Juggling Dynamite

In Ontario, the general minimum wage, including liquor servers, bartenders and waiters, is $15.50 per hour. In some areas of the US, the minimum wage for tipped services is, unbelievably, $2.13 per hour, the same minimum that was established in 1991.

Tipping in the United States is on the rise, and experts are calling it tipflation. In the fourth quarter of 2022, the number of tips provided at full-service restaurants grew by 17% from the fourth quarter of 2021. Meanwhile, the tip frequency at quick-service restaurants rose 16% during the same time period. Experts say that’s because of the newer and sleeker-looking Point-of-Sale, or POS, systems by tech companies like Square, Toast and Clover, who also have increased their sales as a result. The pressure to tip well in front of the tip receiver, before a service is completed, or in front of other customers makes a difference for many. After customers swipe their credit card, they’re typically prompted with three large tipping options on a screen. While businesses can opt out of the tipping feature, most aren’t. In fact, even Starbucks started prompting customers for tips in stores in September 2022. With Americans being pressured to tip higher percentages and for more services, the question is, where is the tipping point? Here is a direct video link.

The Fed’s inflation outlook is “totally disconnected from what the market wants,” @businesscycle Co-Founder Lakshman Achuthan, alongside @SPGlobal’s Paul Gruenwald. “The market is looking for a [rate] pause or a cut, and that is just not in the cards.” (Too bad Gruenwald didn’t control his legs!! ) Here is a direct video link.

The May 2023 Dallas Fed bank credit survey results were just released, and the data is recessionary. It’s not just consumer credit that’s in decline. Commercial and industrial loans have contracted at a 14% annualized pace since mid-March and loans to commercial real estate at a -4% annualized rate. See Banking outlook continues to deteriorate amid further credit tightening, declines in loan demand.

Loan demand declined for the sixth period in a row amid further loan pricing increases and worsening general business activity. Overall, loan volumes continued to decline as well, though at a decelerated pace. Residential real estate loan volumes stabilized after falling for several months, and consumer loan volume declines slowed notably. Significant volume declines continue to be seen in commercial and industrial and commercial real estate lending. Credit conditions tightened further; 48 percent of bankers said they tightened credit standards and terms over the past six weeks, the highest share since the survey began in 2017. Loan nonperformance continued to increase slightly. The banking outlook continues to deteriorate, with contacts expecting a further contraction in business activity and loan demand and an increase in nonperforming loans over the next six months.