Finance

Binance founder and CEO Changpeng Zhao pleads guilty to felony charges Tuesday related to his failure to prevent money laundering on the crypto exchange platform.
King 5 News Seattle

Former Binance CEO Changpeng Zhao on Tuesday named a new CEO of the cryptocurrency exchange he founded, after pleading guilty to federal money laundering charges and stepping down as the company’s chief.
Zhao named Richard Teng, a former CEO of Abu Dhabi Global Market, the UAE capital’s financial services regulator, as Binance’s new CEO. Teng was most recently global head of regional markets at Binance. He was also previously director of corporate finance at the Monetary Authority of Singapore.

In a post on X, Zhao said he “must take responsibility,” and that it was “not easy to let go emotionally.” The controversial crypto entrepreneur, who was accused of violating the U.S. Bank Secrecy Act and sanctions violations, added that he was “proud to point out” U.S. agencies did not allege Binance had misappropriated user funds or market manipulation.
The case against Binance, which was unsealed on Tuesday afternoon, shows that the exchange faces three criminal charges, including conducting an unlicensed money-transmitting business, violating the International Emergency Economic Powers Act, as well as a conspiracy charge. The exchange has agreed to $4.3 billion in fines and forfeiture.
The former Binance chief will personally plead guilty to violating and causing a financial institution to violate the Bank Secrecy Act, according to the plea agreement. The DOJ is also recommending that the court impose a $50 million fine on Zhao.
The settlement comes just after FTX founder Sam Bankman-Fried was found guilty of several criminal counts of fraud and conspiracy following just three hours of deliberation by the jury. For a high-profile monthlong trial that involved nearly 20 witnesses and hundreds of exhibits, experts told CNBC they’d never seen such a speedy decision.
“I can’t see myself being a CEO driving a startup again. I am content being an one-shot (lucky) entrepreneur,” Zhao said. “Should there be listeners, I may be open to being a coach/mentor to a small number of upcoming entrepreneurs, privately. If for nothing else, I can at least tell them what not to do.”

Zhao described Teng as a “highly qualified leader” and added that “with over three decades of financial services and regulatory experience, he will navigate the company through its next period of growth.”
“With CZ, and our leadership team’s support, I have accepted this role so that we can continue to meet and exceed the expectations of stakeholders while achieving our core mission, the freedom of money,” Teng said in a post on X Tuesday afternoon. Teng added that his focus will be on three key areas: including “reassuring users that they can remain confident in the financial strength, security and safety of the company;” “collaborating with regulators to uphold high standards globally that foster innovation while providing important consumer protections;” and “working with partners to drive growth and adoption of Web3.”
“He will ensure Binance delivers on our next phase of security, transparency, compliance, and growth,” Zhao added.
The remarks mark the first public comments made by Zhao after he agreed to a plea deal with the U.S. Department of Justice earlier Tuesday.
Zhao appeared before Judge Brian Tsuchida for a hearing in a Seattle courtroom at 10:00 a.m. Pacific Time (1:00 p.m. ET). More

Federal Reserve officials at their most recent meeting expressed little appetite for cutting interest rates anytime soon, particularly as inflation remains well above their goal, according to minutes released Tuesday. 
The summary of the meeting, held Oct. 31-Nov. 1, showed that Federal Open Market Committee members still worry that inflation could be stubborn or move higher, and that more may need to be done.

At the least, they said policy will need to stay “restrictive” until data shows inflation on a convincing trek back to the central bank’s 2% goal.
“In discussing the policy outlook, participants continued to judge that it was critical that the stance of monetary policy be kept sufficiently restrictive to return inflation to the Committee’s 2 percent objective over time,” the minutes said.
Along with that, however, the minutes showed that members believe they can move “proceed carefully” and make decisions “on the totality of incoming information and its implications for the economic outlook as well as the balance of risks.”
The release comes amid overwhelming sentiment on Wall Street that the Fed is done hiking.
Traders in the fed funds futures market are indicating virtually no probability that policymakers will increase rates again this cycle, and in fact are pricing in cuts starting in May. Ultimately, the market expects that the Fed will enact the equivalent of four quarter percentage point cuts before the end of 2024.

No mention of cuts

However, the minutes gave no indication that members even discussed when they might start lowering rates, which was reflected in Chairman Jerome Powell’s post-meeting news conference.
“The fact is, the Committee is not thinking about rate cuts right now at all,” Powell said then.
The fed’s benchmark funds rate, which sets short-term borrowing costs, is currently targeted in a range between 5.25%-5.5%, the highest level in 22 years.
The meeting occurred amid market worries over rising Treasury yields, a topic that appeared to generate substantial discussion during the meeting. The same day, Nov. 1, when the Fed released its post-meeting statement, the Treasury Department announced its borrowing needs over the next few months, which actually were a bit smaller than markets had anticipated.

Stock chart icon

10-year Treasury yield, 3 months

Since the meeting, yields have receded off 16-year highs as markets digest the impact of heavy debt-fueled borrowing from the government and views over where the Fed is headed with rates.
Officials concluded that the rise in yields had been fueled by rising “term premiums,” or the extra yield investors demanded to hold longer-term securities. The minutes noted that policymakers viewed the rising term premium as a product of greater supply as the government finances its huge budget deficits. Other issues included the Fed’s stance on monetary policy and views on inflation and growth.
“However, they also noted that, whatever the source of the rise in longer-term yields, persistent changes in financial conditions could have implications for the path of monetary policy and that it would therefore be important to continue to monitor market developments closely,” the minutes said.

Economic growth to slow

In other business, officials said they expect economic growth in the fourth quarter to “slow markedly” from the 4.9% increase in Q3 gross domestic product. They said that risks to broader economic growth are probably skewed to the downside, while risks to inflation are to the upside.
As for current policy, members said it “was restrictive and was putting downward pressure on economic activity and inflation,” the minutes said.
Public remarks from Fed officials have been split between those who think the central bank can hold here while it weighs the impact that its previous 11 hikes, totaling 5.25 percentage points, have had on the economy, and those who believe more increases are warranted.
Economic data also has been split, though generally favorable for inflation trends.
The Fed’s key inflation indicator, the personal consumption expenditures price index, showed core inflation running at a 3.7% 12-month pace in September. The number has improved considerably, dropping a full percentage point since May, but is still well above the Fed’s target.
Some economists think getting inflation down from here could be tricky, particularly with wage increases running strong and more stubborn components such as rent and medical care elevated. Indeed, so-called sticky prices rose 4.9% over the past year, according to an Atlanta Fed gauge.
On employment, perhaps the most critical factor in getting inflation lower, the jobs market is strong though moderating. Nonfarm payrolls increased by 150,000 in October, one of the slowest months of the recovery, though the unemployment rate has climbed to 3.9%. The half percentage point increase of the jobless rate, if it persists, is commonly associated with recessions.
Economic growth, after a robust first three quarters in 2023, is expected to slow considerably. The Atlanta Fed’s GDPNow tracker is pointing to growth of 2% in the fourth quarter.
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In parts of San Francisco, the housing market is in dire straits. Consider the example of one swish apartment close to City Hall, with quartz countertops and a rooftop deck, which in 2019 sold for $1.25m. Not today. After the chaos of the covid-19 pandemic, City Hall now overlooks the locus of the city’s drug problems. Biblical scenes of lawlessness and human suffering play out every night. The flat is now listed for $769,000—and is yet to sell.Away from its troubled districts, though, San Francisco’s housing market is once again robust. Prices have risen by 3% from a trough reached earlier this year. Property in swankier parts of town fetches well above asking price. In nearby San Jose, in Silicon Valley, house prices are up by 8% from the trough. The story is similar across the rich world: pockets of weakness, but surprising overall strength.image: The EconomistFigures from the Dallas branch of the Federal Reserve suggest that global house prices rose by 1.3% between the first and second quarters of 2023. Estimates for more recent months point to a further rise (see chart). In cash terms this puts them in line with the previous peak reached in 2022. Adjusted for inflation, they have fallen by less than 5%. That pales in comparison with the 13% peak-to-trough decline which followed the financial crisis of 2007-09, and which also lasted a lot longer.Even in places where the housing market went bananas during the pandemic, leading people to expect a crash, prices are now higher than many had feared. In Britain, a house-price index produced by Halifax, a building society, rose by 1.1% in October, defying economists’ expectations for a 0.4% monthly drop (though the number of transactions is unusually low). Data from Zillow, a housing website, indicate that American house prices are nearly 2% higher than a year ago. A recent survey by Bloomberg, a financial-data firm, suggests that Australian house prices may rise by 7.7% this year.All this has taken most economists by surprise. Since the start of 2022 the rich world’s central banks have raised interest rates by an average of five percentage points. Economists thought house prices would crash as buyers’ purchasing power declined, mortgagors struggled to repay their debts and the economy slowed.Three factors, however, explain why housing markets have so far brushed off higher rates. The first is a shift in preferences. The pandemic seems to have made people more hermit-like: they work from home more and spend relatively more time on home entertainment than on going out. People thus place a higher value on their living space, raising demand for housing. This arrests price declines.The second factor is a changed mortgage market. In some countries, such as America and Denmark, it has long been common to borrow on fixed rates, allowing people to insulate themselves from central-bank rate rises. In the years before 2022 households in other countries shifted in the same direction. Between 2011 and 2021 the share of mortgages in EU countries on variable rates fell from nearly 40% to less than 15% (although some of the rest are fixed for only a few years). The effect has been to delay the impact of rate rises. Since 2021, the average mortgage rate across the rich world has only risen by half as much as the average central-bank policy rate.Household finances also make rising interest costs more manageable—the third factor supporting house prices. Following the property crisis that began in 2007, many governments introduced tougher regulations, shutting out less creditworthy borrowers. Richer folk find it easier to weather higher interest bills. In addition, many borrowers are still sitting on large “excess savings” accumulated during the pandemic, which they can use to make their repayments. The latest estimates suggest that, in the average rich country outside America, these savings still amount to 14% of yearly disposable income.Could housing-market pain merely be delayed? Mortgages with short-term fixes will soon expire. Households will then need to refinance, possibly at the high rates of today; if inflation remains sticky, central bankers may need to raise rates even further. Excess savings will run out eventually, and a rise in unemployment, linked to a weak economy, would also imperil some homeowners. But for now, the rich world is a long way from City Hall. ■ More

Revenue grew by 6% year-on-year to 34.45 billion yuan ($4.72 billion) in the quarter that ended Sept. 30. That was slightly higher than analyst expectations.
It comes after revenue in the previous quarter surged 15% from a year ago, with online and non-online marketing revenue growing by double digits.
“Baidu reported solid third-quarter financial results, demonstrating resilience in a challenging economic climate,” Robin Li, Baidu CEO and co-founder of Baidu, said in a release.

Men interact with a Baidu AI robot near the company logo at its headquarters in Beijing, China April 23, 2021.
Florence Lo | Reuters

BEIJING — Chinese tech giant Baidu reported Tuesday third-quarter revenue that beat expectations, although growth was slower than during the previous three months.
The company’s U.S.-listed shares were up around 2% in pre-market trade at 5:00 a.m. ET. The stock is down almost 3% over the year so far.

Revenue grew by 6% year-on-year to 34.45 billion yuan ($4.72 billion) in the quarter that ended Sept. 30. That was slightly higher than analyst expectations of 34.33 billion yuan, according to Refinitiv.
Online marketing revenue at the search engine provider was up by 5% from a year ago, while non-online marketing revenue was 6% higher over the same period.
It comes after revenue in the previous quarter surged 15% from a year ago, with online and non-online marketing revenue growing by double digits.
“Baidu reported solid third-quarter financial results, demonstrating resilience in a challenging economic climate,” Robin Li, Baidu CEO and co-founder of Baidu, said in a release.

Adjusted earnings per American Depositary Share were 20.40 yuan in the third quarter, down from 22.55 yuan in the previous three months, but up from 16.87 yuan in the year-ago period.

Baidu reported net income of 6.68 billion yuan for the quarter ended Sept. 30, up from 5.21 billion yuan in the previous quarter.
The company said higher marketing spend contributed to an 11% year-on-year increase in selling, general and administrative expenses which came in at 5.8 billion yuan.

Research and development expenses rose by 6% to 6.1 billion year-on-year, partly due to increased server fees to support Ernie bot research, the company said. That’s a pickup from 1% growth in the second quarter from a year ago.
Ernie bot is Baidu’s version of the artificial intelligence-powered chatbot ChatGPT. Baidu only started charging for Ernie bot in November.
“Baidu Core maintained stable margins in the quarter,” Rong Luo, Baidu CFO, said in a release. “Our ongoing investments in AI have underpinned technological and product innovations. Moving forward, while we will continue prioritizing investments in AI, especially in generative AI and foundation models, we will do so with an unrelenting focus on efficiency and strategic resource allocation.”
The company said its Apollo Go robotaxi business operated 821,000 rides in the third quarter, up from 714,000 rides in the second three months of the year.
In September, the suburban Beijing city district of Yizhuang officially let local robotaxi operators charge fares for fully autonomous taxis, with no drivers inside.
Baidu also announced that Sandy Xu, former CFO of JD.com, would join the company as an independent director of the board starting Jan 1, 2024.

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U.S. financial technology firm Plaid has hired Brian Dammeir, Adyen’s global head of unified commerce, as its new head of Europe, the company told CNBC exclusively.
Dammeir will take over the reins from Ripsy Bandourian, who previously oversaw the company’s expansion across Europe, at a pivotal time for the company.

Plaid’s new head of Europe, Brian Dammeir.

U.S. financial technology firm Plaid has hired former Adyen executive Brian Dammeir as its new head of Europe, the company told CNBC exclusively.
Dammeir was previously Adyen’s global head of unified commerce, a role he led out of the Dutch payment company’s San Francisco office. Dammeir oversaw a key part of Adyen’s business — joining up different payment experiences including online, in-store, and app-based, in one single platform.

Dammeir will take over the reins from Ripsy Bandourian, who previously oversaw the company’s expansion across Europe, at a pivotal time for the company as it branches out into other areas of finance including payments and lending.
Plaid, which was last valued by investors at $13.4 billion in a funding round, offers technology that enables financial technology apps to retrieve data from people’s bank accounts and initiate payments on their behalf.
It is part of a movement in finance and technology known as “open banking,” which encourages the opening up of financial data to non-bank financial institutions to encourage competition in the sector.
Dammeir told CNBC in an exclusive interview Monday that the thing he was most excited by in joining the company was “the opportunity around open finance,” an evolution on open banking that looks to innovate in all areas of finance, including lending.
“When we think about Europe, it’s about how can we be more relevant globally … how can we find more and more use cases outside of our starting point in fintech.” Dammeir told CNBC.

“Right now, that’s really about expanding into account-to-account payments as well as into lending and traditional banking,” he added.
Bandourian, a former Booking.com executive, was appointed the company’s first head of Europe last year. She worked with Keith Grose, formerly Plaid’s head of international, who has since left the business to join business-to-business billing platform Sequence.
Bandourian left Plaid to “pursue other passions,” a company spokesperson told CNBC via email. Dammeir had interacted with executives at Plaid for “more than a decade,” the spokesperson added.
Dammeir didn’t take his decision to quit Adyen lightly. The longtime fintech executive held positions at Adyen in its North American and European offices for more than eight years, starting in product, before graduating onto general management and strategy across North America and Europe.
Dammeir said that Plaid wanted to encourage a broader movement toward so-called “open finance,” which would enable the creation of innovative new products in lending, insurance, and other parts of the finance ecosystem.
Payments has been a big focus for Plaid beyond financial data, with payment volumes on the platform having climbed more than 90% in 2023.
Now, Plaid is looking to work with partners beyond just fintechs, Dammeir indicated, without sharing names of any of its potential future partners. The company already works with the likes of Monzo, Checkout.com, Public, and Moneybox. More

China’s property market, which makes up a substantial chunk of the country’s economy, needs more government support to prevent it from deteriorating further, analysts said.
Existing home prices fell in October by the most since 2014, while outstanding property loans fell for the first time in history, Larry Hu, chief economist at Macquarie, said in a note.
Late on Friday, the People’s Bank of China announced it held a meeting with other financial regulators to allow lending to real estate developers that are operating normally, among other signals of support.

Apartment blocks under construction in the Nanchuan area of Xining, Qinghai province, China.
Qilai Shen | Bloomberg | Getty Images

BEIJING — China’s property market, which makes up a substantial chunk of the country’s economy, needs more government support to prevent it from deteriorating further, analysts said.
Existing home prices fell in October by the most since 2014, while outstanding property loans fell for the first time in history, Larry Hu, chief economist at Macquarie, said in a note Friday.

That indicates increased drags on both the demand and the supply side.
Policy so far has focused on boosting demand. But the government hasn’t “addressed the most important issue: credit risk related to developers,” according to a Macquarie report.
“Without a lender of last resort, a self-fulfilled confidence crisis could easily happen as falling sales and rising default risks reinforce each other,” the report said. “Indeed, some large developers have recently seen their credit risks rising rapidly.”

Beijing has sought to reduce real estate developers’ high reliance on debt to fuel growth, while tamping down on a surge in home prices that has made buying an apartment in major cities prohibitively expensive for many young Chinese households.
UBS analysts estimated that real estate and related sectors now account for about 22% of China’s gross domestic product, down from around 25% levels seen in recent years.

Since November 2022, Chinese authorities have rolled out a raft of measures aimed at improving developers’ access to financing and reducing mortgage rates.

Read more about China from CNBC Pro

Markets ‘too optimistic’?

Recent figures indicate that property sector troubles are only worsening.
The average price for existing homes across 70 major cities fell by 0.6% in October from the prior month, compared with a 0.5% drop in September, with China’s largest cities leading declines, Nomura analysts said in a report last week citing official data.
That’s concerning since larger cities are expected to have a more sustained demand for homes due to the availability of jobs.
“China’s property sector has yet to bottom out,” the report said. “Markets appear to have been a bit too optimistic about the property stimulus policies over the past two months.”

More high-level signals

Policymakers in the last few days have made an effort to signal more support.
The People’s Bank of China late Friday announced it held a meeting with other financial regulators to allow lending to real estate developers that are “operating normally”, among other signals of support. The authorities also called for developing affordable housing, according to the readout.
“The meeting should help avoid an undesirable contraction of credit extension in the final two months of the year, as financial institutions try to time new loan deals to the new year to engineer a strong start,” Citi analysts said in a report Monday.
“The continued emphasis on supporting real estate financing and LGFV debt resolution will continue [to help] prevent risks [from] escalating,” the report said. “As fragile growth continues to call for an accommodative monetary environment, the meeting is moving along the needed direction while more supports are still needed to boost private sentiment.”
Shares of several major property companies closed higher on Monday, with developer Sunac rising 5.9% in Hong Kong trading. More

Viewed from one of Istanbul’s glitziest restaurants, the Bosphorus looks sublime. The venue is a favoured haunt of mandarins, businessmen, minor celebrities—and Hamas’s financiers. A man on whom America has imposed sanctions for funding the Islamist group describes his various board seats. “It’s ridiculous,” he says, of America’s accusation, but eventually admits, “now, if you’re asking what our employees do with their own money, why would I know?”Hamas has three sources of power: its physical force inside Gaza, the reach of its ideas and its income. Since Hamas’s attacks on October 7th, Israel has killed more than 12,000 Palestinians in Gaza in seeking to wreck the first. But Israel’s declared goal of destroying Hamas for good requires its financial base to be dismantled, too. Very little of this sits in Gaza at all. Instead, it is overseas in friendly countries. Furnished with money-launderers, mining companies and much else, Hamas’s financial empire is reckoned to bring in more than $1bn a year. Having been painstakingly crafted to avoid Western sanctions, it may be out of reach for Israel and its allies.Hamas’s income pays for everything from schoolteachers’ salaries to missiles. Around $360m each year comes from import taxes on goods brought into Gaza from the West Bank or Egypt. This is the easiest source of cash for Israel to strangle. After withdrawing from the strip in 2005, it strictly limited the movement of goods and people across the border. Now it stops even most basic necessities from getting in.A much larger income stream, though, comes from abroad. Israeli officials reckon this amounts to around $750m per year, making it the main source of funding for Hamas’s current stockpile of arms and fuel. Some comes from friendly governments, the biggest of which is Iran. America reckons that the ayatollahs provide $100m to Palestinian Islamist groups, mainly in military aid. The task for Hamas’s financiers is to move this money around without falling prey to America’s sanctions. In the past month alone, American officials have imposed three rounds of restrictions on people and companies for funding Hamas.Dodging American sanctions requires some ingenuity. Millions of dollars flow to Hamas through crypto markets. “You’d be surprised how much of the market’s activity comes back to [Hamas],” says Firuze Segzin, an economist at Bilkent University. America’s treasury department says Hamas has smuggled more than $20m through Redin, a currency exchange crammed among tourist shops deep in Istanbul’s run-down Fatih neighbourhood.But the lion’s share of Hamas’s money—at least $500m a year, say Israeli officials—comes from its investments, some of which are firms registered in countries across the Middle East. These are run by professionals from Hamas’s investment office and employ its members. American officials say the firms donate to charities which in turn funnel funds to Hamas; Turkish officials say profits are sometimes taken directly. Untangling these revenue streams is tricky for Western regulators. One such firm built the Afra Mall, Sudan’s first shopping mall, while another mines near Khartoum, its capital. A third built skyscrapers in Sharjah, in the United Arab Emirates (uae). Many of these companies boast of their business deals, but deny affiliation with Hamas. Can any revenue streams remaining to Hamas be choked off? That depends on the countries through which they flow. Since 1989, when Israel arrested a handful of Hamas’s top brass in Gaza and the West Bank, its bankers have lived abroad. Over time, though, geopolitical shifts have forced them to keep moving. Hamas abandoned its first financial hub, Amman, after Jordan’s ties to America grew too close.Today, while Hamas’s politicians favour Doha, the capital of Qatar, and its companies range from Algeria and Sudan to the UAE, its financiers live in Istanbul. Zaher Jabarin, accused by Israel of running Hamas’s finances (which he denies), is based there, as are several other individuals under sanctions by America for funding the organisation. Eager to gain regional influence by supporting the Palestinian cause, Recep Tayyip Erdogan, Turkey’s president, offers shelter. Israel says that the Turkish government hands out passports (which it denies) and lets Hamas keep an office in the country.Meanwhile, Turkey’s banking system helps Hamas dodge American sanctions by conducting complex transactions across the world. A booming, lightly regulated crypto market helps. Many of Turkey’s biggest banks, including Kuveyt Turk, have been accused by Israel and America of knowingly storing Hamas’s cash. Some murmur that Mr Erdogan quietly approves. In 2021 the Financial Action Task Force, a G7 watchdog, placed Turkey on its “grey list” of countries doing too little to freeze terrorists’ assets.No one benefits more than Hamas’s businessmen. The Turkish government’s tacit approval “opens doors and makes things smooth in business”, says one of the group’s finance employees. Trend GYO, an Istanbul-listed firm that has been placed under sanctions by America for funnelling funds to Hamas, won an official contract to build Istanbul Commerce University. Construction companies, which feature heavily in Hamas’s portfolio, can quietly swallow huge lumps of cash, and regularly receive large loans. All this allows Turkish officials to say that they are not directly lining Hamas’s pockets.So far, Hamas seems financially bulletproof. Israel has inflicted little harm on either its income or savings; Turkey’s banks have been unco-operative. America’s numerous sanctions are less effective if their targets can keep cash outside its banking system. And Hamas hides its companies well. “Every time you think you’ve got a big fish, it changes its name,” despairs one ex-Treasury official.In fact, the risk is that Hamas’s finances will improve. As Israel steps up its attacks on Gaza, Western governments may blanch at the humanitarian horror. Countries with pro-Palestinian populations may make it even easier for Hamas to earn money. For months, rumours have circulated that some civil servants in Mr Erdogan’s economic ministry are co-ordinating with Hamas’s finance office.For Israel, Hamas growing richer despite the war would be a disaster. With its wealth and financial roots intact, it—or a similar organisation—may well flourish after the destruction. Gazans, meanwhile, have been plunged into tragedy so that Israel can destroy a group whose money and power are safely ensconced elsewhere. Compare their plight to the picture in Istanbul: eating lobster and gazing at the Bosphorus. ■ More

Fifty-seven percent of people tip 15% or less for a sit-down meal at a restaurant, according to a Pew Research Center poll.
Of those, 37% said 15% is their standard tip and 18% tip something less than 15%. An additional 2% tip nothing, Pew found.
Restaurant meals are the most commonly tipped service. When we tip, it’s often due to social approval instead of service quality, one expert said.

Thomas Barwick | Digitalvision | Getty Images

When it comes to dining, tipping at least 15% to 20% is traditional etiquette, say experts.
It seems many Americans disagree.

Almost 1 in 5, 18%, of people tip less than 15% for an average meal at a sit-down restaurant — and an additional 2% tip nothing at all, according to a Pew Research Center survey, which polled 11,945 U.S. adults. More than a third, 37%, said 15% is their standard tip.
“That did surprise me,” Drew DeSilver, co-author of the study, said of finding that more than half of people, 57%, tip 15% or less.
“The U.S. has a more highly developed tipping culture than most other countries,” he added. “But there’s such a lack of agreement about [it].”
Pew hasn’t done historical polling on tips, so it’s unclear how these shares have trended over time.
More from Personal Finance:Here’s how to save on Thanksgiving costs despite inflationMore people turn to their parents to buy a house in today’s market100-year-old explains how he still has $1 million saved

Why consumers are getting tip fatigue

Americans are more likely to tip for a sit-down meal than any other service: Two-thirds of U.S. adults always tip a server when they dine, according to Bankrate. The Pew survey found that 81% always tip for a restaurant meal, a higher percentage than those who tip for haircuts, food delivery, buying a drink at a bar or using a taxi or ride-hailing service, for example.
Etiquette expert Diane Gottsman recommends tipping 15% to 20% for sit-down restaurant service in 2023.
However, studies suggest “tip fatigue” has led tip amounts to decline recently. For example, the average nationwide tip at full-service restaurants fell to 19.4% of the total check in the second quarter of 2023 — the lowest amount since the start of the Covid-19 pandemic, according to Toast data.
And the share of people who always tip restaurant waitstaff fell by 4 percentage points from 2019 to 2022, according to Bankrate.

“People’s willingness to tip, even in restaurant settings, is going down,” said Michael Lynn, a professor at Cornell University’s School of Hotel Administration and an expert on consumer behavior and tipping.
Americans became more generous tippers in the early days of the pandemic, embracing the practice as a way to help service workers and their employers. Now, they’re getting “fed up,” Lynn said.   
“You can understand why: We’re being asked to tip in circumstances and for services that aren’t traditionally tipped,” he said. “And the amounts we’re being asked to tip are higher.”
The proliferation of tip prompts has come to be known as “tip creep.” It comes at a time when pandemic-era inflation — which peaked last year at a high unseen in four decades — has pinched household budgets.

Tips buy social approval

One of the challenges relative to tip amounts is the lack of a “centralized authority” to guide norms, Lynn said.
Most people — 77% — cite service quality as a “major factor” when choosing whether and how much to tip, according to Pew.

However, service is ultimately a weak predictor of consumer behavior, Lynn said; social approval — from our dining partners, waitstaff and others — is a much stronger determinant.
“We’re buying approval” with tips, Lynn said.
Just 23% of Pew survey respondents cited social pressure as a major factor.
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