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The US economy is a puzzle but the pieces aren’t fitting together

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The US economy is a puzzle but the pieces aren’t fitting together


Bloomberg/Getty A female shopper with long brown hair at the Broadway Plaza Shopping Center in Walnut Creek, California, walking on the sidewalk carrying shopping bagsBloomberg/Getty

Ask almost any economist and they will tell you: US President Donald Trump has been running risks with the world’s largest economy.

They say his tariffs and crackdown on immigrants risk a return of 1970s-esque “stagflation”, when a sudden oil shock prompted stagnant growth and spiralling prices, except this time the crisis would be self-inflicted.

The White House has just as steadfastly dismissed those concerns, attacking the experts – and, in the case of the US Bureau of Labor Statistics commissioner, firing her.

Questions about how it will all play out have left the US central bank in a state of paralysis, as it waits for data to clarify what’s happening before making a move on interest rates.

But after a busy few weeks of company updates, data on jobs and inflation, we still don’t really know.

The labour market is sending clearly worrisome signals.

Job creation was almost non-existent in May and June, sluggish in July, and the ranks of discouraged workers are growing.

That 1 August jobs report sent the stock market sinking and Trump into a tailspin, prompting him to fire the BLS commissioner.

A few days later, Moody’s Analytics economist Mark Zandi declared on social media that the economy was “on the precipice of a recession”.

That’s not the consensus.

For sure, the economy has slowed, growing at an annual rate of 1.2% in the first half of the year, down one percentage point from 2024.

But consumer spending, despite weakening, has stayed more resilient than many had expected, despite downbeat assessments by some firms.

Shares, after the 1 August hit, quickly resumed their upward march.

“We continue to struggle to see signs of weakness,” the chief financial officer of JPMorgan Chase, America’s biggest bank, told investors last month. “The consumer basically seems to be fine.”

That has raised hopes that the economy might power through, as it did a few years ago, to widespread surprise, despite getting hit with the highest inflation since the 1980s and a sharp rise in interest rates.

On Friday, the US government reported that spending at retailers and restaurants rose 0.5% from June to July – and that spending in June had been stronger than previously estimated.

“Consumers are down but not out,” wrote Michael Pearce, deputy chief US economist at Oxford Economics, which is predicting a modest recovery in spending in the months ahead, as tax cuts and a stock market recovery boost confidence.

“With the sluggish yet resilient real economy, the labor market is unlikely to deteriorate sharply.”

Challenges remain in the months ahead.

For now, households haven’t seen a dramatic run-up in prices at the store that might force them to cut back.

Consumer prices rose 2.7% in July compared with a year ago, the same pace as in June.

But many forecasters had not expected higher prices to start appearing until later this year, especially after Trump delayed some of his most aggressive tariff plans until this month.

Prices for hard-to-substitute, imported staples, like coffee and bananas, have already jumped.

Forecasters expect price increases to widen in the months ahead, as firms sell down pre-tariff stock and raise prices, now that they have more confidence about what the tariff policies might be.

That’s why there was so much focus on the producer price index, which measures wholesale prices commanded by US producers before they hit consumers, offering a clue to what’s coming.

It accelerated at the fastest pace in more than three years in July.

And worryingly, both consumer and producer inflation show the uptick in prices is not limited to goods, suggesting stagflation might very well be staging a return.



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Galeries Lafayette sets foot in India with Mumbai store – The Times of India

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Galeries Lafayette sets foot in India with Mumbai store – The Times of India


MUMBAI: Parisian luxury department store Galeries Lafayette is tapping India for growth, a market it said lacks luxury retail avenues for high spending consumers who shop for a spate of labels across pricey fashion houses and shopping stores abroad.The retailer’s flagship store in Paris’s Boulevard Haussmann is the second most-visited tourist spot in the French capital after Eiffel Tower and attracts 35 million visitors a year, half of which are foreigners.Galeries Lafayette, which is launching in India through partnership with the Aditya Birla Group, will open its first store in Mumbai early next month, after eight years of studying the local market and consumer nuances.“India is a key and strategic country. It also has great opportunities in terms of growth. Indian consumers are already very interested in buying luxury brands and products. They consume them not only in India but also abroad — Dubai, Singapore, the UK, Paris and especially in Galeries Lafayette. Clearly, there is a lack of offer inside India…there are no (luxury) department stores here,” Galeries Lafayette CEO Arthur Lemoine, told TOI in an interview here.The India foray, announced three years back, comes at a time when US tariff turmoil has clouded global growth prospects, nudging companies to review strategies.Of the 67 Galeries Lafayette stores globally, 58 are in home market France with the rest of the nine outlets spread across Asia including China, Indonesia and Dubai.The luxury brand has stitched a 20-year licensing agreement with the Aditya Birla Group. “Beyond the year which are written in the contract, we are here to build the future together,” said Lemoine. The four-storey department store in south Mumbai will house a broad range of global products — from bags to beauty, apparel and accessories. From a Rs 25-lakh bag to a Rs 3,000 lipstick, the idea is to cater to the luxury consumers but also tapping into the premium cohort who are willing to upgrade to high-end brands.“Luxury in our country today stands at the threshold of transformation,” said Aditya Birla Group chairman Kumar Mangalam Birla, adding that “In the span of less than a decade, the market is set to grow over four-fold from $20 billion to almost $90 billion by 2030.”The brand play will be omni-channel to give access to a wider set of affluent consumers, many of whom are sitting in non-metros. “In India, we have pockets of consumption all across the country,” said R Sathyajit, CEO, international brands at Aditya Birla Fashion & Retail adding that the company’s own website will be launched in a couple of months.Delhi will house the next Galeries Lafayette store. Currently, the assortment at the store is global with a tilt towards French and Parisian brands. “Over a period of time, we would also like to be a platform for emerging designers in India as well. The beauty of a department store is that it evolves with time, reflecting changing generations, tastes,” Sathyajit said.





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Netherland’s renewables drive putting pressure on its power grid

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Netherland’s renewables drive putting pressure on its power grid


John LaurensonBusiness reporter, Rotterdam

AFP via Getty Images Solar panels and wind turbines beside fields of tulips in the NetherlandsAFP via Getty Images

The Netherlands has raced to switch to wind and solar power

In a Dutch government TV campaign called “Flip the Switch” an actress warns viewers about their electricity usage.

“When we all use electricity at the same time, our power grid gets overloaded,” she says. “This can cause malfunctions. So, use as little electricity as possible between four and nine.”

It is the sign that, in one of the most-advanced economies in the world, something has gone wrong with the country’s power supply.

The Netherlands has been an enthusiastic adopter of electric cars. It has the highest number of charging points per capita in Europe.

As for electricity production, the Netherlands has replaced gas from its large North Sea reserves with wind and solar.

So much so that it leads the way in Europe for the number of solar panels per person. In fact, more than one third of Dutch homes have solar panels fitted.

The country is also aiming for offshore wind farms to be its biggest source of energy by 2030.

This is all good in environmental terms, but it’s putting the Dutch national electricity grid under enormous stress, and in recent years there have been a number of power cuts.

The problem is “grid congestion”, says Kees-Jan Rameau, chief executive of Dutch energy producer and supplier Eneco, 70% of whose electricity generation is now solar and wind.

“Grid congestion is like a traffic jam on the power grid. It’s caused by either too much power demand in a certain area, or too much power supply put onto the grid, more than the grid can handle.”

He explains that the problem is that the grid “was designed in the days when we had just a few very large, mainly gas-fired power plants”.

“So we built a grid with very big power lines close to those power plants, and increasingly smaller power lines as you got more towards the households.

“Nowadays we’re switching to renewables, and that means there’s a lot of power being injected into the grid in the outskirts of the network where there are only relatively small power lines.”

And these small power lines are struggling to cope with all the electricity coming in from wind turbines and solar panels scattered around the country.

AFP via Getty Images Dutch homes covered in solar panelsAFP via Getty Images

More than one in three Dutch homes has solar panels

Damien Ernst, professor of electrical engineering at Belgium’s Liege University, is one of Europe’s leading experts on electricity grids. He says it is an expensive problem for the Netherlands to solve.

“They have a grid crisis because they haven’t invested enough in their distribution networks, in their transmission networks, so they are facing bottlenecks everywhere, and it will take years and billions of dollars to solve this.”

Prof Ernst adds that it is a Europe-wide issue. “We have an enormous amount of solar panels being installed, and they are installed at a rate that is much, much too high for the grid to be able to accommodate.”

At Eneco’s headquarters in Rotterdam, Mr Kees-Jan Rameau highlights a large control panel that the company calls its “virtual power plant” and “the brain of our operations”. It is used to help balance the grid, avoiding blackouts.

When electricity generation is too high across the Netherlands, it enables Eneco to turn wind turbines out of the wind and turn off solar panels.

As for when demand for electricity is too high, it lowers the power to customers who have accepted to allow Eneco to stop or reduce their electricity supply when the network is under strain in exchange for lower prices.

But for homes and companies who want to scale-up their use of electricity with a new or larger grid connection, that, increasingly, is just not possible.

“Often consumers want to install a heat pump, or charge their electric vehicle at home, but that requires a much bigger power connection, and increasingly they just cannot get it,” says Mr Kees-Jan Rameau.

He adds that it is worse for businesses. “Often they want to expand their operations, and they just cannot get extra capacity from the grid operators.

And it has got to the point where even new housing construction in the Netherlands is becoming increasingly difficult, because there’s just no capacity to connect those new neighbourhoods to the grid.”

Those people, and companies, end up on waiting lists for a number of years. At the same time there are also waiting lists for those who want to supply the grid with power, such as a new home fitted with solar panels on its roof.

Staff at energy firm Eneco monitor screens

Energy firm Eneco can remotely reduce the amount of electricity generated by its wind farms

Tennet, the government-owned agency that runs the Netherlands’ national grid, says that 8,000 companies are currently waiting to be able to feed in electricity, while 12,000 others are waiting for permission to use more power.

Some sectors of the Dutch economy are warning that it is hampering their growth. “Grid congestion is putting the future of the Dutch chemical industry at risk… while in other countries it will be easier to invest,” says the President of the Dutch Chemical Association Nienke Homan.

So, was all this avoidable? “In hindsight I think almost every problem is avoidable,” says Mr Kees-Jan Rameau.

He adds that following the 2015 Paris Agreement on trying to tackle climate change, “we were very much focussing on increasing the renewable power generation side. But we kind of underestimated the impact it would have on the power grid.”

Tennet is now planning to spend €200bn ($235bn; £174bn) on reinforcing the grid, including laying some 100,000km (62,000 miles) of new cables between now and 2050.

That’s a huge amount of money, but there is also a big cost to not spending it. Grid congestion is costing the Dutch economy up to €35bn a year, according to a 2024 report from management consultancy group Boston Consulting Group.

Eugene Beijings, who is in charge of grid congestion with Tennet, says that patience is sadly required. “To strengthen and reinforce the grid, we need to double, triple, sometimes increase tenfold the capacity of the existing grid.

“And it’s taking on average about 10 years to do a project like that before it goes live, of which the first eight are legislation and getting the rights to put cables in the ground with all property owners. And only the last two years are the construction period.

“And meanwhile the energy transition is going that fast that we cannot cope with it, with the existing grid. So every additional request [to connect] is adding to the waiting list.”

Zet ook de knop om A man with an electric-charging cable stands in front of an electric car with a young womanZet ook de knop om

The Dutch government has paid for adverts encouraging people not to charge their cars during peak hours

At the Dutch energy ministry, which is actually called the Ministry for Climate Policy and Green Growth, the Minister Sophie Hermans wasn’t available for an interview. But her office gave a statement:

“In hindsight, the speed at which our electricity consumption has grown might have been collectively underestimated in the past by all parties involved. It is also hard to predict where the growth will occur first, as this results from individual companies/sectors and households.”

As for solutions, the ministry says it has a “National Grid Congestion Action Plan” focussed on adjusting legislation so grid expansion permits can be granted more quickly.

It is encouraging people to make better use of the existing grid with, for example, its Flip the Switch campaign.

And the financial incentive for people who feed their surplus solar electricity into the grid is being reduced to almost nothing. In some cases, people will even have to pay to feed solar power into the grid.

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Morgan Stanley posts massive third-quarter earnings beat

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Morgan Stanley posts massive third-quarter earnings beat


Ted Pick, CEO of Morgan Stanley speaks on CNBC’s Squawk Box outside the World Economic Forum in Davos, Switzerland on Jan. 23, 2025.

Gerry Miller | CNBC

Morgan Stanley on Wednesday posted third-quarter earnings that beat expectations by the largest margin in nearly five years on booming equities trading, investment banking and wealth management results.

Here’s what the company reported:

  • Earnings per share: $2.80 vs. $2.10 expected, according to LSEG
  • Revenue: $18.22 billion vs. $16.7 billion, according to LSEG

The bank said profit surged 45% from a year earlier to $4.61 billion, or $2.80 per share. Revenue rose 18% to a record $18.22 billion.

Morgan Stanley shares popped almost 5% Wednesday. They are up nearly 30% so far this year.

Wall Street trading desks have had high levels of activity in the quarter, while investment banking continues to see a resurgence in mergers and initial public offerings. Stocks at or near record highs bolstered Morgan Stanley’s giant wealth management division as well.

Put together, Wall Street-centric banks like Morgan Stanley and peer Goldman Sachs are in an ideal environment.

Morgan Stanley said equities trading revenue jumped 35% to $4.12 billion, or $720 million more than what analysts surveyed by StreetAccount had expected. The company cited increased activity across business lines and regions and record results in its prime brokerage business that caters to hedge funds.

Fixed income trading rose 8% to $2.17 billion, essentially matching the StreetAccount estimate.

Investment banking revenue in the quarter surged 44% from a year earlier to $2.11 billion, about $430 million more than the StreetAccount estimate. The bank cited more completed mergers, more IPOs and more fixed income fundraising as drivers for the quarter.

Wealth management revenue rose 13% to $8.23 billion, about $500 million more than expected, as rising asset levels and transaction fees bolstered results.

On Tuesday, JPMorgan Chase, Goldman, Citigroup and Wells Fargo each posted earnings that topped analysts’ expectations for earnings and revenue.

This story is developing. Please check back for updates.



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