Economics

Key Points

• Commerce Department indexes that the Fed relies on heavily for inflation signals showed prices continuing to climb at a rate still considerably higher than the 2% annual goal.
• The stubborn inflation data raised several ominous specters, namely that the Fed may have to keep rates elevated for longer or even have to hike at some point.
• Thus far, the economy has managed to avoid broader damage from the inflation problem, though there are some notable cracks.

A decade ago, someone knocking on your door to sell you solar panels would have been selling you solar panels. Now, they are probably selling you a financial product—likely a lease or a loan. 

Mary Ann Jones, 83, didn’t realize this had happened to her until she received a call last year from GoodLeap, a financial technology company, saying she owed $52,564.28 for a solar panel loan that expires when she’s 106, and costs more than she originally paid for her house. 

In 2022, she says, a door-to-door salesman from the company Solgen Construction showed up at her house on the outskirts of Fresno, Calif., pushing what he claimed was a government program affiliated with her utility to get her free solar panels. At one point, he had her touch his tablet device, she says, but he never said she was signing a contract with Solgen or a loan document with GoodLeap. Unbeknownst to Jones, the salesman used "[email protected]" as her purported email address—that of course, was not her email address. She’s on a fixed income of $960 a month, and cannot afford the loan she says she was tricked into signing up for; she’s now fighting both Solgen and Goodleap in court. 

Her case is not uncommon. Solar customers across the country say that salespeople obscure the specific terms of the financial agreements and cloud the value of the products they peddle. Related court cases are starting to pile up. “I have been practicing consumer law for over a decade, and I’ve never seen anything like what we are seeing in the solar industry right now,” says Kristin Kemnitzer, who represents Jones and says her firm gets “multiple” calls every week from potential clients with similar stories.

Inflation showed little signs of letting up in March, with a key barometer the Federal Reserve watches closely showing that price pressures remain elevated.

The personal consumption expenditures price index excluding food and energy increased 2.8% from a year ago in March, the same as in February, the Commerce Department reported Friday. That was above the 2.7% estimate from the Dow Jones consensus.

Including food and energy, the all-items PCE price gauge increased 2.7%, compared to the 2.6% estimate.

On a monthly basis, both measures increased 0.3%, as expected and equaling the increase from February.

Markets showed little reaction to the data, with Wall Street poised to open higher. Treasury yields fell, with the benchmark 10-year note at 4.67%, down about 0.4 percentage point on the session. Futures traders grew slightly more optimistic about two potential rate cuts this year, raising the probability to 44%, according to the CME Group’s FedWatch gauge.

Boeing reported a slightly smaller loss in the first quarter compared to the same time a year ago, but said fixing the problems that got attention after the Alaska Air incident will push back its financial recovery and cost it $443 million in compensation to its airline customers.

Boeing reported a core operating loss of $388 million, or $1.13 a share, from the $440 million it lost on that basis a year earlier. That was significantly less than analysts’ forecast of $1.63 a share in the quarter. But the improvement came from outside its key commercial airplanes unit, where losses from operations nearly doubled to $1.1 billion.

Revenue tumbled $1.4 billion, or 8% to $16.6 billion, as the problems at the airplane maker resulted in a sharp drop in deliveries of jets to its airline customers. The company gets most of its money from sales of commercial planes only upon deliveries to customers.

The slightly better than expected financial results don’t make up for a company struggling with questions from Congress, regulators and the traveling public about the quality and safety of its aircraft. It is not only scrambling to repair its badly damaged reputation but also to satisfy airline customers being hurt by not receiving the aircraft they had been promised. Boeing said it is taking the necessary steps to fix the quality issues. But those fixes will continue to cause additional losses and missed delivery targets in the months ahead.

KEY POINTS

• Starbucks and the Workers United union will resume bargaining, ending a long stalemate.
• In February, the two sides said they found a “constructive path forward,” marking a major strategic pivot for the coffee giant.
• Labor laws do not require that the employer and union reach a collective bargaining agreement, only that both bargain in good faith.

Starbucks and the union that represents its baristas will resume contract negotiations on Wednesday, ending an extended stalemate.

The two sides’ return to the bargaining table follows their February announcement that they found a “constructive path forward” during mediation discussions related to litigation over the union’s use of Starbucks’ branding. It marked a major pivot for Starbucks, which had spent the previous two years battling Workers United and the broader movement to unionize its cafes.

Roughly 500 company-owned Starbucks in the U.S. have voted to unionize under Workers United since the first elections in December 2021, according to a tally from the National Labor Relations Board, as of Monday. But none of those locations, which make up a small fraction of total U.S. footprint, have come close to a collective bargaining agreement.

Amazon's grown so large that it's causing price inflation online, writes Wall Street Journal reporter Dana Mattioli in "The Everything War," out Tuesday.

Why it matters: The book chronicles the Seattle company's rise from scrappy underdog to a massive conglomerate — and suggests that it has hurt other businesses and consumers.

The big picture: The book echoes the allegations in the antitrust lawsuit the Federal Trade Commission filed against the retail giant last year, and offers an inside look at how that price inflation happens. (Amazon disputes the portrayal.)

Flashback: For a long time, Amazon was a source of disinflation, a place where you could get the lowest prices around, per the book. 

• For years, the company undercut the competition to build market share — it didn't need to make money in its retail business thanks to the steady stream of profits coming from its cloud computing arm.
• FTC commissioner Lina Khan criticized this strategy as "predatory pricing," in a now-famous paper she wrote when she was a student at Yale Law School.

Once it achieved scale — Amazon now makes up about 40% of all online retail — the company started raising prices on the products it sells directly. 

• It also started charging the businesses that sell products on the site's marketplace "monopoly rent," says Mattioli, who spoke to Axios ahead of the book's publication.

Nurtured by Washington, multinationals and universities, the small Central American country is on its way to becoming a hub for integrated circuits

In April 2014, news agencies reported this piece of breaking news from the multinational technology giant Intel: “Chipmaker Intel is closing its assembly and test operation in Costa Rica and eliminating 1,500 jobs (...) It will move its operations from its site in Heredia, where it has been present since 1997, to existing sites in China, Malaysia and Vietnam.” Intel’s operations in the Central American country would subsequently be confined to global services and research and development. But 10 years later, the situation has gone into reverse mode, something not even Intel itself could have predicted.

All efforts are now focused on making Costa Rica a semiconductor industry ecosystem that will attract investment and train young people in technology. This may help mitigate the U.S. government’s current concerns over its enormous dependency on Asian countries for the production of integrated circuits that are essential to digital devices and connectivity; a reliance that Washington believes threatens its national security.

As trade wars between the U.S. and China got underway, not to mention the effects of the pandemic on digitalization and global logistics chains, Costa Rica saw Intel’s manufacturing plant reopen in 2021, an initial sign that the wind was about to change. Now, the development of semiconductors on Costa Rican soil is nurtured by promises of investment and ambitions that go beyond Intel.

• Express filed for Chapter 11 bankruptcy as an investor group led by brand management firm WHP Global looks to acquire most of its assets.
• The longtime mall retailer has failed to stay on trend and keep up with shifting consumer demand, which has led sales to plummet in recent years.
• Express, whose portfolio includes its namesake banner, UpWest and Bonobos, said operations will continue as normal but 95 Express stores and all UpWest stores will close.

The reclining armchairs and plush leather sofas coming off the production line at Man Wah Furniture's factory in Monterrey are 100% "Made in Mexico".

They're destined for large retailers in the US, like Costco and Walmart. But the company is from China, its Mexican manufacturing plant built with Chinese capital.

The triangular relationship between the US, China and Mexico is behind the buzzword in Mexican business: nearshoring.

Man Wah is one of scores of Chinese companies to relocate to industrial parks in northern Mexico in recent years, to bring production closer to the US market. As well as saving on shipping, their final product is considered completely Mexican - meaning Chinese firms can avoid the US tariffs and sanctions imposed on Chinese goods amid the continuing trade war between the two countries.

As the company's general manager, Yu Ken Wei, shows me around its vast site, he says the move to Mexico has made economic and logistical sense.

This idea has been kicking around in my head for a while, and I'm hoping some Lemmy geniuses can poke holes/ flesh it out with me.

Every person I've ever heard of works for and gets paid by some form of company. So instead of the company paying the workers and then those workers getting taxed, why not just tax it all to the corporations to begin with? Instead of hundreds of millions of individuals to think about, the IRS (in US) could just focus on a few million companies.

We the people democratically decide what we think is needed for a functioning society, and charge it to the corporations.

I'd say each company should be responsible for paying the same percentage of the bill as percentage of total "profits" they made. Like, if Apple makes 10% of all the combined profits of all the companies this quarter, they are responsible for paying 10% of the bill. Highest paid employee can make 10x what the lowest paid employee (including contracted and foreign workers) makes; more than that gets included in the calculation as part of the company's "profits". (So that CEO can still get paid absurd amounts of money, but the company will still pay taxes on most of it)

What if we created some sort of secure opinion/voting app where people go to cast their vote on whatever people think needs to be voted on. Should there be UBI? Should it be a token, living, or thriving wage? (Personally, I'd go with thriving and tie it to inflation) Single payer healthcare? All education paid for? Stop funding genocide? No more polluting the planet, or at least force companies to pay to clean up their own messes? When and where are companies allowed to market to us? Where should the threshold of agreement be to enact changes, 40% 50%+1 60%? Etc etc

Then we elect people who agree to simply enact what the people democratically agree on... And if the people don't agree, they'll stay away from it or leave it to the states. And hopefully someday we could build it out so that state and local governments work this way too.

I think we get bogged down on the 2 or 3 things we disagree on and allow that to mean we never get the things we DO agree on. Let's get the things we agree on first, and then continue debating the things we disagree on.

Also I think this would be a long term plan. 12 years would give us 2 full election cycles here in the US and would give zoomers time to grow up, settle, and start to really vote (hopefully with this new system).

Anyway, like I said, let's poke holes and figure out solutions. Thanks

A key member of the Federal Reserve, the US central bank, has told the BBC that inflation is only coming down "very, very slowly" and "let's not be in a hurry" on interest rate cuts.

Raphael Bostic, the President of the Atlanta Federal Reserve, told BBC News that US interest rates will have to be kept at a "restrictive level" and might only ease "at the end of 2024".

Expectations of a delay to US interest rate cuts has sent reverberations around the world economy in recent weeks, impacting government borrowing costs, including in the UK.

At the beginning of the year, markets expected a series of rate cuts in the US and across Europe.

A competitive, green Europe will require trillions in investments. No one has a good answer on where that money will come from.

EU leaders are on a grandiloquent streak, even by their standards.

The EU can stay relevant in a world of resurgent big power politics. Europe won’t drown in the sea of public cash the U.S. and China are throwing at futuristic industries. We can muster military might and prevent climate catastrophe. We can grow a green economy.

One pledge you don’t hear? We’ll break the piggy bank to get there. That’s because EU leaders all know: The piggy bank’s already in smithereens.

On Thursday, the EU’s 27 leaders will build on these lofty goals in Brussels, proclaiming a new “deal” to keep Europe economically relevant, fight climate change and build clean energy and digital industries to rival China, the U.S. and India.

Lynsi Snyder is expanding the family-run California chain as far east as Tennessee. But as for the East Coast? “I’m probably saying never.”

In-N-Out isn’t your typical burger joint, and it insists expanding its footprint won’t change that.

For nearly eight decades, the West Coast restaurant chain has remained a private, family-owned company that has cultivated fiercely loyal customers and a quirky identity despite being located in just a handful of states. But recently it’s been on a growing spree that will soon extend as far east as Tennessee.

Since Lynsi Snyder took over as the California-based company’s president in 2010, its size has nearly doubled, from 230 stores in four states to 402 in eight. In-N-Out Burger is opening in Washington, its ninth state, with New Mexico and Tennessee to follow.

Snyder said she’s still cautious about expanding too far or too fast and remains focused on keeping prices lower than competitors’. Even before taking the reins, she said she “felt such an obligation to look out for our customer. When everyone else was taking these jumps, we weren’t.”

Asian shares skidded Tuesday following a slump on Wall Street after higher yields in the U.S. bond market cranked up pressure on stocks. 

The Shanghai Composite index lost 1.4% to 3,013.84 even though the Chinese government reported that the economy grew at a faster-than-forecast annual rate of 5.3% in the first quarter of the year. In quarterly terms it expanded at a 1.6% pace. 

The Hang Seng in Hong Kong lost 1.9% to 16,279.66. 

Tokyo’s Nikkei 225 fell 2.1% to 38,402.59 as the dollar continued to gain against the Japanese yen, hitting fresh 34-year highs. By midday the dollar was trading at 154.33 yen, up from 154.27 yen.

The euro slipped to $1.0613 from $1.0626.

On a scale not seen in decades, many Americans are stuck in homes they would rather leave.

Something deeply unusual has happened in the American housing market over the last two years, as mortgage rates have risen to around 7 percent.

Rates that high are not, by themselves, historically remarkable. The trouble is that the average American household with a mortgage is sitting on a fixed rate that’s a whopping three points lower.

The gap that has jumped open between these two lines has created a nationwide lock-in effect — paralyzing people in homes they may wish to leave — on a scale not seen in decades. For homeowners not looking to move anytime soon, the low rates they secured during the pandemic will benefit them for years to come. But for many others, those rates have become a complication, disrupting both household decisions and the housing market as a whole.

Indeed, according to new research from economists at the Federal Housing Finance Agency, this lock-in effect is responsible for about 1.3 million fewer home sales in America during the run-up in rates from the spring of 2022 through the end of 2023. That’s a startling number in a nation where around five million homes sell annually in more normal times — most of those to people who already own.

Non-paywall link

New quarterly figures from research IDC suggest a drop in iPhone shipments for the first three months of 2024.

Samsung has regained its position as the top mobile phone-maker globally, having been beaten by Apple late last year, according to new figures.

The latest quarterly data from research firm IDC said overall global smartphone shipments increased 7.8% on this time last year, but Apple shipments dropped by nearly 10%.

As a result, Samsung has regained the top phone-maker spot, with a market share of 20.8%, ahead of iPhone maker Apple, which is second on 17.3% – after the two firms had switched places in the final three months of 2023.

• More federal regulators are probing Morgan Stanley to find out how it vets wealthy clients, per The Wall Street Journal.
• The SEC sent the bank a list of clients with questions about how they were screened, per the report.
• One client includes a Russian-linked billionaire who was sanctioned by the UK, the Journal reported.

These are tough times for two big US dollar store chains. In the past month, Family Dollar said it will close nearly 1,000 stores and 99 Cents Only said it will go out of business.

Both companies said inflation and shoplifting have contributed to their troubles. While inflation has pressured the companies’ low-income customer base and shoplifting has squeezed their profits, those factors alone can’t explain their difficulties.

Years of strategic mistakes and underinvestment have plagued Family Dollar and 99 Cents Only, retail analysts say. Both brands were acquired by other companies and faltered under their new owners.

Tariff Man could be back in the White House next year – and he’s promising the sequel will be even bigger than the original.

Former President Donald Trump, who labeled himself “Tariff Man” in 2018, has made clear he wants to pursue a more aggressive trade strategy if he’s elected in November. Trump has floated a 10% across-the-board tariff on imports, a 60% tariff on imports from China and a 100% tariff on foreign cars – including from Mexico.

Trump’s proposals, if enacted, could easily set off a new trade war with China and potentially other nations, too.

Some economists are warning Trump’s trade agenda and the ensuing retaliation from trading partners would hurt the US economy by worsening inflation, killing jobs, depressing growth and spooking investors.

In a worst-case scenario, economists fear these policies could set the stage for a recession.

The central bank is expected to cut interest rates in June, but a rise in workers’ salaries could impact the pace and rate of cuts.

The European Central Bank is set to leave its key interest rate at a record-high 4 percent on Thursday, as concerns over wage growth temper the urge to give more support to the economy. 

At the Governing Council's last meeting in March, ECB President Christine Lagarde had indicated that the bank could start easing policy in June, and analysts say nothing material has happened to change that in the interim.

Headline inflation continued its downward drift in March, equaling a two-and-a-half** **year low of 2.4 percent, thanks largely to food and energy prices, but services price inflation — heavily influenced by local wage developments — remained stubbornly high at 4 percent. With survey data suggesting the economy has bottomed out in the near term, and with unemployment still near a record low, that all signals another month of wait-and-see.

Boeing has achieved the unthinkable this week: It managed to fall even deeper into crisis.

Adding to an already miserable start to 2024, Boeing stood accused Tuesday of routinely ignoring a whistleblower’s complaints about the allegedly critically flawed manufacturing process for its 787 Dreamliner planes. The whistleblower claimed Boeing retaliated against him and put him on the 777 unit as punishment. That’s when, he says, he found even more production problems.

Boeing strongly denies the claims and says it is confident in the safety of its aircraft. Still, the US Federal Aviation Administration (FAA) said it would investigate — adding to a growing list of federal probes into the beleaguered company, including a criminal investigation. And next week, a Senate subcommittee will hear testimony about the whistleblower’s case and will presumably air more of Boeing’s dirty laundry in public.

The NLRB general counsel has accused US’s largest corporations of creating distractions to cover their law-breaking

The US’s top labor lawyer has said her agency will not “succumb” to Amazon, Starbucks and SpaceX’s attempts to legally challenge the National Labor Relations Board and its ability to enforce federal labor law.

Jennifer Abruzzo, the NLRB general counsel, accused some of the US’s largest corporations of “jumping on the bandwagon” in mounting legal challenges to the labor watchdog, which has found itself at the center of the ongoing battle between the companies and a wave of unionizing efforts by workers.

Attorneys representing Elon Musk’s SpaceX, Amazon, Trader Joe’s and Starbucks have all argued in recent months that the NLRB is “unconstitutional” and has overstepped its authority.