Big discounts equals high pressure for retailers

Black Friday sign in retail store in Walnut Creek, California.

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Major retailers are under intense pressure to deliver on Black Friday after several of them reported a slowdown in sales heading into the do-or-die holiday shopping season.

Macy’s, Target, Kohl’s, Gap and Nordstrom spoke about a lull in sales in late October and early November. Target cut its holiday-quarter outlook and Kohl’s pulled its forecast, citing the slow sales. Macy’s CEO Jeff Gennette said shoppers kept visiting its stores and website during that lull, but the browsing did not turn into buying. Best Buy CEO Corie Barry said shoppers are showing more interest in sales than usual.

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Those results illustrate an emerging theme of this season: Shoppers are holding out for the biggest and best deals — especially as inflation hits their wallets.

“People are willing to wait and be patient,” said Rob Garf, vice president and general manager of retail for Salesforce, a software company that also tracks shopping trends. “The game of discount chicken is back and consumers will ultimately win.”

That big appetite for deals is fueling higher expectations for a bigger Black Friday weekend. Many major retailers, including Walmart and Target, will remain shuttered on Thanksgiving. Yet a record number of people — 166.3 million — are expected to shop during the weekend, which stretches from Thursday through Cyber Monday, according to an annual survey by the National Retail Federation and Prosper Insights & Analytics.

That is up by nearly 8 million people than a year ago and the highest estimate since NRF began tracking the data in 2017.

Consumers are being more selective with how they are spending

Retailers and industry watchers have been anticipating a more muted holiday season with sales driven more by higher prices than a huge appetite for goods. The National Retail Federation is predicting a 6% to 8% increase in sales, including the boost from nearly record-high levels of inflation.

Travel and experiences are competing more fiercely for Americans’ wallets, too, as Covid-19 concerns fade.

Retail executives that have reported earnings have spoken of a shift back to the pre-pandemic style of gift purchasing. In the past two years, consumers shopped earlier and spread out gift-buying because of worries of shipping delays and out-of-stocks caused by a spike in online sales and congested ports.

This year, retailers once again started their sales early — but geared them toward selling excess inventory and catering to a more value-oriented consumer. Amazon threw a second Prime Day-like sale in October, and Target and Walmart had competing sales around the same time.

Shopping strategically

Not only do you have dollars shifting to travel and entertainment, you also have dollars shifting to needs.

Chris Horvers

JPMorgan analyst

Other factors may have dampened demand in late October and November, too. On recent earnings calls, Gap and Nordstrom executives referred to unseasonably warm weather in the fall, which may have inspired consumers to hold off from dashing to stores to buy winter coats or heavy sweaters.

Plus, some Americans were tuning in to the midterm elections — highly contested races that caught their attention and may have contributed to economic uncertainty, too, said Chris Horvers, an equity research analyst who covers retail for JPMorgan.

But, he added, a weaker start to the holidays has also set off some alarms about the health of the consumer. Retailers have been cautious when sharing hopes for the season — and they have alluded to consumers who are dipping into savings accounts and running up credit card balances, despite putting up stronger-than-feared results for the third quarter.

“Not only do you have dollars shifting to travel and entertainment,” Horvers said, “you also have dollars shifting to needs.”

Plus, he said, it’s not all good news if people show up for Black Friday weekend.

“If the consumer is responsive to promotions this week and shops but then stops spending shortly thereafter, it’s going to reinforce this concern retailers already have that the consumer is only shopping in need and only is going to shop when there’s a discount.”

China property stocks surged amid warnings of weak reality, high expectations

China’s housing prices fell in October due primarily to falling prices in less developed, so-called Tier-3 cities, according to Goldman Sachs analysis of official data.

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BEIJING — China’s real estate sector isn’t yet poised for a quick recovery, despite a rally this month in stocks of major property developers.

That’s because recent support by Beijing don’t directly resolve the main problem of falling home sales and prices, analysts say.

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Last week, property developer stocks surged after news the central bank and banking regulator issued measures that encouraged banks to help the real estate industry. It comes alongside other support measures earlier this month.

Shares of Country Garden, the biggest Chinese developer by sales, have more than doubled in November, and those of Longfor have surged by about 90%. The stocks have already given back some of this month’s gains.

Meanwhile, iron ore futures surged by about 16% this month — Morgan Stanley analysts say about 40% of China’s steel consumption is used in property construction.

The situation is one of “strong expectations, but weak reality,” and market prices have deviated from the fundamentals, Sheng Mingxing, ferrous metals analyst at Nanhua Research Institute, said in Chinese translated by CNBC.

Sheng said it’s important to watch whether apartments can be completed and delivered during the peak construction period of March and April.

This really is a temporary relief in terms of the developers having to meet less debt repayment needs in the near future…

The new measures, widely reported in China but not officially released, stipulate loan extensions, call for treating developers the same whether they are state-owned or not and support bond issuance. Neither regulator responded to CNBC’s request for comment.

“This really is a temporary relief in terms of the developers having to meet less debt repayment needs in the near future — a temporary liquidity relief rather than a fundamental turnaround,” Hong Kong-based analyst Samuel Hui, director, Asia-Pacific corporates, Fitch Ratings, said Wednesday.

“The key is that we still need the fundamental underlying home sales market to improve,” he said, noting homebuyer confidence relies on whether developers can finish building and delivering apartments.

Earlier this year, many homebuyers refused to continue paying mortgages on apartments when construction was delayed. Homes in China are typically sold ahead of completion, generating a major source of cash flow for developers.

A drawn-out recovery

Analysts differ on when China’s property market can recover.

Fitch said a timeline “remains highly uncertain,” while S&P Global Ratings’ Senior Director Lawrence Lu expects a recovery could occur in the second half of next year.

“If this policy is implemented promptly, this will stop the downward spiral to the developers, this will help to restore the investors’ confidence [in] the developers,” he said.

Residential housing sales for the first 10 months of the year dropped by 28.2% from a year ago, the National Bureau of Statistics said last week. S&P Global Ratings said in July it expects a 30% plunge in sales for 2022, worse than in 2008 when sales fell by about 20%.

A slowdown in economic growth, uncertainty about ongoing Covid controls and worries about future income have dampened appetite for buying homes.

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Adding to those worries are falling prices.

Housing prices across 70 cities fell by 1.4% in October from a year ago, according to Goldman Sachs analysis of data released Wednesday.

“Despite more local housing easing measures in recent months,” the analysts said, “we believe the property markets in lower-tier cities still face strong headwinds from weaker growth fundamentals than large cities, including net population outflows and potential oversupply problems.”

The report said housing prices in the largest, tier-1 cities rose by 3.1% in October from September, while Tier-3 cities saw a 3.9% drop during that time.

About two years ago, Beijing began to crack down on developers’ high reliance on debt for growth. The country’s most indebted developer, Evergrande, defaulted late last year in a high-profile debt crisis that rattled investor confidence.

Worries about other real estate companies’ ability to repay their debt have since spread to once-healthy developers.

Trading in shares of Evergrande, Kaisa and Shimao is still suspended.

Read more about China from CNBC Pro

While Covid controls have dragged down China’s growth this year, the real estate market’s struggles have also contributed significantly.

The property sector, including related industries, accounts for about a quarter of China’s GDP, according to analyst estimates.

“I think the real estate sector will become lesser of a drag to the economy in 2023,” Tommy Wu, senior China economist at Commerzbank AG, said Wednesday.

“It is too early to tell whether the measures rolled out so far will be enough to rescue the real estate sector,” he said. “But it feels more assuring now because it seems more likely that more forceful measures will be rolled out if the real estate downturn still doesn’t turn around meaningful in the coming months.”

A longer-term transformation

Ultimately, China’s real estate industry is undergoing a state-directed transformation — to a smaller part of the economy and a business model far less reliant on selling apartments before they’re completed.

The property market has shrunk by roughly one-third compared to last year, and will likely remain the same size next year, S&P’s Lu said.

State-owned developers have fared better during the downturn, he pointed out.

In the first three quarters of the year, Lu said sales by state-owned developers fell by 25%, compared to the 58% sales decline for developers not owned by the state.

And despite recent policy moves, Beijing’s stance remains firm in dissuading home purchases at scale.

Whether it’s messaging from the National Bureau of Statistics or the People’s Bank of China, official announcements this month reiterated that houses are for living in, not speculation — the mantra that marked the early beginnings of the real estate market slump.

UK inflation hits 41-year high of 11.1% as food and energy prices continue to soar

U.K. inflation hit a 41-year high of 11.1% annually in October, as household energy bills and food prices continued to soar.

Dan Kitwood | Getty Images News | Getty Images

LONDON — U.K. inflation jumped to a 41-year high of 11.1% in October, exceeding expectations as food, transport and energy prices continued to squeeze households and businesses.

Economists polled by Reuters had projected an annual increase in the consumer price index of 10.7%, and October’s print marks an increase from the 40-year high of 10.1% seen in September.

Despite the introduction of the government’s Energy Price Guarantee scheme, the Office for National Statistics said the largest upward contributions came from electricity, gas and other fuels.

“Indicative modelled consumer price inflation estimates suggest that the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2%,” the ONS said.

On a monthly basis, the CPI rose 2% in October, matching the annual CPI inflation rate between July 2020 and 2021.

Overall, the cost of housing and household services, which includes energy bills, rose by an all-time high of 11.7% in the 12 months to October 2022, up from 9.3% in September 2022.

“In October 2022, households are paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago,” the ONS said.

“Domestic gas prices have seen the largest increase, with prices in October 2022 being more than double the price a year earlier.”

Food and non-alcoholic beverages also contributed heavily, rising by 16.4% in the 12 months to October to notch its highest annual rate since September 1977.

The country faces its longest recession on record, according to the Bank of England, while the government and central bank are attempting to coordinate the tightening of fiscal and monetary policy in order to rein in inflation.

The Bank raised interest rates by 75 basis points earlier this month, its largest hike in 33 years, to take the Bank Rate to 3%, but challenged the market’s pricing of future rate increases.

Finance Minister Jeremy Hunt will deliver a new fiscal statement on Thursday and is expected to announce substantial tax hikes and spending cuts in a bid to plug a £50 billion-plus hole in the country’s public finances.

This is a breaking news story, please check back later for more.

Joe Biden threatens higher taxes on oil companies amid high gas prices

President Biden says oil company profits 'outrageous' and a 'windfall of war'

President Joe Biden threatened Monday to pursue higher taxes on oil company profits if industry giants do not work to cut gas prices.

Biden has criticized oil companies that have made record-high profits as consumers struggle to keep up with high gas prices. The price of a gallon of gas was $3.76 on Monday, according to AAA, down from a record of over $5 in June but still higher than a year ago.

“Their profits are a windfall of war,” Biden said, referring to Russia’s war in Ukraine, which prompted Western sanctions that reduced oil supply. “It’s time for these companies to stop their war profiteering.”

“If they don’t they’re going to pay a higher tax on their excess profits,” he said.

With eight days to go before Election Day, White House messaging has focused on how Democrats are working to improve the economy and how Republicans would make it worse. Inflation and the economy consistently rank as the top issue for voters — and higher gas prices stretched consumer budgets for much of this year.

U.S. President Joe Biden makes a statement about gasoline prices and oil company profits in the Roosevelt Room at the White House in Washington, October 31, 2022.

Leah Millis | Reuters

Ahead of the election, he has highlighted efforts to reduce consumer costs in a range of other industries. Last week, Biden announced initiatives to address “junk fees” from banks, airlines, cable companies and other industries, aiming to “provide families with more breathing room.”

Any new taxes on oil profits would need congressional approval, which may prove difficult as Democrats control both chambers of Congress by slim margins. Progressives like Senators Bernie Sanders of Vermont and Elizabeth Warren of Massachusetts previously floated the idea.

Republicans, who generally support lower taxes, also hope to win back one or both chambers of Congress in the Nov. 8 midterms.

Biden stressed that he is “a capitalist” but added that companies are making “profits so high it’s hard to believe.”

Shell made $9.5 billion in profits in the third quarter, almost double what it made in the same period last year, Biden said. Exxon’s profits in the third quarter were $18.7 billion, nearly triple what Exxon made last year and the most in its 152-year history.

Biden has made pleas to oil companies to increase production rather than to enrich shareholders in recent weeks as the price of gas remains high.

Earlier this month, Biden announced the release of 15 million barrels of crude oil from the Strategic Petroleum Reserve. The White House has released about 165 million barrels of crude from the reserve since the beginning of the year, out of a total that it said would be around 180 million. 

Biden promised in his earlier speech to purchase oil to refill the reserve once the price hits $70 a barrel. He said companies should therefore invest now in increased production with the confidence that the government will purchase the oil later.

The American Petroleum Institute, an oil and natural gas trade association, did not immediately respond to a request to comment on Biden’s remarks.

High court Justice Alito assured Kennedy on abortion rights: NY Times

Senator Ted Kennedy (D-MA) boards an elevator after walking off the floor of the U.S. Senate after a roll call vote to achieve cloture on the nomination of Judge Samuel Alito to the US Supreme Court passed 72 to 25 January 30, 2006 in Washington, DC.

Chip Somodevilla | Getty Images

Supreme Court Justice Samuel Alito, who wrote the majority opinion this summer overturning the abortion rights case Roe v. Wade, assured the late Sen. Ted Kennedy in 2005 that he considered a key legal basis for Roe to be “settled,” a new report reveals.

“I am a believer in precedents,” the conservative Alito told Kennedy, the liberal Massachusetts Democratic senator wrote in his diary in November 2005, The New York Times reported.

“I believe that there is a right to privacy. I think it’s settled as part of the liberty clause of the 14th Amendment and the Fifth Amendment,” Alito said, according to the diary citation.

“So I recognize there is a right to privacy. I’m a believer in precedents. I think on the Roe case that’s about as far as I can go,” Alito said to Kennedy, a staunch defender of abortion rights who died in 2009.

The comment was made as Alito was seeking Senate confirmation to the court during a visit to Kennedy’s office, wrote John Farrell in the Times report. Farrell’s new book, “Ted Kennedy: A Life,” which features details of the diary entries, is being published Tuesday.

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The 1973 decision in Roe established for the first time that there was a federal constitutional right to abortion.

Roe was based on a prior high court decision, Griswold v. Connecticut, which in 1965 found that there was a constitutional right to marital privacy, in a case related to married couples having been barred from using birth control.

Conservatives for decades attacked Roe as flawed, in part with the argument that the Constitution does not explicitly state individuals have a right to privacy, much less one to abortion.

Associate Justice Samuel Alito poses during a group photo of the Justices at the Supreme Court in Washington, April 23, 2021.

Erin Schaff | Pool | Reuters

During his meeting with Alito, Kennedy was skeptical of the judge, who as a lawyer in the Justice Department during the Reagan administration had written a memo in 1985 that noted he opposed Roe.

“Judge Alito assured Mr. Kennedy that he should not put much stock in the memo,” the Times reported.

“He had been seeking a promotion and wrote what he thought his bosses wanted to hear. ‘I was a younger person,’ Judge Alito said. ‘I’ve matured a lot.’ “

Alito also said that his views on Roe being erroneously decided were “personal,” according to Kennedy’s diary.

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“Those are personal,” Alito said, Kennedy wrote in the diary. “But I’ve got constitutional responsibilities and those are going to be the determining views.”

Despite that assurance, Kennedy voted against confirming Alito to the Supreme Court.

Alito didn’t return a request submitted to the Supreme Court’s press office seeking comment on the Times article.

In July, Alito wrote the majority decision in the case Dobbs v. Jackson Women’s Health Organization, which overturned both Roe and another landmark abortion rights case, Planned Parenthood v. Casey, which was decided in 1992.

“Roe was egregiously wrong from the start,” Alito wrote.

“Its reasoning was exceptionally weak, and the decision has had damaging consequences. And far from bringing about a national settlement of the abortion issue, Roe and Casey have enflamed debate and deepened division,” he wrote, noting that those cases “must be overruled.”

“The Constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provision, including the one on which the defenders of Roe and Casey now chiefly rely — the Due Process Clause of the Fourteenth Amendment,” he wrote.

It was that amendment, the 14th, which Alito reportedly had told Kennedy almost 17 years earlier established a right to privacy.

But Alito’s opinion in Dobbs said that abortion is a “fundamentally different” right than ones such as “intimate sexual relations, contraception, and marriage,” because “it destroys … ‘fetal life.'”

The Dobbs ruling meant that individual states would again have the authority to strictly limit or even ban abortion, or to allow it with loose restrictions.

Abortion has been largely banned in at least 13 states since Dobbs was issued.

In a concurring opinion with Dobbs, Alito’s fellow conservative, Justice Clarence Thomas, wrote that other landmark rulings by the court that established gay rights and the right to contraception should be reconsidered now that Roe had been tossed out.

Thomas said in his opinion that those rulings “were demonstrably erroneous decisions.”

The cases he mentioned are Griswold v. Connecticut; Lawrence v. Texas, which in 2003 established the right to engage in private sexual acts; and the 2015 ruling in Obergefell v. Hodges, which said there is a right to same-sex marriage.

Thomas noted that all those decisions are based on interpretations of the due process clause of the 14th Amendment.

He wrote that the constitutional clause guarantees only “process” for depriving a person of life, liberty or property cannot be used “to define the substance of those rights.”

WWE stock hits 52-week high in Vince McMahon scandal aftermath

Vince McMahon attends a press conference to announce that WWE Wrestlemania 29 will be held at MetLife Stadium in 2013 at MetLife Stadium on February 16, 2012 in East Rutherford, New Jersey.

Michael N. Todaro | Getty Images

World Wrestling Entertainment is defying broader market trends this year.

The company’s stock is up more than 50% in 2022, hitting a 52-week high Monday, and trading at levels it hasn’t seen since summer 2019. The S&P 500, by comparison, is down more than 20% this year.

The stock’s strong performance this year occurred WWE’s live wrestling-events business came roaring back after months of Covid restrictions and the company increasingly became the subject of sale talks. The stock continued to do well after the company’s longtime leader and biggest shareholder, Vince McMahon, retired from the company over the summer in a cloud of scandal.

Shares of the company were effectively flat Monday after hitting $76.90. WWE’s market capitalization is over $5.6 billion.

Industry insiders believe WWE could be an acquisition target. A deal could come before the company’s next U.S. TV rights renewal — likely to be announced in mid-2023. WWE’s current U.S. streaming deal with NBCUniversal’s Peacock expires in 2026.

WWE has also had to deal with McMahon’s controversies. He retired in July after it was revealed that he had paid nearly $20 million in previously unrecorded expenses.

Of those payments, almost $15 million went to settle sexual misconduct allegations from four women against McMahon over the last 16 years, and $5 million went to Donald Trump’s foundation from donations made in 2007 and 2009.

WWE has hinted that the hush payments to alleged victims, already the subject of an ongoing independent review overseen by the company’s board, are under investigation by other entities.

Still, WWE stayed in the family. Stephanie McMahon, McMahon’s daughter, took over as chairwoman and co-CEO alongside Nick Khan, who also serves as the company’s president. Stephanie’s husband and longtime wrestler Paul “Triple H” Levesque has taken over as the company’s top creative executive, the role the elder McMahon had before he retired.

Vince McMahon, 77, remains the largest stakeholder in the company, holding about 32% of shares.

Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.

–CNBC’s Chris Hayes contributed to this report.

High inflation has many Americans tweaking their holiday travel plans

D3sign | Moment | Getty Images

Travelers are shifting their holiday getaway plans to avoid busting their budgets amid high inflation, according to a new Bankrate survey.

Forty-three percent of U.S. adults are planning to take overnight leisure trips between Thanksgiving and New Year’s; of them, 79% are adapting to rising prices for travel in various ways, according to the survey.

For example, 26% are shortening their trips, 25% are selecting cheaper accommodations or destinations, 24% are taking fewer trips, 23% are traveling shorter distances and 23% are driving instead of flying, according to the survey.

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The dynamic disproportionately impacts travelers with lower household incomes: 86% of those with less than $50,000 of annual income are adjusting their travel plans versus 70% of those earning more than $100,000, according to Bankrate.

“Travel costs have surged, so it’s important to plan ahead and factor these expenses into your overall holiday budget,” Ted Rossman, senior industry analyst at Bankrate, said. 

“I suggest making airplane and hotel reservations earlier than in previous years, since demand will probably outpace supply,” he added. “This summer, air travel was particularly messy as consumers unleashed pent-up demand and the industry couldn’t keep pace.”

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Costs for airfare, hotels and rental cars had been rising quickly through 2021 along with consumer prices in the broader U.S. economy, though retreated a bit in recent months.

Airline fares in August were up 33% versus a year earlier and by 9.3% relative to 2019, according to the consumer price index, an inflation gauge.

Meanwhile, rental car prices were down 6.2% versus August 2021, while hotel lodging was up 4.5% and gasoline prices increased 25.6% over the same period. Dining out at restaurants is also 8% more expensive.

10 U.S. metros where high earners have seen the most wage growth

Worker wages have risen since the onset of the coronavirus pandemic. That’s true for high, median and low-income workers, and for hourly and salaried workers alike. “It’s labor shortages,” says Sinem Buber, lead economist at ZipRecruiter. There aren’t enough workers to fill certain roles, driving up the offers employers are willing to make.

When it comes to high-income earners, for example, those making salaries in the 95th percentile ― or those making more than 94% of salaried workers ― average earnings across the U.S. went from $299,301 per year in 2019 to $327,254 per year in 2021, according to new data tracking 26 million salaried workers across the U.S. from HR company ADP.

And depending on where you are in the country, you might’ve seen a greater wage hike than others.

ADP surveyed the 53 biggest metro areas in the U.S. (those with more than 1 million residents) to see where salaried workers saw the biggest wage gains. Here are the 10 metro areas with the greatest gains for high-income earners, including their percent gain and average annual salaries in 2019 and 2021.

San Francisco-Oakland-Hayward, California

Percent gain: 15.99%

2019 annual salary: $525,415

2021 annual salary: $609,447

New Orleans-Metairie, Louisiana  

Percent gain: 16.42%

2019 annual salary: $208,149

2021 annual salary: $242,331

San Diego-Carlsbad, CA

Percent gain: 18.59%

2019 annual salary: $338,984

2021 annual salary: $402,000

Jacksonville, Florida 

Percent gain: 18.81%

2019 annual salary: $225,480

2021 annual salary: $267,901

Nashville-Davidson-Murfreesboro-Franklin, Tennessee

Percent gain: 20.15%

2019 annual salary: $283,209

2021 annual salary: $340,280

Miami-Fort Lauderdale-West Palm Beach, Florida

Percent gain: 22.13%

2019 annual salary: $275,132

2021 annual salary: $336,020

Sacramento-Roseville-Arden-Arcade, California

Percent gain: 22.45%

2019 annual salary: $274,540

2021 annual salary: $336,187

Seattle-Tacoma-Bellevue, Washington

Percent gain: 25.44%

2019 annual salary: $399,066

2021 annual salary: $500,570

Buffalo-Cheektowaga-Niagara Falls, New York

Percent gain: 25.71%

2019 annual salary: $235,691

2021 annual salary: $296,287

San Jose-Sunnyvale-Santa Clara, California  

Percent gain: 27.87%

2019 annual salary: $541,438

2021 annual salary: $692,341

A few factors may be contributing to this part of the workforce’s wage gains.

The U.S. brings in top talent from around the world to fill positions in fields like tech. But the pandemic halted or slowed many of these activities, “So the talent shortage we are seeing at the high end of the spectrum is also because of low international immigration,” says Buber. There aren’t as many people around to fill those coveted positions.

As a result, companies are competing for a smaller base of local talent and responding by offering them better packages. While this can include a higher salary, says Buber, often this includes hiring bonuses, which can get reflected in the ADP data. This could be the case in tech hubs like San Francisco and Seattle.

Many of these positions can also be done remotely. As a result, throughout the pandemic, people in the 95th percentile may have moved to cheaper cities, suburbs or states to get the most of their salaries.

“Their departures likely thinned the middle of the salary distribution,” says Issi Romem, a fellow at the ADP Research Institute and co-author of the report, “shifting some high earners down the percentile chain and giving the 95th percentile spot to an even higher earner.” This could be the case in historically expensive cities like San Francisco.

Conversely, it’s possible those people moving out of expensive metros and into less expensive ones shifted the wage scales in the latter. While it seems like wages have hiked in the latter, in fact, there are simply more people making higher salaries there as a result of migration. This could be the case in some of the Californian suburbs highlighted above, says Buber.

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2-year Treasury tops 4.2%, a 15-year high as Fed jolts short-term rates higher

Yields climbed on Friday and the yield on the 2-year Treasury note notched a new 15-year high as markets assessed the Federal Reserve’s latest rate hike and what it means for the economy going forward.

The policy-sensitive 2-year Treasury hit a fresh 15-year record of 4.266% earlier in the session but was last trading at 4.19%.

Meanwhile, the yield on the 10-year hit an 11-year high of 3.829% earlier in the session but last traded two basis points lower at 3.685%.

Yields and prices move in opposite directions, with one basis point equaling 0.01%.

The climb in yields came as markets weighed the implications of the Federal Reserve’s latest policy decisions as it signals its willingness to accept a recession ahead if it means an end to surging inflation.

The Fed on Wednesday delivered another large 75 basis point interest rate hike and indicated it intends to stay aggressive, bumping up interest rates to 4.6% in 2023 and 4.4% by the end of 2022. Global central banks took a note from the Fed’s playbook, implementing their own substantial hikes in the wake of the decision.

Even with this week’s stark move higher in yields, many analysts believe yields could climb higher.

“While we are likely much closer to the end of the increase in global rates then we are the beginning, it’s still going to take a peak in global inflation and a drop in global economic activity for yields to stop this rise and begin to decline,” wrote Tom Essaye of the Sevens Report in a note to clients Friday.

Komal Sri-Kumar, president of Sri-Kumar Global Strategies, told CNBC’s “Squawk Box” on Friday that he sees the 10-year hitting at least 4% and added that the steepening inverted yield curve suggests a recession ahead. Many analysts interpret short-term rates being significantly higher than long-term rates as a signal of a downturn.

“The bond market anticipates a recession in the first half of 2023 and is already looking forward to the eventual recovery,” he said. “That’s what happened in 2006, 2007 — we are following the same pattern.”

Electric vehicle (EV) sales set to hit an all-time high in 2022, IEA says

Tesla electric cars photographed in Germany on March 21, 2022. According to the International Energy Agency, electric vehicle sales are on course to hit an “all-time high” this year.

Sean Gallup | Getty Images News | Getty Images

Electric vehicle sales are on course to hit an all-time high this year, but more work is needed in other sectors to put the planet on course for net-zero emissions by 2050, according to the International Energy Agency.

In an announcement accompanying its Tracking Clean Energy Progress update, the IEA said there had been “encouraging signs of progress across a number of sectors” but cautioned that “stronger efforts” were required to put the world “on track to reach net zero emissions” by the middle of this century.

The TCEP, which is published yearly, looked at 55 parts of the energy system. Focusing on 2021, it analyzed these components’ progression when it came to hitting “key medium-term milestones by the end of this decade,” as laid out in the Paris-based organization’s net-zero pathway.

On the EV front, the IEA said global sales had doubled in 2021 to represent nearly 9% of the car market. Looking forward, 2022 was “expected to see another all-time high for electric vehicle sales, lifting them to 13% of total light duty vehicle sales globally.”

The IEA has previously stated that electric vehicle sales hit 6.6 million in 2021. In the first quarter of 2022, EV sales came to 2 million, a 75% increase compared to the first three months of 2021.

Read more about electric vehicles from CNBC Pro

The IEA said both EVs and lighting — where more than 50% of the worldwide market is now using LED tech — were “fully on track for their 2030 milestones” in its net-zero by 2050 scenario.

Despite the outlook for EVs, the IEA separately noted that they were “not yet a global phenomenon. Sales in developing and emerging countries have been slow due to higher purchase costs and a lack of charging infrastructure availability.”

Overall, the rest of the picture is a more challenging one. The IEA noted that 23 areas were “not on track” with a further 30 deemed as needing more effort.

“Areas not on track include improving the energy efficiency of building designs, developing clean and efficient district heating, phasing out coal-fired power generation, eliminating methane flaring, shifting aviation and shipping to cleaner fuels, and making cement, chemical and steel production cleaner,” the IEA said.

The shadow of 2015’s Paris Agreement looms large over the IEA’s report. Described by the United Nations as a “legally binding international treaty on climate change,” the accord aims to “limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.”

Cutting human-made carbon dioxide emissions to net-zero by 2050 is seen as crucial when it comes to meeting the 1.5 degrees Celsius target.

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In a statement issued Thursday the IEA’s executive director, Fatih Birol, appeared cautiously optimistic. “There are more signs than ever that the new global energy economy is advancing strongly,” he said.

“This reaffirms my belief that today’s global energy crisis can be a turning point towards a cleaner, more affordable and more secure energy system,” he added.

“But this new IEA analysis shows the need for greater and sustained efforts across a range of technologies and sectors to ensure the world can meet its energy and climate goals.”

The IEA’s report comes at a time when the debate and discussion about climate goals and the future of energy has become increasingly fierce.

This week, the U.N. secretary general said developed economies should impose an extra tax on the profits of fossil fuel firms, with the funds diverted to countries affected by climate change and households struggling with the cost-of-living crisis.

In a wide-ranging address to the U.N. General Assembly in New York, Antonio Guterres described the fossil fuel industry as “feasting on hundreds of billions of dollars in subsidies and windfall profits while households’ budgets shrink and our planet burns.”