Headline of the Week

GDP grew at a 2.4% pace in the second quarter, topping expectations despite recession calls

The U.S. economy showed few signs of recession in the second quarter, as gross domestic product grew at a faster-than-expected pace during the period, the Commerce Department reported.  GDP, the sum of all goods and services activity, increased at a 2.4% annualized rate for the April-through-June period, better than the 2% consensus estimate from Dow Jones. GDP rose at a 2% pace in the first quarter.  Consumer spending powered the solid quarter, aided by increases in nonresidential fixed investment, government spending and inventory growth.

 

 

Apparel & Footwear

Gap Inc. just hired the mastermind behind Mattel’s Barbie franchise turnaround as its new CEO. But is the troubled company even fixable?

Finally, at extremely long last, the search is over: Gap Inc. has lined up a new CEO. After more than a year without a permanent chief executive, the troubled parent company of Old Navy, Gap, Banana Republic, and Athleta said on Wednesday it had hired Richard Dickson as its new chief, effective Aug. 22. He is the operations chief and president at Mattel and instrumental in revitalizing the Barbie franchise, as evidenced by the runaway success of the recent motion picture about the iconic doll. Before joining the toymaker in 2014, Dickson had spent time in the apparel industry in a top job at Jones Group. Thus ends an excruciatingly long CEO search that Gap Inc., all of whose brands saw net sales decline last quarter, can’t afford to mess up. The Gap and Banana Republic brands are shadows of their former selves: The Gap brand’s 2022 net global sales were $3.7 billion, or 40% less than a decade earlier—while Old Navy and Athleta, for years juggernauts sustaining the company, have fallen into decline.

Authentic Brands Group Is Acquiring Rockport, Inks Marc Fisher Licensing Deal

Authentic Brands Group has scooped up Rockport, adding another heritage shoe brand to its growing portfolio. The company behind dozens of brand and retailer acquisitions announced on Wednesday that the U.S. Bankruptcy Court for the District of Delaware approved the sale transaction of Rockport, a Newton, Massachusetts-based footwear label. Rockport said in June that it filed for Chapter 11 bankruptcy and would put itself up for sale. In a statement, Authentic CEO, founder and chairman Jamie Salter said that Rockport is a “perfect addition” to the company’s portfolio, given the brand’s resonance with active consumers. He noted Rockport’s potential for category expansion into apparel, accessories, outerwear, travel and more. Authentic also said it has signed a long-term licensing agreement with Marc Fisher Footwear, making it Rockport’s U.S. footwear partner that will oversee footwear design as well as wholesale and e-commerce operations. Marc Fisher also partners with Authentic for its Nine West, Hunter and Bandolino brands.

Gap Inc. taps Alo Yoga president to lead Athleta

Gap Inc. last week named former Alo Yoga executive Chris Blakeslee as the new president and CEO of its Athleta brand, effective Aug. 7. Athleta CEO Mary Beth Laughton left abruptly in March, as sales at the once-fast growing activewear label faltered amid “product acceptance challenges.” Blakeslee most recently served as president of DTC fitness brand Alo Yoga and its sibling company Bella Canvas, an apparel basics wholesaler that expanded into retail during his tenure. Before that, he had senior positions at wholesale distributor Alphabroder. In its release, Gap Inc. said that under Blakeslee, ”Alo Yoga focused on a fashion-forward approach to wellness, building community and brand awareness with high-profile influencers, as well as store and category expansion to drive growth.” Athleta is likely hoping to replicate aspects of the 16-year-old DTC yoga brand’s success under Blakeslee, according to Barbara Kahn, professor of marketing at the Wharton School at the University of Pennsylvania.

David’s Bridal and CION Investment Corporation Complete Successful Transaction

David’s Bridal, the nation’s leading bridal and special occasion authority, has successfully closed its transaction with CION Investment Corporation, a leading publicly listed business development company, for the sale of substantially all of the Company’s assets. Through the CION Transaction, David’s Bridal will continue operations at up to 195 stores, preserving 7,000 jobs across the U.S. CION has invested $20 million into the new business to fund future growth and has assumed certain bankruptcy-related liabilities. Additionally, Bank of America will continue to provide financing to enhance the business’ financial flexibility through a $50 million revolving credit facility and a $20 million term loan facility. “We believe this transaction to substantially reduce the company’s debt burden and store portfolio will enhance the company’s ability to benefit from the expected post-COVID rebound in wedding activity and position the company for future success,” said Gregg Bresner, CION’s President and Chief Investment Officer.

 

 

Athletic & Sporting Goods

Bregal Partners Announces the Sale of Arcus Hunting

Bregal Partners, a private equity firm specializing in investments in consumer and multi-unit, food and beverage, and business services, and a part of the Bregal Investments platform, announced that they have agreed to sell portfolio company, Arcus Hunting. Arcus is the first of six portfolio companies to be sold from Bregal Partners I, a 2013 vintage fund that Bregal Investments announced its intention to realize earlier this year.  Arcus markets and manufactures a range of leading deer lures, attractants, scent control products, broadheads, and archery accessories. Bregal Partners made its investment in Arcus in 2014 through Bregal Partners I.

Adidas gets $565m in orders for unsold Yeezy shoes

Adidas received orders worth more than 508 million euros ($565m) for 4 million pairs of unsold Yeezy shoes, better than the company’s “most optimistic forecast”, the Financial Times has reported.  The orders for the first batch would potentially save the German sportswear company from having to take a big writedown on its remaining stock, the newspaper said on Monday.  Adidas stopped selling Yeezy shoes from its defunct partnership with Ye in October after the rapper formerly known as Kanye West made a series of antisemitic comments on social media and in interviews.  Losing the highly profitable line hit first-quarter sales at the German sportswear company by around $440m.  However, robust demand for the unsold sneakers has quelled fears at Adidas’ headquarters that Ye’s antisemitic outbursts and a drop in marketing in the recent past would have made the Yeezy brand too toxic, FT said, citing sources.

Cosmetics & Pharmacy

L’Occitane’s top shareholder mulling $4.2 billion buyout

L’Occitane International’s CEO and largest shareholder Reinold Geiger is reportedly looking to buy out the US$4.2bn company. Geiger, who owns 72.72% of the company is considering taking the company private by buying out the brand owner’s minority shareholders, according to a report by Bloomberg. He may also seek to list the beauty retailer, which owns Elemis and Sol de Janeiro, on the European stock market if successful.

 

Prada to venture deeper into beauty with new makeup and skincare lines

Joining the ranks of other luxury brands, Prada is now set to launch its own makeup and skincare lines from August 1 as it begins to venture into new product categories. Through Prada Beauty, the Milan-based fashion house will be tackling the new market alongside its licensee, L’Oréal Luxe, which had acquired the brand’s beauty license on January 1, 2021. It builds on the duo’s already established relationship, having previously worked on the launch of a feminine fragrance collection, Prada Paradoxe, which dropped in 2022.

GlossGenius lands $28 million funding led by L Catterton

GlossGenius, the business-in-a-box platform designed for small beauty businesses, has secured US $28m in its latest funding round led by investment company L Catterton. The US-based company provides software to help beauty and wellness business owners manage their operations, provide a better experience for clients and grow their businesses. It will use the funds – which Bessemer Venture Partners and Imaginary Ventures also contributed to – to further develop its business, delivering more advanced products and services and better customer experience.

e.l.f. Beauty partners with Channel 4 on branded YouTube series Ready or Not?!

UK television station Channel 4 has launched its first-ever branded YouTube content series Ready or Not?! with cosmetics company e.l.f. Beauty. The show, which appears on Channel 4’s YouTube strand Channel 4.0, sees content creator Adeola Patronne and guests “dive headfirst into unfamiliar worlds of work,” read a joint statement from both companies. “While expressing their true selves through style, make-up and skin care.” Each episode begins with Patronne and her guest applying e.l.f. Beauty products before heading off to undertake mysterious, adrenaline-fuelled activities.

Hairstory fills out its C-suite

DTC hair care brand Hairstory has spent the past several months building out its executive suite, naming a new CEO, chief marketing officer, vice president of sales and design director, per a company press release. Harley Butler in October was named CEO, succeeding co-founder Eli Halliwell, who stepped down from the role. Other appointees include Dina Rosenbloom as chief marketing officer, Larissa Rhodes as vice president of sales and Stephanie Savidge as design director. The CMO and sales positions are both new, while Savidge succeeds Alexander Brebner as design director. The changes follow a three-year run of significant revenue growth for the brand.

 

Discounters & Department Stores

Dollar General’s chief strategy officer exits

After less than a year, Dollar General’s chief strategy officer has left that position and the company. Prior to the role, Lau served as the retailer’s vice president of investor relations and corporate strategy. Lau’s exit has been among a large number of leadership changes and executive shuffling at Dollar General in a little over a year. At the time that Lau was named to the role of chief strategy officer, Dollar General also named three other leadership appointments within its store operations division.

Walmart adds travel perks to membership program

Adding travel to Walmart+ is part of Walmart’s efforts to enhance its membership program and offer it to a broader range of shoppers. After launching the program in 2020 priced at $98 annually, this month the retailer cut the price to $49 a year for shoppers who receive government assistance through programs like Medicaid, Temporary Assistance for Needy Families and SNAP. Last year, the retailer added more perks to its service. In March 2022, the retailer announced its partnership with Spotify to offer subscribers six months of Spotify Premium access. At that time, the retailer also said it would provide membership into an employee benefit to its 1.6 million part-time and full-time employees.

House of Fraser owner could close more big shops as department store model ‘broken’

The owner of House of Fraser has said it could close more stores, after shutting eight in the past year and declaring “the department store globally is broken”. House of Fraser has already almost halved in size from 59 stores to 31 since it was bought out of administration by Ashley’s retail empire in August 2018. Murray said that historically stores would have been 150,000 sq ft or larger, which was now “too big” and meant that in the past they “didn’t have the investment” they needed. The group now wants stores of about 50,000 sq ft or smaller.

 

 

Emerging Consumer Companies

Seven Sundays, clean cereal brand, raises $6 million
Seven Sundays, a clean-label cereal brand, has raised $6 million in growth capital during its latest funding round. The Minneapolis-based company plans to use the funds to develop new products and expand its supply chain programs, which focus on upcycling, regenerative agriculture, and reducing packaging waste. The funding round was led by individual private investors and included follow-on investors such as Sidekick Partners, Clover Vitality, and GRT SHT Ventures. Seven Sundays aims to create better tasting and better-for-you cereals for people and their families. The company was also previously invested in by Katjesgreenfood, the venture-capital arm of German consumer-goods company Katjes Group.

Zuma Valley receives equity investment from Erewhon
Zuma Valley, a brand specializing in coconut products, has received an equity investment from organic grocer Erewhon. Erewhon CEO Tony Antoci praised Zuma Valley’s coconut products, stating that they are the best-tasting and purest he has ever found. The investment represents a continuation of the partnership between the two companies, with Erewhon being Zuma Valley’s first customer in 2015. Zuma Valley’s current product line includes refrigerated whipped coconut cream, frozen coconut cream, and frozen coconut meat. The company sources its coconuts from small family farms in the Philippines and uses renewable energy during the packing and freezing process.

Pet telehealth company Airvet secures $18.2 million
Pet telehealth company Airvet has raised $18.2 million in Series B funding to focus on enterprise clients. The company was founded in 2018 by CEO Brandon Werber to connect pet owners with veterinarians for telehealth visits. The funding will support Airvet’s expansion of partnerships with enterprise and employer clients, as well as product development and the growth of its sales and marketing teams. Airvet aims to address the shortage of veterinarians by providing accessible and affordable pet care. The company has already secured employer clients such as Adobe, Ceridian, and Rexford Industrial, who offer Airvet as an employer-sponsored benefit for employees with pets. Werber expects Airvet to reach over 50 customers in the next year, with revenue growing at a faster rate than before. The Series B round was led by Mountain Group Partners, bringing Airvet’s total funding to over $33 million. Byron Smith, managing director at Mountain Group Partners, will join Airvet’s board as part of the investment.

 

Food & Beverage

High Brew Sells Majority Stake to Beliv

High Brew Coffee, one of the first “third-wave” canned cold brew brands in the U.S., has been acquired by Latin American beverage portfolio company Beliv, the company announced today.  Beliv is taking a 78% stake in the company, with the remaining 22% still owned by High Brew’s investors and its founder and CEO David Smith. Smith will remain with the brand as a consultant. Financial terms of the agreement were not disclosed.  Founded in 2013, High Brew helped to kickstart the cold brew coffee trend in the U.S. In 2016, it received a $4 million investment from CAVU Venture Partners and entered into a strategic distribution agreement with what at the time was Dr Pepper Snapple Group, prior to its transition into Keurig Dr Pepper (KDP). In 2018, the brand closed a $20 million Series C round.  Though its distribution arrangement with KDP has since ended, High Brew is sold in 15,000 retail locations nationwide – including Whole Foods, Sprouts, Albertsons/Safeway, Kroger, H-E-B, Costco, Raley’s, Wegmans and The Fresh Market – as well as online. The brand offers 11 flavors made with 100% Arabica beans.

Former Mondelēz exec launches $80M agtech startup fund

A venture capital firm co-founded by a former Mondelēz executive is on track to reach $80 million in funding to support food and agriculture startups from Europe and Israel.  The Tel Aviv, Israel-based Flora Ventures said it secured $50 million in first closing investments with help from strategic partners Haifa Group, Harel Group and Sadot Kibbutzim, a cooperative of more than 185 agricultural communities in Israel.  The firm is led by former Nielsen Innovate executive Esther Barak-Landes and Gil Horsky, who ran Mondelēz’s investment arm. It will focus on scaling early-stage startups that can address technology gaps in food security, digitization, sustainable agriculture and food as medicine.

Coke: Full-Year Outlook Raised As Q2 Earnings Surpass Forecasts

The Coca-Cola Company surpassed analyst forecasts in its Q2 2023 earnings report today, announcing 6% net revenue growth in the quarter ending June 30.  Organic revenue growth in the quarter was up 11% and the company raised its full-year guidance to 8% to 9%, up from its previous forecast of 7% to 8%. According to the report, revenue performance was bolstered by a 10% average increase in pricing and 1% in growth sales concentrate.  The beverage giant’s North America segment saw unit case volumes decline 1% as growth in sparkling flavors, value-added dairy and plant-based beverages were offset by declines in water, sports, coffee and tea in addition to Trademark Coca-Cola.

 

 

Grocery & Restaurants

McDonald’s Q2 growth driven by Grimace, core menu items

McDonald’s U.S. marketing team continues to run on all cylinders, as evidenced by the company’s Q2 earnings results, reported Thursday morning. Those results included a 10.3% increase in U.S. same-store sales, and an increase in visits as well. New Placer.ai data indicates the company’s traffic increased by 9.7% in June, versus the overall QSR segment, which experienced a 3.1% year-over-year increase. During the company’s earnings call, executives touted the success of the Grimace Shake campaign, launched in early June in celebration of the character’s 52nd birthday. CFO Ian Borden said the campaign quickly became one of the company’s most socially engaging campaigns of all time and contributed to strong sales growth. McDonalds’ executives also identified the company’s core menu equities and digital business as drivers of its strong quarter. On the digital side, the sales mix is now nearly 40% in the company’s top six markets, with over 52 million 90-day active members enrolled in its loyalty program.

McDonald’s is creating a spinoff restaurant brand called CosMc’s

McDonald’s is creating a spinoff restaurant chain called CosMc’s. The fast-food giant shared few details about the project during its second-quarter earnings call. “CosMc’s is a small format concept with all the DNA of McDonald’s, but with its own unique personality,” McDonald’s CEO Chris Kempczinski said. The company will test CosMc’s in a handful of sites in “a limited geography” in early 2024. McDonald’s said it will share more details about those plans at its investor day in December.

Chick-fil-A to open elevated drive-thru, pickup-only prototypes in 2024

Chick-fil-A is testing two restaurant designs: an elevated drive-thru and a walk-up design, the company said. Both are expected to open in 2024. The elevated drive-thru will open in the Atlanta metro area and the walk-up concept will debut in New York City. The company has a variety of models, like a 2,997-square-foot, drive-thru-focused restaurant in Oahu that opened on Thursday and includes three walk-up windows but no dining room. The company has about 40 drive-thru-only locations across its system, the chain wrote in an email to Restaurant Dive. The units are part of the company’s ongoing strategy to accommodate growing digital sales, while also providing its traditional service model.

Home & Road

Sherwin-Williams posts record quarterly sales, bolstered by higher prices

Sherwin-Williams posted $6.24 billion in consolidated net sales for the second quarter, a 6.3% boost from last year and an all-time record. Net sales from stores in the U.S. and Canada (open for more than 12 months) increased 9.5% for the quarter. Diluted income per share increased 36.5% to $3.29 per share, compared with $2.21 last year. EBIDTA increased 31.4%, rising to $1.28 billion and making up 20.6% of net sales. “Our team delivered very strong results in the second quarter, as sales exceeded expectations in all three segments,” said CEO John G. Morikis. “Gross margin improved sequentially and year-over-year to 46%, driven by strong sales volume in our Paint Stores Group as well as moderating raw material costs. Just like last quarter, the company attributed its increase in net sales to price increases, which “impacted sales by a mid-single-digit percentage.”

Overstock revenue falls 20% ahead of Bed Bath & Beyond rebrand

Overstock’s Q2 revenue fell 20% year over year to $422 million, the company said in an earnings announcement. The retailer posted an operating loss of $4 million, a net loss of $73 million, a gross margin of 22.4% and a gross profit of $94 million. It’s Overstock’s first earnings report since acquiring bankrupt rival Bed Bath & Beyond’s intellectual property for $21.5 million. The company’s adjusted EBITDA was positive at $8 million or 2% of revenue, but down about $13 million versus a year ago. Overstock ended the quarter with $342.9 million in net cash. But active customers during the quarter fell to 4.6 million, a 29% drop year over year.

Home improvement spending to decline faster in 2024, says Harvard report

Annual expenditures for improvements and repairs to owner-occupied homes are expected to decline at an accelerating rate through the first half of 2024, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Joint Center for Housing Studies at Harvard University. The LIRA projects that year-over-year spending on homeowner improvements and maintenance will shrink by 2.7% through the first quarter of next year and by 5.9% through the second quarter, following a slowdown in growth that began in the final quarter of 2022. “Home remodeling activity continues to face strong headwinds from high interest rates, softening house price appreciation and sluggish home sales,” said Abbe Will, associate project director. “Annual spending on homeowner improvements and repairs is expected to decrease from $486 billion through the second quarter of this year to $457 billion over the coming four quarters.”

Jewelry & Luxury

Kering buys 30% of Italy’s Valentino as Gucci sales lag

French luxury group Kering, which is struggling to revive sales at its star brand Gucci, said it was buying a 30% stake in Italian fashion label Valentino from Qatari investment fund Mayhoola for 1.7 billion euros ($1.87 billion) in cash. The agreement includes an option for Kering to purchase the whole of Valentino’s share capital no later than 2028. “The transaction is part of a broader strategic partnership between Kering and Mayhoola, which could lead to Mayhoola becoming a shareholder in Kering,” Kering said in a statement.

LVMH Wants to Remodel Every Tiffany Store

LVMH says that all 300-plus Tiffany stores will have to be remodeled, and it’s planning to make over most of them within the next four years. “We have to redo basically the whole fleet,” said chief financial officer Jean-Jacques Guiony on a conference call following the release of LVMH’s latest results. “Not one single store, apart from the few ones that we have already renovated, are up to our standards. And it will take time and a lot of money to redo them. LVMH bought Tiffany in 2021 for $16 billion. Its decision to remodel all its stores contradicts LVMH’s initial post-takeover assertions that it wouldn’t change anything about the way Tiffany did business.

Canada Goose launches second-hand, trade-in program in Canada

Your next Canada Goose coat might be on its second life by the time it gets to you. The Toronto-based, luxury apparel company announced that it is bringing Generations, a platform allowing consumers to shop for and trade in pre-loved pieces from the brand, to Canada. Pieces available for trade-in or purchase through Generations will range from the company’s popular parkas and outdoor vests to snowsuits, snow pants, trench coats and even fleece and knitwear.

De Beers’ Profit Drops in First Half

Following a slow start to the year, De Beers’ half-year 2023 report shows the total rough diamond sale volume of 15.3 million carats was in line with the previous year. Despite that, revenue fell 21 percent to $2.8 billion from the previous year’s $3.6 billion. The decline comes amid months of weak customer demand, low average selling price, and increased expenses. Average diamond price decreased 23 percent to $163 per carat from $213 per carat in 2022, due to the increase in lower-value diamonds sold in 2023.

 

Office & Leisure

Chewy names interim CFO to replace retiring Mario Marte

Online pet food supplier Chewy named chief accounting officer Stacy Bowman as its interim CFO, replacing outgoing finance chief Mario Marte, on July 28, according to a Thursday release. Marte, who joined the company in 2015, is stepping down from the role after five years in the CFO seat, according to his LinkedIn account. The news comes about seven months after the company disclosed in a December filing with the Securities and Exchange Commission that Marte planned to retire from the company “on a date to be determined in 2023” and that it would begin a search for his successor. Bowman, 44, will temporarily step into the role of finance chief as the company continues its hunt for Marte’s permanent replacement. In the release, Chewy CEO Sumit Singh credited Marte for his role in driving Chewy’s growth and margin expansion over his tenure and described Bowman as “a respected leader who has worked alongside Mario over his tenure” who is “well-positioned to assist through a seamless transition.”

Puttshack expands North American footprint

Tech-driven mini-golf/dining brand Puttshack is adding a new location to its portfolio. The brand, whose creators include the founders of Topgolf, will open its first location in Maryland, in Baltimore’s Harbor East, a retail, dining and entertainment destination. Specifically, the venue will be located at The Whitney, a five-story mixed-use property developed by Chasen Companies.  It is expected to open in late 2024. Puttshack, which opened its first location in 2018, now operates nine U.S. venues in Atlanta, Boston, Chicago, Miami, Denver, Houston, Pittsburgh, Scottsdale, and St. Louis. Two more locations in Dallas and Nashville are slated to open in late 2023. The company also has four venues in the United Kingdom. In September 2022, the company closed on a growth capital round of $150 million from funds managed by BlackRock, Inc.

Tencent to acquire majority shares in Dying Light developer Techland

Techland announced that Chinese company Tencent is about to become its majority shareholder. The Polish video game studio will retain ownership of its intellectual property, presumably including the Dying Light series, as well as its creative freedom. This is far from the first time Tencent has invested in a game studio. In the past few years, the company has acquired Sumo Digital, Inflexion and Turtle Rock Studios, as well as majority shareholdings in Wakeup Interactive and Tequila Works. It’s also developing several games under its in-house Level Infinite brand.

Technology & Internet

Elon Musk’s X rebrand reignites goal to turn Twitter into China’s WeChat

When Elon Musk was in the process of buying Twitter last year, there was a lot of debate about his plans for the app. In October, the billionaire said buying Twitter was an “accelerant to creating X, the everything app,” without providing further details. But it did spark comparisons with China’s WeChat, the messaging service run by Chinese giant Tencent. On Monday, Musk officially changed Twitter’s famous bird logo to an “X,” marking his push to change the platform into something more than just a social media service. “In the months to come, we will add comprehensive communications and the ability to conduct your entire financial world,” Musk said late Monday, re-iterating that the acquisition took place to accelerate the move toward the “everything app.” Newly-appointed CEO of the company Linda Yaccarino said “X is the future state of unlimited interactivity – centered in audio, video, messaging, payments/banking – creating a global marketplace for ideas, goods, services, and opportunities.” These goals laid out by Musk and Yaccarino sound very much like the idea of a “super app” which was pioneered in China and has taken off in other parts of Asia.

 

TikTok to launch e-commerce program to bring Chinese goods to the US

TikTok plans to launch a program in August to help Chinese merchants sell goods globally, and will officially roll it out first to consumers in the United States, a person familiar with the matter said. Seeking to replicate the success shopping platforms like Shein and PDD Holdings’ Temu have had in the U.S., the Chinese-owned short-video platform will provide a suite of services ranging from storage to shipping to merchants in China to help them sell in the U.S., said the person. TikTok is owned by ByteDance and its Chinese equivalent Douyin has a fast-growing e-commerce business in China. The program, called “full service” by TikTok, is already being tested in markets such as Britain. TikTok is working towards an official launch in the U.S. in August. The program has not been created only to help Chinese businesses as TikTok plans to eventually introduce it to merchants elsewhere, the person said. But TikTok has decided to work with Chinese businesses first because China has long been the world’s factory floor with well-established export rules, the person said.

 

Finance & Economy

Home prices continue to climb with ‘striking’ regional differences, says S&P Case-Shiller

Home prices in May rose for the fifth straight month on the S&P CoreLogic Case-Shiller home price index, but regional differences are widening.  The gains come despite a sharp jump in mortgage interest rates during the month. Prices nationally rose 0.7% month to month, seasonally adjusted. The index’s 10-city composite gained 1.1%, and the 20-city composite gained 1%.  Of the 20-city composite, 10 cities saw lower prices in the year ending May 2023 versus the year ending April 2023 and 10 saw higher prices.  Cities in the so-called Rust Belt are outperforming the rest of the nation. Prices in Chicago gained 4.6%; in Cleveland, 3.9%; and New York, 3.5% — making for the top performers.  The Midwest took over the South’s reign as the strongest region.  Cities in the West, where prices had inflated the most, were the worst performers in May. Seattle, down 11.3%, and San Francisco, down 11%, were the worst.

U.S. consumer confidence jumps to a two-year high as inflation eases

U.S. consumer confidence shot to the highest level in two years this month as inflationary pressures eased and the American economy continued to show resilience in the face of dramatically higher interest rates.  The Conference Board, a business research group, said its consumer confidence index rose to 117 in July from a revised 110.1 in June. The gauge beat the 110.5 that economists had expected and was the highest since July 2021.  The U.S. economy — the world’s largest — has proved surprisingly resilient in the face of sharply higher borrowing costs. Employers are adding a strong 278,000 jobs a month so far this year; and at 3.6% in June, the unemployment rate is not far off a half-century low.