Holiday shopping surges, flexing strength of US economy
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(NEW YORK) — Holiday spending surged in 2024, blowing past expectations and outpacing customer purchases over the gift-buying season last year, according to data released on Thursday by Mastercard SpendingPulse, which gauges in-store and online retail sales.
The end-of-year flex of consumer strength marks the latest indication of resilient U.S. buying power, which has kept the economy humming despite a prolonged stretch of high interest rates.
Retail sales climbed 3.8% from Nov. 1 to Dec. 24 compared with the same period last year, Mastercard SpendingPulse data showed. The boost in spending exceeded a Mastercard SpendingPulse estimate of 3.2%, while outperforming last year’s growth of 3.1%. The retail sales data excludes automotive purchases.
“Solid spending during this holiday season underscores the strength we observed from the consumer all year,” Michelle Meyer, chief economist at the Mastercard Economics Institute, told ABC News in a statement.
Jewelry sales grew more than any other product category, climbing 4% compared to last year, the data showed. Spending on apparel and electronics also climbed at a solid pace.
The shopping surge was most pronounced online, where spending grew 6.7% compared to the same period last year, the data showed.
While the overall spending reflects the health of U.S. consumers, the pattern of purchases indicates a search for discounts, Meyer said.
“The holiday shopping season revealed a consumer who is willing and able to spend but driven by a search for value as can be seen by concentrated e-commerce spending during the biggest promotional periods,” Meyer added.
The holiday sales growth suggests the U.S. economy has remained robust, even amid high borrowing costs.
Gross domestic product grew at a solid 2.8% annualized rate over three months ending in September, the most recent quarter for which data is available.
The labor market has slowed but proven sturdy. The unemployment rate stands at 4.2%, a historically low figure.
Consumer spending accounts for nearly three-quarters of U.S. economic activity.
The increase in holiday spending coincided with an initial bout of relief for borrowers, as the Federal Reserve cut interest rates by a total of one percentage point over the final few months of the year. However, interest rates still stand at a historically high level of between 4.25% and 4.5%.
Lower interest rates typically stimulate economic activity by making it easier for consumers and businesses to borrow, which in turn fuels investment and spending. However, interest rate cuts usually influence the economy after a lag of several months, meaning the recent lowering of rates likely had little impact on holiday spending.
Earlier this month, the central bank predicted fewer rate cuts next year than it had previously indicated, suggesting concern that inflation may prove more difficult to bring under control than policymakers thought just a few months ago.
Speaking at a press conference in Washington, D.C., earlier this month, Federal Chair Jerome Powell indicated that the willingness to keep interest rates high stemmed in part from the health of the U.S. economy and the shoppers propelling it.
“We think the economy is in a really good place,” Powell said, later adding: “Growth of consumer spending has remained resilient.”
(WASHINGTON) — TikTok on Monday requested the emergency pause of a law set to ban the popular social media app next month.
A temporary lifting of the measure would afford the Supreme Court time to determine whether it should review the law, the company said in a court filing.
The filling arrives days after TikTok — which boasts more than 170 million U.S. users — lost a challenge against the measure in a federal appeals court.
A pause of the law would afford the Supreme Court time to determine whether it should “review this exceptionally important case,” TikTok said in the court filing on Monday.
The law would impose a nationwide ban of TikTok on Jan. 19, 2025, unless the company finds a different owner.
The ban would take effect one day before the inauguration of President-elect Donald Trump, who has signaled that he would seek to reverse a possible ban.
The legal pause would also allow the Trump administration an opportunity to decide its approach to TikTok, the company’s legal filing said.
TikTok had challenged the law on First Amendment grounds, arguing that a potential ban would deny American users access to a popular venue for public expression. Attorneys for the company also disputed claims that the app poses a national security risk.
In a ruling on Friday, a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit rejected TikTok’s bid to overturn the law.
The federal court found merit in security concerns about potential data collection or content manipulation undertaken by the Chinese government.
Each of those two concerns “constitutes an independently compelling national security interest,” the court opinion said. The court cited previous instances in which the Chinese government had pursued data, noting the government’s use of relationships with Chinese-owned businesses.
The China-based app has faced growing scrutiny from government officials over fears that user data could fall into the possession of the Chinese government and the app could be weaponized by China to spread misinformation. TikTok’s parent company, ByteDance, has denied those claims.
There is little evidence that TikTok has shared U.S. user data with the Chinese government or that the Chinese government has asked the app to do so, cybersecurity experts previously told ABC News.
In a statement on Monday, TikTok urged the Supreme Court to intervene on its behalf.
“The Supreme Court has an established historical record of protecting Americans’ right to free speech, and we expect they will do just that on this important constitutional issue,” the company said. “Unfortunately, the TikTok ban was conceived and pushed through based upon inaccurate, flawed and hypothetical information, resulting in outright censorship of the American people.”
(WASHINGTON) — The Federal Reserve on Wednesday will announce its latest decision setting the level of interest rates, just days after President Donald Trump called on the central bank to lower them.
Investors widely expect the Fed to hold interest rates steady, putting the central bank on a potential collision course with Trump. A longstanding norm of independence typically insulates the central bank from direct political interference.
A decision to maintain the current level of interest rates would pause a series of three consecutive interest rate cuts imposed by the Fed over the final months of 2024.
The Fed indicated last month that it would cut interest rates at a slower pace than it had previously forecast, however, pointing to a bout of resurgent inflation. That forecast sent stock prices plummeting, though markets have broadly recovered the losses.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain nearly a percentage point higher than the Fed’s target rate of 2%.
During a virtual address to the World Economic Forum in Davos, Switzerland, last week, Trump demanded a drop in interest rates after calling for a reduction of oil prices set by a group of nations known as OPEC, which includes Saudi Arabia.
The prospect of low oil prices will enable the Fed to dial back its fight against inflation and bring down interest rates, Trump said.
“I’m going to ask Saudi Arabia and OPEC to bring down the cost of oil,” Trump said, later adding: “With oil prices going down, I’ll demand that interest rates drop immediately.”
The U.S. does not belong to OPEC, nor does the president play a role in the organization’s decisions regarding the price of oil sold by its member states.
Several past presidents have sought to influence the Fed’s interest rate policy, including Trump, who repeatedly spoke out in favor of low interest rates during his first term.
On the campaign trail in August, Trump said a U.S. president should have a role in setting interest rates.
Fed Chair Jerome Powell struck a defiant tone in November when posed with the question of whether he would resign from his position if asked by Trump.
“No,” Powell told reporters assembled at a press conference in Washington, D.C., blocks away from the White House.
When asked whether Trump could fire or demote him, Powell stated: “Not permitted under the law.”
The Fed retreated in its fight against inflation over the final months of last year, lowering interest rates by a percentage point. Still, the Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%.
Last month, Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.
Powell also said a recent resurgence of inflation influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.
“It’s common-sense thinking that when the path is uncertain, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dark room full of furniture.”
(NEW YORK) — An Elon Musk ally hired to overhaul the U.S. Department of Treasury has a lengthy record of undertaking hardline reforms in the private sector that demoralized staff and made them fear for their jobs, according to interviews with several former employees at his tech firm.
Tom Krause, the CEO of Silicon Valley-based Cloud Software Group, oversaw layoffs at his company in each of the last three years while instituting a return-to-office mandate, rigid performance ratings, and a request that weekly updates be sent from workers directly to Krause, the former employees told ABC News — echoing the sort of reforms that Musk’s new Department of Government Efficiency has begun undertaking within government agencies.
One former Cloud Software Group employee said she hid her pregnancy for fear it could make her a target of layoffs. An ex-manager said they dreaded filing performance reviews of subordinates, knowing some workers may fall victim to the next cycle of cuts. Another former employee said they avoided expressing unease in company emails or in the messaging app Slack out of concern that it could jeopardize their job.
“They’re taking business practices popular in boardrooms and on golf clubs, and they’re taking them into government,” Kathleen Roan, a former senior content designer at Cloud Software Group who retired in 2024, told ABC News.
Krause in recent days has vaulted into a key position at the Treasury Department, overseeing its $5 trillion payment system, which sends funds to tens of millions of Americans for programs like Medicare and Social Security, the agency’s website says.
In a press release, the agency said Krause brings decades of experience “managing balance sheets” to the agency’s effort to “maximize payment integrity.”
Neither Krause nor Cloud Software Group responded to a request for comment from ABC News.
A ‘hatchet man’
Several former employees ABC spoke with praised Krause as a savvy business leader, and one said they enjoyed their tenure at the company. But most of them requested that they not be identified due to concerns about reprisals.
“There was a whittling away of the things that made you feel like you were a valued employee and then finally ‘Oh, now we’re going to start eliminating jobs,'” Roan said of her time at the company under Krause. “They saw people as expendable.”
Cloud Software Group company was established in 2022 through the acquisition of enterprise software firm Citrix in a private equity-backed $16.5 billion deal, followed by a merger with TIBCO Software.
Krause, who had previously served as president of software at Palo Alto-based Broadcom, was named CEO of the new firm.
Within months, in January 2023, the company cut 15% of its workforce.
“The feeling was that he was there to cut expenses down and be a hatchet man, similar to what’s happening now in the government,” a former human resources employee said. “Everyone was on edge.”
Some of the cost-cutting measures at Cloud Software Group under Krause were first reported by The American Prospect.
Within months of Krause’s arrival, the company also requested that employees return to the office, multiple former employees said.
At the same time, the company closed some offices in an effort to reduce overhead costs, multiple former employees told ABC News. The closures left some workers without an office nearby, making them exempt from the return-to-office requirement, a former employee said.
On Inauguration Day, Trump signed an executive order calling on federal agency heads to mandate in-office work. Musk backed that policy in an op-ed he co-authored in the Wall Street Journal, predicting that mandatory return to work “would result in a wave of voluntary terminations that we welcome.”
‘A much higher level of business discipline’
Employees at Cloud Software Group lost some perks, too.
David Morgan, a former client support provider at Cloud Software Group, said the firm ended his quarterly bonuses, which amounted to $16,000 each year. Workers also stopped receiving “thank you” days, an extra allotment of paid time off, Morgan said.
“Everything we were told would be benefits at the time of hiring was slowly removed,” Morgan said. An Air Force veteran with a disability, Morgan said he received one day of notice before he lost his job as part of a round of layoffs in January 2024, after having been assured that his position had been safe over the months prior.
In a post on LinkedIn that month, Krause said the company had improved but still required personnel changes.
“Our focus on adding value for our long-standing customers while driving a much higher level of business discipline and accountability is bearing fruit — with customer retention and financial results for our first fiscal year as Cloud Software Group coming in ahead of plan,” Krause said.
“But change often means difficult decisions,” he wrote. “While we have a number of areas of the business where our plans involve additional hiring to support our goals, they also mean a pragmatic look at those places where we simply need fewer or different resources.”
In a direct message to Krause over LinkedIn days later, Morgan wrote, “It’s challenging to reconcile my dedication and commitment to the company with the feeling of being let go in a way that seemed to lack empathy.” It does not appear that Krause responded, according to a screenshot of the conversation reviewed by ABC News.
Another policy shift under Krause brought the implementation of employee-performance ratings on a scale of one to three, multiple former employees said.
The ratings took a toll on one former manager, who said the company required them to label at least one subordinate as a low performer. “I had to give one person a low score, even if I thought they didn’t really deserve a low score,” they said. “It was miserable.”
Rating systems have reportedly been deployed as part of the Trump administration’s recent push to cut staff. Senior staff across the Department of Health and Human Services were told to rank thousands of employees in probationary periods, with as much as 40% to be deemed non-mission critical, the Washington Post reported.
‘It’s very alarming’
Daniel Keum, a professor of management at Columbia University Business School, said the apparent overlap between cost-cutting initiatives at Cloud Software Group and some federal agencies exemplifies the Trump administration’s use of tactics borrowed from the private sector.
“In tech, there’s a mentality that you have to break things to make them a lot better,” Keum told ABC News. “When transposed into federal agencies, that mentality becomes very dicey.”
Nearly all former employees who spoke to ABC News expressed shock or concern about the role at the Treasury taken up by Krause, though one expressed indifference and another voiced support.
“It’s very alarming,” said Roan, the former Cloud Software Group design architect.
“He should absolutely not have anything to do with the U.S. Treasury Department,” said Morgan.
In contrast, a former account executive at the company applauded the choice of Krause for the Treasury role, citing his financial acumen.
“I don’t think you can find a better person to swim in the weeds [and] sit in the edifice of the Treasury Department,” the person said.
In January, Cloud Software Group conducted another round of layoffs. That same month, Krause sent an email to all employees asking them to voluntarily send him a message at the end of each week “telling me what you accomplished,” according to a copy of the email reviewed by ABC News.
The approach draws on best practices from “two great entrepreneurs and CEOs that lead the most valuable companies in the world,” Krause wrote, naming Musk and Nvidia CEO Jensen Huang.
In a separate email in recent days, Krause told employees that he plans to continue in his role at the company during his time at the Treasury, according to a copy of the email reviewed by ABC News that was first reported by CRN.
“I am honored to serve our country,” Krause wrote. “Let me be clear — as CEO of Cloud Software Group, I am committed to our company and to you, our employees.”