Business
Pressure Mounts on the US Fed as Inflation Worsens
The cost of housing and other essentials increased pressure on American households in September, erasing wage gains and ensuring the Federal Reserve will continue to rapidly raise interest rates.
Excluding volatile food and energy expenses, consumer prices rose 6.6% in September compared to the same month a year prior – the quickest rate in four decades. And on a month-to-month basis, these “core” prices rose 0.6% for the second consecutive month, confounding forecasts for a decrease and indicating that the Fed’s many rate hikes have yet to alleviate inflationary pressures. Typically, core prices provide a more accurate depiction of underlying price patterns.
The government announced Thursday in its monthly inflation report that prices grew 8.2% year-over-year in September, a modest decrease from August.
However, prices grew 0.4% from August to September, which was greater than the increase from July to August. Although lower gasoline contributed to a decline in the broadest measure of inflation, higher prices for food, medical care, and housing indicate widespread price pressures throughout the economy.
“We still see no evidence that inflation is decelerating,” Deutsche Bank analyst Matthew Luzzetti said. To say nothing of the clear and persuasive evidence that the Fed is seeking.
In early trade, the stock market suffered a severe decline but recovered and went higher. The Dow Jones increased 560 points, or 1.9%, by midday.
The report released on Thursday represents the penultimate U.S. inflation figures before the midterm elections on November 8, following a campaign season in which rising prices increased public worry, with many Republicans blaming President Joe Biden and congressional Democrats.
In a Thursday speech in Los Angeles, President Biden acknowledged the pain inflation is causing many people, but he also said that the most recent figures indicate “some progress.”
“The cost of living is squeezing Americans,” the president stated. “It’s been the case for years, so people don’t need a report to inform them they’re being squeezed. This daily struggle was crucial to my decision to run for president.”
Despite significant price increases, September statistics revealed that prices fell last month for various tangible products, including clothing, used automobiles, furniture, and appliances.
A crucial factor is that supply chain bottlenecks have alleviated, and many large retailers, including Wal-Mart and Target, have discounted some items to clear out surplus inventory.
However, the price declines were not as dramatic as many economists had predicted, and they were more than offset by substantial price rises in services, such as health care, vehicle repair, and housing.
In September, housing costs increased by 0.8%, the highest increase in 32 years. The Fed’s rate hikes have resulted in significantly higher mortgage rates — an average of about 7% for a 30-year fixed mortgage — which has prompted a decline in home sales and prices.
However, it will take time for falling home prices to influence the government’s measure.
The cost of health insurance increased by 2.1% between August and September and more than 28% over the last year — a record annual increase. In September, the cost of auto repairs increased by 15% year-over-year, also a record high. Many automobile component supply lines are still interrupted.
According to Eric Winograd, U.S. economist at AB, the fundamental driver of inflation has shifted from goods prices to services. “Since wages primarily impact services inflation, taming inflation will need a significant contraction of the labour market.”
Inflation in the services sector is also being driven by consistent consumer demand. Even if there are indications that lower-income Americans are reducing their spending, higher-income households continue to be prepared to spend on travel, restaurant meals, and services such as veterinary care.
This week, for example, Delta and American Airlines reported good revenue increases due to rising traveller demand. From August to September, airfare increased by 0.8%.
Service companies are rapidly increasing wages to recruit the labour force they require. These increased labour costs are frequently passed on to customers through higher prices.
Inflation has increased grocery bills, rentals, and utility rates, among other family expenses, generating challenges for many and spreading pessimism about the economy despite good job growth and record-low unemployment.
Kasondra Mathews is one of those experiencing pressure. Near Denver, 50-year-old Mathews has been working overtime as a nursing assistant to pay her rent and grocery expenditures. Over the past several years, her rent has climbed approximately 5% annually, reducing her budget for other purchases.
Mathews has found means for her daughter, a senior in high school who will soon be attending college, to apply to her selected institutions for free. She is also avoiding college visits to save money on transportation.
“We were unable to do college trips due to financial constraints,” she explained. “I could not do the things you may like to do for your elderly loved one.”
According to a recent study by The Associated Press-NORC Center for Public Affairs Research, Americans’ financial outlook is becoming increasingly negative as the midterm elections approach. Up from 37% in March, almost 46% of Americans now regard their personal financial status as poor. This significant decline contrasts with the generally stable results throughout the pandemic.
The September inflation data ensure that the Fed will raise its main short-term rate by three-quarters of a percentage point for the fourth consecutive time when it meets in early November.
Since March, the Fed has already increased its benchmark short-term rate by three percentage points, the quickest pace of increases since the early 1980s. These hikes aim to increase the cost of borrowing for mortgages, auto loans, and business loans and reduce inflation by slowing the economy.
At their last meeting in late September, Fed officials estimated they would raise their benchmark rate to approximately 4.5% by the beginning of the next year, which would be the highest level in 14 years.
To combat what appears to be an entrenched bout of inflation, several economists believe that the Fed will need to raise interest rates even further. There is a risk that such increased borrowing costs might cause a recession.
According to the minutes of the Fed’s most recent meeting, policymakers stated at the September meeting that inflation showed “no sign so far of abating.”
The price of used automobiles decreased by 1.1% from August to September, the third consecutive dip. However, dealers have avoided passing on these losses to consumers, significantly increasing profits.
The vice chair of the Federal Reserve, Lael Brainard, remarked this week that merchants have likewise reported excellent profit margins, having hiked prices more than salaries.
“The recovery of retail (profit) margins to more typical levels could significantly aid in reducing inflationary pressures in certain consumer items,” said Brainard.
Several major retailers have begun to reduce prices. However, it is unclear what impact this will have on inflation in the coming months. Walmart has announced that it will give hefty discounts on toys, home goods, electronics, and beauty products. This month, Target began promoting Christmas sales.
However, after increasing rates over the past 18 months, businesses are reluctant to change direction. Economists predict that prices for many goods will likely remain high until consumer demand slows more and forces more businesses to compete on price.
According to Eric Swanson, a former Fed economist who is now a professor at the University of California, Irvine, “there is a saying in economics that prices rise like rockets and fall like feathers.” You’re beginning to see this somewhat.
The Associated Press
Business
Hyundai And Kia Recall Nearly 3.4 Million Vehicles Due To Fire Risk And Urge Owners To Park Outdoors
DETROIT — Due to the risk of engine compartment fires, Hyundai and Kia are recalling nearly 3.4 million vehicles in the United States and advising owners to park them outside.
Multiple car and SUV models from 2010 to 2019 have been recalled, including the Hyundai Santa Fe SUV and the Kia Sorrento SUV.
According to documents published Wednesday by the U.S. National Highway Traffic Safety Administration, the anti-lock brake control module can leak fluid and cause an electrical short, which can spark a fire in stationary or moving vehicles.
The dealer will replace the anti-lock brake fuse free of charge. According to company documents, Kia will begin sending notification letters to owners on November 14. The date for Hyundai is November 21.
According to the documents, Hyundai reported 21 vehicle fires and 22 “thermal incidents,” including combustion, burning, and melting parts in the United States. Kia reported ten incidents of fire and dissolving.
According to a statement from Hyundai, no collisions or injuries have been reported. The automaker said it was doing the recall to assure the safety of its customers.
Hyundai And Kia Recall Nearly 3.4 Million Vehicles Due To Fire Risk And Urge Owners To Park Outdoors.
Due to moisture, grime, and dissolved metals in the brake fluid, an O-ring in the antilock brake motor shaft can lose its sealing strength over time, resulting in leaks. According to the statement, the new fuse limits the brake module’s operating current.
Kia stated that an electrical failure resulting in excessive current could cause an engine compartment fire near the brake control unit. The statement indicates that the precise cause of the short circuit is unknown and that no accidents or injuries have occurred.
Michael Brooks, executive director of the non-profit Centre for Auto Safety, questioned why the companies are not addressing the breach issue and why they are taking so long to send letters to owners.
Brooks stated that replacing the fuse is the solution, but brake fluid can still escape, posing a potential safety risk.
He asked, “Why not fix the problem?” “What you’re not doing here is repairing the O-ring and the discharge that initially caused the issue. You are addressing a symptom or portion of the problem, but not the underlying design flaw.”
Brooks also questioned why the NHTSA is allowing the companies to replace only the fuse and why owners must receive interim letters promptly warning them of a serious problem. “You would think that you should immediately notify those owners that they shouldn’t be parking in their garages, lest their home catch fire,” he said.
Statements from both companies need to address why the fluid breaches aren’t being repaired or why it will take about two months to notify owners by letter. Both companies’ spokespersons stated they would investigate the concerns.
Wednesday, a message was left with the NHTSA requesting comment on the recall remedy and why the notices would take so long. Wednesday, the agency released a statement cautioning owners to park their vehicles outside until repairs are made.
Hyundai And Kia Recall Nearly 3.4 Million Vehicles Due To Fire Risk And Urge Owners To Park Outdoors.
Affected Kia models include the 2010-2019 Borrego, 2014-2016 Cadenza, 2010-2013 Forte, Forte Koup, and Sportage, 2015-2019 K900, 2011-2015 Optima, 2011-2013 Optima Hybrid, and Soul, 2012-2017 Rio, 2011-2014 Sorento, and 2010-2011 Rondo.
2011-2015 Elantra, Genesis Coupe, and Sonata Hybrid, 2012-2015 Accent, Azera, and Veloster, 2013-2015 Elantra Coupe and Santa Fe, 2014-2015 Equus, 2010-2012 Veracruz, 2010-2013 Tucson, 2015 Tucson Fuel Cell, and 2013 Santa Fe Sport are included in the recall.
Owners can enter their 17-digit vehicle identification number at www.nhtsa.gov/recalls to determine if their vehicle is affected.
Since 2015, Hyundai and Kia have been beset by fire issues. The Centre for Auto Safety successfully petitioned U.S. regulators to seek recalls in 2018, and according to its website, automakers have already recalled more than 9.2 million vehicles for fires and engine problems, not including Wednesday’s recalls. More than two dozen of the recalls involved more than 20 vehicles from the model years 2006 to 2021.
In addition, the NHTSA is investigating three million vehicles manufactured by manufacturers between 2011 and 2016. NHTSA reports receiving 161 complaints of engine fires, some of which occurred in previously recalled vehicles.
In June 2018, the NHTSA reported receiving complaints from vehicle owners regarding over 3,100 fires, 103 injuries, and one fatality. The NHTSA fined Hyundai and Kia in 2020 for recalling vehicles with a propensity for engine failure too slowly.
SOURCE – (AP)
Business
Amazon: US Accuses Online Giant Of Illegal Monopoly
The U.S. government has filed a lawsuit against Amazon, alleging that the internet giant unlawfully maintains monopoly power.
According to the Federal Trade Commission (FTC), Amazon engages in “a set of interlocking anticompetitive and unfair strategies” to increase prices and stifle competition.
Amazon stated that the lawsuit was “incorrect based on the facts and the law, and we look forward to defending ourselves in court.”
It is the most recent technology titan to be sued by U.S. authorities.
Lina Khan, the head of the FTC, has had Amazon in her sights for years.
In 2017, Ms. Khan, who was only 29 then, published a significant academic article arguing that the online retailer had evaded antitrust scrutiny.
“With its missionary zeal for consumers, Amazon has marched towards monopoly,” she stated then.
The U.S. government has filed a lawsuit against Amazon, alleging that the internet giant unlawfully maintains monopoly power.
Since her unexpected appointment as FTC Chair in 2021, this case has been widely anticipated and regarded as a crucial leadership test.
Some U.S. legislators have called for action to increase competition in online search, retail, and social media in response to the dominance of a handful of large tech companies.
However, under Ms. Khan, the FTC’s robust rhetoric against Big Tech has yielded few results.
It failed in its endeavor to prevent Meta from acquiring V.R. company Within in February.
And in July, it failed to prevent Microsoft from acquiring the Call of Duty developer.
Ms. Khan is pressured to make at least one prominent complaint stick, and the FTC has high aspirations for this case.
The U.S. government has filed a lawsuit against Amazon, alleging that the internet giant unlawfully maintains monopoly power.
Along with 17 state attorneys, the agency asserts that the company is a “monopolist” that prevents competitors and sellers from lowering pricing.
In addition, the regulator claimed Amazon’s actions “degrade quality for consumers, overcharge sellers, stifle innovation, and prevent rivals from competing fairly with Amazon.”
However, the company claims that if the “misguided” FTC lawsuit is successful, consumers will have fewer options, pay higher prices, and experience delayed delivery times.
Due to the alleged monopoly, consumers lose money and receive worse bargains, which is the central argument of the case.
U.S. anti-competition law is complex, but prosecutors must demonstrate that a company’s actions have caused financial harm to consumers.
Many of Big Tech’s services, such as Google’s search engine and Meta’s Instagram, are free, proving this is only sometimes straightforward.
Google and the United States government began a court battle earlier this month, with the government accusing Google of monopolizing advertising technology.
SOURCE – (BBC)
Cryptocurrency
Sony Is Once Again Facing A Potential Security Breach, This Time By A Ransomware Group
Once more, Sony faces the possibility of a security breach, this time from a ransomware group alleging to have compromised PlayStation systems. On Sunday, the group LAPSUS$ proclaimed the alleged hack on their dark website. This could have significant implications for PlayStation users, although details remain scant.
According to the ransomware group, they have compromised all Sony systems and seized valuable information, including game source code and firmware. As “proof,” they have provided screen captures of what appears to be an internal login page, PowerPoint presentation, and file directory.
However, according to cybersecurity specialists, this information could be more convincing. Cyber Security Connect stated, “None of it appears to be particularly compelling information.” They suspect that LAPSUS$ may have exaggerated the scope of their breach.
Based on the limited data available, it is extremely difficult to determine the scope or integrity of the hackers’ claims. PlayStation’s online services do not appear to have been impacted so far, with no word if user data is at risk.
Sony Is Once Again Facing A Potential Security Breach, This Time By A Ransomware Group.
Not for the first time have Sony’s systems been targeted. In 2011, the PlayStation Network was compromised, exposing the personal information of 77 million users. Sony ultimately locked down PSN for nearly a month to improve security.
In 2014, North Korea launched a devastating cyberattack against Sony Pictures in retaliation for the film The Interview. The release of terabytes of sensitive data, including scripts for upcoming films and employees’ personal and medical information. Time will tell if Sony can once again recover its systems from a significant cyberattack. However, PlayStation users may need to prepare for potential consequences.
If LAPSUS$’s claims are accurate, this breach could have comparable repercussions. There is a possibility that sensitive source code and intellectual property could be compromised. There is also the possibility of significant PlayStation Network service disruptions. As with any hack, we recommend that users alter any passwords used on any PlayStation service to avoid problems with other online accounts.
CGMagazine has sought out Sony for comment, but at the time of publication, the company has neither confirmed nor denied the breach’s scope; we will update the article if the situation changes.
SOURCE – (cgmagonline)
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