Business

Retail sales fell in July, highlighting the rocky economic recovery.


Daily Business Briefing

Aug. 17, 2021, 9:11 a.m. ET

Aug. 17, 2021, 9:11 a.m. ET

Spending on cars, car parts, building materials, furniture and sporting goods declined in June despite an overall rise in sales.
Credit…Cristobal Herrera-Ulashkevich/EPA, via Shutterstock

Retail sales dropped in July, the Commerce Department reported Tuesday, showing signs that consumer spending was hampered amid an uneven economic recovery.

The 1.1 percent decline in sales last month, which followed an increase in spending in June, was bigger than the drop economists had expected and came as spending on homes and cars fell.

Sales of furniture, sporting goods and building materials declined. Sales of cars and auto parts were down 2 percent in July, as prices of used and new cars continued to climb amid a shortage.

July’s spending numbers also likely reflected dampened e-commerce sales, because Amazon’s Prime Day promotions that can drive online spending in the summer took place in June this year. Credit card spending data had declined 1.3 percent in July from June, a drop analysts at Bank of America last week attributed to a drop in online spending.

Sales at non-store retailers, which include e-commerce businesses, fell 3 percent in July, the Commerce Department said.

Sales are shifting month to month as the economy’s unsteady reopening continues. Also potentially weighing on spending, economists have said, is the end of pandemic-related unemployment benefits by about two dozen states.

The sales report on Tuesday came amid concerns that consumers are rethinking their return to in-person shopping and dining out as cities and states were forced to slow reopening plans. Still, sales of clothing and clothing accessories, as well as at restaurants and bars, were up about 3 percent — suggesting that the Delta variant’s impact has yet to be felt on spending.

A global shortage of computer chips has slowed down car and truck production in recent months, with companies like Ford, Daimler and BMW feeling the effects in their financial performance. The production of motor vehicles and parts declined percent in July, the Federal Reserve reported Tuesday. Excluding cars and car parts, retail sales fell 0.4 in July.

The shortage continues to weigh down the automotive industry despite the rise in consumer prices, which increased by 5.4 percent last month compared with a year earlier, the Labor Department’s Consumer Price Index showed last week.

A decline in sales could signal a slowdown in the broader economic recovery. Consumer sentiment tumbled more than 13 percent in early August from July, according to preliminary results from the University of Michigan’s consumer sentiment index.

Walmart said its total sales in the United States grew 5.3 percent, while U.S. e-commerce sales grew 6 percent in the quarter.
Credit…Brendan Mcdermid/Reuters

Walmart’s revenue and profit rose in the second quarter, as the giant retailer continued to expand its grocery and e-commerce business.

Walmart said on Tuesday that its total revenue rose 2.4 percent to $141 billion, while operating income was up 21 percent to $7.4 billion from a year earlier, both numbers higher than some analysts had expected. Walmart earned $1.52 on a per share basis in the quarter that ended July 31.

The company “had another strong quarter in every part of our business,” Walmart’s chief executive, Doug McMillon, said in a statement. In particular, he said, the retailer expanded its market share in grocery in the United States and increased its global advertising business.

Walmart is among the retailers that have emerged from the pandemic even stronger as it honed its ability to sell to customers both online and in its thousands of stores.

Walmart said its total sales in the United States grew 5.3 percent, while U.S. e-commerce sales grew 6 percent in the quarter. That online sales growth is modest compared to some of the double digit increases Walmart had reported in recent quarters, but analysts noted that Walmart’s e-commerce sales have more than doubled over the past two years.

Walmart said it was on track to generate a total of $75 billion in e-commerce sales this year.

Often seen as a bellwether for the broader economy, Walmart’s reported optimistic guidance for the remainder of the year despite signs of inflation and the resurgence of the coronavirus.

The company said it expected its U.S. sales to increase by 5 to 6 percent this year, which is similar to what the company estimated in May when the pandemic seemed to be abating.

Walmart also raised its profit expectations from its earlier estimate in May saying, it expects operating income to increase by 9 percent to 11.5 percent.

Gov. Andrew M. Cuomo, left, and Chris Cuomo, the CNN anchor.
Credit…Associated Press

As Gov. Andrew M. Cuomo’s political career teetered, his brother, the TV host Chris Cuomo, kept silent, declining to address the matter on his CNN show and then leaving for what he described as a planned vacation.

On Monday, Chris Cuomo returned to prime time and spoke publicly for the first time about his brother’s stunning resignation — and the ethical headaches it created for him and his network.

“It was a unique situation, being a brother to a politician in a scandal and being part of the media,” Mr. Cuomo said in brief remarks toward the end of his 9 p.m. show. “I tried to do the right thing, and I just want you all to know that.”

He also said he had advised his brother to step down as New York’s governor. “While it was something I never imagined ever having to do,” he told viewers, “I did urge my brother to resign, when the time came.”

For CNN, the conundrum of the Cuomo brothers was painful on several levels.

Chris Cuomo apologized in May after it emerged that he had offered advice to Andrew Cuomo’s aides as the governor faced sexual harassment accusations. The host pledged not to discuss his brother’s travails, but CNN kept him on the air, roiling some colleagues who considered his role a glaring conflict of interest.

It did not help that CNN had openly encouraged the brothers’ on-air rapport at the start of the pandemic, when viewers tuned in to see Chris Cuomo interview Andrew Cuomo about his response to the pandemic.

On his Monday show, Chris Cuomo said the situation involving the governor’s scandal was “unlike anything I could have imagined.”

“I’m not an adviser; I’m a brother,” he told viewers. “I wasn’t in control of anything. I was there to listen and to offer my take. And my advice to my brother was simple and consistent: own what you did, tell people what you’ll do to be better, be contrite, and, finally, accept that it doesn’t matter what you intended. What matters is how your actions and words were perceived.”

Chris Cuomo has also faced scrutiny over his involvement in the efforts by Andrew Cuomo’s aides to stave off the growing scandal. On Monday, the CNN host said: “I never attacked nor encouraged anyone to attack any woman who came forward. I never made calls to the press about my brother’s situation. I never influenced or attempted to control CNN’s coverage of my family.”

He said he had no plans to comment further. “This will be my final word on it,” the host said, before cutting to a commercial. “Let’s take a break. We’ll be right back.”

Shoppers outside stores in London in April, when lockdowns eased. Employers competing to fill jobs have helped cause Britain’s unemployment rate to slip lower in the second quarter.
Credit…Andy Rain/EPA, via Shutterstock

Job vacancies in Britain climbed to a record high at the start of the summer as businesses competed with each other to fill positions after the government lifted pandemic restrictions.

From May to July, businesses sought to fill 953,000 vacancies, up 44 percent from three months earlier and well above prepandemic levels, according to data from the Office for National Statistics published on Tuesday.

Vacancies were highest for health care workers, followed by positions in the wholesale and retail industry and the accommodation and food services industry, such as hotels and restaurants, the statistics office said. In recent months, many businesses in these industries have reported staff shortages and in the case of hospitality, some are restricting their opening hours to ease the burden on existing staff members even as consumer demand is high. Some businesses are raising pay to lure new employees as the pool of people out of work shrinks.

Pay excluding bonuses jumped 7.4 percent in the second quarter from the year before. But even once certain quirks from the pandemic are stripped away — such as the effect of fewer low-paid employees in the work force a year ago, when much of the economy was in lockdown — the increase in pay was 3.5 percent to 4.9 percent, the statistics office estimated. It’s much higher than the average annual increase of the previous decade, which was about 2 percent.

“Rising wage pressures fit with the broader story of rising inflation across the economy,” Kallum Pickering, an economist at Berenberg, wrote in a note. This strengthens the case for the Bank of England to raise interest rates next year, he added.

Overall, the British labor market is recovering strongly from the pandemic. The number of people on payrolls rose by 182,000 in July, up 0.6 percent from June. Compared with February 2020, the number of payrolled employees is down by 201,000. At its worst, in November, there were nearly 969,000 fewer employees than before the pandemic.

In the second quarter, the unemployment rate slipped to 4.7 percent from 4.9 percent in the previous quarter. There was a record flow of about 300,000 people from unemployment into employment. There was also a decrease in the economic inactivity rate, as more people were classified as unemployed because they have resumed hunting for a job.

By the end of the second quarter, about two million people were still on furlough in Britain, but that program will end next month. Even as vacancies remain high, policymakers and economists are watching closely to see if there will be a notable rise in the unemployment rate after the furlough program ends or if those workers are able to find jobs.

The Bank of England is not forecasting another increase in the unemployment rate this year and but expects it to be about 4.25 percent in 2023. It was at 3.8 percent before the pandemic.

“The challenge of avoiding a steep rise in unemployment has been replaced by that of ensuring a flow of labor into jobs,” Andrew Bailey, the governor of the central bank, said earlier this month. “This is a crucial challenge.”

Microsoft’s headquarters in Redmond, Wash. Within a week of Microsoft’s offering Maven Clinic as a benefit in March, 1,300 employees had signed up.
Credit…Stuart Isett for the New York Times

Maven Clinic, which provides online health services to women and families, announced on Tuesday that it had raised a round of $110 million in funding, bringing its valuation to more than $1 billion, a first for a U.S. company in the women and family health space.

“I’m very excited for the vote of confidence not just in us but the category itself,” said Kate Ryder, the founder and chief executive of Maven Clinic.

“There’s a lot of research on the first 1,000 days of life, and if you just invest in that period — up to age 2 — you can have a huge return on investment across the rest of the system because those children have better tools to go through life,” she said.

Maven Clinic’s telehealth platform includes access to a network of providers, including fertility specialists, adoption coaches, doulas, lactation consultants, pediatricians and child care providers. Individuals can participate on a per-use basis, but the bulk of its business comes from companies, including Snap, Bumble, L’Oreal and Microsoft, that offer it as an employee benefit.

Within a week of Microsoft’s offering Maven Clinic as a benefit in March, 1,300 employees had signed up, said Sonja Kellen, a senior director of global health and wellness at Microsoft. Now, a few months in, 2,300 employees use the platform.

“You don’t really know how many people are on this journey — starting a family or building a family — until you launch something like this,” she said.

The company, which was founded in 2014, did not reveal current membership numbers. But it said its membership had soared 400 percent since the onset of the pandemic.

“Covid accelerated all digital health companies forward,” Ms. Ryder said, but people are also now “starting to prioritize health equity, women’s health and family health.”

The pandemic helped reveal the weaknesses in the patchwork of child care systems and the gender and racial inequities of the health system, and it made corporate executives focus on supporting and retaining employees with families, she said.

“All the trends kind of converged for us,” she added.

About 15 percent of the in-person referrals made through the platform are for child care support, and since March 2020, about a quarter of the appointments scheduled have been with mental health providers — an indication of the stresses and struggles of working parents.

Ms. Ryder next wants to lower the barrier to quality health care for lower-income families.

“A Medicaid mom who is Black and who is at heightened risk for maternal mortality — she needs a personalized Maven experience just as much as the member who is working at a company in Dallas or New York,” she said.

The financing was led by Dragoneer Investment Group and Lux Capital and included an investment from Oprah Winfrey.

Xu Jiayin, the founder of Evergrande, in Beijing in 2016.
Credit…Etienne Oliveau/Getty Images

The billionaire founder of Evergrande, China’s most indebted property developer, has stepped down from his position as chairman of the company’s main real estate arm, Hengda Real Estate Group, according to a notice filed to a government website on Tuesday.

The news that Xu Jiayin, the chairman, would be replaced by Zhao Changlong, a previous company director who will take over as general manager of the real estate arm, sent the developer’s shares falling by more than 4 percent.

Details of the management change at Hengda Real Estate Group were published on the National Enterprise Credit Information System, a government corporate information site. A spokesperson for Evergrande said Mr. Xu would remain chairman of Evergrande.

Evergrande is the latest Chinese corporate giant to fall under the microscope of regulators looking to rein in unruly corporate debt. One of the country’s most debt-saddled companies, it has as much as $300 billion in unpaid bills, loan and bond payments.

Evergrande cranes dot China’s urban landscape. During the country’s boom years, it helped to create the kind of economic activity that officials came to depend on to fuel the nation’s miraculous growth. It sold apartments before they were built, using a model that allowed it to grow quickly as the country urbanized. Then it borrowed money to dabble in new business ventures, like an unprofitable soccer club and an electric vehicle company.

Fearing a housing bubble could lead to a crisis that would reverberate through China’s financial system, regulators last year began to crack down on the borrowing habits of the property sector. The central bank created new rules called the “three red lines” that have forced property companies to begin paying off their bills. Evergrande was the primary target.

Evergrande has been selling off parts of its empire to comply. Earlier this month it sold stakes in its internet business. Mr. Xu has told investors that the company is working hard to pay off some of its loans and has reduced the debt that incurs interest to $88 billion from $130 billion last year.

The management changes on Tuesday could foreshadow more turmoil ahead.

Evergrande last week confirmed reports that it was in talks with prospective buyers to sell its electric vehicle business and its property management unit without offering any further details.

Nate Anderson started Hindenburg in 2017. “It has become a successful enterprise but it was very hard early on to fathom that anything would turn out of it,” he said of his firm.
Credit…Bryan Anselm for The New York Times

Hindenburg Research is having a moment. The five-person firm, founded in 2017, is making its name with searing reports about potential wrongdoing at public companies.

Some of those reports have prompted government investigations. Hindenburg’s founder, Nate Anderson, told The New York Times’s Matthew Goldstein and Kate Kelly that he’s not in the business just to move share prices, but the short-selling firm profits when the stocks it targets fall after it issues its research.

The firm, which has the backing of about 10 investors (which Mr. Anderson declined to identify), is named after the German airship that exploded in 1937. Mr. Anderson said his passion is to “find scams,” something he did as a hobby alongside previous jobs in due diligence for hedge funds and family offices. The Hindenburg team, comprising analysts and former journalists, can take six months or more to produce its reports.

  • In early August, the S.E.C. subpoenaed the sports betting firm DraftKings after Hindenburg reported in June that it had potentially enabled black-market betting.

  • Federal authorities began investigating the electric truck maker Lordstown Motors after Hindenburg reported in March that the company was hyping commercial interest. The company’s stock has fallen nearly 70 percent since the research was published.

  • Last month, the founder of Nikola, an electric vehicle manufacturer, was charged with defrauding investors. A Hindenburg report on the firm, published last September, accused the company of making exaggerated statements about its business. (Mr. Anderson said his bet against Nikola was his biggest win to date and remained the firm’s largest short position.)

“He’s become a real giant killer,” said Frank Partnoy, a former derivatives trader who is now a professor of securities law at the University of California, Berkeley, School of Law. He “seems fearless, even when going after some of the biggest corporate targets.”

“Nate’s killing it right now,” said Carson Block, who popularized activist short-selling as the head of the firm Muddy Waters.

Blank-check companies, like the ones that took the three firms mentioned above public through a merger, have given Hindenburg a lot of fodder. Critics say the incentives between sponsors of these takeover vehicles and later investors are misaligned. The S.E.C. is looking more closely at these deals with so-called special purpose acquisition companies, which take other companies public with less scrutiny than traditional initial public offerings.

“There are just so many outrageous companies,” Mr. Anderson said. “Some of these companies we have looked at, they don’t have any revenues at all.”

Jerome Powell, the chair of the Federal Reserve, left; Janet Yellen, a former Fed chair and now the Treasury secretary; and Ben Bernanke, a former Fed chair.
Credit…Christopher Aluka Berry/Reuters

Jerome H. Powell’s term as chair of the Federal Reserve ends in February. Slots for the vice chair and the Fed’s top bank regulator will also be up for grabs soon, and a position on the Fed’s Board of Governors is already vacant.

Assuming officials leave once their leadership terms end, the Biden administration may, in quick succession, be able to appoint four of the Fed’s seven board members, powerful policymakers who have constant votes on monetary decisions and exclusive regulatory authorities, Jeanna Smialek and Alan Rappeport report for The New York Times.

Many who would like to see Mr. Powell replaced play down the role Treasury Secretary Janet Yellen will have in shaping President Biden’s decision wether to oust Mr. Powell. But Treasury secretaries have traditionally been central to the Fed selection process. Ms. Yellen’s views will carry significant weight in the deliberations, coloring both who is considered and the ultimate outcome.

It’s unclear where Ms. Yellen’s preferences lie, but it’s common knowledge that she was unhappy when Mr. Trump broke a tradition of reappointment in her case.

Regulation and climate are key reasons some Democrats are lining up to replace Mr. Powell. READ THE FULL ARTICLE →

In Kabul on Tuesday. The Afghan currency has weakened to a record low to the U.S. dollar.
Credit…Hoshang Hashimi/Agence France-Presse — Getty Images

“It did not have to end this way,” Ajmal Ahmady, the acting governor of Afghanistan’s cental bank, said on Twitter this week, describing the chaos in Kabul as he fled the country.

In a series of posts on Monday, Mr. Ahmady detailed how the central bank tried to respond to turbulence in Afghanistan’s currency market late last week amid the swift takeover of the country by the Taliban, and his disappointment that the country’s leadership was fleeing without any sort of transition plan.

Top figures in President Ashraf Ghani’s government were inexperienced, he wrote, and it was Mr. Ghani’s “failure that he never recognized such weaknesses.”

Mr. Ahmady said the collapse of the government was “so swift and complete” that it was “disorienting and difficult to comprehend.”

The Afghan currency, the afghani, slumped more than 6 percent on Tuesday to a record low of 86 to the U.S. dollar, according to Bloomberg data.

Mr. Ahmady was appointed the central bank’s acting governor in June 2020. Before that, he served as a senior adviser to the president for banking and financial affairs, as well as other ministerial positions. Mr. Ahmady was educated in the United States, at the University of California, Los Angeles and Harvard Business School.

Last week, “currency volatility and other indicators had worsened” before the Afghan government fell, he said, but the central bank had been able to stabilize the economy “relatively well.”

“Then came last Thursday.”

Mr. Ahmady described how he had attended his normal meetings that morning, but by the time he returned home, major cities including Ghazni and Herat were under Taliban control. On Friday, he said, he received a call saying that the central bank would get no further shipments of U.S. dollars, and on Saturday the bank supplied less currency to the markets. “Which further increased panic,” he said.

“I held meetings on Saturday to reassure banks and money exchangers to calm them down,” Mr. Ahmady wrote. “I can’t believe that was one day before Kabul fell.”

On Saturday night, he said, he bought tickets to leave the country on Monday “as a precaution.” But on Sunday he left the central bank and went to the airport, where he saw Afghan politicians.

“I secured a Kam Air flight Sunday 7pm,” he said, referring to an international airline based in Kabul. “Then the floor fell: the President had already left.”

Civil servants and the military immediately left their positions as word of Mr. Ghani’s departure spread, and hundreds of people raced to board an outbound plane. “The plane had no fuel or pilot. We all hoped it would depart,” he wrote.

He then disembarked from the aircraft, and amid of rush of people he ended up on a military plane. Mr. Ahmady did not say who owned the plane he was on or where it was going.

“It did not have to end this way,” he wrote. “I am disgusted by the lack of any planning by Afghan leadership. Saw at airport them leave without informing others. I asked the palace if there was an evacuation plan/charter flights. After 7 years of service, I was met with silence.”



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