The Big Story

Drone Delivery: Getting Closer, But Not Taking Off Yet

Peter Costa

Last year, as Walmart and Amazon started drone pilot programs to provide faster delivery times, I wrote in this forum that commercial drone programs were not developed enough and were not properly regulated enough for wide range commercial use. The buzz around drone deliveries has not dissipated since I wrote that piece. In addition to Walmart, Amazon, and Google, national carriers such as UPS, FedEx and DHL have each begun pilot drone programs. Now, food delivery businesses and grocery chains are evaluating whether it makes sense to deliver foods such as pizzas and burritos to customers via drones. Last week, Kroger announced that it will begin delivering groceries via drones this year near one store in Ohio. The company announced that drones made and piloted by Drone Express will begin test flights in June 2021 and will move to delivering grocery orders from the store in the coming weeks. Research firm Facts and Factors forecasts that the drone delivery market will expand at a 53% CAGR from 2020 – 2026. According to the research report, the global Drone Package Delivery Market was estimated at $528 million in 2020 and is expected to reach $6.7 billion by 2026. However, despite large, multi-national companies jumping headfirst into drone delivery, many questions remain regarding safety, practicality, and effectiveness. At least for now.

Safety remains the top question, particularly for drones delivering to customers in densely populated areas. Doug Davis, director of airworthiness and airspace integration for Northrop Grumman, a developer of autonomous aircraft systems notes that although drone designs are improved, integrating drones into U.S. airspace will be difficult.  “If you’re going to operate new aircraft, which is what drones are considered, you need to operate them within the same framework of operational risk and requirements that apply to all aircraft operating in the domestic airspace of the United States,” he said. Aviation experts, like Davis, are more concerned with drone operators than they are with drone designs. “Many of these new operators are coming into the field from a purely business perspective, with no aviation background at all, and they often don’t understand what’s in the air with them,” he explained. The Federal Aviation Administration (FAA) shares Davis’ concerns, “Several companies have developed technology intended to automatically detect and avoid other aircraft but the technology is still maturing…our long-term goal is to integrate drones safely into that system so that our society can reap the full benefits of drone technology.”

In addition to safety issues, questions remain about size, weight, noise, cost constraints, and drones’ vulnerability to bad weather. Drone deliveries are limited by size and weight restrictions. The average drone’s payload capacity is only approximately five pounds – a clear limitation for the delivery of many kinds of products and orders. Another issue with drones is that they make a lot of noise while flying, which can be a nuisance and unsettling. Furthermore, the current economics of drone delivery are challenged by insurance and labor costs. If these costs eventually fall on the consumer, it could slow adoption of drone delivery. Finally, poor weather conditions may also hinder drone deliveries. Factors such as gusty winds, freezing rain, and unforeseen adverse conditions could delay a planned delivery or even endanger a drone, and thus people below.

Drone technology and its application in making deliveries to consumers remains in its infant stages – widespread delivery of consumer goods by drone is still likely years away. But, like driverless delivery, drone delivery has captured the imagination and attention of numerous companies hoping to cut down on both order fulfillment times and their carbon footprints. Drone developers may eventually be able to surmount drones’ numerous challenges, but it could take a long time. Before delivery becomes faster than ever, we may need to wait a while.





Headlines of the Week

Torrid files for IPO

Torrid Holdings Inc. has resumed its plans to go public. The plus-size young women’s apparel retailer has filed for an initial public offering. Torrid, which operates 608 stores nationwide, previously filed to go public in 2017, eventually withdrawing its filing. The company plans to apply for listing on the New York Stock Exchange under symbol “CURV.” Torrid was originally part of Hot Topic Inc., which was acquired by Sycamore in 2013 for about $600 million. Torrid was spun off in 2015. The company said that e-commerce represented 70% of its net sales in 2020.


Walmart, Amazon simultaneously add prescription discounts to membership perks

Walmart has added another perk to its Walmart+ membership service: medication discounts. In a release, the retailer said Walmart+ members can now access select medications at zero cost and thousands of others at discounts of up to 85%. With the program, dubbed “Walmart+ Rx for less,” members can use the discount instead of health insurance at more than 4,000 Walmart pharmacies. A day after Walmart announced the program, Bloomberg reported that Amazon started offering prescriptions for Prime members at the equivalent of $1 per month with a six-month supply.



Apparel & Footwear

Delta Galil Plans to Merge Bare Necessities and Brayola

Bare Necessities and Brayola are joining forces. Parent company Delta Galil Industries revealed its plans to merge the two lingerie brands in an effort to strengthen its position on the global innerwear market, while playing off each brand’s individual assets. “Delta Galil is committed to investing in digital innovation in order to enhance the online shopping experience and this strategic move is the next step in our journey,” said Isaac Dabah, chief executive officer of Delta Galil Industries. “This merger allows us to combine the merchandising strength of Bare Necessities and the digital technology and fitting expertise of Brayola to establish as the primary destination for women shopping online for intimates.” Delta Galil — which also counts Seven For All Mankind, Splendid, Schiesser, Eminence, Delta, P.J. Salvage, Karen Neuburger, Nearly Nude and Fix in its portfolio of brands — has been on a shopping spree over the last 18 months, first purchasing Brayola in January 2020 for more than $1 million. Then in August, the Tel Aviv, Israel-based company acquired lingerie and swimwear e-tailer Bare Necessities for an undisclosed amount.

Moose Knuckles Welcomes Victor Luis as Investor, Executive Chairman

Audacious Canadian outerwear specialist Moose Knuckles is adding more capital — and management muscle — to fuel its international expansion. WWD has learned that Victor Luis, the former chief executive officer of Tapestry Inc. and the architect of its acquisitions drive, has made a “significant investment” in the Montreal-based firm, and will become its executive chairman. The size of the stake and financial terms were not disclosed. With his investment, Luis become an “operating partner” in Moose Knuckles alongside Paris-based Cathay Capital, the brand’s lead institutional investor that quietly took a stake in 2019. Almost doubling its retail network by adding 10 stores before the end of 2022 are among the immediate projects for Luis, who is to partner with co-chief executive officers Noah Stern and Ayal Twik to accelerate global development, with a particular emphasis on China. Moose Knuckles said it logged a compound annual growth rate nearing 50 percent from 2015 through to the first quarter of this year, with a triple-digit increase in direct-to-consumer sales.

Sock Talk: Renfro Brands Sold

Renfro Brands, a century-old manufacturer that holds licenses for well-known sock brands including Fruit of the Loom, Merrell and Polo, has been sold to The Renco Group, Inc. The purchase includes Loops & Wales, Renfro’s direct-to-consumer e-commerce site. Terms were not disclosed. The plan is to continue to expand Renfro’s reach and diversify its portfolio by reinvesting in the business, Renco Group said. The existing management team, led by Stan Jewell, chief executive officer, will remain on board. Renfro is the sock licensee for more than 20 brands in the athletic, outdoor, work, wellness and fashion categories that are sold in retailers ranging from Macy’s, Walmart and Costco to Amazon. Since its founding in 1921, it has been credited with standardizing sock sizes and eliminating toe seams. It employs some 2,000 people. Renco Group was founded in 1975 and is a family-owned investment holding company with more than $5 billion in revenues and 15,000 employees worldwide. Its holdings include mining and mineral recovery, defense equipment and automotive supplies.

Weyco Group acquires Forsake Brand for $2.5M

Weyco Group acquires operating assets and certain liabilities of Forsake, a distributor of outdoor footwear. The principal assets acquired were inventory, accounts receivable, and intellectual property, including the Forsake brand name for $2.5M, plus contingent payments paid annually over a period of five years, depending on Forsake achieving certain performance measures.



Athletic & Sporting Goods

Liteboxer, the Peloton of boxing, raises $20 million Series A

Liteboxer, the Peloton for boxing, has announced the close of a $20 million Series A funding round led by Nimble Ventures. B. Riley Venture Capital participated, alongside existing investors Raptor Group and Will Ventures.  Liteboxer launched publicly to the world in July of 2020, announcing an in-home device that brings gamification, hit music and a touch of entertainment to a boxing workout. The patented hardware includes a system of lights that smartly pair with music to give the user an intense workout that feels more like a game. Hit where the light goes off, on beat with the music, until your ass has sufficiently been kicked. Content is a big piece of the puzzle with Liteboxer. For $29/month, users get access to unlimited training sessions and workouts led by Liteboxer trainers. The Liteboxer also has a Quick Play option that forgoes the trainer content and lets users workout based on the song they choose.

Academy Sports + Outdoors Announces Record Sales and Earnings for the First Quarter and Raises 2021 Financial Forecast

Academy Sports and Outdoors, Inc. announced its financial results for the first quarter ended May 1, 2021. Unless otherwise indicated, comparisons are to the same period in the prior fiscal year.  Net sales increased 39.1% to a first quarter record $1.58 billion, while comparable sales increased 38.9%. Sales grew 46.8% compared to the first quarter of 2019. The growth was driven by continued strong, double-digit consumer demand across all product categories, notably in Apparel, Footwear and Team Sports, as well as across our entire geographic footprint. E-commerce sales declined 21.0%, as the website anniversaried triple-digit growth in the first quarter of 2020, as consumers shifted to online ordering at the beginning of the pandemic last year. Over the last two years, E-commerce sales have increased 300.0% during the first quarter.

Cosmetics & Pharmacy

Helen of Troy Announces Divestiture of Mass Market Personal Care Business

Helen of Troy Limited, designer, developer, and worldwide marketer of consumer brand-name housewares, health and home, and beauty products, announced it has sold its mass market Personal Care business, not including the Latin America and Caribbean regions, to HRB Brands LLC, a privately-held company that is one of the largest independent branded personal care companies in North America for $44.7 million in cash. The transaction also includes an option that provides HRB Brands LLC the right to purchase the Latin America and Caribbean Personal Care businesses no later than the end of fiscal year 2022, subject to meeting certain agreed-upon conditions. Proceeds from the sale represent substantially all of the negotiated value for the total global Personal Care business. The Company expects to use the proceeds to create further shareholder value in line with Helen of Troy’s capital allocation strategy, including paying down debt, making accretive acquisitions of additional Leadership Brands that are a better fit with the long-term growth strategies for the Company’s portfolio, or engaging in opportunistic share repurchases.

Violette_FR Launches with Seed Funding

Makeup artist and influencer Violette Serrat launches Violette_FR, backed by $2.75 million in a seed funding. French-born and New York-based makeup artist and influencer Violette Serrat has launched multi-category Violett_FR. After a decade of working for big beauty brands, Serrat has introduced a collection of products reflective of her effortlessly cool French aesthetic. The brand launched with an 11-piece collection of hero products across six categories. Violette_FR raised $2.75 million in a seed funding round led by Female Founders Fund, Felix Capital and Greycroft Ventures, and SuperOrdinary. The brand will be sold direct-to-consumer in the US, France, Canada, and the UK, and at one pharmacy in Paris’ Marais district, with more retail partnerships in the works outside of the US.

Super Ordinary Invests in Good Light

David Yi’s gender-inclusive skincare brand Good Light is launching in China and received early-stage investment from Super Ordinary. David Yi launched Very Good Light as a beauty content website in 2016 with a mission to create a space for open and honest conversation within the beauty world. In 2021 the publisher launched a beauty brand called Good Light in an effort to democratize beauty beyond the binary. SuperOrdinary was started by Julian Reis, an industry veteran and the co-founder of Skin Laundry, in 2018 as a laboratory to grow the next generation of innovative consumer brands in China and on Amazon in the US. The fast-growing brand management and distribution company is working with best-in-class global beauty brands to establish and scale their businesses. As an investor SuperOrdinary is patient capital agnostic in terms of the investment cycle, writing checks from $100K to $50MM taking either a minority or controlling interest.


Discounters & Department Stores

Kohl’s is the latest retailer to crash Amazon’s Prime Day party

Kohl’s is the latest retailer to muscle in on Amazon’s Prime Day, on Thursday announcing its “Wow Deals event” to be held in stores and online June 21 and 22. Like Walmart and Target, which also announced sales that compete with Prime Day, Kohl’s has the advantage of stores, where customers can pick up many of their purchases, often the same day. Amazon runs fewer than 600 stores, most of them Whole Foods grocers. Research shows that consumers are increasingly viewing the summertime sales event as an opportunity to find deals, including for back to school and even the holidays, and not just at Amazon.

Walmart follows Target in closing stores on Thanksgiving Day

Walmart announced that it is closing stores on Thanksgiving Day for the second year in a row, following Target’s decision to do the same earlier this year. The Bentonville, Arkansas-based retailer will maintain regular hours on Nov. 24, and details on its Nov. 26 (Black Friday) store hours will be announced at a later date, Walmart said in a release Friday. Target is closing its brick-and-mortar locations on Thanksgiving Day, too. The company said in January that it intends to reinvent its approach to Black Friday.

As pandemic wanes, dollar stores regain lost ground, grab new sales

Dollar stores — those that stayed open as essential retailers — were among the primary beneficiaries of 2020’s topsy-turvy selling environment. Many core and new customers used Dollar General and Family Dollar to stock up and took advantage of their general merchandise assortments to consolidate shopping trips. The questions for the dollar stores in 2021 are the same for much of retail. Can those that rose keep up the momentum and hold on to the customers they gained last year? Can those that declined catch back up this year to their pre-pandemic performance?



Emerging Consumer Companies

Athena Club, direct to consumer drugstore, raises $15 million

Athena Club, an online marketplace selling grooming, wellness and period products, has raised a $15 million Series A round of funding. The round was co-led by Cue Ball Capital and brings the total raised to date to $26 million. Athena Club relaunched in 2019 as an e-commerce operation with its own product line. Customers set up subscriptions, with the option to add more products to their order. The business currently sells a $9 razor kit, $15 body wash, $12 deodorant and other products. Products are made without ingredients like synthetic fragrances, aluminum, parabens and triclosan, and the line has an ingredient glossary on its website to explain the ingredients that do wind up in its formulations. According to the company, Athena Club’s subscriber base grew by more than 2,000 percent in 2020.

Simulate, New York City-based brand behind plant-based eggs, raises $50 million

Nutrition technology startup Simulate, which makes Nuggs simulated chicken nuggets made from plant inputs, has raised $50 million in Series B funding. Seven Seven Six, a software-enabled venture firm founded by Reddit co-founder and internet entrepreneur Alexis Ohanian, led the round and was joined by Chris and Crystal Sacca, NOMO Ventures, McCain Foods, Imaginary Ventures, and Day One Ventures. Ohanian also joined the board of directors as part of the round. Launched in the summer of 2019, Nuggs is now available at more than 5,000 retail locations, including Walmart, Sam’s Club, Target and Whole Foods Market, with plans to add another 10,000 retail locations by the end of this year.



Grocery & Restaurants

Meat giant JBS hit by cybersecurity attack

JBS USA, the world’s largest meat company, announced last week that over the holiday weekend an organized cybersecurity attack affected some of the servers supporting its North American and Australian IT systems. The company took immediate action, “suspending all affected systems, notifying authorities and activating the company’s global network of IT professionals and third-party experts to resolve the situation.” Backup servers were not affected, it added. JBS said is actively working with an Incident Response firm to restore its systems as soon as possible. Reports indicated the event impacted operations at numerous Canadian and U.S. plants as well as stopped all beef and lamb kills across Australia. According to a Bloomberg report, JBS’s five biggest beef plants in the U.S. — which altogether handle 22,500 cattle a day — halted processing following the weekend attack, wiping out nearly a fifth of America’s beef production.


Congress will be introducing a $60 billion replenishment of the Restaurant Revitalization Fund

Congress will be introducing a $60 billion replenishment of the Restaurant Revitalization Fund on Thursday after the U.S. Small Business Administration received requests for more than triple the allocated funds the first time around, according to the National Restaurant Association. The Restaurant Revitalization Fund Replenishment Act of 2021 would more than double the original $28.6 billion of relief for restaurants and will be introduced as a bipartisan effort again. “While it appears that our work to prioritize restaurants most in need was successful in the first round, the extraordinary demand for the Restaurant Revitalization Fund shows that many more businesses still desperately need help,” Blumenauer said in a statement. “We must work quickly to replenish this critical relief program and ensure all local restaurants get the support needed to keep their doors open, pay their staff, and support the industry’s trillion-dollar supply chain that impacts every sector of our economy.”

Home & Road

Lovesac posts 52.5% sales growth in Q1

Net sales for Lovesac, the furniture company known for its Design for Life philosophy, grew by 52.5% to $82.9 million in the first quarter of fiscal 2022 which ended May 2, 2021. This compares with net sales of $54.4 million in the prior year’s first quarter. Lovesac’s gross profit came in at $46.1 million for the quarter compared with $27.3 million in Q1 2021. The company also experienced comparable sales growth of 48.8% with basic earnings per share coming in at 14 cents for the first quarter compared to a loss of $0.58 last year. “Our strong first quarter performance affirms the confluence of two highly favorable dynamics in Lovesac’s evolution,” said Shawn Nelson, Lovesac CEO. “The first is that we are providing a great customer experience, backed by product innovation, investments in digital, and expanded showrooms and other distribution channels. The second is that the pandemic tailwinds continue within the home furnishings category itself, and our teams are executing across the board to strengthen the Lovesac brand and value proposition in this environment.”

Furniture Insights: March orders up 96%

As expected, new orders for furniture skyrocketed in March relative to the same month last year, when the COVID-19 hit home stateside, forcing closures among furniture stores and brick-and-mortar retail in many other categories. While March new orders were up 96% compared with March 2020, the more realistic comparison with March 2019 still shows high-double-digit demand growth, with orders increasing 40% comparing those months. That’s according to the latest Furniture Insights survey of residential furniture manufacturers and distributors from accounting and consulting firm Smith Leonard.

RH bumps up projections based on strong Q1 report

RH posted a 78.3% increase in revenues in the first quarter of 2021, prompting CEO Gary Friedman to adjust fiscal forecasts to reflect the heightened trajectory. “While fiscal 2021 will surely be a tale of two halves, there are many data points that lead us to feel optimistic that our strong performance will continue through the second half of 2021 with growth reaccelerating in fiscal 2022 and beyond,” Friedman wrote in a letter to shareholders. “These include a strong housing and renovation market, both with pent up demand and a long tail, a record stock market, low interest rates and the reopening of several large parts of our economy. Additionally, the un-masking of the general public could lead to a Roaring Twenties type of consumer exuberance.” The retailer posted $860.8 million in revenues in the first quarter, up from $482.9 million in the same quarter a year ago.

Jewelry & Luxury

Alex and Ani Files for Chapter 11

On June 9, Alex and Ani, the once big-time bangle business that has been one of the industry’s most prominent success stories for the last decade, filed for Chapter 11 in Delaware bankruptcy court. The filing caps a number of turmoil-filled years that included several loan defaults, the COVID-19 pandemic, a disruptive computer virus, an ever-changing C-suite, and the ouster of—and legal battles with—founder and former CEO Carolyn Rafaelian. In a first day declaration, chief restructuring officer and interim CEO Robert Trabucco said that the company plans to put most or all of its assets up for sale.

Signet Jewelers Sees Sales Soar In First Quarter

Signet Jewelers saw strong results for the first quarter of fiscal 2022 (ended May 1), with comps rising 27.2% from the same quarter two years ago, and a 106.5% jump from last year’s pandemic-afflicted first quarter. The company posted $1.7 billion in sales for the three-month period, an increase of over $250 million from the same period two years ago, and an $835 million leap from the year before, when most stores were closed. The increases are particularly impressive, CEO Gina Drosos noted on the company’s conference call, as the company has 400 less stores than it did two years ago. She said that all its U.S. banners delivered double-digit revenue growth compared to two years ago, and that roughly 60% of Kay’s and Zales’ business this quarter came from new customers.

Jewelers Mutual Group Acquires Gem + Jewel

Jewelers Mutual Group has acquired Gem + Jewel, a turnkey website service that lets jewelers sell their goods online. Terms of the deal were not disclosed. Gem + Jewel was started in 2018 by Shelia Bayes, the owner of Shelia Bayes Jewelers in Lexington, Ky. She talked about its genesis on a May episode of the JCK podcast The Jewelry District. Gem + Jewel will be integrated into Jewelers Mutual’s industry-serving Zing platform.

Swiss Watch Exports Now Above Pre-Pandemic Levels

Swiss watch exports exceeded pre-pandemic levels in April, hitting 1.8 billion Swiss francs, 2% higher than April 2019, according to data compiled by the Federation of the Swiss Watch Industry FH (FHS). This is the second month in a row that Swiss watch exports have exceeded pre-pandemic levels. In March, they rose an even more dramatic 7.4% over two years ago. April exports were also nearly 450% higher than those posted in April 2020, but since that month was at the height of worldwide COVID-19 lockdown, that number is “no longer relevant,” the FHS says.


Office & Leisure

Loupe, A Sports Cards Collecting App, Raises $12 Million In Series A Funding

When Eric Doty was a child in the 1990s, like many kids his age, he was an avid collector of sports cards. He lost interest in the hobby as a teenager, but he got back into it a few years ago and began buying and selling cards online on a regular basis. Doty, a veteran product and game designer and marketer, enjoyed the trading, although he noticed the websites he used were outdated and could use a refresh when it came to technology and appeal to the masses. That led him to found Loupe, a sports cards collecting app that launched in October 2020. Loupe is announcing today it has raised $12 million of funding in a Series A round led by Forerunner Ventures, a San Francisco venture capital firm that specializes in early-stage and seed investments. Other investors include DJ Skee, a music producer and DJ, and Nat Turner, an entrepreneur who was part of a group that in February acquired Collectors Universe Inc. a company that grades and authenticates sports cards and other collectibles. In January, Loupe had raised $3 million in a seed round led by Upfront Ventures, a Los Angeles venture capital firm.

GameStop names former Amazon execs Matt Furlong, Mike Recupero as its new CEO, CFO

GameStop said Wednesday that it has appointed former Amazon executive Matt Furlong as its new CEO. It has also picked another former Amazon executive, Mike Recupero, as chief financial officer. Furlong will start his new role on June 21. He has worked for Amazon for nearly nine years, most recently leading the growth of its Australia business. Prior to that, he served as a technical advisor to the head of Amazon’s North America consumer business and worked for Procter & Gamble. Recupero began his career at Amazon 17 years ago. Most recently, he was the chief financial officer of its North American consumer business. He previously held similar roles within Amazon’s prime video, European consumer and advertising units.

Teen apparel retailer goes where the kids are – digital games

Pacsun is selling clothing items via an online gaming platform that is popular with tweens and teens. The retailer is partnering with game development studio Melon and global online gaming platform Roblox to make select clothing items available in the Roblox Avatar Marketplace. Roblox players can use their “Robux” online currency (purchased with regular currency) to customize their in-game avatars (on-screen digital characters) with Pacsun-branded clothing and fashion accessories, including a set of gold wings.  Pacsun is also offering a branded tee that is now available for players to pair with Pacsun-branded tie dye sweatpants.

Technology & Internet

Biden revokes TikTok, WeChat bans and orders security review

President Joe Biden is revoking Trump-era bans on the Chinese-owned apps TikTok and WeChat on Wednesday, and instead will review software applications from foreign adversaries that could pose a risk to Americans’ sensitive data, senior administration officials said. Biden, in an executive order, is directing Secretary of Commerce Gina Raimondo to evaluate the apps and take action against those that pose a security risk. The order replaces former President Donald Trump’s actions, aimed specifically at Chinese companies including TikTok owner ByteDance Ltd. and WeChat owner Tencent Holdings Ltd., that tried to ban the use of those apps in the U.S. Trump’s measures have been blocked by federal judges, who said the former administration hadn’t shown those apps, in particular, posed a national security threat justifying a ban. The new order aims to clarify the criteria that the U.S. views as harming Americans’ sensitive data, the officials said. The data includes personally identifiable information and genetic information that would go to people directly linked to foreign adversaries, including China, according to a White House fact sheet.


Instacart wants to replace army of gig shoppers with robots

Instacart Inc. has an audacious plan to replace its army of gig shoppers with robots—part of a long-term strategy to cut costs and put its relationship with supermarket chains on a sustainable footing. The plan, detailed in documents reviewed by Bloomberg, involves building automated fulfillment centers around the U.S., where hundreds of robots would fetch boxes of cereal and cans of soup while humans gather produce and deli products. Some facilities would be attached to existing grocery stores while larger standalone centers would process orders for several locations, according to the documents, which were dated July and December. Despite working on the strategy for more than a year, however, the company has yet to sign up a single supermarket chain. Instacart had planned to begin testing the fulfillment centers later this year, the documents show. But the company has fallen behind schedule, according to people familiar with the situation. And though the documents mention asking several automation providers to build the technology, Instacart hasn’t settled on any, said the people, who requested anonymity to discuss a private matter. Automation would be a major departure for Instacart, which currently relies on hundreds of thousands of gig workers racing through supermarkets alongside shoppers more inclined to linger and browse.


Finance & Economy

Household net worth climbs to $136.9 trillion, thanks to big stock market gains

The net worth of U.S. households climbed to new heights as 2021 began and the effects of the Covid-19 pandemic began to fade.  Thanks largely to a surge in the stock market, the total balance sheet for households and nonprofits rose to $136.9 trillion in the first quarter, a 3.8% gain from the end of 2020, according to Federal Reserve data.  Of that total, $3.2 trillion came from equity holdings, while $1 trillion was due to the continued escalation in real estate values. The S&P 500 gained 7% for the quarter as investors anticipated rising corporate earnings and accommodative fiscal and monetary policy while also placing speculative bets on so-called meme stocks.  From a historical perspective, household net worth has nearly doubled from its level of a decade ago as the nation was still escaping the throes of the Great Recession.

Reopening U.S. economy fuels inflation, labor market recovery

U.S. consumer prices rose solidly in May, leading to the biggest annual increase in nearly 13 years as a reopening economy boosted demand for travel-related services, while a global semiconductor shortage drove up prices for used motor vehicles.  The pandemic’s easing grip on the economy was also underscored by other data showing the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months.  Vaccinations against COVID-19, trillions of dollars from the government and record-low interest rates are whipping up demand, leaving companies scrambling for raw materials and labor. Very expensive used cars and trucks accounted for about one-third of the rise in consumer inflation last month, reflecting a global semiconductor shortage, which is undercutting auto production.