The daily business briefing: September 17, 2021
Retail sales rise unexpectedly despite Delta variant surge, Sears plans to close its last store in its home state, and more
Retail sales rise unexpectedly despite Delta-variant spread
U.S. retail sales rose by 0.7 percent in August, bouncing back unexpectedly from a decline in July, the Commerce Department reported Thursday. The gains came despite concerns that a coronavirus surge driven by the spread of the highly infectious Delta variant was dragging down the economy. Restaurant sales were flat after rising for most of 2020. Initial jobless claims, a key indicator of layoffs, rose by 20,000 last week but remained near pandemic-era lows. "Delta? What Delta?" Ian Shepherdson, chief economist at Pantheon Macroeconomic Advisers, said in a note to clients. He later added in an interview that the Delta-variant surge wasn't ending the recovery. "Absolutely not," he said. "It's an external shock that's denting it temporarily."
Sears to close last store in Illinois, its home state
Long-troubled retailer Sears is closing its last store in its home state of Illinois in November, CNBC confirmed Thursday. Sears, which was founded in Chicago in the 1890s, still had 34 stores in operation in August, down from about 700 when it filed for Chapter 11 bankruptcy protection in October 2018. Sears' parent company, Transformco, acquired the company after the bankruptcy filing. Transformco said it would continue to manage the space after the last Illinois Sears shuts down, but hasn't found a tenant yet. "This is part of the company's strategy to unlock the value of the real estate and pursue the highest and best use for the benefit of the local community," Transformco said in a statement.
China applies to join Pacific trade pact
China has applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a free-trade agreement abandoned by former President Donald Trump, but Japan said Friday it would have to determine whether China meets the "extremely high standards" of the pact. China said Thursday that Commerce Minister Wang Wentao had submitted the application in a letter to New Zealand's trade minister, Damien O'Connor. The agreement, originally known as the Trans-Pacific Partnership, was considered a key part of former President Barack Obama's pivot to Asia, and an important way to counter China's growing economic influence in the region. But Trump withdrew the U.S. in 2017. Eleven countries, including Australia, Canada, Chile, Japan, and New Zealand, signed the pact in 2018.
Stock futures edge down as investors remain cautious
U.S. stock index futures fell slightly early Friday in a sign of investor caution due to concerns about the economic fallout from the spreading of the Delta variant of the coronavirus. Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were all down by about 0.2 percent several hours before the opening bell. The three main U.S. indexes were mixed on Thursday. The Dow and the S&P 500 fell by nearly 0.2 percent, while the tech-heavy Nasdaq rose by just over 0.1 percent. "The economy is widely thought to be slowing under the weight of the Delta variant. Combined with a bad historic September stock market seasonality and ongoing fears of inflation, has caused investors to recently turn cautious," said Jim Paulsen, chief investment strategist for Leuthold Group.
Fed reviews ethics rules after trades spark backlash
Federal Reserve Chair Jerome Powell has ordered a review of internal ethics rules about assets senior Fed officials can hold following criticism of financial trades two policymakers made while the central bank was boosting the economy during the pandemic. The officials, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren, said they would sell the stocks and real-estate assets to avoid any appearance of impropriety, even though the trades complied with Fed ethics rules. Powell last week ordered the review "because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission," a Fed spokesperson said. Any changes to ethics rules regarding permissible financial holdings would be added to the Reserve Bank Code of Conduct.