London and Washington are beginning exploratory talks over a trade deal after Britain leaves the European Union – which both sides say could deliver huge economic benefits. But already sharp differences have emerged over what might be included, as Britain resists U.S. demands to open its markets to agricultural products currently banned under EU law. Henry Ridgwell reports from London.
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Author: Uponbiz
The Trump administration is preparing to tighten the six-decade trade embargo on Cuba on Monday by allowing some lawsuits against foreign companies using properties confiscated by the Cuban government after its 1959 revolution, U.S. officials say.
Every president since Bill Clinton has suspended a section of the 1996 Helms-Burton act that would allow such lawsuits because they would snarl companies from U.S.-allied countries in years of complicated litigation that could prompt international trade claims against the United States.
Major investors in Cuba include British tobacco giant Imperial Brands, which runs a joint venture with the Cuban government making premium cigars; Spanish hoteliers Iberostar and Melia, who run dozens of hotels across the island; and French beverage-maker Pernod-Ricard, which makes Havana Club rum with a Cuban state distiller.
U.S. officials told The Associated Press that Trump would allow Title III of Helms-Burton to go into effect in a limited fashion that exempts many potential targets from litigation. The measure is being presented as retaliation for Cuba’s support of Venezuelan President Nicolas Maduro, who the U.S. is trying to oust in favor of opposition leader Juan Guaido.
Allowing a limited number of lawsuits could make investment in Cuba more burdensome for companies thinking of entering the market, who will now have to do additional research into their legal liability, but it is unlikely to be a major blow against the Cuban economy.
After nearly 60 years of trade embargo, the Cuban economy is in a period of consistently low growth of about 1 percent a year, with foreign investment at roughly $2 billion, far below what it needs to spur more prosperity. But tourism, remittances and subsidized oil from Venezuela have allowed the government to maintain basic services and a degree of stability that appears unshaken by the Trump administration’s recent moves against Cuba and its major remaining allies in Latin America — Venezuela and Nicaragua.
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Even as China and the United States are working to finalize a trade agreement, Beijing is grappling with the challenge of building political consensus about implementing and enforcing the deal on the ground.
The challenge for the Xi Jinping-led government is both economic and political at a time when the annual political congress has just begun in Beijing.
Delegates to the meetings include the heads of major Chinese corporations both private and state-owned.
The deal may hit State Owned Enterprises hard, an important Communist Party base, as they stand to lose subsidies and monopoly status. SOEs employ millions of people in key sectors like energy, mining, banking and manufacturing.
“The Chinese government will face resistance from SOEs and coastal provinces with dynamic trade with the US and other countries,” said Zhiqun Zhu, chair of the department of international relations at Bucknell University.
During the political sessions, President Xi will be closely watched in China and the world over as he deals with issues like the trade deal, the Huawei controversy and an increasingly slowing economy. The two-week sessions will be attended by around 5,000 delegates from around the country.
The US is not just asking China to buy more American goods, it is demanding structural changes from Chinese industry, which enjoy preferential treatment compared to foreign investors in many sectors. The deal could mean an end to government subsidies and monopoly status for SOEs in several markets.
“Structural reforms will be more difficult [for China] due to vested interests of SOEs and local governments and businesses with extensive trade,” Zhiqun said.
Paul Gillis, a professor at Peking University’s Guanghua School of Management said, “Trade policy changes always have winners and losers. Expect opposition from the losers”.
Nature of challenge
The resistance will be internal, voiced in closed-door discussions of small groups of legislators and not during televised discussions of the National People’s Congress and the China People’s Political Consultative Conference, the two bodies that are part of the so-called “Twin Sessions.”
In the main sessions, which are televised live, no one speaks out of turn and without his or her speech vetted by senior leaders in advance, sources said.
“We have our system which is centralized. Once the President gives a directive, the delegates will not say no,” said Shen Dingli, a Shanghai based international relations specialist.
“The Twin Sessions will follow the leader’s view. The leader wants reform while making sure there is no pre-mature reform because that would be result in weakening China,” he said.
Under the surface, provincial leaders from more developed provinces and cities like Shanghai, Guangzhou are expressing concern about the negative fallout on the local economy if the deal is implemented.
Heads of several state owned corporations are already asking the government that their performance must be evaluated differently once the deal is implemented, informed sources said. They expect to take a hit on their profitability as the deal will give a bigger role to foreign competitors.
“At the end of the day, it is up to the central government and President Xi. If they are really determined to carry out structural reforms, they can, despite challenges and resistance,” Zhiqun said. China’s former Premier Zhu Rongji faced a lot of resistance when he carried out structural reforms in the 1990s but he still succeeded in his mission, he said.
Taking the hit
On the other hand, some analysts believe that the giant state-owned corporations are quite capable of handling the new challenge that will emanate from the trade deal with the US.
“They will face tougher competition in China from further opening up and reduction of state support, but I think they can handle that,” Gillis said. He was referring to the expected increase in the role of foreign companies once the deal is implemented in China.
The SOEs have been facing competition from foreign players since 2001 when China became a member of the World Trade Organization, he said. This time the competition will be more intense as restrictions on foreign firms will be reduced.
“The competition seems to have made many of these companies stronger,” Gillis said.
Chinese experts said the US should not expect China to restructure its economy as soon as the ink dries on the contract. Beijing was moving towards market based economy for its own reasons before the trade war and is now ready to hasten the process.
“The question is: Can China stop all subsidies to state owned enterprises? In some cases, China is not ready now, it needs a few years. It’s better if the US accepts a time bound commitment from China,” Shen said.
The US and China look at the situation differently, he said. The US believes that the presence of several competing players in the market is good for the customer. The Chinese think national competitiveness can be enhanced quickly if the government steps in to mobilize national resources to create and nurture a few gigantic national SOEs, he said.
The S&P 500 and the Dow Jones industrial average snapped a three-day run of losses on Friday as optimism about the prospects for a U.S.-China trade agreement countered downbeat U.S. and China manufacturing data.
The Nasdaq, meanwhile, marked its longest streak of weekly gains since late 1999.
Following President Donald Trump’s announcement last weekend of a delay in higher tariffs on Chinese imports, Bloomberg reported late Thursday that a summit between Trump and his Chinese counterpart, Xi Jinping, to sign a final trade deal could happen as soon as mid-March.
“The optimism over trade resolution is outweighing the weakening economic data,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, N.C.
A private survey showed China’s factory activity contracted for a third straight month in February, though at a slower pace, indicating a marginal improvement in domestic demand as a flurry of policy stimulus kicked in from late last year.
ISM data also showed U.S. manufacturing activity for February dropped to its lowest since November 2016, and the University of Michigan survey showed consumer sentiment fell short of expectations in the month.
Detrick said that while the data were weak, investors hoped a U.S.-China trade deal would improve global growth prospects.
The Dow Jones industrial average rose 110.32 points, or 0.43 percent, to 26,026.32; the S&P 500 gained 19.2 points, or 0.69 percent, to 2,803.69; and the Nasdaq Composite added 62.82 points, or 0.83 percent, to 7,595.35.
Good sign
Friday marked the first close above 2,800 for the S&P since Nov. 8. Nate Thooft, global head of asset allocation for Manulife Asset Management in Boston, said technical investors would see a close above that level “as a good omen.”
The index closed 4.2 percent under its September record closing high. It has risen 11.8 percent so far this year, bolstered by trade hopes and the Federal Reserve’s cautious stance on interest rates.
For the week, the S&P rose 0.4 percent while the Dow fell 0.02 percent and the Nasdaq rose 0.9 percent.
Of the 11 major S&P 500 sectors, eight were gainers on the day. The health care sector rose 1.4 percent, providing the biggest boost and supported by gains in companies including health insurer UnitedHealth Group which bounced back after falling for much of the week.
The consumer discretionary sector rose 0.9 percent, with the biggest lift from Amazon.com.
Foot Locker shares rose 5.9 percent after the retailer beat quarterly same-store sales estimates and helped drive a 1.9 percent gain in shares of Nike Inc., the second-biggest boost to the sector.
Gap Inc. surged 16 percent, making it the biggest percentage gainer in the S&P, after it said it would separate its better-performing Old Navy brand and close about 230 Gap stores.
The energy sector rose 1.8 percent despite a decline in oil prices.
A U.S. Commerce Department report showed inflation pressures remaining tame, which along with slowing domestic and global economic growth gave more credence to the Federal Reserve’s “patient” stance toward raising interest rates further this year.
Advancing issues outnumbered declining ones on the NYSE by a 1.79-to-1 ratio; on Nasdaq, a 1.86-to-1 ratio favored advancers.
The S&P 500 posted 54 new 52-week highs and no new lows; the Nasdaq Composite recorded 92 new highs and 29 new lows.
Volume on U.S. exchanges was 7.95 billion shares, compared with the 7.27 billion average for the last 20 trading days.
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U.S. consumer spending tumbled 0.5 percent in December, the biggest decline in nine years, as the holiday shopping season ended in disappointment. Meanwhile, incomes rose sharply in December but edged down in January.
The fall in consumer spending followed sizable gains of 0.7 percent in October and 0.6 percent in November, the Commerce Department reported Friday. December’s result means that spending for the quarter decelerated significantly, a primary factor in the slowing of overall economy in the final three months of the year. Gross domestic product recorded a growth rate of 2.6 percent after a 3.4 percent gain in the third quarter.
Incomes jumped 1 percent in December, though slipped 0.1 percent in January. The government did not release spending data for January because of delays stemming from the government shutdown.
The big fall in spending reflected sizable declines in purchases of durable goods such as autos, as well as nondurable goods such as clothing during the all-important holiday shopping season. The result shows that consumer spending, which accounts for 70 percent of economic growth, was showing significant weakness heading into the current quarter.
Many economists believe that GDP growth will slow further during the current January-March period, with some expecting GDP to drop to a growth rate of 2 percent or lower.
Inflation, as measured by a gauge preferred by the Federal Reserve, was up 1.7 percent for the past 12 months ending in December. That’s the slowest 12-month pace since a similar 12-month gain for the period ending in October 2017 and is below the Fed’s 2 percent target for annual price increases.
Federal Reserve Chairman Jerome Powell told Congress this week that with a number of economic risks facing the country and with inflation so low, the central bank intends to be “patient” in deciding when to change interest rates again.
The move to a prolonged pause in further rate hikes, which the Fed had announced at its January meeting, has cheered financial markets which had been worried that the central bank, which hiked its benchmark rate four times last year, could move rates up too quickly, raising the risks of an economic downturn.
The spending and income report showed that the saving rate jumped to 7.6 percent of after-tax income in December, compared to 6.1 percent in November. That was the highest saving rate since January 2016.
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Oregon Gov. Kate Brown signed the nation’s first statewide mandatory rent control measure on Thursday, giving a victory to housing advocates who say spiraling rent costs in the economically booming state have fueled widespread homelessness and housing insecurity.
Brown, a Democrat, said the legislation will provide “some immediate relief to Oregonians struggling to keep up with rising rents and a tight rental market.”
Landlords are now limited to increases once per year that cannot exceed 7 percent plus the change in the consumer price index, which is used to calculate inflation.
The law prohibits them from serving no-cause evictions after a tenant’s first year of occupancy, a provision designed to protect those who are living paycheck to paycheck and who affordable housing advocates say are often most vulnerable to sudden rent hikes and abrupt lease terminations.
New York has a statewide rent control law, but cities can choose whether to participate. California restricts the ability of cities to impose rent control. Last November, voters defeated a ballot initiative that would have overturned that law.
Emergency measure
The Oregon law takes effect immediately. Democrats who control the Legislature say the state’s housing crisis justified passing the bill as an emergency measure.
In hearings for the bill passed, tenants testified that they have struggled to keep up with skyrocketing rents, with many said they’ve been forced from their homes. Kori Sparks, a resident of the fast-growing city of Bend, said she relies on disability and has “to deal with the stress of losing an accessible home on short notice.”
She said rent control will protect vulnerable people from “a predatory system where profit comes before people and denies them of a basic human right.”
Builders in Oregon have not been able to construct enough houses and apartments to meet the demands of the thousands of people moving to the state for jobs and, in some cases, for a lower cost of living. Many people move to the state from California.
A state report estimated that a renter would need to work 77 hours a week at minimum wage to afford a two-bedroom apartment. One in three renters in Oregon pays more than 50 percent of his or her income for rent, far higher than the congressionally set definition of housing affordability, which suggests setting aside 30 percent toward rent.
In the Portland metropolitan area, rent began to plateau in 2017 after four consecutive years of rent hikes averaging 5 percent or more. The average rental unit costs about $1,400 a month, according to data released by the city.
Many are homeless
Oregon is also suffering from a lack of affordable housing and has one of the highest rates of homelessness in the country.
Landlords and developers argued that rent control would make the housing crisis worse, saying investors will now be less willing to build or maintain properties.
“History has shown that rent control exacerbates shortages, makes it harder for apartment owners to make upgrades and disproportionately benefits higher-income households,” said Doug Bibby, president of the National Multifamily Housing Council, a national association representing apartment building owners.
The governor acknowledged that rent control alone isn’t enough, and that the state needs an “all hands on deck” solution. Brown has proposed a $400 million investment in affordable housing solutions in her two-year budget proposal.
“It will take much more to ensure that every Oregonian, in communities large and small, has access to housing choices that allow them and their families to thrive,” she said.
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Tesla says it is now taking orders for the long-awaited $35,000 Model 3, will close stores and move to online orders.
Tesla says it is now taking orders for the long-awaited $35,000 Model 3, a car for the masses that is essential for the company to survive.
The company says to reach the lower price, it’s shifting all sales worldwide from stores to online only. Some high-traffic stores, however, will remain open.
The company will offer the standard base model, which can go 220 miles (350 kilometers) per charge. It also will offer a $37,000 version with a premium interior that accelerates faster and can go 240 miles (385 kilometers) per charge.
Tesla started taking orders for the Model 3 in March of 2016, but until now hasn’t been able to cut costs enough to sell them for $35,000 and make a profit.
The cheapest one that could be ordered until Thursday started at $42,900.
Gap Inc. said Thursday that it would separate its Old Navy brand into a publicly traded company in order to focus on its struggling namesake apparel business, sending its shares up 18 percent.
Old Navy has had a better success than the Gap brand in recent years as a wide range of budget apparel has made it more appealing to a broader base of consumers.
“It’s clear that Old Navy’s business model and customers have increasingly diverged from our specialty brands over time,” Gap’s Chairman Robert Fisher said.
The company also said it planned to close 230 Gap specialty stores over the next two years.
Gap’s overall same-store sales fell 1 percent in the fourth quarter ended Feb. 2, compared with analysts’ average estimate of a 0.3 percent rise, according to IBES data from Refinitiv.
Gap, Athleta, Banana Republic and the remaining brands will be part of a yet-to-be-named company. The separation is expected to be completed by 2020, Gap said.
The company’s shares were up 17.7 percent at $29.89 in extended trading.
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Online crafts retailer Etsy Inc will go green by offsetting planet-warming carbon emissions from its shipping activities, the U.S. company said Wednesday, joining a host of companies making public moves to battle climate change.
Etsy will buy clean energy certificates supporting tree conservation in the United States, wind and solar power in India and clean automotive technology, it said.
The online marketplace for buying and selling handmade and vintage goods said its initiative is the first time a global e-commerce company has made such a move.
“Fast, free shipping ultimately comes at a cost to our planet,” wrote Josh Silverman, chief executive officer of the New York-based company in a blog on the company’s website.
The certificates are a way for companies to offset the amount of carbon dioxide they produce by paying for projects that support clean development.
The 13-year-old Etsy said its greenhouse gas emissions from shipping in 2018 totaled about 135,000 metric tons of carbon dioxide equivalent, similar to those of 29,000 cars in a year.
About 55,000 metric tons of carbon dioxide equivalent are released each day from the delivery of all packages ordered from online retailers in the United States alone, it said.
Budweiser, Amazon.com
Last month, at the U.S. Super Bowl championship game, giant beer maker Budweiser helped purchase clean energy certificates to offset greenhouse gas emissions linked to fans’ travel and the host city of Atlanta.
More than 100 U.S. companies have committed to setting emission-reduction targets that seek to limit rising temperature to 2 degrees Celsius as part of a United Nations-backed initiative, said Sabrina Helm, who heads the Consumers, Environment & Sustainability Initiative, a research group at the University of Arizona.
Online retailers have largely been absent from those efforts, and Etsy’s move sends a “very important signal,” she said.
“A lot of online retailers are not particularly transparent in what they do in terms of sustainability,” she told Reuters.
Last week, online retail giant Amazon.com Inc said it planned to make its carbon footprint public for the first time this year.
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The United States won a World Trade Organization ruling Thursday that China subsidized its wheat and rice producers too much in recent years.
The WTO in Geneva agreed with the U.S. position that Beijing paid its farmers excessive amounts for growing wheat, Indica rice and Japonica rice from 2012 to 2015, but said the dispute over a corn subsidy had already expired.
The ruling came in a U.S. complaint filed in 2016 during the final months of the last U.S. administration of former president Barack Obama.
The decision can be appealed, but current U.S. Trade Representative Robert Lighthizer praised the ruling.
“China’s excessive support limits opportunities for U.S. farmers to export their world-class products to China,” Lighthizer said in a statement. “We expect China to quickly come into compliance with its WTO obligations.”
The U.S. claimed that China paid its farmers nearly $100 billion more than WTO rules allow, creating an incentive to grow more wheat and rice, thus undercutting global prices for the grains.
The ruling could have ramifications for India, which has calculated its price supports in a similar way as China.
The WTO decision comes amid intense trade talks between Washington and Beijing, with President Donald Trump expressing optimism a deal can be reached.
During a news conference in Hanoi after the abrupt end of his summit with North Korean leader Kim Jong Un, Trump said, “I think we have a very good chance. Their (economic growth) numbers are down, but I don’t want that. I want (China) to do great. But we’ve been losing anywhere from $300 to $500 billion dollars a year with China for many, many years. And again, like other things, many presidents should have done this before me. And nobody did. So, we’re doing it.”
The most recent U.S. statistics show China last year had a $382 billion trade surplus in deals with the United States through November. Trump is trying to alter trade terms between the two countries to end what the United States, Japan and European countries contend are China’s unfair trade practices, including state intervention in markets, subsidies of some industries and theft of foreign technology.
But Lighthizer on Wednesday told a congressional panel in Washington, a new deal is not close to being completed.
“Much still needs to be done before an agreement can be reached,” he said. “If we can complete this effort, and again I say if, and if we can reach a resolution on the issue of enforceability, we might have an agreement that enables us to turn the corner in our relationship with China.”
The United States and China, the world’s two biggest economies, have been negotiating for months on a new agreement, even as they have imposed hefty new tariffs on billions of dollars of each other’s exports.
Lighthizer said the countries’ negotiators, who have been meeting in Washington and Beijing, “are making real progress.”
Trump cited that progress on Sunday in postponing what would have been a sharp increase in U.S. duties on $200 billion in Chinese imports that would have taken effect Friday.
China has offered to increase its purchase of American farm products and energy as part of a new trade pact.
The U.S. economy fell short of the Trump administration’s 3 percent annual growth target in 2018 despite $1.5 trillion in tax cuts and a government spending blitz, and economists say growth will only slow from here.
A better-than-expected performance in the fourth quarter pushed gross domestic product up 2.9 percent for the year, just shy of the goal, Commerce Department data showed Thursday.
President Donald Trump has touted the economy as one of the biggest achievements of his term and declared last July that his administration had “accomplished an economic turnaround of historic proportions.” On the campaign trail, Trump boasted that he could boost annual economic growth to 4 percent, a goal that analysts always said was unachievable.
“We are moving back to a sustainable growth pace that we experienced during most of the Obama years,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. “With the tax cut impacts largely done with, it is hard to see how growth can accelerate sharply.”
Gross domestic product increased at a 2.6 percent annualized rate in the fourth quarter after advancing at a 3.4 percent pace in the July-September period. Economists polled by Reuters had forecast GDP rising at a 2.3 percent rate in the fourth quarter.
Growth in 2018 was the strongest since 2015 and better than the 2.2 percent logged in 2017. The expansion will be the longest on record in July.
The stronger-than-expected fourth-quarter performance, which reflected solid consumer and business spending, was despite many headwinds, including financial market volatility and the United States’ trade war with China, raising optimism that an anticipated slowdown this year would not be abrupt.
The fiscal stimulus is believed to have peaked sometime in the fourth quarter. December economic data such as retail sales, exports, homebuilding and business spending on equipment weakened sharply.
In addition, most manufacturing measures softened in January and February, and motor vehicle demand has eased.
The labor market is also exhibiting signs of cooling, with a report from the Labor Department on Thursday showing the number of Americans receiving unemployment benefits rising to a 10-month high in the week ended Feb. 16.
“The first quarter won’t be this good,” said Paul Ashworth, chief economist at Capital Economics in Toronto. “As the stimulus fades and the lagged impact of past monetary tightening continues to feed through, we expect GDP growth to slow to 2.2 percent this year.”
Slowing growth together with weakening global demand and uncertainty over Britain’s departure from the European Union, support the Federal Reserve’s “patient” stance toward raising interest rates further this year. Fed Chairman Jerome Powell reaffirmed the U.S. central bank’s position in his testimonies before lawmakers Tuesday and Wednesday.
Inflation was largely muted in the fourth quarter.
The dollar trimmed losses against a basket of currencies on the GDP data and was last trading little changed. U.S. Treasury prices fell, while stocks on Wall Street were lower following weak earnings from a handful of companies.
Solid consumer spending
The fourth-quarter GDP report was delayed by a 35-day partial shutdown of the government that ended on Jan. 25, which affected the collection and processing of economic data. The Commerce Department said it could not quantify the full effects of the shutdown on fourth-quarter GDP growth.
Economists expect the longest shutdown in history will hurt growth in the first quarter. Growth in consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a still strong 2.8 percent rate in the fourth quarter. Consumer spending grew at a robust 3.5 percent rate in the third quarter.
Consumption continues to be underpinned by a strong labor market, with inflation-adjusted income at the disposal of households jumping at a 4.2 percent rate in the fourth quarter compared to a 2.6 percent pace in the prior period.
A moderation in spending is, however, likely amid reports 2018 tax refunds have been smaller than in the previous years.
Business spending on equipment accelerated in the fourth quarter from the prior period, growing at a 6.7 percent rate, after losing speed since the first quarter of 2018.
Inventory accumulation
The trade deficit widened further as a combination of the U.S.-China trade dispute, strong dollar and weakening global demand restrained export growth. The trade tensions also led businesses to hoard imports.
The trade shortfall subtracted 0.22 percentage point from fourth-quarter GDP growth after slicing off 2 percentage points in the July-September period. With consumer spending slowing, some of the imports ended up in warehouses, accelerating the pace of inventory accumulation.
While that offset some of the drag on GDP growth from the trade deficit, the piling up of stock is bad news for first-quarter growth.
Inventories increased at a $97.1 billion rate in the fourth quarter after rising at an $89.8 billion pace in the July-September quarter. Inventory investment added 0.13 percentage point to GDP growth last quarter after contributing 2.33 percentage points in the prior period.
“There was a rapid buildup of inventories in the fourth quarter, so inventories likely will be a headwind for growth in the future,” said Daniel Silver, an economist at JPMorgan in New York.
Residential construction contracted at a 3.5 percent rate, marking the fourth straight quarterly decline. Homebuilding has been weighed down by higher mortgage rates, land and labor shortages as well as tariffs on imported lumber.
Government investment increased at a 0.4 percent rate, the slowest since the third quarter of 2017. Nondefense investment contracted at a 5.6 percent rate, the biggest decline in five years, likely reflecting the effects of the five-week government shutdown.
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As Walmart moves to phase out its familiar blue-vested “greeters” at 1,000 stores nationwide, disabled workers who fill many of those jobs say they’re being ill-treated by a chain that styles itself as community-minded and inclusive.
Walmart told greeters around the country last week that their positions would be eliminated on April 26 in favor of an expanded, more physically demanding “customer host” role. To qualify, they will need to be able to lift 25-pound (11-kilogram) packages, climb ladders and stand for long periods.
That came as a heavy blow to greeters with cerebral palsy, spina bifida and other physical disabilities. For them, a job at Walmart has provided needed income, served as a source of pride and offered a connection to the community.
Customer backlash
Now Walmart, America’s largest private employer, is facing a backlash as customers rally around some of the chain’s most highly visible employees.
Walmart says it is striving to place greeters in other jobs at the company, but workers with disabilities are worried.
Donny Fagnano, 56, who has worked at Walmart for more than 21 years, said he cried when a manager at the store in Lewisburg, Pa., called him into the office last week and told him his job was going away.
“I like working,” he said. “It’s better than sitting at home.”
Fagnano, who has spina bifida, said he was offered a severance package. He hopes to stay on at Walmart and clean bathrooms instead.
Walmart greeters have been around for decades, allowing the retail giant to put a friendly face at the front of its stores. Then, in 2016, Walmart began replacing greeters with hosts, adding responsibilities that include helping with returns, checking receipts to deter shoplifters and keeping the front of the store clean. Walmart and other chains have been redefining roles at stores as they compete with Amazon.
The effect of the greeter phase-out on disabled and elderly employees — who have traditionally gravitated toward the role as one they were well-suited to doing — largely escaped public notice until last week, when Walmart launched a second round of cuts.
As word spread, first on social media and then in local and national news outlets, outraged customers began calling Walmart to complain. Tens of thousands of people signed petitions. Facebook groups sprang up with names like “Team Adam” and “Save Lesley.” A second-grade class in California wrote letters to Walmart’s CEO on behalf of Adam Catlin, a disabled greeter in Pennsylvania whose mother had written an impassioned Facebook post about his plight. Walmart said it has offered another job to Catlin.
In Galena, Ill., hundreds of customers plan to attend an “appreciation parade” for Ashley Powell on her last day of work as a greeter.
“I love it, and I think I’ve touched a lot of people,” said Powell, 34, who has an intellectual disability.
‘What am I going to do?’
In Vancouver, Wash., John Combs, 42, who has cerebral palsy, was devastated and then angered by his impending job loss. It had taken his family five years to find him a job he could do, and he loved the work, coming up with nicknames for all his co-workers.
“What am I going to do — just sit here on my butt all day in this house? That’s all I’m going to do?” Combs asked his sister and guardian, Rachel Wasser. “I do my job. I didn’t do anything wrong.”
Wasser urged the retailer to “give these people a fair shake. … If you want to make your actions match your words, do it. Don’t be a wolf in sheep’s clothing.”
With the U.S. unemployment rate for disabled people more than twice that for workers without disabilities, Walmart has long been seen as a destination for people like Combs. Advocacy groups worry the company is backsliding.
“It’s the messaging that concerns me,” said Gabrielle Sedor, chief operations officer at ANCOR, a trade group representing service providers. “Given that Walmart is such an international leader in the retail space, I’m concerned this decision might suggest to some people that the bottom line of the company is more important to the company than inclusive communities. We don’t think those two are mutually exclusive.”
The greeter issue has already prompted at least three complaints to the U.S. Equal Employment Opportunity Commission, as well as a federal lawsuit in Utah alleging discrimination under the Americans with Disabilities Act. Under the federal law, employers must provide “reasonable” accommodations to workers with disabilities.
Walmart did not disclose how many disabled greeters could lose their jobs. The company said that after it made the change at more than 1,000 stores in 2016, 80 percent to 85 percent of all affected greeters found other roles at Walmart. It did not reveal how many of them were disabled.
This time, Walmart initially told greeters they would have 60 days to land other jobs at the company. Amid the uproar, the company has extended the deadline indefinitely for greeters with disabilities.
“We recognize that our associates with physical disabilities face a unique situation,” Walmart spokesman Justin Rushing said in a statement. The extra time, he said, will give Walmart a chance to explore how to accommodate such employees.
Offers made
Walmart said it has already made offers to some greeters, including those with physical disabilities, and expects to continue doing so in the coming weeks.
But some workers say they have been tacitly discouraged from applying for other jobs.
Mitchell Hartzell, 31, a full-time Walmart greeter in Hazel Green, Ala., said his manager told him “they pretty much didn’t have anything in that store for me to do” after his job winds down in April. He said he persisted, approaching several assistant managers to ask about openings, and found out about a vacant position at self-checkout. But it had already been promised to a greeter who doesn’t use a wheelchair, he said.
“It seems like they don’t want us anymore,” said Hartzell, who has cerebral palsy.
Jay Melton, 40, who has worked as a greeter in Marion, N.C., for nearly 17 years, loves church, Tar Heels basketball and Walmart. His sister-in-law, Jamie Melton, said the job is what gets him out of bed.
“He doesn’t have a lot of things he does himself that bring him joy,” she said. Addressing Walmart, Melton added: “When you cut a huge population of people out, and you have written a policy that declares they are no longer capable of doing what they have been doing, that is discrimination.”
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Women around the world are granted only three-quarters of the legal rights enjoyed by men, often preventing them from getting jobs or opening businesses, the World Bank said in study published Wednesday.
“If women have equal opportunities to reach their full potential, the world would not only be fairer, it would be more prosperous as well,” Kristalina Georgieva, the bank’s interim president, said in a statement.
While reforms in many countries are a step in the right direction, “2.7 billion women are still legally barred from having the same choice of jobs as men,” the statement said.
The study included an index measuring gender disparities that was derived from data collected over a decade from 187 countries and using eight indicators to evaluate the balance of rights afforded to men and women.
The report showed progress over the past 10 years, with the index rising to 75 from 70, out of a possible 100, as 131 countries have agreed to enact 274 reforms, adopting laws or regulations allowing greater inclusion of women.
Among the improvements, 35 countries have proposed laws against sexual harassment in the workplace, granting protections to an additional 2 billion women, while 22 nations have abolished restrictions that kept women out of certain industrial sectors.
Six perfect scores
Six nations — Belgium, Denmark, France, Latvia, Luxembourg and Sweden — scored a 100, “meaning they give women and men equal legal rights in the measured areas,” the World Bank said.
A decade ago, no economy had achieved a perfect score.
On the other hand, too many women still face discriminatory laws or regulations at every stage of their professional lives: 56 nations made no improvement over the last decade.
South Asia saw the greatest progress, although it still achieved a relatively low score of 58.36. It was followed by Southeast Asia and the Pacific, at 70.73 and 64.80, respectively.
Latin America and the Caribbean recorded the second-highest scores among emerging and developing economies at 79.09.
Conversely, the Middle East and North Africa posted the lowest score for gender equality at 47.37. The World Bank nevertheless pointed to encouraging changes, such as the introduction of laws against domestic violence, in particular in Algeria and Lebanon.
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The Federal Reserve will stop shrinking its $4 trillion balance sheet later this year, Fed Chairman Jerome Powell said on Wednesday, ending a process that investors say works at cross-purposes with the Fed’s current pause on interest rate hikes.
“We’ve worked out, I think, the framework of a plan that we hope to be able to announce soon that will light the way all the way to the end of balance sheet normalization,” Powell told members of the House Financial Services Committee in what were his most detailed remarks to date on the subject.
“We’re going to be in a position … to stop runoff later this year,” he said, adding that doing so would leave the balance sheet at about 16 percent or 17 percent of GDP, up from about 6 percent before the financial crisis about a decade ago.
The U.S. gross domestic product is currently about $20 trillion, suggesting the Fed’s balance sheet would be between $3.2 trillion and $3.4 trillion.
The Fed has been trimming its balance sheet — bulked up by trillions of dollars of bond-buying during the post-crisis years to help keep interest rates low and bolster the economy — by as much as $50 billion a month since October 2017. As recently as a few months ago it had expected to keep shrinking its portfolio for another couple of years.
New tack
But in a series of meetings that began in November, the Fed has been devising a new approach. With rising demand for currency around the world, and from U.S. banks for reserves held at the central bank, Fed policymakers now believe a big balance sheet is necessary just to ensure it has proper control over the short-term interest rates it sets to manage the economy.
In addition, Fed policymakers now say balance sheet policy should take financial and economic conditions into account.
Questions about the plan remain, including whether the Fed will adjust the maturities of its Treasury portfolio, and how it will go about shedding the mortgage-backed securities (MBS) it accumulated during its asset-buying days.
Powell said the Fed still has a bunch of decisions ahead of it.
“The one on MBS sales is really closer to the back of the line — really, we have to decide about the maturity composition, things like that, and we’ll be working through that in a very careful way,” Powell said. “Markets are sensitive to this.”
Powell’s remarks on the balance sheet came toward the end of more than two hours of testimony before the Democrat-led House panel that includes several new members, including New York Democrat Alexandria Ocasio-Cortez.
But the Green New Deal advocate and Bronx populist asked no questions during the debate, and much of what Powell said on Wednesday repeated comments made Tuesday to the Republican-controlled Senate Banking Committee, including that the economy is on solid ground and the Fed would be patient on raising rates.
Inflation goal unchanged
Powell was asked, as he was in the Senate, about the Fed’s plan to rethink its policy framework this year. He assured lawmakers that the Fed is merely trying to refine its approach so it can meet its current 2 percent inflation goal.
“We are not looking at a higher inflation target, full stop,” he said.
Powell also repeated his warnings against a failure by Congress to raise the debt ceiling, saying there would be “bad consequences” should the United States default on its debt payments.
Powell by law appears two times a year before Congress to brief members of the House Financial Services Committee and the Senate Banking Committee on monetary policy and the state of the economy.
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The top U.S. trade official said Wednesday that a new trade deal with China is not close to being completed.
“Much still needs to be done before an agreement can be reached,” U.S. Trade Representative Robert Lighthizer told a congressional panel in Washington. “If we can complete this effort, and again I say if, and if we can reach a resolution on the issue of enforceability, we might have an agreement that enables us to turn the corner in our relationship with China.”
The U.S. and China, the world’s two biggest economies, have been negotiating for months on a new agreement, even as they have imposed hefty new tariffs on billions of dollars of each other’s exports.
WATCH: US-China Trade Talks ‘Not Close’
Lighthizer said the countries’ negotiators, who have been meeting in Washington and Beijing, “are making real progress.”
President Donald Trump cited that progress Sunday in postponing what would have been a sharp increase in U.S. duties on $200 billion in Chinese imports that would have taken effect Friday.
The most recent U.S. statistics show China last year had a $382 billion trade surplus in deals with the United States through November. Trump is trying to alter trade terms between the two countries to end what the U.S., Japan and European countries contend are China’s unfair trade practices, including state intervention in markets, subsidies of some industries and theft of foreign technology.
China has offered to increase its purchase of American farm products and energy as part of a new trade pact.
Members of Congress, both Republicans and Democrats, urged Lighthizer to reach a wide-ranging trade agreement.
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Boeing on Wednesday unveiled an unmanned, fighter-like jet developed in Australia and designed to fly alongside crewed aircraft in combat for a fraction of the cost.
The U.S. manufacturer hopes to sell the multi-role aircraft, which is 38 feet long (11.6 meters) and has a 2,000 nautical mile (3,704-kilometer) range, to customers around the world, modifying it as requested.
It is Australia’s first domestically developed combat aircraft in decades and Boeing’s biggest investment in unmanned systems outside the United States, although the company declined to specify the dollar amount.
Defense contractors are investing increasingly in autonomous technology as militaries around the world look for a cheaper and safer way to maximize their resources.
Boeing rivals like Lockheed Martin and Kratos Defense and Security Solutions are also investing in such aircraft.
Four to six of the new aircraft, called the Boeing Airpower Teaming System, can fly alongside a F/A-18E/F Super Hornet, said Shane Arnott, director of Boeing research and prototype arm Phantom Works International.
“To bring that extra component and the advantage of unmanned capability, you can accept a higher level of risk,” he said.
The Mitchell Institute for Aerospace Studies in the United States said last year that the U.S. Air Force should explore pairing crewed and uncrewed aircraft to expand its fleet and complement a limited number of “exquisite, expensive, but highly potent fifth-generation aircraft” like the F-35.
“Human performance factors are a major driver behind current aerial combat practices,” the policy paper said. “Humans can only pull a certain number of Gs, fly for a certain number of hours, or process a certain amount of information at a given time.”
In addition to performing like a fighter jet, other roles for the Boeing system early warning, intelligence, surveillance and reconnaissance alongside aircraft like the P-8 Poseidon and E-7 Wedgetail, said Kristin Robertson, vice president and general manager of Boeing Autonomous Systems.
”It is operationally very flexible, modular, multi-mission,” she said. “It is a very disruptive price point. Fighter-like capability at a fraction of the cost.”
Robertson declined to comment on the cost, saying that it would depend on the configuration chosen by individual customers.
The jet is powered by a derivative of a commercially available engine, uses standard runways for take-off and landing, and can be modified for carrier operations at sea, Robertson said. She declined to specify whether it could reach supersonic speeds, common for modern fighter aircraft.
Its first flight is expected in 2020, with Boeing and the Australian government producing a concept demonstrator to pave the way for full production.
Australia, a staunch U.S. ally, is home to Boeing’s largest footprint outside the United States and has vast airspace with relatively low traffic for flight testing.
The Boeing Airpower Teaming System will be manufactured in
Australia, but production lines could be set up in other countries depending on sales, Arnott said.
The United States, which has the world’s biggest military budget, would be among the natural customers for the product.
The U.S. Air Force 2030 project foresees the Lockheed Martin F-35A Joint Strike Fighter working together with stealthy combat drones, called the “Loyal Wingman” concept, said Derrick Maple, principal analyst for unmanned systems at IHS Markit.
“The U.S. has more specific plans for the wingman concept, but Western Europe will likely develop their requirements in parallel, to abate the capabilities of China and the Russian Federation and other potential threats,” he said.
Robertson declined to name potential customers and would not comment on potential stealth properties, but said the aircraft had the potential to sell globally.
“We didn’t design this as a point solution but a very flexible solution that we could outfit with payloads, sensors, different mission sets to complement whatever their fleet is,” she said. “Don’t think of it as a specific product that is tailored to do only one mission.”
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Brazil’s Senate confirmed Roberto Campos Neto as central bank governor on Tuesday, after he stressed that controlling inflation and reining in public spending were critical to supporting economic growth.
Much work must still be done to secure Brazil’s economic recovery, Campos Neto told the Senate’s economic committee at his confirmation hearing.
He indicated there would be little change, if any, to monetary policy, echoing the central bank’s current stance that decisions are based on “caution, serenity and perseverance.”
The Senate approved Campos Neto by a vote of 55 in favor to six opposed, following unanimous confirmation by the economic committee.
He will officially assume the role with the signature of President Jair Bolsonaro, likely later this week.
Campos Neto is a former senior executive at Banco Santander Brasil SA. A University of California-trained economist, he has spent his career in banking and market trading and is acutely aware of the impact central bank policy decisions and communications have on markets, analysts say.
In his testimony Tuesday, Campos Neto said the country must keep opening up capital markets to foreign and domestic investors, while avoiding inflationary stimulus or state intervention.
His rhetoric largely mirrored that of several advisers to President Jair Bolsonaro, most of whom are pushing for an overhaul of the nation’s costly public pension system and a broad series of privatizations.
Campos Neto predicted Brazil’s economy would perform better this year than last, thanks in part to reforms the government is promoting.
Brazilian interest rates have been held at a record low 6.50 percent but economic growth has slowed in recent months, weakening what was already a sluggish recovery from the 2015-16 recession.
“While his market knowledge could make him adopt a more forceful stance at some point, the need to build credibility, particularly at the beginning of his tenure, would favor prudence,” said a U.S.-based source with first-hand experience of Brazilian markets.
Campos Neto refused to discuss whether Brazil should sell any of its $375 billion reserves, saying it was something that would require more analysis.
International FX reserves serve as an insurance policy in times of crisis, he said.
“The price of that insurance is much lower now,” he said, noting the narrowing of the spread between U.S. and Brazilian interest rates to less than 400 basis points from over 1,200 bps a couple of years ago.
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The Federal Reserve is in “no rush to make a judgment” about further changes to interest rates, Fed Chairman Jerome Powell told U.S. lawmakers on Tuesday as he spelled out the central bank’s approach to an economy that is likely slowing.
In two hours of testimony to the Senate Banking Committee, Powell elaborated on the “conflicting signals” the Fed has tried to decipher in recent weeks, including disappointing data on retail sales and other aspects of the economy that contrast with steady hiring, wage growth, and ongoing low unemployment.
“The baseline outlook is a good one,” Powell said, but slower growth overseas is a drag on the U.S. economy that “we may feel more of” in the coming months.
“We have the makings of a good outlook and our (rate-setting) committee is really monitoring the crosscurrents, the risks, and for now we are going to be patient with our policy and allow things to take time to clarify.”
If anything, Powell’s comments solidified a Fed policy shift last month in which it indicated it would pause a three-year cycle of rate hikes, which had been projected to run well into 2020, until the inflation or growth dynamics change.
The flow of new workers into the labor force, for example, has surprised the central bank and means “there is more room to grow,” Powell said.
Powell, who has led the Fed for just over a year, faced virtually no pushback from Republicans on the Senate panel, as former Fed chief Janet Yellen had in the past, that the central bank was courting inflation or financial risks by leaving rates too low.
After raising rates four times in 2018, and anticipating further hikes in 2019, the Fed in January switched to a “patient” stance as concerns about the global economy took root, and markets voiced doubts about the U.S. economic recovery.
The Fed’s benchmark overnight lending rate currently is within a range of 2.25 percent to 2.50 percent.
There was also little said by lawmakers about the Fed’s evolving plan to maintain a balance sheet of perhaps $3.5 trillion, which would be lower than the current $4 trillion but still massive by historical standards. Republican lawmakers generally have pushed the central bank to reduce a financial footprint inflated by crisis-era programs many in the party considered risky.
Financial markets were largely unmoved by Powell’s testimony, which was the first of his two hearings this week in Congress. He is due to appear before the House of Representatives Financial Services Committee on Wednesday.
U.S. Treasury yields were lower in afternoon trading while major U.S. stock indexes were slightly higher. The dollar was weaker against a basket of currencies.
Political Shift
Powell told lawmakers that the Fed expected the U.S. economy to grow solidly but at a slower pace this year than the estimated 3 percent growth for 2018, an outlook that was built into the central bank’s policy statement in January.
The “patient” approach to rate hikes has been a staple of Fed commentary since early last month.
“As long as we have steady growth with no inflation, that should keep the Fed at bay,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.
But Tuesday’s hearing did offer a preview of issues the central bank may confront as the 2020 presidential campaign takes shape, and Democrats use their recently-won control of the House to press new economic and political ideas.
Amid a growing debate over whether the U.S. government may have far more room to expand its debt than conventional economics might recommend, or whether the Fed’s own balance sheet might help finance a “Green New Deal” of economic and environmental programs, Powell made clear he was among the traditionalists.
“The idea that deficits don’t matter for countries that can borrow in their own currency I think is just wrong. I think that U.S. debt is fairly high as a level of (gross domestic product) and, much more importantly than that, it’s growing faster than GDP,” Powell said. “To the extent that people are talking about the Fed – our role is not to provide support for particular policies” on environmental, social or other related issues.
Indeed, asked about the upcoming need to boost the U.S. debt ceiling, he said he considered the prospect of a U.S. government default on its obligations “a bright line, and I hope we never do pass it.”
Powell’s appearances on Capitol Hill this week, part of his semi-annual testimony to Congress, are his first since Democrats won control of the House in the November elections. They also follow the kickoff of a number of 2020 presidential campaigns.
Along with questions that ranged from the sources of rural poverty to the impact of climate change on banks, Senate committee members pressed points likely to figure into the Democratic primary battle.
“The Fed works for big rich banks that want to get bigger and richer,” said Senator Elizabeth Warren, a Massachusetts Democrat running for president. She questioned whether Powell would be adequately aggressive in reviewing a proposed megamerger between U.S. regional lender BB&T and rival SunTrust Banks.
Powell pledged an “open and transparent” review of the deal.
When asked whether there had been any “direct or indirect” communication from the White House about interest rates, Powell deferred, saying he would not comment on private conversations with other officials.
President Donald Trump has castigated the Fed for raising rates, arguing that the monetary tightening was undercutting his administration’s efforts to boost economic growth.
On Tuesday, Powell repeated his oft-heard pledge that the Fed will make policy decisions “in a way that is not political.”
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