NEW YORK (AP) — Cracks are showing in one of the main pillars keeping the economy out of a recession: resilient spending by U.S. households.
Consumer goods giants from PepsiCo to Kraft Heinz have described recently how the combination of high inflation and higher interest rates is hurting their lower-income customers.
It’s the culmination of everything getting more expensive amid high inflation, even if it’s not as bad as before, and the drag of higher interest rates because of more expensive credit-card and other payments.
Remarkably resilient spending by U.S. consumers overall has been one of the main reasons the economy has avoided a recession, at least so far. Capitulation at the lower end of the spectrum could be the first crack for the economy.
“The lower income consumer in the U.S. is stretched,” PepsiCo CEO Ramon Laguarta said late last month when reporting better profit than expected, and “is strategizing a lot to make their budgets get to the end of the month. And that’s a consumer that is choosing what to buy, where to buy, and making a lot of choices.”
At Tyson Foods, during a conference call to discuss its better-than-expected results for the latest quarter, one of the first questions asked by a Wall Street analyst was for executives of the company to describe how they see the state of the U.S. consumer.
“As you know, the consumer is under pressure, especially the lower income households,” Chief Growth Officer Melanie Boulden said.
She said the producer of beef, pork, chicken and prepared foods has seen customers shift away from fine dining and toward quick-service restaurants. It’s also seen customers drop down from those not-as-expensive restaurants to eating more at home.
Kraft Heinz CEO Carlos Arturo Abrams-Rivera also said lower-income customers are pulling back from restaurants and convenience stores. That’s even as higher-income earners buy more Kraft Heinz products because they’re spending more on travel and entertainment.
At Mondelez International, Chief Financial Officer Luca Zaramella recently told analysts that U.S. sales of some products particularly popular with lower-income households have been weakening, such as Chips Ahoy cookies.
Much of the commentary recently has come from big food and drink companies, but several retailers will be joining them in upcoming weeks. Walmart, Dollar General and others will offer more evidence about how well or not lower-income Americans are faring.
Of course, it's not just the lowest-earning households bothered by higher prices for seemingly everything.
“We’re in an environment where the consumer is being price discriminating and, again, that’s not just something that’s low income,” McDonald's CEO Chris Kempczinski said after reporting his company's latest quarterly results. “I think all consumers are looking for good value, for good affordability, and so we’re focused on that action.”
A woman pays with cash as she buys from a street vendor, Sept. 26, 2017 in New York. Despite numbers showing a healthy economy overall, lower-income spenders are showing the strain. (AP Photo/Mark Lennihan)
LONDON (AP) — WikiLeaks founder Julian Assange faced a hearing Monday in the High Court in London that could end with him being sent to the U.S. to face espionage charges, or could provide him another chance to appeal his extradition.
The outcome will depend on how much weight judges give to assurances U.S. officials have provided that Assange’s rights won’t be trampled if he goes on trial.
In March, two judges rejected the bulk of Assange's arguments but said he could take his case to the Court of Appeal unless the U.S. guaranteed he would not face the death penalty if extradited and would have the same free speech protections as a U.S. citizen.
The court said that if Assange, who is an Australian citizen, couldn’t rely on the First Amendment then it was arguable his extradition would be incompatible with the European Convention on Human Rights, which also provides free speech and media protections.
The U.S. has provided those reassurances, though Assange's legal team and supporters argue they are not good enough to rely on to send him to the U.S. federal court system.
The U.S. said Assange could seek to rely on the rights and protections of the First Amendment but that a decision on that would ultimately be up to a judge. In the past, the U.S. said it would argue at trial that Assange is not entitled to the constitutional protection because he is not a U.S. citizen.
“The U.S. has limited itself to blatant weasel words claiming that Julian can ‘seek to raise’ the First Amendment if extradited,” his wife, Stella Assange, said. "The diplomatic note does nothing to relieve our family’s extreme distress about his future — his grim expectation of spending the rest of his life in isolation in U.S. prison for publishing award-winning journalism.”
Assange, 52, has been indicted on 17 espionage charges and one charge of computer misuse over his website’s publication of a trove of classified U.S. documents almost 15 years ago. American prosecutors allege that Assange encouraged and helped U.S. Army intelligence analyst Chelsea Manning to steal diplomatic cables and military files that WikiLeaks published.
Commuters emerging from a Tube stop near the courthouse couldn’t miss a large sign bearing Assange’s photo and the words, “Publishing is not a crime. War crimes are.” Scores of supporters gathered outside the neo-Gothic Royal Courts of Justice chanting “Free Julian Assange” and “Press freedom, Assange freedom.”
Some held a large white banner aimed at President Joe Biden, exhorting: “Let him go Joe.”
Assange's lawyers say he could face up to 175 years in prison if convicted, though American authorities have said any sentence would likely be much shorter.
Assange’s family and supporters say his physical and mental health have suffered during more than a decade of legal battles, which includes seven years spent inside the Ecuadorian Embassy in London from 2012 until 2019. He has spent the past five years in a British high-security prison.
Assange’s lawyers argued in February that he was a journalist who exposed U.S. military wrongdoing in Iraq and Afghanistan. Sending him to the U.S., they said, would expose him to a politically motivated prosecution and risk a “flagrant denial of justice.”
The U.S. government says Assange's actions went way beyond those of a journalist gathering information, amounting to an attempt to solicit, steal and indiscriminately publish classified government documents.
If Assange prevails Monday, it would set the stage for an appeal process likely to extend what has already been a long legal saga.
If the court accepts the word of the U.S., it would mark the end of Assange’s legal challenges in the U.K., though it’s unclear what would immediately follow.
His legal team is prepared to ask the European Court of Human Rights to intervene. But his supporters fear Assange could be transferred before the court in Strasbourg, France, could halt his removal.
Judges Victoria Sharp and Jeremy Johnson may also postpone issuing a decision.
If Assange loses in court, he still may have another shot at freedom.
Biden said last month that he was considering a request from Australia to drop the case and let Assange return to his home country.
Officials provided no other details but Stella Assange said it was “a good sign” and Australian Prime Minister Anthony Albanese said the comment was encouraging.
FILE - WikiLeaks founder Julian Assange being taken from court, where he appeared on charges of jumping British bail seven years ago, in London, Wednesday May 1, 2019. Assange faces what could be his final court hearing in England over whether he should be extradited to the United States to face spying charges. (AP Photo/Matt Dunham, File)
London court to decide whether WikiLeaks founder Assange is extradited to the US
London court to decide whether WikiLeaks founder Assange is extradited to the US
