The Fed projects that as it continues to increase interest rates, unemployment will rise to 4.6% by the end of 2023 – resulting in more than 1m job losses.īut fighting inflation by putting more people out of work is cruel, especially when America’s safety nets – including unemployment insurance – are in tatters.Īs we saw at the start of the pandemic, because the US doesn’t have a single nationwide system for getting cash to jobless workers, they have to depend on state unemployment insurance, which varies considerably from state to state. Putting people out of work is the Fed’s means of reducing workers’ bargaining power and the “upward pressures on wages and prices ”. That way, “supply and demand conditions in the labor market come into better balance over time, easing upward pressures on wages and prices,” says Powell. Their answer is to continue to raise interest rates to slow the economy and put more people out of work, so workers can’t get higher wages. He says “the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers”.īut if the demand for workers exceeds the supply, isn’t the answer to pay workers more? Powell’s solution to inflation is to clobber workers even further. The richest 10% of Americans now own more than 90% of the value of shares of stock owned by Americans. Most of the gains from a more productive economy have been going to the top – to executives and investors. The typical American worker’s wage has been stuck in the mud for four decades. The Fed has been increasing interest rates to slow the economy and thereby reduce the bargaining power of workers to get wage gains.Īt his press conference on 14 December announcing the Fed’s latest interest rate hike, Powell warned that “the labor market remains extremely tight, with the unemployment rate near a 50-year low, job vacancies still very high, and wage growth elevated”. Kroger will have to pay Albertsons $600 million if the deal is terminated.All this is music to the ears of Federal Reserve chair Jerome Powell, because the Fed blames inflation on rising wages. Citi and Wells also jointly arranged $17.4 billion of debt financing to support the deal. Goldman Sachs and Credit Suisse were the financial advisors to Albertsons, while Citigroup and Wells Fargo advised Kroger. "One of the things that will be incredibly important to us is making sure that the (spun out) stores, when we sell them, is making it into a viable, strong business from a competitive standpoint." Kroger CEO McMullen, who will serve as the head of the combined firm, said in an interview with Reuters that they had approached Albertsons a couple of months ago, after the smaller rival began a strategic review process earlier this year. Morgan analysts saying that a deal would underpin the Dutch supermarket major's own M&A appeal. Earlier in the day, Ahold Delhaize (AD.AS) shares also surged on news of a potential deal, with J.P. Shares of Albertsons were down about 6% in morning trading, after closing up 11% on Thursday, while Kroger's stock was down about 3%. Kroger will pay $34.10 for each Albertsons share, representing a premium of about 33% to the stock's closing price on Wednesday, a day before media reports emerged of a deal between the two. "The merger will accelerate our position as a more compelling alternative to larger and non-union competitors," Kroger Chief Executive Officer Rodney McMullen said. Market leader Walmart has been doubling down on its own grocery business and has traditionally used its scale to demand the lowest possible prices from food and beverage suppliers, leaving rivals at a disadvantage in price negotiations. An incremental $1.3 billion will also be invested into Albertsons. Kroger said it expects to reinvest about half a billion dollars of cost savings from deal synergies to reduce prices for customers. With a customer base of 85 million households and 66 distribution centers, Kroger and Albertsons would together have an edge over negotiations on product prices with suppliers, including consumer goods companies, at a time when prices of groceries and essentials are soaring in the country.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |