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U.S. inflation was unchanged in July as rising prices for some imported goods were balanced by falling gas and grocery prices, leaving overall prices modestly higher than a year ago. Consumer prices rose 2.7% in July from a year earlier, the Labor Department said Tuesday, the same as the previous month and up from a post-pandemic low of 2.3% in April. Excluding the volatile food and energy categories, core prices rose 3.1%, up from 2.9% in June. Both figures are above the Federal Reserve’s 2% target. The new numbers suggest that slowing rent increases and cheaper gas are offsetting some impacts of President Donald Trump’s sweeping tariffs. Many businesses are also likely still absorbing much of the cost of the duties. Tuesday’s figures probably reflect some impact from the 10% universal tariff Trump imposed in April, as well as higher duties on countries such as China and Canada. Brian Bethune, an economist at Boston College, said that overall U.S. tariffs calculated as the amount of duties paid by U.S. companies divided by overall imports has reached 10%, the highest in decades, and will likely keep rising for months. Those cost increases will be passed on to the consumer in some way, shape, or form, Bethune said. Some companies could return to shrinkflation, he added, in which they reduce the package size of a good while keeping the price the same. And companies that are absorbing tariff costs, which would cut into their profit margins, are less likely to hire new employees, he said. The Federal Reserve may now be in a difficult spot. Hiring slowed sharply in the spring, after Trump announced tariffs in April. The stalling out of job gains has boosted financial market expectations for an interest rate cut by the central bank at its next meeting in September, and some Fed officials have raised concerns about the health of the job market. A rate cut by the Fed often, but not always, lowers borrowing costs for mortgages, car loans, and business loans. Economists are divided over how Fed officials will read the data in the coming months. Some argued that the worsening jobs picture will outweigh lingering inflation concerns and lead the Fed to cut at its next meeting in September. Yet some say that with core inflation notably above 2% and rising, the Fed will postpone that decision. Chair Jerome Powell has warned that worsening inflation could keep the Fed on the sidelines a stance that has enraged Trump, who has defied traditional norms of central bank independence and demanded lower borrowing costs. On Tuesday, Trump attacked Powell again for not cutting rates and suggested he would allow a lawsuit against the Fed to proceed because of the rising costs of its extensive building renovation. It wasn’t clear what lawsuit he was referring to. On a monthly basis, prices rose 0.2% in July, down from 0.3% the previous month, while core prices ticked up 0.3%, a bit faster than the 0.2% in June. Gas prices fell 2.2% from June to July and have plunged 9.5% from a year earlier, the government’s report said. Grocery prices slipped 0.1% last month, though they are still 2.2% higher than a year ago. Tariffs appeared to raise the cost of some imported items: Shoe prices jumped 1.4% from June to July, though they are still just 0.9% more expensive than a year ago. The cost of furniture leapt 0.9% in July and is 3.2% higher than a year earlier. Coffee costs nearly 15% more than a year earlier, mostly because of troubled harvests overseas, though steep duties on imports from Brazil could push those prices higher in the coming months. Nearly all U.S. coffee is imported. Tuesday’s data arrives at a highly-charged moment for the Labor Department’s Bureau of Labor Statistics, which collects and publishes the inflation data. Trump fired Erika McEntarfer, then the head of BLS, after the Aug. 1 jobs report also showed sharply lower hiring for May and June than had previously been reported. The president posted on social media Monday that he has picked E.J. Antoni, an economist at the conservative Heritage Foundation and a frequent critic of the jobs report, to replace McEntarfer. Adding to the turmoil at BLS is a government hiring freeze that has forced it to cut back on the data it collects for each inflation report, the agency has said. UBS economist Alan Detmeister estimates that BLS is now collecting about 18% fewer price quotes for the inflation report than it did earlier this year. He thinks the report will produce more volatile results, though averaged out over time, still reliable. Smaller companies are trying to avoid raising prices and some have turned to novel ways of raising funds. Clothing maker Princess Awesome, which designs matching clothes for children and adults, has seen its costs jump 15% to 20% because of the tariffs. The company has joined a lawsuit seeking to block the duties. Rebecca Melsky, CEO and co-founder of the firm, says it is prohibitively expensive to make the cotton blend fabrics it uses in the United States. For now, the company has instituted a tip jar on its website where it asks customers to help defray the cost of goods. We have not across the board raised prices because of the tariffs — yet, she said. Trump has insisted that overseas manufacturers will pay the tariffs by reducing their prices to offset the duties. Yet the pre-tariff prices of imports haven’t fallen much since the levies were put in place. Economists at Goldman Sachs estimate that foreign manufacturers have absorbed just 14% of the duties through June, while 22% has been paid by consumers and 64% by U.S. companies. Yet the economists expect that by this fall consumers will bear two-thirds of the burden, while foreign exporters pay a quarter and U.S. companies handle less than a tenth. Many large corporations are raising prices, including apparel makers Ralph Lauren and Under Armour, and eyewear company Warby Parker. Most of those increases weren’t in place for Tuesday’s inflation report. Consumer products giant Procter & Gamble, maker of Crest toothpaste, Tide detergent and Charmin toilet paper, said late last month that it would lift prices in August on about a quarter of its products by mid-single-digit percentages. Walmart has also raised prices. And cosmetics maker e.l.f. Beauty, which makes amajority of its products in China, said on Wednesday that it had raised prices by a dollar on its entire product assortment as of Aug. 1 because of tariff costs, the third price hike in its 21-year history. Christopher Rugaber, AP economics writer Associated Press Retail Writer Anne D’Innocenzio contributed to this report.
Category:
E-Commerce
Delivery drones are so fast they can zip a pint of ice cream to a customer’s driveway before it melts.Yet the long-promised technology has been slow to take off in the United States. More than six years after the Federal Aviation Administration approved commercial home deliveries with drones, the service mostly has been confined to a few suburbs and rural areas.That could soon change. The FAA proposed a new rule last week that would make it easier for companies to fly drones outside of an operator’s line of sight and therefore over longer distances. A handful of companies do that now, but they had to obtain waivers and certification as an air carrier to deliver packages.While the rule is intended to streamline the process, authorized retailers and drone companies that have tested fulfilling orders from the sky say they plan to make drone-based deliveries available to millions more U.S. households. Walmart’s multistate expansion Walmart and Wing, a drone company owned by Google parent Alphabet, currently provide deliveries from 18 Walmart stores in the Dallas area. By next summer, they expect to expand to 100 Walmart stores in Atlanta; Charlotte, North Carolina; Houston; and Orlando and Tampa, Florida.After launching its Prime Air delivery service in College Station, Texas, in late 2022, Amazon received FAA permission last year to operate autonomous drones that fly beyond a pilot’s line of sight. The e-commerce company has since expand its drone delivery program to suburban Phoenix and has plans to offer the service in Dallas, San Antonio, Texas, and Kansas City.The concept of drone delivery has been around for well over a decade. Drone maker Zipline, which works with Walmart in Arkansas and the Dallas-Fort Worth area, began making deliveries to hospitals in Rwanda in 2016. Israel-based Flytrex, one of the drone companies DoorDash works with to carry out orders, launched drone delivery to households in Iceland in 2017.But Wing CEO Adam Woodworth said drone delivery has been in “treading water mode” in the U.S. for years, with service providers afraid to scale up because the regulatory framework wasn’t in place.“You want to be at the right moment where there’s an overlap between the customer demand, the partner demand, the technical readiness and the regulatory readiness,” Woodworth said. “I think that we’re reaching that planetary alignment right now.” Flying ice cream and eggs DoorDash, which works with both Wing and Flytrex, tested drone drop-offs in rural Virginia and greater Dallas before announcing an expansion into Charlotte. Getting takeout food this way may sound futuristic, but it’s starting to feel normal in suburban Brisbane, Australia, where DoorDash has employed delivery drones for several years, said Harrison Shih, who leads the company’s drone program.“It comes so fast and it’s something flying into your neighborhood, but it really does seem like part of everyday life,” Shih said.Even though delivery drones are still considered novel, the cargo they carry can be pretty mundane. Walmart said the top items from the more than 150,000 drone deliveries the nation’s largest retailer has completed since 2021 include ice cream, eggs and Reese’s Peanut Butter Cups.Unlike traditional delivery, where one driver may have a truck full of packages, drones generally deliver one small order at a time. Wing’s drones can carry packages weighing up to 2.5 pounds. They can travel up to 12 miles round trip. One pilot can oversee up to 32 drones.Zipline has a drone that can carry up to 4 pounds and fly 120 miles round trip. Some drones, like Amazon’s, can carry heavier packages.Once an order is placed, it’s packaged for flight and attached to a drone at a launch site. The drone automatically finds a route that avoids obstacles. A pilot observes as the aircraft flies to its destinations and lowers its cargo to the ground with retractable cords. Risks and rewards of commercial drones Shakiba Enayati, an assistant professor of supply chain and analytics at the University of Missouri, St. Louis, researches ways that drones could speed the delivery of critical health supplies like donated organs and blood samples. The unmanned aircraft offer some advantages as a transport method, such as reduced emissions and improved access to goods for rural residents, Enayati said.But she also sees plenty of obstacles. Right now, it costs around $13.50 per delivery to carry a package by drone versus $2 for a traditional vehicle, Enayati said. Drones need well-trained employees to oversee them and can have a hard time in certain weather.Drones also can have mid-air collisions or tumble from the sky. But people have accepted the risk of road accidents because they know the advantages of driving, Enayati said. She thinks the same thing could happen with drones, especially as improved technology reduces the chance for errors.Woodworth added that U.S. airspace is tightly controlled, and companies need to demonstrate to the FAA that their drones are safe and reliable before they are cleared to fly. Even under the proposed new rules, the FAA would set detailed requirements for drone operators.“That’s why it takes so long to build a business in the space. But I think it leads to everybody fundamentally building higher quality things,” Woodworth said.Others worry that drones may potentially replace human delivery drivers. Shih thinks that’s unlikely. One of DoorDash’s most popular items is 24-packs of water, Shih said, which aren’t realistic for existing drones to ferry.“I believe that drone delivery can be fairly ubiquitous and can cover a lot of things. We just don’t think its probable today that it’ll carry a 40-pound bag of dog food to you,” Shih said. The view from the ground in Texas DoorDash said that in the areas where it offers drone deliveries, orders requiring the services of human delivery drivers also increase.That’s been the experience of John Kim, the owner of PurePoke restaurant in Frisco, Texas. Kim signed on to offer drone deliveries through DoorDash last year. He doesn’t know what percentage of his DoorDash customers are choosing the service instead of regular delivery, but his overall DoorDash orders are up 15% this year.Kim said he’s heard no complaints from drone delivery customers.“It’s very stable, maybe even better than some of the drivers that toss it in the back with all the other orders,” Kim said.For some, drones can simply be a nuisance. When the FAA asked for public comments on Amazon’s request to expand deliveries in College Station, numerous residents expressed concern that drones with cameras violated their privacy. Amazon says its drones use cameras and sensors to navigate and avoid obstacles but may record overhead videos of people while completing a delivery.Other residents complained about noise.“It sounds like a giant nagging mosquito,” one respondent wrote. Amazon has since released a quieter drone.But others love the service. Janet Toth of Frisco, Texas, said she saw drone deliveries in Korea years ago and wondered why the U.S. didn’t have them. So she was thrilled when DoorDash began providing drone delivery in her neighborhood.Toth now orders drone delivery a few times a month. Her 9-year-old daughter Julep said friends often come over to watch the drone.“I love to go outside, wave at the drone, say ‘Thank you’ and get the food,” Julep Toth said. AP Video Journalist Kendria LaFleur contributed from Frisco, Texas. Dee-Ann Durbin, AP Business Writer
Category:
E-Commerce
Why do so many of us struggle to save?Saving for the future can be difficult because of a cognitive bias known as hyperbolic discounting: our tendency to place greater weight on immediate satisfaction, even if focusing on the long term will have a greater payoff. This bias is why, when you get a raise, you may consider getting a new carincurring a higher monthly paymentinstead of sacking away more money each month for retirement and perhaps getting to retire several years earlier.Feeling stressed about finances can also get you off track with your savings. While some people respond to financial stress by saving more, others respond by spending more in order to regain feelings of control.Unfortunately, these shortsighted decisions on spending versus saving can have large effects on our ability to achieve our future goals, because of the enormous power of compound interest. So, let’s talk about what you can do to keep saving when you feel the urge to give up. 1) Perform a goals audit Sit down and list what you are saving for. If needed, you can use techniques geared toward helping people find and articulate their financial goals.Then, consider how you might pair up your goals to boost your savings motivation. Research suggests the most motivating financial goals may be those relating to security (for example, retirement) or self-actualization (such as opening a business or contributing to charities). Consider how you may link some of your shorter-term goals to these bigger goals.For instance, you may decide to couple your “savings for home repairs” with your desire to “donate to charity” by committing to donate the excess you saved for repairs to your favorite nonprofit. By ensuring your goals are well-articulated and meaningful, you can always come back to them for a dose of motivation when you feel yourself wavering. 2) Assess what you can (and should) save When we are feeling stressed by finances, we may convince ourselves that all our current spending is more of a priority than our saving. So, start by doing a comprehensive review of your budget.How much money comes in each month, how much goes out, and where does it go? If you don’t find a monthly surplus, that indicates you may need to go through your spending and decide where you can spend less.I recommend giving yourself a reality check by calculating how much you need to save each month to achieve your goal in the time you want to. It’s especially eye-opening to calculate how saving more or less each month can affect your ability to retire.Remember, it’s OK if you cannot save as much in this season of your life as you’d like. But by saving what you can and coming back to this practice when your circumstances change, you can still make serious progress toward your goals. 3) Take it out of your hands Now, make your commitment as easy as possible by automating the process. If you have to decide every month to transfer money into your IRA or savings, the chances are that it won’t happen at some point. You’ll forget, put it off, or maybe decide that this is the month for a treat instead.Research suggests that automating savings can help people save more than they otherwise would, so taking the time to automate your savings now can help you stick with your plan for monthsor yearsto come. This article was provided to The Associated Press by Morningstar. For more personal finance content, go to https://www.morningstar.com/personal-financeDanielle Labotka, Ph.D., is a behavioral scientist at Morningstar. Danielle Labotka of Morningstar
Category:
E-Commerce
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