US retailers pull out all the stops to lure Black Friday shoppers

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Good evening.

The US shopping binge that is Black Friday got under way today with a slight sense of apprehension from retailers that “cost fatigue” — the perception that everything is still more expensive than before the pandemic — might dampen the traditional stampede to the stores.

The National Retail Federation expects 182mn people to shop between today and “Cyber Monday,” the day to pick up online bargains, and stores are pulling out all the stops in terms of discounts. 

According to last week’s official data retail sales in the US are generally still holding up but earnings from some of the country’s big chains have highlighted cracks in consumer confidence.

Walmart, the largest US retailer, whose performance is closely followed as a measure of the mood of American consumers, cautioned last week that growth would moderate in the holiday quarter after experiencing a softening of sales in the second half of October as consumers shift their spending away from discretionary items.

Other economic indicators, however, remain favourable for retailers. This Thanksgiving, for example, was the cheapest for consumers in several years, with falling petrol prices and airfares and lower costs for holiday food staples such as turkey and potatoes as inflation is squeezed out of the economy. 

Falling prices should be good news for politicians. But, according to the FT editorial board at least, bad vibes are harder to shift than lawmakers had hoped.

“Americans’ mood took a while to rebound after previous shocks, including the global financial crisis, even as the broader economy improved,” it says. “Shaking off the gloom of the pandemic is not going to be easy.”

Need to know: UK and Europe economy

The UK’s independent Office for Budget Responsibility said chancellor Jeremy Hunt’s tax cuts in his Autumn Statement had left a £20bn hole in public services budgets, leaving a poison pill for his successor. The Resolution Foundation think-tank said high inflation, poor economic growth and a rising tax burden meant households would be £1,900 poorer by 2025. FT specialists discuss Hunt’s measures in the new Political Fix podcast.

UK business activity grew marginally in November, according to new S&P Global/Cips PMI data. The better than expected score of 50.1, where 50 marks the divide between expansion and contraction, eases fears of the economy shrinking in the final quarter of the year.

Strong UK consumer confidence data this morning has damped market expectations of interest rate cuts but Bank of England chief economist Huw Pill told the Financial Times that it could not yet afford to ease off in its battle against high inflation. Read the full interview in our Economists Exchange series.

Dutch far-right leader Geert Wilders won big in parliamentary elections and immediately pledged to cut immigration to the Netherlands and ensure “the Dutch get their country back” although he received a setback today when the right-leaning liberal VVD party said it would not join a government with him. Wilders’ victory has boosted Europe’s far right and put European liberal democracy on the defensive.

Germany is to suspend its constitutional limit on new borrowing for the fourth year in a row as it scrambles to deal with a court ruling that has left the government’s spending plans in disarray.

Eurozone business allayed fears of a deepening recession as evidenced in a slight improvement in the bloc’s PMI score to a two-month high of 47.1. Minutes from the European Central Bank’s last meeting showed policymakers leaving open the possibility of another interest rate rise to avoid “unwarranted loosening of financial conditions”.

Need to know: Global economy

Donald Trump is planning to slash US President Joe Biden’s landmark climate law — the $369bn Inflation Reduction Act — and increase investment in fossil fuels and roll back regulations aimed at accelerating the green transition if he is elected next year.

The FT revealed that western influencers are being cultivated by China to speak up for the Communist party and defend the country from overseas criticism. This has coincided with Beijing’s expulsion of some foreign journalists and restriction of accreditations for others. 

Colombia’s leftwing president Gustavo Petro promised “total peace” when he was elected last year but instead the country has been subject to a surge of violence, kidnappings and extortion.

Need to know: business

Hong Kong’s Cathay Pacific Airways is offering discounted fares from mainland China to help authorities boost voter turnout in a “patriots only” local election next month, highlighting concerns among Chinese officials about a lack of public enthusiasm for the poll after pro-democracy candidates were banned.

KPMG widened its pay freeze to around 12,000 UK employees, as demand for its services dipped. It recently launched a fresh round of job cuts.

The battle for the Telegraph newspaper heated up as former CNN boss Jeff Zucker accused rival bidders of slinging mud and said he would guarantee its editorial independence. Zucker’s Abu Dhabi-backed RedBird IMI company is in pole position to buy the publisher, causing concern among Conservative MPs over the future of a newspaper traditionally aligned with their party.

An FT Big Read explains how mining company Anglo American is “moving from warming the world to feeding the world” with its $9bn investment in a UK mine that will produce a fertiliser mineral for which there is currently little demand.

FT specialists weigh in on this week’s Open AI saga. West coast editor Richard Waters says it has brought to an end the halo effect from its partnership with Microsoft that has benefited both companies, while innovation editor John Thornhill says that at the core of the recent turmoil is the tension between the commercial drive to make money and concerns about the collateral damage that AI can cause. Companies editor Anne-Sylvaine Chassany says it demonstrates the need for Europe-based AI alternatives.

Science round up

The cyclical El Niño effect which has pushed the world to record temperatures will persist into 2024, scientists say. The naturally occurring warming effect in the Pacific Ocean can cause global temperatures to rise in the short term and wreak havoc on crop yields.

Elon Musk’s Starship rocket — the most powerful ever launched — reached space for the first time though both the ship and its main booster were lost shortly into the flight in another setback to Musk’s ambition of carrying humans to Mars.

The FT revealed that a sodium-ion battery breakthrough from Swedish start-up Northvolt could minimise dependence on China for the green transition. The battery has no lithium, cobalt or nickel — the critical metals that are subject to wild swings in prices as manufacturers scramble for supplies.

The World Health Organization asked China for information on a rise in “undiagnosed pneumonia” among children, in a sign of the heightened vigilance over infectious disease since the Covid-19 pandemic.

The UK announced £500mn in new spending on computing power to develop artificial intelligence and five “moonshot missions” for its £2.5bn national quantum strategy, as part of chancellor Jeremy Hunt’s Autumn Statement.

Commentator Anjana Ahuja says science should apply some of its famed rigour to professionalising fraud detection. Rooting out mistakes and manipulation should not have to depend on whistleblowers or dedicated amateurs who take personal legal risks for the greater good, she argues.

Some good news

Immersing patients in virtual worlds is helping with the pain of drawing blood or an IV insertion. One example is Smileyscope, which sends children on an underwater adventure where the cool swipe of an alcohol wipe becomes cool waves washing over the arm while the pinch of the needle becomes a gentle fish nibble.  

Something for the weekend

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