Current Events in June 2018

Like it or not, the auto and technology industries appear determined to remove humans from behind the wheel, and they're strengthening their partnerships to do so.

Despite a high profile tragedy in Arizona in March, when a self-driving Uber failed to notice a pedestrian in the road, finance and industry are rushing to develop fully autonomous vehicles.

Just this week, Fiat Chrysler (FCA) expanded its relationship with Waymo, while GM's autonomous car project drew an investment from Softbank.

FCA has agreed to add up to 62,000 Chrysler Pacifica Hybrid minivans to Waymo's self-driving fleet. It's a significant increase over the previous commitment. Delivery is expected to begin later this year.

"FCA is committed to bringing self-driving technology to our customers in a manner that is safe, efficient and realistic," said Sergio Marchionne, FCA's CEO. "Strategic partnerships, such as the one we have with Waymo, will help to drive innovative technology to the forefront."

GM gains a powerful new ally

At the moment, Waymo appears to be slightly ahead in the autonomous car race, with the only fleet of fully self-driving cars, with no one in the driver seat, on public roads. However, GM has a powerful ally as it attempts to pull ahead.

The company has announced that the Softbank Vision Fund will invest $2.25 billion in GM Cruise Holdings, the company's division planning to commercialize autonomous vehicle technology at large scale. GM is committing another $1.1 billion toward the effort.

“GM has made significant progress toward realizing the dream of completely automated driving to dramatically reduce fatalities, emissions and congestion,” said Michael Ronen, managing partner, SoftBank Investment Advisers.

“The GM Cruise approach of a fully integrated hardware and software stack gives it a unique competitive advantage. “We are very impressed by the advances made by the Cruise and GM teams, and are thrilled to help them lead a historic transformation of the automobile industry.”

Less than thrilled

Despite these investments, consumers appear less than thrilled about self-driving cars. In February, a survey conducted for Solace found that 60 percent of consumers who own a vehicle with “smart” technology would not buy an autonomous car. A common reason is drivers don't feel confident in handing over control of their vehicle to a computer.

A survey by AAA, released less than two weeks ago, suggests consumer qualms are increasing, not diminishing. The survey found 73 percent of motorists would be afraid to ride in a completely self-driving vehicle, a significant increase from 63 percent recorded in late 2017. Two-thirds of adults said they would actually feel less safe as a pedestrian or bicycle rider when it comes to sharing the road with self-driving cars.

As of July 1, Australian Amazon shoppers will be limited to a much smaller item selection.

The online retailer has geoblocked Australian customers, effectively preventing them from shipping items from non-Australian versions of its website. Shoppers that attempt to visit Amazon.com -- the American domain name -- will be redirected to Amazon.au -- the Australian one.

The decision is tied to Australia’s new Goods and Services Tax (GST), which imposes a 10 percent tax on any imported goods. Previously, the tax was only imposed on imported items over A$1,000 ($756).

What this means for consumers

Though Amazon’s Australian site is still stocked with tens of millions of items, it’s still roughly one-tenth less than what consumers can find on the United States site. Consumers shouldn’t notice a huge difference, as most basics will still be there, but more specific, specialized items might pose an issue.

“While we regret any inconvenience this may cause customers, we have had to assess the workability of legislation as a global business with multiple international sites,” an Amazon spokesperson said.

Amazon and the law

The Australian tax was seen as a win for local Aussie retailers, who had lobbied tirelessly for the 10 percent tax on imported goods bought both online and in-stores. Business owners said they were looking to “even the playing field” with overseas, online rivals.

“They think they have the right to pay no tax in Australia,” said Gerry Harvey, the executive chairman of Harvey Norman (a local Australian retailer), on Amazon’s decision to try to skirt the new tax. “They’ve done the dirty on the government. They’ve done the dirty on the public.”

“The second biggest company in the world, run by richest man in the world (Jeff Bezos) shouldn’t get a leave pass from paying tax in Australia,” Australia’s Treasurer Scott Morrison said. “If multinationals aren’t forced to pay their fair share of tax, they will have the competitive advantage over retailers here in Australia. A level playing field will help Australian businesses grow and create more jobs and opportunities.”

Options for consumers

Despite Amazon’s unwillingness to comply with Australia’s new tax, one of its biggest competitors -- eBay --  has stepped up to the plate. The company announced on Thursday that it would begin working on a way to collect the GST on overseas sales without restricting any sellers.

“This requires major changes to eBay’s global systems and we are working to have these ready by 1st July,” said an eBay spokesperson. “eBay’s GST solution will allow us to collect GST in any currency, from any seller, from any eBay site.

“We won’t block Aussie buyers, redirect them, or require them to pretend they are located overseas. Australians will continue to be able to buy from any eBay site.”

Additionally, Australian tech writer Darren Price said that he and many other Australians will most likely utilize package redirection services to get around the block. In doing so, orders would be shipped to U.S. addresses and then forwarded to Australia.

“Australians are very isolated and it’s the likes of Amazon that have enabled consumers to have more variety,” said Price. “The money will be made offshore still - the only thing is it’s the consumer that is going to be inconvenienced.”

Consumers earned more money in April, but a government report shows that they spent all of it, and more.

As a result, the U.S. savings rate dropped to 2.8 percent, the lowest since December when consumers were loading up their credit cards with holiday purchases.

The Bureau of Economic Analysis (BEA) report shows personal incomes grew 0.3 percent from March. At the same time, consumers increased their spending by 0.6 percent, suggesting they dipped into savings or added to credit card balances.

Spending rose, in part, because gasoline prices surged during the month. The BEA notes gasoline and other energy-related costs were a significant driver of the spending increase.

But spending also increased for non-necessities. Consumers purchased more durable goods, such as appliances and tool. Spending on non-durable goods and services also showed healthy increases.

Confidence consumers tend to spend more

Analysts say some of the spending may have been fueled by late income tax refunds, as well as improving confidence in the economy. With a tightening job market, consumers may be more comfortable drawing down savings temporarily.

A normal savings rate is considered to be around 3 percent. But when it's below that, it is usually considered a sign of consumer optimism. For example, during the run-up to the housing market crash and Great Recession, the savings rate usually stayed below 3 percent because both the stock market and home prices were rising.

After the crash, consumers did a better job of both paying down debt and socking away cash. For example, in May 2009, the savings rate hit a high of 8.1 percent.

Why save?

Despite what now appears to be a solid economy, personal finance experts stress the importance of putting aside some money on a regular basis.

“Savings is the foundation for financial stability,” Bruce McClary, spokesperson for the National Foundation for Credit Counseling, said earlier this year. “Financial goals are hard to reach without an ongoing commitment to save.”

America Saves, part of the Consumer Federation of America, says the first step is to build an emergency fund so that you'll be able to meet an unexpected expense without going into debt. You'll find 53 other savings tips here.

The nation's economy produced 223,000 new jobs in May, as the unemployment rate among African Americans fell to the lowest level since the Bureau of Labor Statistics began tracking that number in 1972.

The overall unemployment rate dipped to 3.8 percent. Broken down demographically, the jobless rates for adult men was 3.5 percent; among African Americans it was 5.9 percent, and among Asians it was 2.1 percent. All were improvements from the previous month.

The jobless rates for adult women (3.3 percent), teenagers (12.8 percent), whites (3.5 percent), and Hispanics (4.9 percent), were little changed from April.

Retail remains strong

Some of the biggest job gains came in retail, which added 31,000 jobs. Retail stores have added 125,000 new jobs so far in 2018.

People also found work in the health care sector during the month. Employment grew by 29,000, in line with expectations. Health care has been adding about the same number of jobs over the last several months.

Employment in construction continued its upward trend, adding 25,000 jobs last month. The construction industry has added 286,000 jobs over the last 12 months.

There were also strong gains in professional and technical services, as well as transportation and warehousing, and manufacturing. Factories added 18,000 jobs in May, with plants producing big-ticket durable goods accounting for the lion's share of the increase.

Earnings rise

Workers earned a little more for their efforts, in line with forecasts. In May, average hourly earnings for all employees on private nonfarm payrolls rose by 8 cents, to $26.92. On a year-over-year basis, average hourly earnings have increased by 71 cents, or 2.7 percent.

Government economists revised March's job creation to 155,000, an increase from 135,000. April, however, was revised downward from 164,000 to 159,000. The economy has produced an average of 179,000 new jobs per month over the last three months.