Economics

Price growth continued to soften in the US last month, falling to its lowest level since February 2021 as the Federal Reserve prepares to cut interest rates for the first time since the start of the pandemic.

As inflation continues to fade, the consumer price index rose at an annual rate of 2.5% in August – down from 2.9% in July, and below the 2.6% expected by economists.

On a month-to-month basis, the index rose 0.2% last month, in line with its rate of growth during July.

• Europe’s top court on Tuesday ruled against Apple in the tech giant’s 10-year court battle over its tax affairs in Ireland. 
• The case stems back to 2016 when the European Commission ordered Ireland to recover up to 13 billion euros ($14.4 billion) in back taxes from Apple.
• The Commission said at the time Apple had received “illegal” tax benefits from Ireland over the course of two decades.

Boeing is offering its staff a 25% pay rise over four years in a bid to avoid a strike that could potentially shut down its assembly lines as early as Friday.

Union leaders representing more than 30,000 employees have urged the workers to support the proposal, describing it as the best contract they had ever negotiated.

If approved, the agreement would be an important achievement for Boeing's new chief executive, Kelly Ortberg, who faces pressure to fix the company's quality and reputational issues.

• Big Lots filed for bankruptcy protection, citing stubborn inflation, high interest rates and a slowdown in consumer spending on home goods such as furniture and decor.
• Private equity firm Nexus Capital Management has agreed to buy Big Lots for $760 million, consisting of $2.5 million in cash plus its remaining debt.
• The home goods sector has been under pressure over the last two years after demand surged during the Covid-19 pandemic.

The Japanese owner of convenience store chain 7-Eleven has rejected a $38bn (£29.2bn) takeover bid from Canadian rival Alimentation Couche-Tard.

In a letter addressed to the prospective buyer, Seven & i Holdings said the Circle K owner's offer "grossly" undervalued the company and was fraught with regulatory risk.

Dollar General shares tumbled on Thursday after the discount retailer slashed its sales and profit guidance for the full year, suggesting its lower-income customers are struggling in this economy.

Federal Reserve Chair Jerome Powell sent a straightforward message to markets in a key speech on Friday, saying "the time has come" for the central bank to begin lowering interest rates.

https://www.bls.gov/web/empsit/cesprelbmk.htm

Both of Canada's major freight railroads have come to a full stop because of a contract dispute with their workers, an impasse that could bring significant economic harm to businesses and consumers in Canada and the U.S. if the trains don't resume running soon. 

Canadian National and CPKC railroads both locked out their employees after the deadline of 12:01 a.m. Eastern Thursday passed without new agreements with the Teamsters Canada Rail Conference, which represents some 10,000 engineers, conductors and dispatchers.

• Elon Musk's Twitter acquisition ended up being the worst financing deal for banks since 2008, the WSJ said.
• The $13 billion in loans Musk took out have been stuck on banks' balance sheets.
• The loans have cut into pay for bankers and lenders' ability to finance other deals, the Journal reported.

In this video, we dive into the mismanagement that led to a collapse so severe that international agencies stopped tracking it

• The layoffs include roughly 600 jobs at General Motors’ tech campus near Detroit.
• The layoffs represent about 1.3% of the company’s global salaried workforce of 76,000 as of the end of last year.

When you hear “startup”, you might think of the millions of entrepreneurs who have founded new businesses over the past few years. But these are mostly freelancers, contractors and people with full-time jobs who can accommodate a side gig. The real startup story is quietly happening elsewhere: trillions of dollars of wealth are slowly being transferred to a younger generation by boomers selling their businesses to those looking to build their own.

According to a new report from BizBuySell, a business brokerage and research site, the number of small businesses being sold has not only recovered to pre-pandemic levels, but is quickly rising. And the market for would-be entrepreneurs is hot. Business owners who sold their companies in the second quarter of this year are getting 20% higher prices than those who sold their businesses the same time last year.

Boomers are selling at a furious pace and they’re just getting started. This shouldn’t come as a huge surprise. According to the US Small Business Administration, more than half of the nation’s small-business owners are over the age of 50, and approximately 21% of the US population were born before 1964. As of February 2024, according to one study, baby boomers owned about 51% of the privately held businesses in the United States, which is about 3m businesses valued at $10tn.

According to a recent report, around half of OECD countries are earning less now than they had before the pandemic. Considering hourly real wages—wages adjusted for inflation—people in the United States, Canada, Japan, Australia and many European countries now have less money at their disposal than roughly four years ago. No data was published for Turkey, Chile and Colombia.

Big Lots is closing more than 300 locations across the United States, or roughly a quarter of its stores, following an earlier warning that its future was in “substantial doubt” amid ongoing financial troubles.

The discount retailer previously said it planned to close as many as 40 stores during its most recent earnings report in June, when it recorded a 10% decrease in sales and a $205 million loss for the quarter because customers are cutting back on spending. In a recent regulatory filing, Big Lots said it would increase the number of closures to 315 stores, part of an updated loan agreement to secure its finances.

A specific list wasn’t revealed, but Big Lots is listing closing sales at hundreds of its 1,389 stores on its website.

Year-over-year inflation reached its lowest level in more than three years in July, the latest sign that the worst price spike in four decades is fading and setting up the Federal Reserve for an interest rate cut in September.

• Starbucks has ousted CEO Laxman Narasimhan, effective immediately.
• Chipotle CEO Brian Niccol will step in as the coffee chain’s new leader on Sept. 9.
• Starbucks’ sales have struggled in recent quarters due to shrinking demand in the U.S. and China, its two largest markets.

Wholesale price increases in the United States eased in July, suggesting that inflation pressures are further cooling as the Federal Reserve moves closer to cutting interest rates, likely beginning next month.

The Labor Department reported Tuesday that its producer price index — which tracks inflation before it reaches consumers — rose 0.1% from June to July and 2.2% from a year earlier.

Excluding food and energy prices, which tend to fluctuate from month to month, so-called core wholesale prices were unchanged from June and up 2.4% from July 2023. The increases were milder than forecasters had expected and were nearly consistent with the Fed’s 2% inflation target.

The great inflation spike of the past three years is nearly spent — and economists credit American consumers for helping slay it. 

Some of America’s largest companies, from Amazon to Disney to Yum Brands, say their customers are increasingly seeking cheaper alternative products and services, searching for bargains or just avoiding items they deem too expensive. Consumers aren’t cutting back enough to cause an economic downturn. Rather, economists say, they appear to be returning to pre-pandemic norms, when most companies felt they couldn’t raise prices very much without losing business.

Chicago Federal Reserve Bank President Austan Goolsbee on Thursday reiterated that the central bank's job is not to respond to stock market routs or political considerations

"The Fed's out of the election business. The Fed is in the economic business," Goolsbee said in an interview on Fox News, noting the Fed has been very clear about what economic data would motivate an interest-rate cut, a hold on policy, or even a rate hike.