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.

London
CNN
 — 

The British pound crashed to a record low last fall as investors rebelled against budget plans by former Prime Minister Liz Truss. Now, it’s enjoying a comeback.

Sterling hit its highest level against the US dollar in 10 months on Tuesday, topping $1.25 for the first time since June 2022. The pound, which has advanced about 3.3% versus the greenback since the start of 2023, is the best-performing currency among developed economies this year.

The UK currency has been boosted by indications the country’s economy is holding up better than expected. Activity is now thought to have expanded 0.1% in the final three months of last year, up from a previous estimate of no growth at all. Gross domestic product growth in January has been estimated at 0.3% after dropping 0.5% in December.

This resilience is bolstering expectations the Bank of England will maintain aggressive interest rate hikes despite concerns about the health of the global banking sector. Rising rates can boost the domestic currency because they help attract foreign investors searching for higher returns.

Inflation in the United Kingdom also jumped to an annual rate of 10.4% in February, underscoring the need for the Bank of England to maintain its tough approach.

The pound plunged close to $1.03 in September 2022 after the Truss government unveiled plans to boost borrowing while slashing taxes, unleashing panic in financial markets that fueled fears of a recession in the United Kingdom.

The International Monetary Fund predicted in January that the UK economy would contract by 0.6% this year, while all other advanced economies would grow, if only slightly.

“There was a lot of pessimism being priced into the pound,” said Francesco Pesole, a currency strategist at ING.

But the sharp pullback in energy prices and China’s reopening have provided some relief about the economic outlook since the start of the year.

“There was a big re-rating of growth expectations around Europe, and that impacted the UK,” Pesole said.

The euro has also been lifted by these dynamics, rising 2.3% against the US dollar in 2023. The pound’s rally has been sharper in large part because its 2022 declines were more severe, according to Pesole.

Both currencies have been aided by the greenback’s sharp drop from highs reached last September as recession fears have percolated in the United States.

A lack of clarity around the Federal Reserve’s next steps has also restrained the dollar in recent weeks. Investor speculation has increased that the Fed could pause or stop rate hikes due to concerns about the economy following the failure of Silicon Valley Bank last month.

Jordan Rochester, a currency strategist at Nomura, said he thinks the pound could rise to $1.30 this year and “potentially higher.” But he still sees risks given the uncertainty surrounding the Bank of England’s plans and how rate rises will feed back through the country’s economy. And Pesole cautioned that currency fluctuations are often overdone when markets are choppy, as they are now.

“In a volatile market environment, moves are exacerbated,” he said.

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.

New York
CNN
 — 

Twitter’s traditional bird icon was booted and replaced with an image of a Shiba Inu, an apparent nod to dogecoin, the joke cryptocurrency that CEO Elon Musk is being sued over.

Musk addressed the change Monday afternoon, tweeting, “as promised” above an image of a year-old conversation in which another user suggested that Musk “just buy Twitter” and “change the bird logo to a doge.”

The doge logo appeared on the site two days after Musk asked a judge to throw out a $258 billion racketeering lawsuit accusing him of running a pyramid scheme to support the dogecoin, according to Reuters.

Lawyers for Musk and Tesla called the lawsuit by dogecoin investors a “fanciful work of fiction” over Musk’s “innocuous and often silly tweets.”

It wasn’t clear whether the logo change was permanent. Musk has been known to use Twitter to troll both his fans and his critics.

The price of dogecoin, which is typically volatile, was up more than 20% over the past 24 hours, to about 9 cents. It was trading just under 8 cents Monday morning.

Dogecoin was created December 6, 2013, by a pair of software engineers — as a joke. The name is a nod to the “doge” meme that became popular a decade ago. Its Shiba Inu mascot mimicks that meme: a dog surrounded by a bunch of Comic Sans text in broken English.

CNN
 — 

When Lovie Smith was hired by the Houston Texans in February 2022 as the team’s new head coach, he said the NFL had “a problem” with hiring Black coaches and diversity.

“I realize the amount of Black head coaches there are in the National Football League,” Smith told reporters just under a year ago.

“There’s Mike Tomlin and I think there’s me, I don’t know of many more. So there’s a problem, and it’s obvious for us. And after there’s a problem, what are you going to do about it?”

Smith was fired Monday at the end of his one and only season at the helm of the Texans, finishing with a record of 3-13-1.

Smith is the second Black coach in two years to be relieved of his duties by the Texans, which fired David Culley at the end of the 2021 season.

Smith’s time in charge wasn’t full of wins and high points – though his parting gift to the organization was a last-minute Hail Mary victory over the Indianapolis Colts, which saw them relinquish the No. 1 pick in the 2023 NFL draft to the Chicago Bears. But his Texans team showed togetherness and competence, traits often desired by outfits undergoing a rebuild.

Houston general manager Nick Caserio said Smith’s firing was the best decision for the team right now.

“On behalf of the entire organization, I would like to thank Lovie Smith for everything he has contributed to our team over the last two seasons as a coach and a leader,” Caserio said in a statement.

“I’m constantly evaluating our football operation and believe this is the best decision for us at this time. It is my responsibility to build a comprehensive and competitive program that can sustain success over a long period of time. We aren’t there right now, however, with the support of the McNair family and the resources available to us, I’m confident in the direction of our football program moving forward.”

But the firing of the 64-year-old coach, the Texans organization as a whole, and the measures implemented by the league to promote diversity have been heavily criticized by former players and TV pundits.

“The Houston Texans have fired Lovie Smith after 1 year. Using 2 Black Head Coaches to tank and then firing them after 1 year shouldn’t sit right with anyone,” former NFL quarterback Robert Griffin III tweeted Sunday, when news of Smith’s firing broke.

On ESPN, Stephen A. Smith and NFL Hall of Famer Michael Irvin also condemned the decision. Smith called the Texans organization an “atrocity.”

“They are an embarrassment. And as far as I’m concerned, if you’re an African American, and you aspire to be a head coach in the National Football League, there are 31 teams you should hope for. You should hope beyond God that the Houston Texans never call you,” Smith said.

Irvin said Black coaches are being used as “scapegoats” by the Texans.

“It’s a mess in Houston and they bring these guys in and they use them as scapegoats. And this is what African American coaches have been yelling about for a while and it’s blatant, right in our face,” he said.

When CNN contacted the Texans for comment, the team highlighted the moment at Monday’s news conference when Caserio was asked why any Black coach would consider working for the team, and his response was that individual candidates would have to make their own choices.

“In the end it’s not about race. It’s about finding quality coaches,” the general manager said. “There’s a lot of quality coaches. David (Culley) is a quality coach. Lovie (Smith) is a quality coach.

“In the end, each coach has their own beliefs. Each coach has their own philosophy. Each coach has their comfort level about what we’re doing. That’s all I can do is just be honest and forthright, which I’ve done from the day that I took this job, and I’m going to continue to do that and try to find a coach that we feel makes the most sense for this organization. That’s the simplest way I can answer it, and that’s my commitment.

“That’s what I’m hired to do, and that’s what I’m in the position to do. At some point, if somebody feels that that’s not the right decision for this organization, then I have to respect that, and I have to accept it.”

CNN has reached out to Lovie Smith for comment.

At the beginning of the 2022 season, NFL.com reported Smith was one one of just six minority head coaches in the NFL, a low number in a league where nearly 70% of the players are Black.

Since Art Shell was hired by the Los Angeles Raiders in 1989 as the first Black head coach in modern history, there have been 191 people hired as head coaches, but just 24 have been Black.

However, the NFL has taken steps to increase diversity in the coaching ranks.

Notably, in 2003, the NFL introduced the Rooney Rule to improve hiring practices in a bid to “increase the number of minorities hired in head coach, general manager, and executive positions.”

But the Rooney Rule hasn’t been an unqualified success.

In 2003, the Detroit Lions were fined $200,000 for not interviewing any minority coaches before hiring Steve Mariucci as their new head coach.

In response to criticism, the NFL announced it was setting up a diversity advisory committee of outside experts to review its hiring practices last March. Teams would also be required to hire minority coaches as offensive assistants.

Despite changes to the rule being implemented in recent years to strengthen it, a 2022 lawsuit alleges that some teams have implemented “sham” interviews to fulfill the league’s diversity requirements.

Last February, former Miami Dolphins head coach Brian Flores filed a federal civil lawsuit against the NFL, the New York Giants, the Denver Broncos and the Miami Dolphins organizations alleging racial discrimination.

Flores, who is Black, said in his lawsuit that the Giants interviewed him for their vacant head coaching job under disingenuous circumstances.

Two months after submitting the initial lawsuit, Flores added the Texans to it, alleging the organization declined to hire him this offseason as head coach “due to his decision to file this action and speak publicly about systemic discrimination in the NFL.”

In response to the lawsuit, the Texans said their “search for our head coach was very thorough and inclusive.”

The NFL called Flores’ allegations meritless.

“The NFL and our clubs are deeply committed to ensuring equitable employment practices and continue to make progress in providing equitable opportunities throughout our organizations,” the league said in response to the lawsuit.

“Diversity is core to everything we do, and there are few issues on which our clubs and our internal leadership team spend more time. We will defend against these claims, which are without merit.”

But 12 months after firing their last Black head coach, the Texans have fired another one.

“How do you hire two African Americans, leave them one year and then get rid them?” questioned NFL Hall of Famer Irvin.

“You know the mess that Houston is,” Irvin added. “We get the worst jobs and we don’t get the opportunity to fix the worst jobs, just like this.

“I don’t know any great White coach that would take the (Texans) job unless you give them some guarantees. ‘You’re going to have to guarantee me four years to turn this place around.’ But the African American coaches can’t come in with that power because Lovie wouldn’t have got another job.

“This was his last chance to get back into the NFL and you have to take what’s on the table to try to change that.”

The Texans are now searching for a new head coach under general manager Caserio. The new appointment will be Caserio’s third coach in the role: It is almost unprecedented for a general manager to get the opportunity to hire a third head coach with the same team.

Texans chairman and CEO Cal McNair said he would take on a more active role in the hiring process. The next head coach will be the organization’s fourth in three years.

According to the NFL, the Texans have requested to speak to five candidates already about filling Smith’s position, a list that includes two Black coaches.

After Smith was hired in March 2021, McNair said: “I’ve never seen a more thorough, inclusive, and in-depth process than what Nick (Caserio) just went through with our coaching search.”

At that introductory news conference, Smith spoke candidly about how to bring greater diversity to the NFL coaching ranks.

“People in positions of authority throughout – head coaches, general managers – you’ve got to be deliberate about trying to get more Black athletes in some of the quality control positions just throughout your program. If you get that, they can move up, that’s one way to get more.”

Smith continued: “It’s not just an interview, if you’re interviewing a Black guy. It’s about having a whole lot of guys to choose from that look like me. And it’s just not about talk. You look at my staff, that’s what I believe in. And letting those guys show you who they are. That’s how we can increase it, then it’s left up to people to choose. We all have an opportunity to choose, and that’s how I think we’ll get it done.”