SEOUL, June 29 (Reuters) – South Korean battery maker LG Energy Solution Ltd (LGES) (373220.KS) plans to reevaluate its investment plan for a standalone Arizona battery factory due to the current U.S. economic environment, a company spokesperson said on Wednesday.
The spokesperson’s comments on the previously announced $1.3 billion investment came after LGES said in a statement that, “Given the unprecedented economic conditions and investment circumstances in the U.S., LG Energy Solution is currently reviewing various investment options.”
The company, South Korea’s biggest player in the booming market for electric vehicles and batteries, said no decisions have been made in its statement, which didn’t mention the Arizona plan.
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LGES shares fell 2.6% in early trading, while the benchmark KOSPI (.KS11) index was down.
The statement comes just three months after LGES, which counts Tesla Inc (TSLA.O), General Motors Co (GM.N) and Volkswagen AG (VOWG_p.DE) among its customers, announced plans to build a battery factory in Arizona by 2024 to meet demand from startups and other North American customers. read more
LGES said in March the plant would be its first U.S. factory to make cylindrical cells, a type of battery that has been used in Tesla and Lucid vehicles. Construction was to begin in the second quarter of 2022, it said, with mass production to start in 2024.
In the United States, LGES is building three plants with GM in Ohio, Tennessee and Michigan and plans to expand its existing factory in Michigan. read more
LGES has production sites in the United States, South Korea, China, Poland, Canada and Indonesia.
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Reporting by Heekyong Yang; Editing by Tom Hogue and Kenneth Maxwell
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WASHINGTON, June 28 (Reuters) – The White House said on Tuesday that companies are planning to invest more than $700 million to boost U.S. manufacturing capacity for electric vehicle (EV) chargers – actions set to add at least 2,000 jobs and make charging more accessible and affordable.
The investments include $450 million earmarked by Volkswagen (VOWG_p.DE) unit Electrify America and more than $250 million by Siemens (SIEGn.DE) to expand its Grand Prairie, Texas and Ponoma, California EV charger plants.
FLO, an EV charging network operator, is also investing $3 million in its first U.S. assembly plant in Auburn Hills, Michigan.
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The investments will help boost U.S. manufacturing capacity for EV chargers to more than 250,000 per year, the White House said, without giving a figure for current production capacity.
Last August, President Joe Biden set a non-binding goal to make half of all new vehicles sold in 2030 electric, fuel cell or plug-in hybrid. As part of that, he wants to see the U.S. network of EV chargers grow to 500,000 by 2030, up from about 100,000 today.
The investments by private companies follow more than $7.5 billion in subsidies that were in last year’s bipartisan infrastructure law.
Biden’s goals and the subsidies have helped spur private investments, White House deputy national climate advisor Ali Zaidi told reporters on Monday.
That has meant “chargers weren’t getting brought in from overseas (and) they were being a source of opportunity in communities all around the country,” he said in a call about a U.S. report showing jobs in the energy business rose 4% last year, led by jobs in carbon-cutting vehicles. read more
The U.S. public charging network for EVs is becoming more robust, but significant differences in reliability and performance remain between providers, an industry ranking by engineering consulting firm umlaut found this year. read more
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Reporting by Timothy Gardner; Editing by Edwina Gibbs
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WASHINGTON, June 28 (Reuters) – U.S. consumer confidence dropped to a 16-month low in June as worries about high inflation left consumers to anticipate that the economy would slow significantly or even slide into recession in the second half of the year.
Despite the gloomy outlook, consumers showed little sign of cutting back on spending, with buying plans for motor vehicles and other big ticket items like refrigerators and washing machines increasing, the survey from the Conference Board on Tuesday showed. But fewer consumers compared to April intended to go away on vacation at home or abroad, reflecting record high gasoline prices and expensive airfares.
The economy is on recession watch as the Federal Reserve aggressively tightens monetary policy to tackle inflation. For now, it continues to grow, with other data on Tuesday showing the goods trade deficit again narrowing significantly in May as exports hit a record high.
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“Right now we are at an inflection point in the economy, where actual spending and economic activity is still positive, however, consumer confidence and financial conditions, especially interest rates, are indicating a slowdown ahead,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
The Conference Board’s consumer confidence index dropped 4.5 points to a reading of 98.7 this month, the lowest since February 2021. Consumers’ assessment of current business and labor market conditions were little changed. But their short-term outlook for income, business and labor market conditions were the weakest since March 2013, which the Conference Board said were “suggesting weaker growth in the second half of 2022 as well as growing risk of recession by year end.”
Consumer fears of a recession could become self-fulfilling. The University of Michigan’s survey last week showed consumer sentiment plunging to a record low in June.
The Conference Board survey places more emphasis on the labor market, which remains tight, but consumers are feeling the inflation pain. National gasoline prices averaged just above $5 per gallon for most of June, before slipping back to around $4.88 per gallon as of Tuesday, according to data from AAA.
“Consumers hate inflation and this is depressing consumer confidence via the expectation channel even as households see labor market conditions as strong,” said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
The Conference Board survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, ticked up to 39.7 from a reading of 39.5 in May. This measure correlates to the unemployment rate from the Labor Department.
There were 11.4 million job openings at the end of April, with nearly 2 openings per every unemployed person.
Stocks on Wall Street were mostly lower. The dollar rose against a basket of currencies. U.S. Treasury prices fell.
INFLATION EXPECTATIONS JUMP
Consumers’ inflation expectations over the next 12 months jumped to a record high 8.0% from 7.5% in May.
The Fed this month raised its policy rate by three-quarters of a percentage point, its biggest hike since 1994. The U.S. central bank has increased its benchmark overnight interest rate by 150 basis points since March.
Consumers still intend to keep on spending on goods even as they worry about inflation. The share of consumers planning to buy a motor vehicle over the next six months rose. More consumers planned to buy major household appliances, including dryers and vacuum cleaners.
But vacation is not on the cards for many, which could slow consumer spending and economic growth in the second half.
Plans to buy a home were unchanged as borrowing costs increase further and house prices remain elevated amid a shortage of entry-level homes.
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller national home price index increased 20.4% on a year-on-year basis in April after surging a record 20.6% in March. Hefty price gains were recorded in Tampa, Miami and Phoenix.
Signs that house price inflation has probably peaked were reinforced by a third report from the Federal Housing Finance Agency showing home prices increased 18.8% in the 12 months through April after accelerating 19.1% in March.
Nevertheless, the economy is chugging along. A fourth report from the Commerce Department showed the goods trade deficit contracted 2.2% to $104.3 billion in May, suggesting that trade could contribute to economic growth this quarter for the first time in nearly two years. read more
A record trade deficit weighed on the economy in the first quarter, resulting in gross domestic product declining at a 1.5% annualized rate. Trade has subtracted from GDP for seven straight quarters. Growth estimates for the second quarter range from as low as a 0.3% rate to as high as a 2.9% pace.
Wholesale inventories increased 2.0% in May, while stocks at retailers climbed 1.1%.
“Exports and inventories are still rising in May at least, and this means the recession clouds offshore will have to sit on the horizon for another month,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
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Reporting by Lucia Mutikani; Editing by Paul Simao and Chizu Nomiyama
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A electric vehicle charger is seen as a vehicle charges in Manhattan, New York, U.S., December 7, 2021. REUTERS/Andrew Kelly
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June 28 (Reuters) – German industrial giant Siemens AG (SIEGn.DE) is investing more than $100 million in Volkswagen AG’s (VOWG_p.DE) Electrify America unit, becoming the first outside investor in the North American network of electric vehicle charging stations.
Including new funds from its parent Volkswagen, the Electrify America unit would receive a total injection of $450 million, the companies said.
The partnership in Electrify America is “part of a much larger investment that Siemens is making in the electrification market,” said John DeBoer, head of the Siemens’ North American e-mobility unit.
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Electrify America was established by VW in 2017 with a 10-year, $2-billion investment commitment in the wake of the German automaker’s diesel emissions cheating scandal.
The two companies did not specify the exact amount each is contributing to the latest investment, other than to say Siemens’ share is more than $100 million.
Siemens, which is making the investment through financing arm Siemens Financial Services, will be a minority investor with a seat on Electrify America’s board.
A year ago, Reuters reported that VW intended to sell a stake in Electrify America as the automaker hoped to attract up to $1 billion in outside funding to help expand infrastructure for electric vehicles. read more
In an interview, Giovanni Palazzo, Electrify America president and CEO, said the company still plans to more than double its charging infrastructure to 1,800 charging stations and more than 10,000 fast chargers by 2026.
Electrify America has EV charging partnerships with a broad array of vehicle manufacturers outside the Volkswagen Group, including Ford Motor Co (F.N), Hyundai/Kia (005380.KS), BMW (BMWG.DE), Mercedes-Benz (MBGn.DE), Geely Automobile’s (0175.HK) Volvo and Polestar, and Tesla rival Lucid (LCID.O).
Siemens, which builds charging stations for commercial fleets and other customers, has invested in several electrification companies, including Swedish battery startup Northvolt and wireless charging startup WiTricity, as well as Electrify America competitor ChargePoint (CHPT.N), according to investor website PitchBook.
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Editing by Deepa Babington
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Wild party held at $8 million home, authorities say
Video from social media shows a wild party at an $8 million beach house in Florida. Deputies say teens broke in, chaos followed, and they’re actively looking for each one.
LAKE MARY, Fla. – Video from social media appears to show a wild party inside an $8 million beach house in Florida. Deputies said teenagers broke into the home and chaos followed. Now, they are actively looking for each one.
In multiple videos on the Walton County Sheriff’s Office Facebook page, investigators said party-goers are seen trying on the homeowner’s jewelry, dancing in the hallway, and having a boxing match in the foyer. FOX 35 News sent the video to Richard Dempsey, a luxury real estate senior advisor with over three decades in the business.
“It’s crazy. Just crazy,” said Dempsey as he scrolled through each video.
He has handled selling luxury properties like the one used for the party and is currently selling this $25 million mansion in Orlando. Dempsey said people with high-end homes on the market are often at risk of others trying to get onto or into the property.
“We have a saying in the office, ‘when the market is crazy, the crazies come out,’” said Dempsey.
Walton County Sheriff’s officials said they were alerted to the massive party by a noise complaint. It’s not clear if the homeowner had cameras, but Dempsey said this is your sign to get some.
“Common sense practical safety measures to make sure your property is protected,” said Dempsey, “A security system would have alerted the owners long before it got to this.”
Law enforcement officials in Central Florida have had to shut down other types of unauthorized parties at vacation rentals. Back in 2020, Osceola County sheriff’s deputies arrested over a dozen people after a series of rowdy parties in the Windsor at Westside Subdivision.
Dempsey said he advises clients not to list their properties on Airbnb as they wait to sell. He said the reward of extra money may be too high of a risk.
“If you’re trying to sell, listing on Airbnb kind of rental is not very smart,” said Dempsey, “It opens it up to a lot of risks.”
Airbnb is also working to crack down on unauthorized parties in some of these million-dollar rentals or other vacation homes.
Around New Year’s Eve – the company wouldn’t let guests with negative reviews book one-night stays in Orlando or Kissimmee. It hoped to lessen the chance guests would use it for parties.
FOX 35 did reach out to Airbnb to see if it will have restrictions in place again for the Fourth of July but we are still waiting to hear back.
The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/File Photo
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June 15 (Reuters) – The U.S. Securities and Exchange Commission (SEC) on Wednesday requested information on the activities of financial information providers amid growing concerns over their influence on investment decisions, despite not being fully regulated.
Critics have expressed concerns that information providers, particularly index companies such as S&P Global, MSCI (MSCI.N) and FTSE Russell which assist in trillions of dollars of investment decisions globally, have acted as unregulated investment advisors.
“The role of these information providers today raises important questions under the securities laws as to when they are providing investment advice rather than merely information,” U.S. SEC chair Gary Gensler said in a statement.
Index providers are currently treated as data publishers by the SEC.
The information gathered will help the watchdog to understand whether information providers should be regulated, given the influence of these companies in driving investment decisions, the statement said.
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Reporting by Akriti Sharma and Shubhendu Deshmukh in Bengaluru; editing by Richard Pullin
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COPENHAGEN, June 15 (Reuters) – Toymaker Lego on Wednesday said it will invest more than $1 billion in a factory in the United States to shorten supply chains and keep up with growing demand for its coloured plastic bricks in one of its biggest markets.
The factory in Chesterfield County, Virginia, will be the Danish company’s second in North America and seventh worldwide, after it announced a new factory in Vietnam last year. read more
The investment is in line with a decade-old strategy of placing production close to its key markets, which the company says has been beneficial as the global retail industry faces pandemic-related supply chain issues. The plant will also be carbon neutral.
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“Our strategy to be close to our core markets has only been confirmed recently,” Chief Operations Officer Carsten Rasmussen told Reuters.
The toy market is characterized by large seasonal fluctuations, while more than half of the company’s products in stores are new items, he said.
“It’s difficult to predict what children and adults want to buy for a birthday or for Christmas. So the reaction time is very worthwhile to make sure we have the right products on the shelves,” said Rasmussen.
The factory will be powered by renewable energy produced at an onsite solar park, the company said.
Lego has pledged to replace oil-based plastic bricks with ones made from sustainable materials by the end of the decade.
The 160,000-square-meter factory is scheduled to be operational in the second half of 2025 and will employ more than 1,760 people. Lego closed a smaller factory in Connecticut in 2006, and the U.S. market is currently supplied from a factory in Mexico.
“The U.S. market has done really well in recent years. We see huge potential in the United States and throughout the Americas,” said Rasmussen.
The company now employs around 2,600 people in the United States, where it operates 100 stores.
The family-owned company outpaced growth in the toy industry last year, with sales growing 27% to 55.3 billion Danish crowns ($7.8 billion). The company is also investing in increasing capacity at existing factories in Europe and China. read more
Lego produces roughly 100 billion bricks each year and employs around 24,000 people worldwide.
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Reporting by Jacob Gronholt-Pedersen; Editing by Bernadette Baum and Mark Porter
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DUBAI, June 15 (Reuters) – The prince who’s the international face of Saudi business may no longer be able to call all the shots.
For years, Prince Alwaleed bin Talal, Saudi Arabia’s self-styled Warren Buffett, has made hundreds of millions of dollars by investing in companies from Citigroup (C.N) to Uber (UBER.N) to Twitter (TWTR.N) with almost complete autonomy.
Now, his Kingdom Holding (4280.SE) investment firm counts Saudi Arabia’s Public Investment Fund (PIF) as a minority shareholder and the powerful sovereign wealth fund is unlikely to sit on the sidelines, sources familiar with the matter said.
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The wealth fund, which is at the heart of Crown Prince Mohammed bin Salman’s ambitious plan to diversify the Saudi economy, will want Kingdom Holding’s investment committee to have more power over decision making than in the past, two sources with knowledge of Kingdom’s business told Reuters
“(PIF) will want to be an active investor,” said a sovereign wealth fund investor in the Gulf. “The investment committee of Kingdom Holding is essentially Alwaleed, and I can’t imagine the PIF being at the whims of the prince.”
The PIF, Kingdom Holding, Prince Alwaleed and his spokesman all declined to comment when contacted by Reuters about what PIF’s minority stake would mean for future investments.
Alwaleed, 67, had long kept a tight grip on Kingdom’s shares, owning all but 5% traded on the Saudi stock market until PIF purchased a 16.87% stake for $1.5 billion last month.
The deal came more than four years after Prince Alwaleed was swept up in an anti-corruption drive ordered by the Crown Prince and held for nearly three months at Riyadh’s Ritz-Carlton along with scores of royals, senior officials and businessmen.
Most detainees were released after reaching financial settlements and Prince Alwaleed said in March 2018 that he had struck a confidential and secret deal with the government.
It was not clear whether the PIF purchase was related to the settlement. A spokesman for Prince Alwaleed, the grandson of Saudi Arabia’s first king Abdulaziz and Lebanon’s first prime minister Riad Al Solh, has said it was purely a business deal.
The PIF deal was struck at Kingdom Holding’s lowest share price this year, with no premium. Bankers who usually work with the PIF or Alwaleed were not engaged for this deal, two sources familiar with the matter said.
‘CHANGE OF TACK’
The Saudi state took direct controlling stakes in the businesses of some Saudi entrepreneurs detained in 2017, including the Binladen construction group and media company MBC, as part of the settlements securing their release.
Analysts said, however, that the intervention in Kingdom Holding marked a shift in strategy by the Saudi government, as the other stakes are being held by the Ministry of Finance (MoF) rather than the wealth fund.
“It is an indication of a change of tack,” said James Swanston, Middle East and North Africa economist at Capital Economics. “With PIF now holding the stake, it may now be seen more as an investment opportunity.”
The PIF’s role is to earn enough income through investments to develop new sectors in the Saudi economy whereas the Ministry of Finance is more the guardian of day-to-day spending and is much less strategic or interested in risk, said Jim Krane, research fellow at Rice University’s Baker Institute.
Alwaleed’s investment style has focused on new opportunities that could be very lucrative but carry risk, as well as looking at undervalued assets, said one of the sources with knowledge of Kingdom’s business.
“The PIF is essentially buying a stake in Prince Alwaleed’s successful investing track record. As long as Alwaleed demonstrates he can still pick winners, Saudis will benefit,” said Jim Krane, author of “Energy Kingdoms: Oil and Political Survival in the Persian Gulf.”
Alwaleed rose to international prominence after making a big successful bet on Citigroup in the 1990s and he was an early investor in Apple (AAPL.O).
The prince and Kingdom also made a joint investment of $300 million in Twitter in 2011 and he raised his stake in 2015. Last month, he agreed to roll a stake now worth $1.89 billion into Elon Musk’s takeover deal, rather than cashing out.
SUCCESSION
While PIF’s move may affect Prince Alwaleed’s room for manoeuvre, Kingdom Holding will benefit from the sovereign wealth fund’s political and financial clout when it comes to dealmaking, the two sources close to Kingdom said.
Since becoming a more active investor in 2015, the sovereign wealth fund has taken some bold steps to raise its profile in the world of business and sport.
It took a $3.5 billion stake in Uber before its listing, invested $45 billion in Softbank’s inaugural technology fund, bought 80% of British soccer club Newcastle United last year and has disrupted the world of golf with its new LIV league.
The PIF now manages more than $600 billion of assets though its investment record has been mixed.
It made a huge profit from investing in electric vehicle maker Lucid (LCID.O) before it listed, but its Softbank investment has been more volatile as rising rates and geopolitical instability whiplashed high-growth tech stocks.
The wealth fund is backing the Crown Prince’s mega projects in his Vision 2030 economic diversification plan.
Property consultant Knight Frank estimates projects to develop Saudi Arabia’s nascent tourism industry and other sectors, which includes building a vast futuristic green city called NEOM for $500 billion, are worth over $1 trillion.
But Riyadh has struggled as many foreign investors as hoped and the PIF could benefit from Alwaleed’s relations with key players in the hotel industry thanks to stakes in Four Seasons as well as the Fairmont, Raffles and Swissotel chains.
Despite his high-profile image, Alwaleed has kept close to his roots. He often heads deep into the Saudi desert, where he spends time with guests and meets tribesmen and their families.
The fact his son Khaled bin Alwaleed has forged his own path, investing in technology, real estate, food manufacturing and vegan chains through his KBW Ventures and KBW Investments, has raised the question of succession, three sources said.
One source from the world of finance said PIF could propose a candidate to be groomed by the prince as a successor.
“You take the prince out of the equation, and it’s just a Saudi investment holding company,” the person said. “I don’t think many of these deals would have been done without him.”
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Reporting by Hadeel al Sayegh and Saeed Azhar; Editing by David Clarke
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Storage tanks are seen at Marathon Petroleum’s Los Angeles Refinery, which processes domestic & imported crude oil, in Carson, California, U.S., March 11, 2022. Picture taken March 11, 2022. Picture taken with a drone. REUTERS/Bing Guan/File Photo
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NEW YORK, June 8 (Reuters) – U.S. commercial crude oil inventories rose unexpectedly last week, while crude in the Strategic Petroleum Reserve fell by a record amount as refiners ramped up production to pre-pandemic levels, the Energy Information Administration said on Wednesday.
Crude inventories (USOILC=ECI) rose by 2 million barrels in the week to June 3 to 416.8 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.9 million-barrel drop.
SPR crude stocks fell by a record 7.3 million barrels to 519.3 million, their lowest since March 1987.
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Refinery crude runs (USOICR=ECI) rose by 354,000 barrels per day to 16.4 million bpd, their highest since January 2020, and utilization rates (USOIRU=ECI) jumped by 1.6 percentage points to 94.2% of capacity, their highest since December 2019, the EIA said. On the East Coast, utilization rose to 99.2%, its highest since November 2017.
“The commercial crude build is in part due to inventory shifts from the drawdowns in the Strategic Petroleum Reserve, but those inventories continue to move aggressively lower and that’s the expectation for the next several months,” said Tony Headrick, energy market analyst at CHS Hedging.
“That’s a bullish consideration.”
Brent and U.S. West Texas Intermediate crude futures (WTI)
Crude stocks at the Cushing, Oklahoma, delivery hub for WTI (USOICC=ECI) fell by 1.6 million barrels last week, EIA said.
U.S. gasoline stocks (USOILG=ECI) fell by 800,000 barrels in the week to 218.2 million barrels, the EIA said, compared with analysts’ expectations for a 1.1 million-barrel rise.
Distillate stockpiles (USOILD=ECI), which include diesel and heating oil, rose by 2.6 million barrels in the week to 109 million barrels, more than double forecasts for a 1.1 million-barrel rise, the EIA data showed.
Net U.S. crude imports (USOICI=ECI) rose by 1.69 million bpd, EIA said.
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Reporting by Stephanie Kelly
Editing by Marguerita Choy
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WASHINGTON, May 31 (Reuters) – U.S. consumer confidence eased modestly in May as persistently high inflation and rising interest rates force Americans to become more cautious about buying big ticket items, including motor vehicles and houses, which could curtail economic growth.
The survey from the Conference Board on Tuesday also showed consumers’ perceptions of the labor market softening a bit this month. Though the drop in confidence was small, it suggested that the Federal Reserve’s aggressive monetary policy actions to slow demand were starting to have an impact.
“We can never underestimate the U.S. consumer,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. “But plans to pull back on purchases, and become a little more cautious, is something that the Federal Reserve would welcome as it aims to cool demand.”
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The Conference Board’s consumer confidence index slipped to a reading of 106.4 this month. Data for April was revised higher to show the index at 108.6 instead of the previously reported reading of 107.3. The index remains above its pandemic lows.
The survey’s so-called labor market differential, derived from data on respondents’ views on whether jobs are plentiful or hard to get, fell to 39.3 this month from a reading of 44.7 in April. This measure correlates to the unemployment rate from the Labor Department. On face value it suggests that the jobless probably ticked up from a two-year low of 3.6% in April.
Despite consumers’ somewhat unfavorable perceptions, the labor market is tightening, with the Conference Board noting that “they do expect labor market conditions to remain relatively strong, which should continue to support confidence in the short run.” There were a record 11.5 million job openings on the last day of March.
U.S. stocks were trading lower. The dollar rose against a basket of currencies. U.S. Treasury prices fell.
INFLATION PEAKED
Consumers’ inflation expectations over the next 12 months dipped to 7.4% from 7.5% in April. That fits in with economists’ views that inflation has likely peaked.
The Fed has increased its policy interest rate by 75 basis points since March. The U.S. central bank is expected to hike the overnight rate by half a percentage point at each of its next meetings in June and in July.
With prices still high and borrowing costs rising, consumers are reassessing their spending plans. The share of consumers planning to buy a motor vehicle over the next six months dipped. Fewer consumers intended to buy major household appliances like refrigerators, washing machines, dryers and television sets.
But the buying plans remained at levels sufficient to keep consumer spending growing and the overall economy expanding. Rising interest rates and the accompanying tightening in financial conditions have left Americans worried about an imminent recession.
“The economy will most likely avoid a recession in the near term as the Fed successfully navigates a ‘softish’ landing,” said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.
Consumers were also less inclined to buy a house as rising mortgage rates and record house prices reduced affordability.
A separate report on Tuesday showed the S&P CoreLogic Case-Shiller 20 metropolitan area home price index surged a record 21.2% on a year-on-year basis in March after increasing 20.3% in February. Tight inventory, especially of previously owned houses, is driving house prices.
Strong house price inflation was reinforced by another report from the Federal Housing Finance Agency showing home prices increased 19% in the 12 months through March after rising 19.3% in February.
With demand slowing, house price inflation will cool down.
“House price gains will be far more modest from here,” said Matthew Pointon, senior property economist at Capital Economics in New York. “We expect annual growth to slow to zero by mid-2023.”
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Reporting by Lucia Mutikani; Editing by Andrea Ricci
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