Retail Sales, Intel, Apple, and More!
Editor’s Note: Howdy, dear reader! I hope you are having a great week so far.
Let’s get to it!
Retail Sales Beat August Estimates
Despite concerns about the potential of recession, the Commerce Department’s August retail report indicated that you can’t keep a good consumer down.
According to the report, spending at U.S. retailers rose 0.1% from July. That’s significantly higher than the 0.2% dropoff in spending that economists had been expecting.
In addition, the Commerce Department revised July’s report to show a 1.1% monthly gain.
“The stronger-than-expected retail sales data for August suggest that, boosted by rapid wealth gains and falling energy prices, consumers continue to spend freely despite the labor market slowdown,” economist Olivia Cross of Capital Economics North America wrote in a note to clients.
Consumer spending is an important indicator of America’s economic health. After all, it accounts for roughly two-thirds of the U.S.’s gross domestic product (GDP).
But despite the healthy spending pattern reported by the Commerce Department, there are some recent indications that shoppers may pull back in the near term.
For one, a Federal Reserve Bank of New York survey in August showed a 5% annual increase in household spending. A previous survey conducted in April indicated a 4.6% uptick.
However, the survey also found that on a monthly basis, expected spending growth slowed slightly to 3%. Although that remains higher than pre-pandemic levels, it’s significantly lower than the 5.4% expected monthly growth reported in April 2022.
An additional survey conducted by Bank of America (NYSE: BAC) showed that consumers expect to pull back on spending over the next three months, as well as over the next year.
According to analyst Robert Ohmes, the survey is “pointing to a picture of a consumer that, incrementally, is getting even more discerning about where they spend their money.”
Ohmes noted that consumers are growing more cautious due to increased food costs.
“Today, it’s a 27% increase versus what you were paying five years ago. If you’re making 15% more money, but your grocery prices are up 27%, you have to buy less of something to be in the same place.”
Intel to Restructure, Make Foundry Unit Independent Business
Shares of Intel (NSDQ: INTC) rose this week after the company announced its plan to turn its foundry unit into an independent business.
According to CEO Pat Gelsinger, restructuring Intel would allow the foundry business to seek independent sources of funding.
Unlike other chip companies such as Nvidia (NSDQ: NVDA), which does not make its own chips, Intel does. The company plans to use its foundry unit to manufacture chips for other “fabless” brands. It recently picked up Amazon (NSDQ: AMZN) as a customer. Intel will start making custom artificial intelligence (AI) chips for Amazon Web Services (AWS), the e-commerce giant’s cloud-computing unit.
According to rumors, Intel is considering spinning off its foundry business entirely into a separate publicly traded company.
The chipmaker could use a lifeline. So far this year, shares of Intel have plummeted by more than 50%. Investors have bailed on the company after several disastrous quarters.
“The board and I agreed that we have a lot of work ahead to drive greater efficiency, improve our profitability, and enhance our market competitiveness,” Gelsinger wrote in a recent memo.
In addition to turning the foundry business into a subsidiary, Intel also plans to sell its stake in chip startup Altera and pause construction on new chip factories underway in Germany and Poland.
Apple Slides on Weak iPhone 16 Pre-sales
Shares of Apple (NSDQ: AAPL) fell this week on reports that demand for the next-generation iPhone is weaker than expected.
According to TF Securities analyst Ming-Chi Kuo, first-weekend sales of the new iPhone 16 were 12% lower than the first-weekend sales of the iPhone 15, which was released last year.
According to Kuo, the iPhone 16 isn’t selling as well as expected because a “major selling point, Apple Intelligence, is not available at launch alongside the iPhone 16 release. Additionally, intense competition in the Chinese market continues to impact iPhone demand.”
Now, Apple Intelligence is the Cupertino Giant’s artificial intelligence (AI) feature suite. It won’t be available for iPhone 16 until next month.
Pre-orders for the iPhone 16 began last Friday. The product is slated to “officially” launch on this coming Friday.
That said, fierce competition in China is also curbing enthusiasm for the iPhone 16. Homegrown electronics companies such as Huawei are offering similar smartphones to Apple’s products.
According to analysts at Barclays, “Based on our conversations with distributors and analysis of pre-order figures on major Chinese e-commerce sites, total pre-order [Apple iPhone 16] units were down year over year within the first couple of days, with a lower Pro model mix.
“We heard that Pro model units were down double digits on a year-over-year basis, while base and plus models grew year over year.”
In addition, as Barclays pointed out, Apple’s China sales are not helped byb the fact that the company doesn’t plan to roll out a Chinese language version of Apple Intelligence until sometime in 2025.
For Apple’s most recently completed quarter, the company reported a 1% year-over-year decline in iPhone sales to $39.3 billion.
In China, quarterly iPhone sales dropped 6.5% to $14.73 billion.
The World’s Populations in 2100
What will the world look like in the year 2100?
According to data from the United Nations, populations will have shifted.
In 2020, five of the 10 largest countries by population size — China, India, Indonesia, Pakistan, and Bangladesh — were located in Asia. Of the remaining countries, two were in Latin America, one was in Africa, and the other was the U.S.
However, by 2100, four of the top 10 will be in Africa: Nigeria, Ethiopia, Tanzania, and the Democratic Republic of Congo.
By contrast, the populations of China and Bangladesh are expected to shrink due to lower birth rates.
Take a look:
You will find more infographics at Statista
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