Business

NEW YORK — The Black Friday kick-off of the holiday shopping season is expected to bring especially deep discounts in 2022, but one challenge will be finding consumers confident enough to spend.

Grinding inflation in the world's biggest economy in recent months has cast uncertainty over this year's festive season, which kicks off the day after Thursday's Thanksgiving holiday.

A year ago, retailers faced product shortfalls in the wake of shipping backlogs and Covid-19-related factory closures. To avert a repeat, the industry front-loaded its holiday imports this year, leaving it vulnerable to oversupply at a time when consumers are cutting back.

"Supply shortages was yesterday's problem," said Neil Saunders, managing director for GlobalData Retail, a consultancy. "Today's problem is having too much stuff."

Saunders said retailers have made progress in recent months in reducing excess inventories but that oversupply created banner conditions for bargain-hunters in many categories, including electronics, home improvement and apparel.

Juameelah Henderson always checks for sales, "but more so now", she said while exiting an Old Navy store in New York with four bags of items.

The clothing chain's prices were "pretty good", she said. "If it's not on sale, I really don't need it."

Higher costs for gasoline and household staples like meat and cereal are an economy-wide issue, but do not burden everyone equally.

"The lower incomes are definitely hit worst by the higher inflation," said Claire Li, a senior analyst at Moody's. "People have to spend on the essential items." 

Leading forecasts from Deloitte and the National Retail Federation project a single-digit percentage increase, but it likely won't exceed the inflation rate.

The consumer price index has been up about eight percent on an annual basis, which means that a similar size increase in holiday sales would equate with lower volumes.

US shoppers have remained resilient throughout the myriad stages of the Covid-19 pandemic, often spending more than expected, even when consumer sentiment surveys suggest they are in a gloomy mood.

Part of the reason has been the unusually robust state of savings, with many households banking government pandemic aid payments at a time of reduced consumption due to Covid-19 restrictions.

But that cushion is starting to whittle away. After hitting $2.5 trillion in excess savings in mid-2021, the benchmark fell to $1.7 trillion in the second quarter, according to Moody's.

Consumers with incomes below $35,000 were affected the most, with their excess savings falling nearly 39 per cent between the fourth quarter of 2021 and mid-2022, according to Moody's.

Accompanying this drop has been a rise in credit card debt visible in Federal Reserve data and anecdotally described by chains that also report more purchases made with food stamps.

"We're seeing continued pressure," said Michael Witynski, chief executive of Dollar Tree, a discount retailer that has seen "shifts" in shoppers, "where they're very consumable and needs-based focused to try and make that budget work and stretch it over the month".

Earnings reports from retailers in recent days have painted a mixed picture on consumer health.

Target stood on the downcast side of the ledger, pointing to a sharp decline in shopping activity in late October, potentially portending a weak holiday season.

The big-box chain expects a "very promotional" holiday season, said Chief Executive Brian Cornell.

"We've had a consumer who has been dealing with very stubborn inflation for quarter after quarter now," Cornell said on a conference call with analysts. 

"They're shopping very carefully on a budget, and I think they're looking at discretionary categories and saying, 'All right, if I'm going to buy, I'm looking for a great deal and a great value.'"

But Lowe's, another big US chain specialising in home-improvement, offered a very different view, describing the same late-October period as "strong" and seeing no evidence of consumer deterioration.

"We are not seeing anything that feels or looks like a trade down or consumer pullback," said Lowe's Chief Executive Marvin Ellison.

Consumers like Charmaine Taylor, who checks airline websites frequently, are staying vigilant

Taylor thus far has been thwarted in her travel aspirations due to exorbitant plane ticket prices. Taylor, who works in child care, isn't sure

how much she'll be able to spend on family this year

"I'm trying to give them some little gifts," Taylor said at a park in Harlem earlier this week. "I don't know if I'll be able to. Inflation is hitting pretty hard."

PARIS — The European Space Agency said Wednesday it has adopted a budget of nearly 17 billion euros for the three next years, a significant increase but less than requested by its director general.

The ESA's 22 member states, whose ministers have been meeting for two days in Paris, decided on a new budget of 16.9 billion euros ($17 billion) to fund space exploration, rocket launchers, climate change monitoring and other projects.

That marks a 17 per cent increase from the 14.5 billion euros agreed at the last ministerial council meeting in 2019, but is short of the 18.5 billion euros requested by ESA director general Josef Aschbacher.

"With inflation being so high, I have to say that I'm very impressed by this figure," Aschbacher told the meeting. 

He added that the increased funds were necessary for Europe not to "miss the train" in the face of competition from the United States and China.

French Economy Minister Bruno Le Maire hailed a "great success" that was "beyond expectations".

ROME — Italy's new far-right government unveiled its first budget on Tuesday, with most of the nearly 35 billion euros in spending for 2023 going on the energy crisis rather than flashy electoral promises.

More than 21 billion euros ($21.5 billion) will go towards supporting households and businesses with sky-high gas and electricity bills, a major cause of the soaring inflation which risks tipping the eurozone's third largest economy into recession next year.

"There are two big priorities, growth... and social justice, meaning a particular focus on families, those on the lowest incomes and the most fragile groups," Prime Minister Giorgia Meloni told a press conference after her Cabinet approved the budget in the early hours.

Meloni's far-right Brothers of Italy Party swept to power in elections in September, forming a coalition government with the anti-immigration League and Silvio Berlusconi's right-wing Forza Italia.

They had promised sweeping tax cuts and more funds for pensioners and for families, sparking concerns about the impact on Italy's already colossal debt.

But Meloni, whose party once called for Italy to abandon the euro single currency, has sought to present herself as a responsible leader at a time of global economic uncertainty.

Notably, the coalition's flagship measure — extending a 15 per cent flat tax for the self-employed — did not go as far as initially expected.

"It's a prudent and responsible budget, in continuity" with the previous government under Mario Draghi, said Giuliano Noci, professor at Milan's Politecnico school of management.

League leader Matteo Salvini told a joint press conference it was a budget that was "not miraculous but that brings more money to millions of Italian homes".

The plan now heads to parliament, where it can be amended. It must then be adopted by both chambers by December 31.

Pension reform 

Italy's last populist government, led by the Five Star Movement and the League in 2018-19, clashed with the European Union over its failure to keep spending under control.

Italy raised its 2023 public deficit forecast earlier this month to 4.5 per cent of gross domestic product, above the 3.4 per cent forecast in September by Draghi's government.

But the deficit is forecast to fall to 3.7 per cent in 2024 and 3 per cent in 2025, according to an economic roadmap adopted by Rome.

The coalition had promised to raise the annual income ceiling for the 15 per cent tax rate for the self-employed from 65,000 euros ($66,700) to 100,000 euros, but the proposed budget puts it at 85,000.

Employees will benefit from tax reductions of 2 per cent for incomes up to 35,000 euros per year, as under Draghi, and 3 per cent for those on salaries below 20,000 euros. 

Companies hiring women and young people will benefit from tax exemptions, while tax amnesties, an election promise, will be offered to people owing less than 1,000 euros incurred before 2015. 

On cash payments in shops and businesses, the government raised the ceiling from 2,000 euros to 5,000 euros — despite warnings from opposition parties that the move would favour corruption.

It also adjusted pension rules so people who have worked for 41 years can retire at 62 years old, a move affecting an estimated 48,000 people.

The retirement age in Italy, known for its ageing population, had been set to rise from 64 to 67 in 2023.

"With the global economy slowing down and interest rates rising, it is forced to remain cautious" and carry out what electoral promises it can, a bit at a time, noted Lorenzo Codogno a former chief economist at the Treasury.

Poverty relief measure 

The new measures will be financed in part by reforming the so-called citizens' income, a poverty relief scheme introduced by the Five Star Movement.

The reform shortens the time those deemed fit to work can claim the benefit and the entire system will be overhauled by 2024.

The government is also set to raise new revenues from a windfall tax on energy companies.

The budget also includes the resurrection of a long-shelved plan to construct a bridge linking Sicily to mainland Italy.

Salvini said he would seek EU funds for the controversial plan for the Strait of Messina, either in launching a new tender or reopening the project ultimately shuttered in 2011. 

That year, the European Commission said the project — revived and cancelled by various previous governments — was not strategic for the development of transport in the EU. 

ZURICH — Despite Europe feeling the pinch from soaring inflation, Nespresso boss Guillaume Le Cunff told AFP he believes their coffee capsules are creature comforts and will therefore stay in demand.

Inflation is running at 10.6 per cent in the eurozone and household budgets are under pressure.

But Le Cunff said that even in periods when customers have to tighten their belts, they tend to stick with their "everyday" small pleasures — such as having a coffee.

"When you have to raise prices to guarantee quality — because the value chain is subject to inflation — the idea is to be reasonable, by only doing it where absolutely necessary," said Le Cunff, chief executive of Swiss food giant Nestle's Nespresso subsidiary since 2000.

"It remains a daily expenditure, a moment of pleasure, a moment for oneself. And I'm not sure people want to abandon having this moment for themselves."

"We'll see what the future holds, but we are very confident."

That said, Nespresso sales volumes dropped by 1.9 per cent in the first nine months of the year, notably in Europe, offset by sales continuing to grow in North America.

Le Cunff said global sales accelerated in 2020 and 2021, as people worked from home during the COVID-19 pandemic.

But this year, people are working from home less and going out more — something the company has tracked via an uptick in its out-of-home sales.

The Frenchman said that while Europe was Nespresso's historic market, it was still in expansion mode in North America.

"The COVID effect is less visible there," he said.

"Consumption at home is readjusting. But today, we are 20 per cent above the pre-COVID situation, that is to say 2019."

Recycling versus composting 

Nespresso was on Monday launching a new alternative to its well-known aluminium coffee capsules: A compostable paper version compatible with the existing Nespresso machines. A thin biopolymer film inside the paper keeps the coffee fresh.

But the firm is not planning on simply ditching its traditional metal capsules, instead leaving it up to consumers.

"Aluminium has its virtues: In terms of freshness protection and a barrier to oxygen, it is the best in terms of shelf life. And aluminium is infinitely recyclable," Le Cunff said.

"These are two different offers, with different benefits. Each has its advantages. We will offer both options and see what customers prefer."

The compostable pods will be launched in Switzerland and France next year before spreading out from there, and Nespresso intends to find out what customers like about recycling and composting, and how they go about using the new product.

"These are discussions that will take place in the shops. We will learn from them," said Le Cunff.

MADRID — Competition in Spain's high-speed rail market is heating up with a new operator starting passenger services on Friday, making it Europe's first nation with three players in the sector.

The new firms have pushed down prices and increased passenger traffic on the high speed network, which at 4,000 kilometres is the second longest in the world after China's.

Spain is the world's second most popular tourist destination after France.

Private operator Iryo, which is 45 per cent owned by Italy's Trenitalia, made an inaugural symbolic trip on Monday from Madrid to Valencia on Spain's Mediterranean coast.

It will begin passenger services on Friday with 16 daily return trips between Madrid and Barcelona, Spain's two largest cities.

Iryo will compete with French railway company SNCF's firm in the country, Ouigo, which has been operating since May 2021 and Spanish state-owned rail operator Renfe, which opened its first high-speed service in 1992.

The arrival of a third operator is a "historical step" which is "novel" in Europe, said Carlos Lerida, a rail transport expert at the Autonomous University of Madrid.

"Until now no high-speed rail network has operated with three competitors. Spain could serve as a model," he told AFP.

Iryo, which is kicking off its operations in Spain with 20 trains, will in mid-December expand its services to include a Madrid-Valencia route.

And it March 2023 it will start running trains from Madrid to Seville and Malaga in the southwestern region of Andalusia.

Ouigo already operates trains along the Madrid-Barcelona and Madrid-Valencia routes and plans to start services to the Mediterranean port of Alicante as well as Andalusia next year.

'Democratise high-speed' 

Spain's state rail infrastructure operator Adif in 2019 granted contracts allowing the firms to operate on these routes for 10 years.

Socialist Prime Minister Pedro Sanchez's government is keen to lower ticket prices for bullet train tickets to make greater use of the high-speed rail network.

Greater competition will "democratise high-speed" rail travel, Transport Minister Raquel Sanchez said last month, calling Spain's model for the sector "revolutionary".

Renfe responded to the arrival of Ouigo in May 2021 with the launch of a low-cost bullet train service called Avlo.

The company has also renewed its fleet of trains and improved the service it offers passengers on their journeys.

Renfe has a seat sale underway with prices of a 500 kilometre trip between Madrid and Barcelona for as little as seven euros.

"We see the arrival of competition as an opportunity not as a problem," a Renfe spokesman said.

Average prices for tickets on high-speed trains between Madrid and Barcelona have dropped by 25 per cent since Ouigo started operating last year, according to Spain's competition watchdog CNMC.

'Underused' network 

Passenger traffic on the route has jumped by 47 per cent, and is up by 14 per cent along Spain's entire rail network since May 2021, according to Adif.

"The network was underused," the director general of Ouigo's Spanish branch, Helene Valenzuela, told AFP, adding this meant there was a "limited risk" in entering the market.

The company spent 630 million euros ($644 million) to launch its operations in Spain.

"Our main rivals are planes and cars, not other trains," said Valenzuela.

"On a technical level, it is a challenge, because we have to organise the flow [of trains] in the stations. But on an economic level, it is an opportunity," she added.

Competition in the high-speed rail sector has its limits.

"It works on 'very busy lines' but it is 'much more complicated' on other routes where it is harder for companies to cover their costs and make a profit," said rail transport expert Lerida.

SHARM EL SHEIKH — An often fraught UN climate summit wrapped up on Sunday with sweeping agreement on how to tackle global warming and a "historic" deal to create a special fund to cover the damages suffered by vulnerable nations.

The two-week talks, which at times appeared to teeter on the brink of collapse, delivered a major breakthrough on a fund for climate "loss and damage" but left some disappointed over a failure to push further ambition on cutting emissions.

Delegates applauded after the loss and damage fund was adopted as the sun came up Sunday following days of marathon negotiations over the proposal.

Collins Nzovu, Zambia's minister of green economy and environment, said he was "excited, very, very excited".

"This is a very positive result from 1.3 billion Africans," he told AFP.

"Very exciting because for us, success in Egypt was going to be based on what we get from loss and damage."

A final COP27 statement covering the broad array of the world's efforts to grapple with a warming planet held the line on the aspirational goal of limiting global warming to 1.5ºC from pre-industrial levels.

It also included language on renewable energy for the first time, while reiterating previous calls to accelerate "efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies".

But that failed to go much further than a similar decision from last year's meeting in Glasgow on key issues around, disappointing observers.

"New calls to accelerate deployment of renewable energy were very welcome," said Ani Dasgupta, head of the World Resources Institute.

"But it is mind-boggling that countries did not muster the courage to call for phasing down fossil fuels, which are the biggest driver of climate change."

As the final session stretched until sunrise after crunch talks went overnight, some delegates slept in their chairs, others struggled to keep their eyes open.

UN chief Antonio Guterres said the UN climate talks had "taken an important step towards justice" with the loss and damage fund.

"Clearly, this won't be enough, but it is a much needed political signal to rebuild broken trust. The voices of those on the frontline of the climate crisis must be heard," he said in a recorded message.

'Historic' deal 

A statement from the Alliance of Small Island States, comprised of islands whose very existence is threatened by sea level rise, said the loss and damage deal was a "historic" deal 30 years in the making.

"The agreements made at COP27 are a win for our entire world," said Molwyn Joseph, of Antigua and Barbuda and chair of AOSIS.

"We have shown those who have felt neglected that we hear you, we see you, and we are giving you the respect and care you deserve."

Conversely the deal on loss and damage — which barely made it onto the negotiation agenda — gathered critical momentum during the talks.

Developing nations relentlessly pushed for the fund during the summit, finally succeeding in getting the backing of wealthy polluters long fearful of open-ended liability.

With around 1.2ºC of warming so far, the world has seen a cascade of climate-driven extremes in recent months, shining a spotlight on the plight of developing countries faced with escalating disasters, as well as an energy and food price crisis and ballooning debt.

The World Bank estimated that devastating floods in Pakistan this year caused $30 billion in damage and economic loss.

Pakistan's Climate Minister Sherry Rehman said prior to the fund's approval that its creation would be "a historic reminder to vulnerable people all over the world that they have a voice and that if they unite... we can actually start breaking down barriers that we thought were impossible".

The fund will be geared towards developing nations "that are particularly vulnerable to the adverse effects of climate change" — language that had been requested by the EU.

The EU had pushed for the wording with the aim of ensuring that wealthier developing countries such as China, which has grown into the world's second biggest economy, are not beneficiaries of the fund.

'On the brink' 

The Europeans had also wanted to broaden the funder base to cough up cash — code for China and other better-off emerging countries. 

The final loss and damage text left many of the thornier questions to be dealt with by a transitional committee, which will report to next year's climate meeting in Dubai to get the funding operational.

On Saturday morning, with the talks already in overtime, the European Union said it was prepared to have "no result" rather than a bad one over concerns around ambition on emissions cuts.

WASHINGTON — Twitter's owner Elon Musk has pledged the platform will not become a "hellscape", but experts fear a staff exodus following mass layoffs may have devastated its ability to combat misinformation, impersonation and data theft.

Twitter devolved into what campaigners described as a cesspit of falsehoods and hate speech after recent layoffs cut half the company's 7,500 staff and fake accounts proliferated following its botched rollout of a paid verification system.

Further throwing the influential platform into disarray — and raising doubt about its very existence — reports said hundreds of employees chose to depart the company Thursday in defiance of an ultimatum from Musk.

"The huge number of layoffs and resignations raises serious questions about content moderation and the security of user data," Cheyenne Hunt-Majer, from the nonprofit Public Citizen, told AFP. 

"It is imperative that [US regulators] act with urgency as users could have their sensitive data exploited or even stolen given the lack of sufficient staff that remain to adequately protect it."

The hashtag #RIPTwitter gained huge traction on the site after resignations poured in from employees who chose "no" to Musk's demand that they either be "extremely hardcore" or exit the company.

Twitter has plunged into turmoil as Musk, a self-professed free speech absolutist, seeks to shake up the money-losing company after his blockbuster $44 billion buyout late last month.

'Debacle' 

The site's content moderation teams — largely outsourced contractors that combat misinformation — have been axed and a number of engineers fired after openly criticising Musk on Twitter or on an internal messaging board, according to reports and tweets.

Wary brands have paused or slowed down ad spending — Twitter's biggest revenue source — after a spike in racist and antisemitic trolling on the platform.

"Misinformation super spreaders" — or untrustworthy accounts peddling falsehoods — saw a 57 per cent jump in engagement in the week after Musk's acquisition of Twitter, according to a survey by the nonprofit watchdog group NewsGuard.

"Elon Musk has swiftly decimated Twitter's ability to maintain the platform's integrity, health and safety," said Jessica Gonzalez, co-chief executive officer at the nonpartisan group Free Press.

"If there is one lesson that all social-media platforms must take away from this debacle, it's that without protecting users from hate and lies you have no company at all."

In a response to critics, Musk on Friday indicated a new direction for content moderation on the site.

While not being totally removed from the site, Musk said that "negative/hate tweets" will be "max deboosted [and] de-monetised, so no ads or other revenue to Twitter".

"You won't find the tweet unless you specifically seek it out, which is no different from rest of Internet," he added.

But his plan fell on skeptical ears.

'Significant blow' 

"We could certainly see a spike in misinformation, hate speech, and other objectionable content because of Musk's latest moves," Zeve Sanderson, executive director of the New York University's Center for Social Media and Politics, told AFP.

"Content moderation is a lot harder to do without people around to actually do content moderation."

Potentially adding to the pressure: Musk on Saturday restored the Twitter account of Donald Trump, 22 months after the then-president was suspended over the US Capitol riot by his supporters seeking to overturn the 2020 election result.

In a letter to the Federal Trade Commission, a regulatory agency, a group of Democratic senators blamed Musk for introducing "alarming" new features that undermined safety despite warnings that they would be "abused for fraud, scams and dangerous impersonation".

"Users are already facing the serious repercussions of this growth-at-all-costs strategy," they wrote in the letter published Thursday, noting the recent spike in fake accounts impersonating companies, politicians and celebrities.

Among the victims was drugmaker Eli Lilly, whose stock price nosedived — erasing billions in market capitalisation — after a parody account stamped with a verification tag purchased for $8 tweeted that insulin was being made available for free.

Last week, Twitter disabled sign-ups for the contentious feature known as Twitter Blue, with reports saying it had been temporarily disabled to help address impersonation issues — but not before several brands took a hit.

Given the apparent vulnerabilities, digital experts have warned activists, particularly in autocratic countries, of the increased risk of identity theft or their private messages falling into the hands of hackers. 

"Around the world, Twitter is used to organise against oppression," said Hunt-Majer.

"If Musk's mismanagement kills it, that would be a significant blow to freedom of information and, frankly, human rights in general on a global scale."