The International Energy Agency says 13% of cars sold worldwide this year will be electric. Mike O’Sullivan reports from Los Angeles that consumer demand for electric vehicles is increasing as the industry overcomes technical hurdles.
U.S. shoppers spent a record $9.12 billion online on Black Friday, a report showed Saturday, as consumers weathered the squeeze from high inflation and grabbed steep discounts on everything from smartphones to toys.
Online spending rose 2.3% on Black Friday, Adobe Inc’s data and insights arm Adobe Analytics said, thanks to consumers holding out for discounts until the traditionally big shopping days, despite deals starting as early as October.
Adobe Analytics, which measures e-commerce by analyzing transactions at websites, has access to data covering purchases at 85% of the top 100 internet retailers in the United States.
It had forecast Black Friday sales to rise a modest 1%.
Adobe expects Cyber Monday to be the season’s biggest online shopping day again, driving $11.2 billion in spending.
Consumers were expected to flock to stores after the pandemic put a dampener on in-store shopping over the past two years, but Black Friday morning saw stores draw less traffic than usual with sporadic rain in some parts of the country.
Americans turned to smartphones to make their holiday purchases, with data from Adobe showing mobile shopping represented 48% of all Black Friday digital sales.
The outlook for the global economy headed into 2023 has soured, according to a number of recent analyses, as the ongoing war in Ukraine continues to strain trade, particularly in Europe, and as markets await a fuller reopening of the Chinese economy following months of disruptive COVID-19 lockdowns.
In the United States, signs of a tightening job market and a slowdown in business activity fueled fears of a recession. Globally, inflation grew and business activity, especially in the eurozone and the United Kingdom, continued to shrink.
In an analysis released Thursday, the Institute of International Finance predicted a global economic growth rate of just 1.2% in 2023, a level on par with 2009, when the world was only beginning its emergence from the financial crisis.
The Organization for Economic Cooperation and Development (OECD) agrees with the pessimistic forecast. In a report issued this week, the organization’s interim Chief Economist Alvaro Santos Pereira wrote, “We are currently facing a very difficult economic outlook. Our central scenario is not a global recession, but a significant growth slowdown for the world economy in 2023, as well as still high, albeit declining, inflation in many countries.”
U.S. interest rates
In the U.S., inflation and the Federal Reserve’s efforts to combat it have been the dominant factors in most analyses of the current and future states of the economy.
The U.S has been experiencing its highest levels of inflation in 40 years, with prices beginning to jump significantly in mid-2021. By the beginning of 2022, annualized rates were over 6%, and while fluctuating a bit, touched a high of 6.6% in October.
Beginning in March, the central bank’s Federal Open Market Committee (FOMC), which sets base interest rates, has engaged in a dramatic series of increases, raising the benchmark rate from between 0.0% and 0.25% to between 3.75% and 4.0% today.
The idea behind the Fed’s moves is to change consumers’ incentives. By making the interest rates on savings more appealing, and the rates on borrowing less so, the central bank is working to reduce demand and thereby slow the rate of price increases.
In general, the Fed believes that an annual 2% rate of inflation is healthy and considers that its long-term target.
Avoiding a recession
The Fed’s goal is to get inflation under control without plunging the economy into a damaging recession. And while a number of economic signs indicate that efforts to slow demand might be working, the threat of a recession still looms.
Evidence released this week showed that business activity in the U.S. contracted for a fifth consecutive month as companies reacted to decreased consumer demand. Although the economy has continued to add jobs in recent months, applications for unemployment benefits are on the rise, suggesting a potential softening in the labor market.
The Federal Reserve this week released the minutes from the early November meeting of the FOMC. The minutes revealed a pessimistic view among the central bank’s staff economists about the U.S. economy in the coming year.
Among their findings was that they “viewed the possibility that the economy would enter a recession sometime over the next year as almost as likely as the baseline.”
A “substantial majority” of the voting members of the committee indicated that they believe it is time to slow the rate of interest rate increases, suggesting that the FOMC will retreat from its recent 0.75% increases when it meets in December, perhaps raising rates by just 0.5%.
Internationally, governments are facing a difficult challenge: supporting their citizens during a time when prices are rising dramatically, particularly for necessities like food and fuel, which have been deeply affected by the war in Ukraine.
In a report this week, the International Monetary Fund pointed to the difficult balancing act governments must manage, saying, “With many people still struggling, governments should continue to prioritize helping the most vulnerable to cope with soaring food and energy bills and cover other costs — but governments should also avoid adding to aggregate demand that risks dialing up inflation. In many advanced and emerging economies, fiscal restraint can lower inflation while reducing debt.”
According to the Institute of International Finance (IIF), while global growth will be low but net positive in 2023, specific areas will face declines. Chief among them is Europe, where the IIF forecasts a 2.0% decline in cumulative GDP.
To the extent that there are bright spots in the global economy in 2023, they are in areas such as Latin America and China.
Many countries of Latin America, where the export of raw materials, including timber, ore, and other major economic inputs drives many economies, global inflation has proved beneficial insofar as the prices for those goods have risen. The IIF report projects a 1.2% expansion in GDP across the region, even as much of the remainder of the world sees economic contraction.
China has suffered economically as a result of President Xi Jinping’s “zero-COVID” strategy, which has forced massive lockdowns of whole cities and regions, with serious disruption to economic activity. The IFF and other organizations expect significant loosening in China’s policy in the coming year, which will lead to economic growth of as much as 2.0% as the Chinese economy attempts to revive itself.
U.K. to suffer
With the exception of Russia, which is still laboring under crushing sanctions related to its invasion of Ukraine, the United Kingdom faces the gloomiest outlook for the coming year of any of the world’s largest economies.
With inflation running significantly ahead of other countries, annualized price increases are expected to touch 10% by the end of the year, before slowly moderating in 2023.
Among the G-7 countries, the U.K. is the only one in which economic output has not returned to pre-pandemic levels, and it is forecast to shrink further. The OECD projects that the British economy will decline in size by 0.3% in 2023 and will grow at only 0.2% in 2024.
Elon Musk said Friday that Twitter plans to relaunch its premium service that will offer different colored check marks to accounts next week, in a fresh move to revamp the service after a previous attempt backfired.
It’s the latest change to the social media platform that the billionaire Tesla CEO bought last month for $44 billion, coming a day after Musk said he would grant “amnesty” for suspended accounts and causing yet more uncertainty for users.
Twitter previously suspended the premium service, which under Musk granted blue-check labels to anyone paying $8 a month, because of a wave of imposter accounts. Originally, the blue check was given to government entities, corporations, celebrities and journalists verified by the platform to prevent impersonation.
In the latest version, companies will get a gold check, governments will get a gray check, and individuals who pay for the service, whether or not they’re celebrities, will get a blue check, Musk said Friday.
“All verified accounts will be manually authenticated before check activates,” he said, adding it was “painful, but necessary” and promising a “longer explanation” next week. He said the service was “tentatively launching” Dec. 2.
Twitter had put the revamped premium service on hold days after its launch earlier this month after accounts impersonated companies including pharmaceutical giant Eli Lilly & Co., Nintendo, Lockheed Martin, and even Musk’s own businesses Tesla and SpaceX, along with various professional sports and political figures.
It was just one change in the past two days. On Thursday, Musk said he would grant “amnesty” for suspended accounts, following the results of an online poll he conducted on whether accounts that have not “broken the law or engaged in egregious spam” should be reinstated.
The yes vote was 72%. Such online polls are anything but scientific and can easily be influenced by bots. Musk also used one before restoring former U.S. President Donald Trump’s account.
“The people have spoken. Amnesty begins next week. Vox Populi, Vox Dei,” Musk tweeted Thursday using a Latin phrase meaning “the voice of the people, the voice of God.”
The move is likely to put the company on a crash course with European regulators seeking to clamp down on harmful online content with tough new rules, which helped cement Europe’s reputation as the global leader in efforts to rein in the power of social media companies and other digital platforms.
Zach Meyers, senior research fellow at the Centre for European Reform think tank, said giving blanket amnesty based on an online poll is an “arbitrary approach” that’s “hard to reconcile with the Digital Services Act,” a new EU law that will start applying to the biggest online platforms by mid-2023.
The law is aimed at protecting internet users from illegal content and reducing the spread of harmful but legal content. It requires big social media platforms to be “diligent and objective” in enforcing restrictions, which must be spelled out clearly in the fine print for users when signing up, Meyers said.
Britain also is working on its own online safety law.
“Unless Musk quickly moves from a ‘move fast and break things’ approach to a more sober management style, he will be on a collision course with Brussels and London regulators,” Meyers said.
European Union officials took to social media to highlight their worries. The 27-nation bloc’s executive Commission published a report Thursday that found Twitter took longer to review hateful content and removed less of it this year compared with 2021.
The report was based on data collected over the spring — before Musk acquired Twitter — as part of an annual evaluation of online platforms’ compliance with the bloc’s voluntary code of conduct on disinformation. It found that Twitter assessed just over half of the notifications it received about illegal hate speech within 24 hours, down from 82% in 2021.
The numbers may yet worsen. Since taking over, Musk has l aid off half the company’s 7,500-person workforce along with an untold number of contractors responsible for content moderation. Many others have resigned, including the company’s head of trust and safety.
Recent layoffs at Twitter and results of the EU’s review “are a source of concern,” the bloc’s commissioner for justice, Didier Reynders tweeted Thursday evening after meeting with Twitter executives at the company’s European headquarters in Dublin.
In the meeting, Reynders said he “underlined that we expect Twitter to deliver on their voluntary commitments and comply with EU rules,” including the Digital Services Act and the bloc’s strict privacy regulations known as General Data Protection Regulation, or GDPR.
Another EU commissioner, Vera Jourova, tweeted Thursday evening that she was concerned about news reports that a “vast amount” of Twitter’s European staff were fired.
“If you want to effectively detect and take action against #disinformation & propaganda, this requires resources,” Jourova said. “Especially in the context of Russian disinformation warfare.”
Ghana’s finance minister says the country is at high risk of debt distress as the currency, the cedi, has depreciated against the U.S. dollar, increasing its foreign debt by $6 billion this year alone. Ghana on Thursday announced more spending cuts, including a freeze on government hiring and a hike in the Value Added Tax. It’s also looking to buy oil using gold rather than U.S. dollars as the West African country grapples with the worst economic crisis in a generation.
There is immense pressure on the Ghanaian government to turn things around, with inflation hitting a record 40 percent in October. Traders closed their shops last month to protest the rising cost of goods and services as citizens decry the high cost of living.
Market confidence is very low as the West African country negotiates with the International Monetary Fund (IMF) for a (U.S.) $3 billion deal to help restructure the economy.
Presenting the 2023 budget in parliament Thursday, Finance Minister Ken Ofori-Atta, who some governing party lawmakers have already called for the president to fire, said depreciation of the cedi continues to be a huge problem as the government strives to address the country’s current challenges.
“The demand for foreign exchange to support our unbridled demand for imports undermines and weakens the value of the cedi,” he said. “This contributed to the depreciation of the cedi, which has lost about 53.8 percent of its value since the beginning of the year. Compared to the average 7 percent average annual depreciation of the cedi between 2017and 2021, the current year’s depreciation, which is driving the high costs of goods and services for everyone, is clearly an aberration – a very expensive one.”
As part of the measures to get the economy back in shape, Ofori-Atta announced a freeze on new tax waivers for foreign companies, a review of tax exemptions for mining, oil and gas companies and a reduction in the fuel allocation to government appointees.
Daniel Amartey, an economist with the Accra-based Policy Initiative for Economic Development (PIED), said the spending cuts send a positive signal, but he wants the government to focus more on blocking leaks in the system.
“What could be done more significantly in terms of minimizing government expenditure has to do with the corruption in the system and then financial malfeasance,” Amartey said. “So, we should have a way of addressing corruption and its related offences. The government if indeed is ready to minimize expenditures should empower the office of the special prosecutor to be able to deal with corruption and its related offences.”
Meanwhile, the Vice-President Mahamudu Bawumia announced on Facebook that Ghana is working on a new policy, effective next year, to buy oil products with gold rather than U.S. dollar reserves as part of the government measures to strengthen the cedi.
Explaining how the policy works, Gideon Boako, the spokesperson of the vice president in a text to VOA said, “it is basically going to be [a] government-to-government transaction. The significant drain on the forex [FX, the foreign exchange marketplace] is from oil imports. Once you lock that tunnel, you are good on the FX side.”
He added: “The government of Ghana will buy gold locally with cedis through the Bank of Ghana (financier) and then exchange the gold for fuel (oil) in a barter form, for example, with the government of UAE.”
Amartey described the policy as innovative.
“It is a very progressive one and within the shortest possible time it should be able to help us address the depreciation of the cedi. So, less dollars will be used in terms of our exportation.”
Retailers braced for their biggest test of the year: Will U.S. consumers open their wallets wide for the Black Friday sales that kick off the holiday shopping season?
Consumer confidence is precarious, rattled by soaring inflation in the world’s biggest economy, casting uncertainty on this festive shopping season that starts the day after Thursday’s Thanksgiving holiday.
A year ago, retailers faced product shortfalls in the wake of shipping backlogs and COVID-19-related factory closures. To avert a repeat, the industry front-loaded its holiday imports this year, leaving it vulnerable to oversupply at a time when consumers are cutting back.
“Supply shortages was yesterday’s problem,” said Neil Saunders, managing director for GlobalData Retail, a consultancy. “Today’s problem is having too much stuff.”
Saunders said retailers have made progress in recent months in reducing excess inventories, but that oversupply created banner conditions for bargain-hunters in many categories, including electronics, home improvement and apparel.
Juameelah Henderson always checks for sales, “but more so now,” she said while exiting an Old Navy store in New York with four bags of items.
The clothing chain’s prices were “pretty good,” she said. “If it’s not on sale, I really don’t need it.”
Higher costs for gasoline and household staples like meat and cereal are an economy-wide issue but do not burden everyone equally.
“The lower incomes are definitely hit worst by the higher inflation,” said Claire Li, a senior analyst at Moody’s. “People have to spend on the essential items.”
Leading forecasts from Deloitte and the National Retail Federation project a single-digit percentage increase, but it likely won’t exceed the inflation rate.
The consumer price index has been up about 8% on an annual basis, which means that a similar size increase in holiday sales would equate with lower volumes.
European countries including Britain and France have been marking Black Friday for a few years now, too, and are also enduring sky-high inflation. So merchants there face a similar dilemma.
“Retailers are desperate for some spending cheer, but the worry is that it could turn out to be more of a Bleak Friday,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said in London.
U.S. shoppers have remained resilient throughout the myriad stages of the COVID-19 pandemic, often spending more than expected, even when consumer sentiment surveys suggest they are in a gloomy mood.
Part of the reason has been the unusually robust state of savings, with many households banking government pandemic aid payments at a time of reduced consumption due to COVID-19 restrictions.
But that cushion is starting to whittle away. After hitting $2.5 trillion in excess savings in mid-2021, the benchmark fell to $1.7 trillion in the second quarter, according to Moody’s.
Consumers with incomes below $35,000 were affected the most, with their excess savings falling nearly 39% between the fourth quarter of 2021 and mid-2022, according to Moody’s.
Accompanying this drop has been a rise in credit card debt visible in Federal Reserve data and anecdotally described by chains that also report more purchases made with food stamps.
“We’re seeing continued pressure,” said Michael Witynski, chief executive of Dollar Tree, a discount retailer that has seen “shifts” in shoppers, “where they’re very consumable and needs-based focused to try and make that budget work and stretch it over the month.”
Earnings reports from retailers in recent days have painted a mixed picture on consumer health.
Target stood on the downcast side of the ledger, pointing to a sharp decline in shopping activity in late October, potentially portending a weak holiday season.
The big-box chain expects a “very promotional” holiday season, said Chief Executive Brian Cornell.
“We’ve had a consumer who has been dealing with very stubborn inflation for quarter after quarter now,” Cornell said on a conference call with analysts.
“They’re shopping very carefully on a budget, and I think they’re looking at discretionary categories and saying, ‘All right, if I’m going to buy, I’m looking for a great deal and a great value.'”
But Lowe’s, another big U.S. chain specializing in home-improvement, offered a very different view, describing the same late-October period as “strong” and seeing no evidence of consumer deterioration.
“We are not seeing anything that feels or looks like a trade down or consumer pullback,” said Lowe’s Chief Executive Marvin Ellison.
Consumers like Charmaine Taylor, who checks airline websites frequently, are staying vigilant.
Taylor thus far has been thwarted in her travel aspirations due to high plane ticket prices. Taylor, who works in child care, isn’t sure how much she’ll be able to spend on family this year.
“I’m trying to give them some little gifts,” Taylor said at a park in Harlem earlier this week. “I don’t know if I’ll be able to. Inflation is hitting pretty hard.”
Railroad engineers accepted their deal with the railroads that will deliver 24% raises but conductors rejected theirs, threatening the health of the economy just before the holidays and casting more doubt on whether the industry will be able to resolve the labor dispute before next month’s deadline without the help of Congress.
Even the threat of a work stoppage could tangle the nation’s supply chain as railroads will freeze shipments of chemicals and other goods that could create hazards if disrupted midway to their destination.
A split vote Monday from the two biggest railroad unions follows the rejection by three other unions of their deals with the railroads that the Biden administration helped broker before the original strike deadline in September. Seven smaller unions have approved the five-year deal that, on top of the 24% raise, includes $5,000 in bonuses.
But many union members have voted to reject the contracts because, they say, they fail to address demanding schedules and quality of life issues for employees.
All 12 must approve the contracts to prevent a strike that could cripple supply chains and hamper a stressed U.S. economy still emerging from the pandemic.
The Retail Industry Leaders Association said a rail strike “would cause enormous disruption to the flow of goods nationwide” although retail stores are well stocked for the crucial holiday shopping season.
“Fortunately, this year’s holiday gifts have already landed on store shelves. But an interruption to rail transportation does pose a significant challenge to getting items like perishable food products and e-commerce shipments delivered on time, and it will undoubtedly add to the inflationary pressures already hitting the U.S. economy,” said Jess Dankert with the group that represents more than 200 major retailers.
The unions that rejected their deals agreed to return to the bargaining table to try to hash out a new agreement before a new strike deadline early next month. But those talks have deadlocked because the railroads refuse to consider adding paid sick time to what was already offered.
It appears increasingly likely that Congress will have to step in to settle the dispute. Lawmakers have the power to impose contract terms if both sides can’t reach an agreement. Hundreds of business groups have urged Congress and President Joe Biden to be ready to intervene if needed.
Workers frustrated with the demanding schedules and deep job cuts in the industry pushed to reject these contracts because they don’t resolve workers’ key quality-of-life concerns. The deals for the engineers and conductors did include a promise to try to improve the scheduling of regular days off and negotiate the details of those schedules further at each railroad. The unions that represent engineers and conductors also received three unpaid days off a year to tend to medical needs as long they were scheduled at least 30 days in advance.
The railroads also lost out on their bid to cut crew sizes down to one person as part of the negotiations. But the conductors in the Transportation Division of the International Association of Sheet Metal, Air, Rail and Transportation Workers union still narrowly rejected the deal with roughly 51% voting against it. A smaller division of the SMART-TD union that represents about 1,300 yardmasters did approve the deal.
“The ball is now in the railroads’ court. Let’s see what they do. They can settle this at the bargaining table,” SMART-TD President Jeremy Ferguson said. “But, the railroad executives who constantly complain about government interference and regularly bad-mouth regulators and Congress now want Congress to do the bargaining for them.”
Paid sick time
The railroads maintain that the deals with the unions should closely follow the recommendations made this summer by a special panel of arbitrators Biden appointed. That’s part of the reason why they don’t want to offer paid sick time. Plus, the railroads say the unions have agreed over the years to forgo paid sick time in favor of higher pay and strong short-term disability benefits.
The unions say it is long overdue for the railroads to offer paid sick time to workers, and the pandemic highlighted the need for it.
The group that negotiates on behalf of the railroads said Monday that the unions that rejected their deals shouldn’t expect to receive more than the Presidential Emergency Board of arbitrators recommended. The National Carriers Conference Committee said businesses could start to be affected by the threat of a strike even before the deadline because railroads will start curtailing shipments of dangerous chemicals and perishable cargo days ahead of the deadline.
“A national rail strike would severely impact the economy and the public. Now, the continued, near-term threat of one will require that freight railroads and passenger carriers soon begin to take responsible steps to safely secure the network in advance of any deadline,” the railroads said.
It’s unclear what Congress might do given the deep political divisions in Washington and a single lawmaker could hold up a resolution. But the head of the Association of American Railroads trade group, Ian Jefferies, said, “If the remaining unions do not accept an agreement, Congress should be prepared to act and avoid a disastrous $2 billion a day hit to our economy.”
Republicans may try to impose a deal that includes only what the Presidential Emergency Board recommended while Democrats who still narrowly hold control of both the House and Senate during this lame-duck period might be willing to force the railroads to make additional concessions.
The unions that voted Monday represent more than half of the roughly 115,000 rail workers involved in the contract dispute with Union Pacific, Norfolk Southern, BNSF, Kansas City Southern, CSX and other railroads.your ad here
Growing up in a Chinese village, Julian Zhu saw his father only a few times a year when he returned for holidays from his exhausting job in a textile mill in southern Guangdong province.
For his father’s generation, factory work was a lifeline out of rural poverty. For Zhu, and millions of other younger Chinese, the low pay, long hours of drudgery and the risk of injuries are no longer sacrifices worth making.
“After a while, that work makes your mind numb,” said the 32-year-old, who quit the production lines some years ago and now makes a living selling milk formula and doing scooter deliveries for a supermarket in Shenzhen, China’s southern tech hub. “I couldn’t stand the repetition.”
The rejection of grinding factory work by Zhu and other Chinese in their 20s and 30s is contributing to a deepening labor shortage that is frustrating manufacturers in China, which produces a third of the goods consumed globally.
Factory bosses say they would produce more, and faster, with younger blood replacing their aging workforce. But offering the higher wages and better working conditions that younger Chinese want would risk eroding their competitive advantage.
And smaller manufacturers say large investments in automation technology are either unaffordable or imprudent when rising inflation and borrowing costs are curbing demand in China’s key export markets.
More than 80% of Chinese manufacturers faced labor shortages ranging from hundreds to thousands of workers this year, equivalent to 10% to 30% of their workforce, a survey by CIIC Consulting showed. China’s Ministry of Education forecasts a shortage of nearly 30 million manufacturing workers by 2025, larger than Australia’s population.
On paper, labor is in no short supply: roughly 18% of Chinese ages 16-24 are unemployed. This year alone, a cohort of 10.8 million graduates entered a job market that, besides manufacturing, is very subdued. China’s economy, pummeled by COVID-19 restrictions, a property market downturn and regulatory crackdowns on tech and other private industries, faces its slowest growth in decades.
Klaus Zenkel, who chairs the European Chamber of Commerce in South China, moved to the region about two decades ago, when university graduates were less than one-tenth this year’s numbers and the economy as a whole was about 15 times smaller in current U.S. dollar terms. He runs a factory in Shenzhen with around 50 workers who make magnetically shielded rooms used by hospitals for MRI screenings and other procedures.
Zenkel said China’s breakneck economic growth in recent years had lifted the aspirations of younger generations, who now see his line of work as increasingly unattractive.
“If you are young, it’s much easier to do this job, climbing up the ladder, doing some machinery work, handle tools, and so on, but most of our installers are aged 50 to 60,” he said. “Sooner or later, we need to get more young people, but it’s very difficult. Applicants will have a quick look and say ‘no, thank you, that’s not for me.'”
The National Development and Reform Commission, China’s macroeconomic management agency, and the education and human resources ministries did not reply to requests for comment.
Manufacturers say they have three main options to tackle the labor-market mismatch: sacrifice profit margins to increase wages; invest more in automation; or move to cheaper pastures such as Vietnam or India.
But all those choices are difficult to implement.
Liu, who runs a factory in the electric battery supply chain, has invested in more-advanced production equipment with better digital measurements. He said his older workers struggle to keep up with the faster gear or read the data on the screens.
Liu, who like other factory chiefs declined to give his full name so he could speak freely about China’s economic slowdown, said he tried luring younger workers with 5% higher wages but was given a cold shoulder.
Liu described his workers’ performance this way.
“It’s like with Charlie Chaplin,” he said, alluding to a scene in the 1936 movie “Modern Times,” about the anxieties of U.S. industrial workers during the Great Depression. The main character, Little Tramp, played by Chaplin, fails to keep up with tightening bolts on a conveyer belt.
Chinese policymakers have emphasized automation and industrial upgrading as a solution to an aging workforce.
The country of 1.4 billion people, on the brink of a demographic downturn, accounted for half of the robot installations in 2021, up 44% year-on-year, the International Federation of Robotics said.
But automation has its limits.
Dotty, a general manager at a stainless-steel treatment factory in the city of Foshan, has automated product packaging and work surface cleaning, but says a similar fix for other functions would be too costly. And young workers are vital to keep production moving.
“Our products are really heavy, and we need people to transfer them from one processing procedure to the next. It’s labor intensive in hot temperatures and we have difficulty hiring for these procedures,” she said.
Brett, a manager at a factory making video game controllers and keyboards in Dongguan, said orders have halved in recent months, and that many of his peers were moving to Vietnam and Thailand.
He is “just thinking about how to survive this moment,” he said, adding he expected to lay off 15% of his 200 workers even as he still wanted younger muscles on his assembly lines.
The competitiveness of China’s export-oriented manufacturing sector has been built over several decades on state-subsidized investment in production capacity and low labor costs.
The preservation of that status quo is now clashing with the aspirations of a generation of better-educated Chinese for a more comfortable life than the sleep-work-sleep daily grind for tomorrow’s meal their parents endured.
Rather than settling for jobs below their education level, a record 4.6 million Chinese applied for postgraduate studies this year. There are 6,000 applications for each civil service job, state media reported this month.
Many young Chinese are also increasingly adopting a minimal lifestyle known as “lying flat,” doing just enough to get by and rejecting the rat race of China Inc.
Economists say market forces may compel both young Chinese and manufacturers to curb their aspirations.
“The unemployment situation for young people may have to be much worse before the mismatch could be corrected,” said Zhiwu Chen, professor of finance at the University of Hong Kong.
By 2025, he said, there may not be much of a worker shortfall “as the demand will for sure go down.”
‘You feel free’
Zhu’s first job was to screw fake diamonds into wristwatches. After that he worked in another factory, molding tin boxes for mooncakes, a traditional Chinese bakery product.
His colleagues shared gruesome stories about workplace injuries involving sharp metal sheets.
Realizing he could avoid reliving his father’s life, he quit.
Now doing sales and deliveries, he earns at least 10,000 yuan ($1,421.04) a month, depending on how many hours he puts in. That’s almost double what he would earn in a factory, though some of the difference pays for accommodation, as many factories have their own dorms.
“It’s hard work. It’s dangerous on the busy roads, in the wind and rain, but for younger people, it’s much better than factories,” Zhu said. “You feel free.”
Xiaojing, 27, now earns 5,000 to 6,000 yuan a month as a masseuse in an upscale area of Shenzhen after a three-year stint at a printer factory where she made 4,000 yuan a month.
“All my friends who are my age left the factory,” she said, adding that it would be a tall order to get her to return.
“If they paid 8,000 before overtime, sure.”
Let the sticker shock begin: The upcoming U.S. Thanksgiving holiday, a time when families and friends typically celebrate with groaning sideboards, a stuffed turkey, and a more-is-better-than-less attitude, is going to cost roughly 20% more than last year, according to estimates compiled by the American Farm Bureau Federation in an annual survey of grocery prices.
Blame it on the weather, Russia’s invasion of Ukraine or corporations’ drive to maximize profits, all of which have had a hand in rising food prices, but this year’s jump is the largest since the Farm Bureau’s first Thanksgiving dinner cost survey in 1986.
Coupled with last year’s 14% increase, which was the second-largest, the price of a “classic” meal of turkey, stuffing, green peas, sweet potatoes, cranberries, rolls and pumpkin pie for 10 people has risen more than a third since 2020, at the outset of the worst U.S. inflation surge in 40 years, from $46.90 to $64.05.
“That kind of increase we recognize is a burden on some families, no question about that,” said Roger Cryan, the Farm Bureau’s chief economist, though he noted that discounting as the holiday approaches may allow consumers to lower the bill.
U.S. consumer prices rose 7.7% on an annual basis in October and had been increasing by as much as 9.1% earlier this year, triggering a Federal Reserve effort to tame price pressures with aggressive interest rate increases.
Food prices, particularly items bought for home consumption, have risen even faster, hitting a 13.5% annual rate in August and still rising 12.4% annually last month, a shock to one part of the household budget where prices had dependably increased less than incomes.
As food prices have risen, a U.S Census survey showed the share of households reporting food scarcity rising from 7.8% in August 2021 to 11.4% as of early October.
“If you’re in the grocery store right now, you see it, in any grocery store you go to, people making tradeoffs,” San Francisco Fed President Mary Daly said last week. “How many people can they invite? What are they going to serve? Are they going to trade down? Are we having a different kind of meal? Are we not having as many options?”
Skip the stuffing?
As with other goods and services, there is a broad set of forces behind the Thanksgiving food spike.
An outbreak of avian flu cut turkey flocks, and while supply is adequate the Farm Bureau said the harvest of smaller birds along with higher feed prices has raised the cost of that Thanksgiving centerpiece by 21%, to an average $1.81 per pound in the 224 stores where surveyors checked prices during the Oct. 18-31 period.
That accounted for about half of the $10.74 increase in the full price of the classic meal this year. The largest percentage rise was for packaged stuffing, up 69% to $3.88, while a 1-pound tray of carrots and celery was up just 8%, to $0.88, and the price of cranberries fell 14%, to $2.57 for a 12-ounce bag.
For food items generally, key inputs like fuel and fertilizer prices have skyrocketed, said Wendiam Sawadgo, an agricultural economics professor at Auburn University, with some fruit farmers in Alabama, for example, now spending $1,000 an acre on fertilizer compared to around $600 in 2018.
“A big chunk was Ukraine and Europe not having fertilizer production for a good while. That was a big problem,” he said.
Grocery store margins also rose during the COVID-19 pandemic. Net profit after taxes hit 3% in 2020 and 2.9% in 2021, compared with an average of around 1.2% from 2015 through 2019, according to data from the Food Industry Association. Those were the highest margins the association has seen in reports dating back to 1984.
Andy Harig, a vice president at the association, said high demand for food at home early in the pandemic, when restaurants were closed or in-person dining was considered risky, gave food retailers leverage to boost profits. He said consumers also bought more higher-margin products like seafood during the crisis, while changes in shopping — including the rise in food delivery — let stores trim labor costs.
But he also said the net profit figure is expected to fall back to the long-run industry average of between 1% and 2%.
“It’s a penny industry,” Harig said. With restaurants recovering and wages rising, margins are likely already declining.
Still, the rising cost of necessities has been top of mind for U.S. officials, with consumer sentiment near a low point after a year when average gas prices reached $5 a gallon. Thanksgiving-related travel this year may at least be cheaper than it was, with airline and fuel prices having declined recently.
And there may be some respite on the food front as well.
Walmart Inc., for example, said earlier this month that it would leave prices for Thanksgiving staples unchanged from last year and keep them in effect through Christmas, including turkey for under $1 a pound.
Discounted turkey prices often lure consumers to grocery stores and supermarkets, and bargains intensify as the holiday approaches. The Farm Bureau noted that frozen turkey prices had fallen to 95 cents a pound as of this week.
Auburn’s Sawadgo said that shopping for alternatives can also bring down the cost, with one of his personal favorites, collard greens, selling right now at $1.14 a pound, down 3 cents from last year, according to U.S. Department of Agriculture data.
Sawadgo recently priced the goods for a Thanksgiving dinner for six at about $70.76, up 19% from $59.50 for the same basket last year.
“If you are not someone who shops the ads, this might be the year to do that,” he said.
Disgraced Theranos CEO Elizabeth Holmes was sentenced Friday to more than 11 years in prison for duping investors in the failed startup that promised to revolutionize blood testing but instead made her a symbol of Silicon Valley ambition that veered into deceit.
The sentence imposed by U.S. District Judge Edward Davila was shorter than the 15-year penalty requested by federal prosecutors but far tougher than the leniency her legal team sought for the mother of a year-old son with another child on the way.
Holmes, who was CEO throughout the company’s turbulent 15-year history, was convicted in January in the scheme, which revolved around the company’s claims to have developed a medical device that could detect a multitude of diseases and conditions from a few drops of blood. But the technology never worked, and her claims were false.
Theranos was dashed “by misrepresentations, hubris and just plain lies,” the judge said.
“This case is so troubling on so many levels,” he said. “What was it that caused Ms. Holmes to make the decisions she did? Was there a loss of a moral compass?”
Holmes’ meteoric rise once landed her on the covers of business magazines that hailed her as the next Steve Jobs. And her deception was persuasive enough to draw in a list of sophisticated investors, including software magnate Larry Ellison, media mogul Rupert Murdoch and the Walton family behind Walmart.
She sobbed as she told the judge she accepted responsibility for her actions.
“I regret my failings with every cell of my body,” Holmes said.
The sentencing in the same San Jose courtroom where Holmes was convicted on four counts of investor fraud and conspiracy in January marked another climactic moment in a saga that has been dissected in an HBO documentary and an award-winning Hulu series.
Holmes, 38, faced a maximum of 20 years in prison. Her legal team asked the judge for a sentence of no more than 18 months, preferably served in home confinement.
Her lawyers argued that Holmes was a well-meaning entrepreneur who is now a devoted mother with another child on the way. Their arguments were supported by more than 130 letters submitted by family, friends and former colleagues praising Holmes.
Prosecutors also wanted Holmes to pay $804 million in restitution — an amount that covers most of the nearly $1 billion that she raised from investors. But the judge left that question for a future hearing that has not been scheduled.
While wooing investors, Holmes leveraged a high-powered Theranos board that included former Defense Secretary James Mattis, who testified against her during her trial, and two former secretaries of state, Henry Kissinger and the late George Shultz, whose son submitted a statement blasting Holmes for concocting a scheme that played Shultz “for the fool.”
The judge gave Holmes more than five months of freedom before she must report to prison on April 27. She gave birth to a son shortly before her trial started last year.
If Holmes’ pregnancy had a role in determining her sentence, the decision could prove controversial. A 2019 study found that more than 1,000 pregnant women entered federal or state prisons over a 12-month study period; 753 of them gave birth in custody.
According to a 2016 survey by the Bureau of Justice Statistics, more than half of women entering federal prison — 58% — reported being mothers of minor children.
‘Preyed’ on investor hopes
Federal prosecutor Robert Leach described the Theranos scam as one of the most egregious white-collar crimes ever committed in Silicon Valley. In a scathing 46-page memo, Leach told the judge he had an opportunity to send a message that curbs the hubris and hyperbole unleashed by the tech boom of the past 30 years.
Holmes “preyed on hopes of her investors that a young, dynamic entrepreneur had changed health care,” Leach wrote. “And through her deceit, she attained spectacular fame, adoration and billions of dollars of wealth.”
Even though Holmes was acquitted by a jury on four counts of fraud and conspiracy tied to patients who took Theranos blood tests, Leach also asked the judge to factor in the health threats posed by Holmes’ conduct.
Holmes’ lawyer Kevin Downey painted her as a selfless visionary who spent 14 years of her life trying to revolutionize health care.
Although evidence submitted during her trial showed the blood tests produced wildly unreliable results that could have steered patients toward the wrong treatments, her lawyers asserted that Holmes never stopped trying to perfect the technology until Theranos collapsed in 2018.
They also pointed out that Holmes never sold any of her Theranos shares — a stake valued at $4.5 billion in 2014.
Defending herself against criminal charges has left Holmes with “substantial debt from which she is unlikely to recover,” Downey wrote, suggesting that she is unlikely to pay any restitution.
“Holmes is not a danger to society,” Downey wrote.
Downey also asked Davila to consider the alleged sexual and emotional abuse Holmes suffered while she was involved romantically with Ramesh “Sunny” Balwani, who became a Theranos investor, top executive and eventually an accomplice in her crimes.
Balwani, 57, is scheduled to be sentenced December 7 after being convicted in a July trial on 12 counts of fraud and conspiracy.
U.S. Vice President Kamala Harris convened an emergency meeting of key regional powers Friday on the sidelines of the Asia Pacific Economic Cooperation summit in Bangkok to discuss North Korea’s latest missile launch, that fell 200 kilometers off Japan’s coast.
“This conduct by North Korea most recently is a brazen violation of multiple U.N. Security resolutions. It destabilizes the security in the region, and unnecessarily raises tensions,” Harris said in brief remarks to press prior to meeting with leaders of Japan, South Korea, Australia, New Zealand and Canada.
The launch is the latest of the barrage of missiles that North Korea has test-fired in recent weeks. Pyongyang said they were a “corresponding military operation” aimed at conducting simulated strikes on South Korea and the United States in response to large-scale allied air drills.
North Korea’s provocation occurs amid already heightened geopolitical tensions over the war in Ukraine that has exacerbated supply chain issues and inflationary pressures globally.
Harris is in Bangkok as the head of the U.S. delegation in the meetings of members of APEC, a grouping of 21 economies in the Asia Pacific, whose mandate is to promote regional economic cooperation and integration.
“Our message is clear; the United States has an enduring economic commitment to the Indo Pacific, one that is measured not in years but in decades and generations,” she said during remarks at the APEC CEO Summit.
Harris argued that there is “no better economic partner for the Indo-Pacific than the United States of America” as she pushed for the Indo-Pacific Economic Framework that Washington launched in May.
Indo-Pacific Economic Framework
The framework is a trade facilitation, standards-setting, and capacity-building mechanism designed to provide a counterweight against Chinese economic clout in the region. It is the Biden administration’s effort to reengage Indo-Pacific nations on trade after former President Donald Trump’s administration withdrew in 2017 from the Trans-Pacific Partnership. The previous U.S. administration, that of President Barack Obama, had promoted and launched that regional comprehensive trade pact in 2015.
Thirteen countries in the region have signed on to the Indo-Pacific Economic Framework, or IPEF, which includes provisions divided into categories that countries can choose from – fair and resilient trade; supply chain resiliency; clean energy, decarbonization and infrastructure; and taxation and anti-corruption.
While there are signals the region wants the U.S. to increase its economic engagement to counterbalance China’s, it has given lukewarm reception to IPEF, which does not include market access or tariff-reduction provisions.
Beijing meanwhile boasts the Regional Comprehensive Economic Partnership, a free trade agreement it promoted and has been signed onto by Australia, Brunei, Cambodia, Indonesia, Japan, South Korea, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. It is also accelerating negotiations on the ASEAN -China Free Trade Area “Version 3.0” with Southeast Asian nations.
It is a big challenge for U.S. policymakers to match China’s latest geoeconomic maneuver, said Thitinan Pongsudhirak, director of the Institute for Science and International Security at Bangkok’s Chulalongkorn University.
Nevertheless, the U.S. is still a major investor in the region, Pongsudhirak told VOA.
“The stock of U.S. investments is immense, very close to China. They take turns going back and forth,” he said.
Partnership for Global Infrastructure and Investment
Harris highlighted the Partnership for Global Infrastructure and Investment, the West’s counter to China’s Belt and Road Initiative.
“At the G-7 we intend to mobilize $600 billion in infrastructure investment in the developing world that will be high standard, transparent, climate-friendly,” Harris said.
In a veiled criticism of Beijing, she added the partnership, “does not leave countries with insurmountable debt.”
Harris noted the Just Energy Transition Partnership developed with Indonesia during its G-20 presidency that aims to mobilize $20 billion over the next three to five years to help the country’s energy transition and implementation of its climate agenda.
“That effort shows Washington recognizes that it has work to do to compete with China,” said Susannah Patton, director of the Southeast Asia Program at the Lowy Institute, said.
“However, until tangible projects are delivered, skepticism about U.S. efforts will remain,” she told VOA.
Like many other countries in the region who look to China to bankroll its infrastructure, Indonesia in 2023 is set to launch its Beijing-funded $8 billion high-speed rail project connecting Jakarta and Bandung.
The APEC summit caps off a series of international meetings in Southeast Asia this week, following the G-20 summit in Bali, Indonesia and the ASEAN meeting in Phnom Penh, Cambodia. Harris is standing in for President Joe Biden who attended the G-20 and ASEAN meetings but returned to Washington Wednesday to host his granddaughter’s upcoming wedding at the White House.
Biden’s absence will feed into some of the concerns and anxieties the region has on U.S. commitment to the region, said Andreyka Natalegawa, associate fellow for the Southeast Asia Program at the Center for Strategic and International Studies, to VOA.
However, Natalegawa noted that the U.S. IS taking over as APEC chair next year.
“That’s sort of a strong signal that Washington remains engaged and committed to economic integration in the Indo-Pacific,” he said.
Following his meeting with Biden on the sidelines of the G-20 summit in Bali Monday, from Bangkok Chinese President Xi Jinping warned against Cold War tensions, saying that the Asia-Pacific is no one’s backyard and should not become an arena of big power rivalry.
Capping off her day in Bangkok, Harris and second gentleman Doug Emhoff will meet with King Maha Vajiralongkorn Phra Vajiraklaochaoyuhua and Queen Suthida Bajrasudhabimalalakshana.
Africa’s biggest cotton exporter, Benin, has built an industrial park to move the country away from raw exports to finished products. Environmental activists say local manufacturing will also cut down on emissions from shipping that contribute to climate change. Henry Wilkins reports from Djigbé, Benin.
Camera: Henry Wilkins Video Editor: Henry Wilkins
Taiwan’s envoy to a gathering of Asia-Pacific leaders is the 91-year-old billionaire founder of a computer chip manufacturing giant that operated behind the scenes for decades before being thrust into the center of U.S.-Chinese tension over technology and security.
Morris Chang’s hybrid role highlights the clash between Taiwan’s status as one of China’s top tech suppliers and Beijing’s threats to attack the self-ruled island democracy of 22 million people, which the mainland’s ruling Communist Party says it part of its territory.
Taiwan’s decision to send Chang instead of a political leader to the Asia-Pacific Economic Cooperation summit in Thailand reflects the island’s unusual status. The United States and other governments have agreed to Chinese demands not to have official relations with Taiwan or have their leaders meet its president.
Chang transformed the semiconductor industry when he founded Taiwan Semiconductor Manufacturing Corp. in 1987 as the first foundry to produce chips only for customers without designing its own. That allowed smaller designers to compete with industry giants without spending billions of dollars to build a factory.
TSMC has grown into the biggest chip producer, supplying Apple Inc., Qualcomm Inc. and other customers and turning Taiwan into a global tech center. TSMC-produced chips are in millions of smartphones, automobiles and high-end computers.
Despite that, TSMC ranks high on any list of the biggest companies that are unknown outside their industries.
Chang, a Texas Instruments Inc. veteran who served as TSMC chairman until 2018, represented then-President Chen Shui-bian at the Asia-Pacific Economic Cooperation meeting in 2006. He was re-appointed to the same job in 2018, 2019 and 2020 by President Tsai Ing-wen.
“Taiwan’s semiconductor industry, especially TSMC, plays a pivotal role in the domestic and even the world economy,” Tsai told reporters on Oct. 20. “At this important moment, Chang is an irreplaceable candidate to serve as the representative of our country’s APEC leaders.”
Britain’s trade minister, Greg Hands, said London wants closer cooperation with Taiwan on semiconductors during a visit this month. Britain is home to Arm, a leading chip designer.
Taiwan is in a “very challenging environment” and APEC is the “most important international conference venue for Taiwan,” Chang said at the Oct. 20 briefing with Tsai.
“Taiwan needs to build a secure and resilient supply chain with trusted partners, especially in the electronics sector,” he said.
Last year, Chang warned support was eroding for globalization and free markets that helped TSMC prosper.
“Globalization seems to be a bad word and ‘free market economy’ is beginning to carry conditions,” Chang said while accepting an award from the Asia Society.
“Many companies in Asia and America face challenges as to how to operate in the new environment,” Chang said. “Still, I’m confident that solutions will be found.”
TSMC was thrust into geopolitics in 2020 when then U.S. President Donald Trump blocked the company and other vendors from using U.S. technology to make chips for Chinese tech giant Huawei Technologies Ltd., which produces smartphones and network gear for phone and internet carriers. American officials say Huawei is a security threat and might enable Chinese spying, an accusation the company denies.
Most of the world’s smartphones and other consumer electronics are assembled in Chinese factories. But they need components and technology from the United States, Europe and Asian suppliers — especially Taiwan, the biggest chip exporter.
Huawei, China’s first global tech brand, designs chips but needs TSMC and other contractors to make them. Their foundries need American manufacturing technology, which gives Washington leverage to disrupt Chinese high-tech industry.
Processor chips are China’s biggest import at $300 billion a year, ahead of oil. The ruling Communist Party sees that as a strategic weakness and is spending heavily to create its own chip producers, but they are generations behind TSMC and other global leaders.
Trump’s successor, Joe Biden, left Trump’s curbs in place and imposed more restrictions that extend to other Chinese companies.
TSMC, headquartered in Hsinchu, adjacent to the Taiwan capital, Taipei, says it made 12,302 different products last year for 535 customers. The company reported an $18.7 billion profit last year on $49.8 billion in revenue.
Chang was born in Ningbo, south of Shanghai, and moved to Hong Kong after a civil war on the mainland ended with the Communist Party taking power in 1949.
The mainland’s former ruling Nationalist Party fled to Taiwan. The two sides have been ruled separately since then. They have no official relations but are linked by billions of dollars of trade and investment.
Chang studied at Harvard University and the Massachusetts Institute of Technology before receiving a Ph.D. in electrical engineering from Stanford University in 1964.
Chang spent a quarter-century at Texas Instruments, rising to become a vice president in charge of its semiconductor business, before being invited to Taiwan in the 1980s to lead a technology research institute.
In 1988, TSMC became Taiwan’s first company traded on the New York Stock Exchange. Chang’s stake in the company is worth $1.6 billion.
Nigeria’s plan to replace its naira currency with new designs to reduce excess cash and to fight counterfeiting, inflation and crime has led to a rush on U.S. dollars. Analysts say the timing — just ahead of February’s election and as the economy struggles — could undermine confidence in Africa’s largest economy. Timothy Obiezu reports from Abuja, Nigeria. Camera: Emeka Gibson