Earlier today CBS removed their 14 owned CBS locals from DIRECTV, DIRECTV NOW, and U-verse TV. Now CBS Sports Network and the Smithsonian Channel has also been removed from AT&T’s owned DIRECTV service.
Here is the statement AT&T sent Cord Cutters News about the CBS blackout:
CBS has put our customers into the middle of its negotiations by pulling its local CBS stations in 14 cities. We were willing to continue to negotiate and also offered to pay CBS an unprecedented rate increase. That increase would present CBS the highest fee we currently pay to any major broadcast network group, despite the fact that CBS stations are available free over the air.
We had hoped to avoid any unnecessary interruption to any CBS-owned stations or national channels that some of our customers care about. But CBS refused.
CBS is a repeat blackout offender and has removed these same stations from DISH Network and Charter Spectrum customers in the past and threatened to remove them from others to ensure much higher fees. CBS continues to demand unprecedented increases even as CBS advances content on CBS All Access instead of on its local broadcast stations. CBS has said publicly that it priced All Access much higher to capitalize on customers it can capture from cable, satellite or other means of distribution.
In short, CBS is seeking to convert a free, publicly subsidized broadcast station into a high-cost channel while leaving cable and satellite customers holding the bag.
Make no mistake. We want the CBS owned-and-operated local broadcast stations in our lineup. Yet customers today are demanding more choice and value from their local stations. Instead, it has become clear to us that CBS is intent on blacking out any home that chooses to receive cable or satellite service, antagonizing its most loyal viewers.
CBS and other broadcasters continue to cause blackouts at a record pace with more than 213 so far this year, tying the prior record set in 2017.
The vast majority of our TV homes in thousands of different cities will continue to receive their local CBS station the same as before. For those customers who do not, CBS shows also remain available in many affected cities through the new Locast app on DIRECTV Genie and U-verse internet-connected receivers. We are also able to offer our customers an innovative product called Local Channel Connector that can put local broadcast station signals into the program guides of many DIRECTV customers with Genie receivers. Both of these options could be helpful for football fans if CBS’ removal carries on into the college and pro seasons.
Fans of any of the 14 CBS local stations involved can also watch over the air and typically at the station website, at CBS.com or using the CBS app. CBS Sports Network and Smithsonian Channel stream their shows via their own network websites and mobile apps.
There are ways to try to permanently eliminate these blackouts, including new legislation, and fortunately Congress has taken more interest. But the best option is to create mutually beneficial relationships with broadcasters like CBS through good faith negotiations.
Our goal is simple: to deliver the content our customers want at a value that also makes sense to them. We continue to fight for that here and appreciate our customers’ patience.
Google has to pay the FTC a multimillion dollar fine to settle a probe into YouTube's shortcomings when it comes to protecting kids using its service, according to The Washington Post. The agency launched an investigation into the video-sharing platform to figure out whether it violated federal data privacy laws for children by collecting data from kids under 13. By the end of the probe, WP says the commission found that Google and YouTube failed to protect children adequately and that they collected their data, which breached the Children's Online Privacy Protection Act or COPPA.
The FTC has been getting child privacy complaints against YouTube for years, according to previous reports. COPPA, after all, prohibits companies from collecting data from users under 13 and from targeting them with personalized ads. To better protect kids using the internet these days, the agency intends to reexamine how COPPA is enforced, seeing as a lot of young users access websites and video games that weren't made for them.
Since the Post's sources aren't authorized to speak on the issue, the exact amount and the conditions of the settlement are still unclear. A multimillion dollar fine is likely chump change for a massive corporation like Google, and the FTC's officials were reportedly divided on the settlement: it was reportedly backed by the agency's three Republicans and opposed by its two Democrats. That said, the agency's decision could affect the tech industry as a whole. As the Post noted, the issues privacy advocates raised against Google also apply to other tech and gaming companies.
President Donald Trump weighed into a simmering debate over the Federal Reserve interest rate policy, saying Friday that the central bank needs to end its "crazy" tightening moves.
Market participants initially took Williams' remarks as indicative that the central bank was prepared to cut rates aggressively, by perhaps a half a percentage point. But a Fed spokesman soon walked back the comments, causing confusion over where policy is headed.
Trump said he liked Williams' "first statement much better than his second." He called on the Fed to "stop with the crazy quantitative tightening" and not to "blow it" by halting "unparalleled" growth.
The president, though, mischaracterized Williams' comments. Williams never said in the speech that the Fed raised "far too fast & too early," as Trump suggested. Rather, Williams said the Fed, when confronted with an economic downturn and interest rates close to zero, should cut quickly and aggressively.
Trump has long been a Fed critic, saying the central bank's rate hikes since December 2015, along with its efforts to reduce bond holdings on its balance sheet, i.e. "quantitative tightening," have constrained economic growth. The Fed already has announced plans to halt the balance sheet rolloff, likely in September.
With fears building over a bevy of issues including global economic slowdown, tariffs, Brexit, debt ceiling negotiations and a vexing lack of inflationary pressures, markets widely expect the Fed to announce a rate cut at its July 30-31 meeting.
In his speech, Williams said that when faced with "economic distress," the Fed should "act quickly" and "keep interest rates lower for longer." Coming along with similarly dovish comments from Fed Vice Chairman Richard Clarida and St. Louis Fed President James Bullard, markets immediately started pricing in an even sharper reduction from the Fed than the typical quarter-point moves and looked for a possible half-point cut.
Williams' office, however, followed with a statement saying that his comments were only in regard to an academic study and shouldn't be construed as a current policy intention.
Traders on Friday were assigning a 41% chance of a half-point cut, according to the CME's FedWatch tracker.
President Donald Trump weighed into a simmering debate over the Federal Reserve interest rate policy, saying Friday that the central bank needs to end its "crazy" tightening moves.
Market participants initially took Williams' remarks as indicative that the central bank was prepared to cut rates aggressively, by perhaps a half a percentage point. But a Fed spokesman soon walked back the comments, causing confusion over where policy is headed.
Trump said he liked Williams' "first statement much better than his second." He called on the Fed to "stop with the crazy quantitative tightening" and not to "blow it" by halting "unparalleled" growth.
The president, though, mischaracterized Williams' comments. Williams never said in the speech that the Fed raised "far too fast & too early," as Trump suggested. Rather, Williams said the Fed, when confronted with an economic downturn and interest rates close to zero, should cut quickly and aggressively.
Trump has long been a Fed critic, saying the central bank's rate hikes since December 2015, along with its efforts to reduce bond holdings on its balance sheet, i.e. "quantitative tightening," have constrained economic growth. The Fed already has announced plans to halt the balance sheet rolloff, likely in September.
With fears building over a bevy of issues including global economic slowdown, tariffs, Brexit, debt ceiling negotiations and a vexing lack of inflationary pressures, markets widely expect the Fed to announce a rate cut at its July 30-31 meeting.
In his speech, Williams said that when faced with "economic distress," the Fed should "act quickly" and "keep interest rates lower for longer." Coming along with similarly dovish comments from Fed Vice Chairman Richard Clarida and St. Louis Fed President James Bullard, markets immediately started pricing in an even sharper reduction from the Fed than the typical quarter-point moves and looked for a possible half-point cut.
Williams' office, however, followed with a statement saying that his comments were only in regard to an academic study and shouldn't be construed as a current policy intention.
Traders on Friday were assigning a 41% chance of a half-point cut, according to the CME's FedWatch tracker.
U.S. stocks rose at the start of trade Friday, with Wall Street hopeful that the Federal Reserve will take aggressive action to stamp out signs of stress in the economy, even as the Fed attempted to moderate dovish comments made Thursday by the New York Fed President John Williams.
All three benchmarks, however, remain set to book slight losses on the week.
How are the major benchmarks performing?
The Dow Jones Industrial Average
DJIA, +0.20%
rose 78 points, or 0.3%, at 27,299, the S&P 500 index
SPX, +0.14%
edged 8 points higher, or 0.3%, at 3,003, while the Nasdaq Composite index
COMP, +0.23%
gained 28 points, or 0.4%, at 8,236.
For the week, the Dow is on pace to fall 0.1%, the S&P 500 was set for a 0.3% weekly slide, while the Nasdaq was on track for a weekly loss of 0.1% in early trade Friday. A decline will mark the first time the equity indexes have logged a weekly fall since the week ended June 28.
What’s driving the market?
The Federal Reserve attempted to walk back statements made by New York Federal Reserve President John Williams on Thursday that the market read as decidedly dovish and which caused Fed funds futures markets to place much a higher probability of an unusual 50 basis-point cut to the federal-funds rate at the July 30-31 meeting of the rate-setting Federal Open Market Committee. The benchmark rates currently sits at between 2.25% and 2.5%.
However, the Wall Street Journal, citing a Fed spokesman, referred to Williams comments as merely academic in nature and not predictive of future policy: “This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting,” the New York Fed spokesman told the paper late Thursday.
Some market participants viewed the attempt to walk back the comment by the New York Fed as atypical. “This unusual step by New York Fed officials suggests a concern that markets are getting ahead of themselves in pricing in the prospect of a 50 basis point rate cut at the end of the month,” said Michael Hewson, chief market analyst at CMC Markets, in a Friday research note.
Federal -funds futures are showing a still-high 41.1% probability of a half-a-percentage point rate reduction compared with a 54% chance of a 25 basis-point cut to key rates at the end of the month, according to CME Group data. The market’s expectations for a 50 basis-point cut hit a peak at 60.2% after Williams’ comments.
Good earnings from the heavyweights like Microsoft Corp.
MSFT, +1.81%
, however, also are helping to bolster markets. Microsoft blew away earnings expectations late Thursday thanks to strong growth from its Azure cloud offering and LinkedIn.
In trade policy news, senior U.S. and Chinese officials, including U.S. trade representative Robert Lighthizer and Treasury Secretary Robert Mnuchin, spoke via phone this week, a USTR spokesman confirmed, according to Bloomberg.
There were no details provided on the talks and no plans released for face-to-face meeting, potentially underscoring the lack of substantive progress made in trade negotiations since talks between the two sides collapsed in May.
Looking ahead, Investors will also be watching for University of Michigan’s July consumer confidence data due at 10 a.m. Eastern Time.
Which stocks are in focus?
Boeing Co.’s stock
BA, +3.50%
was in focus after the aeronautics and defense contractor said it would take a $4.9 billion second-quarter charge related to its 737 Max groundings. Shares of the company were up 2.5% early Friday.
BlackRock Inc.
BLK, +0.30%
reported second-quarter earnings and revenue that fell below expectations, as the investment management and advisory company said it had lower base fees as a result of lower securities and lending revenue and lower performance fees. Shares rose 1.7% Friday morning.
Microsoft MSFT, +1.81%
now America’s most valuable company, was up after it topped analysts’ estimates.
Shares of American Express Co.
AXP, -2.48%
fell 1.2%, after the payment-processing company reported second-quarter earnings and revenue that slightly surpassed expectations. The stock has rallied 33.2% year-to-date.
Shares of Schlumberger NVSLB, -2.63%
fell 0.5% before the bell Friday, after the oil services company reported second-quarter revenue that beat expectations and revenue that was in line and announced that CEO Paal Kibsgaard will retire and step down as chairman of the board.
How are other markets trading?
The yield on the 10-year U.S. Treasury rose two basis points to 2.053% early Friday.
In commodities markets, the price of U.S. crude oil
CLQ19, +0.40%
jumped 0.6% at $56.65 a barrel as Iran denied that the U.S. Navy downed one of its drones in the Strait of Hormuz, while gold
GCQ19, +0.96%
extended its gains, up 0.6% to $1,436.80 an ounce, extending its climb to a six-year peak.
The U.S. dollar index
DXY, +0.25%
meanwhile, rose 0.3%, after tumbling about 0.5% on Thursday.
In Asia, stocks closed mostly higher, with the China CSI 300
000300, +1.05%
rising 1.5% , Japan’s Nikkei 225
NIK, +2.00%
jumping 2%, while Hong Kong’s Hang Seng Index
HSI, +1.07%
added 1.1%. In Europe, stocks were slightly higher, with the Stoxx Europe 600
SXXP, +0.15%
up 0.2%.
In a House hearing on monetary policy last week, Federal Reserve Chair Jerome Powell made a telling confession in response to a question from Rep. Alexandria Ocasio-Cortez (D-NY). The topic was the so-called natural rate of unemployment: the idea, believed by many economists and policymakers, that there is a rate at which unemployment could get so low that it could trigger ever-rising inflation.
It’s an idea that has governed decades of monetary policymaking, often prompting the Fed to keep interest rates higher than it should — slowing down the economy in the process — out of fear of accelerating inflation.
Ocasio-Cortez didn’t waste time poking holes at it. She pointed out that the unemployment rate, now 3.7 percent, has fallen well below the Fed’s estimates of the natural rate, which it forecast at 5.4 percent in 2014 and 4.2 percent today. And yet, she noted, “inflation is no higher today than it was five years ago. Given these facts, do you think it’s possible that the Fed’s estimates of the lowest sustainable unemployment rate may have been too high?”
Powell’s response, to his credit, was as simple and direct as you’ll ever hear from a central banker: “Absolutely.” He elaborated: “I think we’ve learned that ... this is something you can’t identify directly. I think we’ve learned that it’s lower than we thought, substantially lower than we thought in the past.”
Powell’s response was commendable, perhaps even groundbreaking; here was the Fed chair challenging decades of conventional economic wisdom. It was a welcome sign of a policymaker’s willingness to question age-old assumptions that have dictated policy and affected millions.
And it’s not the only economic “iron law” that we need to revisit. In the spirit of Powell’s act, I’d like to dig deeper into some assumptions that have defined economic policymaking these past few decades, assumptions that have needlessly caused a lot of economic pain.
The natural rate of unemployment that AOC questioned is one such idea (more on that below). There are three others worth singling out:
that globalization is a win-win proposition for all, an idea that has deservedly taken a battering in recent years;
that federal budget deficits “crowd out” private investments; and
that the minimum wage will only have negative effects on jobs and workers.
Economists and policymakers have gotten these ideas wrong for decades, at great cost to the public. Especially hard hit have been the most economically vulnerable, and these mistakes can certainly be blamed for the rise of inequality. It’s time we moved on from them.
The mandate of the Federal Reserve is to achieve maximum employment at stable prices. It has interpreted the latter to mean an inflation rate of 2 percent. For decades, the Fed has used the benchmark interest rate it controls to target that inflation rate, and it’s done so by trying to keep actual unemployment close to its estimate of what’s called the natural rate of unemployment — a rate below which it was believed inflation would spiral up.
The problem is that the core relationship behind this model — the negative correlation between unemployment and inflation — has been weakening for years, and with it any ability to reliably estimate the natural unemployment rate. Moreover, as Powell acknowledged, there’s been an asymmetry: Because the estimates of the natural rate have been too high, the Fed has often intervened in the direction of raising or failing to cut interest rates.
The cost of this asymmetry has been steep. Since 2009, the average of the Fed’s natural rate estimate has been about 5 percent. As Powell stressed, we can’t accurately identify the natural rate of unemployment, but suppose it’s actually 3.5 percent. Targeting 5 percent unemployment when we could achieve 3.5 percent with little risk of spiraling inflation would mean 2.4 million people unnecessarily out of work. Even targeting the Fed’s current natural rate (4.2 percent) would sacrifice a million potential workers to the altar of an empirically elusive concept.
And the unemployed are just one subgroup that gets hurt in such a scenario. Muchresearch has shown that in slack labor markets, middle- and low-wage earners lack the bargaining clout they have in tight labor markets. As such, they face lower pay, fewer hours of work, higher poverty, and wider racial economic gaps.
By contrast, high-income households are little affected — which means that labor market slack can deepen inequality. The figure below, from a recent paper by Keith Bentele and me, shows the acceleration — the difference between wage growth in strong versus weak labor markets — for real annual earnings.
For low-income workers, we found earnings rose at about a 2 percent annual pace in hot labor markets and fell at about a 4 percent pace in cool ones (the difference, 6 percent, is the first bar). Clearly, the benefits of moving from slack to taut conditions are much more important for low- than for high-earning households.
Such are the costs of over-estimating the natural rate.
Source: Jared Bernstein and Keith Bentele
Back in the 1990s, when the Clinton administration was trying to sell NAFTA, the view that expanded trade was virtually all upside began to pervade the rhetoric and politics of both parties. They were supported by economic arguments that exporting industries would expand into markets and add new jobs, and consumers would have cheaper goods. By dint of their superior productivity, US manufacturers and their communities wouldn’t be hurt. Any disruption to workers’ livelihoods was either dismissed as an impossibility or placed under the antiseptic rubric of “transition costs.”
This excerpt from the 1994 economic report of the president nicely captures the zeitgeist:
As economists have long predicted, freer trade has been a win-win strategy for both the United States and its trading partners, allowing all to reap the benefits of enhanced specialization, lower costs, greater choice, and an improved international climate for investment and innovation. American industries—both their workers and their owners—have benefited from increased export markets and from cheaper imported inputs. American consumers have been able to purchase a wider variety of products at lower prices than they could have without the expansion of trade.
When pressed as to how expanded trade could truly be “win-win,” advocates like Clinton’s economics team above cited the economic theory of comparative advantage: When trading partners produce what they’re best at producing, both countries will come out ahead.
But the theory never said expanded trade would be win-win for all. Instead, it (and its more contemporary extensions) explicitly said that expanded trade generates winners and losers, and that the latter would be our blue-collar production workers exposed to international competition. True, the theory maintained (correctly in my view) that the benefits to the winners were large enough to offset the costs to the losers and still come out ahead. But as trade between nations expanded, policymakers quickly forgot about the need to compensate for the losses.
The era of free trade eventually led to large trade deficits with countries with comparatively productive factories to ours but with much lower wages, most notably Mexico and China. As in every other advanced economy, the share of US manufacturing employment had long been drifting down. But the number of US factor jobs held pretty constant around 17 million — until around 2000, when, over the next decade, almost 6 million such jobs were lost. Economists who’ve studied the period now refer to it as “the China Shock.”
Once again, these impacts didn’t just translate into just job losses; wages were hit, too. Between the late 1940s and the late 1970s, when production workers were relatively insulated from foreign competition, blue-collar manufacturing compensation more than doubled. By contrast, it’s grown only 5 percent since then.
Did the winners from trade — the multinational corporations that relocated production, the finance sector that made the deals, the retailers that profited from “the China price” — compensate the losers? Of course not. They argued that “everyday low prices” were reward enough.
But not only did the winners fail to help the losers — say, through serious employment-replacement programs, robust safety net assistance, direct job creation, and investments to make our manufacturers more competitive — they instead used their winnings to invest in politicians to cut their taxes and write ever more trade deals favoring investors over workers.
Let me be very clear. Both the US and developing countries have significantly benefitted from global trade. But because of the demonstrably false view that free trade is all upside — win-win — considerable economic pain has been meted out, pain that has not been met with anything approaching an adequate policy response.
For decades, economists argued that when the federal government runs a budget deficit, it pushes up interest rates and slows economic growth. It’s a theory known as “crowd-out,” suggesting government borrowing from a relatively fixed stock of loanable capital crowds out private borrowing, which in turn raises the cost of capital — i.e., the interest rate.
But this is yet another relationship that has failed to hold up, though not before its adherents created considerable hardship, both here and even more so in Europe, through austere budget policy in the wake of the Great Recession. The belief in this idea prompted policymakers to reduce government spending to avoid alleged crowd-out effects well before the private sector had recovered and could generate enough growth on its own.
There were certainly periods in the past when crowd-out did indeed appear in the data. The 1970s and early 1980s saw larger budget deficits (i.e., more negative) and higher interest rates. But since then, deficits have swung significantly up and down while interest rates have consistently drifted down.
Most recently, we’ve been posting very large budget deficits given the state of the economy (due to both deficit-financed tax cuts and spending) and interest rates arenonetheless hitting historic lows — precisely the opposite of crowd-out predictions.
Source: Federal Reserve and Bureau of Economic Analysis
This all sounds pretty abstract, but it has stark implications on the ground. Based on the deeply embedded notion (at the time) that the deficits built up in the Great Recession needed to come down quickly, the federal government pivoted to deficit reduction well before our private sector had recovered.
As a member of the Obama economic team at the time, I can confirm that crowd-out fears were a motivation for the pivot. According to this analysis by the Brooking’s Institute, between 2011 and 2014, fiscal policy cut about 1 percentage point per year from real GDP growth. Based on the historical correlation between growth and jobs, this austerity added 2 points to the unemployment rate in those years, or about 3 million jobs.
I tend not to give Trump a lot of credit for economic policy, and I believe his tax cut will exacerbate inequality and rob the Treasury of needed revenue. But the fiscal economics of Trump’s tax cuts are revealing in ways that relate both to crowd-out and the natural rate of unemployment. As noted, deficits are up and interest rates are down. Meanwhile, the positive fiscal boost has helped drive the unemployment rate down to 50-year lows while inflation remains low and stable. These developments clearly undermine long-held economic doctrines, and they’ve been a boon to working families.
That said, a final point must be underscored: The absence of crowd-out doesn’t mean deficits no longer matter. Even with low rates, we’ll still be devoting more tax revenue to financing our debt, and even more worrisome is the fact that we’re almost certain to enter the next recession with a debt-to-GDP ratio that’s twice that of the historical norm. This will likely lead Congress to be more timid in fighting the next recession. But this is a political constraint, not an economic one.
Another big mistake with lasting consequences has been the assumption that minimum wage increases will hurt their intended beneficiaries: low-wage workers.
The theory is that free markets set an “equilibrium” wage that perfectly matches supply and demand given employers needs and workers’ capabilities. Force that equilibrium wage up and rampant unemployment will result.
When I was coming up in the profession, our textbooks argued that believing minimum wages could help low-wage workers was akin to believing that water flowed uphill. Their message was particularly comforting to conservative politicians who wanted to protect the profits of employers of low-wage workers.
Today, decades of high-quality research (much of it initiated by the late, great economist Alan Krueger) have introduced a much more nuanced view about the true impacts of minimum-wage hikes. But years of economists’ opposition to the policy have left us with a national minimum wage of $7.25 per hour, a level far too low to support the many families that depend on the minimum wage. (Another myth was that only teenagers earned the minimum; David Cooper’s work shows the main beneficiaries of higher minimum wages are working adults.)
How the consensus began to change is instructive. To their credit, some state policymakers decided to ignore the economists and raise minimum wages in their states. This provided researchers like Krueger with quasi-natural experiments of a type too rare in economics. The positive results of these studies led many more states and cities to raise their wage floors (29 states plus DC now have minimums above the federal level), and this fed back into the experimental research, creating a powerful loop.
Summarizing a large and still contentious body of research, a fair conclusion is that, conditional on their magnitude, minimum wage increases accomplish their goal of raising pay for low-wage workers without large job-loss effects. But the broader point is that an economic relationship believed to be steadfast was tested and was found wanting.
The changing consensus can be seen in a new report from the Congressional Budget Office — a bastion of mainstream economics — that found an increase in the minimum wage to $15, phased in by 2025, would benefit 27.3 million workers, with an average gain of $1,500 per year, reduce the number of the poor by 1.3 million, but also cut employment of affected workers by 1.3 million. Yes, some would lose jobs, but so many more would benefit — hardly the “everybody loses” prediction that prevailed among economists for decades.
Pegging the “natural rate” too high, ignoring the harm from exposure to international competition, austere budget policy, low and stagnant minimum wages — all of these misunderstood economic relationships have one thing in common.
In every case, the costs fall on the vulnerable: people who depend on full employment to get ahead; blue-collar production workers and communities built around factories; families who suffer from austerity-induced weak recoveries and under-funded safety nets, and who depend on a living wage to make ends meet. These groups are the casualties of faulty economics.
In contrast, the benefits in every case accrue to the wealthy: highly educated workers largely insulated from slack labor markets, executives of outsourcing corporations, the beneficiaries of revenue-losing tax cuts that allegedly require austere budgets, and employers of low-wage workers.
In this regard, there is a clear connection between each one of these mistakes and the rise of economic inequality.
I cannot overemphasize the importance of recognizing who benefits and who loses from these economic mistakes, because that difference is why these mistakes persist. Every one of the wrong assumptions described here benefits conservative causes, from reducing the bargaining clout of wage earners, to strengthening the hand of outsourcers and offshorers, to lowering the labor costs of low-wage employers. These economic assumptions are thus complementary to the conservative agenda and that, in and of themselves, makes them far more enduring than they should be based on the facts.
It is no coincidence that the assumptions are being so rigorously questioned by a new group of highly progressive politicians, like Rep. Ocasio-Cortez. They are making the critical connections in our political economy to challenge old assumptions that have hurt working people for too long. The vast majority of us will be better off for their work.
Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities and was the chief economic adviser to Vice President Joe Biden from 2009 to 2011.
WARREN, Mich. (AP) — When you first lay eyes on the new 2020 Corvette, a modern version of the classic American sports car isn't the first thing that pops into your head.
Instead, you think Lamborghini, Lotus, McLaren.
The eighth-generation 'Vette, dubbed C8, is radically different from its predecessors, which for 66 years had the engine in the front. This time, engineers moved the General Motors' trademark small-block V8 behind the passenger compartment. It's so close to the driver that the belt running the water pump and other accessories is only a foot away.
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Also gone are the traditional long hood and large, sweeping front fenders, replaced by a downward-sloping snub nose and short fenders. In the back, there's a big, tapered hatch that opens to a small trunk and the low-sitting all-new 6.2-liter, 495 horsepower engine.
So why change the thing?
"We were reaching the performance limitations of a front-engine car," explains Tadge Juechter, the Corvette's chief engineer, ahead of Thursday night's glitzy unveiling in a World War II dirigible hangar in Orange County, California.
With a mid-engine, the flagship of GM's Chevrolet brand will have the weight balance and center of gravity of a race car, rivaling European competitors and leaving behind sports sedans and ever-more-powerful muscle cars that were getting close to outperforming the current 'Vette.
"We're asking people to spend a lot of money for this car, and people want it to be the best performer all around," Juechter said.
GM President Mark Reuss said the C8 will start below $60,000, 7% more than the current Corvette's base price of $55,900. Prices of other versions weren't announced but the current car can run well over $100,000 with options, still thousands cheaper most than European competitors.
Corvette sales aren't huge. Through June, the company sold just under 10,000 of them. But industry analysts say the car helps the company's image, showing that it can build a sports car that performs with top European models.
GM says the new version, with an optional ZR1 performance package, will go from zero to 60 mph (96.6 kilometers per hour) in under three seconds, the fastest Corvette ever and about a full second quicker than all but one high-performance version of the outgoing Vette.
The "cab forward" design with a short hood looks way different, but GM executives say they aren't worried that it will alienate Corvette purists who want the classic long hood and the big V8 in the front.
Harlan Charles, the car's marketing manager, said mid-engine Corvettes had for years been rumored to be the next generation so it wasn't unexpected. GM also is hoping the change will help draw in younger buyers who may not have considered a Corvette in the past.
George Borke, a member of Village Vettes Corvette Club in The Villages, Florida, a huge retirement community, said he hasn't heard anyone in the 425-member club complain about the new design. "I think after 60 years it's time for a change," said Borke, who owns a current generation "C7," bought when the car was last redesigned in the 2014 model year.
The new car has two trunks, one in the front that can hold an airline-spec carry-on bag and a laptop computer case. Under the rear hatch behind the engine is another space that can hold two sets of golf clubs.
Even though it's a performance car, Juechter said the Corvette can go from eight cylinders to four to save fuel. Some owners get close to 30 mpg on the freeway with the current model, and Juechter said he expects that to be true with the new one. Full mileage tests aren't finished, he said.
Engineers also took great pains to make the new car quiet on the highway, with heat shields and ample insulation to cut engine noise.
Even though the car has an aluminum center structure and a carbon fiber bumper beam, it still weighs a little more than the current model. It's also slightly less aerodynamic due to large air intake vents on the sides to help cool the engine. The new Corvette comes with a custom-designed fast-shifting eight-speed automatic transmission with two tall top gears. It also will be made with right-hand-drive for international markets.
Higher-performance versions are coming, although Juechter wouldn't say if the C8 is designed to hold a battery and electric motor.
Workers at a GM plant in Bowling Green, Kentucky, are just starting to build the new cars, which will arrive in showrooms late this year.
Earlier today CBS removed their 14 owned CBS locals from DIRECTV, DIRECTV NOW, and U-verse TV. Now CBS Sports Network and the Smithsonian Channel has also been removed from AT&T’s owned DIRECTV service.
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