Scarred and scared: post-Covid consumers not their old selves

By Mark John

LONDON (Reuters) – Michael Clark of Amy’s Housewares has one big fear as its London stores prepare to reopen on June 15 along with other retailers around Britain: “Customers not spending, having no trust in the economy.”

His concern, captured in a survey by the British Independent Retailers Association (BIRA) before a nationwide easing of social distancing measures, may be well-founded.

Across the world, consumers are emerging from lockdowns warier and more thrift-conscious than before. That will drag on any recovery and could encourage governments and central bankers to follow up on coronavirus handouts with more costly stimulus.

The new thrift is showing up in various ways: some households are hoarding the cash they saved during lockdowns; some are flocking to cheaper brands or sticking with essentials.

GRAPHIC: Savings rates in Europe rise Savings rates in Europe rise – https://graphics.reuters.com/ECONOMY-EU/SAVINGS/yxmvjkqlnpr/chart.png

Other risks to consumer demand include the outright collapse of purchasing power among those whose livelihoods were ruined by the pandemic and even imponderables such as what happens to spending patterns if more people continue to work from home.

In China, shopping malls began to fill up again from April after lockdown eased. Online sales have surged in some categories, often helped by discounts and state coupons.

But a lingering wariness about items deemed non-essential means consumers may still not emerge as the pillar of growth which Beijing hopes they will be.

“Consumers are placing a greater focus on essential spending categories,” Fitch Solutions said in a June 4 report, predicting a fall in Chinese household spending this year and slashing its 2020 growth forecast to just 1.1% from 5.6% before the pandemic.

DOLLAR STORE CLIENTELE GROWS

In the United States, commonplace brands such as chocolate giant Hershey or toothpaste-maker Colgate say consumers have traded down. Dollar stores, meanwhile, expect to open their doors to a new set of customers as they did after the 2008-09 Great Recession.

“In 2008, folks lost jobs … and they found us. And I think that’s some of what we’re planning for as we take a look into our crystal ball at back half of the year and 2021,” Dollar Tree Chief Executive Gary Philbin said on May 28.

Much hangs now on what happens to the mountain of savings built up by those U.S. households which weathered the worst of the lockdown fall-out and have pushed the overall U.S. savings rate to a record 33% of income.

GRAPHIC: Savings rates in the U.S. rise – https://graphics.reuters.com/ECONOMY-USA/SAVINGS/nmovakbjdva/chart.png

While that rate will fall, those who expect cash to flood back into the economy may be disappointed. A 2012 paper by IMF researchers found that lingering uncertainty after the onset of the 2008-09 recession boosted saving rates durably, leading to lower consumption and growth in the wider economy.

Moreover many U.S. households are about to suffer “income cliffs” with one-off tax rebates expiring in May and pandemic unemployment compensation ending in July, Oxford Economics said, forecasting lower household income through the rest of the year.

“This will likely act as a constraint on the consumer spending recovery well into 2021,” it said in a June 3 note.

Such a scenario could force policy makers across the world to encourage savers to spend by speeding up moves to ease lockdowns, offering more economic support or pushing interest rates further towards, and even into, negative territory.

The same dilemma exists in Europe. The European Central Bank expects household savings to rise six points to 19% of income this year and remain high next year due to what economists call “scarring”, when an event leaves a durable impact on behaviour.

Citing the risk of cash-hoarding, French Finance Minister Bruno Le Maire has called for direct incentives to boost demand. The budget he will present next week will forecast a drop in consumer spending of 10% this year as households amass savings.

Germany has announced a cut in valued-added tax for the second half of the year to drive consumption, coupling that with cash handouts to parents.

Presenting hefty downgrades of the bank’s eurozone growth protections on Thursday, ECB President Christine Lagarde said the depth of scarring of domestic demand was one big factor that will determine the size of the contraction and recovery to come.

She warned: “Overall, the (ECB) Governing Council sees the balance of risks … to the downside.”

(Additional reporting by Reuters bureaux; editing by Philippa Fletcher)

Outpouring of rage over George Floyd killing tests limits of U.S. police tactics

By Sarah N. Lynch and Jonathan Allen

WASHINGTON/NEW YORK (Reuters) – Responses by law enforcement authorities in the U.S. capital and in Flint, Michigan, to protests over the police killing of George Floyd illustrated starkly contrasting approaches to handling angry crowds on American streets and repairing relations with grieving communities.

Sheriff Christopher Swanson of Michigan’s Genesee County was keenly aware that some protests in other cities against police brutality after the May 25 death of Floyd, an unarmed black man, in police custody in Minneapolis had descended into arson and looting.

Tensions were rising in Flint on Saturday when Swanson saw a few officers actually exchange friendly fist-bumps with protesters. So Swanson removed his helmet, strode into the crowd, hugged two protesters and told them, “These cops love you.” Swanson then joined the march.

“We’ve had protests every night since then. … Not one arrest. Not one fire. And not one injury,” Swanson said in a telephone interview.

Federal law enforcement officers took a far less conciliatory approach on Monday evening in confronting a crowd of peaceful protesters outside the White House. The officers charged and used tear gas to clear a path for President Donald Trump to walk to a nearby church for a photo opportunity holding up a copy of the Bible.

“Not only is it a terrible tactic and unsafe … it also is sending a tone as if this is the president that has ordered this,” said Ronald Davis, who headed the Justice Department’s Office of Community Oriented Policing Services under Trump’s predecessor Barack Obama.

Davis oversaw a task force that in 2015 released new federal guidelines for improving police practices after demonstrations that turned violent over the 2014 police killing of a young black man named Michael Brown in Ferguson, Missouri, one of a long list of similar killings.

The guidelines addressed ways to improve trust between police and their communities and included recommendations to prevent protests from escalating into violence.

They advised officers to ease rather than rush into crowd control measures that could be viewed as provocative, to consider that anger over longstanding racial disparities in the American criminal justice system was the root cause of such protests and to not to start out with the deployment of masked, helmeted officers and military-style weapons.

That approach appears to have been seldom used in protests that have engulfed many U.S. cities since Floyd’s death after a white police officer knelt on his neck for nearly nine minutes during his arrest.

LACK OF TRUST

For example, police in New York City have used pepper spray on protesters, hit people with batons and in one case drove two cruisers into a crowd. In New York and some other cities police themselves have been the target of violence.

“If we were dealing with traditional, peaceful protest, everything would have been different,” New York Mayor Bill de Blasio told reporters on Monday.

Candace McCoy, a professor at New York’s John Jay College of Criminal Justice, noted police face a complicated task.

“They know that there are people who have announced beforehand that they intend to do violence both to property and to other people,” McCoy said. “The notion that the property destruction could have somehow been prevented is, I think, perhaps naive.”

New York police were heckled by some demonstrators when some officers knelt in solidarity at a Brooklyn protest. During a Manhattan protest, a police officer shook the hand of a young woman wearing a T-shirt showing slain civil rights leader Martin Luther King and hugged her. Just a few minutes later, another officer zip-tied the woman’s arms behind her back and detained her.

U.S. Senate Judiciary Committee Chairman Lindsey Graham said he plans a hearing on police conduct and race.

“This committee has a unique opportunity to build on some things that the Obama administration did and ask ourselves some hard questions,” Graham said.

Some Obama administration law enforcement reforms aimed at reducing racial discrimination and improving community policing came to a halt after Trump became president in 2017 and his Justice Department took actions such as ceasing investigations into police departments suspected of systemic racial bias.

Civil rights advocates have taken heart over conciliatory approaches displayed in places like Camden, New Jersey, as well as Baltimore, a city torn by violent protests following the 2015 death in police custody of another black man, Freddie Gray.

“I’ve been somewhat encouraged to see that there are some police departments that have demonstrated that police can make the decision to operate in a constitutional fashion and give protesters an opportunity to speak to exercise their First Amendment rights to vent their anger,” Sherrilyn Ifill, president of the NAACP Legal Defense and Educational Fund, told reporters this week, referring to the right of free speech.

Community policing experts said that will be important.

“You have to be transparent and police need to be held accountable when they make mistakes,” said Roberto Villaseñor, the former police chief of Tucson, Arizona, who worked on the 2015 guidelines. “What we need to do is just listen.”

 

(Reporting by Sarah N. Lynch and Jonathan Allen; Additional reporting by Andrea Shalal in Washington; Editing by Scott Malone and Will Dunham)

North Korea says may reconsider steps to build trust with U.S.: KCNA

SEOUL (Reuters) – North Korea said on Thursday its patience has limits and it could reverse steps to build trust with the United States, as it criticized a U.N. Security Council call for it to cease its weapons programs and denounced a U.S. missile test.

The five European members of the U.N. Security Council met on Tuesday to urge North Korea “to take concrete steps” towards giving up its nuclear weapon and ballistic missile programs in a complete, verifiable and irreversible manner.

That call came days after North Korea said it test-fired a new submarine-launched ballistic missile, in what was the most provocative action by North Korea since it resumed dialogue with the United States in 2018.

North Korea, as part of its efforts to sustain that dialogue, which has included three meetings between its leader, Kim Jong Un, and U.S. President Donald Trump, has stopped testing nuclear weapons and intercontinental ballistic missiles.

But North Korea’s foreign ministry spokesman, in a statement reported by its state KCNA news agency, raised questions about that restraint.

“There is a limit to our patience and there is no law that anything we have refrained from so far will continue indefinitely,” the spokesman said.

The spokesman also denounced what he said was the U.N. Security Council’s unfair taking up of the issue of North Korea’s self-defense.

“The fact … is prompting us to reconsider the crucial pre-emptive steps we have taken to build trust with the U.S.”

The spokesman did not elaborate on what pre-emptive steps he was referring to, but North Korean state media and officials have referred to the halting of nuclear and intercontinental ballistic missile tests, and the return of remains of U.S. soldiers killed in the 1950-1953 Korean War, as good-faith gestures to the United States, which it says have not been reciprocated.

The North Korean spokesman also referred to a U.S. Air Force test of a Minuteman III intercontinental ballistic missile this month.

The U.S. test was “clearly carried out in order to pressure us”, the North Korean spokesman said.

(Reporting by Joyce Lee; Editing by Raissa Kasolowsky, Robert Birsel)

North Korea says it wants peace, relations with U.S.

Directional signs bearing North Korean and U.S. flags are seen near the demilitarized zone in Paju, South Korea, June 12, 2018. REUTERS/Kim Hong-Ji

By Stephanie Nebehay

GENEVA (Reuters) – North Korea said on Tuesday that relations with the United States will develop “wonderfully at a fast pace” if Washington responds to its efforts on denuclearization with trustworthy measures and practical actions.

North Korea’s ambassador to the United Nations in Geneva, Han Tae Song, told the U.N.-sponsored Conference on Disarmament that Pyongyang would continue working to establish a “permanent and durable peace mechanism on the Korean peninsula”.

The landmark summit between North Korean leader Kim Jong Un and U.S. President Donald Trump last June produced a promise to work toward the complete denuclearization of the divided peninsula. Progress since then has been patchy.

Washington is demanding concrete action, such as a full disclosure of North Korea’s nuclear and missile facilities, before agreeing to key goals of Pyongyang – easing international sanctions and declaring an official end to the 1950-53 Korean War that ended with an armistice.

The summit had brought about a dramatic turn in relations that had been “the most hostile on earth” and contributed to ensuring peace and security on the peninsula, Han said..

He referred to the two leaders’ joint statement issued after their meeting in Singapore and Kim’s New Year’s Address, adding:

“Accordingly we declared that we would neither make and test nuclear weapons any longer nor use and proliferate them and we have taken various practical measures.

“If the U.S. responds to our efforts with trustworthy measures and corresponding practical actions, bilateral relations will develop wonderfully at a fast pace through the process of taking more definite and epoch-making steps,” he said.

Han told Reuters that he had no information on a possible second summit between Kim and Trump, which the White House has said would be held in late February without saying where.

“As we open a new year, we are determined to seize this hard-won unprecedented window of opportunity of diplomacy,” South Korea’s deputy ambassador Lee Jang-Keun told the Geneva forum on Tuesday.

“The recent announcement by the U.S. of holding a second U.S.-DPRK summit meeting in late February is another harbinger of hope,” he said.

South Korea’s foreign minister Kang Kyung-wha told Reuters at Davos last week that North Korea must make concrete pledges toward curbing its nuclear weapons program, such as dismantling its main nuclear complex and allowing international inspections to confirm the process, when leader Kim meets Trump as soon as next month.

(Reporting by Stephanie Nebehay; editing by Angus MacSwan)

German Catholic Church apologizes for ‘pain’ of abuse victims

Cardinal Reinhard Marx, chairman of German Bishops's Conference attends a press conference to present the findings of a study into the report of sexual abuse by Catholic priests of thousands of children over a 70-year period in Fulda, Germany, September 25, 2018. REUTERS/Kai Pfaffenbach

By Riham Alkousaa and Maria Sheahan

BERLIN (Reuters) – The head of the Catholic Church in Germany apologized on Tuesday “for all the failure and pain”, after a report found thousands of children had been sexually abused by its clergy and said the “guilty must be punished”.

Researchers from three German universities examined 38,156 personnel files spanning a 70-year period ending in 2014, and found indications of sexual abuse by 1,670 clerics, with more than 3,700 possible victims.

German magazine Der Spiegel reported the findings earlier this month after the report was leaked. The scandal comes as the church is grappling with new abuse cases in countries including Chile, the United States, and Argentina.

“Those who are guilty must be punished,” Cardinal Reinhard Marx, chairman of the German Bishops’ Conference, said at a news conference to launch the report in the city of Fulda.

“For too long in the church, we have looked away, denied, covered up and didn’t want it to be true,” he added.

“All this must not remain without consequences. Those affected are entitled to justice,” Marx said, without specifying what consequences perpetrators might face.

“For all the failure, pain and suffering, I must apologize as the chairman of the Bishops’ Conference as well as personally,” he said.

“The study .. makes it clear to us that the Catholic Church has by no means overcome the issue of dealing with the sexual abuse of minors.”

Sexual abuse by Catholic clerics has not ended, Harald Dressing of the Central Institute of Mental Health, one of the report’s authors, told the news conference.

He said many cases were likely to have never been reported or not taken seriously enough to be noted in the files.

“The resulting numbers (in the report) are the tip of an iceberg whose actual size we cannot assess,” he added.

Around 51 percent of victims were aged 13 or younger when first abused, and most abusers committed their first offense when aged between 30 and 50, the study found.

It said 62 percent of those affected by sexual abuse were male.

“Neither homosexuality nor celibacy are the sole causes of sexual abuse of minors,” Dressing said.

“But complex interaction of sexual immaturity and the denial of homosexual inclinations in ambivalent, sometimes openly homophobic surroundings, can provide further explanation for the predominance of male victims of sexual abuse by Catholic clerics.”

Germany’s Justice Minister Katarina Barley said in a statement the church had to report every case so the rule of law could apply.

“The massive abuse of trust, dependencies, and power from within the church is intolerable,” she said.

(Reporting by Riham Alkousaa and Maria Sheahan; editing by Thomas Seythal and Andrew Roche)

Democracies facing crisis of faith: survey

A man leaves a booth during Hungarian parliamentary election at a polling station in Budapest, Hungary, April 8, 2018. REUTERS/Leonhard Foeger

COPENHAGEN (Reuters) – The world’s democracies are facing a severe crisis of public faith, according to the conclusions of a large study published on Thursday.

The report by German polling firm Dalia Research, titled Democracy Perception Index 2018, found that trust in governments appears even lower among people in democracies than in states deemed by the firm to be undemocratic.

“Right now the biggest risk for democracies is that the public no longer sees them as democratic,” said Nico Jaspers, CEO of Dalia Research.

When asked “do you feel that your government is acting in your interest?” 64 percent of respondents living in democracies said “rarely” or “never”.

In non-democracies 41 percent said the same, according to the study, based on 125,000 respondents in 50 countries.

Kenya, Austria, Portugal, Sweden and Denmark were the countries where the largest proportions of people said the government was not acting in their interest.

Kenya is categorized as “partly free” and the other four countries “free” in a ranking by the U.S. organization Freedom House, which Dalia uses.

People in Saudi Arabia, Egypt, Turkey and China, all countries categorized “not free” by Freedom House, most rarely gave that response.

When asked “Do you feel that the voice of people like you matters in politics?” 54 percent of citizens in democracies said their voices “rarely” or “never” mattered, compared with 46 percent in non-democracies.

Of the 10 countries that had the highest percentages of people saying their voices were rarely or never heard, nine are democracies, Dalia said.

“While citizens in democratic societies might be inherently more critical of their government than those living in non-democratic societies, perception is often as important as reality, and therefore the implications of the findings remain relevant and insightful,” it said in a news release.

The publication of the survey results came on the eve of the opening of the Copenhagen Democracy Summit, to be attended by figures including former U.S. vice president Joe Biden and former British prime minister Tony Blair.

The summit and survey are both organized by the non-profit Alliance of Democracies Foundation, founded by former NATO Secretary General Anders Fogh Rasmussen last year.

(Reporting by Teis Jensen; editing by Andrew Roche)