Business

(NEW YORK) — CVS Health is laying off 5,000 employees as part of an effort to shed costs, the retail and pharmacy chain confirmed on Tuesday.

The layoffs will primarily affect “non-customer facing positions” such as corporate roles, the company said, adding that it does not expect the move to impact brick-and-mortar stores, pharmacies and clinics.

“Our industry is evolving to adapt to new consumer health needs and expectations,” CVS told ABC News in a statement. “As part of an enterprise initiative to reprioritize our investments around care delivery and technology, we must take difficult steps to reduce expenses.”

Laid-off workers will receive severance pay and benefits, the company said, including access to “outplacement services” to help find a job elsewhere.

“We’re committed to supporting impacted colleagues,” the company said.

As of December, CVS employed roughly 300,000 workers worldwide, according to a securities filing. The just-announced layoffs will eliminate less than 2% of the company’s workforce.

The Rhode Island-based company operates more than 9,000 retail locations and 1,100 walk-in medical clinics, the securities filing said. It also owns one of the nation’s largest health insurers, Aetna, as well as the country’s largest pharmacy-benefit manager, CVS Caremark.

The move to slash workers comes as CVS pivots toward expanded healthcare services, and away from the magazine and snack aisles.

In May, the company closed a $10.6 billion acquisition of Oak Street Health, a Chicago-based primary care provider that operates more than 150 healthcare centers in 21 states.

Two months earlier, the company closed an $8 billion deal to acquire Signify Health, a New York-based home healthcare company.

In 2021, CVS announced plans to close roughly 900 stores over the ensuing three years as it evaluated population shifts, consumer buying patterns and projected needs. As part of this “strategic review” of its retail business, the company said it would “reduce store density” in certain locations.

“We do not anticipate there will be any impact to our clients and customers as we remain focused on our mission – continuing to provide the exceptional care and support our customers, patients and communities deserve and depend on,” the company said in Tuesday’s statement.

“Throughout our company’s history, we’ve continuously adapted to market dynamics to lead the industry,” the statement added. “The difficult decision we are making will set the company up for long-term success.”

CVS is set to hold their next quarterly earnings call Wednesday morning. Shares of CVS ticked down 1% in early trading on Tuesday.

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(NEW YORK) — The Federal Reserve raised interest rates to a 22-year high this week — a milestone that carries major implications for the finances of everyday people, experts told ABC News.

The move escalated an aggressive series of rate hikes that has helped dramatically reduce inflation from a peak last summer.

But the historically high interest rates are bad news for borrowers, who will face even higher costs for things like car loans to credit card debt to mortgages.

The high interest rates do deliver benefits for savers, however, who stand to gain from an uptick in the interest yielded by accounts held at banks as well as bonds and high-yield savings accounts.

“It depends what side of the ledger you find yourself on,” James Cox, a financial advisor and managing partner of Virginia-based Harris Financial Group, told ABC News.

“If you’re a saver and you have money in the bank, this is fantastic,” he added. “For people who borrow money, it’s way more expensive.”

Here’s what to know about how the sky-high interest rates affect people’s personal finances:

What do historically high interest rates mean for borrowers?

The high interest rates make borrowing more expensive.

So any purchase that requires a loan — for a home, car, or higher education — could be affected. Credit card rates are also highly sensitive to Federal Reserve moves, so card holders should expect even higher payments. As of Wednesday, average credit card interest rates stood at a staggering 20.5%, Bankrate data showed.

“Borrowers are negatively affected,” Christine Benz, the director of personal finance at Morningstar. “Higher rates mean higher interest payments on loans.”

Mortgages, for instance, show how much more costly borrowing has become.

The 30-year fixed-rate mortgage reached more than 7% in October, achieving heights last seen more than 20 years ago, Freddie Mac data showed. The rate has fallen slightly below 7% but remains highly elevated, Freddie Mac said on Thursday.

At the start of 2022, by comparison, the mortgage rate on a 30-year fixed mortgage stood at 3.22%.

For homebuyers, each single percentage point increase in a mortgage rate can add thousands or tens of thousands in additional costs each year, depending on the price of the house, according to Rocket Mortgage.

However, the jump in interest rates comes with a silver lining: The elevated cost of loans should slash demand and cut home prices, Benz said.

“We haven’t seen it yet but there might be a chilling effect on home prices,” she said, citing a supply shortage that she believes could slacken over time.

What does the elevated interest rate mean for savers?

As much as high interest rates hammer borrowers, they benefit savers.

“If you’re a saver right now, it’s pretty darn good,” Derek Horstmeyer, a finance professor at George Mason University’s School of Business, told ABC News.

The yields on savings accounts have climbed as the Federal Reserve has lifted its interest rates, since banks accrue additional revenue in a high-interest rate environment and pass along some of that income to depositors.

Meanwhile, an array of high-yield savings accounts has emerged as firms seek to entice depositors with high returns.

The average annual yield on a savings account has more than doubled since April but still stands at just 0.52%, meaning that a typical customer earns a fraction of a percentage point of interest each year for his or her savings deposit, Bankrate data showed.

High-yield savings accounts, however, offer customers as much as about 5% annual percentage yield, a Bankrate analysis said.

Moreover, the simultaneous presence of high interest rates alongside declining inflation means that savers can avoid the elevated consumer prices that previously ate away at savings, said Cox, of Harris Financial Group.

“It’s massively beneficial,” Cox said, noting his expectation that inflation will continue to fall. “It only gets better from here.”

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(NEW YORK) — Anheuser-Busch plans to lay off hundreds of corporate employees, a company spokesperson told ABC News on Thursday.

The layoffs come months after a product endorsement from Dylan Mulvaney, a transgender influencer, in April set off a consumer boycott among conservatives that hammered sales.

The layoffs will affect “less than 2%” of the company’s U.S. employees, the company said. That figure amounts to roughly 380 workers, since the company’s website says it employs a total of about 19,000 U.S.-based workers.

The layoffs will affect workers “across every corporate function” but will not impact frontline workers, such as warehouse staff, drivers and salespeople, the company spokesperson said.

“Today we took the very difficult but necessary decision to eliminate a number of positions across our corporate organization,” Anheuser-Busch CEO Brendan Whitworth said in a statement to ABC News. “While we never take these decisions lightly, we want to ensure that our organization continues to be set for future long-term success.”

The layoffs were originally reported by CNN and the Wall Street Journal.

Sales of Bud Light across the U.S. fell for at least six weeks after the start of the boycott, according to data from Bump Williams Consulting and Nielsen NIQ reviewed by ABC News. For instance, sales dropped nearly 26% over the week ending on May 20, the data showed.

Last month, Modelo overtook Bud Light as the top-selling beer in the U.S.

The stock price of Anheuser-Busch InBev has fallen nearly 12% since the start of the boycott in early April. Over that period, the S&P 500 has risen by nearly 12%.

In response to declining sales, the company provided financial support for tens of thousands of frontline workers at independent distributors, Anheuser-Busch InBev CEO Michel Doukeris said on an earnings call in May.

After the initial boycott, Anheuser-Busch InBev posted a statement in April from CEO Brendan Whitworth on its website.

“We never intended to be part of a discussion that divides people,” Whitworth said. “We are in the business of bringing people together over a beer.”

The company placed two executives who oversaw the endorsement of Mulvaney’s Instagram post on leave, the Wall Street Journal reported in April.

The response drew sharp criticism from some LGBTQ advocates who considered it a capitulation to the backlash. The Human Rights Campaign, the nation’s largest LGBTQ advocacy organization, suspended the company’s Corporate Equality Index score, USA Today reported. Previously, the company scored 100, the top rating.

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(NEW YORK) — U.S. economic growth accelerated over three months ending in June, blowing past economist expectations and rebuking concern about a possible recession.

The U.S. gross domestic product grew by a 2.4% annualized rate to finish the first half of 2023, according to government data released Thursday.

The results mark an advance from the 2% annualized GDP growth recorded over the previous quarter. That growth showed a cooling from the 2.6% growth displayed in the quarter before that.

The finding of 2.4% annualized growth over the three months ending in June demonstrates that economic growth has accelerated over that period, dispelling concern among some about a fast-approaching recession.

The heightened growth stems from an increase in consumer and government spending, as well as a jump in business investment in inventory, according to the Bureau of Economic Analysis, the federal agency that releases the GDP data.

A decrease in exports and home investment detracted from the GDP growth, the agency said.

Personal income — an overall measure of a variety of incomes such as wages and rental payments — grew at a slower pace than it had in the previous quarter, the data showed. The personal saving rate, however, inched upward from the previous quarter.

Fears of a recession have cast a thundercloud over the economy for many months but forecasters sun-kissed by falling inflation and a robust jobs market have grown optimistic about the U.S. averting a downturn.

Many observers define a recession through the shorthand metric of two consecutive quarters of shrinking in a nation’s GDP.

The GDP data released on Thursday arrives a day after the Federal Reserve raised interest rates by 0.25%, bringing its benchmark rate to a 22-year high of between 5.25% and 5.5%.

Economists surveyed by Bloomberg, however, think the move constitutes the central bank’s final rate increase of an aggressive series that began in March 2022.

For more than a year, the Federal Reserve has aimed to roll back inflation through interest rate hikes that typically slow the economy and slash consumer demand. The approach, however, risks tipping the economy into a downturn.

The policy appears to have succeeded in cooling prices. Inflation has fallen significantly from a peak last summer but remains one percentage point above the Federal Reserve’s target of 2%.

Some key economic indicators, meanwhile, have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs.

“The U.S. economy has actually been quite resilient,” Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.

Nearly three-quarters of forecasters surveyed by the National Association for Business Economics said that the probability of the U.S. entering a recession in the next 12 months is 50% or less, the organization announced on Monday.

On Tuesday, the International Monetary Fund released fresh projections showing an improved outlook for the global and U.S. economy. The organization said it expects the U.S. economy to grow 1.8% this year, a revision upward from a previous estimate released in April.

“The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods,” Pierre-Olivier Gourinchas, IMF chief economist and research department director, said at a press conference on Tuesday.

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(NEW YORK) — United Airlines announced Thursday that it is the first U.S. airline to add Braille to its aircraft cabin interiors.

The airline has about a dozen planes outfitted with Braille already, and plans to add Braille to its entire mainline fleet of more than 900 planes by 2026. The Braille will help blind and visually impaired people identify row numbers and seat assignments, and will be located in the lavatory as well.

“One of the things you want to do with all your customers is allow them to be as self-sufficient as possible,” said Linda Jojo, United’s executive vice president and chief customer officer. “This is one of the ways that our vision-impaired customers can navigate themselves to the right row in the right seat, without asking for help.”

The addition of Braille is part of the United NEXT plan, which involves purchasing more planes and upgrading the interiors of the existing fleet. The Braille is being added when the planes go in to be retrofitted.

For blind customers, the flying experience can be difficult. Dan Spoone, the interim executive director of the American Council of the Blind, is blind and said the challenges range from locating the call button and the overhead light to dealing with the lavatory.

“By God, those flush buttons are on a different spot in every different model of aircraft,” said Spoone.

Chris Danielsen, the director of public relations for the National Federation of the Blind, is blind as well, and says when the cabin crew states that passengers must comply with lighted signs, placards and crewmember instructions, he’s unable to see signs or placards and has to only rely on what the crew says.

“It’s an important paradigm shift,” said Danielsen. “The flying experience is so full of visual signs and indicators.”

United has included the National Federation of the Blind and the American Council of the Blind in its accessibility efforts — not only with Braille, but also exploring the use of other tactile navigation aids in the cabin, and in the development of United’s accessible in-flight entertainment and mobile app that work with screen reader technology.

Jojo said that the airline would welcome input from customers about how the Braille is working for them and that United will incorporate the feedback as the retrofits continue.

“This is an excellent step for United,” said Spoone. “We want to travel and be independent and go where we want to go and visit our families and go on vacations… There’s just a lot of opportunity to improve accessibility through the whole path from the time your Uber drops you off at the airport til you get on the plane and get to your destination.”

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(NEW YORK) — Fears of a recession have cast a thundercloud over the economy for many months but forecasters sun-kissed by falling inflation and a robust jobs market have grown optimistic about the U.S. averting a downturn.

Gross domestic product data to be released by the federal government on Thursday will show if and how much the economy grew over the three months ending in June, offering a fresh look at what is widely considered the most comprehensive measure of a nation’s economic health.

Economists expect the GDP to have grown at an annualized rate of 1.7% over that period. The increase will owe to robust consumer and government spending, as well as a small jump in business investment, said Mark Zandi, chief economist at Moody’s Analytics.

Such results would indicate a slowdown from the 2% annualized GDP growth recorded over the previous quarter, which itself showed a cooling from the 2.6% growth displayed in the quarter before that.

However, the anticipated finding of 1.7% annualized growth over the second quarter of 2023 would demonstrate that the economy expanded rather than shrank, dispelling concern about an imminent recession.

Many observers define a recession through the shorthand metric of two consecutive quarters of shrinking in a nation’s GDP.

The data to be released on Thursday arrives a day after the Federal Reserve raised interest rates by 0.25%, escalating its aggressive inflation fight.

Economists surveyed by Bloomberg, however, think the move constitutes the central bank’s final rate increase of an aggressive series that began in March 2022.

For more than a year, the Federal Reserve has aimed to roll back inflation through interest rate hikes that typically slow the economy and slash consumer demand. The approach, however, risks tipping the economy into a downturn.

The policy appears to have succeeded in cooling prices. Inflation has fallen significantly from a peak last summer but remains one percentage point above the Federal Reserve’s target of 2%.

Some key economic indicators, meanwhile, have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs.

“The U.S. economy has actually been quite resilient,” Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.

Nearly three-quarters of forecasters surveyed by the National Association for Business Economics said that the probability of the U.S. entering a recession in the next 12 months is 50% or less, the organization announced on Monday.

On Tuesday, the International Monetary Fund released fresh projections showing an improved outlook for the global and U.S. economy. The organization said it expects the U.S. economy to grow 1.8% this year, a revision upward from a previous estimate released in April.

“The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods,” Pierre-Olivier Gourinchas, IMF chief economist and research department director, said at a press conference on Tuesday.

Copyright © 2023, ABC Audio. All rights reserved.

(NEW YORK) — Fears of a recession have cast a thundercloud over the economy for many months but forecasters sun-kissed by falling inflation and a robust jobs market have grown optimistic about the U.S. averting a downturn.

Gross domestic product data to be released by the federal government on Thursday will show if and how much the economy grew over the three months ending in June, offering a fresh look at what is widely considered the most comprehensive measure of a nation’s economic health.

Economists expect the GDP to have grown at an annualized rate of 1.7% over that period. The increase will owe to robust consumer and government spending, as well as a small jump in business investment, said Mark Zandi, chief economist at Moody’s Analytics.

Such results would indicate a slowdown from the 2% annualized GDP growth recorded over the previous quarter, which itself showed a cooling from the 2.6% growth displayed in the quarter before that.

However, the anticipated finding of 1.7% annualized growth over the second quarter of 2023 would demonstrate that the economy expanded rather than shrank, dispelling concern about an imminent recession.

Many observers define a recession through the shorthand metric of two consecutive quarters of shrinking in a nation’s GDP.

The data to be released on Thursday arrives a day after the Federal Reserve raised interest rates by 0.25%, escalating its aggressive inflation fight.

Economists surveyed by Bloomberg, however, think the move constitutes the central bank’s final rate increase of an aggressive series that began in March 2022.

For more than a year, the Federal Reserve has aimed to roll back inflation through interest rate hikes that typically slow the economy and slash consumer demand. The approach, however, risks tipping the economy into a downturn.

The policy appears to have succeeded in cooling prices. Inflation has fallen significantly from a peak last summer but remains one percentage point above the Federal Reserve’s target of 2%.

Some key economic indicators, meanwhile, have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs.

“The U.S. economy has actually been quite resilient,” Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.

Nearly three-quarters of forecasters surveyed by the National Association for Business Economics said that the probability of the U.S. entering a recession in the next 12 months is 50% or less, the organization announced on Monday.

On Tuesday, the International Monetary Fund released fresh projections showing an improved outlook for the global and U.S. economy. The organization said it expects the U.S. economy to grow 1.8% this year, a revision upward from a previous estimate released in April.

“The global economy continues to gradually recover from the pandemic and Russia’s invasion of Ukraine, but it is not yet out of the woods,” Pierre-Olivier Gourinchas, IMF chief economist and research department director, said at a press conference on Tuesday.

Copyright © 2023, ABC Audio. All rights reserved.

(WASHINGTON) — U.S. Federal Reserve Chair Jerome Powell told reporters Wednesday that the Fed staff no longer forecasts a recession for the U.S., and there is a chance inflation could return to target without high job losses.

In April, the Federal Reserve staff expected the regional bank crisis to tip the economy into recession, according to a Fed minutes release. Powell indicated during his news conference with reporters that the spring prediction may not be the case.

“The staff now has a noticeable slowdown in growth starting later this year in the forecast, but given the resilience of the economy recently, they are no longer forecasting a recession,” he said.

The Fed staff is an independent staff within the Federal Reserve that makes its own projections on the economy. Their forecasts are not the official position of the Federal Open Market Committee, the body that determines rate hike decisions.

Earlier in the day, the Federal Reserve raised its benchmark interest rate another 0.25% to a 22-year high of between 5.25% and 5.5%.

The central bank left its benchmark interest rate unchanged in June, ending a string of 10 consecutive rate increases that stretched back to March 2020.

Powell said the impacts of the current hikes are still working through the economy, and he could not use the word “optimism” to describe the trajectory of the economy.

Powell did leave the door open to more rate hikes saying they will react to the data. He pointed out that there will be two jobs’ reports and two inflation reports before the next Fed decision.

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(WASHINGTON) — The Federal Reserve raised its benchmark interest rate another 0.25% on Wednesday, reviving its inflation fight despite a significant cooldown of price increases in recent months.

The rate hike brought the Fed’s benchmark interest rate to a 22-year high of between 5.25% and 5.5%.

Inflation has fallen significantly from a peak last summer, but remains at a level one percentage point higher than the Federal Reserve’s target of 2%.

Speaking at a press conference in Washington, D.C., on Wednesday, Fed Chair Jerome Powell downplayed the progress achieved so far in reducing inflation.

“Inflation has moderated somewhat since the middle of last year,” Powell said. “Nonetheless, the process of getting inflation back down to 2% has a long way to go.”

The Fed remains open to raising rates again at its next meeting in September, depending on the economic data released over the months prior to that decision, Powell added.

The central bank left its benchmark interest rate unchanged in June, ending a string of 10 consecutive rate increases that stretched back 15 months.

Prior to the announcement on Wednesday, economists surveyed by Bloomberg said they expected the move to be the last rate increase of the current inflation battle. The size of the rate hike on Wednesday matched economist expectations.

For more than a year, the Federal Reserve has aimed to roll back price increases by slowing down the economy and slashing consumer demand. The approach, however, risks tipping the economy into a recession.

So far, the rate hikes appear to have slowed but not imperiled the nation’s economic growth.

Some key economic indicators have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs.

“The U.S. economy has actually been quite resilient,” Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.

A day later, a major upward revision of government data showed that gross domestic product increased at a 2% annualized rate for a three-month period ending in March — a sizable jump from the previous estimate of 1.3%.

Despite the upward revision, U.S. economic growth over the first three months of this year was slower than the 2.6% growth in the previous quarter. In turn, that performance was down from 3.2% growth in the previous quarter.

Still, the Fed offered words of caution along with its rate-hike announcement on Wednesday.

“The Committee remains highly attentive to inflation risks,” the Federal Open Market Committee, the Fed’s decision-making body on interest rates, said in a statement on Wednesday.

The cooldown of inflation alongside resilient economic performance has given rise to optimism among some observers that the U.S. will avert a recession.

Nearly three-quarters of forecasters surveyed by the National Association for Business Economics said the probability of the U.S. entering a recession in the next 12 months is 50% or less, the organization announced on Monday.

Speaking late last month, Powell expressed cautious optimism that the U.S. could avoid a severe recession, citing a modest slowdown of wage growth in recent months.

As part of its inflation fight, the Fed closely watches the pace of wage growth, since in theory employers raise prices to keep up with higher pay.

“We’re getting the softening we need,” Powell said. “We’re getting it slower than expected but it’s nonetheless happening. In my view, the least unlikely case is that we do find a way to better balance without a severe downturn,” he added.

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(WASHINGTON) — The Federal Reserve on Wednesday will decide whether to revive an aggressive series of interest rate hikes and may indicate a willingness to soon end its full-throttle inflation fight.

Last month, the central bank left its benchmark interest rate unchanged, ending a string of 10 consecutive rate increases that stretched back 15 months.

Economists surveyed by Bloomberg this month expect the Fed to impose a modest quarter-point rate hike on Wednesday. However, economists said they expect the move to be the last rate increase of the current inflation battle.

For more than a year, the Federal Reserve has aimed to roll back price increases by slowing down the economy and slashing consumer demand. The approach, however, risks tipping the economy into a recession.

Inflation has fallen significantly from a peak last summer, but remains at a level one percentage point higher than the Federal Reserve’s target of 2%.

Meanwhile, the rate hikes appear to have slowed but not imperiled the nation’s economic growth.

Some key economic indicators have sustained robust performance. A jobs report earlier this month showed that the labor market cooled, but still grew at a solid clip in June, adding 209,000 jobs.

“The U.S. economy has actually been quite resilient,” Fed Chair Jerome Powell said late last month in Sentra, Portugal, at a conference organized by the European Central Bank.

A day later, a major upward revision of government data showed that gross domestic product increased at a 2% annualized rate for a three-month period ending in March — a sizable jump from the previous estimate of 1.3%.

Despite the upward revision, U.S. economic growth over the first three months of this year was slower than the 2.6% growth in the previous quarter. In turn, that performance was down from 3.2% growth in the previous quarter.

The cooldown of inflation alongside resilient economic performance has given rise to optimism among some observers that the U.S. will avert a recession.

Nearly three-quarters of forecasters surveyed by the National Association for Business Economics said the probability of the U.S. entering a recession in the next 12 months is 50% or less, the organization announced on Monday.

Speaking late last month, Powell expressed cautious optimism that the U.S. could avoid a severe recession, citing a modest slowdown of wage growth in recent months.

As part of its inflation fight, the Fed closely watches the pace of wage growth, since in theory employers raise prices to keep up with higher pay.

“We’re getting the softening we need,” Powell said. “We’re getting it slower than expected but it’s nonetheless happening. In my view, the least unlikely case is that we do find a way to better balance without a severe downturn.”

Copyright © 2023, ABC Audio. All rights reserved.