Americans Plan to Scale Back on Holiday Spending This Year

Americans predict they will spend an average $805 on Christmas gifts this year, significantly below their estimate a year ago ($942) and the lowest October holiday spending projection Gallup has measured since 2016. The sharp decline in Americans’ spending intentions since 2019 points to weak holiday sales for retailers.

The Sept. 30-Oct. 15 poll also finds 28% of Americans saying they will be spending less on holiday gifts this year than in 2019, more than double the 12% who expect to spend more. While the majority say their spending will stay the same, the 28% planning to spend less is the highest October reading since 2012.

A strong tilt toward less spending, as is seen now, is typical of consumer intentions during recessions and slow economic times, but contrasts with the past three October polls, when Americans were about equally as likely to say they would spend more as spend less.

Gallup’s annual question asking Americans to predict what their holiday spending will be has been a reliable harbinger of annual retail sales in most years. This is particularly true for Gallup’s forthcoming November estimate, as that better captures consumers’ mindset during the height of the season.

Holiday sales typically increase year-over-year, rising 3.3% on average since 2000, with sales up more than 5% in strong years and around 2% in weak years, according to figures compiled by the National Retail Federation. Since 2000, holiday sales have been worse than that only twice: in 2008, during the global financial crisis and December 2007-June 2009 recession, and in 2009, when the economy was still recovering from these events.

Should Americans’ predictions for their holiday spending hold up over the next month, retailers may see gains of just over 2% in sales, on average, this year. (…)

Gallup trends show Americans’ spending intentions have declined between October and November in 10 out of 13 years when the question was asked in both months. If that occurs this year, retailers should brace for even weaker sales. But it’s also possible that their spending estimate could increase significantly as occurred once, in 2011, thus portending a better situation for retailers. The best they might reasonably hope for is stability.

Struggling Rental Market Could Usher in Next American Housing Crisis A housing crisis that is emerging in the U.S. threatens to send millions of renters into eviction and leave landlords short billions of dollars

A large number of renters have been unable to pay some or even all of their rent since March, when the pandemic temporarily shut down most businesses. Many businesses remain closed or only partially open, pushing renters into unemployment and draining their savings.

Federal and local eviction moratoriums have protected many of them from losing their homes if they missed payments during the pandemic. But the national eviction ban and some state and city protections are set to expire by January or sooner. Renters will then be on the hook for months of missed payments, which even those who have jobs could struggle to pay. (…)

A study of unemployed workers released last week by the Federal Reserve Bank of Philadelphia calculated outstanding rent debt would reach $7.2 billion before the close of 2020. Moody’s Analytics estimates that it could reach nearly $70 billion by year-end if there is no additional stimulus spending. The economic-research firm calculated that 12.8 million Americans would then owe an average of $5,400 from missed payments.

Even the larger figure would be far less than what was lost when the $1.3 trillion subprime-mortgage bubble burst, leading to a national wave of defaults and foreclosures. But the tens of millions of people potentially caught in a web of home-rental debt and eviction would far exceed the 3.8 million homeowners who were foreclosed on in 2007-2010. (…)

But about a quarter of American renter households with children are now carrying debt from not paying rent, U.S. Census Bureau surveys show. (…) “These households will have to make some pretty massive financial choices and pull back on other spending to pay their rent,” said Mark Zandi, Moody’s chief economist. “That’s a hit to the economy.” (…)

Even some higher-income renters are falling behind. An analysis of rent payments in 11.5 million professionally managed rental apartments shows that unpaid rent was 7% higher in those buildings between April and August this year than it was during the same months in 2019. (…)

Subleases in downtown Toronto more than doubled over the past three months, sending the office vacancy rate to 4.7 per cent in the third quarter, from 2.7 per cent in the second, according to new data from commercial real estate brokerage CBRE.

In downtown Vancouver, sublease space rose 30 per cent, pushing the office vacancy rate to 4.6 per cent, from 3.3 per cent. (Sublease space is included in the overall vacancy rate.) (…)

Across the country, the vacancy rate reached 12 per cent in the third quarter compared with 11 per cent in the second. Calgary, which was still trying to recover from 2014′s oil crash when it was hit with another oil downturn and the pandemic, is in a dire position. Its downtown vacancy rate is nearly 30 per cent.

Montreal and Ottawa, two cities that had enjoyed a downtown real estate revival, also had more space become available throughout the pandemic. In Montreal, the office vacancy rate in the core rose to 8.7 per cent from 7.3 per cent. In Ottawa, the level climbed to 8.8 per cent from 7.7 per cent. (…)

VIRUS UPDATE

(NBF)

All-In Push for Vaccine in U.S. Raises Risk Virus Will Linger

(…) “We’re not going to control the pandemic,” Meadows said. “We are going to control the fact that we get vaccines, therapeutics and other mitigations.”

But ending the crisis won’t be quick or easy. Vaccines may initially slow deaths among the vulnerable, such as those with chronic conditions. But the logistical, production and public education challenges of immunizing 60% to 70% of national populations — the level the World Health Organization says is needed to achieve herd immunity — will be a time-consuming process. The world will still need masks, social distancing, widespread testing and effective new therapies to keep the virus at bay, public-health specialists say. (…)

To quell the virus by mid-July of 2021, the government would need all six vaccines purchased in advance to succeed, and it would need to obtain all of the optional extra allocations baked into those deals as well, according to the London-based analytics firm Airfinity Ltd.

If just four of the vaccines are approved, and production and supply are 20% lower then expected, the U.S. could see delays in arresting the virus that run into the second quarter of 2023, Airfinity found. (…)

And that assumes a large part of the population takes the vaccine. Various polls indicate that 50-58% of Americans would be willing to get a Covid-19 vaccine when available. “In China, for instance, 97% of adults questioned in a World Economic Forum-Ipsos survey responded that they would strongly or somewhat agree that they should get vaccinated.”

Study Shows Covid-19 Antibodies Waning Over Time, Suggesting Immunity Might Wear Off If confirmed, results suggest widespread long-term herd immunity will be difficult to achieve

A large English study showed the number of people with Covid-19 antibodies declined significantly over the summer, suggesting that getting the virus might not confer long-lasting immunity from future infection.

The survey of 365,000 adults in England who tested themselves at home using a finger-prick test showed the proportion of people testing positive for Covid-19 antibodies declined by 26.5% between June 20—12 weeks after the peak of infections in the country—and Sept. 28.

The results also suggested that people who didn’t display symptoms were likely to lose detectable antibodies before those who had showed symptoms. (…)

The findings showed 18-24-year-olds lost antibodies at a slower rate than those aged 75 and over. The smallest decline of 14.9% was of people aged between 18 and 24 years, and the largest decline of 29% was of people aged 75 and over.

The study reflects earlier smaller trials and suggests that antibodies to the virus decline over 6-12 months after infection, as in other seasonal coronaviruses such as the common cold. The study doesn’t indicate whether other types of immune responses—such as that contributed by so-called T cells—would help protect against reinfection.

The study showed 6% of the population of England had antibodies on June 20, compared with 4.4% on Sept. 28. (…)

The authors admitted the trial had limitations. “It included nonoverlapping random samples of the population, but it is possible that people who had been exposed to the virus were less likely to take part over time, which may have contributed to apparent population antibody waning,” they said.

Trump yesterday: “It’s ending anyway. We are rounding the turn. It’s ending anyway,” Prescient? We will know in about a week.

China Is Far Behind on U.S. Purchases Under Trade Deal U.S. farm exports to China picked up last month but remain well below bilateral goals set for 2020, as do sales of manufactured goods and energy products.

As of Sep. 30, China had purchased $58.8 billion in goods covered by the agreement, according to calculations Chad Bown of the Peterson Institute for International Economics made based on Commerce Department figures released Monday. Purchases should have reached $108 billion by that time to be on track toward the full-year target. (…)

China has purchased or committed to purchase about $23 billion in specified agricultural goods, U.S. government officials said Friday, or about 71% of its target. Their report said purchased or contracted sales of corn are at an all-time high of 8.7 million tons, and that U.S. pork exports to China are at record levels.

The $23 billion figure includes contracts for future purchases that have not yet been completed. In terms of actual exports through September, the U.S. had sent $12.7 billion of agricultural goods to China through September against a target for 2020 of $33.4 billion.

For manufactured goods, the U.S. has exported $40.2 billion against an annual target of $83.1 billion. Many categories of manufacturing have been depressed by the pandemic, but one of the biggest categories—aircraft exports—has also suffered from Boeing Co. ’s crisis over its 737 MAX airplane.

For energy, sales to China are especially far behind. As of September, the U.S. had exported $5.9 billion against a target for the year of $26.1 billion. The gap is so wide in part because energy prices collapsed earlier in the year, requiring far greater volumes to meet the goal, which is stated in terms of dollars, not product volume. (…)

The accord’s targets, however, are about to get harder to meet. The deal signed on Jan. 15 called for a significant increase in the pace of purchases in 2021. Under the trade deal, China agreed over two years to expand purchases of U.S. goods and services by $200 billion from 2017 levels.

To meet that goal, the purchases would not only need to make up for lost ground in 2020. The targets next year are about 21% higher for agricultural goods, about 59% higher for energy goods and 14% higher for manufactured goods. (…)

“It’s a two-year agreement, and we need to see what happens in the first half of 2021,” said Craig Allen, president of the U.S. China Business Council. “If the Chinese are going to meet their agreement, it would be a huge surge in 2021, in the second half of 2021.” (…)

Wall Street is living up to its bad reputation

Axios’ Felix Salmon writes: Recent headlines will have you convinced that Wall Street is hell-bent on living up to all of its stereotypes.

Goldman Sachs is the biggest and the boldest, paying more than $5 billion in fines in the wake of the 1MDB scandal, in which billions were stolen from the people of Malaysia.

• Goldman Sachs pleaded guilty to bribing Malaysian officials, among others, with a total of $1.6 billion in order to get deal mandates in the bond and stock markets.
• That’s the largest set of bribes ever prosecuted under the Foreign Corrupt Practices Act.

• In a very Goldman twist, the $1.6 billion was not paid from Goldman’s own funds. Instead it came out of other people’s money — it was skimmed off of bond-issue proceeds that were supposed to belong to the Malaysian people.
• Gary Cohn, who was Goldman’s chief operating officer when the bribes were paid, cashed out all of his bonuses when he joined the Trump administration in 2017. He’s the one former Goldman official who hasn’t agreed to repay a chunk of his 2011 bonus, as the board has requested.

Wells Fargo paid a $3 billion fine for taking advantage of millions of customers by opening accounts in their names that they weren’t even aware of.

JPMorgan, which lost billions in the “London whale” trading scandal, paid $920 million in fines to settle charges that it manipulated futures markets in Chicago.

Citigroup, which has been considered “too big to manage” since at least the financial crisis, was fined $400 million for its management’s failure to effectively stay on top of its operations.

Morgan Stanley paid a relatively modest $60 million fine for failing to protect its customers’ data. According to a pair of lawsuits, the bank failed to remove sensitive data from computers it decommissioned — including Social Security numbers, passport numbers and account numbers.

The last word: In a sign of how deep the rot runs, hundreds of bank employees have been fired from Wells Fargo and JPMorgan Chase for abusing the government’s coronavirus relief programs. So far, there’s little sign that banks are shedding their reputation for being greedy to the point of criminality.

And this is far from being a complete list… From the  Mark Twain fan in me:

• Some men worship rank, some worship heroes, some worship power, some worship God, and over these ideals they dispute-but they all worship money.
• Honesty is the best policy – when there is money in it.
• Nothing incites to money-crimes like great poverty or great wealth.
• Virtue has never been as respectable as money.