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Inflation clouds ‘Black Friday’ kickoff of US holiday shopping season

Photo: VOA

| By AFP | John Biers |

Retailers unveiled a trove of fresh seasonal promotions Friday, as they try to coax sales from reticent shoppers whose holiday cheer has been tempered by inflation and worries over a softening economy.

“Black Friday,” the unofficial start of the US holiday shopping season, announced itself with the annual day-after-Thanksgiving deluge of online promotions and early store openings.

But industry experts have been cautious about this year’s prospects, in light of price pressures that have exacerbated concerns about an oversupply of goods.  

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A year ago, retailers faced product shortfalls in the wake of shipping backlogs and factory closures related to Covid-19. 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 reducing excess inventories, but oversupply will mean deep discounts in many categories, including electronics, home improvement and apparel.

Online shoppers spent $5.3 billion on Thanksgiving Day itself, according to an Adobe report early Friday, up 2.9 percent from a year ago.

Higher costs for gasoline and household staples like meat and cereal are a nationwide issue, and they do not burden everyone equally.

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

Diminishing savings

Leading forecasts from Deloitte and the National Retail Federation project a single-digit percentage rise in sales, but this is unlikely to exceed the inflation rate.

Adobe has forecast an overall holiday sales increase of 2.5 percent, less than a third of the level from last year. Besides inflation, Adobe cited higher Federal Reserve interest rates and an uptick in brick-and-mortar shopping as factors.

European countries like Britain and France have been marking Black Friday for a few years now too, but with soaring inflation, merchants there face a similar dilemma.

“Retailers are desperate for some spending cheer but the worry is that it could turn out to be more of a Bleak Friday,” said Hargreaves Lansdown analyst Susannah Streeter.

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US shoppers have remained resilient throughout the 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 virus 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.

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.

Mixed picture

Recent earnings reports from retailers paint a mixed picture on consumer health.

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Target stood on the downcast side, 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.

He added that customers are “shopping very carefully on a budget.”

But Lowe’s, another big US chain specializing in home-improvement, offered a different view, describing the same late-October period as “strong.”

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“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, who works in child care, has had her travel plans thwarted due to exorbitant plane ticket prices — and she is unsure of how much she can spend on family this year.

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

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International

Stoltenberg calls on the NATO bloc to “urgently” offer anti-aircraft systems to Ukraine

NATO Secretary General Jens Stoltenberg called on the member states of the bloc to offer Ukraine anti-aircraft defense systems or financial support and lamented that “every delay costs lives and damage” in the face of the Russian invasion.

“We are working with all our allies and asking them to provide air defense systems such as the Samp/T or others,” he assured the media upon his arrival at the summit of foreign ministers of the G7 on the Italian island of Capri (south), when asked if other countries, in addition to Germany, could offer ‘Patriots’ to Kiev.

Stoltenberg encouraged the bloc’s allies who cannot provide anti-aircraft systems to the Ukrainian resistance to give it financial support.

In this sense, he stressed that the Netherlands has confirmed a package of 4 billion euros in additional military aid for Kiev, while Denmark has announced a new remittance.

And he celebrated as “an encouraging sign” Washington’s decision, after months of delays, to discuss the approval of other funds for $61 billion, with the commitment of US President Joe Biden to ratify it immediately.

NATO, he said, has given 99% of the aid to Ukraine but if it stops doing so “they will not be able to defend the country.”

“That’s why we have to do more and that’s why we’re here,” said the leader of the Atlantic Alliance, who will meet tomorrow with the Ukrainian president, Volodymir Zelenski.

In his opinion, accelerating aid to Ukraine is “urgent” because “every day delays cost deaths and damage” in that country in the face of a Russia that puts pressure on the defensive lines.

Stoltenberg finally promised “maximum surveillance” in NATO countries against Russian espionage, after the recent arrest in Germany of two men on suspicion of espionage under the orders of Moscow.

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International

The US announces new sanctions against Iran for the attack on Israel

U.S. President Joe Biden announced new sanctions against Iran, directed against its Revolutionary Guard and the Ministry of Defense, for the attack on Israel.

Through a statement signed by the spokesman of the State Department, Matthew Miller, the US Government explained that it is also targeting the unmanned aerial vehicle program, the steel industry and the automobile companies of Iran.

“In response to Iran’s unprecedented attack on Israel, the United States is taking radical measures against several actors involved in Iran’s unmanned aerial vehicle program, suppliers and customers of one of Iran’s largest steel producers and Iranian automotive companies with connections to the United States,” the statement said.

The designated entities are the Islamic Revolutionary Guard Corps (IRGC) and the Ministry of Defense and Logistics of the Armed Forces (MODAFL).

In total, the Treasury Department imposes sanctions on 16 people and two entities that allow the production and testing of Iranian unmanned aerial vehicles, as well as the proliferation of actors working on behalf of the Islamic Revolutionary Guard, its unmanned aerial production division, Kimia Part Sivan Company, and other Iranian manufacturers of unmanned aerial vehicles and unmanned aerial vehicle engines.

The Treasury also sanctions five companies that supply component materials for steel production to the Khuzestan Steel Company (KSC) of Iran, an entity sanctioned by the United States, or that buy finished steel products from the KSC.

In addition, the Treasury sanctions the Iranian car manufacturer Bahman Group and three of its subsidiaries, which have continued to materially support the IRGC and other sanctioned entities.

Finally, the Department of Commerce imposes new controls to restrict Iran’s access to technologies such as basic commercial-grade microelectronics.

“We will continue to work with our allies and partners to use the full range of tools at our disposal to address income flows and disrupt the networks that support Iran’s reckless proliferation of weapons that destabilize the Middle East and beyond,” Miller said.

U.S. Treasury Secretary Janet Yellen said last Tuesday that the United States and its partners were coordinating a new round of sanctions against Iran for the attack on Israel, the first launched by Tehran directly against Israeli territory.

Several countries had previously designated the Revolutionary Guard, a branch of the Armed Forces of Iran created after the Islamic Revolution of 1979, as a terrorist group.

In 2019, the United States included the Revolutionary Guard on the blacklist of terrorist groups, while the Government of Canada already said in January of this year that it was studying ways to include the Revolutionary Guard on its list of terrorist organizations.

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International

Argentina asks to be a “global partner” of NATO

Argentina requested to be a “global partner” of NATO in the framework of a meeting held this Thursday by its Minister of Defense, Luis Petri, and the deputy secretary general of the multilateral organization, Mircea Geoana, official sources reported.

As published by the holder of the portfolio on social network X and disseminated his ministry, Petri presented “the letter of intent that expresses Argentina’s request to become a global partner of this organization.”

“We will continue to work on recovering links that allow us to modernize and train our forces to the NATO standard,” concluded the Argentine Minister of Defense.

Petri accompanied his publication with several photographs – including that of the delivery of the official letter – of his meeting with Geoana in Brussels, where the headquarters of the North Atlantic Treaty Organization (NATO) is located.

Argentina’s rapprochement with NATO is linked to the new foreign policy developed by the Government of the ultraliberal Javier Milei, which has as references the United States and Israel.

In addition to the recent visit to Argentina of the commander of the Southern Command of the United States, Army General Laura Richardson, with a vocation to expand collaboration in defense, the South American country is clearly aligned with Israel both in the war in the Gaza Strip against the armed wing of Hamas and in the recent crisis unleashed with Iran.

Petri is this week in Europe, where on Monday he signed an agreement for the purchase of 24 used F-16 fighter planes from the Danish Army.

Milei was going to travel to Denmark to meet with the Prime Minister, Mette Frederiksen, and celebrate the signing of the agreement, but suspended the visit following Iran’s attack on Israel and returned from the United States – where he had traveled to receive a tribute from a Jewish organization – to organize a “crisis committee” in Buenos Aires.

Argentina keeps in its memory the memory of two serious attacks against the interests of the Jewish community: in 1992 against the Embassy of Israel; and in 1994 against the Asociación Mutual Israelita Argentina (AMIA). Both left more than 100 dead and hundreds of injured.

As its official website shows, NATO has 32 full members. Born after World War II (1939-1945), twelve countries signed their accession in 1949: Belgium, Canada, Denmark, the United States, France, Iceland, Italy, Luxembourg, Norway, the Netherlands, Portugal and the United Kingdom.

They were joined, in various expansions, Greece, Turkey, Germany, Spain, Czech Republic, Hungary, Poland, Bulgaria, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Romania, Albania, Croatia, Montenegro, North Macedonia, Finland and Sweden – the last two incorporations, in 2023 and 2024, respectively, against the background of the war between Russia and Ukraine.

In addition, it has several allies qualified as global partners, the same status that Argentina now intends: Australia, Afghanistan, Iraq, Japan, South Korea, Mongolia, New Zealand, Pakistan and Colombia, the only country in Latin America, admitted in 2017.

Undoubtedly, an important aspect that could generate some internal conflict is the diplomatic dispute over the sovereignty of the Falkland Islands between the United Kingdom – one of the founding members of NATO – and Argentina, which caused a war in 1982.

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