Inflation in the United States may have surged to a 30-year high in October, but that didn’t stop consumers from spending up a storm last month as Americans got a jump start on the holiday shopping season.
Sales at retail stores, online and at restaurants in the world’s largest economy increased 1.7 percent in October compared to the previous month, the US Department of Commerce said on Tuesday. That was the biggest gain since March and marked the third straight month of rising retail sales.
Compared to the same period last year, retail and food services sales advanced 15.4 percent in October.
Supply chain snarls as well as shortages of raw materials and workers have been raising prices this year for US businesses, which in turn have been passing those higher costs on to American consumers.
Last month, US consumer prices jumped a blistering 6.2 percent from the same period a year ago, the US Department of Labor said, marking the sharpest acceleration in consumer prices in three decades.
That matters tremendously to the health of the US economy because consumer spending drives two-thirds of the nation’s growth. And some are concerned that mounting inflation could downshift the engine of the US economy.
Consumers tend to spend more when they feel more confident about the outlook for the economy and their own financial prospects. Rising inflation and the perception that not enough is being done to contain it helped drive US consumer confidence to a 10-year low in November, the University of Michigan said in its latest survey.
But with US households still flush with more than $2.5 trillion in savings amassed during the coronavirus pandemic, Americans managed to spend at a faster clip than expected in October.
“An improving Covid situation, easing supply constraints in the auto sector and an early start to holiday shopping all boosted purchases last month,” said Oxford Economics Chief US Economist Gregory Daco in a client note. “Households were still willing to open their wallets in the face of higher prices – which inflated nominal sales figures – but there is increasing evidence that higher inflation is eroding purchasing power.”
While more affluent households have a bigger income cushion to absorb inflation, low-income households are being hit especially hard. Consumers can respond to higher prices by delaying purchases of non-essential items, but there is no putting off shelling out for essentials like food on the table, gasoline, heating, and a roof overhead.
Food spending alone gobbled up 27 percent of household budgets for the lowest-income Americans last year, according to the US Department of Agriculture.
One way consumers can react to higher prices for essentials is to substitute purchases for lower-cost options.
The nation’s – and the world’s- largest retailer, Walmart, known for its bargain prices, said on Tuesday that its online sales and sales at its US stores opened at least a year increased 9.2 percent in its third quarter ending October 29, even though its costs had climbed. The retailing giant also said it grabbed a bigger share of the US grocery market and that more shoppers are returning to its stores.
Even though consumers are searching for bargains to weather the inflation storm, analysts still see the economic recovery staying on track, thanks to climbing wages, an improving jobs market, and declining COVID-19 infections and restrictions.
“As the economy heads into 2022, an improving health situation should reinvigorate consumer confidence while a strengthening jobs recovery and strong wage gains should support income growth,” said Daco.
TD raising dividend, plans to buy back up to 50 million shares – BNN
TD Bank Group kept pace with its peers in dishing out rewards to its shareholders on Thursday.
The bank announced it will raise its quarterly dividend 13 per cent to $0.89 per share, effective Jan. 31. It also said it’s seeking regulatory approval to repurchase up to 50 million of its shares.
All five of the big Canadian lenders that have reported this week announced similar moves after the Office of the Superintendent of Financial Institutions recently ended its ban on buybacks and dividend hikes. Bank of Montreal, the last of the Big Six banks to report earnings, will announce its results on Friday.
TD’s full-year profit climbed to $14.3 billion compared to $11.9 billion in 2020, the bank also announced on Thursday. In the fiscal fourth quarter, which ended Oct. 31, net income fell to $3.8 billion from $5.1 billion a year earlier when it got a $1.4-billion lift from the sale of its stake in TD Ameritrade.
On an adjusted basis, TD earned $2.09 per share in the most recent quarter. Analysts, on average, were expecting $1.96.
TD’s American unit was the primary driver in the fiscal fourth quarter, as the division’s net income surged 66 per cent year-over-year to US$1.09 billion. Stripping out an investment in Charles Schwab, profit for the core U.S. retail banking operations soared 123 per cent to US$897 million as revenue climbed and US$62 million was freed up after previously being set aside for loans that could go bad.
In Canada, TD’s retail banking division saw profit rise 19 per cent year-over-year to $2.14 billion. Similar to the U.S., revenue rose year-over-year and credit quality improved. However, those factors were partially offset by an eight per cent rise in expenses — which TD said was due to higher variable compensation and investments in technology.
Meanwhile, the bank’s wholesale division — which comprises activities like capital markets and investment banking — was a drag on profit as net income from that unit slid 14 per cent to $420 million. TD said its trading revenue in the quarter fell to $510 million from $761 million a year earlier.
“We ended the year in a position of strength, with a growing base of customers across highly competitive and diversified businesses and a robust capital position, enabling us to increase our dividend and providing us with a strong foundation upon which to continue building our business in 2022,” said TD President and Chief Executive Bharat Masrani in a release.
Editor’s note: The original version of this story incorrectly presented the dividend increase as being 11 per cent. We regret the error.
Tentative deal between union workers and beef producer Cargill struck | CTV News – CTV News Calgary
With less than a week to go before workers were set to go on strike at Cargill’s High River, Alta. beef processing plant, the company says a tentative deal has been reached.
The company announced the development on Wednesday and says it is “encouraged by the outcome” of recent talks.
“After a long day of collaborative discussion, we reached an agreement on an offer that the bargaining committee will recommend to its members. The offer is comprehensive and fair and includes retroactive pay, signing bonuses, a 21 per cent wage increase over the life of the contract and improved health benefits,” Cargill wrote in a statement to CTV News via email.
The company adds it also “remains optimistic” a deal can be finalized before the strike deadline.
“(We) encourage employees to vote on this offer which recognizes the important role they play in Cargill’s work to nourish the world in a safe, responsible and sustainable way. While we navigate this negotiation, we continue to focus on fulfilling food manufacturer, retail and food service customer orders while keeping markets moving for farmers and ranchers,” it wrote.
The United Food and Commercial Workers’ Union (UFCW) Local 401 was expected to go on strike on Dec. 6.
It rejected the most recent attempt at a deal on Nov. 25 by a 98 per cent margin.
According to a statement from UFCW Local 401, the negotiating team engaged in “a marathon day” of talks with the company on Tuesday.
“Late in the evening, our bargaining committee concluded that they were in receipt of a fair offer and that they were prepared to present that offer to their coworkers with a recommendation of acceptance,” it wrote in a statement.
The union says the tentative deal will “significantly improve” the lives of Cargill workers and will be the ‘best food processing contract in Canada.”
Highlights from the deal include:
- $4,200 in retroactive pay for many employees;
- $1,000 signing bonus;
- $1,000 COVID-19 bonus;
- More than $6,000 total bonuses for workers three weeks before Christmas;
- $5 wage increase for many employees;
- Improved health benefits; and
- Provisions to facilitate a new culture of health, safety, dignity and respect in the workplace
While UFCW Local 401 president Thomas Hesse calls the deal “fair,” he will support workers on the picket line if they decide to reject the proposal.
“If they do accept it, I’ll work with them every day to make Cargill a better workplace,” Hesse said in a statement. “I will do as our members ask me to do.
“I respect all of the emotions that they feel and the suffering that they have experienced.”
Employees are expected the vote on the new deal between Dec. 2 and 4.
Afterpay delays vote on $29 billion buyout as Square awaits Spain’s nod
Afterpay Ltd will delay a shareholder meet to approve Square Inc’s $29-billion buyout of the Australian buy now, pay later leader, as the Jack Dorsey-led payment company awaits regulatory nod in Spain.
The investor meet was set for Dec. 6, but Afterpay said it would likely take place next year as Square, which has rebranded itself to Block Inc, is likely to get an approval from the Bank of Spain only in mid-January.
The delay is unlikely to impact the completion of Australia‘s biggest deal, which is set for the first quarter of 2022, Afterpay said.
“We continue to believe the risks of the transaction closing are minimal,” RBC Capital Markets analyst Chami Ratnapala said in a brief client note.
Meanwhile, Twitter Inc co-founder Dorsey is expected to focus on Square after stepping down as chief executive of the social media platform as it looks to expand beyond its payment business and into new technologies like blockchain.
Afterpay shares fell more than 6%, far underperforming the broader Australian market, tracking Square’s 6.6% drop overnight in U.S. market on worries over the Omicron variant.
(Reporting by Nikhil Kurian, Sameer Manekar and Indranil Sarkar in Bengaluru; Editing by Anil D’Silva, Rashmi Aich and Arun Koyyur)
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