Finance

When david hockney’s mother visited the British artist in Los Angeles she made an observation that points to the difficulties with transatlantic economic comparisons. “Strange,” she said, after a couple of days in the sun, “all this lovely weather and you never see any washing out.” It is an observation many European visitors have echoed. American travellers to Europe, meanwhile, often despair at washer-dryer machines that leave clothes damp. Indeed, for some American writers the lack of standalone dryers is symbolic of the continent’s backwardness. While economic statistics should solve such debates—by allowing for apples-to-apples comparisons—they are not immune to the problems posed by cultural differences. Is it that Europeans cannot afford proper tumble dryers? Or are they simply getting their “drying services” free of charge?Questions like these are important when comparing countries. On the surface, America has by far the best case for prosperity. Gross domestic product (gdp) per person is almost $70,000. The only European countries where it is higher are Luxembourg, Switzerland, Norway and Ireland, where figures are distorted by firms’ profit shifting. In Germany, Europe’s economic powerhouse, gdp per person (adjusted for purchasing-power parity) is $58,000. That puts it level with Vermont, but far below New York ($93,000) and California ($86,000). The comparisons are even less flattering for other European countries. Incomes in Britain and France are equal to those in Mississippi ($42,000), America’s poorest state. Yet a lot is hidden by these figures. To understand why, consider how they are calculated. Spending is deflated by some measure of price, to allow accurate comparisons between countries of the amount of goods and services purchased. For manufactured goods this is a straightforward calculation: the amount Americans spend on dryers, divided by an index of their cost, will give a pretty accurate figure for total consumption.For services, it is harder to work out a reasonable deflator. And that matters because it is here, rather than household appliances, where Europe and America differ most. Combined spending on health care, housing and finance accounts for about half the difference in consumption between America and the biggest European economies. In 2019 Americans consumed $12,000-worth of health services per person; Germans managed just $7,000.The difficulty in working out a reasonable deflator is partly conceptual. What are people paying for when they buy health care, a service or an outcome? Is a unit of “health-care services” the cost of a specific treatment or the cost of health? What does being healthy even mean? International price indices simply (and a little unsatisfactorily) calculate the price per treatment. These differ substantially. The oecd, a club of mostly rich countries, estimates that a hip replacement in Norway costs seven times as much as one in Latvia and Lithuania. In any case, while American prices are higher than European ones, the gap is not big enough to account for the difference in health-care consumption: Americans also undergo lots more medical treatment.Simon Kuznets, a Nobel-prize-winning economist and statistician, suggested estimates of gdp should exclude things an “enlightened social philosophy” would consider harms rather than benefits. For him, that included weapons, advertising, much of finance and anything necessary to “overcome difficulties that are, properly speaking, costs implicit in our economic civilisation”.Many Europeans would suggest this category rightfully includes American health-care spending. Life expectancy in America is five years lower than in Italy; lots of money is spent fixing the damage done by higher levels of violent crime, traffic accidents and obesity. Follow Kuznets’s advice—by removing from the calculation finance, health, public administration and defence spending—and the gap between America and Germany in gdp per hour worked drops from $11 to just $4. Much of the remaining gap is accounted for by “housing services”, a category of consumption similarly bedevilled by conceptual difficulties. International comparisons are done on the basis of the rental cost per square metre. That flatters sparsely populated America and its sprawling cities, where rents are generally cheaper. While nearly everyone would rather have a bigger house, preferences for suburban over urban living are hardly universal.Top dollarThere are diminishing returns to America’s spending on health care. But treating all of it as an additional cost would be a mistake. Cancer survival rates are higher in America than Europe. Health-care spending can be considered a luxury good that a richer country may choose to spend more on (Germany, Norway and Switzerland spend the most in Europe). Meanwhile, as American defence hawks like to point out, Europe’s low military spending is possible only thanks to America’s largesse and the security it provides. America has other genuine advantages. The combination of higher productivity and the fact that workers spend more time at work allows Americans to enjoy greater quantities of consumer electronics, cars, furniture and clothes. The only categories in which Germans and the French consistently consume more are education, spending abroad, and food and drink, suggesting there is something to stereotypes of Europe’s cosmopolitan café culture and America’s infatuation with consumer goods. Still, while arguments can be made for Europe, there is no way of slicing the data, despite your columnist’s best efforts, to make the continent’s biggest economies richer than America. Even in the areas where Europe does consume more than America, the old-world economies are not ahead by much. Maybe the true lesson of the comparison is that neither side ought to be satisfied: Europeans should be unhappy with their lower incomes; Americans really should be getting a lot more from their riches. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

Buy stocks so you can dream, buy bonds so you can sleep—or so the saying goes. A wise investor will aim to maximise their returns relative to risk, defined as volatility in the rate of return, and therefore hold some investments that will do well in good times and some in bad. Stocks surge when the economy soars; bonds climb during a crisis. A mix of the two—often 60% stocks and 40% bonds—should help investors earn a nice return, without too much risk. Such a mix has been a sensible strategy for much of the past two decades. Since 2000 the average correlation between American stocks and Treasuries has been staunchly negative, at -0.5. But the recent rout in both stock and bond prices has wrong-footed investors. In the first half of the year the s&p 500 shed 20.6% and an aggregate measure of the price of Treasuries lost 8.6%. Is this an aberration or the new normal?The answer depends on whether higher inflation is here to stay. When economic growth drives asset prices, stocks and bonds diverge. When inflation drives them, stocks and bonds often move in tandem. On August 10th American inflation data showed prices did not rise in July. Stocks soared—the s&p 500 rose by 2.1%—and short-term Treasury prices climbed, too. For as long as central bankers kept a lid on inflation, investors were protected. Yet look back before 2000, to a period when inflation was more common, and you see that stocks and bonds frequently moved in the same direction. aqr Capital Management, an investment firm, notes that in the 20th century the correlation between stocks and bonds was more often positive than negative.Lots of hedge-fund types, pension-fund managers and private-equity barons are therefore worrying about the potential for repeat inflation shocks. Last year the debate in the halls of finance was about whether inflation would be “transitory” or “persistent”; this year it is about whether it is “cyclical” or “structural”.At the heart of this is not whether central bankers can bring down prices, but whether the underlying inflation dynamic has changed. Those in the “structural” camp argue that the recent period of low inflation was an accident of history—helped by relatively calm energy markets, globalisation and Chinese demographics, which pushed down goods prices by lowering the cost of labour. These tailwinds have turned. Covid-19 messed up supply chains; war and sabre-rattling are undermining globalisation. Manoj Pradhan, formerly of Morgan Stanley, points out that China’s working-age population has peaked. Jeremy Grantham, a bearish hedge-fund investor, fears that the switch to renewables will be slow and costly, and that lower investment in fossil-fuel production will make it hard for energy firms to ramp up supply, increasing the risk of energy-price spikes. All this, the structuralists argue, means the current inflation shock is likely to be the first of many: central bankers will be playing whack-a-mole for a while yet. Recurrent inflation would upend 20 years of portfolio-management strategy. If the correlation between stocks and bonds shifts from -0.5 to +0.5 the volatility of a “60/40” portfolio increases by around 20%. In a bid to avoid being wrong-footed once again, investors are updating their plans. As Barry Gill of ubs’s asset-management arm puts it, the task is “to realign your portfolio around this new reality”. What assets will allow investors to sleep soundly in this new reality? Cryptocurrencies once looked like an interesting hedge, but this year they have fallen and risen in lockstep with stocks. A recent paper by kkr, a private asset-management firm, argues, perhaps unsurprisingly, that illiquid alternatives, like private equity and credit, are a good way to diversify. But that may be an illusion: illiquid assets are rarely marked-to-market, and are exposed to the same underlying economic forces as stocks and bonds. There are other options. aqr suggests stock-picking strategies where success has little to do with broader economic conditions, such as “long-short” equity investing (going long on one firm and short on another). Meanwhile, commodities are the natural choice for those worried about a disorderly green transition, since a basket of them appears to be uncorrelated with stocks and bonds over long periods. In the search for new ways to minimise risk, investors dreaming of high returns will have to get creative. That, at least, should tire them out by the end of the day.For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter. More

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Investors have a new way to buy cryptocurrencies.
Schwab Asset Management released its Schwab Crypto Thematic ETF (STCE) this month to answer investor demand.

David Botset, who was directly involved in the launch, told CNBC’s “ETF Edge” the new product is unique because investors get an indirect way to significantly play cryptocurrencies.
“It is a very speculative investment,” the head of equity product and strategy said on Monday. “But we are seeing certain segments of Schwab investors that are seeking access to this asset category in their portfolios.”
The fund does not target actual cryptocurrencies. Instead, it bundles companies with skin in the game.
“[The Schwab Crypto Thematic ETF] is different than other crypto-related ETFs on the market today in the way that the index identifies, selects and weights constituents based on a company’s relevance to the crypto ecosystem using natural language processing,” Botset said in the ETF launch news release.
Widely held crypto names including MicroStrategy, Marathon Digital, Riot Blockchain, Coinbase, Silvergate Capital, Robinhood and Interactive Brokers have holdings in the fund, not unlike other crypto-related thematic products.

The crypto thematic ETF, with its low-cost and index design, differ from similar funds, Botset explained. The fund is “the lowest-cost crypto-related product in the marketplace at 30 basis points.” A basis point equals 0.01 percentage point. 
“Our approach of combining the human insight with AI and in models to assess companies’ exposure to the crypto theme, we think, is differentiated,” he said of the fund.
Botset said he finds that small companies, in particular, have the potential to grow as a result of this strategy.
The Schwab Crypto Thematic ETF is up about 5 % since its launch on Aug. 4.
Botset contends launch timing “was happenstance,” acknowledging the dramatic downside in the space.
Wall Street is still coping with this year’s crash or so-called “crypto winter.” But bitcoin, the world’s biggest coin by market cap, is showing signs of strength this month.
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Disney store is seen in Times Square, New York City.
Nick Pfosi | Reuters

Check out the companies making headlines after the bell Wednesday: 
Walt Disney — Shares of the entertainment company jumped 5.8% after Disney posted better-than-expected Disney+ subscription numbers for the previous quarter. Subscriptions came in at 152.1 million, above the expected 147.76 million according to StreetAccount. Disney’s earnings per share and revenue also topped estimates.

Sonos — Shares of the wireless home sound system maker cratered more than 19% after the company slashed its full-year guidance amid a challenging macro environment. Sonos’ earnings and revenue for the previous quarter also missed expectations.
Bumble — Bumble slumped more than 13% after slashing its guidance for the full year despite a revenue beat for the previous quarter. The company cited inflation and foreign exchange headwinds among the reasons for the forecast cut.
Vacasa — The vacation rental management stock soared 42% on the back of an unexpected profit of 2 cents per share. Analysts had expected a loss of 20 cents per share, according to Refinitiv. Vacasa also shared solid guidance for the current period.

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Crypto bridges, which link blockchain networks together, have become major targets for cybercriminals.
A total of around $1.4 billion has been lost to breaches on cross-chain bridges this year, according to figures from blockchain analytics firm Chainalysis.
The biggest incident was the record $615 million haul snatched from Ronin, a bridge supporting the popular nonfungible token game Axie Infinity.

Mining the Worlds Second-most-valuable Cryptocurrency at Evobits I.T SRL An engineer inspects Sapphire Technology Ltd. AMD graphics processing units (GPU) at the Evobits crypto farm in Cluj-Napoca, Romania, on Wednesday, Jan. 22, 2021. The worlds second-most-valuable cryptocurrency, Ethereum, rallied 75% this year, outpacing its larger rival Bitcoin. Photographer: Akos Stiller/Bloomberg via Getty Images
Photographer: Akos Stiller/Bloomberg via Getty Images

Crypto investors have been hit hard this year by hacks and scams. One reason is that cybercriminals have found a particularly useful avenue to reach them: bridges.
Blockchain bridges, which tenuously connect networks to enable the fast swaps of tokens, are gaining popularity as a way for crypto users to transact. But in using them, crypto enthusiasts are bypassing a centralized exchange and using a system that’s largely unprotected.

A total of around $1.4 billion has been lost to breaches on these cross-chain bridges since the start of the year, according to figures from blockchain analytics firm Chainalysis. The biggest single event was the record $615 million haul snatched from Ronin, a bridge supporting the popular nonfungible token game Axie Infinity, which lets users earn money as they play.
There was also the $320 million stolen from Wormhole, a crypto bridge backed by Wall Street high-frequency trading firm Jump Trading. In June, Harmony’s Horizon bridge suffered a $100 million attack. And last week, almost $200 million was seized by hackers in a breach targeting Nomad.

“Blockchain bridges have become the low-hanging fruit for cyber-criminals, with billions of dollars worth of crypto assets locked within them,” said Tom Robinson, co-founder and chief scientist at blockchain analytics firm Elliptic, in an interview. “These bridges have been breached by hackers in a variety of ways, suggesting that their level of security has not kept pace with the value of assets that they hold.”
The bridge exploits are occurring at a striking rate, considering it’s such a new phenomenon. According to Chainalysis data, the amount stolen in bridge heists accounts for 69% of funds stolen in crypto-related hacks so far in 2022.

How bridges work

A bridge is a piece of software that allows someone to send tokens out of one blockchain network and receive them on a separate chain. Blockchains are the distributed ledger systems that underpin various cryptocurrencies.

When swapping a token from one chain onto another — as in sending some ether from ethereum to the solana network — an investor deposits the tokens into a smart contract, a piece of code on the blockchain that enables agreements to execute automatically without human intervention.
That crypto then gets “minted” on a new blockchain in the form of a so-called wrapped token, which represents a claim on the original ether coins. The token can then be traded on a new network. That can be useful for investors using ethereum, which has become notorious for sudden spikes in fees and longer wait times when the network is busy.
“They usually hold tremendous amounts of money,” said Adrian Hetman, tech lead at crypto security firm Immunefi. “Those amounts of money, and how much traffic goes through bridges, are a very enticing point of attack.”

Why they’re under attack

The vulnerability of bridges can be traced in part to sloppy engineering.
The hack on Harmony’s Horizon bridge, for example, was possible because of the limited number of validators that were required for approving transactions. Hackers only needed to compromise two out of a total of five accounts to obtain the passwords necessary for withdrawing funds.
A similar situation occurred with Ronin. Hackers only needed to convince five out of nine validators on the network to hand over their private keys to gain access to crypto locked inside the system.
In Nomad’s case, the bridge was much simpler for hackers to manipulate. Attackers were able to enter any value into the system and then withdraw funds, even if there weren’t enough assets deposited in the bridge. They didn’t need any programming skills, and their exploits led copycats to pile in, leading to the eighth-largest crypto theft of all time, according to Elliptic.

Nomad is offering hackers a bounty of up to 10% to retrieve user funds and says it will abstain from pursuing legal action against any hackers who return 90% of the assets they took.
Nomad told CNBC it’s “committed to keeping its community updated as it learns more” and “appreciates all those who acted quickly to protect funds.”

Why they’re important

Bridges are an essential tool in the decentralized finance (DeFi) industry, which is crypto’s alternative to the banking system.
With DeFi, instead of centralized players calling the shots, the exchanges of money are managed by a programmable piece of code called a smart contract. This contract is written on a public blockchain, such as ethereum or solana, and it executes when certain conditions are met, negating the need for a central intermediary. 
“We cannot simply move those assets,” Hetman said. “That’s why we need blockchain bridges.”
As the DeFi space continues to evolve, developers will need to make blockchains interoperable to ensure that assets and data can flow smoothly between networks.
“Without them, assets are locked on native chains,” said Auston Bunsen, co-founder of QuikNode, which provides blockchain infrastructure to developers and companies.
But they’re risky.
“They’re effectively ungoverned,” said David Carlisle, head of regulatory affairs at Elliptic. They’re “very vulnerable to hacks, or to being used in crimes like money laundering.”
Criminals have transferred at least $540 million worth of ill-gotten gains through a bridge called RenBridge since 2020, according to new research that Elliptic provided to CNBC.
“One major question is whether bridges will become subject to regulation, since they act a lot like crypto exchanges, which are already regulated,” Carlisle said.
This week the U.S. Treasury Department’s Office of Foreign Assets Control, or OFAC, announced sanctions against Tornado Cash, a popular cryptocurrency mixer, banning Americans from using the service. Mixers are tools that blend a user’s tokens with a pool of other funds to conceal the identities of individuals and entities involved.
Carlisle said it’s becoming evident that “U.S. regulators are prepared to go after DeFi services that facilitate illicit activity.”
WATCH: Adrian Hetman of Immunefi explains how hackers stole $200 million More

The costs associated with air travel, hotel stays and car rental declined in July, according to the U.S. Department of Labor’s inflation report issued Wednesday.
However, prices are still up versus prepandemic levels.
Travelers can use a few tips to score the best-possible deal.

Fluxfactory | E+ | Getty Images

Travelers saw prices fall for big-ticket pieces of their vacation budgets in July, offering at least a temporary reprieve after soaring costs earlier this year.
Airfares fell nearly 8% from June to July, while prices for rental cars and lodging such as hotels declined 9.5% and about 3%, respectively, according to a monthly inflation report issued Wednesday by the U.S. Department of Labor. It was the second consecutive month of price declines for each category.

“That’s really good news, I think, when people are planning out their vacations,” said Sally French, a travel expert at NerdWallet.
Airline ticket prices peaked in May this year, driven by factors like elevated consumer demand coming out the Covid-19 pandemic and operational issues for airlines such as high jet-fuel costs and staffing shortages, which led companies to pare back flight schedules, according to experts.
More from Personal Finance:Inflation Reduction Act extends $7,500 tax credit for electric cars30 companies that will help employees pay off their student loansClimate change is making some homes too costly to insure
That surge in airfare earlier in 2022 was “anomalous,” said Hayley Berg, lead economist at Hopper.
Hotel and rental car prices also topped out in the spring, while high gasoline costs also served to stretch road-trip budgets.

‘A lot’ of people traveled recently, despite high costs

Thirty-nine percent of travelers said the general cost of trips being too expensive deterred them from traveling more than they would have otherwise preferred in the past half-year, according to Destination Analysts, a tourism market research firm. Almost half, 47%, explicitly cited gasoline costs and 27% did so for airfare.
Financial concerns compounded other travel headaches over the last several months, such as an increase in lost baggage and delayed or canceled flights.

However, “a lot” of people still traveled over the summer — more than half of Americans took a trip in the past month, according to a Destination Analysts survey fielded in July.
Despite the recent cooling, travel largely remains pricier than it was pre-pandemic. Airfare this July was up 16% versus July 2019, according to monthly Consumer Price Index data.
Hotels are up more modest 6% for the same period while rental cars are up about 48%, which is “easily the sharpest price increase of any [travel] category we track,” French said. In addition to consumer demand, factors like a semiconductor shortage that impacted the auto industry more broadly have flowed through to consumers, she added.
“It’s still important to remember [that] if you haven’t traveled or done a big trip since pre-Covid, you should expect to pay more than what you’re used to,” French said.

How to score good deals on upcoming trips

Travel experts had a few tips to ease the sting of potentially costly travel.
Travelers who can remain flexible regarding vacation dates may be able to score a better deal on airfare, French said. A tool like Google Flights lets users compare prices for selected travel dates as well as other combinations earlier or later in the week or month, for example, she said.
You may find that extending a trip by a day could save enough on airfare that it more than offsets an extra night at a hotel — and gives you an additional day of vacation.
“I’d encourage people to really be flexible about their budgeting,” French said.

For the best deals on airfare, travelers planning a domestic trip for the fall should book their plane tickets at least three to six weeks before departure, after which prices tend to rise quickly, Berg said.
Flying in the autumn is also one of the best ways to save on international airfare, since prices are often lower in September and October relative to summer months, Berg added. Travelers generally get the best deal if booking approximately four weeks ahead, she said.
Further, departing midweek instead of on peak days generally saves about $35 a ticket, according to Hopper.
Travelers may be better-served booking a hotel closer to their arrival date, though, especially for big-city destinations with ample accommodations, experts said. That’s because hotels often drop their prices to clear inventory as the check-in date approaches.

I’d encourage people to really be flexible about their budgeting.

Sally French
travel expert at NerdWallet

Renting a car from a major airport hub may also be a safer bet especially amid high demand — the typically larger car fleets at those hubs reduce the chances of a company saying they don’t have a vehicle for you upon arrival, Berg said. Travelers who’d prefer to fly into a regional airport can consider renting from a bigger airport nearby and taking a taxi there, for example.
Refundable travel may also offer a financial benefit — especially relative to rental cars and hotels — for those travelers willing to do a bit of extra legwork, French said.
For example, travelers can often choose to defer payment for these purchases until their arrival date. While travelers may pay a slightly higher rate for that luxury, opting for a fully refundable hotel or rental car purchase allows travelers to monitor prices leading up to their trip; if the price drops beforehand, travelers can book at the lower rate and then cancel their original booking, French said. However, consumers should, of course, be cognizant of any restrictions that may apply.

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Check out the companies making headlines in midday trading.

Coinbase reported a 27% decline in revenues in the first quarter as usage of the platform dipped.
Chesnot | Getty Images

Coinbase – Shares of the crypto services operator jumped about 7.4% despite the company reporting a wider-than-expected loss late Tuesday and a decline in volumes in the most recent quarter. The rally coincided with a move higher in bitcoin after a key inflation reading showed a better-than-expected slowdown in rising prices.

Wendy’s – The restaurant chain saw its shares fall nearly 2% after reporting a revenue miss. U.S. same-restaurant sales rose 2.3% — less than analysts had estimated — as consumers spent more cautiously. Wendy’s earnings in the latest quarter topped estimates, however.
Roblox – Shares of the video game platform added 1.4% even after postmarket earnings Tuesday missed analyst expectations. Roblox’s quarterly loss was wider than expected, and its bookings, which include sales recognized during the quarter and deferred revenue, declined by 4% year over year.
Twitter – The social media company climbed 3.7% after Elon Musk disclosed the sale of nearly $7 billion in Tesla shares in the past few days. Investors are uncertain whether a Delaware Chancery court will force Musk to follow through on his deal to buy Twitter for $44 billion. Shares of Tesla gained more than 2.5%.
Sweetgreen — Shares gained 8% after the salad chain lowered its full-year forecast, and second quarter revenue missed analyst estimates. Sweetgreen also said it laid off 5% of support center employees.
Trade Desk — Shares of the digital advertising firm soared 36.2% after it gave an upbeat forecast for the current quarter and revenue beat estimates in the quarter just ended.

Fox — The media company rose 3.4% even after Fox missed estimates on the top and bottom lines in the latest quarter. Earnings per share came in 1 cent below estimates.
Unity Software — The software company jumped more than 10% after Unity reported an adjusted loss of 18 cents per share, three cents better than estimates, according to Refinitiv. Unity’s revenue and guidance were lower than expected. The stock is now trading within 10% of $58.85 per share, which is the price offered by AppLovin in a nonbinding merger proposal earlier this week.
H&R Block — The tax preparation services company jumped more than 15% after it raised its dividend and authorized a new $1.25 billion buyback. H&R Block also beat top and bottom line estimates in the most recent quarter.
BuzzFeed — BuzzFeed ended the day 1% higher after slumping earlier in the session. The company reported a bigger-than-expected loss per share, noting that it faces rising costs and a troublesome advertising market.
— CNBC’s Tanaya Macheel, Sarah Min, Carmen Reinicke, Jesse Pound, Michelle Fox and Yun Li contributed reporting.

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Detroit fell into bankruptcy amid auto industry globalization and local suburban sprawl.
The city bounced back by attracting new investments by awarding tax abatements to commercial developers while raising consumption and property taxes on residents.
Local residents say the changes have the potential to be beneficial, but also raise concerns over gentrification and displacement.

A new wave of development is rippling through downtown Detroit.
“Walking around Detroit in 2008 or 2009 is not the same as walking around in 2022,” said Ramy Habib, a local entrepreneur. “It is absolutely magnificent what happened throughout those 15 years.”Between 2010 and 2019, just 708 new housing structures went up in the city of Detroit, according to the Southeast Michigan Council of Governments.Much of the new construction traces back to the philanthropic wings of large local businesses. For example, Ford Motor is nearing completion of a 30-acre mixed-used development at Michigan Central Station. The station sat abandoned for years as the city fell into bankruptcy.Detroit’s decline into insolvency formed amid 20th century globalization in the auto industry, according to economists. The city’s population fell from 1.8 million to 639,000 in the most recent but controversial count by the U.S. Census. “With the population leaving, with the infrastructure staying in place, it meant strains on the city. Cumulatively, they started to mount over time,” said Raymond Owens III, a former senior economist at the Federal Reserve Bank of Richmond.

The 2007-08 Great Recession left another round of scars on the city as scores of homes fell into foreclosure. The U.S. Treasury Department has since funded the removal of 15,000 blighted structures in the city. “A lot of Black people are leaving the city. So sometimes that identity can change and shift in certain communities,” said Alphonso Carlton Jr, a lifelong Detroit resident.
Local leaders have used tax and spending policies to advance economic development downtown. In July 2022, the Detroit City Council finalized a tax abatement for the real estate developer Bedrock to finance the $1.4 billion Hudson’s site project. The abatement could be worth up to $60 million over its 10-year span. Bedrock is in a family of companies controlled by billionaire investor Dan Gilbert, who moved several of his businesses downtown in 2010.Bedrock told CNBC that decision was consistent with the council’s handling of other major developments, due to high local tax rates. One local analysis suggests that in 2020, Detroit’s effective property tax rate on homes was more than double the national average. Detroit’s new tax, spending and placemaking policies have drawn the interests of bond investors in recent years, providing another source of revenue for the local government.Watch the video above to learn more about Detroit’s escape from bankruptcy.

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