The daily business briefing: March 3, 2023
Nordstrom to shut down Canada stores, Fed governor says hot economic data could force more rate hikes than anticipated, and more
Nordstrom to close Canada operations
Nordstrom announced Thursday it would close its 13 Nordstrom and Nordstrom Rack stores in Canada after concluding its operations in the country had no "realistic path to profitability." Nordstrom, which has 2,500 employees in Canada, said it would fund an employee trust for workers who will lose their jobs. Nordstrom has been under pressure to increase growth and profitability as shopper demand falls. An inventory glut and supply-chain bottlenecks have hurt sales. Nordstrom Canada has accounted for less than 3 percent of the company's total sales, and leaving the country is expected to reduce the company's revenue by $400 million. The news came as the Seattle-based department store chain reported lower holiday-quarter sales and profits but better-than-expected earnings.
Fed official says rates will go higher if hiring, consumer spending stay hot
Federal Reserve governor Christopher Waller said Thursday that the central bank will have to raise interest rates higher than previously expected to bring down high inflation if hiring and consumer spending remain as strong as recent reports indicated. "After seeing promising signs of progress, we cannot risk a revival of inflation," Waller said in remarks posted on the Fed's website. He indicated that if data stays hot the Fed will have to lift its benchmark rate above 5.4 percent, higher than the 5.1 percent peak Fed officials signaled in December. Fed policymakers last month voted unanimously to slow their rate hikes, raising their benchmark rate a quarter percentage point after months of larger increases.
Biden asks Congress for money to fight COVID aid fraud
President Biden on Thursday called on Congress to approve $1.6 billion to help clean up fraud in COVID aid programs, and to prevent the recurrence of such a massive theft of taxpayer money. The more than $5 trillion in emergency spending Congress authorized helped people get through the coronavirus crisis and boosted the economic recovery from the shock of pandemic lockdowns, but fraudulent aid claims diverted billions of dollars. Lawmakers have expressed anger over the huge amounts of money stolen as the government rushed to distribute the aid, but many remain reluctant to spend more money to get to the bottom of the fraud.
Zoom fires President Greg Tomb
Zoom Video Communications on Thursday abruptly fired President Greg Tomb, a former Google executive who joined the video conferencing company in June after remote work and education made Zoom a household name. A Zoom spokesperson said the company wasn't seeking a replacement. Tomb had a high-profile role on earnings calls and other events in his short tenure. He told Bloomberg at the World Economic Forum in Davos, Switzerland, in January that Zoom had a bright future despite mounting competition. The company announced it was laying off 15 percent of its workforce weeks later.
Stock futures rise after Thursday's gains
U.S. stock futures edged higher early Friday after comments by Federal Reserve leaders about the central bank's next moves on raising interest rates to fight inflation. Futures for the Dow Jones Industrial Average and the S&P 500 were up 0.2 percent and 0.3 percent, respectively, at 6:30 a.m. ET. Nasdaq futures were up 0.4 percent. The Dow jumped 1.1 percent on Thursday. The S&P 500 and the tech-heavy Nasdaq gained 0.8 percent and 0.7 percent, respectively. The indexes reversed early declines after Atlanta Fed President Raphael Bostic said he "still very firmly" supported smaller, quarter-point interest rates hikes as the economy showed signs of slowing. Fed Governor Christopher Waller said more increases than previously anticipated could be necessary if hiring and consumer spending stay hot.