rates may need to rise again.But “while there’s a lot of risks out there … I remain optimistic that we can bring inflation down in a reasonable amount of time without requiring a large increase” in unemployment, she said.That does not mean that rate cuts are likely anytime soon.”It will be important for us to maintain a restrictive stance for some time,” Collins said, adding she wanted to see “sustained evidence” inflation was returning to 2% before considering a policy shift. More

The announcements came as FDIC Chair Martin Gruenberg this week faced calls for his resignation following Wall Street Journal reporting according to which the agency had failed to eradicate widespread harassment in its workforce and spotlighting Gruenberg’s personal role in cases of alleged harassment and discrimination.Gruenberg has said in testimony he found the reports deeply troubling and vowed to take corrective action as a top priority.Friday’s announcements suggest lawmakers will continue to pile pressure on Gruenberg over revelations about a key agency in the Biden administration’s financial reform agenda.In a letter, Republican members of the House Financial Services Committee on Friday publicly notified Gruenberg of a probe announced earlier this week.An FDIC spokesperson told Reuters the agency would be “fully transparent and cooperative” with the committee’s investigation.Meanwhile, Democratic members of the Senate Banking Committee released a letter demanding an investigation by the FDIC’s Office of Inspector General (OIG), saying the reports of misconduct were “nothing short of appalling.”An FDIC OIG representative told Reuters on Friday the office had received the Senate Democrats’ request and was reviewing it.”Chairman Gruenberg, the viability of your leadership is in question,” wrote House Financial Services Committee Chair Patrick McHenry and senior members Bill Huizenga and Andy Barr, all Republicans. “The Committee will use its full arsenal of oversight and investigative tools, including compulsory mechanisms, to ensure that our banking system remains safe and sound.” More