Shell made a recordprofit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.
Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business.The company’s stock was up 1.7% in London.
The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.
Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”
The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.
ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron
(CVX) reported a record full-year profit of $36.5 billion.
That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.
Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.
Shell
(RDSA) also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.
High prices are driving an increase in attempts to bring eggs into the US from Mexico, according to border officials.
Officers at the San Diego Customs and Border Protection Office have seen an increase in the number of attempts to move eggs across the US-Mexico border, according to a tweet from director of field operations Jennifer De La O.
“The San Diego Field Office has recently noticed an increase in the number of eggs intercepted at our ports of entry,” wrote De La O in the Tuesday tweet. “As a reminder, uncooked eggs are prohibited entry from Mexico into the U.S. Failure to declare agriculture items can result in penalties of up to $10,000.”
Bringing uncooked eggs from Mexico into the US is illegal because of the risk of bird flu and Newcastle disease, a contagious virus that affects birds, according to Customs and Border Protection.
In a statement emailed to CNN, Customs and Border Protection public affairs specialist Gerrelaine Alcordo attributed the rise in attempted egg smuggling to the spiking cost of eggs in the US. A massive outbreak of deadly avian flu among American chicken flocks has caused egg prices to skyrocket, climbing 11.1% from November to December and 59.9% annually, according to the Bureau of Labor Statistics.
The increase has been reported at the Tijuana-San Diego crossing as well as “other southwest border locations,” Alcordo said.
For the most part, travelers bringing eggs have declared the eggs while crossing the border. “When that happens the person can abandon the product without consequence,” said Alcordo. “CBP agriculture specialists will collect and then then destroy the eggs (and other prohibited food/ag products) as is the routine course of action.”
In a few incidents, travelers did not declare their eggs and the products were discovered during inspection. In those cases, the eggs were seized and the travelers received a $300 penalties, Alcordo explained.
“Penalties can be higher for repeat offenders or commercial size imports,” he added.
Alcordo emphasized the importance of declaring all food and agricultural products when traveling.
“While many items may be permissible, it’s best to declare them to avoid possible fines and penalties if they are deemed prohibited,” he said. “If they are declared and deemed prohibited, they can be abandoned without consequence. If they are undeclared and then discovered during an exam the traveler will be subject to penalties.”
Santa Fe, New Mexico, paid a local contractor $47,000 to round up about 3,000 shopping carts around the city in 2021 and 2022.
Fayetteville, North Carolina, spent $78,468 collecting carts from May 2020 to October 2022.
Shopping carts keep wandering away from their stores, draining taxpayers’ coffers, causing blight and frustrating local officials and retailers.
Abandoned shopping carts are a scourge to neighborhoods, as wayward carts block intersections, sidewalks and bus stops. They occupy handicap spots in parking lots and wind up in creeks, ditches and parks. And they clog municipal drainage and waste systems and cause accidents.
There is no national data on shopping cart losses, but US retailers lose an estimated tens of millions of dollars every year replacing lost and damaged carts, say shopping cart experts. They pay vendors to rescue stray carts and fork over fines to municipalities for violating laws on shopping carts. They also miss out on sales if there aren’t enough carts for customers during peak shopping hours.
Last year, Walmart paid $23,000 in fines related to abandoned shopping carts to the small town of Dartmouth, Massachusetts, said Shawn McDonald, a member of the town’s Select Board.
Dartmouth public workers spent two years corralling more than 100 Walmart carts scattered around town and housed them in one of the city’s storage facilities. When Walmart applied for a new building permit, the company was told it had to pay the town thousands of dollars in daily storage fees, McDonald said.
“It’s a safety issue with these carts careening down the hill. I had one that was left in the road as I was driving,” he said. “I got to the point where I got pissed.”
More municipalities around the country are proposing laws cracking down on stray carts. They are imposing fines on retailers for abandoned carts and fees for retrieval services, as well as mandates for stores to lock up their carts or install systems to contain them. Some localities are also fining people who remove carts from stores.
The city council in Ogden, Utah, this month approved an ordinance fining people who take store carts or are in possession of one. The measure also authorizes the city to charge retailers a fee of $2 a day for storage and handling fees to retrieve lost carts.
“Abandoned shopping carts have become an increasing nuisance on public and private properties throughout the city,” the council said in its summary of the bill. City officials “are spending considerable amounts of time to pick up and return or dispose of the carts.”
Matthew Dodson, the president of Retail Marketing Services, which offers cart retrieval, maintenance and other services to leading retailers in several western states, said lost shopping carts is a growing problem.
During the busy 2022 holiday season, Retail Marketing Service leased extra carts to retailers, and got back 91% of its approximately 2,000 carts, down from 96% the prior year.
Dodson and others in the shopping cart industry say the rise in lost carts can be attributed to several factors, including unhoused people using them to hold their belongings or as shelter. Homelessness has been rising in many major cities due to skyrocketing housing prices, lack of affordable housing, and other factors. There have also been incidents of people stealing carts for scrap metal.
Some people, especially in cities, also use supermarket carts to bring their groceries home from the store. Other carts drift away from parking lots if they aren’t locked up during rough weather or at night.
To be sure, the problem of wayward shopping carts is not new. They began leaving stores soon after they were introduced in the late 1930s.
“A new menace is threatening the safety of motorists in stores,” the New York Times warned in a 1962 article. “It is the shopping cart.” Another New York Times article in 1957 called the trend “Cart-Napping.”
There’s even a book, “The Stray Shopping Carts of Eastern North America: A Guide to Field Identification,” dedicated to the phenomenon and a system of identification for stray shopping carts, much like guides for bird-watching.
Edward Tenner, a distinguished scholar in the Smithsonian’s Lemelson Center for the Study of Invention and Innovation, said the misuse of everyday items like shopping carts is an example of “deviant ingenuity.”
It’s similar to talapia fishermen in Malaysia stealing payphones in the 1990s and attaching the receivers to powerful batteries that emitted a sound to lure fish, he said.
Tenner hypothesized that people take shopping carts from stores because they are extremely versatile and aren’t available elsewhere: “There’s really no legitimate way for an individual to buy a supermarket-grade shopping cart.”
Supermarkets can have 200 to 300 shopping carts per store, while big-box chains carry up to 800. Depending on the size and model, carts cost up to $250, said Alex Poulos, a sales director at R.W. Rogers Company, which supplies carts and other equipment to stores.
Stores and cart makers over the years have increased the size of carts to encourage shoppers to buy more items.
Stores have introduced several cart safety and theft-prevention measures over the years, such as cart corrals and, more recently, wheels that automatically lock if a cart strays too far from the store. (Viral videos on TikTok show Target customers struggling to push around carts with wheeled locks.)
Gatekeeper Systems, which offers shopping cart control measures for the country’s largest retailers, said demand for its “SmartWheel” radio-frequency locks has increased during the pandemic.
At four stores, Wegmans is using Gatekeeper’s wheel locks.
“The cost of replacing carts as well as the cost of locating and returning missing carts to the store led to our decision to implement the technology,” a Wegmans spokesperson said.
Aldi, the German grocery chain that’s rapidly expanding in the United States, is one of the few US retailers to require customers to deposit a quarter to unlock a cart.
Coin-lock shopping cart systems are popular in Europe, and Poulos said more US companies are requesting coin-lock systems in response to the costs of runaway shopping carts.
Treasury Secretary Janet Yellen on Friday warned of the widespread global effects that could be felt if the federal government exhausts extraordinary measures and fails to raise the debt ceiling, telling CNN’s Christiane Amanpour about the ways everyday Americans could face stark consequences.
Yellen’s warning comes after the United States on Thursday hit its $31.4 trillion debt limit set by Congress, forcing the Treasury Department to start taking extraordinary measures to keep the government paying its bills.
While those newly deployed extraordinary measures are largely behind-the-scenes accounting maneuvers, Yellen told Amanpour that “the actual date at which we would no longer be able to use these measures is quite uncertain, but it could conceivably come as early as early June.”
Speaking exclusively to CNN from Senegal, Yellen said that after the measures are exhausted, the US could experience at a minimum downgrading of its debt as a result of Congress failing to raise the debt ceiling. The effects of the federal government failing to make payments, she argued, could be as broad as a “global financial crisis.”
“If that happened, our borrowing costs would increase and every American would see that their borrowing costs would increase as well,” Yellen said. “On top of that, a failure to make payments that are due, whether it’s the bondholders or to Social Security recipients or to our military, would undoubtedly cause a recession in the US economy and could cause a global financial crisis.”
“It would certainly undermine the role of the dollar as a reserve currency that is used in transactions all over the world. And Americans – many people would lose their jobs and certainly their borrowing costs would rise,” she continued.
Yellen wrote a letter to House Speaker Kevin McCarthy on Thursday explaining the measures being taken, escalating pressure on Capitol Hill to avoid a catastrophic default.
Hardline Republicans have demanded that lifting the borrowing cap be tied to spending reductions. The White House has countered by saying that it will not offer any concessions or negotiate on raising the debt ceiling. And so far, Yellen’s warnings have failed to spark bipartisan discussion, with both Republicans and Democrats reaffirming their rigid positions over the past week.
As part of the debt issuance suspension period using extraordinary measures, the agency intends to sell existing investments and suspend reinvestments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. Also, it will suspend the reinvestment of a government securities fund of the Federal Employees Retirement System Thrift Savings Plan.
No federal retirees or employees will be affected, and the funds will be made whole once the impasse ends, Yellen said in the letter.
“I respectfully urge Congress to act promptly to protect the full faith and credit of the United States,” she wrote.
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In the fervor-filled days leading up to the November 16 launch of the long-awaited Artemis I mission, an uncrewed trip around the moon, some industry insiders admitted to having conflicting emotions about the event.
On one hand, there was the thrill of watching NASA take its first steps toward eventually getting humans back to the lunar surface; on the other, a shadow cast by the long and costly process it took to get there.
“I have mixed feelings, though I hope that we have a successful mission,” former NASA astronaut Leroy Chiao said in an opinion roundtable interview with The New York Times. “It is always exciting to see a new vehicle fly. For perspective, we went from creating NASA to landing humans on the moon in just under 11 years. This program has, in one version or another, been ongoing since 2004.”
There have been numerous delays with the development of the rocket at the center of the Artemis I mission: NASA’s Space Launch System (SLS), the most powerful rocket ever flown — and one of the most controversial. The towering launch vehicle was originally expected to take flight in 2016. And the decade-plus that the rocket was in development sparked years of blistering criticism targeted toward the space agency and Boeing, which holds the primary contract for the SLS rocket’s core.
NASA’s Office of Inspector General (OIG) repeatedly called out what it referred to as Boeing’s “poor performance,” as a contributing factor in the billions of dollars in cost overruns and schedule delays that plagued SLS.
“Cost increases and schedule delays of Core Stage development can be traced largely to management, technical, and infrastructure issues driven by Boeing’s poor performance,” one 2018 report from NASA’s OIG, the first in a series of audits the OIG completed surrounding NASA’s management of the SLS program, read. And a report in 2020 laid out similar grievances.
For its part, Boeing has pushed back on the criticism, pointing to rigorous testing requirements and the overall success of the program. The OIG report also included correspondence from NASA, which noted in 2018 that it “had already recognized the opportunity to improve contract performance management” and agreed with the report’s recommendations.
In various op-eds, the rocket has also been deemed “the result of unfortunate compromises and unholy politics,” a “colossal waste of money” and an “irredeemable mistake.”
Despite all the heated debate that has followed SLS, by all accounts, the rocket is here to stay. And officials at NASA and Boeing said its first launch two months ago was practically flawless.
“I worked over 50 Space Shuttle launches,” Boeing SLS program manager John Shannon told CNN by phone. “And I don’t ever remember a launch that was as clean as that one was, which for a first-time rocket — especially one that had been through as much as this one through all the testing — really put an exclamation point on how reliable and robust this vehicle really is.”
The Artemis program manager at NASA, Mike Sarafin, also said during a post-launch news conference that the rocket “performed spot-on.”
But with its complicated history and its hefty price tag, SLS could still face detractors in the years to come.
Many have questioned why SLS needs to exist at all. With the estimated cost per launch standing at more than $4 billion for the first four Artemis missions, it’s possible commercial rockets, like the massive Mars rocket SpaceX is building, could get the job done more efficiently, as the chief of space policy at the nonprofit exploration advocacy group Planetary Society, Casey Dreier, recently observed in an article laying out both sides of the SLS argument.
(NASA Administrator Bill Nelson noted that the $4 billion per-launch cost estimate includes development costs that the space agency hopes will be amortized over the course of 10 or more missions.)
Boeing was selected in 2012 to build SLS’s “core stage,” which is the hulking orange fuselage that houses most of the massive engines that give the rocket its first burst of power at liftoff.
Though more than 1,000 companies were involved with designing and building SLS, Boeing’s work involved the largest and most expensive portion of the rocket.
That process began over a decade ago, and when the Artemis program was established in 2019, it gave the rocket its purpose: return humans to the moon, establish a permanent lunar outpost, and, eventually, pave the path toward getting humans to Mars.
But the SLS is no longer the only rocket involved in the program. NASA gave SpaceX a significant role in 2021, giving the company a fixed-price contract for use of its Mars rocket as the vehicle that will ferry astronauts to the lunar surface after they leave Earth and travel to the moon’s orbit on SLS. SpaceX’s forthcoming rocket, called Starship, is also intended to be capable of completing a crewed mission to the moon or Mars on its own. (Starship, it should be noted, is still in the development phases and has not yet been tested in orbit.)
Boeing has repeatedly argued that SLS is essential and capable of performing tasks that other rockets cannot.
“The bottom line is there’s nothing else like the SLS because it was built from the ground up to be human rated,” Shannon said. “It is the only vehicle that can take the Orion spacecraft and the service module to the moon. And that’s the purpose-built design — to take large hardware and humans to cislunar space, and nothing else exists that can do that.”
Starship, meanwhile, is not tailored solely to NASA’s specific lunar goals. SpaceX CEO Elon Musk has talked for more than a decade about his desire to get humans to Mars. More recently, he has said Starship could also be used to house giant space telescopes.
Yet, another reason critics remain skeptical of SLS is because of its origins. The rocket’s conception can be traced back to NASA’s Constellation program, which was a plan to return to the moon mapped out under former President George W. Bush that was later canceled.
But the SLS has survived. Many observers have suggested a big reason was the desire to maintain space industry jobs in certain Congressional districts and to beef up aerospace supply chains.
Much of the criticism levied against SLS, however, has focused on the actual process of getting the rocket built.
At one point in 2019, former NASA administrator Jim Bridenstine considered sidelining the SLS rocket entirely, citing frustrations with the delays.
“At the end of the day, the contractors had an obligation to deliver what NASA had contracted for them to deliver,” Bridenstine told CNN by phone last month. “And I was frustrated like most of America.”
Still, Bridenstine said, when his office reviewed the matter, it found “there were no options that were going to cost less money or take less time than just finishing the SLS” — and the rocket was never ultimately sidelined. (Bridenstine noted he was also publicly critical of delayed projects led by SpaceX and others.)
NASA continued to stand by Boeing and the SLS rocket even as it became a political hot potato, with some in Congress both criticizing its costs and refusing to abandon the program.
The SLS rocket ended up flying its first launch more than six years later than originally intended. NASA had allocated $6.2 billion to the SLS program as of 2018, but that price tag more than tripled to $23 billion as of 2022, according to an analysis by the Planetary Society.
Those escalating costs can be traced back to the type of contracts that NASA signed with Boeing and its other major suppliers for SLS. It’s called cost-plus, which puts the financial burden on NASA when projects face cost overruns while still offering contractors extra payments, or award fees.
In testimony before the Senate Appropriations Subcommittee on Science last year, current NASA Administrator Bill Nelson criticized the cost-plus contracting method, calling it a “plague.”
More in vogue are “fixed-price” contracts, which have a firm price cap, like the kind NASA gave to Boeing and SpaceX for its Commercial Crew Program.
In an interview with CNN in December, however, Nelson stood by cost-plus contracting for SLS and Orion, the vehicle that is designed to carry astronauts and rides atop the rocket to space. He said that without that type of contract, in his view, NASA’s private-sector contractors simply wouldn’t be willing to take on a rocket designed for such a specific purpose and exploring deep space. Building a rocket as specific and technically complex as SLS isn’t a risk many private-sector companies are anxious to take on, he noted.
“You really have difficulty in the development of a new and very exquisite spacecraft … on a fixed-price contract,” he said.
“That industry is just not willing to accept that kind of thing, with the exception of the landers,” he added, referring to two other branches of the Artemis program: robotic landers that will deliver cargo to the moon’s surface and SpaceX’s $2.9 billion lunar lander contract. Both of those will use fixed-price — often referred to as “commercial” — contracts.
“And even there, they’re getting a considerable investment by the federal government,” Nelson said.
Still, government watchdogs have not pulled punches when assessing these cost-plus contracts and Boeing’s role.
“We did notice very poor contractor performance on Boeing’s part. There’s poor planning and poor execution,” NASA Inspector General Paul Martin said during testimony before the House’s Subcommittee on Space and Aeronautics last year. “We saw that the cost-plus contracts that NASA had been using…worked to the contractor’s — rather than NASA’s — advantage.”
Shannon, the Boeing executive, acknowledged in an interview that Boeing and SLS have faced loud detractors, but he said that the value of the drawn out development and testing program would become evident as SLS flies.
“I am extremely proud that NASA — even though there were significant schedule pressures — they could set up a test program that was incredibly comprehensive,” he said. “The Boeing team worked through that test process and hit every mark on it. And you see the results. You see a vehicle that is not just visually spectacular, but its performance was spectacular. And it really put us on the road to be able to do lunar exploration again, which is something that’s very important in this country.”
But the rocket is still facing criticism. During a Congressional hearing with the House’s Science, Space, and Technology Committee in March 2022, NASA’s Inspector General said that current cost estimates for SLS were “unsustainable,” gauging that the space agency will have spent $93 billion on the Artemis program from 2012 through September 2025.
Martin, the NASA inspector general, specifically pointed to Boeing as one of the contractors that would need to find “efficiencies” to bring down those costs as the Artemis program moves forward.
In a December 7 statement to CNN, Boeing once again defended SLS and its price point.
“Boeing is and has been committed to improving our processes — both while the program was in its developmental stage and now as it transitions to an operational phase,” the statement read, noting the company already implemented “lessons learned” from building the first rocket to “drive efficiencies from a cost and schedule perspective” for future SLS rockets.
“When adjusted for inflation, NASA has developed SLS for a quarter of the cost of the Saturn V and half the cost of the Space Shuttle,” the statement noted. “These programs have also been essential to investing in the NASA centers, workforce and test facilities that are used by a broad range of civil and commercial partners across NASA and industry.”
The successful launch of SLS was a welcome winning moment for Boeing. Over the past few years, the company has been mired in controversy, including ongoing delays and myriad issues with Starliner, a spacecraft built for NASA’s Commercial Crew Program, and scandal after scandal plaguing its airplane division.
Now that the Artemis I mission has returned safely home, NASA and Boeing can turn to preparing more of the gargantuan SLS rockets to launch even loftier missions.
SLS is slated to launch the Artemis II mission, which will take four astronauts on a journey around the moon, in 2024. From there, SLS will be the backbone of the Artemis III mission that will return humans to the lunar surface for the first time in five decades and a series of increasingly complex missions as NASA works to create its permanent lunar outpost.
Shannon, the Boeing SLS program manager, told CNN that construction of the next two SLS rocket cores is well underway, with the booster for Artemis II on track to be finished in April — more than a year before the mission is scheduled to take off. All of the “major components” for a third SLS rocket are also completed, Shannon added.
For the third SLS core and beyond, Boeing is also moving final assembly to new facilities Florida, freeing up space at its manufacturing facilities to increase production, which may help drive down costs.
Shannon declined to share a specific price point for the new rockets or share any internal pricing goals, though NASA is expected to sign new contracts for the rockets that will launch the Artemis V mission and beyond, which could significantly change the price per launch.
Nelson also told CNN in December that NASA “will be making improvements, and we will find cost savings where we can,” such as with the decision to use commercial contracts for other vehicles under the Artemis program umbrella.
How and whether those contracts bear out remain to be seen: SpaceX needs to get its Starship rocket flying, a massive space station called Gateway needs to come to fruition, and at least some of the robotic lunar landers designed to carry cargo to the moon will need to prove their effectiveness. It’s also not yet clear whether those contracts will result in enough cost savings for the critics of SLS, including NASA’s OIG, to consider the Artemis program sustainable.
As for SLS, Nelson also told reporters December 11, just after the conclusion of the Artemis I mission, that he had every reason to expect that lawmakers would continue to fund the rocket and NASA’s broader moon program.
“I’m not worried about the support from the Congress,” Nelson said.
And Bridenstine, Nelson’s predecessor who has been publicly critical SLS, said that he ultimately stands by SLS and points out that, controversies aside, it does have rare bipartisan support from its bankrollers.
“We are in a spot now where this is going to be successful,” Bridenstine said last month, recalling when he first realized the Artemis program had support from the right and left. “All of America is going to be proud of this program. And yes, there are going to be differences. People are gonna say well, you should go all commercial and drop SLS…but at the end of the day, what we have to do is we have to bring together all of the things that are the best programs that we can get for America and use them to go to the moon.”
The clock is now ticking to prevent a financial crisis.
The US hit its debt ceiling Thursday, triggering the Treasury Department to start taking extraordinary measures to prevent a default.
While Treasury Secretary Janet Yellen doesn’t expect the US to default on its debt before early June, Congress has to get serious about negotiating a solution, which is not expected to be easy.
Here’s what the situation is all about.
Established by Congress, the debt ceiling is the maximum amount the federal government is able to borrow to finance obligations that lawmakers and presidents have already approved – since the government runs budget deficits and the revenue it collects is not sufficient. Increasing the cap does not authorize new spending commitments.
The debt ceiling, which currently stands at $31.4 trillion, was created more than a century ago and has been modified more than 100 times since World War II.
Though it was originally designed to make it easier for the federal government to borrow, the limit has become a way for Congress to restrict the growth of borrowing – turning it into a political football in recent decades.
Still, fears of a default have prompted lawmakers to pass legislation to raise or suspend the ceiling every time, most recently in December 2021.
It is unlikely that the government will exhaust its cash and the extraordinary measures before early June, though there is “considerable uncertainty” around that forecast, Yellen wrote in a letter to House Speaker Kevin McCarthy last week. It depends in part on how much 2022 tax revenue the government collects this spring.
If the government is no longer able to borrow, it would not have enough money to pay all its bills in full and on time – including interest on the national debt. So it would likely have to temporarily delay payments or default on some of its commitments, potentially affecting Social Security payments, veterans’ benefits and federal employees’ salaries, among others.
But no one knows exactly how Treasury would handle the situation since it has never happened.
A default would also wreak havoc on the US economy and the global financial markets, as well as raise borrowing costs. Even the threat of one in 2011 caused the only credit rating downgrade in the nation’s history.
These moves are mainly behind-the-scenes accounting maneuvers. Treasury secretaries are authorized by Congress to take several types of extraordinary measures to prevent a default, giving lawmakers more time to increase or suspend the limit. Secretaries in both Democratic and Republican administrations have taken such steps.
This time, Yellen anticipates selling existing investments and suspending reinvestments of the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund. Also, she is suspending the reinvestment of a government securities fund of the Federal Employees Retirement System Thrift Savings Plan.
These funds are invested in special-issue Treasury securities, which count against the debt limit. Yellen’s actions would reduce the amount of outstanding debt subject to the limit and temporarily provide the agency with additional capacity to continue financing the federal government’s operations.
No retirees will be affected, and the funds will be made whole once the impasse ends.
Recent contention in the House speaker election has raised concerns about whether McCarthy will be able to corral Republican hardliners – who see a potential default as a way to force the government to cut back spending – and negotiate a deal with Democrats, who oppose any reductions. McCarthy said on Fox on Sunday that now is a good time to “look at the places that we can change our behavior” because “what we’re going to do is bankrupt this country.”
But the White House last week said that it would not offer any concessions or negotiate on raising the debt ceiling.
Meanwhile, House Republicans are preparing contingency plans that would tell the Treasury Department which payments to prioritize if lawmakers can’t agree to address the debt ceiling.
While the two are often confused, a government shutdown happens when Congress doesn’t pass a federal funding bill, while a debt ceiling crisis would occur if lawmakers don’t approve legislation to lift the debt limit.
Congress passed a $1.7 trillion federal spending bill last month, avoiding a government shutdown that could have caused nonessential operations to cease and could have left many federal employees without pay. The legislation will fund government operations until the end of the fiscal year on September 30.
This story and headline have been updated with additional developments.
Tracking used car prices is enough to give anyone whiplash.
Since the start of the pandemic and the resulting disruptions to new car supply chains first sent prices soaring, used car prices posted their largest annual increase on record – up 45% in the 12 months ending in June 2021, according to the Consumer Price Index – before swinging to a 12-month drop of 8.8% in the most recent reading for December.
That was the biggest 12-month plunge in prices for used cars since June 2009, when General Motors and Chrysler were both in bankruptcy proceedings and the economy was hemorrhaging a half-million jobs a month.
“It was a completely wild ride,” said Ivan Drury, director of insights at Edmunds.com Inc., an online resources for inventory and information on cars.
Data from Edmunds shows the average price of a used car purchase in December at $29,533, down nearly $1,600 from the record high of $31,095 reached in April 2022. Today’s average used car price is about the same as the average new car price as recently as 2010.
While the prices of late model used cars are down only 5% off their peak according according to Edmunds, the price of older used cars, those five years or older, have fallen 15% or more from their peaks early in 2022.
Experts say reasons for the decline include higher interest rates that make it more expensive to finance a car purchase, limiting demand. CarMax
(KMX), the nation’s largest pure used car dealer, has warned that the combination of high prices and high interest rates is creating an affordability problem for many buyers, hurting overall demand.
But the leading reason for the drop in used car prices is the increased supply of new cars.
It was the lack of new car inventory that drove up prices. Parts shortages, especially for computer chips, had choked off production of new cars in much of 2022, causing the lowest level of full-year US new car sales since 2011.
The low supply of new cars caused an even bigger jump in the average price of used cars, as buyers who would otherwise buy new vehicles turned to the used car market.
“At one point it seemed that everyone who was going to buy new ended up buying used,” said Greg Markus, executive vice president of AutoLenders, parent company of New Jersey’s largest used car dealership chain.
That included rental car companies, which before the pandemic normally bought about 10% or more new cars per year. With limited inventory of cars to sell, automakers essentially stopped making lower-priced fleet sales, and even rental car companies were forced to turn to the used car market.
All that has started to change in recent months. Automakers are reporting more supplies of the chips they need, and are producing and selling more cars, including a return of fleet sales. Overall, sales were up 9% in the fourth quarter compared to a year ago, and nearly 6% higher than in the third quarter, according to Cox Automotive. And with more buyers finding the new cars they want, that means lower demand for used cars.
Experts say part of the decline in used car prices is that the price increases were not sustainable and were partly driven by buyers at used car auctions overpaying for the limited supply of used vehicles.
“There was nowhere for these prices to go but down,” said Markus.
There could be more declines in used car prices in the months ahead, as new car inventories continue to build. One thing that could put a floor under the used car prices: late model used cars will likely be in short supply given the reduced new car production over the last three years.
“The supply issue is still grim,” said Markus. Because of that, “I don’t think we’re getting down to 2019 levels,” he added.
The run-up in used car prices was a major driver in the nation’s overall inflation rate, adding about a full percentage point to the overall increase in consumer prices from April of 2021 through May of 2022. Now it’s a factor helping to bring down the pace of inflation, shaving more than a third of a point off the overall rate in December.
This is obviously good news for those wanting or needing to buy a used car, though it can have a negative effect on car buyers by reducing the value of vehicle they hope to trade in. Edmunds shows the average trade-in value in December down nearly $3,000, or 11%, to $22,605, from the record high hit in June of 2022.
That drop in the value of trade-ins could also be a headwind on car prices by reducing what buyers are able to pay.
Fast Retailing, the Japanese giant that owns popular clothing brands Uniqlo and Theory, will start paying its employees much more this year.
The company announced Wednesday that it would boost salaries in Japanby up to 40%, acknowledging that “remuneration levels have remained low” in the country in recent years.
“This will include employees from headquarters and corporate departments responsible for the functions of the company’s global headquarters, as well as employees working in stores,” the firm said in a statement.
The move comes just days after Japanese Prime Minister Fumio Kishida called on business leaders to accelerate raises for workers, warning that the economy risked falling into stagflation if wage rises continued to fall behind price increases.
Japan is grappling with the biggest drop in living standards in nearly a decade.
Last Friday, the world’s third largest economy reported its worst real-wage decline in more than eight years, exacerbating conditions for workers already contending with higher costs of living.
In the capital of Tokyo, core inflation, which measures items excluding fresh food, climbed 4% in December compared to a year ago, above the 3.8% expected by economists, according to official figures released Tuesday.
That was “the highest seen in 40 years,” analysts at Nomura said in a Wednesday report.
“Inflation in Japan is a factor in our considerations,” a Fast Retailing spokesperson told CNN on Wednesday.
But the company is generally more focused on aligning “each employee’s remuneration with global standards, to be able to increase our competitiveness,” the representative added.
The company will officially adjust its overall compensation system in March. Starting salaries for entry-level university graduates will jump by roughly 18%, while new store managers could see a hike of approximately 36%, according to the company.
The retailer has also been hiking pay for staff in some of its overseas markets, leading to pay bumps ranging from 5% to 25%, the spokesperson said.
The latest monthly jobs report, set to be released at 8:30 a.m. ET, is expected to show that the US economy added 200,000 jobs in December, with the unemployment rate holding steady for the third-straight month at 3.7%.
The Labor Department’s final monthly employment tally for 2022 likely brings with it some familiar story lines.
— Job growth is expected to remain robust, although slower than the breakneck pace of historically high job gains during the early stages of economic recovery from the pandemic.
— Workers are still not returning to hard-hit sectors such as leisure and hospitality, public service and child care.
— The strong labor market, while it keeps the economy churning, is a little too consistently vigorous for the Federal Reserve’s needs to reduce inflation by tempering demand.
— The tight labor market needs more workers, and wage growth still hasn’t returned to pre-pandemic levels, which would help quell fears of a wage-price spiral, when higher wages cause price increases that in turn cause higher wages.
Lather, rinse and repeat.
“The preponderance of evidence suggests that the labor market is still nowhere near back to normal,” said Julia Pollak, senior economist with ZipRecruiter online employment marketplace.
The US labor market remains atypically tight — something that was reinforced Wednesday when the Bureau of Labor Statistics released its Job Openings and Labor Turnover Survey (JOLTS) report for November. It showed there were still north of 10.5 million job openings, or about 1.7 available positions for every unemployed person looking for work.
The survey also showed that what has been deemed the “Great Resignation” is still chugging along, Pollak said. During the Covid-19 pandemic, a record number of workers voluntarily quit their jobs in search of greener pastures — be it better working conditions, higher pay, or increased flexibility.
The number of people per month quitting their jobs has now landed above 4 million for 18 months straight. In the two decades leading up to the pandemic, the monthly average was 2.6 million.
“Companies are still battling huge retention difficulties,” Pollak said.
The latest JOLTS didn’t show that the market was loosening up as maybe some had hoped or expected. Butit did provide a window into some of the divergence that’s occurring at a time when some businesses are hiring more to meet consumer demand while others scale down their operations because of bloat, the rippling effects of high interest rates, or preparation for less fruitful economic times ahead.
Industries such as accommodation and food services reported about 50% fewer layoffs in November than what was seen on average between 2000 and February 2020, Pollak said.
“I think it’s mostly just pre-pandemic recovery,” she said. “Leisure and hospitality is still short hundreds of thousands of workers and just still ramping up, because spending recovered more quickly than staffing.”
As of October 2022, the leisure and hospitality sector was still below pre-pandemic employment levels by more than 1 million jobs, or 6.3%, according to a CNN Business analysis of BLS employment data.
Technology companies have accounted for the lion’s share of job cuts announced in recent months. During the pandemic, when people were relegated to working and spending their money from home, tech and e-commerce firms bulked up to meet the demand.
During 2022, technology was the leading job-cutting industry, with 97,171 reductions announced, according to Challenger, Gray & Christmas’ latest job cut announcement report released Thursday.
Overall, job cuts trended upward in 2022 at 363,824 as compared to 321,970 the year before. There were 43,651 job cuts announced in December, a 129% jump from December 2021, according to the report.
But the job cuts announced in 2022 were the second-lowest on record, going back to 1993, Challenger, Gray & Christmas data showed. In 2019, there were 592,556 job cuts announced.
“The overall economy is still creating jobs, though employers appear to be actively planning for a downturn,” Andrew Challenger, senior vice president of Challenger, Gray & Christmas, said in the report.
If the monthly job gains come in as expected on Friday, that would mean the economy added more than 4.5 million jobs in 2022.
That would be the second-highest annual total on record, behind the massive 6.7 million gains in 2021, which of itself was a pendulum swing from a record 9.2 million job losses in 2020, BLS data shows.
“The Federal Reserve would like to see a [monthly job growth] number closer to 100,000 or below that,” said Nick Bunker, economic research director for North America at the Indeed Hiring Lab. “That’s more in line with a clearly cooling labor market.”
Economists are also expecting average hourly earnings growth to slow on a monthly and year-over-year basis, to 0.4% and 5%, respectively, according to Refinitiv.
Wage gains, although outpaced by inflation, remain well above pre-pandemic averages and beyond what the Fed wants to see in its price-busting campaign. Chair Jerome Powell, while acknowledging that the wage increases did not cause inflation to spike to the highest levels in 40 years, has repeatedly noted that persistent wage growth in such a tight labor market could keep inflation levels elevated.
“This is a set of labor market data that for workers and job seekers, [continued, strong nominal wage growth] it’s very much positive news,” Bunker said. “But for central bankers, they see this as a problem.”
Inflation has started to come down in recent months, with key gauges showing declines. But for the Fed to reach its desired target of 2% inflation, the labor market will have to take a hit, with unemployment rising to about 4.6% this year, according to the central bank’s projections released in December.
“The fact that inflation appears to be cooling down without the labor market taking a significant hit is a sign that a lot of this very high inflation was not driven by the labor market and that it is possible for inflation to be coming down from these levels without the labor market taking a hit,” Bunker said.
“But it’s unclear how far inflation can fall without the labor market deteriorating, or rather, it’s not clear what the underlying pace of inflation is with the labor market this tight.”
One year after losing the title it held for nearly a century as the top car seller in America, General Motors is back on top.
GM
(GM) reported Wednesday US sales of 2.3 million vehicles. Strong fourth quarter sales, up 41% from a year ago, allowed it to end the year with sales up nearly 3% from the 2.2 million US vehicles it sold in 2021, when it suffered a 13% decline.
Meanwhile Toyota
(TM), which had captured the top sales spot in 2021, had its full-year sales fall nearly 10% to 2.1 million, despite posting a 13% increase in fourth quarter sales.
In each of the last two years, industry-wide auto sales were limited by a shortage of parts, primarily computer chips, needed to build the cars and trucks consumers wanted. Total US new vehicle sales are expected to be down to just less than 14 million vehicles when the final sales results are reported across the industry later this week.
That would be the lowest sales total since the country was just climbing out of the Great Recession more than a decade go. Sales bottomed out at 10.5 million in 2009, the year GM and Chrysler declared bankruptcy and received federal bailouts, and had only climbed back to 12.7 million by 2011, the last year the industry sales fell below 14 million.
Sales had been 17 million in 2019, the year before the pandemic upended both the economy and supply chains.
Most forecasts say the supply chain problems are getting better, and that should allow automakers to increase production in 2023. They point to the better sales that took place in the fourth quarter than earlier in the year as a proof of that, even with higher car prices and rising interest rates making it more expensive for buyers than in the past.
That in turn has led them to forecast a modest increase in sales this year to just north of 14 million vehicles once again.
But many experts caution that their forecast of increased sales depend on the US economy not falling into recession, and instead simply experiencing slower growth. And uncertainty about what will happen to the economy is making the outlook for car sales far more uncertain than in years previous, they say.
“I’ve been forecasting the car market for decades now. This next year is the most challenging,” said Charlie Chesbrough, chief economist for Cox Automotive. “Normally we an idea which way it is headed. But this year it could be up or down.”
There are a number of factors supporting new car sales in the coming year, even if the economy stumbles. One is the fact that car rental companies have not be able to buy the supply of new cars they need in the last two years, as automakers limited the supply of cars available for lower priced fleet sales, selling all or virtually all the cars they had to consumers instead.
“Rental companies have been running at half of the purchases that they’re accustomed to,” said Ivan Drury, director of insights at Edmunds.
And Drury said if automakers start to see weakness in consumer demand, they can bring back incentives, including lower rate financing, that they haven’t had to offer in recent years when there was more demand than supply.
“The incentives recently have been virtually nothing,” he said.
So far demand is still strong, as there is pent-up demand from potential buyers who have delayed purchases because they couldn’t find the vehicle they wanted. But both Drury and Chesbrough say the higher average prices and higher interest rates are already driving buyers out of the market.
A turn in the economy, especially if historically low unemployment rates start to rise, could quickly result in lower new car sales.