Why the average American family's net worth increased 37% during the pandemic


Tesla (TSLA.O) on Wednesday joined General Motors (GM.N) and Ford (F.N) in being cautious about expanding electric vehicle production capacity, citing economic uncertainties and underscoring fears of a slowdown in demand.

Tesla CEO Elon Musk said he was worried that higher borrowing costs would prevent potential customers from affording its vehicles despite substantial price cuts and that he would wait for clarity on the economy before ramping up its planned factory in Mexico.

"People hesitate to buy a new car if there's uncertainty in the economy," Musk said on a post-earnings call where he also talked about "paycheck-to-paycheck" pressures on American workers. "I don't want to be going into top speed into uncertainty."

Musk's comments, which sent Tesla shares down more than 4% in after-market trading, come after warning bells from other automakers and EV startups.

GM said on Tuesday it would delay production by a year of Chevrolet Silverado and GMC Sierra electric pickup trucks at a plant in Michigan, citing flattening demand for EVs.

Detroit peer Ford said last week it would temporarily cut one of three shifts at the plant that builds its electric F-150 Lightning pickup truck. The automaker in July slowed its EV ramp-up, shifting investment to commercial vehicles and hybrids.

EV startup Lucid (LCID.O) on Tuesday reported a near 30% plunge in third-quarter production and only a marginal increase in deliveries despite big discounts, raising worries about demand for its Air luxury sedan.

Amazon-backed Rivian (RIVN.O), which makes electric pickup trucks and sport utility vehicles, also disappointed investors this month when it shied away from raising its full-year production forecast despite stronger-than-expected third-quarter numbers.

"It does highlight that there could be a slowdown in EV (demand) in the near term," said Tom Narayan, global autos analyst at RBC Capital Markets. "But it has more to do with pricing and affordability than a rejection of EVs."

Narayan said he expected this to be a "dip" that improves as prices of EVs fall and lower-priced variants are available.

Automakers have billions of dollars in EV-related investments riding on how the next several quarters play out. Worries about slowing demand have been rising just as companies come to grips with supply chain constraints that wrecked production plans.

Reuters reported in July that the U.S. market was not growing fast enough to prevent unsold EVs from stacking up at some auto dealerships.

To prevent demand from waning, market leader Tesla, with industry-leading profit margins, has been the first and most aggressive in slashing prices, forcing others to follow suit and squeezing margins.

But Musk said higher financing costs due to rising interest rates meant to fight stubbornly high inflation in some cases almost entirely offset the price reductions, making consumers looking to shift away from gas-guzzling vehicles wary.

"If interest rates remain high ... it's that much harder for people to buy the car. They simply can't afford it," Musk said, adding he would "accelerate" expansion of the Mexico factory if interest rates come down.

That is not expected in the United States until June 2024, based on current market estimates, with recent robust economic data suggesting the central bank might leave interest rates higher for longer.

Netflix (NFLX.O) increased subscription prices for some streaming plans in the United States, Britain, and France on Wednesday as it shattered expectations for new customers, sending its shares surging 13%.

Almost 9 million subscribers joined Netflix around the globe in the third quarter, surpassing Wall Street analysts' forecast for 6 million, according to LSEG. Netflix said it expected a similar number of additions in the current quarter.

The strong performance showed Netflix was thriving despite Hollywood labor tensions that shut down a large swath of U.S. production. Netflix makes many of its shows and movies overseas, which accounted for the bulk of its new sign-ups.

Netflix pointed to the global success of "One Piece," a live-action adaptation of the venerable Japanese manga series and an example of its hefty investment in stories with local resonance that travel the world. The streaming giant also attracted new audiences to long-running television shows, such as the legal drama "Suits," which it licensed from Comcast (CMCSA.O), and HBO's World War Two series "Band of Brothers."

"These are the times I'm glad we have such a rich and deep and broad programming selection," Netflix co-CEO Ted Sarandos said after the release of the quarterly results. "The same was true during COVID when we were able to manage the slate through a prolonged and pretty unpredictable production interruption."

Hollywood's film and television writers ratified a new contract this month, but actors remain on strike. Sarandos said Netflix was "totally committed to ending this strike."

The company's third-quarter customer gains represented its strongest quarterly uptick since the second quarter of 2020 when lockdowns early in the global pandemic led to an unprecedented surge in streaming subscriptions.

Netflix increased the U.S. price of its premium ad-free plan by $3 per month to $22.99. The cost for premium rose by 2 pounds to 17.99 pounds in Britain and by 2 euros to 19.99 euros in France.

Investors welcomed the news, sending Netflix shares climbing to $390.80 in extended trading from a close of $346.19.

PP Foresight analyst Paolo Pescatore said the third-quarter growth at Netflix was a testament to its recent crackdown on password sharing and the opportunities for growth as it moves into advertising.

"It is firing on all cylinders, with recent efforts all heading in the right direction," he said.


The price hikes were announced in an earnings report that showed the company's global subscriber base reached 247 million at the end of September.

Substantial subscriber gains came in Europe, the Middle East, and Africa, where Netflix added nearly 4 million subscribers. More than 70% of its members now reside outside the United States.

During the quarter, "Suits" became the most-watched title across film, and original TV and acquired TV on streaming in the U.S. for 12 straight weeks after it hit Netflix. The series, starring Prince Harry's wife, Meghan Markle, originally aired on the USA cable network from 2011 to 2019.

"As the competitive environment evolves, we may have increased opportunities to license more hit titles," Netflix said in its quarterly letter to shareholders.

The company posted revenue of $8.54 billion, in line with analyst forecasts. Earnings came in at $3.73 per share, ahead of Wall Street's expectation of $3.49.

Netflix's forecast for fourth-quarter revenue of $8.69 billion was slightly below analysts' estimates of $8.77 billion.

The writer and actor strikes prompted Netflix to revise its projections on content spending to $13 billion in 2023, assuming the studios reach a settlement with striking actors "in the near future."

That was down from the $17 billion it expected to spend.

Netflix said it continued to dominate viewership. Netflix programming accounted for 8% of television screen time, second only to YouTube, the company said, citing Nielsen data.

The German government on Wednesday proposed steps to speed up the integration of tens of thousands of Ukrainian refugees into its labor market, calling on companies to loosen their German language requirements and offer extra training.

The government is hoping to enlist the support of companies, employment agencies, and associations for a voluntary commitment, and appointed a special representative from the Federal Employment Agency, Daniel Terzenbach, to liaise with them.

European countries have not fully seized on the opportunity to plug workforce gaps presented by the arrival of Ukrainian refugees since last year, even though many of those fleeing the war are highly educated or have sorely needed skills.

The German economy urgently needs labor and skilled workers, Labour Minister Hubertus Heil said on Wednesday. "Work also leads to integration."

According to the Federal Employment Agency, the employment rate of Ukrainians in Germany is currently 19%.

"But this is far from enough," Heil told a press conference.

Speaking at the same event, Terzenbach said he wants to establish which municipalities have the most childcare available in order to get mothers into work in a targeted way.

The new steps are geared towards giving help, especially to tens of thousands of Ukrainian refugees who have completed or are about to complete the integration courses offered by the German government.

Once refugees complete such courses, they are expected to seek employment or risk losing their state benefits. Job centers are meant to help match the right workers with the right qualifications.

Since Russia's invasion in February 2022, more than one million people from Ukraine have sought protection in Germany.

According to government data, there were about 196,600 employed Ukrainian nationals in Germany in July, of which 154,600 were in employment subject to social security contributions and 42,000 in lower-earning or part-time work.

As of September, there were 205,970 unemployed Ukrainians in Germany.

Ford Motor (F.N) said late on Wednesday it is laying off another 150 workers in Michigan because of the ongoing United Auto Workers strike, bringing the total to 2,730 workers furloughed.

Ford said the UAW's walkout last week at its Kentucky Truck Plant prompted the new layoffs at a Michigan axle plant. Another 16,600 Ford employees are on strike at three assembly plants, including Kentucky Truck, the company's largest plant worldwide.

The targeted strike against the Detroit Three automakers Ford, General Motors (GM.N), and Chrysler-parent Stellantis (STLAM.MI) began on Sept. 15.

Americans' family finances overall improved in recent years, despite the economic upheaval caused by the pandemic, according to a new survey from the Federal Reserve.

The average family's net worth jumped 37% between 2019 and 2022. That's the largest three-year increase since the Fed began conducting the survey more than three decades ago.

The survey also found the wealth gap between rich and poor narrowed somewhat during that period. Temporary government relief measures tied to the pandemic may have contributed to the widespread gains.

Job losses or COVID bonuses shifted family financial dynamics

Median family income also rose during the survey period, but only by 3%, and much of that increase was concentrated among people on the upper rungs of the income ladder.

Still, it wasn't the same for all. The income portion of the survey focused on 2021 when more than one in four families said their income was significantly higher or lower than usual. Early in the pandemic, many people lost jobs or dropped out of the workforce, while many others who continued working saw increased wages and COVID-related bonuses.

The central bank has conducted a survey of consumer finances every three years since 1989.

Fewer bankruptcies, more homeowners

Debt levels in the 2022 survey showed little change since 2019. But families were in a better position to cover those debts than they had been earlier, and the share of families who'd filed for bankruptcy in the past five years fell to just 1.3% from 2% in 2019 and 3% in 2016.

Nearly two out of three families were homeowners in 2022 — a modest increase from three years earlier. Rising home values contributed to the gain in household wealth during the period. But they also made homes less affordable for those looking to break into the market.

In 2022, the median home cost more than 4 and a half times the median family income. Affordability has gotten worse this year, as home prices have stayed high and mortgage rates have continued to climb.

Costco announced Wednesday that CEO W. Craig Jelinek will step down in January. He’ll be succeeded by the company’s president, Ron Vachris, who has been with Costco for more than 40 years.

Jelinek has been CEO of the members-only warehouse chain since 2012 when he took over from Costco co-founder James Sinegal.

Vachris started with Costco as a forklift driver and worked his way into management. The company based in Issaquah, Washington, said he has served in every major role related to Costco business operations and merchandising.

Jelinek will remain with the company through April in an advisory role and will continue as a member of Costco’s board.

With just over one month remaining until Thanksgiving and the start of the winter holiday season, Americans are already eyeing grocery prices to gauge how much their festive gatherings are going to cost this year. However, one major retailer is ignoring inflation in order to keep a traditional turkey dinner more affordable.

John Furner, president and CEO of Walmart U.S. -- the largest retailer in the country -- joined "Good Morning America" on Wednesday and, in an ABC News Exclusive, revealed Walmart's new plan to make Thanksgiving more affordable.

PHOTO: Walmart U.S. CEO John Furner announces the cost of a Thanksgiving meal will be less this year, Oct. 18, 2023, on "Good Morning America."
Walmart U.S. CEO John Furner announces the cost of a Thanksgiving meal will be less this year, Oct. 18, 2023, on "Good Morning America."
ABC News

"Last Thanksgiving we decided we were going to sell a Thanksgiving meal at the same price as 2021," Furner said of the strategy they implemented across other major holidays. "This year, finally, we are able to have the Thanksgiving basket that the prices are coming down versus a year ago -- we are really proud to say that the price of a Thanksgiving meal is going to come down."

This year, the Thanksgiving basket from Walmart includes ingredients to make a meal for up to 10 people, which Furner said will "sell for around $2 less than last year" at just over $70.

Furner added that the move comes on the heels of consumer feedback: "92% of our customers tell us they are concerned about food inflation."

PHOTO: Walmart U.S. CEO John Furner announces the cost of a Thanksgiving meal will be less this year, Oct. 18, 2023, on "Good Morning America."
Walmart U.S. CEO John Furner announces the cost of a Thanksgiving meal will be less this year, Oct. 18, 2023, on "Good Morning America."
ABC News

Inflation is up 3.7% from a year ago and, according to Moody's Analytics, American households are spending $235 more per month on the same goods and services than they spent a year ago.

As Americans have seen shifts in supply chains, changes in consumer habits, and other financial impacts that came out of the pandemic, Furner said "It's been an interesting couple years -- from last year, when inflation really started things like food and consumables picked up and we see more people eating at home."

"Whether it's food or getting ready for guests, people are buying early," Furner also said.

Starting Nov. 1, the holiday food basket at Walmart will be offered at a lower price through Dec. 26. There will be two purchasing options: one with ingredients for customers who want to cook from scratch, and one for customers who like more convenience, ready-to-bake options.

"Walmart's Thanksgiving meal includes customers' favorites and fixings including many national brands, from turkey (for under $1/lb.!) and ham to stuffing and pumpkin pie," a Walmart press release stated.

The holiday meal baskets are available for online order, pickup, and delivery, as well as in-store.

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