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Gold prices hit a record high. What's behind the surge?

Getty Images - STOCK

(NEW YORK) -- Shoppers are flocking to Costco for gold bars but they're hardly the only ones scooping up the precious metal.

Investors drove gold prices to a record high on Friday, the latest surge in a 17% rally so far this year. Over that period, bullion prices have climbed more than twice as fast as the S&P 500, the index that most people's 401(k)'s track.

The price gains stem from a wider trend of investors seeking out high-return assets in anticipation of interest rate cuts expected later this year, some experts told ABC News.

A so-called momentum trade has also pushed prices higher, they added, since investors see the price of gold swell and want to share in the gains.


"We're seeing a situation where people are actually increasing their risk exposure," Campbell Harvey, a professor at Duke's Fuqua School of Business who studies commodity prices, told ABC News, noting that the typical price volatility of gold resembles that of the S&P 500.


"You see things like the S&P 500 going up and bitcoin going up," Harvey added. "Gold is part of that."

Costco has generated an estimated $100 million to $200 million per month in gold bar sales, Wells Fargo said in a recent equity research note.

While the price is not disclosed online to nonmembers, the product typically sells for nearly 2% above the spot price, which as of time of publication stood at $2,430 per ounce.

The buying spree has also taken hold at central banks, UBS said in a report last week, citing some central banks' desire to move away from U.S. dollars and hedge against inflation risks.

In January and February, central banks purchased about 64 metric tons of gold and China imported 132 metric tons from Switzerland, a gold-refinery stalwart, UBS said.


Hedge funds and other institutional investors have also bought into the gold craze in an effort to capitalize on the commodity's blistering rise, Campbell said. "That institutional pressure is pushing the price of gold up," he added.

Gold prices have surged despite low activity in a key instrument for everyday investors: ETFs.

An ETF amounts to a bucket of securities that gives investors a way to bet that an underlying asset will increase in price without purchasing that asset.

An ETF for gold, in turn, allows individuals to put money on the price movement of the precious metal rather than buy, lug and store the physical item.

Over the last 10 months, however, gold ETFs have incurred a net outflow of funds, meaning that on the whole the ETFs are losing investment rather than gaining it, Harvey said. That trend, he added, suggests retail investors are not a major cause of the price increase.

Gold is also widely viewed as a hedge against geopolitical unrest because the millennia-old store of value is perceived as an investment that could outlive calamity.

World Gold Council, a United Kingdom-based trade association for the gold industry, said global disruption could drive up prices this year, according to a January report.

"In addition to monetary policy, geopolitical uncertainty is often a key driver of gold demand and in 2024 we expect this to have a pronounced impact on the market," the World Gold Council report said.

For his part, Harvey cast doubt on the role of geopolitics in the price surge, since the onset of the rally did not coincide with the outbreak of the Israel-Gaza war in October.

Investors aiming to put money in gold can do it in a variety of ways. In addition to purchasing the gold bars on offer at some stores like Costco, investors can put funds into a variety of gold ETFs or buy shares in gold mining companies.


Individuals can also invest in gold futures, contracts to buy or sell gold on an agreed-upon date, which essentially amount to a bet on the movement of the price.

Investors should beware, however, Harvey said, noting that bullion typically generates modest returns over the period following an all-time high. UBS expects the price of gold to tick up to $2,500 by the end of the year, according to its report last week.

"Investing at an all-time high is very risky," Harvey said.

Reporters at Good Morning America contributed to this report.

Copyright © 2024, ABC Audio. All rights reserved.


How to get a last-minute tax filing extension

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(NEW YORK) -- Tax season, beloved by few and dreaded by many, comes to a close on Monday. For some tardy filers, though, the task will just be getting started.

Up to one in three Americans waits until the last minute to file their taxes, according to a 2021 survey by IPX 1031. That amounts to tens of millions of people.

A portion of them will realize that they do not have enough time to submit their taxes by the end of Tax Day. Luckily, the Internal Revenue Service offers the opportunity to file for an extension.

Here’s what to know about whether to file for an extension, what it requires and how long it lasts:

What are the benefits of filing a tax extension?

A tax extension pushes back the filing deadline, affording taxpayers additional time to get their submission in order.

An extension, however, does not allow filers to delay payment. If a filer thinks he or she might owe the government money, then the person must hand over the estimated amount by April 15. If not, the filer stands at risk of paying penalties and interest.

When estimating how much they owe, filers should keep in mind changes to the tax code, such as updated tax brackets and new tax credits. Knowledge of those rules can help filers optimize their tax refund.

If a filer forgoes an extension and files late, the person risks additional fees for the tardy submission. The penalty amounts to 5% of the taxes owed for each month that the filing is late, up to a maximum of 25%.

Under such circumstances, the IRS mails a letter or notice alerting the filer of a late fee.

How do you file a tax extension?

Before filing an extension, a taxpayer can check to see if he or she qualifies for an automatic extension. That option is available to people who live in a federally declared disaster area, members of the military stationed abroad or in a combat zone and citizens living outside the U.S.

Otherwise, an extension can be submitted in one of three ways.

First, if an individual opts to pay the anticipated amount owed, he or she can check off an extension-request box in the IRS online payment portal.

Alternatively, a filer can submit an online extension request through the government’s free service, IRS Free File.

Finally, the taxpayer can always go about it the old-fashioned way by mailing the extension. Such filers should fill out the Form 4868 and send it to an address listed on the IRS website. The form requires filers to estimate the amount of tax owed for the filing year.

Tax professionals can also assist filers in obtaining an extension.

The extension request must be submitted by the end of the day on April 15.

How long does a tax extension last?

A tax extension lasts six months, meaning those who obtain an extension will be allowed to submit their tax forms without penalty until Oct. 15.

Some may not want their tax season to end before that, however. They’re welcome to file taxes at any point over the six-month period.

Copyright © 2024, ABC Audio. All rights reserved.


Popular 'Buy Now, Pay Later' programs come with help and headaches

The Afterpay application login page arranged on a smartphone, Aug. 3, 2021. -- Brent Lewin/Bloomberg via Getty Images

(NEW YORK) -- The Buy Now, Pay Later (BNPL) trend, a significant shift in shopping habits, emerged as a game-changer during the recent holiday season. It broke records and offered customers a refreshing alternative to traditional methods of making large purchases.

The BNPL payment option generated $16.6 billion in online sales during the 2023 holiday season. The method allows shoppers to purchase products in installments instead of paying the full amount at once. Thus, you can get the product immediately and pay it off over a fixed period.

With the BNPL trend, consumers have the freedom to pay finance companies such as Affirm, Klarna, or Afterpay over a fixed period. These are essentially installment loans -- but with a twist.

BNPL programs typically offer short-term loans with fixed payments, no interest, and no additional charges, giving you the financial freedom to make those big purchases without the immediate burden of a large payment.

Other benefits of using BNPL to make a purchase are fast approval and the lack of a need for good credit or a high credit score. Women, people under 40, and users with lower income and credit scores are the most active users, according to research by the Federal Reserve Bank of New York.

Example on how Buy Now, Pay Later works

Suppose you plan to purchase a new TV for $250. When it comes time to pay, you may choose to pay in installments using services like Affirm, Afterpay, or Klarna.

To obtain a loan for your purchase, you may need to provide your personal information and undergo a soft credit check.

Once approved, you agree to repay the amount you owe over four equal payments. Each payment will be the same number, with the first payment due immediately and the others due every two weeks.

Spreading out payments for a big purchase, such as a TV or home appliance, can be helpful if you need more cash upfront.

What are the risks of using Buy Now, Pay Later?

There are a few drawbacks to using BNPL services. For one, paying off a BNPL loan typically won't improve your credit score. Additionally, you won't be able to take advantage of credit card benefits like cash-back or rewards points when you opt for Buy Now, Pay Later.

Another risk consumers face is forgetting to make payments, which can result in fees. A report by the Consumer Financial Protection Bureau found one of every ten borrowers in 2021, one was charged a late fee averaging $7 per missed payment. This is a way for payment companies to make money and stay in business.

If you used BNPL to purchase an item and want to return it, there could be some issues. You are entitled to a refund, but the merchant needs to inform the BNPL lender of the return, which could cause a delay.

You still have to make payments during this time, and missing or delaying payments could result in additional fees and negatively impact your credit score.

What can I do to avoid the risks of Buy Now, Pay Later?

If someone loses track of the payment cycle, their debt can spiral very quickly. To avoid this risk, consumers should set up auto-pay or keep track of payment due dates to avoid falling behind.

It is crucial to review a retailer's return policy before making a purchase to avoid complications with returns and avoid being charged for returned items. Additionally, before using the Buy Now, Pay Later option, take a moment to assess whether it fits within your budget.

Other facts about Buy Now, Pay Later

It's important to note that certain purchases may not be eligible for Buy Now, Pay Later financing. For example, some merchants may not offer financing for certain types of products or services.

Additionally, there are limits on the amount that you can finance through this payment option. These limits can vary depending on your credit score, income, and other factors.

To ensure that you qualify for Buy Now, Pay Later financing and to understand the terms and conditions, it's essential to read the merchant's financing agreement carefully and to consult with a financial adviser if you have any questions or concerns.

Copyright © 2024, ABC Audio. All rights reserved.


New whistleblower claims put Boeing's quality control under more scrutiny

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(NEW YORK) -- Boeing has come under fire and intense scrutiny ever since a door plug flew out of an Alaska Airlines flight on Jan. 5. Investigators revealed the plane, a 737 Max, was missing key bolts when the door was installed.

The company has been accused of not doing enough to ensure its aircraft and other products are up to standards, and some former employees attest the company has been doing shoddy work for years.

On Wednesday, another whistleblower, Boeing engineer Sam Salehpour, alleged the company took shortcuts in its production of 787 and 777 jets and, as a result, the planes have serious structural flaws.

"I literally saw people jumping on the pieces of the airplane to get them to align, basically by jumping up and down your deforming parts so that the holes align temporarily and you can hit a piece with a mallet so that you can go into the hole. And that's not how you build an airplane," Salehpour told reporters.

Boeing refuted Salehpour's claims in a statement released Wednesday.

ABC News' Gio Benitez spoke with "Start Here" about the latest development.

START HERE: Gio who is this person?

GIO BENITEZ: Hey, Brad. So this is Sam Salehpour. He's an engineer with Boeing, and he claims that parts of the plane's fuselage are being fastened together improperly on the assembly line which, in theory, he says could weaken the aircraft over time. So we're talking about decades of time, and he spoke at a press conference yesterday.

And his lawyer said that he had been raising these issues with Boeing management for years, but that they just weren't listening.

Now the FAA says it is investigating these claims from a Boeing whistleblower, but Boeing is actually responding very, very strongly. And they told us this, "These claims about the structural integrity of the 787 are inaccurate. The issues raised have been subject to rigorous engineering examination under FAA oversight.

"This analysis has validated that these issues do not present any safety concerns, and that the aircraft will maintain its service life over several decades."

So obviously, Boeing is very strongly disagreeing with this whistleblower and they sent us a very long statement, probably one of the longest I've ever seen.

START HERE: And just so I'm clear. So this is different from the Max planes. When we talk about the door plug that was a 737 Max. These are Dreamliners he's complaining about.

BENITEZ: Yeah. These are totally different planes. These are the 787 Dreamliners. You're talking about the Max 9, obviously, scrutiny was intensified over Boeing because of that door plug flying off that plane in January. It was a very, very serious issue. And then you think back to 2018 and 2019, you had those Max crashes.

So those were the 737 Max planes. Now we're talking about the 787 Dreamliners. There has not been any accident with the 787 Dreamliner. This is just a concern. In fact, these planes have been in service for about 13 years now and back in 2021 and 2022 Boeing actually addressed this exact issue because of employee concerns. They slowed production down and they actually temporarily stopped delivering the 787. At the time, the FAA signed off on how Boeing addressed this issue.

Now, it's important to note that this whistleblower has not provided any documented evidence. So right now, the onus is really on the FAA to tell us, is this a new problem or is this the same problem that Boeing already dealt with?

START HERE: And is this a problem at all. It's interesting that he's kind of presenting this hypothetical. He's almost saying yes, we haven't seen any accidents yet, but they could become issues after decades of flying. It's only been 13 years. How would you even test that? How would you even predict what's going to happen decades from now, though, Gio?

BENITEZ: Well, there are special stress tests, and Boeing has conducted a lot of them, actually, and they used an older 787. They actually put it through 165,000 simulated cycles of takeoffs, pressurization, depressurization and landings. And they didn't find any issues of fatigue there, and this jet is actually designed for a lifespan of 44,000 cycles. So we're talking about almost four times the amount of cycles that it would go through anyway.

Now that is what Boeing is saying. Of course, the simulation is very different than what's happening in real life, but Boeing believes that this is very accurate.

So the whistleblower says he's going to testify on Capitol Hill next week. And he says that's when he's going to provide the evidence.

Copyright © 2024, ABC Audio. All rights reserved.


Hot inflation likely to delay interest rate cuts. Here's what to expect

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(NEW YORK) -- Consumers saddled with high credit card and mortgage rates held onto a source of solace in recent months: A forecast from the Federal Reserve promising long-awaited interest rate cuts.

The economy has refused to cooperate, however, casting that financial relief into doubt.

Fresh price data released on Wednesday marked the third consecutive month of firmer-than-expected inflation; while a blockbuster jobs report last week revealed that employers are hiring with gusto.

The hot economy casts doubt over interest rate cuts, likely delaying their widely anticipated start this summer and possibly removing them entirely from the Fed's calendar this year, some economists told ABC News, while acknowledging that multiple rate cuts remain within the realm of possibility.

"The future is uncertain -- I wouldn't bet the farm," Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics and a former Federal Reserve official, told ABC News. "You might get no cuts this year or you might get three or four cuts."

In December, when the Fed announced plans for eventual rate cuts, prices were cooling steadily amid robust economic growth. The trend elicited a burst of optimism about the chances for a "soft landing," in which inflation returns to normal while the economy avoids a recession.

Price increases have cooled dramatically from a peak of about 9%, but inflation has stalled in recent months, hovering more than a percentage point higher than the Federal Reserve's target rate of 2%.

Meanwhile, the economy has continued to run hot. Breakneck hiring and robust economic growth have rebuked fears of a recession.

That combination of elevated inflation and economic fortitude offers the Fed an opportunity to hold rates steady at highly elevated levels, since the central bank runs little immediate risk of triggering a downturn, Fed Chair Jerome Powell said last week, before the latest inflation reading.

"On inflation, it's too soon to say whether the recent readings represent more than just a bump," Powell told a business conference at Stanford University.


"Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy," Powell added.

The Fed Funds rate remains between 5.25% and 5.5%, matching its highest level since 2001.

Interest rate cuts would lower borrowing costs for consumers and businesses, potentially triggering a burst of economic activity through greater household spending and company investment.

But the Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand on top of solid economic activity could lead to an acceleration of price increases.

At the outset of this year, many economists and traders expected interest rate cuts to begin in June. However, the cautious approach from the Fed has largely nixed expectations of a rate cut in the coming months.

"At this point, a June rate cut seems to be out of the picture," Yeva Nersisyan, a professor of economics at Franklin & Marshall College, told ABC News. "The Fed is signaling that it doesn't want to lower rates."

Bret Kenwell, U.S. investment analyst at eToro, agreed. The latest higher-than-expected inflation reading delivered a "blow" to plans for a rate cut in June, he told ABC News in a statement.

"There's growing uncertainty about when the first cut of 2024 will come," he added.

Some economists said they doubt whether an interest rate cut would happen this year at all. Persistently elevated inflation could push the Fed to abandon its forecast of lower rates, they said, while a commitment to political neutrality may foreclose a move ahead of the November election.

"There is likely sufficient caution within the Fed now to mean that a July cut may also be a stretch, by which point the US election will begin to intrude with Fed decision making," Seema Shah, chief global strategist for principal asset management at investment firm Edelman Smithfield, told ABC News in a statement.

Still, some observers have retained expectations of a rate this summer, citing progress made in the Fed's inflation fight over the past two years. In a note to clients obtained by ABC News, Bank of America said it still predicts a rate cut in June.

The firm, however, acknowledged the threat posed by the latest inflation data, saying it "points to significant risk of a delay to the start of Fed easing."

Copyright © 2024, ABC Audio. All rights reserved.


Internet service now comes with 'nutrition label'-style information about prices

Carol Yepes/Getty Images

(NEW YORK) -- Starting Wednesday, internet users will now have more transparency about their broadband services.

The Federal Communications Commission now requires broadband providers to display all the information about the price and performance of their services in clear labels.

Alejandro Roark, the chief of the consumer and governmental affairs bureau for the FCC, spoke with ABC News' "Start Here" about the new rule.

START HERE: What should we know about this announcement today?

ALEJANDRO ROARK: Well, good morning, Brad. Very happy to be here today. And I think what's important to recognize is that the bipartisan infrastructure law, [and] within that law Congress directed the FCC to require [a] broadband provider to display, in the form of labels, specific and important information about price and performance regarding their internet service plan.

So anywhere that is considered a point of sale, whether you are shopping online, on your mobile phone, [or] whether you're in-store, these have to be clearly visible to all consumers.

So they shouldn't be hidden behind some special five clicks that you have to get to or make it harder, confusing to find this information. The rules require these labels to be present at the point of sale, and at the point where we are comparison shopping and are getting ready to make the choice that best meets our household needs and our long-term budgets.

START HERE: What is this label going to do and what will it look like?

ROARK: The FCC, I think, we were smart to borrow the nutrition label model format from food products because we wanted it to make this basic information easily recognizable and easy to understand.

START HERE: And just so we're clear, it literally looks like the label with the same formatting and shape and all that stuff.

ROARK: Exactly. So as of today, consumers will have simple, easy-to-read facts about price, the speed, the data allowances and other aspects of high-speed internet service upfront.

Plus, by requiring providers to display introductory rates clearly, we seek to end the unexpected one-time or hidden recurring fees or other junk fees that can often get buried in long and confusing statement of terms and conditions that lead to -- I know that I've definitely felt -- that consumer bill shock when I signed up for a service that was supposed to be a really great deal, and then I get my first monthly service [bill] and the prices are completely different.

START HERE: Ah, so, OK. So literally like a food nutrition label, but this will be a broadband nutrition label. When does that go into effect?

ROARK: Well Brad, breaking news happens on this podcast. So I'm happy to say that as of today, April 10, 2024, broadband providers are required to display these new broadband nutrition labels at the point of purchase. And all of us will start seeing those everywhere that internet services are sold.

START HERE: Is it just the design of all this? Is it just kitsch, or do you think it will have a serious effect? I guess I'm wondering how big of an issue this is in, in real life for a lot of people.

ROARK: This, from my perspective, is a kind of market, a transforming ecosystem tool.

I think what we know at this point, after the global health crisis is that, you know, having access to high-quality internet service is essential to sustaining important aspects of our everyday lives. I'm talking about telemedicine. I'm talking about educational opportunities for students, and I'm talking about our ability to engage with the world and to either seek out government services -- .

Think about all of the essential services that were completely migrated overnight to online, and none of those processes, systems or support, services are coming back in person. They're staying online. And it really has forced us all to come face to face with the reality that the internet is an essential tool for 21st-century success.

START HERE: But here's what I'm wondering, though, because if all of this is about making the internet more accessible, making everything transparent and just easier for consumers across the country to get online, there are programs designed to give low-income Americans access to broadband internet. I think it's like 30 bucks a month.

The funding for that program is going to run out at the end of this month, and I'm sure the FCC, would be like, "Yeah, we'd love Congress to pass a law about that," but the FCC can impose fees on broadband companies to pay into a pot. I think it's the Universal Service Fund for these sorts of lifelines for these communities. So, I mean, will the FCC do that?

ROARK: So I will say that this particular program, the Emergency Broadband Benefit program, which was a COVID emergency response program, really was designed to ensure that every single person, regardless of their ZIP code or economic standing, had the ability to sign up for the internet service that they need.

Again, just for basic participation. The Affordable Connectivity Program since then, over the course of the past two years, has done more to bridge our country's digital opportunity divide than any other standalone effort in our nation's history.

Right now, the program counts with over 23 million households enrolled across all 50 states, territories and federally recognized tribal lands and its success, its reach and the impact of the program are absolutely unquestionable.

But we know, like you mentioned, that without congressional action to appropriate new funding for the program, the Affordable Connectivity Program is projected to run out of funding by the end of April, leaving potentially millions of households without the internet connections that we all depend on.

Right now, Congress is thinking about how best to both give the program long-term, sustainable funding. But also, I think in this moment, they're also considering, what do we do in the meantime? April, the end of April, is right around the corner.

START HERE: Like, why can't you guys enact some of these fees on broadband providers, I guess?

ROARK: Yep. And so I think all of that is still being negotiated. The Universal Service Program is something that I think has been around for a long time, and there's a lot of debate and a lot of conversation about: Can we adapt this program to meet the funding needs of the Affordable Connectivity Program.

And that's something that right now Congress is debating with consumer advocates, and we're at the table ensuring that whatever comes out of that process meets American consumers where they are. And we know that 23 million households are currently enrolled, and many more continue to be eligible to sign up for this program.

Copyright © 2024, ABC Audio. All rights reserved.


'Ridiculous': USPS proposes raising the prices of 1st class stamps to 73 cents

Mario Tama/Getty Images

(WASHINGTON) -- If the U.S. Postal Service gets its way, the price of a first-class stamp will go up for the fourth time in less than two years.

The USPS is proposing hiking the cost of a first-class stamp to 73 cents, or roughly 7% on all forms of postage.

If approved, the plan, which was announced on Tuesday, will raise the price of metered 1-ounce letters to 69 cents, international ounce-size letters and postcards to $1.65 and domestic postcards to 56 cents.

The proposal has been sent to the independent Postal Regulatory Commission for final approval. If the commission signs off, the new prices will take effect in July.

The price-hike proposal comes after the USPS raised the cost of a first-class stamp to 68 cents from 66 cents on Jan. 21. Stamp prices rose twice in 2023.

In the past 20 years, the price of a first-class stamp has climbed about 84%.

"It's ridiculous, absolutely ridiculous," New Yorker Jacqueline Pollen told ABC News as she exited a post office on the upper West Side of Manhattan. "I’m a senior on a fixed income. I cannot really afford stamps that much. I do have a lot of Forever stamps that I bought years ago and I’m using them up, but I don’t know how I’m going to afford 73 cents for one stamp."

Like millions of Americans, Pollen said she has cut back on mailing letters, even Christmas cards, saying, "I use E-cards and email. That's what I use now to save money."

But Manhattan resident Albert Quiles, who was going into the post office to purchase stamps, said he's resigned to paying the higher postal prices.

"I've got to deal with it. What else can you do? You've got to go with the flow, man. Times change," Quiles told ABC News. "There's nothing you can do. The government says this is what you've got to do. It's not like it's just me -- it's everybody. I don't feel bad about that."


The postage price jump is part of a 10-year "Delivering for America" plan launched in March 2021 to transform the USPS from a money-strapped organization to one that is self-sustaining and high-performing.

The USPS reported a $6.5 billion net loss in 2023 as revenue fell 0.4% to $78.2 billion and the use of first-class mail dropped to its lowest level since 1968, postal officials said.

In 2022, Postmaster General Louis DeJoy issued a warning for customers to expect "uncomfortable" increases in postage until the USPS gets on track to be self-sustaining.

"While our pricing decisions are ultimately made under the authority of the Board of Governors, in the near term, I will most likely be advocating for these increases," DeJoy said during a meeting with the USPS Board of Governors in 2022. "I believe we have been severely damaged by at least 10 years of a defective pricing model, which cannot be satisfied by one or two annual price increases, especially in this inflationary environment."


Despite the price hike in postage, a USPS survey done in 2023 showed the prices of stamps in the United States are still lower compared to 31 other countries it analyzed.

"The 2023 price of a standard domestic letter in the U.S. was nearly half the average price in our 31 sampled countries," according to the USPS Office of Inspector General report released in March.

Copyright © 2024, ABC Audio. All rights reserved.


Inflation surged higher in March

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(NEW YORK) -- Consumer prices rose 3.5% in March compared to a year ago, accelerating markedly from the previous month and reversing some of the progress achieved in a two-year fight to cool inflation, U.S. Bureau of Labor Statistics data showed. The finding matched economists' expectations.

Price increases have cooled dramatically from a peak of about 9%, but inflation still stands more than a percentage point higher than the Federal Reserve's target rate of 2%.

A spike in housing and gasoline prices at the outset of this year has helped prolong the nation's bout of elevated inflation. Meanwhile, economic performance has been robust, boosting consumer demand and putting upward pressure on prices.

The latest finding indicated an uptick from the 3.2% annual inflation rate recorded in February.

At a meeting last month, the Fed opted to keep rates highly elevated in response to stubborn inflation. The Fed Funds rate remains between 5.25% and 5.5%, matching its highest level since 2001.

"On inflation, it's too soon to say whether the recent readings represent more than just a bump," Fed Chair Jerome Powell told a business conference at Stanford University last week.

"Given the strength of the economy and progress on inflation so far, we have time to let the incoming data guide our decisions on policy," Powell added.

The Fed said last month that it still intends to make three interest rate cuts this year.

Interest rate cuts would lower borrowing costs for consumers and businesses, potentially triggering a burst of economic activity through greater household spending and company investment.

But the Fed risks a rebound of inflation if it cuts interest rates too quickly, since stronger consumer demand could lead to an acceleration of price increases.

In recent days, some business leaders and policymakers have voiced concern about the outlook for inflation.

In his annual shareholder letter on Monday, JPMorgan Chase CEO Jamie Dimon warned that a host of factors, including government spending and global trading shocks, could make the final leg of inflation's path down to normal levels much more difficult than many observers expect.

Speaking at a meeting of the Shadow Open Market Committee in New York City last week, Fed Governor Michelle Bowman said she sees "a number of upside risks to inflation."

The rough patch for inflation in recent months has coincided with strong economic performance, despite persistently high interest rates meant to slow economic activity.

Employers hired 303,000 workers last month, blowing past economist expectations of 214,000 jobs added, according to a report from the U.S. Bureau of Labor Statistics on Friday.

The hiring far surpassed the average number of jobs added each month over the previous year, suggesting an acceleration in performance for one of the key metrics used to assess the nation's economic health.

Last week, Powell referred to surveys of consumer and business sentiment that suggest inflation is widely expected to return to normal levels.

"The public does believe -- and it's a good thing, because it's true -- that inflation will go back down to 2%," Powell said. "That's very reassuring but that's partly because of the very strong action we took and also because of our ongoing commitment to actually return inflation to 2% over time."

"And that is our commitment," Powell added.

Copyright © 2024, ABC Audio. All rights reserved.


Tesla stock has plummeted this year. Will the company recover?

Xiaolu Chu/Getty Images

(NEW YORK) -- Tesla, the Elon Musk-led electric vehicle company, appears desperate for a tune-up.

The company’s share price has plummeted more than 25% so far this year, making it one of the worst-performing stocks in the S&P 500. Over the same period, that index has risen about 10%.

Shrinking car sales, major setbacks in autonomous driving and increased competition have cost the company more than $200 billion in lost market value in less than four months.

Analysts who spoke to ABC News differed on whether the company would ever recover those losses.

Critics say demand for the company’s cars has slowed as a result of its failure to release a new, affordable model, as well as a chill in the overall EV market. As competitors roll out alternatives, Tesla faces a difficult path to regain its previous breakneck growth.

Proponents, however, point to the company’s record of industry-leading innovation, suggesting the breakthroughs that fueled its sprint ahead of the competition could reemerge as it readies for new EV models and perfects its autonomous driving software.

“Tesla has been here before but this is a code red,” Dan Ives, a managing director of equity research at the investment firm Wedbush, a longtime Tesla bull, told ABC News.

Tesla did not immediately respond to ABC News' request for comment.

Last week, Tesla reported a significant decline in car sales over the first three months of 2024. The company delivered 387,000 cars over that period, marking a 20% decline from the previous quarter and an 8% decline year-over-year, an earnings report showed. The results fell well short of Wall Street expectations.

In a statement that day, the company attributed the sluggish performance to preparation for production of a forthcoming version of its Model 3, as well as shipping delays in the Red Sea and an alleged arson attack at its Berlin factory.


Gordon Johnson, CEO and founder of data firm GLJ Research, who is bearish on Tesla, said consumer demand for the company’s cars has fallen sharply from the heights attained during the pandemic.

At that time, a major shortage in the worldwide supply of auto parts ultimately benefited Tesla since the company streamlined production and outperformed hamstrung competitors, Johnson said.

“Tesla had cars available when the auto industry writ large globally did not,” Johnson told ABC News.

Once supply blockages eased, competitors ramped up production and rolled out new EV models. The glut of alternative options has coincided with a slowdown of overall consumer demand for EVs, Johnson said.

“Tesla has more capacity than there is demand for its cars,” Johnson added. “That’s the reason why it’s struggling.”

Over the past year, Tesla has discounted some of its models in an effort to goose up demand. Analysts who spoke to ABC News said Tesla would need to release a newer, low-cost model as a means of attracting thrifty spenders.

According to a Reuters report last week, however, the company dropped plans for a low-cost model to be priced at about $25,000. Musk refuted the report in a post on X hours after the story was published.

“They need a sub-$30,000 vehicle sooner rather than later,” Ives said.

Boosters of the company’s potential for long-term growth point to its autonomous driving software, but that product has faced challenges of its own. In December, Tesla recalled about 2 million cars over a safety issue tied to its autopilot system. Two months later, the company recalled about 360,000 more cars over crash risks tied to its self-driving system.

In response to a letter from members of Congress calling for an investigation of the self-driving system, Tesla senior director of public policy, Rohan Patel, said last March: "Tesla's Autopilot and FSD Capability features enhance the ability of our cusotmes [sic] to drive safer than the average driver in the U.S." The response was first reported by Reuters.

Looking ahead, analysts said Tesla retains a path to recovery but it remains unclear whether the firm can achieve it.

“In order for the stock to appreciate, we need sales to reaccelerate and for the full self-driving to start seeing greater adoption,” Craig Irwin, a senior research analyst at Roth MKM, told ABC News. “Call me a skeptic.”

Gordon said he expects the company’s outlook to worsen, since declining sales revenue and persistent costs could force the company to fill a potential budget gap with an injection of outside funds. “That will scare the bejesus out of Tesla bulls,” Johnson said.

For Ives, the current crisis at Tesla marks an opportunity for the company to innovate and recapture its previous era of remarkable growth.

“I believe they can get through it, but this is a white-knuckle period,” Ives said.

Copyright © 2024, ABC Audio. All rights reserved.


Cybersecurity expert shares what guests, hotels should know in wake of Omni breach

The Omni Houston Hotel at Four Riverway, Dec. 31, 2020, at in Houston. (Karen Warren/Houston Chronicle via Getty Images)

(NEW YORK) -- In the wake of a recent cyberattack on Omni Hotels & Resorts that prompted a "shut down [of] its systems to protect and contain its data," experts are reminding people of the actions guests can take to preserve their digital safety and weighing in on risks facing the hospitality industry at large.

"We are currently working to determine the scope of the event, including impact to any data or information maintained on Omni systems," the company said in an statement following the cyberattack on Friday, March 29. "Our investigation into the incident remains ongoing and we are working with external specialists in this process."

When Omni learned of the issue, the company said it shut down certain systems, "most of which have been restored" and "launched an investigation with a leading cybersecurity response team, which is ongoing."

The Dallas-based luxury hospitality chain with over 50 properties across the U.S. and Canada first confirmed the outage on social media. Omni said it would "post relevant updates" to its cyber attack update page "as new communications can be shared," and in the meantime said guests could contact travel planners or the hotel directly with any questions about a stay or guest experiences.

"As our team works diligently to restore the remainder of the systems to full functionality, we continue to welcome our guests and accept new reservations," the company's statement continued. "We apologize for the disruption and inconvenience this cyberattack is causing. The care and comfort of our guests remains our highest priority and we are grateful for the hard work of all our teams who are doing everything possible to deliver the Omni experience expected by our guests."

Omni and TRT Holdings, the owner of the hotel chain, did not immediately respond to ABC News' request for additional comment.

Initially, the outage included a shut down of reservations, hotel room door locks and point-of-sale systems.

How guests can stay safe if hotels fall victim to cyberattacks

BlackCloak CEO Chris Pierson, a cybersecurity expert with more than 25 years of private and government experience in the industry, which has included clients in hospitality, told ABC News' Good Morning America what steps people should take to protect themselves after a breach.

"Every single company is going to be targeted by cybercriminals," Pierson said. "Data breaches, ransomware attacks, extortion, stolen credit card information, all these things are a fact of life. The important thing is knowing what to do about it -- what should they do and what should they know."

"If you are a consumer of a hotel that has had a breach, the biggest immediate impact could be on the financial side," he continued. "Making sure that you know what credit card information was included or was used for that hotel is going to be critical. Monitoring that credit card for any signs of fraud or identity theft, perhaps switching that credit card are also things that you should think about doing."

"The second thing is going to be the information that you've given or transmitted to the hotel," he continued. "Have you given them your name, address, phone number and email address information? ... Be on the lookout for scams like phishing and other types of social engineering attacks."

For domestic travelers, Pierson said to check if you provided your driver's license information, and for international travelers, any passport information.

"That information can then be used for additional forms of onward identity theft or making you susceptible to scams," Pierson added.

What makes hotels, hospitality industry more susceptible to cyberattacks

Pierson, a former cybersecurity adviser to the Department of Homeland Security, explained what makes the hospitality industry so susceptible to cyberattacks like the one on Omni Hotels & Resorts.

When cyber criminals target specific industries and companies, "they are seeking the largest payout in the most expedient time possible," Pierson said, adding that with service-oriented businesses, "that does cause a time clock to speed up on their end in terms of every hour, day, week, that that industry is down."

"Especially for the hospitality industry or transportation -- if those are unable to be up and running and operational, then they are literally losing money each and every minute, hour, day and week," he said. "That can bring about swifter decisions [by a company] to get back up and get clients back onto the platform, back into their hotel rooms, back into their kind of service experience."

Hotel responses to cybersecurity attacks

"All of these different hotels that have been in the news are victims, [guests] trust that their information is going to be secure." said Pierson, who now specializes in digital executive protection for corporate executives, boards and other high value targets including employees and their families.

"When there is a breach, obviously some trust is lost there. However, cybercrime, cyber attacks, ransom, data breach, and all the rest are facts of life, they will hit most major companies," he continued. "What consumers need to pay attention to is, 'Is the company communicating with me? Has the company communicated with me in a manner that is clear and ethical and consistent? Have they provided me with an explanation as to what is happening to the best of their knowledge at that given point in time?'"

Pierson said that the current updated U.S. Securities and Exchange Commission guidance stating that "publicly traded companies must disclose a material cyber incident within four days" could "potentially cause more confusion in consumers."

"Every initial statement is going to say: 'We're investigating something that has happened, we can't tell you exactly what has happened because we're at the beginning stages of the investigation, and as a result, we don't know or have any other further details,'" Pierson said. "Providing that type of a disclosure can actually cause more frustration than having waited a week until you had more details."

Pierson said that every data breach response can take "about seven to 14 days until a company actually knows all the proper details that it needs in order to more fully disclose what has happened."

Preventative steps companies take to ensure guest, customer information is safe

Pierson explained some of the steps business leaders might want to take to prevent attacks.

First among those is "making sure you have a cybersecurity program that is in place at the company, that is at least updated annually, and the threats and risks around it are known," he said.

Second, he said, is "making sure you have have governance and supervision, in terms of enterprise risk management, over that program from a board level and from an executive level." He added that risks need to be "absolutely clear" to best ensure "they're being mitigated."

"Number three, making sure that you have all of the right things in place for incident response, because events will happen," he said. "Making sure that you know what they are, when they are, what to do when they happen and how to respond is going to be the other critical part."

Copyright © 2024, ABC Audio. All rights reserved.


How Walmart shoppers can qualify for cash from $45 million settlement

Self-service checkout customer scanning and paying in a Walmart Supercenter in Miami, Florida. (Jeffrey Greenberg/Getty Images)

(NEW YORK) -- Walmart shoppers may be entitled to up to $500 in cash after the retail giant agreed to pay $45 million to settle a class action lawsuit over "weighted goods."

The company, which has denied any wrongdoing, was accused of overcharging customers for sold-by-weight items such as meat, poultry, pork, seafood and bagged citrus fruit at Walmart locations across the U.S. and Puerto Rico between Oct. 19, 2018, and Jan. 19, 2024, according to the administrator for the settlement's website.

The 2022 class action lawsuit, filed in the Middle District of Florida, stated that "Walmart uses unfair and deceptive business practices to deceivingly, misleadingly, and unjustly pilfer, to Walmart's financial benefit, its customers' hard-earned grocery dollars."

Other products that customers may have "paid more than the lowest in-store advertised price," include certain organic oranges, grapefruit, tangerines, and navel oranges sold in bulk in mesh or plastic bags -- referred to as "Bagged Citrus."

The settlement administrator site includes "product descriptions and a searchable list of UPC Codes for the Weighted Goods and Bagged Citrus" to help customers navigate the products up for reimbursement.

Walmart has denied the claims in the lawsuit. 

ABC News has reached out to Walmart for comment on the settlement.

How to claim cash from Walmart grocery settlement

Walmart shoppers who purchased qualifying items between the more than five-year period can submit a claim online or through the mail by June 5, 2024 to receive compensation.

If you've kept your receipts, you can qualify for up to $500 cash back, and if not, you may still be able to get up to $25.

If a customer does not have their receipts, they can try to retrieve them via Walmart's website, looking at past purchase history.

Copyright © 2024, ABC Audio. All rights reserved.


What's after AI? The next watershed technology could be quantum computing

MR.Cole_Photographer/Getty Images

(NEW YORK) -- Artificial intelligence commands the attention of corporate giants and political leaders but a global race is underway to develop what some experts consider the next transformative technology: quantum computing.

The computers, which draw on theoretical physics, could drive advances in everything from drug research to stock investing to encryption, promising an economic boon for the companies and nations that lead its development, some experts told ABC News.

Google, Microsoft and Intel are among the companies trying to achieve breakthroughs in quantum computing. Tech firm IBM announced on Friday its first-ever quantum computer on a university campus, unveiling the machine at Rensselaer Polytechnic Institute, or RPI, which is located in Troy, New York.

Here's what to know about how quantum computing works, why the technology matters and what's significant about the new machine at RPI:

What is quantum computing?

Quantum computing uses the principles of abstract physics to supercharge a machine's computational horsepower well beyond what's found in an everyday computer.

The next-generation technology stands in contrast with classical computing, or binary computing, which relies on tiny units of data called bits. Those bits are oriented as either ones or zeroes, indicating on/off switches that make up the basic inputs of any task performed by a computer.

On the other hand, quantum computing draws on a fundamental concept of quantum physics known as "superposition," which means a single entity can occupy multiple states at the same time, Daniel Lidar, a professor of engineering at the University of Southern California, told ABC News.

"In some sense, this is one computer performing many calculations all at once," Lidar said. "In a standard case, you'd need lots of computers performing simultaneous calculations."

Three decades ago, a physicist named Peter Shor proved that quantum computing could break a common form of internet encryption within just a few hours; whereas a standard computer would take billions of years to achieve the same task, Lidar added.

"Ever since that discovery, there's been a worldwide race to build these computers," Lidar said.

What's at stake with the development of quantum computing?

The countries and firms that develop quantum computing stand to gain a significant advantage in an array of lucrative industries, some experts told ABC News.

Consulting firm McKinsey & Company identified four industries most likely to see early economic impact from quantum computing: automotive, chemicals, financial services and life sciences, according to a report last year. Across those four industries, the technology could add a combined $1.3 trillion in value by 2035, the report said.

In 2022, President Joe Biden visited IBM's quantum data center in Poughkeepsie, New York, which features the world's largest collection of quantum computers, the company said in a news release at the time.

"The government that will hold the first truly useful quantum computer will have a power at its fingertips that is breathtaking," Lidar said. "That's why many governments are heavily invested and companies are betting billions of dollars on this field."

While thousands of researchers worldwide work out the kinks of quantum computing, concrete applications remain 5 to 10 years away, Lidar said.

What is the significance of the new quantum computer at Rensselaer Polytechnic Institute?

The IBM quantum computer at RPI marks the first of its kind on a university campus.

The machine will help students push quantum computing from experimental uses to real-life applications, Jay Gambetta, IBM fellow and vice president of Quantum Computing, told ABC News.

"Getting quantum computing into their hands is essential for us to create this industry," Gambetta said.

Thirty percent of the university's sophomore class major in computer programming, RPI President Martin Schmidt told ABC News. The newly unveiled quantum computer will equip them with direct training in one of the latest advancements in the tech field, he added.

"Everybody's going to be scrambling for talent," he said. "There are going to be some people that just really make this thing sing. And I want to see that magic happen."

Copyright © 2024, ABC Audio. All rights reserved.


How Rochester, New York, hopes the eclipse brings a lasting economic boom to city

Rochester, New York, is expecting between 300,000 and 500,000 people to visit the region to watch the total solar eclipse on April 8, 2024. -- ABC News

(ROCHESTER, N.Y.) -- Seven years ago, Debra Ross wondered why she should care about an eclipse.

Her daughter, Ella, vowed that she would get her driver's license and that they would take a road trip to Missouri to see the 2017 total solar eclipse that stretched across the U.S.

"I was still skeptical about this," Ross told ABC News. "I knew what an eclipse was, but I didn't know what the big deal was. It gets dark every day. I know what a shadow is, right? Why is it such a big deal?"

Ross and her daughter drove to Kimmswick, Missouri, -- about 20 miles southwest of St. Louis -- where they found a railroad trestle and watched the eclipse. As Ross watched the sun slowly be obscured -- and then completely covered -- by the moon, she felt a change come over her.

"When totality happened ... and the world around us just whooshed down to darkness, and I saw the stars come out around the sun, and it looked like this velvet hole in the sky ... I was just completely transformed and taken," she said. "So, after totality, I understood what a human and what a unifying kind of community experience this was."

Ross knew the next total solar eclipse in North America was happening on April 8 and that her home city of Rochester, New York, was going to be in the path of totality. She wanted the city to be prepared, so she became the Rochester Eclipse Task Force chair and started contacting community members.

For the past seven years, Ross said the local government, museums, and small businesses—from restaurants to brewing companies to chocolate shops—in the mid-size city have been preparing to welcome hundreds of thousands of tourists to watch the total solar eclipse on April 9.

Store owners, residents and local officials are hoping the eclipse brings an economic boom to a city that was once a hub of industry and has struggled to recover from the pandemic that shuttered so many small businesses.

'Wonders for the economy'

Rochester is estimating the eclipse will bring in between 300,000 and 500,000 visitors and between $10 million to $12 million from Friday to Monday, Mayor Mailk Evans told ABC News. He said the celestial event is a great opportunity to market the city from an economic development standpoint.

"The eclipse is only about three minutes and 38 seconds, but what we've said is no, we want to make it three days, and even longer," he said. "So, we've used this as an opportunity to have people come to Rochester to see what all of the region has to offer."

The city has gone all out, including a festival at the Rochester Museum & Science Center (RMSC), an all-day celebration at the public market, performances by the Rochester Philharmonic Orchestra, art exhibits, eclipse-themed specials at restaurants and eclipse-themed merchandise being sold including beer, chocolate and jewelry.

"These are all things that we are marketing, in connection with the eclipse, so that gives us the opportunity to see a large economic impact," Evans said.

Both Evans and residents said they are hoping this will be a huge money maker, particularly for small businesses, which were hit hard by the COVID-19 pandemic, like many places across the U.S.

The population of the city dropped slightly, by about 2,000, during the first two years of the pandemic, according to data from the U.S. Census Bureau. In Rochester and the Finger Lakes region, 37% of households struggled to afford basics in 2021, up from 29% in 2019, according to a report from United Way of Greater Rochester and the Finger Lakes.

Perhaps no businesses were hit harder than restaurants.

Kelly Metras, co-owner of Salena's Mexican Restaurant, said when Ross first contacted her in 2021 to help get restaurants on board with preparing for the eclipse, she wasn't sure if her restaurant would be open by then.

"I told her we didn't know if we were going to be open next week, much less 2024, and that restaurants specifically wouldn't be ready to prepare till much closer to the event," she told ABC News.

Her husband and co-owner, Aaron Metras, said business has slowly been building back up and, while the restaurant is not in danger of closing, the eclipse presents a well-timed boost.

"The pandemic has changed a lot of things; business levels are still not quite the same as they used to be," Aaron Metras said. "The landscape for business in general, especially for restaurants, has gotten a lot more difficult, since 2020."

"The influx of tourists and dollars is certainly going to be helpful for all the businesses that have been struggling, and hopefully this will be the start of an upward trajectory that just keeps rising," he added.

Jason Snyder, owner of Blu Wolf Bistro, feels similarly. He said although his restaurant was able to adapt during the pandemic, it was difficult and he's still building back his business.

"The pandemic was hard for restaurants, especially small, non-chain restaurants," he told ABC News. "We're hoping the eclipse will kind of spring us forward to great sales for the summer ... We're going to use the eclipse and the money and business that brings in to try to get things finally back to normal."

Snyder said coming out of the pandemic, he and his co-workers were looking for something to look forward to, and the eclipse did the trick.

"When we figured out we were in the path of totality, it was a light at the end of the tunnel for us," he said. "We see this as the beginning of a great new year, a new beginning for Rochester ... we think it's going to do wonders for our economy."

John Urlaub, owner of the Rohrbach Brewing Company, said over the weekend he is expecting to a see a 20% to 30% boost in sales compared to what he sees in a normal weekend, which he described as "significant."

Lindsay Tarnotff, co-owner of Laughing Gull Chocolates, has faced struggles, too. She said the while she felt confident her business would survive the pandemic -- and that she and her team pivoted to serve those who were purchasing chocolates online -- it doesn't mean there weren't challenges.

"All of our costs went up pretty dramatically, and so that impacted and still is impacting the bottom line of our business, and we work hard every day to be successful," Trarnoff said. "We are a very, very small business, and we are known within our community, but hoping that [the eclipse] kind of raises awareness about us and all of the other small businesses."

Tarnoff continued, "We want people to support small businesses. Small businesses, women-owned businesses are such a huge part of our economy that people don't always think about."

Culmination of years-long preparation

Ross, the chair of the Rochester task force, said when she first started talking to people about preparing for the eclipse, it was several years out, and some people thought she was too eager.

"I mean, I think probably I was a little over the top. So maybe people were saying. 'Seven years out, really Deb? Six years out, five years out. This a little early, isn't it?'" she said. "But the fact is pulling all these folks together and working for something that's going to happen far in the future for three minutes and 38 seconds, that is a kind of wacky proposition. But it was really fun, and everybody just jumped right on board."

The effort has paid off. The Rohrbach Brewing Company and Laughing Gull Chocolates are both selling eclipse-themed beer and chocolate and are hosting the event at the public market.

Salena's Restaurant and Blu Wolf Bistro are both hosting eclipse-themed events and have eclipse-themed food and drinks.

"I know a lot of businesses, ourselves included, rolled out the red carpet," Snyder said. "We want to make it a special day and we hope people leave thinking what a great city Rochester is, and they'll come back."

At the Museum & Science Center, more than 500,000 pairs of eclipse glasses were ordered, with more than 30,000 passed out to the Rochester City School District, according to Dan Schneiderman, Eclipse Partnerships Coordinator.

The Museum & Science Center is planning its Roc the Eclipse Festival, which will have several events including speakers, exhibitions, planetarium shows and comedic acts.

"We're just going all out for the weekend," Schneiderman said. "We are expecting several thousand people on Saturday and Sunday, but on Monday, April 8, we are expecting about six [thousand] to 80,00 people in total at the RMSC."

The Museum & Science Center said it expects several thousand people on Saturday and Sunday and between 6,000 and 8,000 people on April 8. Schneiderman said there is a mix of emotions as the museum reaches the culmination of its preparation.

"There are some times when I'm feeling anxious," he said. "There are times when I'm feeling overwhelmed, just because there's still so much to do, and then there's just times of calm. It's very surreal, overall getting to this point of years and years of working towards this one moment in time."

Putting Rochester on the map

Evans is hoping eclipse weekend doesn't just encourage people to come back to visit Rochester but also even convince them to move to the Flower City.

Rochester currently has a population of 209,000, according to 2022 U.S. Census Bureau data. While this makes it the fourth most populous city in New York, it is a decline from the peak of the 20th century when, in 1950, 332,000 lived in the city, data shows.

As companies like Kodak, Xerox and Bausch & Lomb left and Rochester changed from a "company town" to a "town of companies", the number of jobs declined -- and so did the population, officials said.

But Evans said he's met many residents who decided to move to Rochester due to events they attended in the city.

"There are plenty of people that I've met over the years ... and you ask them later on to say, 'How did you end up living in Rochester?' and it was an event that they came to that piqued their interest," he said. "I think that we want to use this eclipse as a way to showcase Rochester, all that it has to offer, and we want to invite people to come back and we hope that one day they will decide to live here."

Ross agreed and said she hopes eclipse weekend is "imprinting" the city on people's minds.

"What we're going to be doing is kind of imprinting Rochester on the memories of all these people who are here," she said. "You always remember where you were when you were in the path of totality. So, by giving people all of these different experiences all weekend, we're kind of saturating them not just with the eclipse, but with Rochester, and we think they're going to take that away as they leave, but then I think that's going to help them come back."

Copyright © 2024, ABC Audio. All rights reserved.


Boeing paid Alaska Airlines $160M in compensation after door plug incident, airline says

Stephen Brashear/Getty Images

(NEW YORK) -- Boeing has paid Alaska Air Group approximately $160 million in compensation following the door plug incident on Alaska flight 1282, according to an SEC filing from the carrier.

Alaska said the money is "initial compensation" from Boeing "to address the financial damages incurred as a result of Flight 1282 and the 737-9 MAX groundings," the filing stated.

The airline said as a result of the incident, it lost approximately $160 million in first-quarter pretax profit -- "primarily comprising lost revenues, costs due to irregular operations, and costs to restore our fleet to operating service," the filing, dated Thursday, stated.

Alaska also said additional compensation is expected from Boeing, the terms of which are confidential, according to the filing.

In response to a request for comment, Boeing referred ABC News to comments made by its CFO, Brian West, at a conference last month where he said there is going to be "customer consideration that is going to manifest itself in the quarter."

"We've got to take care of that and we're well down the road to do that. And we continue to stand behind our customers with that responsibility," West said at the Bank of America Industrials Conference on March 20.

The door plug of Alaska Airlines flight 1282 fell off a few minutes after take off from Portland International Airport on Jan. 5. Passengers captured footage showing a hole where the door plug came loose on the Boeing 737 Max 9 plane. The plane safely made an emergency landing and no one was seriously injured.

The Federal Aviation Administration grounded approximately 171 Max 9s worldwide following the incident. Alaska resumed flying the Boeing 737 Max 9 following fleet inspections on Jan. 26.

A National Transportation Safety Board preliminary report released in February found that four bolts designed to prevent the door plug from falling off the Boeing 737 Max 9 plane were missing before the flight.

The incident remains under investigation by the NTSB. The Department of Justice has also launched a probe.

The FAA increased its oversight of Boeing and began an audit of the company's production and manufacturing in the wake of the door plug blow-out.

Amid the fallout of the door plug failure, Boeing announced last week that its CEO, Dave Calhoun, will step down at the end of the year.

"The eyes of the world are on us, and I know that we will come through this moment a better company," Calhoun said in a statement last week. "We will remain squarely focused on completing the work we have done together to return our company to stability after the extraordinary challenges of the past five years, with safety and quality at the forefront of everything that we do."

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Cosmic yoga, portable toilets: Solar eclipse will deliver 'tourism boom' for economy

People watch the Annular Solar Eclipse with using safety glasses in Brownsville, Texas on Oct. 14, 2023. (Mike Gonzalez/Anadolu via Getty Images)

(NEW YORK) -- A fully booked hotel in Maine said it received its first request from a solar eclipse tourist five years ago. A portable toilet vendor in Indiana said it is doing 10 times more business than it usually would at this time of year. A botanical garden in Texas already sold out its eclipse viewing event, warning "walk-ups will not be accepted."

A wave of travel to the 15 states in the viewing path of the total solar eclipse, set to take place on April 8, will generate a surge of spending to the tune of at least hundreds of millions of dollars, delivering a windfall for local businesses and a burst of activity for towns suddenly transformed into tourist destinations, some economists told ABC News.

"This is a once-in-a-lifetime event," Adam Kamins, senior director of economic research at Moody's Analytics, told ABC News. "It will essentially be a weekend-long tourism boom."

In the U.S., the path of totality will begin in Texas and travel upward through midwestern states such as Indiana and Ohio, ultimately reaching the likes of New York, New Hampshire and Maine.

As many as four million people will travel to the path of totality for the eclipse, making it the largest travel day of the year, according to research group Great American Eclipse.

Travelers will mainly shell out money for gas, lodging and food, generating between $372 million and $1.5 billion in economic activity, Bulent Temel, professor of practice and economics at the University of Texas, San Antonio, told ABC News.

Temel examined the spending of a typical tourist during the most recent solar eclipse, in 2017, adjusting for inflation and projecting that visitors this time around would each spend about $244 each.

"It's quite significant," Temel said.

Rangeley, Maine, a snowy resort destination for stargazers and snow-mobile riders, is home to 1,200 people.

The town expects as many as 20,000 visitors for the eclipse, Travis Ferland, owner of the Rangeley Inn and board member at the local chamber of commerce, told ABC News.

The Rangeley Inn, which began taking reservations in November, sold out in January. To serve eclipse tourists, the hotel will host a "Coffee & Constellations" discussion leading up to the eclipse and a themed party afterward, replete with a live band.

Other activities on offer for eclipse tourists in Rangeley: "Cosmic Yoga," "Total Eclipse Paint Night" and "Night Sky Trivia."

Parkside & Main, a local restaurant, has received about 20 calls per day from eclipse visitors as far flung as Washington State, California and Australia, Kash Haley, the part owner of the businesses, told ABC News.

"People love their astronomy," Haley said.

The restaurant plans to stock 50% more food than it typically would at this time of year, but Haley said he doesn't want to run the risk of purchasing too much and suffering the cost.

"For a small business, it's tricky," Haley said. "There's no science behind it."

The restaurant has sold themed T-shirts bearing the slogan, "Parkside of the Moon," and an illustration of a fork and knife inside the iconic triangle that appears on the cover of the Pink Floyd album by a similar name.

In all, the eclipse is expected to bring more than $24 million in spending to Maine, according to research firm The Perryman Group.

The spending in Texas, which Temel estimated could reach more than $600 million, will make it "the most profitable 22 minutes in Texas history," Temel said, referring to the expected duration of the full solar eclipse over the state.

In Arkansas, the eclipse could bring nearly $50 million in economic activity, according to a study by Michael Pakko, chief economist and state economic forecaster at the Arkansas Economic Development Institute at the University of Arkansas at Little Rock.

"It might very well be the biggest single tourism event in the state's history," Pakko told ABC News.

Kamins, of Moody's Analytics, said the eclipse would bring a significant, albeit temporary boom for towns and cities along the path of totality. However, he added, the economic benefits will be limited by the lodging and restaurant capacity of the regions involved.

Some of the states -- including Arkansas, Ohio and Indiana -- rank among the lowest for their share of the nation's consumer-driven economic output, Kamins added.

"Obviously, it's a natural event," Kamins said. "It has no concern for where the tourism infrastructure might be."

An unsung feature of that infrastructure: toilets. In Bloomington, Indiana, where local officials expect 300,000 visitors for the eclipse, a portable toilet company called Izzy's Rentals is seeing more customer demand than it ever has in its nearly 20 years of operation, Cindy Lewis, the company's part owner, told ABC News.

Izzy's typically rents out about 20 portable toilets on a typical weekend day in April, Lewis said. On the day of the eclipse, she added, the company will rent out 200.

In preparation, the family-owned firm added a third employee and expanded its inventory with help from a company in Indianapolis, Lewis said.

"To have a big day like this in April is wonderful," Lewis said, while acknowledging some trepidation about the frenzy headed her company's way.

"It feels like a big impending storm," Lewis added. "You don't quite know what's coming."

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KJC Kennel Club

   

 



JET

2007-2009

"Always in our Heart! "