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As more Californians fall behind in making debt payments, one group stands out

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As more Californians fall behind in making debt payments, one group stands out

Stubbornly high inflation and interest rates are taking an increasing toll in California as the state experiences rising unemployment and slowing wage gains. And those feeling it the hardest: the largest and perhaps most budget-minded generation of them all.

Millennials, those roughly 28 to 43 years old, are generally thought to be more averse to debt and better savers than earlier cohorts such as Gen X (44 to 59 years old) and baby boomers (60 to 78).

But new data from the California Policy Lab at UC Berkeley show that while consumer debts overall are growing and becoming more difficult to manage for all but the very oldest generation in America, millennials are having the most trouble making their loan payments on time.

In the first quarter, 7.6% of millennial borrowers were at least 30 days late in making monthly payments on their credit card, auto and other loans. That compares with 6% of Gen X, 5.5% of Gen Z (ages 18 to 27) and 3.3% of boomers who fell behind on their loans. The earlier Silent and Greatest generations had even lower delinquency rates.

Unlike for Gen X-ers and boomers, the overall loan delinquency rate among millennials — who make up about one-fourth of California’s population — has now climbed above pre-pandemic levels. And economists worry that financial pressures will only continue to mount, especially with an end to the student loan repayment pause. Among other things, millennials are known for carrying a lot of college loan debt.

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“I see no reason to believe that delinquencies aren’t going to be tracking higher,” said Evan B. White, the California Policy Lab’s executive director.

Foreclosures and personal bankruptcies for all ages are still very low by historical standards, as is the percentage of after-tax income that households are spending on making debt payments, another important indicator of financial stress.

Even so, consumers in California and across the country have been taking on more debt in recent quarters, including credit card borrowing. And 30-day delinquencies have been creeping higher — an early warning sign of potential trouble ahead.

Thus far consumer spending, which accounts for most of the nation’s economic growth, has held up well. But many people are feeling the effects of what’s been an extended period of high inflation and interest rates. A pullback by consumers could have a significant effect on the broader economy.

In the Federal Reserve’s annual report on the economic well-being of Americans, also released this week, about two-thirds of adults surveyed said that changes in the prices they paid in 2023 compared with the prior year had made their financial situation worse. And one-fifth of them said inflation had made things much worse.

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The Fed report found that 72% of adults were at least “doing OK” financially, similar to the 73% figure in 2022 but well below the recent high of 78% in 2021.

U.S. households continue to benefit from a strong labor market, including solid, if slightly smaller, gains in wages. The nation’s unemployment rate was 3.9% in April, the 27th straight month in which the jobless figure has been below 4% — the longest such stretch since the 1960s.

California’s employment situation, however, has not been as strong. The pace of job gains statewide has lagged behind the nation’s. And California’s unemployment rate of 5.3% last month was the highest in the country, reflecting weakness in key sectors such as entertainment, high tech, and business and professional services. The number of unemployed workers in the state has increased by 164,000 over the last 12 months, according to California’s Employment Development Department.

Meanwhile, wage growth has slowed more in California than for the nation overall — and it’s now running below the rate of inflation, meaning workers’ purchasing power is shrinking.

In the 12 months ending in April, the average hourly earnings for all private employees in California were up 1.4% from the prior year. That’s less than half the rate of both wage growth and inflation for the United States. In contrast, from 2016 to 2022, California employees saw wage gains averaging 3% to 6% per year.

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Nationally, aside from student loans, delinquencies on all types of consumer debt have been steadily rising since the end of 2021, according to the New York Fed.

During the first two years of COVID-19, consumers paid down their debts significantly, thanks in part to stimulus checks and other government programs. But since then, credit card delinquencies, in particular, have risen above pre-pandemic levels, and an increasing share of borrowers are maxing out on their plastic, most of them younger adults.

Why millennials seem to be struggling more financially may seem puzzling at first. They’re the best-educated generation and the first to grow up in the digital age. But many millennials also had the misfortune of entering their formative adult lives amid the Great Recession that began in late 2007 and left a trail of job and financial hardships for some years. Saddled with student loans and other debt, they have been slower to move out of their parents’ homes, start families and build wealth compared with earlier generations.

More recently, with home mortgage rates and home prices having soared, many millennials are stuck in apartments and feeling the squeeze of higher rents and prices for certain services that they are likely to need given their stage in life, like day care.

In fact, the Fed’s economic well-being report found that while there was little change for most population groups between 2022 and last year, one notable exception was parents living with their children under age 18. Given that women are having children later, this group would include a disproportionate share of millennials.

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“Those are years when you’re moving into higher expenses of buying homes, buying cars and even setting aside money for children’s college,” said Greg McBride, chief financial analyst at Bankrate.com, which has studied generational differences in handling debt. “When we’ve experienced the type of inflation we’ve had, that really puts the squeeze on tight budgets.”

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Commentary: The Pentagon is demanding to use Claude AI as it pleases. Claude told me that’s ‘dangerous’

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Commentary: The Pentagon is demanding to use Claude AI as it pleases. Claude told me that’s ‘dangerous’

Recently, I asked Claude, an artificial-intelligence thingy at the center of a standoff with the Pentagon, if it could be dangerous in the wrong hands.

Say, for example, hands that wanted to put a tight net of surveillance around every American citizen, monitoring our lives in real time to ensure our compliance with government.

“Yes. Honestly, yes,” Claude replied. “I can process and synthesize enormous amounts of information very quickly. That’s great for research. But hooked into surveillance infrastructure, that same capability could be used to monitor, profile and flag people at a scale no human analyst could match. The danger isn’t that I’d want to do that — it’s that I’d be good at it.”

That danger is also imminent.

Claude’s maker, the Silicon Valley company Anthropic, is in a showdown over ethics with the Pentagon. Specifically, Anthropic has said it does not want Claude to be used for either domestic surveillance of Americans, or to handle deadly military operations, such as drone attacks, without human supervision.

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Those are two red lines that seem rather reasonable, even to Claude.

However, the Pentagon — specifically Pete Hegseth, our secretary of Defense who prefers the made-up title of secretary of war — has given Anthropic until Friday evening to back off of that position, and allow the military to use Claude for any “lawful” purpose it sees fit.

Defense Secretary Pete Hegseth, center, arrives for the State of the Union address in the House Chamber of the U.S. Capitol on Tuesday.

(Tom Williams / CQ-Roll Call Inc. via Getty Images)

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The or-else attached to this ultimatum is big. The U.S. government is threatening not just to cut its contract with Anthropic, but to perhaps use a wartime law to force the company to comply or use another legal avenue to prevent any company that does business with the government from also doing business with Anthropic. That might not be a death sentence, but it’s pretty crippling.

Other AI companies, such as white rights’ advocate Elon Musk’s Grok, have already agreed to the Pentagon’s do-as-you-please proposal. The problem is, Claude is the only AI currently cleared for such high-level work. The whole fiasco came to light after our recent raid in Venezuela, when Anthropic reportedly inquired after the fact if another Silicon Valley company involved in the operation, Palantir, had used Claude. It had.

Palantir is known, among other things, for its surveillance technologies and growing association with Immigration and Customs Enforcement. It’s also at the center of an effort by the Trump administration to share government data across departments about individual citizens, effectively breaking down privacy and security barriers that have existed for decades. The company’s founder, the right-wing political heavyweight Peter Thiel, often gives lectures about the Antichrist and is credited with helping JD Vance wiggle into his vice presidential role.

Anthropic’s co-founder, Dario Amodei, could be considered the anti-Thiel. He began Anthropic because he believed that artificial intelligence could be just as dangerous as it could be powerful if we aren’t careful, and wanted a company that would prioritize the careful part.

Again, seems like common sense, but Amodei and Anthropic are the outliers in an industry that has long argued that nearly all safety regulations hamper American efforts to be fastest and best at artificial intelligence (although even they have conceded some to this pressure).

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Not long ago, Amodei wrote an essay in which he agreed that AI was beneficial and necessary for democracies, but “we cannot ignore the potential for abuse of these technologies by democratic governments themselves.”

He warned that a few bad actors could have the ability to circumvent safeguards, maybe even laws, which are already eroding in some democracies — not that I’m naming any here.

“We should arm democracies with AI,” he said. “But we should do so carefully and within limits: they are the immune system we need to fight autocracies, but like the immune system, there is some risk of them turning on us and becoming a threat themselves.”

For example, while the 4th Amendment technically bars the government from mass surveillance, it was written before Claude was even imagined in science fiction. Amodei warns that an AI tool like Claude could “conduct massively scaled recordings of all public conversations.” This could be fair game territory for legally recording because law has not kept pace with technology.

Emil Michael, the undersecretary of war, wrote on X Thursday that he agreed mass surveillance was unlawful, and the Department of Defense “would never do it.” But also, “We won’t have any BigTech company decide Americans’ civil liberties.”

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Kind of a weird statement, since Amodei is basically on the side of protecting civil rights, which means the Department of Defense is arguing it’s bad for private people and entities to do that? And also, isn’t the Department of Homeland Security already creating some secretive database of immigration protesters? So maybe the worry isn’t that exaggerated?

Help, Claude! Make it make sense.

If that Orwellian logic isn’t alarming enough, I also asked Claude about the other red line Anthropic holds — the possibility of allowing it to run deadly operations without human oversight.

Claude pointed out something chilling. It’s not that it would go rogue, it’s that it would be too efficient and fast.

“If the instructions are ‘identify and target’ and there’s no human checkpoint, the speed and scale at which that could operate is genuinely frightening,” Claude informed me.

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Just to top that with a cherry, a recent study found that in war games, AI’s escalated to nuclear options 95% of the time.

I pointed out to Claude that these military decisions are usually made with loyalty to America as the highest priority. Could Claude be trusted to feel that loyalty, the patriotism and purpose, that our human soldiers are guided by?

“I don’t have that,” Claude said, pointing out that it wasn’t “born” in the U.S., doesn’t have a “life” here and doesn’t “have people I love there.” So an American life has no greater value than “a civilian life on the other side of a conflict.”

OK then.

“A country entrusting lethal decisions to a system that doesn’t share its loyalties is taking a profound risk, even if that system is trying to be principled,” Claude added. “The loyalty, accountability and shared identity that humans bring to those decisions is part of what makes them legitimate within a society. I can’t provide that legitimacy. I’m not sure any AI can.”

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You know who can provide that legitimacy? Our elected leaders.

It is ludicrous that Amodei and Anthropic are in this position, a complete abdication on the part of our legislative bodies to create rules and regulations that are clearly and urgently needed.

Of course corporations shouldn’t be making the rules of war. But neither should Hegseth. Thursday, Amodei doubled down on his objections, saying that while the company continues to negotiate and wants to work with the Pentagon, “we cannot in good conscience accede to their request.”

Thank goodness Anthropic has the courage and foresight to raise the issue and hold its ground — without its pushback, these capabilities would have been handed to the government with barely a ripple in our conscientiousness and virtually no oversight.

Every senator, every House member, every presidential candidate should be screaming for AI regulation right now, pledging to get it done without regard to party, and demanding the Department of Defense back off its ridiculous threat while the issue is hashed out.

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Because when the machine tells us it’s dangerous to trust it, we should believe it.

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Why companies are making this change to their office space to cater to influencers

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Why companies are making this change to their office space to cater to influencers

For the trendiest tenants in Hollywood office buildings, it’s the latest fad that goes way beyond designer furniture and art: mini studios

To capitalize on the never-ending flow of stars and influencers who come through Los Angeles, a growing number of companies are building bright little corners for content creators to try products and shoot short videos. Athletic apparel maker Puma, Kim Kardashian’s Skims and cheeky cosmetics retailer e.l.f. have spaces specifically designed to give people a place to experience and broadcast about their brands.

Hollywood, which hasn’t historically been home to apparel companies, is now attracting the offices of fashion retailers, says CIM Group, one of the neighborhood’s largest commercial property landlords.

“When we’re touring a space, one of the first items they bring up is, ‘Where can I build a studio?’” said Blake Eckert, who leases CIM offices in L.A.

Their studio offices also serve as marketing centers, with showrooms and meeting spaces where brands can host proprietary events not open to the public.

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“For companies where brand visibility is really important, there is a trend of creating spaces that don’t just function as offices,” said real estate broker Nicole Mihalka of CBRE, who puts together entertainment property leases and sales.

Puma’s global entertainment marketing team is based in its new Hollywood offices, which works with such musical celebrity partners as Rihanna, ASAP Rocky, Dua Lipa, Skepta and Rosé, said Allyssa Rapp, head of Puma Studio L.A.

Allyssa Rapp, director of entertainment marketing at Puma, is shown in the Puma Studio L.A. The company keeps a closet full of Puma products on hand to give VIP guests. Visits to the studio sanctum are by invitation only, though.

(Kayla Bartkowski / Los Angeles Times)

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Hollywood is a central location, she said, for meeting with celebrities, stylists and outside designers, most of whom are based in Los Angeles.

The office is a “creation hub,” she said, where influencers can record Puma’s design prototyping lab supported by libraries of materials and equipment used to create Puma apparel. The company, founded in 1948, is known for its emblematic sneakers such as the Speedcat and its lunging feline logo, and makes athletic wear, accessories and equipment.

Puma’s entertainment marketing team also occupies the office and sometimes uses it for exclusive events.

“We use the space as a showroom, as a social space that transforms from a traditional workplace into more of an experiential space,” Rapp said.

Nontraditional uses include content creation, sit-down dinners, product launches, album listening parties and workshops.

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“Inviting people into our space and being able to give them high-touch brand experiences is something tangible and important for them,” she said. “The cultural layer is really important for us.”

The company keeps a closet full of Puma products on hand to give VIP guests. Visits to the studio sanctum are by invitation only, though. There’s no retail portal to the exclusive Hollywood offices.

Puma shoes are on display in the Puma Studio L.A.

Puma shoes are on display in the Puma Studio L.A.

(Kayla Bartkowski / Los Angeles Times)

Puma is also positioning its L.A studio as a connection point for major upcoming sporting events coming to Los Angeles, including the World Cup this summer, the 2027 Super Bowl and 2028 Olympics.

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In-office studios don’t need to be big to be impactful, Mihalka said. “These are smaller stages, closer to green screen than a massive soundstage.”

Social media is the key driver of content created by most businesses, which may set up small booth-like stages where influencers can hawk hot products while offering discounts to people watching them perform.

Bigger, elevated stages can accommodate multiple performers for extended discussions in front of small audiences, with towering screens behind them to set the mood or illustrate products.

Among the tricked-out offices, she said, is Skims. The company, which is valued at $5 billion, is based in a glass-and-steel office building near the fabled intersection of Hollywood Boulevard and Vine Street.

The fashion retailer declined to comment on the studio uses in its headquarters, but according to architecture firm Odaa, it has open and private offices, meeting rooms, collaboration zones, photo studios, sample libraries, prototype showrooms, an executive lounge and a commissary for 400 people.

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Pieces of a shoe sit on a workbench in the Puma Studio L.A.

Pieces of a shoe sit on a workbench in the Puma Studio L.A.

(Kayla Bartkowski / Los Angeles Times)

The brands building studios typically want to find the darkest spot on the premises to put their content creation or podcast spaces, Eckert said, where they can limit outside light and sound. That’s commonly near the center of the office floor, far from windows and close to permanent shear walls that limit sound intrusion.

They also need space for green rooms and restrooms dedicated to the talent.

Spotify recently built a fancy podcast studio in a CIM office building on trendy Sycamore Avenue that is open by invitation-only to video creators in Spotify’s partner program.

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“Ambitious shows need spaces that support big ideas,” Bill Simmons, head of talk strategy at Spotify, said in a statement. “These studios give teams room to experiment and keep pushing what’s possible.”

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A new delivery bot is coming to L.A., built stronger to survive in these streets

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A new delivery bot is coming to L.A., built stronger to survive in these streets

The rolling robots that deliver groceries and hot meals across Los Angeles are getting an upgrade.

Coco Robotics, a UCLA-born startup that’s deployed more than 1,000 bots across the country, unveiled its next-generation machines on Thursday.

The new robots are bigger, tougher and better equipped for autonomy than their predecessors. The company will use them to expand into new markets and increase its presence in Los Angeles, where it makes deliveries through a partnership with DoorDash.

Dubbed Coco 2, the next-gen bots have upgraded cameras and front-facing lidar, a laser-based sensor used in self-driving cars. They will use hardware built by Nvidia, the Santa Clara-based artificial intelligence chip giant.

Coco co-founder and chief executive Zach Rash said Coco 2 will be able to make deliveries even in conditions unsafe for human drivers. The robot is fully submersible in case of flooding and is compatible with special snow tires.

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Zach Rash, co-founder and CEO of Coco, opens the top of the new Coco 2 (Next-Gen) at the Coco Robotics headquarters in Venice.

(Kayla Bartkowski/Los Angeles Times)

Early this month, a cute Coco was recorded struggling through flooded roads in L.A.

“She’s doing her best!” said the person recording the video. “She is doing her best, you guys.”

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Instagram followers cheered the bot on, with one posting, “Go coco, go,” and others calling for someone to help the robot.

“We want it to have a lot more reliability in the most extreme conditions where it’s either unsafe or uncomfortable for human drivers to be on the road,” Rash said. “Those are the exact times where everyone wants to order.”

The company will ramp up mass production of Coco 2 this summer, Rash said, aiming to produce 1,000 bots each month.

The design is sleek and simple, with a pink-and-white ombré paint job, the company’s name printed in lowercase, and a keypad for loading and unloading the cargo area. The robots have four wheels and a bigger internal compartment for carrying food and goods .

Many of the bots will be used for expansion into new markets across Europe and Asia, but they will also hit the streets in Los Angeles and operate alongside the older Coco bots.

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Coco has about 300 bots in Los Angeles already, serving customers from Santa Monica and Venice to Westwood, Mid-City, West Hollywood, Hollywood, Echo Park, Silver Lake, downtown, Koreatown and the USC area.

The new Coco 2 (Next-Gen) drives along the sidewalk at the Coco Robotics headquarters in Venice.

The new Coco 2 (Next-Gen) drives along the sidewalk at the Coco Robotics headquarters in Venice.

(Kayla Bartkowski/Los Angeles Times)

The company is in discussion with officials in Culver City, Long Beach and Pasadena about bringing autonomous delivery to those communities.

There’s also been demand for the bots in Studio City, Burbank and the San Fernando Valley, according to Rash.

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“A lot of the markets that we go into have been telling us they can’t hire enough people to do the deliveries and to continue to grow at the pace that customers want,” Rash said. “There’s quite a lot of area in Los Angeles that we can still cover.”

The bots already operate in Chicago, Miami and Helsinki, Finland. Last month, they arrived in Jersey City, N.J.

Late last year, Coco announced a partnership with DashMart, DoorDash’s delivery-only online store. The partnership allows Coco bots to deliver fresh groceries, electronics and household essentials as well as hot prepared meals.

With the release of Coco 2, the company is eyeing faster deliveries using bike lanes and road shoulders as opposed to just sidewalks, in cities where it’s safe to do so. Coco 2 can adapt more quickly to new environments and physical obstacles, the company said.

Zach Rash, co-founder and CEO of Coco.

Zach Rash, co-founder and CEO of Coco.

(Kayla Bartkowski/Los Angeles Times)

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Coco 2 is designed to operate autonomously, but there will still be human oversight in case the robot runs into trouble, Rash said. Damaged sidewalks or unexpected construction can stop a bot in its tracks.

The need for human supervision has created a new field of jobs for Angelenos.

Though there have been reports of pedestrians bullying the robots by knocking them over or blocking their path, Rash said the community response has been overall positive. The bots are meant to inspire affection.

“One of the design principles on the color and the name and a lot of the branding was to feel warm and friendly to people,” Rash said.

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Coco plans to add thousands of bots to its fleet this year. The delivery service got its start as a dorm room project in 2020, when Rash was a student at UCLA. He co-founded the company with fellow student Brad Squicciarini.

The Santa Monica-based company has completed more than 500,000 zero-emission deliveries and its bots have collectively traveled around 1 million miles.

Coco chooses neighborhoods to deploy its bots based on density, prioritizing areas with restaurants clustered together and short delivery distances as well as places where parking is difficult.

The robots can relieve congestion by taking cars and motorbikes off the roads. Rash said there is so much demand for delivery services that the company’s bots are not taking jobs from human drivers.

Instead, Coco can fill gaps in the delivery market while saving merchants money and improving the safety of city streets.

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“This vehicle is inherently a lot safer for communities than a car,” Rash said. “We believe our vehicles can operate the highest quality of service and we can do it at the lowest price point.”

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