Inflation Is Near a 40-Year High. Here's What It Looks Like

 

Inflation in the U.S. climbed to a 39-year high in November. The price didn’t change at the same rate for all goods and services. The primary reason for the inflation burst was due to increase in prices for gasoline, and ither energy resources and the prices for cars. There’s wasn’t a significant increase in price for services like medical care and education. The increase in price for goods and services are related to the pandemic and the broadening of price could be a signal that inflation will remain elevated into 2022, even after COVID related disruptions end. The increase in price is due to cost push and demand-pull inflation.

 

 

https://www.wsj.com/articles/inflation-is-near-a-40-year-high-heres-what-it-looks-like-11639737004

Spike in interest rates as Russia fights inflation

 Recent interest rates hike in Russia in order to fight the growing inflation, which is a global issue currently faced by the majority of the world's countries due to the COVID pandemic which has highly burdened the global market. As labor shortages have increased in the country accompanied by massive geopolitical tensions, Russia has warned despite a 100 basis point hike in interest rates that monetary tightening is not halting at this point. The central bank has increased, for the seventh time, the key rate to a level of 8.5 percent, which was expected regarding their policy. The governor of the bank of Russia has claimed that the chances of more hikes are lower than before but the possibilities still exist due to the unstable economic condition as inflation runs at double the central bank’s target. The President of the country himself has stepped in and ordered the price growth back in line. Although the pressure from the labor market has increased, the aim is to get inflation back to 4-4.5 percent. The ruble has benefited from the central bank’s tight policies and has only traded down 0.2 percent against the US dollar. Economists assure that while inflation looks to set slow due to the efforts, the central bank is still monitoring the situation and it could possibly be the last hike of the cycle. Geopolitical tensions due to the border issues with Ukraine carry a threat of penalties from the US and Europe which could potentially increase the volatility of the financial markets.

Source: https://www.aljazeera.com/economy/2021/12/17/bbbank-of-russia-delivers-another-big-rate-hike-to-tame-inflation

Major crash in the Turkish stock market

 The Turkish economy has suffered a major blow as they halted trades on all listed stocks on 17 September as Borsa Istanbul, the sole exchange entity of Turkey, suffered losses of seven percent in their primary index (100 indexes). According to the article, trading of equities, equity derivatives, and debt repo transactions was halted two times within one hour as the index fell 7 percent, triggering a market-wide circuit breaker. Upon resuming, it fell as much as 9.1 percent within the first two minutes of operation. The increased panic in the market as shares began to lose value caused a high degree of damage to the economy of the country. The decline of the Lira, which has fallen 37 percent against the value of the dollar, has made Borsa Istanbul’s main index one of the worst-performing equity markets in the world. The president of the country has advised for cuts in borrowing cuts but has faced many complaints from industrialists who are being negatively affected by the current volatility. Richard Seagal, an analyst from Ambrosia Capital in London suggests that the recent crash is different from previous ones due to the current volatility of the exchange rate as the Lira approaches rates. The real reason behind the recent crisis is linked to the previous insistence of the Turkish president on lowering interest rates as inflation levels increase in the country.  

Source: https://www.aljazeera.com/economy/2021/12/17/turkey-stock-trading-halted-twice-as-lira-crashes-to-new-low

No relief for Student Loan Debt in 2022 too?

 The Biden 2020 campaign promised a lot to win the election, and student loan relief was a very big part of the campaign. However, the government seems to be taking a step back. It's been almost a year and there has been no bill introduced in the house that has provisions for student loan forgiveness.

The student loan crisis has devastated much of the US's low and middle income families for decades. Billions of dollars would have to be spent or given up in lost revenue from the loan repayments. And as we know it already, one wing of the Congress is very hesitant on adding more spending to the already big multi-trillion dollar spending budget bills introduced since the the Biden government took over.

The government also seems to taking a step back on spending on education front. The Build Back Better bill passed recently, was supposed to have provisions for free community college. But, before the bill could pass, those provisions were removed in favor of increasing the chances of passing the bill in the Congress. Hence, it is highly improbably this government is going to take a significant step in the next year about the student loans forgiveness they had promoted heavily in their campaigns.

https://www.forbes.com/sites/robertfarrington/2021/12/17/dont-expect-student-loan-forgiveness-next-year-either/

Wages Shoot Up in Travel, Food and Other In-Demand Industries

 A Report released on Friday December 3, showed that the wages in the U.S continue to rise especially in sectors with labor shortages. The labor department said that the report indicated increased payrolls and the declining unemployment rate. Average hourly earnings were also higher in November compared to a year ago. Wages were highest for leisure and hospitality followed by transportation and warehousing. These two sectors were affected the most by pandemic due to labor shortages. As wage growth is increasing, it could ease inflationary pressure in the coming months because the cost of wages constitutes a big chunk of the economy. The wage growth is being observed by the Federal Reserve, as it can be a predictor of future inflation and to prevent wage-price spiral – employees demand raises because their earnings have gone down relative to their cost of living- and the high labor costs are then passed to the consumers in the form of price increases, which can cause inflation. According to Fed Chairman, high energy prices and increasing rents can keep inflation elevated. The Increasing wages are bringing workers back into the workforce and as a result  the labor participation rate in November was 61.8 percent.

 

 

 

 

https://www.wsj.com/articles/worker-wages-continued-to-rise-for-services-shipping-jobs-11638557999

China Focuses on Stability

 China has been one of the biggest economic players in the last few decades and their growth has been astonishing. Since the pandemic, many have pushed the narrative that China's astonishing growth may be coming to an end. It is possible that they have come to the end of their transition from agriculture to industry. The Lewis Model that China has been following for some time now must eventually come to and end, and that end may be nearing. 

Many of the largest companies in China have taken hard hits during the pandemic. With so many ups and downs with different Covid variants that have gone around, many countries are only seeking some kind of stability in the market. That is what China is hoping to achieve with its new economic policies which will be rolled out throughout the beginning of the new year. Instead of focusing on growth, which they have been throughout the last decade or so, China will be pushing for economic stability in an attempt to achieve a new normal. All of this was claimed throughout the Chinese Communist Party's most recent economic reports, and the question here is whether or not China can re-grasp the growth that they have seen in the past. 

Link:https://www.bloomberg.com/news/articles/2021-12-10/china-emphasizes-economic-stability-in-plans-for-next-year

United States Inflation Rates Hit Highest Levels of Over the Last 40 Years

Recent figures have came out recently this week pointing to inflation levels being the highest of over the last 40 years. Inflation has been one of the many results of the on going pandemic, and it seems to be only getting worse for the United States. Recent numbers show that inflation has rose 6.8% over this current year up to November. Monthly inflations numbers are rising by 0.8% which is ultimately down from 0.9% in October. Consumers have ultimately felt the effects of this inflation head on as consumers have reported a normal grocery store trip costing an extra 30 dollars compared to what they previously paid. In addition to Inflation rising, petrol prices have jumped 6.1% as well, increasing traveling prices. What is interesting as Biden has stated, as mentioned in the article, that the economy is in good shape. This is interesting as even though we see these inflation numbers we also see job growth failing short of expectations. What will be interesting to see as how rising inflation will impact Biden's proposed social spending bill. Economists have pointed to the presidents spending programs being the cause of rising inflation. Other economist have pointed to the effect of the pandemic on supply chains effecting inflation as with a decreased supply in most things. This same economist went on to mention that with energy prices now look to be falling, we can hopefully look too see inflation come down in the coming months, but ultimately will come down to the ongoing pandemic and if it begins to ease or not. Although president Biden has pledged to tackle inflation head on and work on supply chain issues, it will be interesting to see how the president looks to deal with the inflation issue as he pushes for more government spending. 

Companies planning to give big pay raises for employees in 2022

 Companies planning to give big pay raises for employees in 2022

By:  Bob D'Angelo, Cox Media Group National Content Desk

https://www.wpxi.com/news/trending/companies-planning-give-big-pay-raises-employees-2022/QWYFADFFHBEYTIYKJJGGQ53ET4/

2022 could be a very promising year financially as an employee. “According to the report, businesses are expected to boost employees’ paychecks by 3.9%, signaling the fastest wage growth since 2008, The Washington Post reported.” As of now this number is just a speculation, with inflation on the rise I wonder how much of a wage increase we will actually see. The job market has been great since the economy has reopened, a lot of businesses are still looking for more employees and a large number of people chose to remain unemployed. With so many people out of work, companies need to offer an intentisng salary to incentivize people to get back to work. The wage increase needs to be significantly more than the % inflation has increased or there will still not be enough reasons to go back to work..