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Retail Sales Rebound Slows in August: Live Updates


Here’s what you need to know:

Credit…Ting Shen for The New York Times

Officials at the Federal Reserve are contemplating their next steps after announcing a new approach to interest rate setting last month, one that could lay the groundwork for longer periods of low unemployment and rock-bottom borrowing costs.

But it may be too soon for Fed officials to make big changes to their policy setting because they might need more time to coalesce around their next steps, economists said.

Here’s what to expect at the Fed’s September meeting, which concludes Wednesday:

  • The Fed slashed interest rates to near zero in March, and it is broadly expected to leave them there for years. Officials are now debating whether to concretely communicate their future plans for rates by promising that they will not lift them until inflation, employment or both cross some preset threshold.

  • They are also discussing when and how to update their bond buying program. Since March, the central bank has been purchasing large amounts of Treasury and mortgage-backed securities to keep markets functioning smoothly, but officials have signaled that they will eventually shift that program to focus instead on stimulating economic growth.

  • The central bank’s Summary of Economic Projections, a document in which officials anonymously forecast where interest rates, inflation and unemployment will be in coming years, will get a refresh.

Any changes could add a little more oomph to the central bank’s policies, potentially helping to fuel the recovery from the coronavirus-induced economic crisis.

“It feels like there’s going to be a forward lean from them — there’s a refinement coming,” said Julia Coronado, a former Fed economist and founder of MacroPolicy Perspectives. Still, she does not expect either threshold-based forward guidance or a big tweak to the bond buying program just yet. “This is a big and diverse committee, these are complicated issues, and it is uncharted territory.”

Despite an end to the federal stimulus measures that have propped up consumer spending, retail sales climbed for the fourth straight month in August, extending a bounce back that has lasted longer than many economists had expected.

Retail sales rose 0.6 percent last month, the Commerce Department reported on Wednesday, as Americans continued to spend on home computers, new cars and online groceries. Retailers serving those pandemic-related needs reported record sales.

The gains, however, were smaller than in previous months, which some economists warned could be a sign that the retail recovery has finally run out of steam. The 1.2 percent increase in July was revised down to an 0.9 percent gain.

The rise in consumer spending in August occurred against a grim economic backdrop that grew even darker as the $600-a-week supplemental unemployment assistance expired and Congress failed to agree on new stimulus measures. Unemployment declined, but stayed high as huge sectors of the economy — like hospitality, food service and travel — remain largely shut down.

In the face of such broad economic turmoil, the level of spending has surprised some experts, even when factoring in Americans’ seemingly unwavering propensity to shop.

A few factors likely converged, including stock market gains that increased purchases among wealthy spenders and money that people in the lower-income bracket had been saving from their $600 weekly assistance, which ended July 31.

The recovery continued to be strong for some retailers, while others have struggled.

Most apparel chains and department stores have seen sales tumble during the pandemic. In the past six weeks, Lord & Taylor and Century 21, a staple of bargain apparel shopping in New York, joined the growing list of retailers that have filed for bankruptcy in recent months. Both plan to liquidate.

Yet, national chains like Best Buy, Dick’s Sporting Goods and West Elm have reported revenue jumps this summer, with many Americans spending more on goods that they could use at home or while socially distancing outdoors. Dick’s reported a record quarter last month, fueled by outdoor activities like golf, camping and running.

“I would have expected more weakness,” said Scott Anderson, an economist at the Bank of the West. “I think there is a bit of deer-in-the-headlights phenomenon. People are having trouble wrapping their minds around the extent of the economic losses.”

Credit…Gabby Jones for The New York Times

The recovery in consumer spending continued to be strong for some retailers in August, while others have struggled.

Most apparel chains and department stores have seen sales tumble during the pandemic. In the past six weeks, Lord & Taylor and Century 21, a staple of bargain apparel shopping in New York, joined the growing list of retailers that have filed for bankruptcy in recent months. Both plan to liquidate.

Yet, national chains like Best Buy, Dick’s Sporting Goods and West Elm have reported revenue jumps this summer, with many Americans spending more on goods that they could use at home or while socially distancing outdoors. Dick’s reported a record quarter last month, fueled by outdoor activities like golf, camping and running.

“When you look at the numbers, it was V-shaped,” Sucharita Kodali, a retail analyst at Forrester Research, said of the recovery. ”It was just extremely poorly distributed across different sectors.”

Michael Gapen, an economist at Barclays, has been surprised by how much spending has migrated from one sector of the economy to another. Instead of spending on restaurants, people bought more groceries and liquor. They took on home improvement projects or bought new cars instead of spending that money on travel.

Mr. Gapen attributes this shift partly to resilient consumers, but also to businesses that have found a way to deliver goods to people’s homes.

“It’s the Amazonification of the world that has facilitated this,” he said. “If this pandemic hit 10 to 15 years ago, I am not sure we would have been able to make this shift. It reflects how nimble certain businesses have become.”

Credit…Jim Lo Scalzo/EPA, via Shutterstock

Raytheon Technologies, the American aerospace and defense manufacturer, said Wednesday that it would eliminate 15,000 commercial aerospace and corporate jobs as the pandemic continued to suppress demand for commercial air travel.

That’s nearly double the company’s previous estimate of roughly 8,500 job cuts, which were announced in July. The reductions are part of an effort to reduce costs by $2 billion and conserve $4 billion in cash this year.

“And we’re not done yet looking for further ways to reduce structural costs in all of our businesses,” Raytheon’s chief executive, Gregory J. Hayes, said at the Morgan Stanley Laguna Conference, which was held virtually this year.

Reducing costs would allow the business to emerge stronger when air traffic returns to normal levels, a process that could take years, Mr. Hayes said.

“We see a gradual return to flight across all of the commercial markets,” he said. “But probably not a full return to 2019 levels until somewhere around 2023.”

Raytheon has eliminated some of the jobs already, and the bulk of the cuts will be made this year, Michele Quintaglie, head of media relations, said in an interview.

Credit…Samuel Aranda for The New York Times

The global economy has been rebounding faster from coronavirus lockdowns than expected just a few months ago, as actions by governments and central banks to support businesses and households have helped prevent a more dire downturn, the Organization for Economic Cooperation and Development said in a new report Wednesday.

But the recovery already appears to be losing some momentum, especially in countries where a resurgence of the virus has led to a new wave of local lockdowns, the organization warned.

The global economy is now on track to contract by 4.5 percent this year — still a historic decline, but less than the 6 percent fall predicted in June. If the virus is kept under control, growth worldwide could expand by 5 percent next year. A more forceful return of the pandemic could cut that outlook by two to three percentage points, the organization said.The report noted that the overall numbers mask “considerable differences across countries,” and pointed out that China, the United States and Europe are all doing better than projected in June.

For example, China is now expected to be the lone major economy to expand this year, growing 1.8 percent over 2019, compared with the earlier estimate of a 2.6 percent contraction. The study forecasts the United States ending the year with a 3.8 percent contraction, an improvement from June’s forecast of a 7.3 percent contraction.

India, Mexico and South Africa, on the other hand, are predicted to do worse than expected as the virus hits their economies. The earlier forecast, for example, predicted India’s economy would shrink by 3.7 percent; now the prediction is a 10.2 percent contraction.

The O.E.C.D.’s forecasts assumed local outbreaks would continue but that countries would use local restrictions rather than resume nationwide lockdowns to contain the virus. It also assumed a vaccine would not be widely available until late next year.

Credit…Dmitry Kostyukov for The New York Times

Europe was supposedly done with political histrionics. In the face of the pandemic, a continent not known for common purpose had put aside long-festering national suspicions to forge a collective economic rescue, raising hopes that a sustainable recovery was underway.

But the European revival appears to be already flagging, and in part because of worries that traditional political concerns may disrupt economic imperatives.

The European Central Bank — which won confidence with vows to do whatever it took to stabilize the economy and support lending — has been hesitant to reprise such talk, sowing doubts about the future availability of credit.

National governments that have spent with abandon to subsidize wages and limit layoffs are wrapping up those efforts, presaging a surge of joblessness.

And in the midst of the worst public health emergency in a century, twinned with the most severe economic downturn since the Great Depression, the British government has opted to unleash a fresh crisis: It has sharply escalated fears that it may follow through with years of bellicose threats to abandon Europe without a deal governing future commercial relations across the English Channel.

A chaotic Brexit would almost certainly worsen Britain’s already terrible economic downturn while also assailing major European trading partners like the Netherlands, France and Spain.

Collectively, these developments have crystallized fresh worries that Europe could find itself mired in bleak economic circumstances for many months, especially as the virus regains strength, yielding an alarming increase of cases in Spain, France, and Britain.

“It’s hard to imagine a recovery that’s going to be strong and sustained given the current situation,” said Ángel Talavera, lead eurozone economist at Oxford Economics in London. “There’s not a lot of engines of growth.”

Credit…Francesca Jones for The New York Times

Hitachi said on Wednesday that it would end its eight-year quest to build nuclear plants in Britain. The announcement from the corporate giant’s Tokyo headquarters appears to draw the long saga of Hitachi’s nuclear efforts in Britain to a close.

The decision to pull out leaves unanswered questions about the fate of Hitachi’s prospective site on an island off Wales and about Britain’s future electric power supply. If Britain requires new nuclear power stations, then the Wales site is considered a top candidate to be sold to another developer.

Hitachi’s inability to agree to terms on financing with the British government led to an announcement in January 2019 that it would suspend work on Anglesey Island in Wales and at another site in England. It was forced to write off about $2.75 billion.

Recently, there has been hope in the British nuclear industry that the Wales project could be revived. On Wednesday, Hitachi quashed those hopes, saying “the investment environment has become increasingly severe due to the impact of Covid-19.”

There is a lively debate in Britain about whether the country needs to build new nuclear power plants in order to generate emissions-free power to meet ambitious climate change targets. Most of Britain’s nuclear plants are expected to be retired for age reasons by 2030.

In a statement on Wednesday, Duncan Hawthorne, chief executive of Horizon Nuclear Power, Hitachi’s unit in Britain, appeared to try to stoke interest in the company’s sites. “We will do our utmost to facilitate the prospects for development, ” he said.

Credit…Kate Medley for The New York Times

Fending off an eviction could depend on which judge a renter in financial trouble is given, despite a federal government order intended to protect renters at risk of being turned out.

The order, a moratorium imposed by the Centers for Disease Control and Prevention, is meant to avoid mass evictions and contain the spread of the coronavirus. All a qualifying tenant must do is sign a declaration printed from the C.D.C. website and hand it over to his or her landlord.

But it’s not as simple as it sounds: Landlords are still taking tenants to court, and what happens next varies around the country.

Some judges say the order, which was announced on Sept. 1, prevents landlords from even beginning an eviction case, which can take months to play out. Some say a case can proceed, but must freeze at the point where a tenant would be removed — usually under the watchful eye of a sheriff or constable. Other judges have allowed cases to move forward against tenants who insist they should be protected.

With millions of people unemployed and no progress on an agreement on another relief package, housing advocates and legal aid lawyers are fretting over the confusion.

Marilyn Hoffman showed up to a hearing in North Carolina — where court administrators informed state court clerks last week that the protections “must be invoked by a tenant” — and expected to have her eviction case postponed. But the judge refused to accept her signed declaration.

Ms. Hoffman, who rents a single-family house in Sanford, N.C., said the judge seemed to be under the impression the C.D.C. order applied only to rental apartments that were covered by a previous moratorium under the CARES Act, which had a more limited scope. The judge gave Ms. Hoffman, whose monthly rent is $649, 10 days to come up with more than $3,000 in back rent and late fees or face eviction.

“If I had the money, I would pay the rent,” she said.

  • U.S. stocks were flat on Wednesday, after the S&P 500 gave up early gains. On Tuesday, tech shares had led markets higher, with the Nasdaq composite closing up more than 1 percent and the S&P 500 up about half a percent.

  • Investors were awaiting an update from Federal Reserve officials on the U.S. economic outlook and any change to monetary policy as the central bank’s September meeting comes to an end.

  • New data on U.S. retail sales showed that the recovery in sales slowed in August. Retail sales increased 0.6 percent, compared with expectations for a rise of 1 percent.

  • European markets were also unchanged after inching higher earlier in the day. The STOXX Europe 600 index was up less than half a percent, while Britain’s FTSE 100 dropped 0.6 percent in late trading.

  • Asian markets ended the day mixed, with Japan’s Nikkei slightly higher and Hong Kong’s Hang Seng Index ended in negative territory.

  • Oil prices rose, with Brent crude, the international benchmark, gaining 2 percent to $41.38 a barrel, after Hurricane Sally shut down more than a quarter of U.S. offshore production on Tuesday. Adding to the gains was data showing that oil stockpiles have decreased.



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