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Former Milly Designer Michelle Smith Has a New Line, and a New Life

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The wind was whipping around a makeshift outdoor SoulCycle studio at Manhattan’s Hudson Yards the other day, but the fashion designer Michelle Smith pulled off her “Legalize Equality” sweatshirt, baring toned limbs. She was hot. For the second time that day, she was front row and center in a spin class taught by her girlfriend, the platinum-haired star instructor Stacey Griffith.

“You are the pebble, you are the water, you are the ripple,” Ms. Griffith said into a headset, as tourists gawked and snapped pictures and Ms. Smith pedaled diligently.

The power couple had more glamorous outings before the pandemic — holding hands leaping into the water on the Côte d’Azur in France last fall, posing for bikini-clad selfies on the beach of Saint Barths in February. But an exercise session in a troubled mall was paradise compared to what Ms. Smith was going through 18 months ago at a corporate office in Midtown.

It was April 2019, and some 20 or so men were bidding for Milly, the contemporary fashion line known for brightly colored, boldly patterned dresses that she had built with Andrew Oshrin, whom she married in 2003 and separated from in 2017.

Carried in Barneys, Saks Fifth Avenue and Bloomingdale’s, Milly had a flagship boutique on Madison Avenue. The brand was a favorite of Jennifer Lopez, Mika Brzezinski and Michelle Obama, who wore a white stretch cotton poplin maxi sundress with a print that conjured the quilts of Gee’s Bend for her official portrait, by the artist Amy Sherald.

But even as the portrait was unveiled in February 2018, showering favor on the designer and the brand, Milly was in trouble.

Credit…Ángel Franco/The New York Times
Credit…via Michelle Smith

In its heyday, Milly had generated $50 million in annual wholesale revenue. But costs associated with trying to navigate the changing retail economy had brought it to auction, which concluded with its sale in 2019 to a subsidiary of S. Rothschild & Co., an apparel company, for $5.7 million.

After the last bid, Ms. Smith slipped out of the office, in tears. “I left quietly, not wanting to be noticed. I felt stripped and raw,” she said.

This week, though, she is introducing a new fashion line, named simply Michelle Smith. It diverges from Milly in nearly every way and is a reflection both of the current moment and her own new life.

In the penthouse apartment in Harlem that she shares with her children, ages 13 and 11, and often Ms. Griffith, Ms. Smith described relief from the pressures of the old fashion cycle. “Instead of working from a place of, ‘I need to make a camisole that’s on-trend,’ I am asking myself, ‘How can I express myself most honestly through this fabric,” she said.

Milly was a comer in the contemporary market of the aughts, alongside brands like Alice + Olivia and Marc by Marc Jacobs. It was introduced to a New York defined for women by the ladylike polish of Kate Spade and the lustful adventures of Carrie Bradshaw. The aesthetic of Michelle Smith is that of a more mature New York woman who’s done with norms of office dressing (just let a man criticize her for what she wears to work — not that she’s leaving home to work these days anyway). It is not exactly androgynous, but it is less overtly ladylike. Women won’t wear it to look pretty for others; they’ll wear it to feel comfortable and sexy to themselves.

Bright and flowy dresses have been replaced by comfortable and sexy loungewear: sweaters with extra long sleeves and chill-out slip-on pants, all in cashmere, to be paired and layered with silk camisoles and slip dresses for the dressing-up version of dressing for your couch.

In muted colors (beige, black and a few pops of maroon) the entire new line was hanging on racks in Ms. Smith’s apartment, which doubles as her studio and office. A bolt of black sparkly fabric sat idly in a corner, awaiting a different moment in the culture. “I was excited to use it, then Covid happened and I literally went back to the drawing board,” she said.

Starting a business of luxury casual wear with pieces that cost between $600 to $1,000 during a pandemic marked by a steep economic downslope for the average American isn’t ideal. She is using all her own money to get started, is selling directly to her customers online, and will take pre-orders that will dictate how much she produces.

After decades of the runway-to-department-store churn, Ms. Smith is now interested in conserving resources, both material and psychological. “This is not a time of excess and Michelle’s sensitive to the fact that she is launching a luxury brand when the country is under a lot of strain,” said Stephanie Ruhle, the senior business correspondent for NBC News and the anchor of “MSNBC Live With Stephanie Ruhle,” who has been a friend of Ms. Smith’s and a Milly customer for years.

“People are not going to spend money for the sake of spending money right now. We’ve all trimmed down our lives and so has Michelle. With her, you have a designer that truly lives her brands. Michelle Unzipped” — the Instagram handle adopted by Ms. Smith as she separated herself from Milly — “is the brand I followed much more than a label.”

On that Instagram account, Ms. Smith has chronicled her metamorphosis from creative director of a corporate brand and wife to unbound, freehanded designer and champion of personal freedom, love and L.G.B.T.Q. rights.

Image“Instead of working from a place of, ‘I need to make a camisole that’s on-trend,’ I am asking myself, ‘How can I express myself most honestly through this fabric,” Ms. Smith said.
Credit…Simbarashe Cha for The New York Times

Now 47, Ms. Smith first came to New York in 1990 at 18, enrolling at the Fashion Institute of Technology. She’d wanted to be a designer since she was a little girl drawing dresses on the kitchen floor of her family’s middle-class homes in Connecticut, New Jersey and Ohio — wherever she, her siblings and her stay-at-home mother moved for her father’s job as a factory plant manager.

While still a student, Ms. Smith got a retail job at the flagship Hermès boutique on 57th Street which she parlayed into an internship with the brand in Paris. Smitten with the French city and language, she landed another internship at Louis Vuitton and then enrolled at ESMOD, the French fashion school.

The next internship was at the haute couture atelier of Christian Dior on the Avenue Montaigne. Ms. Smith worked on the second floor, illustrating gowns in watercolor: one copy for the client, one for the archives. “It was such a dream,” she said.

Missing the energy of New York, though, she decided to return in 1996.

She got an entry-level job on the design team at Gallery, an outerwear company. “I love coats,” she said. “A coat is the first impression you make.” She was brought in by Mr. Oshrin, an executive on the company’s business side who was impressed by her portfolio.

By 1998, Ms. Smith moved to a design role at Helen Wang, a contemporary brand. “It was a new market sector that I was excited about, with brands like DKNY, Anna Sui and Rebecca Taylor. I wanted to be able to create beautiful fashionable clothing that I could almost afford.”

She carefully tracked the progress of her designs, sold in the department stores that were not yet seriously threatened by e-commerce. “The designs I worked on were doing well and one even got on the cover of a Neiman Marcus catalog,” she said. “It was building my confidence.”

In 2000, Ms. Smith and Mr. Oshrin, who’d begun dating and ideating, started Milly as a wholesale brand. “I handled the design and creative aspects and Andy handled the financial side and production,” she said. The business plan called for Milly to do $1.2 million in wholesale sales in the first year. They hit the target in three months.

“I think Michelle has always done a great job at knowing how to design in a way that is relevant and shifting as things shift in time,” said Tracy Margolies, the chief merchant for Saks Fifth Avenue.

Milly spread across the country, to Neiman Marcus and Fred Segal in Los Angeles. “We were coming out of the minimalist ’90s with the dark Prada and Calvin Klein looks. What I was doing was super-colorful and printed with a little ironic wink to vintage,” Ms. Smith said. “It was totally different from what was going on at the time.”

In 2011, Milly opened its store on Madison Avenue and, a few years later, another in East Hampton. Ms. Smith began to develop close relationships with her customers.

“I would go to the store on Madison Avenue and we would sit in the dressing room and talk about our bodies and our lives and everything women talk about,” said Ms. Brzezinski, who hosts “Morning Joe,” on MSNBC with her husband, Joe Scarborough, whom she married in a dress designed by Ms. Smith. “Michelle can feel your vibe and has an ability to help you translate that into your own personal style that is just so spot on.”

But supplying the contemporary market, which demanded new product every month, could be dizzying. “By the end, I was designing 27 collections a year with over 100 styles per collection,” Ms. Smith said. “It was a crazy carousel and it was going so fast.”

In 2013, the stressed-out designer followed the advice of her friends and started taking SoulCycle classes. She especially enjoyed those of Ms. Griffith, a favorite of Kelly Ripa and the former trainer of Madonna who wrote a book about going from alcohol and drugs to fitness, “Two Turns From Zero.”

“I couldn’t believe Stacey’s energy and personality and the way she lit up the room,” Ms. Smith said. The two became friends outside of class, collaborating in 2015 on a collection of T-shirts with Ms. Griffith’s motivational catchphrases like, “No One Remembers Normal.”

But Milly’s expenses and debt were growing as the brand tried to expand its e-commerce footprint while continuing to meet its department store obligations. Its founders quietly decided to separate while still living and working together, but the situation was untenable. “It just became a dysfunctional environment,” Ms. Smith said, of the company. “I don’t think the right decisions were getting made, because you had one person who said ‘black’ and one person who said ‘white.’”

Mr. Oshrin is currently working as a apparel industry consultant. “It’s a tough time to start any business,” he said, “but Michelle is a talented designer and has tremendous creative instincts.”

Ms. Griffith declined to be interviewed for this article, saying that she wanted the spotlight on her girlfriend.

Credit…David Benthal/BFA

At the end of 2016, Ms. Smith heard from Meredith Koop, the stylist for Michelle Obama. Ms. Koop had been selecting pieces from Milly for the first lady for years, first buying things off the rack and then working directly with Ms. Smith on pieces like an off-the-shoulder dress Mrs. Obama wore on the cover of Essence in 2016, and a prom dress for Malia Obama. Ms. Smith “is a woman who designs for women,” Ms. Koop said in an interview. “It’s a cliché thing to say, but it’s true in her case.”

The white dress Ms. Koop wanted for the official portrait “was very authentic to what Mrs. Obama would actually wear in her personal life,” the stylist said.

Ms. Smith worked on sketches, adjustments and pulled the dress from her collection to keep it special, but still wasn’t sure it would be selected. “I had made coats for the second inauguration that weren’t chosen, so I didn’t think it was a slam dunk,” she said. Its choosing “was the most exciting moment in my entire design career.” (The dress will be on display in the Smithsonian’s National Portrait Gallery exhibit, “Every Eye Is Upon Me: First Ladies of the United States,” which opens on Nov. 13.)

It is the only piece of her past professional life that Ms. Smith hangs on to, and she finds it irritating when Milly’s new owner seems to claim credit for the dress, as it has on Instagram on occasions like Mrs. Obama’s birthday. “It’s cheesy,” Ms. Smith said. (“We bought all the assets of Milly and that dress is an asset of Milly,” said Mark Friedman, the president and chief executive of S. Rothschild. “I feel bad that she’s irritated, but she shouldn’t be.”)

In August 2018, Ms. Smith was invited to a barbecue in Montauk. Ms. Griffith was there. “We both felt really happy to be in each other’s presence and we started spending more time together,” Ms. Smith said.

When the relationship became serious enough to tell her children, Ms. Smith said overheard her son tell a friend, “Wait till you hear this one: My dad has a new girlfriend and so does my mom.”

Last year, the couple made it Instagram-official, posting photos of themselves in embrace at the New York City Ballet. Ms. Smith captioned hers “#lovewins.”

Department stores are falling. Fashion is flailing. Winter is coming. But her wheels are turning, and she finally feels comfortable in her own skin.

“Going through everything I’ve been through, going from a young woman to an adult in my late 40s, I have found my own voice and my confidence to freely express myself in my personal life and my creativity,” she said. “For the first time, everything has aligned and it feels amazing and true.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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