Washington, DC
CNN
 — 

Spending at US retailers fell in March as consumers pulled back after the banking crisis fueled recession fears.

Retail sales, which are adjusted for seasonality but not for inflation, fell by 1% in March from the prior month, the Commerce Department reported on Friday. That was steeper than an expected 0.4% decline, according to Refinitiv, and above the revised 0.2% decline in the prior month.

Investors chalk up some of the weakness to a lack of tax returns and concerns about a slowing labor market. The IRS issued $84 billion in tax refunds this March, about $25 billion less than they issued in March of 2022, according to BofA analysts.

That led consumers to pull back in spending at department stores and on durable goods, such as appliances and furniture. Spending at general merchandise stores fell 3% in March from the prior month and spending at gas stations declined 5.5% during the same period. Excluding gas station sales, retail spending retreated 0.6% in March from February.

However, retail spending rose 2.9% year-over-year.

Smaller tax returns likely played a role in last month’s decline in retail sales, along with the expiration of enhanced food assistance benefits, economists say.

“March is a really important month for refunds. Some folks might have been expecting something similar to last year,” Aditya Bhave, senior US economist at BofA Global Research, told CNN.

Credit and debit card spending per household tracked by Bank of America researchers moderated in March to its slowest pace in more than two years, which was likely the result of smaller returns and expired benefits, coupled with slowing wage growth.

Enhanced pandemic-era benefits provided through the Supplemental Nutrition Assistance Program expired in February, which might have also held back spending in March, according to a Bank of America Institute report.

Average hourly earnings grew 4.2% in March from a year earlier, down from the prior month’s annualized 4.6% increase and the smallest annual rise since June 2021, according to figures from the Bureau of Labor Statistics. The Employment Cost Index, a more comprehensive measure of wages, has also shown that worker pay gains have moderated this past year. ECI data for the first quarter of this year will be released later this month.

Still, the US labor market remains solid, even though it has lost momentum recently. That could hold up consumer spending in the coming months, said Michelle Meyer, North America chief economist at Mastercard Economics Institute.

“The big picture is still favorable for the consumer when you think about their income growth, their balance sheet and the health of the labor market,” Meyer said.

Employers added 236,000 jobs in March, a robust gain by historical standards but smaller than the average monthly pace of job growth in the prior six months, according to the Bureau of Labor Statistics. The latest monthly Job Openings and Labor Turnover Survey, or JOLTS report, showed that the number of available jobs remained elevated in February — but was down more than 17% from its peak of 12 million in March 2022, and revised data showed that weekly claims for US unemployment benefits were higher than previously reported.

The job market could cool further in the coming months. Economists at the Federal Reserve expect the US economy to head into a recession later in the year as the lagged effects of higher interest rates take a deeper hold. Fed economists had forecast subdued growth, with risks of a recession, prior to the collapses of Silicon Valley Bank and Signature Bank.

For consumers, the effects of last month’s turbulence in the banking industry have been limited so far. Consumer sentiment tracked by the University of Michigan worsened slightly in March during the bank failures, but it had already shown signs of deteriorating before then.

The latest consumer sentiment reading, released Friday morning, showed that sentiment held steady in April despite the banking crisis, but that higher gas prices helped push up year-ahead inflation expectations by a full percentage point, rising from 3.6% in March to 4.6% in April.

“On net, consumers did not perceive material changes in the economic environment in April,” Joanne Hsu, director of the surveys of consumers at the University of Michigan, said in a news release.

“Consumers are expecting a downturn, they’re not feeling as dismal as they were last summer, but they’re waiting for the other shoe to drop,” Hsu told Bloomberg TV in an interview Friday morning.

This story has been updated with context and more details.

New York
CNN
 — 

OPEC and its allies’ surprise move to slash oil production will soon be felt at US gas pumps.

The group known as OPEC+ announced Sunday it would cut oil production by more than 1.6 million barrels a day starting in May, running through the end of the year. The news sent both Brent crude futures, the global oil benchmark, and WTI, the US benchmark, up about 6% in trading Monday.

The production cut announcement also had an immediate impact on gasoline futures, which will be passed onto US drivers much more quickly than the spike in oil prices. RBOB, the most closely watched wholesale gasoline price, was up about 8 cents a gallon, or about 3%, in morning trading.

“I think OPEC is reawakening the inflation monster,” said Tom Kloza, global head of energy analysis for OPIS, which tracks gas prices for AAA. “The White House has to be shocked and major-time pissed. It certainly alters the calculus for a while.”

The national average for US gas prices stood at $3.51, on Monday, according to AAA. Kloza said he could see it getting up to $3.80 to $3.90 in relatively short order thanks to the move by OPEC.

“We’re not going to get back to $5 a gallon. I don’t think we’re even going as high as $4,” he said. But he said by the end of the summer US drivers could be back above year-earlier prices, especially if there is a hurricane or other storms affecting production along the Gulf Coast.

The average US regular gas price a year ago stood at $4.19 a gallon in the wake of Russia’s invasion of Ukraine and the disruption that caused to world’s energy markets. Prices eventually reached a record $5.02 a gallon on June 14, before starting a slow but steady decline over the course of more than three months during which the average price fell every day. The decline was partly driven by the release of oil from the US Strategic Petroleum Reserve, and partly by concerns that there could be a US or global recession that reduced the demand for gasoline.

Even at $3.51, US gas prices were just below the $3.53 average on Feb. 23, 2022, the day before Russia’s invasion of Ukraine.

Kloza said one thing keeping prices from getting anywhere near the record levels of 2022 is that the US plans additional releases from the SPR, and US oil production and refining capacity are both up. But a cut of 1 million barrels a day of oil by OPEC+ will not be easy to make up.

“They have ability to cut production and they seem motivated to do so,” he said.

CNN
 — 

A new study found a moderately higher risk of autism spectrum disorder in children born to pregnant people exposed to tap water with higher levels of lithium, but experts caution that this association does not show a direct link between the two.

About 1 in 36 children in the US is diagnosed with autism spectrum disorder (ASD) each year, according to data from the US Centers for Disease Control and Prevention.

Scientists still don’t know the exact cause of autism, a developmental disorder. Genetics may be a factor, but some have been looking at potential environmental causes, too.

Cases may be on the rise, but that is also unclear. One study published this year on cases in the New York-New Jersey area found that autism diagnosis rates tripled among certain age groups between 2000 and 2016. A 2021 report found similar increases in cases, but the CDC says the increased number of cases is most likely linked to more doctors screening for the condition.

Lithium is an alkali metal that can be found naturally in some food and ground water. It’s used in batteries, grease and air conditioners, as well as in the treatment of bipolar disorder and some blood disorders. Its levels in US drinking water are not regulated, according to the US Geological Survey.

A new study, published Monday in the journal JAMA Pediatrics, found a small association between lithium and autism diagnosis in Denmark, where the researchers say the level of lithium in drinking water is similar to that in American water systems.

The researchers checked a database of people with psychiatric disorders for children born between 2000 and 2013 to find information on 8,842 cases of ASD and 43,864 participants who did not have ASD. They then measured the concentration of lithium in 151 public waterworks that served more than half of the Danish population and mapped out where pregnant people lived in relation.

As lithium levels in water increased, there was a modest increased risk of an ASD diagnosis. Specifically, compared with people at the lowest exposure level, those who had the second and third highest exposure during pregnancy had a 24% to 26% higher risk of ASD diagnosed in children. The group with the highest exposure had a 46% higher risk than those at the lowest level of exposure.

The researchers could not tell how much water the pregnant people drank, but they picked Denmark in part because residents there consume some of the lowest amounts of bottled water in Europe.

Experts say it’s important to note that the research can’t show that lithium exposure leads directly to an autism diagnosis.

Further study is required, said study co-author Dr. Beate Ritz, a professor of neurology in the David Geffen School of Medicine at UCLA, and a professor of epidemiology and environmental health at the UCLA Fielding School of Public Health.

“Any drinking water contaminants that may affect the developing human brain deserve intense scrutiny,” Ritz said in a news release. She added that the research would need to be replicated in other countries to look for a similar connection.

The implications of the findings are complex as far as public health policy is concerned, according to an editorial published alongside the study. Lithium levels in water, at concentrations that the study associated with a potential ASD risk, have also been linked with health benefits such as lower rates of hospitalization for psychiatric disorders and suicide.

“If all these of associations are valid, the wisdom of Solomon will be required to develop guidelines for lithium in drinking water that are maximally protective of the entire population,” wrote Dr. David C. Bellinger, a professor of neurology and psychology at Harvard Medical School. “Until the basic biology of ASD is better understood, it will be difficult to distinguish causal from spurious associations.”

Dr. Max Wiznitzer, director of the Rainbow Autism Center at University Hospitals Rainbow Babies and Children’s Hospital in Cleveland, points to other research on the effects of lithium on pregnant people who take it for mental health disorders. Those studies – which look at people exposed to much higher levels than are found in drinking water – do not show a connection with autism spectrum disorder.

“It’s an interesting association, but causation is definitely not proven,” said Wiznitzer, who was not involved in the new research. “We have to see if there’s a viable and biologically plausible mechanism by which a small amount of lithium in the water supply can somehow do this, yet pharmacologic dosing of lithium in women with bipolar disorder has not been reported to be causing increased risk of ASD.”

Other studies have also suggested connections between ASD and environmental exposures to things like pesticides, air pollution and phthalates. But none of them points to any of these factors as a direct cause of the disorder.

A link between environmental exposure and ASD is hard to prove, Wiznitzer said. With research showing that increased exposure to air pollution raises the risk of giving birth to a child with ASD, for example, he often wonders whether pollution is the determining factor or if it’s just the populations who live in more polluted areas.

“There’s a lot of speculation about about environmental factors, but how many of them are truly causally associated?” Wiznitzer said. “We are bombarded with a variety of environmental stressors in our everyday lives. We have to figure out how to basically safely navigate them, and this is probably not one that’s high on our list.”

Editor’s Note: A version of this story first appeared in CNN’s Meanwhile in the Middle East newsletter, a three-times-a-week look inside the region’s biggest stories. Sign up here.

Abu Dhabi, UAE
CNN
 — 

Turkey’s persecuted pro-Kurdish party has emerged as a kingmaker in the country’s upcoming election, playing a decisive role that may just tip the balance enough to unseat two-decade ruler Recep Tayyip Erdogan.

In a key setback to the Turkish president and leader of the Justice and Development Party (AK Party), the pro-Kurdish Peoples’ Democratic Party (HDP) last month announced that it would not put forward its own presidential candidate, a move analysts say allows its supporters to vote for Erdogan’s main rival.

“We are facing a turning point that will shape the future of Turkey and (its) society,” said the HDP in a statement on March 23. “To fulfill our historical responsibility against the one-man rule, we will not field a presidential candidate in (the) May 14 elections.”

It is a twist of irony for the Turkish strongman, who spent the better half of the past decade cracking down on the party after it began chipping away at his voter base. Its former leader Selahattin Demirtas has been in prison for nearly seven years and the party faces possible closure by a court for suspected collusion with the militant Kurdistan Workers’ Party (PKK) and affiliated groups. But its influence may nonetheless determine the course of Turkey’s politics.

The HDP’s decision not to field a candidate came just three days after head of the Republican People’s Party (CHP) Kemal Kilicdaroglu, Erdogan’s main rival, visited the party’s co-chairs. He told reporters that the solution to Turkey’s problems, “including the Kurdish problem” lies in parliament,” according to Turkish media.

Kilicdaroglu, who represents the six-party Nation Alliance opposition bloc, is the strongest contender to run against Erdogan in years. And while the HDP hasn’t yet announced whether it will put its weight behind him, analysts say it is the kingmaker in the elections.

“It was a carefully crafted political discourse,” Hisyar Ozsoy, deputy co-chair of the HDP and a member of parliament from the predominantly Kurdish province of Diyarbakir, told CNN. “We are not going to have our own candidate, and we will leave it to the international community to interpret it the way they wish.”

Experts say the crackdown on the HDP is rooted in the threat it poses to Erdogan politically, as well as its position as one of the main parties representing Turkey’s Kurds, an ethnic minority from which a separatist militant movement has emerged.

The party and the Kurdish people have had a complicated relationship with Erdogan. The leader courted the Kurds in earlier years by granting them more rights and reversing restrictions on the use of their language. Relations with the HDP were also cordial once, as Erdogan worked with the party on a brief peace process with the PKK.

But ties between Erdogan and the HDP later turned sour, and the HDP fell under a sweeping crackdown aimed at the PKK and their affiliates.

Kurds are the biggest minority in Turkey, making up between 15% and 20% of the population, according to Minority Rights Group International.

It is unclear if the HDP will endorse Kilicdaroglu, but analysts say that the deliberate distance may be beneficial for the opposition candidate.

The accusations against the HDP place it in a precarious position during the elections. It currently faces a case in Turkey’s Constitutional Court over suspected ties to the PKK, which is designated as a terrorist group by Turkey, the United States and the European Union. Knowing it may be banned at any moment, its candidates are running under the Green Left Party in parliament.

If the opposition is seen as allying with the HDP, Erdogan’s AK Party may use its influence in the media to discredit it as being pro-PKK, said Murat Somer, a political science professor at Koc University in Istanbul and author of Return to Point Zero, a book on the Turkish-Kurdish question in Turkey.

The HDP’s threat to Erdogan’s hold on power became apparent after the June 2015 election, the first general election it participated in. It won 13% of the seats, denying the ruling AK Party its majority for the first time since 2002. Erdogan, however, called a snap election five months later, which led to a drop in the HDP’s support to 10.7%, as well as the restoration of the AK Party’s overall majority.

“They are a kingmaker in these elections because the HDP gets about half of the votes of the Kurdish population in Turkey,” said Somer, adding that the other, more conservative Kurdish voters have traditionally voted for Erdogan’s AK Party. And last month, the Free Cause Party (HUDA-PAR), a tiny Kurdish-Islamist party announced support for Erdogan in the elections. The party has never won seats in parliament.

The HDP knows that its position is key to the outcome of next month’s vote, but that it’s also in a delicate situation.

“We want to play the game wisely, and we need to be very careful,” said Ozsoy, adding that the party wants to avoid a “contaminated political climate” where the elections are polarized “between a very ugly ultra-nationalist discourse against Kilicdaroglu and others.”

The party was founded in 2012 with a number of aims, said Ozsoy, one of which was “peaceful and democratic resolution of the Kurdish conflict.”

Somer said that the party was seen to be “an initiative” of the PKK, which later led to a heavy government crackdown on it in the name of counterterrorism.

Its former leader Demirtas remains an influential figure.

The Turkish government has been trying to link the HDP to the PKK but has so far failed to prove “a real connection,” said Asli Aydintasbas, a visiting fellow at the Brookings Institution in Washington, DC.

A post-Erdogan Turkey may give some breathing space to the Kurds and Kurdish-dominated parties in Turkey, Aydintasbas told CNN, noting that many Kurdish voters have recently left Erdogan’s camp. “For HDP, this is more than just an ideological choice,” she said. “It’s a matter of survival.”

Ozsoy says his party understands what’s at stake, not only for Turkey’s Kurds but for all its minorities.

“We are aware of our responsibility here. We are aware of our role. We know we are in a kingmaker position,” the HDP lawmaker said.

Two women arrested for not wearing hijab following ‘yogurt attack’

Two women were arrested in Iran for failing to wear the hijab in public, after a man threw a tub of yogurt at them at a store in the city of Shandiz on Thursday, according to Mizan News Agency, the state-run outlet for Iran’s judiciary.

Oil prices surge after OPEC+ producers announce surprise cuts

Oil prices spiked Monday after OPEC+ producers unexpectedly announced that they would cut output. Brent crude, the global benchmark, jumped 5.31% to $84.13 a barrel, while WTI, the US benchmark, rose 5.48% to $79.83. Both were the sharpest price rises in almost a year. The collective output cut by the nine members of OPEC+ totals 1.66 million barrels per day.

Iran blames Israel for the killing of second IRGC officer, vows to respond

A second Iranian Islamic Revolutionary Guard Corps (IRGC) officer died following an attack in Syria on Friday, according to Iranian state media on Sunday. Iranian state media said the Iranian military adviser died after an Israeli attack near the Syrian capital Damascus left him wounded. The attack also killed another IRGC officer. In a tweet on Sunday, Iranian government spokesman Ali Bahadori Jahromi said the alleged Israeli attack wouldn’t go unanswered. Iranian Foreign Ministry spokesman Nasser Kanaani said on Sunday that Iran has the right to respond to “state terrorism.”

Iranian-American comedian Maz Jobrani, who has been touring the Middle East, spoke to CNN’s Becky Anderson about his support for the protests in his homeland, saying that he used his standup comedy platform to highlight the “brutality against the Iranian people.”

“It was an opportunity for me to say, ‘let’s keep fighting,’” he said.

Watch the interview here.

An Iranian state news outlet is gloating at what it sees as the demise of the US dollar.

IRNA recreated a popular meme to mark China and Brazil’s decision to reportedly ditch the US dollar as an intermediary in trade, citing the Chinese state news outlet, China Daily. It shows two men representing China and Brazil posing in front of a grave labelled “USD.”

The meme was pinned to the top of IRNA’s Twitter page, and was met with laughter and ridicule. “Dream on,” said another user, pointing to the dollar’s use as the main reserve currency around the world.

China Daily said that the agreement was part of “the rising global use of the Chinese renminbi.” It would reportedly enable China and Brazil to conduct trade and financial transactions using local currencies instead of the dollar.