Los Angeles Times - 25.08.2019

BuSINESS

SUNDAY, AUGUST 25, 2019:: LATIMES.COM/BUSINESS

D

C

WASHINGTON — As President

Trump considers tax cuts and other ways

to bolster a weakening economy and his

reelection prospects, the financial wild

card may be the American consumer.

Americans have been spending heart-

ily in recent months, outperforming ex-

pectations and compensating for the

softness in business investments, manu-

facturing and net exports due largely to

Trump’s trade war with China.

“The consumer continues to be the

Atlas holding up the economy,” said Jack

Kleinhenz, chief economist for the Na-

tional Retail Federation.

But for how long?

The United States this summer broke

the record for the longest economic ex-

pansion, but many economists now see a

recession — typically defined as two or

more consecutive quarters of declining

output — hitting next year or in 2021.

And the outlook dimmed Friday after

the United States and China announced

an escalation of tit-for-tat tariffs. Trump

also continued his verbal attack on China

and essentially labeled Chinese Presi-

dent Xi Jinping an “enemy” — a stark

change after having lavished praise on Xi

and referring to him as a great friend.

So far, the U.S.-China trade conflict

hasn’t slowed consumer spending, which

accounts for more than two-thirds of

American economic activity.

Their spending has been supported

by the tight labor market, rising incomes

and relatively low household debts. The

recent upheaval in financial markets and

some key indicators flashing red, howev-

er, have begun to weigh on consumers’

moods. And sentiments can be both con-

tagious and self-fulfilling.

One closely followed national survey,

by the University of Michigan, saw a

sharp drop in consumers’ expectations

earlier this month, shortly after the Fed-

eral Reserve cut interest rates and

Trump announced more tariffs on China.

By historical measures, consumer

confidence remains high, but the survey’s

director, Richard Curtin, noted that de-

mand already was softening for some

large discretionary items, including

early-warning indicators such as recre-

ational vehicles.

As it is, Americans have been socking

away more money. In recent months the

personal saving rate, the amount of after-

tax income that isn’t spent, has been hov-

ering around 8%, the highest in several

years.

Consumers haven’t yet turned from

uncertainty to pessimism, Curtin said,

but are taking their cues from people like

Federal Reserve Chairman Jerome H.

Powell. “They’re thinking, ‘If he’s going to

be more cautious, so should I.’ ”

The Fed, worried about trade and the

global outlook, shaved a quarter-point off

its benchmark interest rate on July 31.

And Powell indicated Friday that the

central bank is prepared to do more to

sustain economic growth, which has

slowed to about 2%, a still healthy pace,

from al-

ATHLETIC FOOTWEAR,coats and electronics such as TVs are among the Chinese imports that will now see additional 15% tariffs in September.

Spencer PlattGetty Images

Can Trump count on consumers?

Confidence is high and unemployment low, but tariffs and tweet storms stoke unease

By Don Lee

AUTO SALESwere fueled by pent-up demand from the Great

Recession, but they have peaked and aren’t likely to keep growing.

Jerome AdamsteinLos Angeles Times

[SeeRecession,C8]

Two young tech co-work-
ers named Michael, who
knew absolutely nothing
about fashion, unexpectedly
found themselves in the rag
bin of the dot-com bust at
the beginning of the century.
Now they’re running one
of the fastest-growing e-
commerce clothing compa-
nies in the nation: Revolve
Group. It was valued at
nearly $1.5 billion when it re-
cently went public and, de-
spite a snag here and there,
is headed to more than $600
million in sales this year.
Michael Mente, 38, and
Mike Karanikolas, 41, are co-
chief executives of Revolve,
whose initial public offering
in June was one of the year’s

Buddies in fashion and in tech

FORMER TECH workers Michael Mente, left, and Mike Karanikolas co-founded

Revolve Group, a clothing e-tailer valued at nearly $1.5 billion when it went public.

Courtney CrowNew York Stock Exchange

Clothing neophytes

tapped Instagram and

crunched data to build

apparel firm Revolve.

By Ronald D. White

[SeeRevolve,C7]

Proponents of

a proposed

law allowing

women to be

paid to do-

nate their

eggs for re-

search say it’s

all about

equity.

Research subjects in

other fields can get paid,

they observe. And men can

get paid for donating sperm.

In California, it’s legal for

women to be paid for eggs to

assist couples undertaking

fertility treatments. But it’s

illegal for researchers to

compensate women for

their eggs beyond reim-

bursements for direct ex-

penses, such as travel.

A research lobbying

organization and Assembly-

woman Autumn Burke

(D-Marina del Rey) want to

change that. The existing

rules, Burke says, amount

to “100% gender-based

discrimination. This is my

way of making sure that

women are able to partici-

pate in [fertility] research

and participate in an equi-

table way.”

This is not the first time

this idea has come before

the Legislature. When Jerry

Brown was governor, he

vetoed a similar bill by then-

Assemblywoman Susan

Bonilla (D-Concord) in 2013,

observing that the long-

term risks of egg donation

are not adequately known

and that offering women a

cash blandishment to do it

was therefore improper.

Why it’s a terrible

idea to pay women to

give eggs for research

MICHAEL HILTZIK

[SeeHiltzik,C6]