Latest news with #discretionaryspending
Zawya
a day ago
- Business
- Zawya
ECB should change inflation target, researchers to tell policymakers
FRANKFURT - The ECB should abandon targeting headline inflation and focus instead on price growth in discretionary spending to protect the bloc's poorest, a paper to be presented to policymakers at the bank's preeminent research conference argued on Friday. The ECB targets inflation at 2% and a soon-to-be-concluded review will not even discuss the definition of the target as policymakers have long argued that using a different measures, like underlying inflation, or figures incorporating housings costs, could sow confusion. But the paper written for the ECB Forum on Central Banking in Sintra, Portugal next week argues that the current framework disproportionately hurts low income workers and leads to an inferior outcome for society. The logic is that after an interest rate hike, discretionary spending contracts significantly more than needed, triggering a fall in labour demand in sectors producing discretionary goods and services. "These sectors employ a larger share of low-income, hand-to-mouth workers, whose consumption is highly sensitive to income fluctuations," the paper agued. Thus, the initial drop in discretionary spending cascades into a broader decline of overall demand, amplified by this impact on lower-income households. "By targeting discretionary inflation, the central bank provides households with an incentive to smooth their discretionary spending; in turn, this ameliorates the negative employment effects on hand-to-mouth workers in discretionary industries," the paper argued. Although this would lead to a more accommodative policy stance, stabilising discretionary spending inflation allows the economy to more effectively close the so-called output gap, or the difference between potential and actual output, the paper argued.
Reuters
a day ago
- Business
- Reuters
ECB should change inflation target, researchers to tell policymakers
FRANKFURT, June 27 (Reuters) - The ECB should abandon targeting headline inflation and focus instead on price growth in discretionary spending to protect the bloc's poorest, a paper to be presented to policymakers at the bank's preeminent research conference argued on Friday. The ECB targets inflation at 2% and a soon-to-be-concluded review will not even discuss the definition of the target as policymakers have long argued that using a different measures, like underlying inflation, or figures incorporating housings costs, could sow confusion. But the paper written for the ECB Forum on Central Banking in Sintra, Portugal next week argues that the current framework disproportionately hurts low income workers and leads to an inferior outcome for society. The logic is that after an interest rate hike, discretionary spending contracts significantly more than needed, triggering a fall in labour demand in sectors producing discretionary goods and services. "These sectors employ a larger share of low-income, hand-to-mouth workers, whose consumption is highly sensitive to income fluctuations," the paper agued. Thus, the initial drop in discretionary spending cascades into a broader decline of overall demand, amplified by this impact on lower-income households. "By targeting discretionary inflation, the central bank provides households with an incentive to smooth their discretionary spending; in turn, this ameliorates the negative employment effects on hand-to-mouth workers in discretionary industries," the paper argued. Although this would lead to a more accommodative policy stance, stabilising discretionary spending inflation allows the economy to more effectively close the so-called output gap, or the difference between potential and actual output, the paper argued.
Wall Street Journal
10-06-2025
- Business
- Wall Street Journal
DSW Store Chain Owner Pulls Outlook as Sales Fall
Designer Brands withdrew its outlook for the year, citing persistent instability and pressure on discretionary spending. The move came Tuesday as the owner of the DSW store chain swung to a loss and logged lower sales in its fiscal first quarter.
South China Morning Post
10-06-2025
- Business
- South China Morning Post
Malaysia's new luxury tax a hard sell for Anwar as popularity wanes
Many Malaysians may find life's little indulgences suddenly beyond their reach from next month, when fresh taxes bite on premium goods and services like salmon and silk – and even haircuts – after the cash-strapped government said it would raise revenue from so-called luxury spending. Taxes of between 5 and 10 per cent will be imposed on 'discretionary and non-essential goods' as well as financial and beauty services and private education from July 1, the Finance Ministry said in a statement late on Monday. This means Malaysians will have to pay 5 per cent more for premium goods – ranging from king crab to cod, truffle mushrooms and essential oils – and an extra 10 per cent on their hobbies if they are looking to buy racing bicycles or antique artwork. These items all now come under the discretionary spending category. As these luxury items are not typically consumed by most Malaysians, they will not have much effect on inflation, according to the government. Basic necessities such as pet food will be exempt from the new sales tax. Photo: Shutterstock Basic necessities like chicken, rice, milk, medicines and pet food, however, will remain exempt from sales tax, along with construction materials and agricultural inputs like fertiliser, 'to avoid direct pressure on the cost of living' for most Malaysians, the government added.
Al Jazeera
21-05-2025
- Business
- Al Jazeera
Target cuts annual forecast as tariffs, boycotts weigh on sales
Target has slashed its annual forecasts amid a pullback in discretionary spending due to tariff-driven uncertainty and a backlash against shifts in its diversity, equity and inclusion (DEI) policy. The United States big box retailer, which reported its first-quarter earnings on Wednesday, relies on China for 30 percent of its store label goods. While it is on track to reduce its dependency by another 5 percent by the end of the year, tariff-driven uncertainty has caused a slump. In its forecast, the Minneapolis, Minnesota-based retailer expects a low single-digit decline in annual sales. Wall Street analysts expected a marginal increase of 0.27 percent in annual sales, according to the LSEG. Target previously forecasted net sales growth of about 1 percent. This comes as Bank of America recently forecasted that consumers have eased up on spending as the most recent report from The Conference Board showed a slowdown in consumer confidence, which hit a 13-year low in April. The US economy also showed the first contraction in three years in the first quarter. Target's first-quarter comparable sales fell 3.8 percent compared with analysts' estimates of a 1.08 percent decline. It expects annual adjusted earnings of $7 to $9 per share, compared with its prior forecast of $8.80 to $9.80. Analysts were expecting $8.40. 'Expectations were very low for Target's first quarter. Even against that, Target's results came in light,' Michael Baker, a DA Davidson analyst, told the news agency Reuters. Target's stock has performed poorly, down nearly 28 percent this year, in contrast to Walmart's 9 percent gain and Home Depot's 2.3 percent decline. Target's stock is tumbling on the news of its disappointing earnings report. As of 11am in New York (15:00 GMT), it was down 2.91 percent from the market open although it is up more than 1 percent over the past five days. Target also said its first-quarter performance was impacted by changes made to its DEI policies in January. Target ended many of its DEI policies, drawing condemnation as some of its critics noted that its commitment to inclusiveness had helped attract younger, more diverse consumers. The decision generated more attention as it coincided with US President Donald Trump's executive order to eliminate DEI policies in federal agencies and schools. The backlash led to economic boycotts, notably from Reverend Jamal-Harrison Bryant, a Georgia pastor who organised a 40-day 'fast' of Target stores. He has since called for those efforts to continue in recognition of the fifth anniversary of George Floyd's murder by police in Minneapolis, Target's headquarters. CEO Brian Cornell said the reversal of some DEI policies played a role in first-quarter performance but he couldn't quantify the impact. 'Target's [results] do nothing to restore confidence in the company. On the contrary, they are emblematic of a business that has made too many mistakes and has lost its way on several fronts,' GlobalData Managing Director Neil Saunders told Reuters, pointing to issues including poor inventory management and a lack of exciting merchandise. Target's forecast contrasts with its bigger rival Walmart, which maintained its annual forecasts last week but said it would need to pass on higher prices due to tariffs. That has drawn the ire of Trump, who said Walmart should 'eat the tariffs' on imported goods instead of passing on the costs. Unlike Walmart, which generates the bulk of its revenues by selling groceries like bananas, milk, toilet paper and shampoo, a majority of what Target sells falls in the nonessential category – largely apparel, home furnishings and beauty products, which it sources from China. TJX, the parent company of retailer TJ Maxx, also reported its earnings on Wednesday, and while tariffs loom, the company is set to maintain its forecasts. The Massachusetts-based big box retailer expects comparable sales to grow 2 percent to 3 percent during the current quarter. Unlike Target and Walmart, TJ Maxx, relies on expansive sourcing from middlemen in the US, which limits the impact of any new tariffs on China. On a media call, Target executives declined to provide details on potential price increases due to tariffs. Most tariff-related increases could be offset, they said, but acknowledged that raising prices could be a 'last resort'. Cornell said pricing decisions will largely depend on ongoing efforts to source more products from the US and reduce reliance on China. 'That is going to play a very important role,' he said. Rick Gomez, the company's chief commercial officer, said Target is working on negotiating with suppliers, expanding sourcing to other Asian countries beyond China, re-evaluating its product assortment, and adjusting the timing and quantity of orders. 'These efforts are expected to offset the vast majority of the incremental tariff exposure,' Gomez said.
