Business

Subterms

    More stories

    • 213 Shares99 Views

      in US Politics

      US government shutdown bad for credit rating, Moody’s warns, as pound hits six-month low – business live

      by

      From 3h agoGood morning, and welcome to our rolling coverage of business, the financial markets and the world economy.The possibility of a US government shutdown is looming over global markets today, and threatening America’s triple-A credit rating.Overnight, credit rating agency Moody’s warned that dysfunction in Washington DC would reflect negatively on the country’s rating.Moody’s is the last of the Big Three credit who still gives the US a AAA rating with a stable outlook (the gold standard for credit worthiness).It warned:
      A shutdown would be credit negative for the US sovereign,”
      “In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability.”
      There are just a few days left for Capitol Hill to avert a shutdown, by passing a spending bill by 1 October. If that doesn’t happen, the federal government will be left without funding.That is expected to force hundreds of thousands of federal workers to go without pay and bring a halt to some crucial government services.Moody’s analyst William Foster told Reuters:
      “If there is not an effective fiscal policy response to try to offset those pressures … then the likelihood of that having an increasingly negative impact on the credit profile will be there.
      And that could lead to a negative outlook, potentially a downgrade at some point, if those pressures aren’t addressed.”
      But there is deadlock in Washington DC, where a group of rightwing Republican members of the House of Representatives are refusing to reach a compromise with their own party’s leadership over a spending bill.Moody’s predicts that a shutdown would probably be shortlived, and likely not to affect government debt service payments.But the row is focusing investors’ attention on US creditworthiness, at a time when the interest rates on sovereign bonds are rising on fears that interest rates will stay higher for longer than hoped.Kyle Rodda, senior financial market analyst at Capital.com, says:
      While what these agencies rate most government debt means diddly-squat, it does say something about the dysfunction in the US government….
      Moody’s warning is a reminder of the costs of an unstable Government.
      Just last month, Fitch downgraded the US government’s top credit rating, blaming the “steady deterioration in standards of governance”, following the row over lifting the US debt ceiling.Also coming up todayGatwick, the UK’s second largest airport, is expected to announce details of flights which are being cancelled this week due to a shortage of staff in air traffic control.Thousands of passengers flying to and from Gatwick this week are expected to suffer disruption, after it imposed an immediate cap on Monday of 800 flights taking off or landing a day.The airport said it would share the total of 164 cancellations proportionately between airlines until Sunday, with easyJet passengers most likely to be affected given the carrier operates just under half of all Gatwick flights.People travelling on Friday are most likely to be hit, with 865 flights scheduled to depart.The agenda
      8am BST: European Central Bank chief economist Philip Lane speaks at a conference “Monetary Policy Challenges for European Macroeconomies”.
      2pm BST: US house price index for July
      3pm BST: US consumer confidence for September
      Filters BETABanks including some of Europe’s largest lenders have helped fossil fuel companies to raise more than €1tn (£869bn) from the global bond markets since the Paris climate agreement, according to an investigation by the Guardian and its reporting partners.In the push to zero carbon Europe’s biggest lenders face growing pressure to limit their financial support for fossil fuel companies through direct loans and other financing facilities.But analysis of thousands of transactions since 2016, when more than 190 countries agreed at a UN summit in Paris to limit global warming by curbing pollution, has revealed that lenders including Deutsche Bank, HSBC and Barclays have continued to profit from the expansion of oil, gas and coal by supporting the sale of fossil fuel bonds.The findings have raised concerns among sustainable investment campaigners that banks are continuing to offer “hidden” financial support to energy companies that are responsible for increasing the world’s carbon emissions – even as they pledge publicly to phase out direct lending for new projects.The Guardian worked alongside other European newspapers and the Dutch platforms Investico and Follow the Money to look in detail at 1,700 bond issues recorded by the financial information provider Bloomberg.Here’s the full story.In the property sector, US tech giant Meta has paid £149m to break its lease on a major London development near Regent’s Park.Commercial property developer British Land told the City this morning that Meta had surrendered its least on 1 Triton Square – one of the two buildings it has leased at Regent’s Place – yesterday, at a cost of £149m.The move somes as major companies adjust their property needs due to the move towards home working following the Covid-19 pandemic.Simon Carter, CEO, is looking on the positive side, though, saying:
      Meta’s surrender of our building at 1 Triton Square also enables us to accelerate our plans to reposition Regent’s Place as London’s premier Innovation and Life Sciences campus.”
      European stock markets have lost more ground this morning, with the Stoxx 600 index down by 0.35% so far.Germany’s DAX, France’s CAC and Italy’s FTSE MIB indices are all down over 0.4%, while the UK’s FTSE 100 is 12 points (0.17%) higher.Pierre Veyre, technical analyst at ActivTrades, says investor risk appetite is decreasing – partly due to concerns of a US government shutdown within days.
      “All Eurozone benchmarks were in the red shortly after the opening bell, led lower by real estate and consumer cyclical shares, as sentiment stays under pressure by several market drivers.”
      “Lingering inflation and higher rates concerns are keeping investors from increasing their exposure to riskier assets, and the prospect of a Federal shutdown in the US next week is also adding pressure to market sentiment. Indeed, a lack of a funding agreement from the US Congress would likely negatively impact the country’s credit rating, according to Moody’s, further denting confidence in the nation’s economic outlook.”
      “Stock investors also face another bearish pressure from China as property fears grow following a missed payment from the sector’s giant, Evergrande. This highlights concerns over the management of the property sector’s debt pile and leads to uncertainties about the overall recovery in the second-biggest economy in the world.”
      “Dark clouds continue to pile up for investors, and the next batch of macro data is likely to be scrutinised by most to determine where risky assets may go soon.”
      Although the pound is weaker today, it’s in better shape than a year ago.Today is the first anniversary of sterling slumping to a record low against the US dollar, in the aftermath of the mini-budget.At one point a year ago, the pound fell below $1.04. It’s up around 17% since, at below $1.22 today.The Hollywood writers and actors strikes have hit sales at Videndum, the UK-based maker of hardware and software for the entertainment industry.Videndum has reported that revenues fell 24% in the first half of this year, while it made a loss of £50m, down from a £16.4m profit a year earlier.Videndum blamed ongoing macroeconomic headwinds, destocking by customers, and the US writers’ strike which began in early May.It told shareholders this morning:
      The Group is experiencing significantly more impact from the strikes in H2 2023 than anticipated at the time of its May Update. This is due to the prolonged writers’ strike, the additional impact of the actors’ strike, and the fact that there is less time for a recovery in the current year.
      Additionally, the macroeconomic environment remains challenging. We are not yet seeing recovery in the consumer or ICC segments, and retailers are increasingly concerned about interest rates and working capital, and we are therefore still seeing some destocking. This is resulting in worse-than-expected trading conditions.
      CEO Stephen Bird says management are focused on tightly managing costs and preserving cash, and adds that the company may need to raise fresh equity.Videndum’s shares have tumbled by almost a third this morning, to the lowest since early 2010.The company can trace its history back to 1909, when mechanical engineer William Vinten. began making Kinemacolor projectors for Charles Urban, who produced the world’s first successful motion picture colour system.There could be a “traumatic” end to September if a US shutdown can’t be averted, says Neil Wilson of Markets.com.He writes:
      Keep your eyes on Washington.
      If Republicans have not agreed a short-term funding deal to keep the US government from shutting down on September 30th, we could be in for a traumatic end of the month/quarter.
      A full, lengthy shutdown of the US government is “likely” at the end of the month, PIMCO said last week.
      Moody’s said a US government shutdown would likely have “an increasingly negative impact on the credit profile”. Are we seeing any of this in the bond market? I don’t know – maybe there is some risk premium being added, but also there is just a general impetus to push yields up – issuance + liquidity mismatch.
      UK online fashion retailer Asos has warned that earnings for the last financial year are likely to be at the bottom of expectations, after clothing sales were disrupted by bad weather this summer.Asos reported that revenues fell 10% in the year to 3 September, and predicted that EBIT (earnings before interest and tax) will come in around the bottom of the guided £40m to £60m range.José Antonio Ramos Calamonte, Asos’s chief executive officer, said:
      Across many of our markets (but most notably the UK), the hot weather drove a strong June and a wet July and August produced a weaker sales result.
      Calamonte also told shareholders that his turnaround plan was bearing fruit:
      We have reduced our stock balance by c.30%, significantly improved the core profitability of the business and generated cash against a very challenging market backdrop.
      Shares in ASOS are down 2% this morning.Chris Beauchamp, chief market analyst at IG Group, says:
      It’s another grim set of numbers on the sales front for ASOS, but the improvement in profitability does offer some hope for the future, suggesting that the actions taken over the last year have borne fruit to an extent.
      The poor summer weather hit performance, but these look to be a more solid set of numbers for this fallen titan.
      Water companies in England and Wales have been ordered to return £114m to customers through lower bills next year because progress on leakage and sewage spills has been “too slow”.In its annual water company performance report, the regulator Ofwat said the majority of water and wastewater companies were underperforming ontargets set for 2020 until 2025 to deliver better outcomes, for customers and the environment.Companies are judged against metrics including pollution incidents, customer service and leakage. This year, no company has been ranked in the “leading” category, and 10 companies are in the “average” category, while seven are “lagging” – Anglian Water, Dŵr Cymru, Southern Water, Thames Water, Yorkshire Water, Bristol Water and South East Water.More here.The pound has weakened to a new six-month low against the US dollar this morning.Sterling has extended its recent selloff, losing almost half a cent this morning to $1.2175, the lowest since mid-March.The US dollar is at a 10-month high against a basket of currencies, despite – or even because – of the deadlock in Washington DC.Ipek Ozkardeskaya, senior analyst at Swissquote Bank, explains:
      Even if it sounds funny, the dollar could profit from safe-haven inflows if the government shutdown drama doesn’t last long. During the last US government shutdown, in 2018 – which was, by the way the longest shutdown since 1970s – the US dollar gained against most major currencies.
      Of course, the longer a shutdown lasts, the bigger the impact would be on the economy, and potentially on the US’ credit rating. And the bigger the impact on the US growth and its credit worthiness, the more likely we see the US dollar get – at least a small – hit from another political gong show.
      For now, though, don’t pull all your eggs out of the US basket, because, the dollar could well strengthen despite the political shenanigans in the US, and the US stocks could see increased inflows, as well. The last time the US government was shut in 2018, the S&P500 rallied 13%.
      US governnment bond prices are coming under more pressure this morning, pushing up the yield (or interest rate) on Treasury bills to the highest since 2007.Yesterday was “another stormy day” in parts of the financial markets, reports Deutsche Bank strategist Jim Reid, with fresh milestones reached across several different asset classes.Reid told clients this morning;
      Just to give you a sense of what happened: the 10yr Treasury yields rose +10.0bps and closed comfortably above 4.5% for the first time since 2007; 10yr real yields were near 15yr highs; the 10yr bund yield traded above 2.8% for the first time since 2011; the VIX index of volatility flirted with its highest level since May intra-day; the US dollar index hit a YTD high; and European natural gas prices reached their highest level in almost 6 months.
      And if that weren’t enough, we remain days away from a potential US government shutdown, unless Congress can agree to pass funding beyond September 30. So a pretty tough backdrop for just about everything.
      The risk of a US government shutdown this weekend is one of several potential tail risks nagging away at investors, says Stephen Innes, managing partner at SPI Asset Management.Innes explains:
      Congress faces a critical deadline at the end of September, just days away. They must come to an agreement on government funding by this deadline. Failure to do so could result in the federal government’s partial or complete shutdown. But this has looked somewhat likely since the debt limit deal, given the thin House majority and a lack of consensus on spending levels. Other issues, like aid for Ukraine, funding for Justice Dept. investigations, or border security, could hinder progress, and the US sovereign downgrade could put an extra spotlight on the fiscal situation, adding to the risks.
      In contrast to the debt limit, where Congress reached a deal due to the severe potential economic repercussions of an impasse, a government shutdown is viewed as relatively more manageable from a macroeconomic standpoint. However, this very fact, the less severe economic impact of a shutdown, paradoxically increases the likelihood that Congress may fail to take timely action.
      Other tail risks include rising oil prices, and the ongoing US Hollywood actors’ strike, Innes adds.Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.The possibility of a US government shutdown is looming over global markets today, and threatening America’s triple-A credit rating.Overnight, credit rating agency Moody’s warned that dysfunction in Washington DC would reflect negatively on the country’s rating.Moody’s is the last of the Big Three credit who still gives the US a AAA rating with a stable outlook (the gold standard for credit worthiness).It warned:
      A shutdown would be credit negative for the US sovereign,”
      “In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability.”
      There are just a few days left for Capitol Hill to avert a shutdown, by passing a spending bill by 1 October. If that doesn’t happen, the federal government will be left without funding.That is expected to force hundreds of thousands of federal workers to go without pay and bring a halt to some crucial government services.Moody’s analyst William Foster told Reuters:
      “If there is not an effective fiscal policy response to try to offset those pressures … then the likelihood of that having an increasingly negative impact on the credit profile will be there.
      And that could lead to a negative outlook, potentially a downgrade at some point, if those pressures aren’t addressed.”
      But there is deadlock in Washington DC, where a group of rightwing Republican members of the House of Representatives are refusing to reach a compromise with their own party’s leadership over a spending bill.Moody’s predicts that a shutdown would probably be shortlived, and likely not to affect government debt service payments.But the row is focusing investors’ attention on US creditworthiness, at a time when the interest rates on sovereign bonds are rising on fears that interest rates will stay higher for longer than hoped.Kyle Rodda, senior financial market analyst at Capital.com, says:
      While what these agencies rate most government debt means diddly-squat, it does say something about the dysfunction in the US government….
      Moody’s warning is a reminder of the costs of an unstable Government.
      Just last month, Fitch downgraded the US government’s top credit rating, blaming the “steady deterioration in standards of governance”, following the row over lifting the US debt ceiling.Also coming up todayGatwick, the UK’s second largest airport, is expected to announce details of flights which are being cancelled this week due to a shortage of staff in air traffic control.Thousands of passengers flying to and from Gatwick this week are expected to suffer disruption, after it imposed an immediate cap on Monday of 800 flights taking off or landing a day.The airport said it would share the total of 164 cancellations proportionately between airlines until Sunday, with easyJet passengers most likely to be affected given the carrier operates just under half of all Gatwick flights.People travelling on Friday are most likely to be hit, with 865 flights scheduled to depart.The agenda
      8am BST: European Central Bank chief economist Philip Lane speaks at a conference “Monetary Policy Challenges for European Macroeconomies”.
      2pm BST: US house price index for July
      3pm BST: US consumer confidence for September More

    • 213 Shares189 Views

      in US Politics

      Strikes aren’t bad for the US economy. They’re the best thing that could happen | Robert Reich

      by

      America is in the midst of the biggest surge in labor activity in a quarter-century.The United Auto Workers (UAW), the Writers Guild of America, the actors’ union known as Sag-Aftra, Starbucks workers, Amazon workers, the Teamsters and UPS, flight attendants. The list goes on.More than 4.1m workdays were lost to stoppages last month, according to the labor department. That’s the most since 2000. And this was before the UAW struck the big three.Some worry about the effect of all this labor activism on the US economy, and view organized labor as a “special interest” demanding more than it deserves.Rubbish. Labor activism is good for the economy in the long run. And organized labor isn’t a special interest. It’s the leading edge of the American workforce.What accounts for this extraordinary moment of labor activity?Not that workers enjoy striking. Even where unions have funds to help striking workers offset lost wages, they rarely make up even half of what’s forgone. Large corporations whose operations are hobbled by strikes often lay off other workers, as the big three and their suppliers are now threatening to do.The reason workers go on strike is their expectation that the longer-term gains will be worth the sacrifices.Today’s labor market continues to be tight, despite efforts by the Fed to slow the economy and make it harder for workers to get raises. So employers (like UPS) are more inclined to give ground to avoid a prolonged strike.But something far more basic is going on here. As I travel around the country, I hear from average working people an anger and bitterness I haven’t heard for decades. It centers on several things.The first is that wages have barely increased while corporate profits are in the stratosphere.Average weekly non-supervisory wages, a measure of blue-collar earnings, were higher in 1969 (adjusted for inflation) than they are now.The American dream of upward mobility has turned into a nightmare of falling behind. Whereas 90% of American adults born in the early 1940s were earning more than their parents by the time they reached their prime earning years, this has steadily declined. Only half of adults born in the mid-1980s are now earning more than their parents by their prime earning years.Nearly one out of every five American workers is in a part-time job. Two-thirds are living paycheck to paycheck.Meanwhile, executive compensation has gone through the roof. In 1965, CEOs of America’s largest corporations were paid, on average, 20 times the pay of average workers. Today, the ratio is over 398 to 1.Not only has CEO pay exploded. So has the pay of top executives just below them. The share of corporate income devoted to compensating the five highest-paid executives of large corporations ballooned from an average of 5% in 1993 to more than 15% today.Corporate apologists claim CEOs and other top executives are worth these staggering sums because their corporations have performed so well. They compare star CEOs to star baseball players or movie stars.But most CEOs have simply ridden the stock market wave. Even if a company’s CEO had done nothing but play online solitaire, the company’s stock price would have soared.Stock buybacks have also soared – a huge subsidy to investors that further tips the scales against working people. The richest 1% of Americans owns about half the value of all shares of stock. The richest 10%, over 90%.Why don’t corporations devote more of their income to research and development, or to higher wages and benefits for average workers? In a word, greed.Small wonder that unions are more popular than they’ve been in a generation. A Gallup poll published in August found that 67% of Americans approve of unions, the fifth straight year such support has exceeded the long-term polling average of 62%.Joe Biden has pitched himself as the most pro-union president in recent history. More surprisingly, Republican politicians are trying to curry favor with union workers as well. Both parties know that much of the working class is up for grabs in 2024.American workers still have little to no countervailing power relative to large American corporations. Unionized workers now comprise only 6% of private-sector workforce – down from over a third in the 1960s.Which is why the activism of the UAW, the Writers Guild, Sag-Aftra, the Teamsters, flight attendants, Amazon warehouse workers and Starbucks workers is so important.In a very real sense, these workers are representing all American workers. If they win, they’ll energize other workers, even those who are not unionized. They’ll mobilize some to form or join unions.They’ll push non-union employers to raise wages and benefits out of a fear of becoming unionized if they don’t. They’ll galvanize other workers to stage wildcat strikes for better pay and working conditions.For far too long, America’s top executives, Wall Street traders and biggest investors have siphoned off almost all the economic gains. This is unsustainable, economically and politically.It’s not economically sustainable because the only way businesses can sell the goods and services American workers produce is if workers have enough money to buy them. If most gains continue to go to the top, the economy will become ever more susceptible to downdrafts and crashes.Today’s mainstream media emphasize the feared negative effects of the current wave of strike on the US economy, forgetting that the wave of strikes in the 1930s, 1940s, and 1950s helped create the largest middle class the world had ever seen – the key to America’s postwar prosperity.Stagnant wages and widening inequality are politically unsustainable because they foster anger and bitterness that’s easily channeled by demagogic politicians (re: Donald Trump and his enablers in the Republican party) into bigotry, paranoia, xenophobia and authoritarianism.The current wave of strikes isn’t bad for America. It’s good for America.Labor is not a “special interest”. It is, in a real sense, all of us.
      Robert Reich, a former US secretary of labor, is a professor of public policy at the University of California, Berkeley, and the author of Saving Capitalism: For the Many, Not the Few and The Common Good. His newest book, The System: Who Rigged It, How We Fix It, is out now. He is a Guardian US columnist. His newsletter is at robertreich.substack.com More

    • 138 Shares119 Views

      in US Politics

      Does Wile E Coyote explain US voters’ gloom amid buoyant economy?

      by

      Strolling past the colorfully restored Victorian homes of the Fourth Ward, watching the barman hand-carve blocks of ice for old fashioneds at the jam-packed bar of The Crunkleton, it’s easy to fall for Charlotte’s ample southern charms. And yet, people are not happy – at least according to the polls.Consumer sentiment in North Carolina is now lower than it was at the height of the pandemic, according to High Point University’s confidence tracker. “People are just not feeling particularly good,” said Martin Kifer, director of the university’s survey research center.North Carolina is not alone. Official figures suggest the US pulled off an astonishing recovery from the Covid pandemic and recession.More than 20 million people in the US lost their jobs in April 2020 as the coronavirus pandemic shuttered the world’s largest economy. The unemployment rate rose to 14.7%. But the rebound was just as dramatic. Unemployment has hovered near 50-year lows since January 2022 and is now 3.8%. In North Carolina, it’s just 3.3%. More than 100 people are moving to the city every day.But as an exclusive Guardian/Harris Poll survey found this week, two-thirds (68%) of Americans report it’s difficult to be happy about positive economic news when they feel financially squeezed each month.Across the country, poll after poll shows people are not feeling it. That’s not good news for the Biden administration, particularly in a potential swing state where the perceived success – or failure – of “Bidenomics”, as Biden has dubbed his economic strategy, will be one of the key issues in next year’s election.The election is still a way out, and Biden has proven pollsters wrong in the past. Nevertheless, the economy – or voters’ perception of it – will be a defining issue in one of the most consequential elections in US history.Americans are deeply divided on the economy. The Harris poll shows over half (53%) of Americans believe the economy is getting worse. Some 72% of Republicans share that view compared with 32% of Democrats. But the unhappiness runs deep on both sides. Only a third of Democrats believe that the economy is getting better.Even when Americans say they are doing OK financially, they believe the economy is in trouble. According to the Federal Reserve’s annual survey of economic wellbeing, 73% of households said that they were “at least doing OK financially” at the end of 2022. In 2019, that figure was 75% of households. But back then, 50% said the national economy was good or excellent. By 2022, that number had fallen to just 18%.Some heavyweight voices share the gloom. Both the former Treasury secretary Larry Summers and Bill Dudley, former president of the Federal Reserve Bank of New York, have speculated that having shot out of the pandemic like a coyote chasing a roadrunner, the US may be in a “Wile E Coyote” economy and, like Warner Brother’s cartoon canine, the US economy may be heading off a cliff. “Falling back to earth will not be a pleasant experience,” Dudley has warned.Partisanship explains much of the seeming disconnect between economic data and sentiment. But not all of it. Large forces are reshaping the US economy and may explain the nation’s vertigo.Many low-wage workers, have been living with that fear of falling for a long time.Ieisha Franceis’s wages have shot up from $12.50 to $17 since the Durham, North Carolina, resident made the shift from working in fast food to a job at a senior living facility. Wages are – finally – running ahead of inflation overall but for Franceis, “everything looks the same. Inflation’s not gone down, it’s just not going up,” she said. “These days $17 an hour is looking a lot like $12.50,” said the low-wage activist.Franceis used to buy her family’s side dishes, boxes of macaroni and cheese, mashed potato, at Dollar General. The Kraft Macaroni and Cheese (“the good stuff”) has gone. “Now they only carry a cheaper brand with the powdered cheese.” At the average grocery store, that Kraft Mac and Cheese is over $2.“The Dollar Tree went from everything being $1 to everything being $1.25. Now they even have a $5 section and a $10 section. Huh? This was a dollar store,” she said. “Bidenomics” means little to Franceis. “What we need is higher wages and more unions,” she said.Even entrepreneurs are finding the new, post-Covid economy taxing.Cocktail queen Tamu Curtis saw her business boom during lockdown. A Los Angeles transplant, she started giving cocktail classes online and saved enough to open her bricks-and-mortar shop. The Cocktailery – nestled between an Anthropologie and Warby Parker inside an old streetcar station – opened in September 2021 when the vaccines started rolling out. “I thought, OK everybody is going to run and get the vaccines. We are saved! Of course, it didn’t work out that way,” she said ruefully. “That was a plot twist.”Up and running now for over a year, business has been strange. “This has been the craziest summer. It’s so slow,” she said.Retail sales have collapsed but classes have boomed. “People will spend money on experiences. On travel. We spent two years filling our houses with stuff. Maybe we just don’t need that any more.”On top of that, she said, “inflation is killing me.” An order of cocktail bitters that used to cost her $700 shot up to $1,500. “There’s only so much you can pass on. I can’t sell a bitter for $42. There’s a max people will pay.”At the same time, rent is high and financing is getting tougher as interest rates rise. “It’s difficult,” she said. And more so for a minority, woman-owned business. She hasn’t been able to get a traditional bank loan yet or a line of credit from her bank, Charlotte-based Bank of America. “Now the banks aren’t lending the way they were.”Post-Covid has been an easier ride for other local business people but still, existential questions remain, ones that may point to a wider national malaise.Desmond Wiggan and his partner Aubrey Yeboah launched their business, BatteryXchange, in 2019, just before the pandemic. The company sets up battery charging stations for mobile devices and the idea had originally been to target people at conferences or out on the town. “Suddenly there were no people,” said Wiggan.BatteryXChange retooled and now rents its equipment to healthcare providers and others who use the service to help keep their customers online. It worked and business is booming, as is Wiggan’s profile. He has just returned from a business symposium on swanky Martha’s Vineyard. A copy of Propel, a local Black business magazine, sits on his office table. Wiggan’s headshot is above a message from Michelle Obama: “Success isn’t about how much money you make, it’s about the difference you make.”But Wiggan has some wider concerns. He spent two years living in China and has seen firsthand that other countries think on a longer timescale. Back in the US, he said, it’s all about the next election cycle. On top of that another likely hot election issue worries him. “The age gap of our leaders. They are old. The torch has got to be passed.“These other countries are starting to sniff us out,” he said. Foreign students were getting their education in the US then going home because they see their country looking to the future, he said. “They are thinking 2060 not every four, eight years when we go back and forth.”****Why people feel so bad about an economy that – technically – appears strong is a question that is vexing not just the White House but Nobel economic laureates. Historians will have a better answer. For now, the reasons look manifold.As HPU’s Kifer points out “the perception of the economy is not the economy.” The disconnect between the official figures and how people feel may be temporary. Nor is it unusual for the hangover of a recession to outlast what looks like the beginning of a recovery. High Point’s own consumer confidence index started in 2010, two years after the peak of the 2008/2009 recession. It wasn’t until September 2011 that confidence started rising.The US’s pandemic recession began in February 2020 and ended two months later, making it the shortest recession on record. The body blow it dealt to confidence is, however, proving hard to shift. And things are different this time. For one, there is relatively high inflation – something never directly experienced by Americans under 40. Slowing increases have done little to calm people’s nerves and most people in North Carolina expect inflation to get worse next year, according to another HPU poll.The mood of economic despondency is fueled by other fires, too, illustrated by life in North Carolina and felt across the country.Politics plays a huge role. The University of Michigan’s national consumer confidence index shows Republican confidence soared under Trump and dropped under Biden while Democrats’ did the opposite.But it’s not the only factor. While people may not have lost their jobs, America’s middle class has lost $2tn in wealth since 2020 thanks to inflation and the fastest increase in interest rates since the 1980s, according to data compiled by economists at the University of California, Berkeley.That fall comes after outsized gains from stimulus cheques, rising house prices and other assets for those who rode out the pandemic with little financial cost. Still, the psychological pain of losing is about twice the pleasure of winning, according to Nobel-winning psychologist and economist Daniel Kahneman. Losses loom larger than gains.Then there are the epochal issues of our day – ones that will spread far beyond North Carolina and the Biden presidency.North Carolina has been voted the best state for business for two consecutive years and business is still good. But there are signs of a slowdown. According to the Charlotte Regional Business Alliance, the Charlotte area expects businesses to invest $2.3bn in the region this year and create 7,200 jobs. That’s down from $8bn in investment and 20,000 jobs last year.Uncertainty is a large part of that drop, said Danny Chavez, chief business recruitment officer of the Charlotte Regional Business Alliance. Concerns about the direction of interest rates and political change are part of it – businesses waiting to see what happens next year, a natural part of the cycle. There is also something more.The number of jobs created per investment is also decreasing as tech takes jobs. Financial services and manufacturing are extremely important to the region. They remain so, said Chavez. “But in terms of jobs, both those industries are highly vulnerable to automation and AI,” he said.While Charlotte is better positioned than most to ride out that change, Chavez said the region – and the rest of the US – is also increasingly competing with global players. India and China are challenging the US’s rank as the world’s largest economy.Biden’s economic plans are playing to the long term and America has proved resilient to big shocks before. The president also has a track record of beating expectations. If hiring stays steady and inflation keeps receding, maybe Americans will hear the good news soon. That may or may not happen before the 2024 election.But the polls may also reflect a wider anxiety about the existential challenges the US (and other economies) face. Perhaps those challenges explain some of the national mood. It’s hard to measure existential dread.Longer term, neither Bidenomics – nor Trumponomics – are likely to fix America’s broken healthcare and childcare systems or the climate crisis. Nor do they offer clear solutions to the global trade winds that threaten American exceptionalism or the challenges presented by AI and automation.Little wonder then that so many in the US feel like Wile E Coyote, running off the cliff, treading air, waiting for the fall. More

    • 175 Shares169 Views

      in US Politics

      ‘We build those cars’: US workers on Ford picket line demand a fair share

      by

      Under blue skies in Wayne, Michigan, a half-hour outside Detroit, the mood was festive but defiant as hundreds of autoworkers settled in for the first weekend of picketing at the entrances to Ford’s Michigan Assembly Plant.Ford’s workers were among the first to go out in a series of targeted strikes that marked the beginning of the largest industrial action taken by US car workers in over a decade.A chorus of horns blared in support from Michigan Avenue, a busy highway running through the nation’s automotive heartland. Strikers turned away semi-truck after semi-truck trying to deliver parts to the plant, which produces the Ranger and Bronco. “Hell no, you’re not coming in here, keep it moving,” a worker yelled.The United Auto Workers (UAW) president, Shawn Fain, called the strike after failing to reach new union contracts with Ford, General Motors and Stellantis before a midnight Thursday deadline.The strikers’ message: they’re no longer accepting the automakers’ “corporate greed”. They point to the companies’ record profits in recent years and huge stock buyback programs that are enacted as workers struggle to make ends meet.Ford’s CEO, Jim Farley, briefly stopped by to meet with picketers. Several workers near retirement weren’t particularly impressed by the gesture. He made $29m a year, they noted, while hourly workers were “fighting to get money to survive after we leave here”, said plant worker Stu Jackson. “How many years do we even have left to live after we retire? Ten years?” asked Jackson, who highlighted the toll factory work exacts on workers’ bodies and health.“Did you see Farley in his tailored European suit? Wasn’t he sharp?” Jackson asked. “He looks like the $29m man. Those nice shoes.“And look at us,” Jackson added with indignation, motioning to the small group dressed in jeans, T-shirts and sweatpants. “This isn’t fair.”As Fain has pointed out repeatedly, CEO pay has soared as the car companies have recovered from the 2008/2009 financial crisis. Pay for the big three companies’ bosses jumped by 40% between 2013 and 2022. The GM boss, Mary Barra, took home $29m in 2022. Meanwhile, auto manufacturing workers have seen their average real hourly earnings fall 19.3% since 2008, according to the Economics Policy Institute.Domonique Hicks, a young mother of three who lives in Detroit, said the $16.67-an-hour wage she received was not feeding her children.“We’re here to take back what Ford took from us,” Hicks said. “They didn’t want to bargain with us so we’re making a statement – if you can make millions and billions, then we deserve something. We build those cars.” The strike will go on for as long as Ford “wants to keep their checkbook in their pocket”, she added.Among other issues, the union is calling for a 40%-plus pay increase, an end to two-tier wage systems in which new hires are paid significantly less for doing the same work and the restoration of benefits cut to help save the car companies after the 2008/2009 recession drove them to bankruptcy.Auto executives expressed frustration as the strike entered its first weekend. A Ford spokesman called the UAW’s terms “unsustainable”. “I’m extremely frustrated and disappointed. We don’t need to be in a strike right now,” Barra told CNBC on Friday.The White House is watching developments closely. On Friday Joe Biden said his team was engaged in trying to find a resolution and called on the car companies to “go further” in their negotiations with striking workers.“The companies have made some significant offers. But I believe that should go further to ensure record corporate profits mean record contracts,” he said. “Record corporate profits, which they have, should be shared by record contracts for the UAW,” Biden reiterated.Hicks said she had a message for those who oppose the strike, or worry about how it will affect the economy. “People are hurting. You’re talking about shutting down the economy? [The auto companies] are shutting down the economy because they aren’t putting money back into it, so we’re here to get it.“How am I supposed to feed my kids?” Hicks asked. “We’re just trying to live and support our family.”Even with a wage of about $24 an hour after starting at $16 nearly four years ago, plant worker Amanda Robinson says she can barely afford the payments on her car and there’s not much left after bills at the end of the month to raise her three-year-old son.Working in the plant is not an “easy walk in the park, sit at a desk” job, she said. It was grueling and took a physical toll, Robinson added, and they deserved better wages.“We’re showing them that we’re not playing,” she said. “We’re willing to do whatever it takes. Everybody is standing behind us.” More

    • 163 Shares169 Views

      in US Politics

      UAW strike: Joe Biden calls for resolution but understands workers’ frustrations – video

      by

      The US president said on Friday that no one wanted the United Auto Workers’ union to strike in its labour dispute with the big three US carmakers – but workers should get a share of the profits those companies are making.

      Biden told reporters at the White House that he understood the workers’ frustration, adding: ‘Record corporate profits … should be shared by record contracts for the UAW’ More

    • 138 Shares199 Views

      in US Politics

      US economy going strong under Biden – Americans don’t believe it

      by

      Americans do not trust the government’s economic news – or the media’s reporting of it – according to a Harris poll conducted exclusively for the Guardian that presents the White House with a major hurdle as it pushes Biden’s economic record ahead of next year’s election.The US has roared back from the Covid recession by official measures. But two-thirds of Americans are unhappy about the economy despite consistent reports that inflation is easing and unemployment is close to a 50-year low. And the poll suggests many are unaware of or don’t believe the positive economic news the government has reported.The results illustrate a dramatic political split on economic views – with Republicans far more pessimistic than Democrats. But unhappiness about the economy is widespread.
      Two-thirds of respondents (68%) reported it’s difficult to be happy about positive economic news when they feel financially squeezed each month (Republicans: 69%, Democrats: 68%).
      Two-thirds of Americans (65%) believe that the economy is worse than the media makes it out to be rather than better (35%).
      In August the unemployment rate was 3.8%, close to a 50-year low. But the poll found that 51% wrongly believe that unemployment is nearing a 50-year high rather than those who believe it’s actually low (49%).
      The lack of confidence in the economy has many academics and politicians puzzled. Some have blamed the US’s polarized politics and this was illustrated in the poll. But Harris’s data also shows that fears are widespread – and reinforced by disbelief of or ignorance about official figures and a mistrust of the media’s reporting of them.Some 82% of Republicans and 66% of independents believe the economy is worse than the media’s portrayal. But nearly half of Democrats (49%) also said the media viewed the economy too favorably.Overall, the poll found widespread despondency about the state of the economy. More than half of Americans (53%) believe the economy is getting worse instead of better or staying the same. Republicans and independents are more likely to think it’s getting worse (72% and 58%, respectively, v Democrats: 32%), while more Democrats think it’s getting better (32% v Republicans: 8%, independents: 13%).The results paint a difficult picture for Joe Biden, who is making “Bidenomics” – his economic policy record – a central plank of his re-election platform.The views of those familiar with Bidenomics showed a perhaps unsurprising party split. Some 60% of Democrats believe his plans are improving the US economy overall compared with 12% of Republicans.There is a widespread belief that Bidenomics is good in theory but isn’t being implemented well – something both Democrats and Republicans agree with (62% v 58%).Biden supporters have just launched a $13m advertising campaign extolling the president’s economic achievements, which include a landmark $1.2tn infrastructure and climate bill, massive investment in domestic microchips production and green energy solutions. His legislative actions are predicted to create 1.5m jobs per year for the next decade.That message may be hard to sell given the widespread disbelief of and ignorance about the health of the US economy highlighted by the poll.As well as being wrong about the unemployment data, respondents were unaware of, or chose to mischaracterize, other major economic data points.skip past newsletter promotionafter newsletter promotionThe widest measure of economic growth – gross domestic product – increased at a 2.1% annualized rate last quarter and has been steadily improving since the Covid downturn. But more respondents (59%) believe that the US economy is shrinking this year than those who believe it is growing (41%). More Republicans (72%) and independents (63%) believe the economy is shrinking than do Democrats. But still, a sizeable 44% of Democrats believe the economy is shrinking.The S&P 500 stock market index is up 16% so far this year. But 59% of respondents wrongly said they believe the S&P is down for the year compared with those who said they believe it is up (41%). The majority of all those asked said the S&P was down whether Republican (66%), independent (60%) or Democrat (52%).US wages are, finally, growing faster than inflation. But 75% of those polled wrongfully believe that wages aren’t keeping up with inflation. That view is held by the majority of Republicans (84%), independents (75%) and Democrats (67%).There was some good news for Biden. The poll found that 75% of respondents support at least one of the four main branches of Bidenomics: improving infrastructure, attracting high-tech electronics manufacturing, building clean energy manufacturing facilities and attracting more high-paying union jobs.Still, 51% of Americans believe that government spending under the current administration is having a negative impact on the US economy (Republicans: 72%, independents: 54%, Democrats: 30%) rather than a positive impact (21%) or no impact (28%). And only just over a third of Democrats (35%) believe it’s having a positive impact (Republicans: 11%, independents: 16%).“All these perceptual-reality gaps underscore Biden’s difficulty in claiming credit for economic gains. Americans either view the economy through their politics or aren’t feeling it in real life, or both,” said John Gerzema, the CEO of Harris Poll.
      This survey was conducted online within the US by the Harris Poll from 1 to 3 September among a nationally representative sample of 2,055 US adults, where 1,063 were familiar with Bidenomics. More

    • 138 Shares149 Views

      in US Politics

      Auto workers strike after contract talks with US car giants fail

      by

      Auto workers have launched a series of strikes after their union failed to reach agreement with the US’s three largest manufacturers over a new contract, kicking off the most ambitious industrial labor action in decades.The deadline for talks between Ford, General Motors, Stellantis and the United Auto Workers (UAW) expired at midnight on Thursday, with the sides still far apart on the union’s new contract priorities.The strike – which marks the first time all three of the Detroit Three carmakers have been targeted by strikes at the same time – is being coordinated by UAW president Shawn Fain. He said he intended to launch a series of limited and targeted “standup” strikes to shut individual auto plants around the US.The strikes kicked off at midnight at a General Motors plant in Wentzville, Missouri, a Stellantis plant in Toledo, Ohio, and a Ford assembly plant in Wayne, Michigan.They involve a combined 12,700 workers at the plants, which are critical to the production of some of the Detroit Three’s most profitable vehicles including the Ford Bronco, Jeep Wrangler and Chevrolet Colorado pickup truck.“This is our defining moment,” said Fain during a livestream on Thursday night, less than two hours before the strike was set to begin.Fain said he would join the picket line at the Wayne plant when the action began at midnight and did not rule out broadening the strikes beyond the initial three targets. “If we need to go all out, we will.”The UAW has a $825m strike fund that is set to compensate workers $500 a week while out on strike and could support all of its members for about three months. Staggering the strikes rather than having all 150,000 members walk out at once will allow the union to stretch those resources.A limited strike could also reduce the potential economic damage economists and politicians fear would result from a widespread, lengthy shutdown of Detroit Three operations.Stellantis has more than 90 days worth of Jeeps in stock, and has been building SUVs and trucks on overtime, according to Cox Automotive data.But a week-long shutdown at Stellantis’ Jeep plant in Toledo could cut revenue by more than $380 million, based on data from the company’s financial reports.“If the negotiations don’t go in a direction that Fain thinks is positive, we can fully expect a larger strike coming in a week or two,” said Sam Fiorani, a production forecaster at Auto Forecast Solutions.He estimated the limited action would stop production of about 24,000 vehicles a week.Among the union’s demands are a 40% pay increase, an end to tiers, where some workers are paid at lower wage scales than others, and the restoration of concessions from previous contracts such as medical benefits for retirees, more paid time off and rights for workers affected by plant closures.Workers have cited past concessions and the big three’s immense profits in arguing in favor of their demands. The automakers’ profits jumped 92% from 2013 to 2022, totaling $250bn. During this same time period, chief executive pay increased 40%, and nearly $66bn was paid out in stock dividends or stock buybacks to shareholders.The industry is also set to receive record taxpayer incentives for transitioning to electric vehicles.Despite these financial performances, hourly wages for workers have fallen 19.3%, with inflation taken into account, since 2008.The Biden administration is reportedly considering emergency aid for smaller supply firms to the automaker manufacturers due to the strike, and president Biden spoke to Fain on the status of negotiations on Thursday.Ford said in a statement the UAW’s latest proposals would double its US labor costs. A walkout could mean that UAW profit-sharing checks for this year will be “decimated,” the company said.GM and Stellantis declined to comment ahead of the midnight strike deadline.However in an earlier video GM’s top manufacturing executive Gerald Johnson said that the UAW’s wage and benefits proposals would cost the automaker $100 billion, “more than twice the value of all of General Motors and absolutely impossible to absorb.” He did not detail how the union proposals would result in that cost, or over what time frame.And in an appearance on CNBC on Thursday evening, Ford CEO Jim Farley also criticized the union, claiming, “there’s no way we can be sustainable as a company,” if they met the union’s wage demands.GM CEO Mary Barra also said in a letter to employees about the status of negotiations and the company’s latest offer to the union, “Remember: we had a strike in 2019 and nobody won.”The contract fight has garnered significant support from the public and US labor movement. Drivers represented by the Teamsters have pledged not to cross the picket line, halting deliveries of vehicles from the automakers throughout the strike. Several labor unions, environmental, racial and social justice groups have publicly announced support for the UAW in their fight for new contracts. More