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Macy’s To Downsize And Close 150 Stores 

Macy’s is making some major changes to keep their 150+ year brand relevant and alive during a time where retail shopping is constantly changing. For starters, the company will be downsizing and getting a new, smaller, more luxurious look, according to reports

Macy’s will be closing 150 underperforming stores. They’re planning on closing 50 by the end of 2024, and the remaining 100 over the course of the next few years. The ultimate goal is to have just 350 Macy’s stores by 2026. 

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The company will also be focusing more on its brands Bloomingdale’s and Bluemercury, as both have remained successful and have outperformed the Macy’s brands. They’re planning on opening more, smaller versions of those stores within the next several years. 

The general plan shows that Macy’s is accommodating wealthier shoppers through their more luxurious brands. Consumer trends show that shoppers are choosing smaller stores outside of shopping malls, so Macy’s will also be building 30 smaller stores within the next two years that won’t be inside of malls. 

Macy’s stock price has dropped 75% since its peak of $73 a share back in 2015. Since that point they’ve closed around 300 stores, which is almost a third of its locations. They still operate around 700 stores across all of their brands. 

With the downsizing, Macy’s also announced that it was laying off around 2,350 employees; about 3.5% of its total workforce.  

“We believe paring down the Macy’s store base to a more manageable (and profitable) size is prudent given the general structural shift towards online spending” and the shift away from department stores,” Dana Telsey, a retail analyst, said. 

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New Macy’s CEO Tony Spring, who was previously the CEO of Bloomingdale’s, said in a statement that this will be a “bold new chapter” for the brand, and was developed through extensive market research to “reinvigorate” the Macy’s brand.  

“We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value,” Spring said in a statement, explaining that Macy’s will also be improving their digital marketplace.

They’ll also be downsizing the products sold in store as a means of focusing on brands and items that customers actually want. 

“That should lead to sustained profit growth over time,” Spring stated.

Over the next three years, Macy’s said it will open 15 new Bloomingdale’s stores and 30 new Bluemercury stores, with other plans to remodel 30 existing Bluemercury stores. 

“The Bloomingdale’s expansion can work as there are several strong luxury markets where the chain is not represented,” Neil Saunders, an analyst at GlobalData Retail, said.

lunar

China Reports Record Breaking Holiday Travel Rates For Lunar New Year 

China has reported a record breaking increase in travel and spending during this year’s Lunar New Year holiday season, which could mean great things for the world’s second largest economy.

hiring

Job Openings In The US Grew In December According To New Labor Data 

The US job market currently remains stable with workers being in demand in multiple industries, according to new data from the Bureau of Labor Statistics. The Bureau reported that the number of available jobs in the US rose in December to an estimated 9.026 million. 

The data specifically came from the Bureau’s monthly Job Openings and Labor Turnover Survey report, according to CNN. The December data marks the first time job openings exceeded 9 million since September. 

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Economists were surprised by this as the additional jobs have outpaced November’s 8.925 million jobs, which initially led them to believe December would see around 8.7 million jobs added. 

“We’re back over the 9 million mark, which is a three-month high, and the bulk of the gains were in the private sector,” Jennifer Lee, senior economist with BMO Capital Markets, wrote.

“So the good news is that there are options out there — if one is still unemployed or is looking for extra work. The bad news is that it means that the consumer could spend more, and that’s not what the Fed wants right now,” she added. 

Federal Reserve Chairman Jerome Powell discussed that the labor market has “remained robust but in better balance” than it was during the initial years of the pandemic. In early 2022, job openings reached above 12 million. 

The Bureau noted that other aspects in the Survey report “changed little” from months previous, which could be an indication of the labor market slowing down. 

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“We’re all trying to figure out whether we’re going to manage a soft landing [of tamed inflation without significant job losses],” Fiona Greig, global head of investor research and policy at Vanguard, told CNN.

 “There’s no doubt that the level of openings is still exceeding pre-pandemic times [of 7 million]. The labor market isn’t as tight as, say, a year ago; but it is still strong,” she added. 

In December, layoffs increased to 1.616 million from 1.531 million the month before, which is still well below pre-pandemic averages. 

Tech, media, and transportation industries are seeing massive layoffs, leading to a lack of employee confidence for those in the field. According to research published by Glassdoor, their recorded employee confidence index dropped in January to 45.6%, a record-low. 

“This is a reflection of increasing fear around job security among employees,” Daniel Zhao, Glassdoor’s lead economist, told CNN.

housing

Poverty Rates In The UK Have Been So Bad, They Soon May Reach Victorian Era Levels 

According to a new report from the Center for Social Justice, the most disadvantaged and impoverished people in the United Kingdom are no better off than they were 15 years ago. The report found a “yawning gap between those who can get by and those stuck at the bottom.”

The Center for Social Justice is an independent think tank whose earliest work has led to a reformation of Britain’s welfare system and the introduction of Universal Credit; a monthly government payment for individuals earning low incomes, according to CNN.

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The Center published the 300-page report as the latest evidence of how the UK’s economies lack of movement has made it nearly impossible to work through their poverty problem. The cost-of-living crisis in the UK in general has only made the impoverished population suffer more. 

“We have uncovered a nation of two halves. The general public for the most part can get by, and then there is this cohort of people whose lives are marked by family breakdown, physical and mental ill-health; who live in crime-ridden communities and experience multiple barriers to work,” said Sophia Worringer, deputy policy director at the Center for Social Justice, said Monday. 

The Center for Social Justice also warns that the UK is currently risking “sliding back into the two nations of the Victorian era, marked by a widening gulf between mainstream society and a poverty stricken underclass.”

During the Victorian age, the social divide in the UK was so severe that the working class was facing brutal living conditions, with little to no access to clean water, food, and sanitation, and they had no feasible ways of improving their lives and economic situations. 

Unfortunately, the report went on to state that the current poverty situation in the UK is reaching closer levels to the Victorian era due to addiction, joblessness, personal debts, and educational failures. 

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According to CNN, the study itself surveyed 6,000 people with more than half being from the UK’s poorest communities. The survey also used data from more than 350 small charities and experts across over 20 towns and cities in the UK. 

“For too many, Britain is broken and the gap between the haves and have-nots is in danger of becoming a chasm,” says the foreword to the report, signed by Mervyn King, a former Bank of England governor.

The report also discussed how the pandemic and the lockdown only made things worse, and had a “catastrophic effect on the nation’s social fabric.”

CNN said that “during lockdowns, calls to domestic abuse helplines surged 700%; mental health problems in young people spread from one in nine to one in six; severe school absence jumped 134%; and 1.2 million more people received welfare payments. Deaths from alcohol poisoning, which had been dropping before the pandemic, have also risen since the mass outbreak of Covid-19.”

“Those who are left behind are still reeling from the impact of the Covid-19 pandemic. Life for them never returned to normal and the scars of that time are still very deeply felt,” said Worringer.

Aid Groups In Afghanistan Struggle With Recovery Efforts After Massive Earthquake Kills More Than 2,000

International aid groups in Afghanistan are struggling to allocate resources and recovery efforts after the nation was hit with a massive earthquake that has left more than 2,000 people dead and many more injured.

Anil Saini Saini Express Inc. Pooja Trucking

Hauling the Nation: The Crucial Role of Trucking and Intermodal Drayage in the US Economy | Anil Saini

In the vast expanse of the United States, where commerce stretches from coast to coast and heartland to metropolis, a silent but mighty force keeps the nation’s economic engine humming. The American trucking industry, often operating behind the scenes, is the unsung hero of modern commerce. Anil Saini, CEO and owner of intermodal drayage companies Saini Express Inc. and Pooja Trucking, knows how trucks are the connective tissue binding together the diverse tapestry of American industries and regions.

shopping

China To Relax Their Internal Migration Rules To Kickstart Their Economy 

China is moving to relax its rules on internal migration to make it easier for people to settle into smaller cities in an attempt to increase their ailing economy and provide growth, according to a government announcement this week. 

The ministry of public security (MPS) announced plans to lower the standard for receiving an urban hukou, their household registration. Beijing, specifically, wants local governments to cancel hukou restrictions in cities that have less than 3 million people, as well as relax the restrictions for cities with 3-5 million residents, according to the MPS.

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Cities with a larger population, more than 5 million people, will also be encouraged to relax their hukou quotas, to ideally allow more people to receive the highly prized urban registration documents. 

China’s national development and reform commission, which oversees economic and social policy, first announced these plans back in 2019, however, it’s not clear how many cities have actually adopted the rules. 

One of the main goals of relaxing these registrations is to encourage rural migrants to move into cities to aid the urban economy. One-third of the total working population in China, around 292 million people, are rural migrants that are working in China’s growing metropolitans.

However, these population groups don’t have proper access to public education, healthcare, and other social benefits, leading many of them to leave their families and return to villages themselves. Without urban hukou, many rural migrants are forced to pay more for social services, and are even banned from buying property in the city. 

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The hukou system also deters migrants from spending money and moving into cities long-term, which economists in China claim have impacted its growth. 

“To the extent that there is a spare capacity of workers in the rural areas to draw upon and go and work in the urban areas, easing the registration requirements may help at the margins … but I don’t think it’s really going to alleviate labor supply problems,” said George Magnus, a research associate at the University of Oxford’s center in China. 

In the second quarter of 2023, when compared to 2022, China’s economy grew by 6.3%, which was below expectations, and marked a .8% increase in the first three months of the year. 

Part of this decrease is due to the decreasing workforce in China. The number of individuals working who are aged 16 to 59 declined by more than 40 million between 2019 and 2022. 

Central Bankers Around The World Claim The Fight Against Inflation Will Continue To Get Worse

Central bankers from all over the world are claiming that the fight against high inflation rates will only continue to get more “serious and painful” if certain rates remain how they are currently.

commercial

Economists Worried About The Current State Of Commercial Real Estate 

Economists are currently worried about the state of the $20 trillion commercial real estate industry. Ever since the beginning of the Covid-19 pandemic, office and retail property values have fallen due to lower occupancy rates, and the shift to working from home and rise in online retail. 

According to Goldman Sachs economists, about 80% of all bank loans for commercial properties are coming from regional banks; smaller banks have had more pressure to liquidate properties as time goes on and the properties don’t show a lot of interest. 

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“I do think you will see banks pull back on commercial real estate commitments more rapidly in a world [where] they’re more focused on liquidity, and I do think that is going to be something that will be important to watch over the coming months and quarters,”  wrote Goldman Sachs Research’s Richard Ramsden, reported by CNN.

Xander Snyder is a senior commercial real estate economist at First American who recently spoke to the media about the current state of the commercial real estate market and its potential threats to the economy. 

“Price growth is slowing and for some asset classes it’s starting to decline. Office properties have been more challenged than others for obvious reasons.”

“Now private lending to the industry is starting to slow as well — bank lending was beginning to dry up over a month before the Silicon Valley Bank failure even happened. Credit was getting scarce for all commercial real estate and a fresh bank failure on top of that only exacerbates that trend,” Snyder explained. 

“A lot of people hear commercial real estate and they think it’s all the same thing and the trends are they’re all the same but they’re not. The underlying fundamentals of multifamily and industrial assets remain relatively stable on a national level.”

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Snyder then explained exactly why commercial real estate ended up in the position it’s in today after the trends it saw within the past few years: 

“As credit becomes scarcer and more expensive, it’s hard to know exactly what buildings are worth. You get this gap opening up between sellers and buyers: Sellers want to get late 2021 prices and buyers are saying ‘we don’t know what things are worth so we’ll give you this lowball offer.’ That was already happening and the result of that price differential was bringing deal activity down.

It’s different for office and retail properties. There’s been a fundamental shift in how we use office space and that has changed demand. That’s something you should have your eye on, especially as low-interest office loans come due.

We’re running into a situation where office-owners have to refinance at a higher rate and only 50% of the building is being used. That doesn’t translate to good cash flow metrics for the lender,” he explained. 

According to The National Association for Business Economists’ (NABE) most recent survey, published this Monday, a majority of economists are predicting a recession to occur this year as inflation rates will likely remain above 4%.

“Panelists generally agree on the outlook for inflation and the consequences of rate hikes from the Federal Reserve. More than seven in ten panelists believe that growth in the consumer price index (CPI) will remain above 4% through the end of 2023, and more than two-thirds are not confident that the Fed will be able to bring inflation down to its 2% goal within the next two years without inducing a recession,” said NABE Policy Survey Chair Mervin Jebaraj.

tesla

Tesla Vehicles Are Becoming Cheaper, What This Means For The Company 

Tesla has recently cut their prices on some of their top-selling models, including the Model Y SUV and Model 3, by up to 20% across the US and Europe. The changes were revealed on Tesla’s website last Thursday. 

While the vehicles are still relatively expensive, the drop is significant when compared to its previous premium pricing. Many are speculating that these decreases are a sign of Tesla backing away from the months they spend gradually raising the prices of the electric vehicles. 

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Tesla has also experienced the impact of the economy in recent months, missing market estimates for sales last year, shifting its market capitalization from $1 trillion to less than $400 billion, according to reports from Business Insider.

Company owner Elon Musk has recently bought and taken over the popular social media platform Twitter, where he’s made it clear that rising interest rates in general have been taking a toll on the electric vehicle company. 

“Fed needs to cut interest rates immediately, they are massively maplifting the probability of a severe recession,” Musk tweeted in November. 

Interest rate increases have had a major impact on the costs of financing Tesla vehicles, making it even more difficult for consumers to become a Tesla owner. 

Dan Ives, senior equity research analyst at Wedbush Securities, said “it’s no secret that demand for Tesla is starting to see some cracks as a global slowdown of the economy that started in 2022 continues into 2023.”

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“A softening demand for the global EV market is a bigger driver of price cuts than interest rate hikes. When it comes to demand, backlog orders have come down significantly for Tesla, making price cuts is a good way to increase the immediate- and medium-term sales pipeline,” said Simon Moores, CEO of Benchmark Mineral Intelligence, a price reporting agency for the EV supply chain, to Insider. 

Traditional automakers have also entered the electric vehicle market, providing cheaper alternatives to Tesla, which has dominated the EV market since its launch. 

According to data from an Experian report, from January to September 2022, Tesla accounted for 65.4% of new electric vehicle registrations in the US. This percentage marks a significant decrease from the two previous years: 68.2% in 2021 and 79.4% in 2020. 

The cuts to Tesla pricing will likely welcome more consumers to purchase the vehicles. Ives stated that he estimated the price cuts could definitely increase demand by around 12-15% globally in 2023. 

“This is a clear shot across the bow at European automakers and US stalwarts (GM and Ford) that Tesla is not going to play nice in the sandbox with an EV price war now underway,” he said.