First Republic fails, and is snapped up by JPMorgan Chase

 Yet another bank has bit the dust as First Republic has recently been acquired by investment banking powerhouse JP Morgan Chase. Starting May 1st, all First Republic branches will operate as JP Morgan Chase branches. JP Morgan acquired First Republic with the assistance of the Federal Deposit Insurance Corporation (FDIC). The FDIC is also assisting with the acquisition by partially paying for losses on the bank's residential and commercial loans.

Most believed that it would be a matter of time before the small California-based lender collapsed, especially following the recent increases to interest rates and the collapse of Silicon Valley Bank (SVB). Both banks faced issues associated with the lack of depositors not covered by federal deposit insurance. As a result, we saw significant decline in deposit base in the first quarter of 2023 by $72 billion.

Investors had low expectations for First Republic in 2023 especially after the collapse of SVB. In the March, First Republics stock price decline 89 percent. There is some hope for the rest of the banking industry as it appears that no other banks are being significantly impacted by the recent news. It is also beneficial for the industry to see a large bank like JP Morgan step in during time of need. It is still a very concerning time in the market as American regional-bank shares have declined nearly 30 percent. It will be interesting to see future conditions and how the government and large banks will respond. 

Source: First Republic Fails

Oil Stock prices drop due to Growth Concerns

Oil stock prices fell this week due to growing economic concerns from the U.S. and China. The U.S. is thought to be raising interest rates to balance out their somewhat volatile economy post covid, this along with lower-than-expected Chinese manufacturing data has caused concern in the oil field. The FED will make the official oil stock price change as they will be the ones to more than likely increase the United States interest rates. 

The oil industry is actually the third massive U.S. institution to fail in the past couple of months which isn't a great look for our economy worldwide and is starting to show potential weakness. This weakness is also scaring investors as the continuous failure of big institutions and the threat of increasing interest rates are very worrying to many. 

China is experiencing economic problems as well as its manufacturing sector is doing worse than expected. They went from expansionary to contractionary over the past month with a decrease in their PMI or purchasing managers' index. This decrease is also worrying to many and is directly affecting the U.S. as most of our goods are produced by this sector. All of these factors are negatively affecting the U.S. economy and are the reasons for the Oil stock prices decrease.

Article: https://www.msn.com/en-us/money/markets/oil-drops-as-economic-growth-concerns-offset-opec-cuts/ar-AA1aAmZs

How the development of AI can impact our economic system.

With the rise of technology over recent decades, companies and businesses have learned and adjusted with the new information and ways of growth that have been occurring around the world. The newest progression of technology, Artificial Intelligence, is the next wave of technology both in the United States and across the world that can help consumers, businesses, and corporations. AI is so important in the acceleration of the economy because it can help increase the speed at which we are making technological advancements, and are developing entrepreneurial businesses, and the value of corporations. Businesses need to be open to adjustments and advancements within their industry in order to stay up to date on the latest technological updates, in order to stay on top of the needs of the clients, their employees, and their markets. If an organization falls behind and fails to make advancements alongside other competitors within the market, then they are going to be out valued, and absorbed because they now lack efficiency and performance. These companies need to keep in mind that AI can help them reach their goals more effectively, and achieve the growth that they desire, and that it is not there to take over their jobs. This is a growing and developing industry that is going to be very important in the future economy that many businesses and organizations have already started planning for and developing in order to make their organization ass effective and efficient as possible over the coming years.

 https://www.cnbc.com/advertorial/2023/04/25/generative-ai-is-poised-to-change-everything-is-your-company-ready.html?utm_campaign=NativeTout22&utm_source=Polar&mvt=i&mvn=e30a537bfb0740b29fb43fd759cc3159&mvp=NA-CNBC-11239420&mvl=%20%5BNativeThreeUpStackv2%5D

U.S. GDP rose at a 1.1% pace in the first quarter as signs build that the economy is slowing

Overall economic growth has slowed at a large rate within the first 3 months of 2023. This is largely due to covid, but also because of the continuing effects that inflation and high-interest rates have on the economy. On top of that, Gross domestic product (GDP) has risen at a 1.1 percent annualized pace within the first economic quarter - the expected growth was 2 percent. The U.S. Bureau of Economic Analysis also measured the personal consumption expenditures price index, which saw an increase of 4.2 percent, which is half a percent above the estimate of 3.7 percent. If you exclude things like food and energy within the PCE, then it saw an increase of 4.9 percent which is .5 percent more than the previous increase of 4.4 percent. 

Following this report, it was stated that a Citigroup economist named Veronica Clark said “Overall, I think it’s a relatively inflationary report, even though the headline GDP number is a bit softer. All of those signs that demand is still strong and prices are still rising were very much present today.” Although Veronica sees optimism in overall inflation, her expectation is that the U.S. economy will sooner or later tip into a recession. Given the recent Q1 data for 2023, Veronica believes that we will not slip into this recession just yet but is something we should expect and prepare for. 

The recession scare is coming from data that reports slow growth. For example, the economy has seen a decline in private inventory investment, a deceleration in nonresidential fixed investment, and a Gross private domestic investment that fell 12.5 percent. However, things that counteract this recession scare come from an increase in personal consumption expenditures by 3.7 percent and an increase in exports by 4.8 percent. 

Overall, the economy is likely to see itself in a recession within a year and a half to two years. This is simply based on slow growth and the rate of joblessness (3.5% unemployment rate - 230,000 jobless claims).

https://www.cnbc.com/2023/04/27/gdp-q1-2023-.html

Eurozone economy ekes out 0.1% growth in Q1, misses expectations as Germany stagnates

The Euro zone economy grew by a marginal 0.1% in Q1 of 2023, as Germany's GDP remained stagnant over the period. Growth came in below expectations, with a Reuters poll of economists previously forecasting a Q1 growth rate of 0.2%. The annual economic growth was also at 1.3%, a hair under the projected 1.4%. 

The low growth figures come in light of high inflation in Europe, with rising energy prices due to the war in Ukraine being a key driver of inflation, with Carsten Brzeski, global head of macro at ING stating that a bloc-wide recession being averted by a warmer than expected winter along with fiscal stimulus. He further went on to state that there exist significant disparities between individual countries, and that future growth relies heavily on a positive momentum in industry and wage growth, and the possibility of a US recession and a tightening of the monetary policy by the European central bank. 

Germany's economy stagnated in the first quarter of 2023, avoiding a technical recession by a narrow margin, while France's GDP increased by 0.2% despite widespread strikes. Irish GDP declined by 2.7% on the previous quarter, while Portugal's economy grew by 1.6%. The European Central Bank (ECB) meeting on May 4th will closely scrutinize these figures as they seek to tackle headline inflation of 6.9% and core inflation at a record high of 5.7%. Some ECB policymakers have suggested a further interest rate rise may be necessary, but concerns remain about banking sector turmoil and deposit outflows.

Source: Euro zone economy ekes out 0.1% growth in first quarter (cnbc.com)

Regulators Prepare to Seize and Sell First Republic Bank

     This weekend federal regulators led by the FDIC have worked to seize First Republic Bank to stop its collapse and to hopefully finally put a cork in the recent banking crisis. Since First Republic announced that over half of their customers had withdrawn half of their deposits, the bank's stock price has fallen tremendously. However, since the government has seized First Republic Bank, banks like PNC, JPMorgan Chase and the Bank of America have shown interest in buying First Republic and taking on their deposits. This is a very important time when it comes to addressing this banking crisis that is plaguing the country. The government must act in order to save bigger banks from failing and must restore consumers confidence in the country's banking system. Perhaps the government has learned things from the 2008 banking crisis that will benefit us in this new crisis. Hopefully the government will able to get financial institutions to band together with one another as well as the government to ease consumer fears and rid the country of this crisis.

Source: https://www.nytimes.com/2023/04/29/business/first-republic-seizure-fdic.html

Economic growth hit the brakes in the first quarter

    With the new Q1 reports for GDP released, many economists are aware of whats to come for the US economy. With a GDP growth of 1.1% in Q1, the Feds attempt to slow economic growth and decrease inflation by raising interest rates is finally being felt. The original prediction for Q1 GDP was 1.9%, so the Feds actions are working much quicker than expected. 

    The goal of raising the interest rates was to create a soft landing for the American economy, but some economists are skeptical of this actually working. They predict that in the second half of 2023, there will be a mild recession for the economy. There was a business group included in the article that "puts the probability of a U.S. recession over the next year at 99%." This is a worrying fact, as the whole point of the soft landing was to avoid the risk of a recession.

The only reason we haven't reached lower GDP growth rates is because there is a strong consumer in America right now. All economic indications are pointing towards a struggling economy; imports are greater that exports, inflation is high, and interest rates are being risen. Soon, the strong consumer will pull back on their spending and will push the economy ever so closer to a recession.

https://www.cbsnews.com/news/u-s-economy-gdp-first-quarter-2023/

"Mild" Recession in the Forecast

 Fed is predicting a mild recession will hit the US economy. Unwavering inflation as well as emerging bank failures are leading to this prediction.  In an aim to fight inflation, the Fed has increased interest rates 9 times in 2022. This increase is the highest it's been in 17 years. With high interest rates, it becomes more expensive to borrow, so it discourages people from borrowing money. On top of this, banks were limiting credit, so that they remain safe if danger is in the horizon. The limitation of credit also makes it harder for people to borrow. This tightening is usually a response to a recession which means banks are preparing now, so they aren't affected as deeply. If people can't borrow money, this will result in a decline in the growth of the economy. The article brings up a good point that the economy heading into a recession might solve high inflation. 

https://www.usnews.com/news/us/articles/2023-04-27/how-will-we-know-if-the-us-economy-is-in-a-recession

Calls to move away from the U.S. dollar are growing — but the greenback is still king

    Calls to move away from the U.S. dollar are growing — but the greenback is still king

    Countries such as Brazil and others in the Southeast Asia region are trying to find currencies other than the US dollar to carry out trade. With the Fed steeply hiking up interest rates, other central banks around the world have to follow in order to stem outflows and as a result are depreciating their own currencies. 

    The main player in trying to move away from reliance on the US dollar for trade is China, and they have some leverage as being the biggest exporting country in the world. China is also selling off US Treasury's, and has been doing so for years. 

    Moving away from the dollar can really benefit local economies in other countries. It can help simplify importing/exporting businesses and allow them to better mitigate risks and help in their hedging strategies. A reason why moving away from the dollar is being accelerated can be due to the US freezing Russian reserves of US dollars, showing other countries that the US dollar may not be a safe haven to park money.

    A global economy moved on from the US dollar could be highly detrimental to the US economy, and its geopolitical power. We should do what we can to make sure the US dollar remains the global reserve currency.

The banking crisis is having a slow-burn impact on the economy

 https://www.cnbc.com/2023/04/25/the-banking-crisis-is-having-a-slow-burn-impact-on-the-economy.html 

The banking crisis that began just two months ago is being watched closely. Economists have determined that it will most likely lead to a recession through a slow burn. This crisis had already led to smaller banks being more stingy about loaning out money, which impacts economic growth negatively. Bank earnings largely have been decent for the first quarter, but the sector’s future is uncertain. Stocks have been under pressure, with the SPDR S&P Bank ETF (KBE) off more than 3% in Tuesday afternoon trading. In the immediate future, the reading on first-quarter economic growth is expected to be largely positive despite the banking problems. That growth, though, isn’t expected to last, due primarily to two interconnected factors: the Federal Reserve interest rate hikes aimed purposely at cooling the economy and bringing down inflation, and the constraints on small-bank lending. First Republic, for one, reported that it suffered a more than 40% decline in deposits, part of a $563 billion drawdown this year among U.S. banks that will make it tougher to lend. Consumer spending has seemed to hold up fairly well in the face of the banking crisis, with Citigroup estimating excess savings of about $1 trillion still available. However, delinquency rates and balances are both rising: Moody’s reported Tuesday that credit card charge-offs were 2.6% in the first quarter, rising by 0.57% from the fourth quarter of 2022, while balances soared 20.1% on an annual basis. Where the economy and possible recession lead to is all up to the consumer. Consumer demand is currently approaching pre-pandemic levels, but if consumers cannot get those lending services from banks, it will quickly tarnish the progress made.

Russia’s economy can withstand a long war, but not a more intense one

 Since the beginning of the war between Russia and Ukraine last year Russia has been in financial trouble ever since. The value of the ruble has decreased rapidly, the Russian stock market has closed, interest rates have more than doubled, and their credit rating has been labeled terrible. The hope with all these issues that Russia has been facing throughout this war will impede the progress of Russia during this war. Russia's government deficit last fiscal year was at about 37 billion dollars in value before the start of the war which is 2% of GDP. Economists believe that there is a chance this deficit will more than triple, being almost 5% of GDP.

Unfortunately wealth will not be a huge obstacle for the military as Russia's Sovereign wealth fund is at about 150 billion dollars and if they chose not to dip into that they can increase borrowing from the energy companies.

https://www.economist.com/briefing/2023/04/23/russias-economy-can-withstand-a-long-war-but-not-a-more-intense-one

Why America will soon see a wave of bank mergers

 This article stresses how the United States is on the verge of experiencing a wave of bank mergers. The pandemic brought significant change in consumer behavior, which has made a shift in banking practices necessary to remain relevant. The rise of digital banking services such as mobile and online banking has become the new norm, making it important for banks to make large investments in technology to keep up with their competition. This will be costly, and the only way for smaller banks to survive is to merge with large banks. The article suggests that merging will be easy under Biden’s administration.Large banks like JP Morgan and Bank of America will merge to reduce costs and expand market share, while small banks will merge with larger ones to remain in business. Banks that do not adapt to changing consumer habits and invest in new technology are likely to face significant challenges in the future and go bankrupt.

https://www.economist.com/leaders/2023/04/20/why-america-will-soon-see-a-wave-of-bank-mergers

Oil and Gas Prices

An article that I found talks about the price rises in the last two years for oil and gas and how this could mean greater impacts due to the recession that is coming into view. Since the recession is coming into view many oil and gas prices are lowering which is greatly impacting the economy. It was stated that, “S&P 500 energy sector is down about 1.4% so far this year…Oil prices, meanwhile, fell by $2 per barrel as fears of a recession rise.” (CNN). This overall is very concerning for the economy and the oil and gas companies. There are five large companies that are already gearing to combat these fluctuations in prices. All in all, this article describes how these price fluctuations are affecting the economy and what is being planned for combating these changes. 

Article: https://www.cnn.com/2023/04/21/investing/premarket-stocks-trading/index.html 

China is concerned about much more than India outgrowing its population

    China has reacted defensively to the news that India is on track to overtake it as the world's most populous country, accusing Western media of focusing only on population size rather than other factors such as education, industrial output, and economic clout. While the two countries are geopolitical rivals, with a border dispute and ongoing clashes between troops, China says that population size doesn't equate to national power, and instead emphasizes the importance of consumer and investor confidence. Both China and India face their own challenges, with China's aging population raising serious questions about the country's ability to maintain its economic status, while India has struggled to create enough jobs to support its growing population.



https://www.nbcnews.com/news/world/china-reacts-india-overtake-worlds-most-populous-country-economy-rcna80581

Recent CNBC All-America Survey Shows Americans Continue to Have a Negative Outlook On Economy

 The most recent CNBC All-America Economic survey (an indicator of American perceptions of the economy and economic indicators) found that almost seven out of every ten adults currently have a negative outlook on the U.S. economy, the highest level in the poll's 17-year history. Two thirds of individuals polled believe their wages are falling behind the level of inflation, while another two thirds of people believe the economy is either headed for a recession or already in one. This data comes after the Fed raised interest rates for the ninth consecutive time last month in its attempt to tame inflation, which appears to be cooling according to the latest data, showing a decline from 9.1% in June of 2022 to 5.0% last month. Despite the decline in inflation over the last year or so, Americans are still modifying their spending habits. According to the poll, individuals are now spending less on entertainment and travel, and are less likely to buy a car or home due to higher interest rates. While the Fed's efforts to lower inflation come at a cost, the U.S. economy is showing its resilience, as unemployment dropped from 3.6% in February to 3.5% in March, adding 236,000 new jobs. 

https://thehill.com/business/economy/3956526-record-69-percent-holds-negative-views-of-us-economy-survey/

Drop in Transportation Stocks Foreshadows Weakening Economy

 According to a recent article in the Wall Street Journal, a drop in transportation stocks could foreshadow a weakening economy. Transportation stocks are often viewed as an indicator of economic health because they are closely tied to the movement of goods and people. If these stocks begin to falter, it could suggest that demand is slowing down and the economy is weakening.

    The Dow Jones Transportation Average, which tracks the performance of 20 transportation-related companies, has declined by -7.7% since February. This is a significant drop and is especially concerning given that transportation stocks typically perform well when the economy is strong.

    The drop in transportation stocks can be attributed to several factors. For one, rising fuel prices have increased the cost of transportation, which has led to a decrease in demand for goods and services that rely on transportation. Additionally, supply chain disruptions and labor shortages have slowed shipping and transportation operations, further hurting the transportation sector.

    The transportation industry is vital to the economy's overall health, as it is responsible for moving goods and people across the country and worldwide. A slowdown in transportation could lead to decreased consumer spending and a decline in business activity. This could ultimately lead to a recession if the trend continues.

https://www.wsj.com/articles/drop-in-transportation-stocks-foreshadows-weakening-economy-fcf83650?mod=economy_lead_pos3 

De-Dollarization Is Happening at a ‘Stunning’ Pace, Jen Says

    The greenback's share in global reserves slid last year at 10 times the average rate of the past two decades as numerous countries looked for alternative reserve currencies after the U.S. government decided to impose sanctions on Russia for their invasion of Ukraine. The dollar has lost 11% of it's market share since 2016 and 22% since 2008

    Some of the reason for the U.S. seeing a decrease in the market share their dollar has comes from the BRICS (China, India, Russia, etc.) nations trying to internationalize their currency for trading settlements due to the U.S. and Europe cutting Russia off of SWIFT. The U.S. dollar has become politicized in the past year as the Biden administration has used it to pressure smaller countries to enforce sanctions they may not agree with. The controversy is that these small developing countries are not able to ditch the greenback due to the strong financial markets that come with using the greenback.

    The U.S. dollar today represents about 58% of the world's global reserves. Given this, it can be claimed that the U.S. dollar's massive role as a leading global currency will not be taken away any time soon. Because smaller countries cannot switch reserve currencies, the U.S. is still able to be a hegemonic power in the global political economy. 

    Now this is not a guarantee due to more countries trending towards losing faith in the U.S. dollar. for example, the BRICS nations and even some Eastern European countries have admitted that they are not confident in the strength of the dollar. Overall, this situation can either improve or worsen, the main indicators to look for are how much inflation rises or falls, and the emergence and adoption of the new BRICS currency in new countries. 

Link: https://finance.yahoo.com/news/dollarization-happening-stunning-pace-jen-082144378.html

    

UK economy flat in February as strikes and inflation bite

According to an article from CNBC, the UK economy stagnated in February 2023 as a result of strikes and inflation. The article cites data from the Office for National Statistics (ONS), which showed that gross domestic product (GDP) remained unchanged in February after growing 0.5% in January. The UK was hit by several strikes in February, which disrupted economic activity in various sectors, including public transportation, healthcare, and education. The strikes were organized by various unions to protest against the government's proposed changes to pension schemes, working hours, and pay. In addition to the strikes, inflation continued to rise in February, putting pressure on consumer spending and business investment. The ONS reported that the Consumer Prices Index (CPI) increased by 3.1% in February, the highest level since 2012. The rise in inflation was mainly driven by higher fuel and energy prices, as well as the impact of supply chain disruptions caused by the pandemic. The article also notes that the UK's economic growth was weaker than expected in the first quarter of 2023, with some analysts predicting that GDP growth may be revised downwards in the coming months. The ongoing strikes, combined with rising inflation and uncertainty over Brexit, are seen as potential headwinds for the UK economy in the near term.

https://www.cnbc.com/2023/04/13/uk-economy-stagnates-in-february-as-strikes-and-inflation-bite.html

Can the West win?

    The Economist article, "Can the West win?" argues the importance and growing relevance of neutral or non-aligned countries in the greater conflict between Russia and Ukraine (or the West).  The article mentions that over 4 billion people spread amongst more than 100 countries are remaining neutral in the war and continuing to trade with both the US and Russia in many instances.  The US has encouraged countries to join the fight against Russia by limiting trade and giving up their neutral position.  The article, however, acknowledges the economic strength and growth of these countries since the Cold War as being greater than growth in Europe.  This, however, is not surprising given out previous discussions on growth rates being much higher in the first years of industrialization and production than consequential years showing that Europe industrialized before the 100+ neutral countries.  Nonetheless, these countries are also becoming unexpected champions for free trade by not letting the political decision Russia made to invade Ukraine to interfere with trade.  Although morally it may not be supported, these countries are in fact doing well economically because of their decision to stay neutral and the article begs the question that if the West's decision to stop trade and tear down relationship with neutral countries really to their benefit?

Today’s homebuyers have their mortgage rate tipping point, and it’s artificially low

Link to the article: https://www.cnbc.com/2023/04/14/homebuyers-mortgage-rate-tipping-point-is-artificially-low.html

For most homebuyers, price is not as nearly as important as the monthly payment and what determines it is the mortgage rate.

According to a new survey by John Burns Research and Consulting, 71% of potential homebuyers say that they will not accept a 30-year fixed mortgage rate over 5.5%. Interestingly, the average mortgage rate since 1977 is 7.75% with the lowest of 2.65% during 2021, the height of the pandemic but 62% of buyers said that the historically normal rate was below 5.5%. Therefore, without true statistics, consumers' perception might be a bit skewed towards the lower end.

In addition, 63% of homeowners and 83% of renters believed that homes are overpriced, which is quite understandable as mortgage rates have gone up dramatically since the low in 2021. As homebuyers are waiting for the mortgage rates to come lower below 5.5%, unfortunately, it might take a bit more time than expected as rates have been over 6% and do not show any sign of coming down yet. While the Fed's decision to cut rates might in some way influence the mortgage rates to come down, it is still not confirmed yet as inflation is still quite far from the 2% target. 

Jamie Dimon issues warning on rates: ‘It will undress problems in the economy’

 Link to the article: https://www.cnbc.com/2023/04/14/jamie-dimon-warning-on-rates-it-will-undress-problems-in-the-economy.html

According to JP Morgan (Ticker: JPM) CEO, Jamie Dimon, investors and businesses should plan for interest rates to remain higher for longer than expected by the market.

During his conference call with the analysts, he warned that higher rates would undress problems for those who are exposed to floating rates and to refinancing risks, referring to loans that reset the market rates.

He also said that a benchmark rate closer to 6% would impact the economy. As the federal funds rates are ranging from 4.75% to 5% and the Fed is expected to have a quarter-point rate hike, would the target rates reach close to 6%? Inflation would be expected to come down then, but would it reach the 2% target rate and also at what cost of the economy?

A.I. Software Could Potentially Close Tax Loopholes

No-one likes paying taxes, and according to the IRS the Federal tax gap was $496 billion (2014-2016). Tax loopholes are primarily to blame for this large disparity. Johns Hopkins Associate Professor Benjamin Van Durme and University of Maryland Law Professor Andrew Blair-Stanek are currently developing an AI program that aims to close tax loopholes. However, a common misconception is that tax loopholes are all illegal. This is not necessarily the case, Congress specifically includes some tax loopholes to incentivize certain activities such as investing. Such contemporaneous tax loopholes are not the target of this software. Rather, the software seeks tax loopholes fabricated by lawyers and accountants that provide overly generous tax breaks not originally intended. Furthermore, the goal is to have the AI software identify loopholes before lawyers and accountants can take advantage of them. The biggest question regarding this software is what are the implication for average tax payers? There will likely be no effect on everyday taxpayers, because individuals abusing these loopholes are at the upper level of the income distribution. Put simply, the majority of taxpayers will never know about these creative tax loopholes. While the software is intriguing, I personally believe it may not have as big of an impact as expected. There’s an underlying principal-agent problem that could hinder the effectiveness of this software. Specifically, the same individuals we elect to hold positions of power, are also the same individuals who benefit from these creative tax loopholes (irrespective of political party). Therefore, it will be interesting to see what impact this software has in the future. 

Article: https://finance.yahoo.com/video/ai-almost-game-changing-potential-205004615.html

The world’s peak population may be smaller than expected

 Big families are not hard to find in Nigeria. With the growing discussion of “overpopulation” as an environmental economic problem, African countries are often looked upon as a place where there are too many people being born, and there are not enough resources to allow for everyone to live a fair life with food, water, education, housing, employment, etc. The UN predicts that the current 1.2 billion population in Africa will grow to 3.4 billion by 2100. Some predict that Africa will undergo the same fertility changes that happened in China in the early 2000’s when the one-child policy was introduced. For Nigeria, which has Africa’s biggest population numbering about 213m people, the UN has reduced its forecast for 2060 by more than 100m people (down to around 429m). By 2100 it expects the country to have about 550m people, more than 350m fewer than it was reckoned a decade ago.

The topic of overpopulation, for me, correlates with the topics that we have been learning in class about socialism. In socialism, there are resources in the economy that are not always efficiently allocated, and shortages happen often due to there not being enough resources allocated. In terms of overpopulation we have the same thing going on. Some places on Earth are too populated and those places probably don't have enough resources to hold more and more people which will cause shortages and a lower quality of life in those places. In my opinion, overpopulation can be solved by limiting birth rates in some parts of the world, and encouraging it in others. The world can handle a larger population. Africa might not be able to do this.

https://www.economist.com/middle-east-and-africa/2023/04/05/the-worlds-peak-population-may-be-smaller-than-expected

Samsung's Fall

 Samsung's Fall

Samsung Electronics, a big technology company from South Korea, recently announced that it will reduce the production of computer chips due to lower profits, which is the worst performance in almost 15 years. The company expects its operating profits for the first quarter of the year to drop by more than 96 percent, which is a huge decrease. This is because there is not much demand for IT products like computers and smartphones all over the world. Samsung said that its profits from January to March are expected to be the lowest in 14 years, at around 600 billion won (equivalent to $455 million). The reason for this decline is the weak demand for IT products, which is affecting all sectors of the company. Samsung did not give specific details about how much production will be cut, but they said it will be significant. They mentioned that they will reduce the production of memory chips, which are an important component of computers and smartphones. This announcement shows that the global technology industry is facing difficult times, especially the semiconductor industry, which makes computer chips. It also shows how external factors like weak demand for IT products can affect the profitability of big companies like Samsung. This decision by Samsung to reduce chip production reminds us that the technology market can be unpredictable, and companies need to be ready to adapt to changes in the economy. The production cuts by Samsung are expected to have a big impact on the chip supply chain and the overall semiconductor market, although we don't know the exact scale of the cuts. As the global economy slows down, the future of the semiconductor industry and its major players remains uncertain. Samsung's decision to cut chip production is a reminder that the technology market can change quickly, and companies need to be proactive in responding to economic changes.

https://www.aljazeera.com/economy/2023/4/7/samsung-flags-96-percent-plunge-in-profit-amid-chip-slump

Job growth stays at expectation for March

Ever since Covid began the job market has been all over the place. Toward the start of the pandemic unemployment was at some of the highest rates it's ever been at. As this pandemic moved on jobs became less and less sought after as most companies were hiring people back and adding more than before to make up for the losses they endured from the pandemic. As of last year, unemployment was extremely low as there have begun to be more jobs than workers to fill those jobs. Now as of the end of March 2023, this trend of too many jobs and not enough workers is starting to slightly level out. 

As of March 2023, 236,000 new jobs were created in the U.S. and unemployment only slightly declined from 3.6 percent to 3.5 percent. While low unemployment is typically a very good thing it can lead to a lot of different economic changes such as high inflation, which is why the FED and other organizations are attempting to even out this rate. March is a good sign in terms of things to come as it shows these organizations might be doing a good job in slowing this rate. The overall number of jobs created this month was actually less than expected by 2000.

Another topic regarding the labor market that should be confronted is wages. It was shown that over the past year wage percentage change per month has continued to lessen from 5.7% this time last year to 4.2% this month. This might be a cause of too many jobs as many are looking for second or third jobs which will cause these job increases to stay more steady. If companies pay their workers more, fewer jobs will be needed but that's a conversation for another time.

Article: https://www.cnbc.com/2023/04/07/jobs-report-march-2023.html

(originally posted 4/10 updated on 4/12 to say this post was for the 3/27- 4/9 period)

US adds a healthy 236,000 jobs despite Fed’s rate hikes

     236,000 Americans got a job in the month of March, and experts are surprised by this shift. The Fed continues to rise the interest rates, which usually leads to the unemployment rate to increase. It did fall from January, but only by .1% to 3.5% to keep up with the lowest rates America has need in over half a century. The labor force participation rate is now up to 62.6%,m the highest it's been since COVID. People want jobs and they are finding them with ease. The African American unemployment all fell to half a century lows when it reached 5% last month.

    All of this consistency and success in the job market could led to the Fed dropping the interest rates because the job market is helping keep the economy stable. Although it probably won't be by much, a drop in interest is definitely wanted and needed by the American economy. With the recent fear of a recession ever looming around the corner, seeing this positive data is the perfect way to part the storm. This data is also the last employment data seen by the Fed before they meet in May, making the historically positive numbers a vital role for the future of the American economy.

https://apnews.com/article/jobs-unemployment-inflation-layoffs-economy-federal-reserve-40add7d390eca72a0294c8d5c80b2dd6

Asian shares subdued as jobs data raises odds of Fed rate hike

 Link to the article: https://www.reuters.com/markets/global-markets-wrapup-1-2023-04-10/

Asian shares inched higher as US latest job data implied a tight labour market, firming up expectations that the Fed will again raise interest rates next month.

Data from the Labor Department on Friday showed that nonfarm payrolls increased by 236,600, just a bit under 239,000 expected by the economists.

It also can be seen that even though wage gains have started to slow down, they are still too high to match the Fed's 2% inflation target.

While traders are convinced of rate cuts in the second half of the year by the Fed to prevent an economic downturn after the event of bank failures, some analysts see a disconnect between the Fed's path and the market's expectations. The disconnect is the consistently too-strong inflation, hovering at 6% compared to the 2% inflation target rate, which makes it quite unlikely that the Fed will cut rates.

Employment Issues Facing the Construction Sector.

    The Biden administration has been focused on improving and innovating the United States' infrastructure and public transport through new policy and funding efforts. It was around a year and a half ago, the president signed a 1 trillion dollar deal to give many roads, bridges, and transit systems a makeover.

    These proposed policies and subsidies are great ideas but can never be carried through if there aren't enough workers for the job. The number of available jobs in the construction industry jumped to 129,000 in February even though the total amount of listening dropped by 18,000. This is in contrast to the recent reports of the overall job markets where job openings have seen a dip signifying less unemployment.

    The issue is caused by not the lack of government funding but the lack of programs for the funding to be allocated towards. The government needs to step in a create more training opportunities, apprenticeships, and pipelines that support the education and job fulfillment of construction workers. By doing this, grants for the industry will be able to be used for the apprenticeship programs and for the improved infrastructure once enough workers are in the field. 

https://www.npr.org/2023/04/06/1158576556/where-did-the-workers-go-construction-jobs-are-plentiful-but-workers-are-scarce

    

A labor market cooldown: US economy added just 236,000 jobs in March

    With the unemployment number being released this past Friday, the numbers for new jobs were also posted. March came in underperforming. Only 236,000 jobs were created when 239,000 were expected. Though this is not a huge difference it is a sign that the labor market which has been on a boom recently is starting to slow down. In the last 12 months this is the first time that new job creation underperformed. However this market is still significantly higher than pre pandemic numbers where the average new jobs per month was about 183,000. Some of the industries leading the way are the hospitality, leisure, and health care. As more people begin to get back out into the world hospitality and leisure are starting to move back to pre covid number., Health care has been on the uptick because of the pandemic and continues to grow. Along with new jobs, the amount of available jobs drop to 9.93 million which is the first time in 10 years that it has dropped below 10 million. This is another signal that the boom is starting to slowly come back down to earth from soaring during covid.

https://www.cnn.com/2023/04/07/economy/march-jobs-report-final/index.html

Soaring Food Prices

 

Inflation has been a growing concern for governments and central banks worldwide, and a new threat to this problem is rising in the form of increasing food prices. According to a recent article in the Wall Street Journal, food prices have steadily risen due to various factors, including weather-related events, supply chain disruptions like the war in Ukraine, and increased demand.

            The rising food prices have significant implications for governments and central banks, as they can contribute to inflation and reduce consumer purchasing power. This is especially problematic for lower-income households, who spend a more significant percentage of their income on food.

            Rising food prices are a new inflation threat that governments and central banks must address. While there are no easy solutions to this complex problem, taking proactive measures to address the root causes of the problem may be necessary to prevent a worsening of the situation.

https://www.wsj.com/articles/food-prices-are-new-inflation-threat-for-governments-and-central-banks-969e7483?mod=economy_lead_pos1

Wages May Not Be Inflation’s Cause, but They’re the Focus of the Cure

 https://www.nytimes.com/2023/04/07/business/economy/wages-prices.html

Wages and inflation have been rising at the fastest pace in decades, but it has not been an even match back and forth as inflation has managed to outpaced wages in 22 consecutive months.

The economists are fearing the there will be a wage-price spiral, a phenomenon where higher prices lead to higher wages, which then feed on each other to create a spiral.

Sonal Desai, the chief investment officer for Franklin Templeton Fixed Income suggested that "wages are high enough that inflation is potentially unstable". While the Fed has stated the cause for inflation is mainly due to the Ukraine war, supply chain issues, shifts in consumer spending trends, employee cost is remain important to the "underlying inflation" rate: upward price pressures without these shocks.

Chairman Powell also commented in March that "some part of the high inflation is very likely related to an extremely tight labor market". This is building upon his remark in the fall that "strong wage growth is a good thing, but for wage growth to be sustainable, it needs to be consistent with 2% inflation".

BlackRock warns that investors are making a mistake by betting on the Fed to cut rates

Source: BlackRock warns that investors are making a mistake by betting on the Fed to cut rates (cnbc.com)

According to the Asset Management Firm BlackRock, investors mustn't rely on the Fed to lower interest rates to support the stock market. The firm's global chief investment strategist, Mike Pyle issued the warning, stating that investors who are banking on the Fed to bail them out are making a grave error, reasoning that interest rates are already at historic lows, and inflationary pressures are mounting, limiting the Federal Reserve's leeway with regards to dropping interest rates. Pyle recommended that investors must diversify their portfolios and prioritize high-quality assets that can weather market turbulence. 

Investors are also increasingly worried about the stock market's reaction to rising inflation, caused by several factors such as supply chain disruptions, rising commodity prices, and labor shortages. The Fed has stated that it will monitor inflation closely and adjust its monetary policy accordingly. Still, the effectiveness of its efforts in stabilizing the market remains to be seen. BlackRock's warning serves as a reminder that investors should not solely rely on the Federal Reserve to bolster their investments, relying instead on long-term, diversified investment strategies that have the ability to weather the storm of inflationary pressures and other unforeseeable market shocks. 

Factory Jobs making a comeback in the U.S.

The manufacturing industry has been a crucial part of the American economy for decades, providing jobs to millions of workers and contributing to the country's overall growth. After years of decline and outsourcing, however, the industry has seen a recent resurgence, with factory jobs making a comeback.

            According to a recent report by the WSJ, last year, U.S. production capacity showed its strongest growth since 2015. Manufacturing employment is up by nearly 800,000 jobs over the past two years, and the total number stands at 13 million. Despite all this growth, the manufacturing industry still needs to add about 800,000 more workers, according to the article.

            One of the main drivers of this resurgence is a renewed focus on domestic production and “reshoring.” Many American companies recognize the benefits of keeping their production in the United States, including reduced transportation costs, more control over quality and supply chain, and the ability to respond more quickly to changes in demand.

            The resurgence of factory jobs is a testament to the resilience of the industry and its ability to adapt to changing circumstances. As the United States continues to focus on domestic production and innovation, the manufacturing sector is well-positioned to play a significant role in driving economic growth and creating jobs in the future.

https://www.wsj.com/articles/american-manufacturing-factory-jobs-comeback-3ce0c52c?mod=economy_lead_story

IMF says U.S-China tensions could cost the world about 2% of its output

 

https://www.cnbc.com/2023/04/06/imf-foreign-direct-investment.html 

The International Monetary Fund said in a report on Wednesday, April 5th 2023, that the global tension between the United States and China could have significant impacts on the world output. This is because the tensions would disrupt the overseas investment and therefore lead to a long-term loss of 2% of the world’s GDP. This would highly impact supply chains that are already suffering, and countries are brainstorming various ways to create supply chains that can withstand this tension.

IMF economists said that money is now flowing into what are considered “geopolitically close countries.” The rise of “friend-shoring” could hurt less developed markets the most, the organization said. Friend-shoring or ally-shoring is the act of manufacturing and sourcing from countries that are geopolitical allies. Some companies and governments pursue friend-shoring as a way to continue accessing international markets and supply chains while reducing certain geopolitical risks.

As we have discussed in class, economies can experience shocks, and from our planner’s headache problem, we saw first hand how hard it is for companies to redesign their resource allocation and needs to produce products. These tensions have created strong vulnerability for countries to experience macroeconomic shocks. Overall, companies and countries are in dire need for reconfiguration of supply chains in order to keep them viable and not further hurt the world economy and its various systems.

Housing market data suggests sector's downturn 'coming to an end'

     Some positive news is coming from the housing industry as recent numbers suggest stabilization in a sector that has been struggling. Although there was a 25bps increase in interest rates by the Fed, mortgage rates dropped for the third consecutive week according to Freddie Mac. Reports show commercial mortgage loans may become increasingly more challenging, but residential mortgages will remain readily available. 

     Contracts to buy existing homes rose in February, the third month with the same effect. Along with that is the increasing confidence of home builders, who continue to build homes. Even with the high prices of materials, the builders continue to grow more confident that their homes will be sold. Existing home sales jumped 14.5% in February, which could be due to the decreasing mortgage rates. Home prices in major cities also fell 0.6%.

    The housing sector is one of the biggest parts of the US economy, almost single handily causing the recession in 2008. A strong housing market could show exemplify a stronger-than-expected economy. With the increase in home purchases, it seems people have a more positive outlook on the economy than expected. As long as consumers continue spending, the economy just might be ok. 

https://finance.yahoo.com/news/housing-market-data-suggests-sectors-downturn-coming-to-an-end-202631499.html

Layoffs are Up Nearly Fivefold so Far this Year

 Companies announced almost 90,000 layoffs in March, which is a 15 percent increase from February.  Over the past year, job cuts have totaled over 270,000, which is up 396 percent from the prior year.   The tech sector has been the leader in the cuts over the past year.  They have announced over 100,000 cuts in 2023 so far, which is responsible for 38 percent of all reductions.   It is on pace to surpass the 2001 dot com bust.  According to Andrew Challenger, the senior vice president of Challenger, Gray & Christmas, "With rate hikes continuing and companies' reigning in costs, the large-scale layoffs we are seeing will likely continue."

Financial companies were the second-highest sector in job cuts with over 30,000 layoffs this year, up 419 percent from last year's first quarter.  The main reason cited for the recent job cuts has been economic and market conditions, with cost-cutting being the next most often mentioned.

 https://www.cnbc.com/2023/04/06/layoffs-are-up-nearly-fivefold-so-far-this-year-with-tech-companies-leading-the-way.html 

How can the U.S. Banking system lower its level of risk and uncertainty?

https://www.cnbc.com/2023/03/31/its-the-us-not-europes-banking-system-thats-a-concern-top-economists-say.html 

Over the years, Europe has faced significant financial struggle and problems within their banking systems. However, as of today, they are in a very strong place to avoid further stress on its banking system after learning many lessons from its financial crises over the years. The United States on the other hand are still learning very crucial lessons about how to endure stress on their banking systems. In early March of 2023, there was a large collapse of the U.S. based Silicon Valley Bank, and several other regional lenders of these banks. This is causing a large amount of uncertainty and anxiety for the rest of the fiscal year, and in future years. However, the European Central Bank does not have this same worry factor. This is where central planning can be an effective tool in order to ease the uncertainty and anxiety that comes with the downfall of the central banking systems. If central planning were to be utilized in the united states, it might help them reach the level of European banking systems in their security.

In Ohio, Electric Cars are Starting to Reshape Jobs and Companies

    Electric cars are a step in reducing our carbon footprint by eliminating the use of gas for automobiles. However, the new EVs could also mean bad things for those employed in the auto industry. Ohio is the biggest producer of internal combustion engines (gas-consuming engines) in the country. 90,000 people in Ohio work in some form of automobile manufacturing. The increase in electric cars means that the factories that create internal combustion engines will not have to produce as many engines, forcing them to lay off workers until the internal combustion engine is deemed archaic in which case the factories will shut down all together. In other words, the days are numbered on the thousands of jobs supplied by the production of internal combustion engines. Sure electric cars also require labor, but they require much less work-hours than the production of combustion engines by a long shot. The big question is will the benefit of switching to electric cars outweigh the costs of the lost jobs? We're talking about two different areas of value, jobs and the environment, yet it would still be an important cost-benefit analysis scenario to consider.

Source: https://www.nytimes.com/2023/04/05/business/energy-environment/ohio-electric-vehicles-jobs.html

How inflation has been disproportionately hurting women

As a woman who studies economics, this article by Hakyung Kim entitled Paying more and earning less: How inflation disproportionately hurts women caught my attention. Personally, I feel as though there aren't a lot of articles in the media that focus on the issue of women in the economy and how we are affected differently by economic hardship than men are. 

In the article, Kim says that this issue mainly stems from the rising cost of childcare. As it is pretty much universally known, women tend to take the brunt of healthcare costs compared to men. This, combined with the rising costs of childcare and with wage growth currently being stagnant, has led many women to either have to reduce consumption in other facets of their personal consumption or to have to leave the workforce altogether to have childcare.  

With inflation still steadily rising, there is no relief in sight for women, especially single mothers. Kim suggests that there is a solution to this issue. This could be done in the form of a bill that would set a price ceiling on the cost of childcare. This would provide relief to the women currently struggling to afford childcare due to inflation. 

https://www.cnbc.com/2023/03/31/paying-more-and-earning-less-how-inflation-disproportionately-hurts-women.html

Growth of the US in the last quarter

An article that I find talks about the growth of the US economy in the fourth quarter. The growth and consumer spending both trended down in the fourth quarter. The article states, “In the Commerce Department’s first two reads of fourth-quarter GDP, the growth was initially estimated at 2.9%, then revised down last month to 2.7%. Concurrently, consumer spending trended down as well, decreasing from 2.1% in the first read to 1.4% in the second revision and landing at 1% in the final print, released Thursday morning.”(CNN). This decrease in consumer spending and growth mainly had to do with local government spending, and improvements in non-residential areas. Overall, this article talks about the drop in consumer spending and growth compared to other years and what that looks like for the future of the US economy.   

Article: https://www.cnn.com/2023/03/30/economy/us-gdp-4q-final/index.html 

U.S. economy adds 236,000 jobs in March as labor market stays strong

 The U.S. labor market has continued to add jobs at a pace that seems to have the market going in the right direction upwards. The unemployment rate has gone down to 3.5% which is a record low in over half a century. The department of labor reported that almost half a million jobs were added in January. With the nearly half a million jobs added the average hourly earnings have risen almost .5% since January. With these statistics going up the labor force participation rate has increased .1% since february which shows that the job market has not cooled down at all.  This is positive news for our economy after Silicon Valley Bank was taken over by the government. The labor force continues to stay strong which shows promise for our economy which people were certain was doom to fail at this point. With the wages going up though we can expect to see a markup in many products and services. Gasoline prices are still going up and down at an unpredictable rate.

https://www.axios.com/2023/04/07/jobs-report-march-economy-federal-reserve

Stocks have shrugged off the banking turmoil. Haven’t they?

We all know the historical effects of a bank collapsing and how it impacts the economy. In March, we saw three banks fail. Bank failures directly impact businesses, as the banks tend to lend less and at a higher rate during times of uncertainty. This has a direct impact on economic growth and profits. 

In the past, we have seen huge stock dumps when banks have failed. Continental Illinois failed in May 1984, and the DOW took a substantial blow dropping nearly 6% during the month. Again, in September 2008, Lehman Brothers collapsed and stocks declined nearly 10%. The most severe case we have seen was during the Great Depression when numerous banks failed, resulting in a decline of nearly 89% between 1929 and 1932. 

We have seen three banks fail in March alone in our current economy. Historical trends would suggest that stock prices would decline drastically as a result. However, this has not been the case as the S&P 500 has increased by 4% and European stocks have increased by 3%. It is interesting to see this and it leads many to question why? 

There are various assumptions as to why investors and the market have responded the way they have. There is a belief that investors are betting on interest rate cuts. We have seen gains in stock prices for tech companies that are sensitive to higher rates, such as Apple and Microsoft. Overall, the Nasdaq rallied nearly 7% during March. Another significant factor in the current economy has been interest-rate derivatives. These investments allow investors to hedge risk and essential bet on where interest rates will go. These "swaptions" have allowed investors to protect themselves against expected interest rate changes. 

It will be interesting to see how the economy responds in the coming months and how investors respond.  Additionally, there is still uncertainty with interest rates as the Fed is still attempting its "soft landing" through incremental interest rate hikes. However, if market conditions worsen then we may see the Fed back off from their increases. Currently, we see that investors still have high hopes as overall stock prices and indices have increased over the past month. 

Source: Stocks have shrugged off the banking turmoil. Haven’t they?

The case for an environmentalism that builds

 The Economist article "The case for an environmentalism that builds" describes the need for the world to greatly increase its production of electricity, while also limiting the high amounts of fossil fuel derived emissions in order to slow down the current climate change crisis.  Similarly to what we described in class with Kuznet's curve, the article argues that economic growth can lead to a heightened concern for the environment, but that we cannot wait for the global economy to expand to an undetermined level before taking action to improve infrastructure related to the production of electricity.  The article describes that building improved and cleaner solutions to electricity production could cost upwards of $1.1 trillion dollars, but by describing to the people the environmental value of taking on these new technologies and tools, the people are more willing to support the government's decision to invest in green technology.

https://www.economist.com/leaders/2023/04/05/the-case-for-an-environmentalism-that-builds 

IMF head expects less than 3% global economic growth in 2023

The International Monetary Fund (IMF) has warned that the world economy is expected to grow less than 3% this year, down from 3.4% last year, increasing the risk of hunger and poverty globally. IMF chief Kristalina Georgieva said the period of slower economic activity will be prolonged, with the next five years of growth remaining around 3%, and called it “our lowest medium-term growth forecast since 1990, and well below the average of 3.8% from the past two decades.” She also said that slower growth would be a “severe blow," making it even harder for low-income nations to catch up. Given the economic projections, non-governmental organizations are calling for the IMF to allocate more funds to low-income countries through Special Drawing Rights, which are an IMF international reserve asset that can be exchanged for hard currency. Georgieva also warned that high-interest rates, a series of bank failures in the U.S. and Europe, and deepening geopolitical divisions are threatening global financial stability.



https://abcnews.go.com/Politics/wireStory/imf-head-expects-3-global-economic-growth-2023-98404025

Denouncing the Dollar

    There has been a rise in interest between countries to abandon the US dollar as the world's reserve currency. I think the war in Ukraine has definitely exacerbated these efforts because the US currency has only appreciated 10% more since the start of the invasion. The article goes as far to say that the dollar's status as the world's reserve currency is enforcing its hegemonic power. While the appreciation of the dollar,  is great for the US economy, it makes trade more expensive for other countries. Nations with US debt will also end up owing a lot more. So a bunch of other countries will benefit from the depreciation of the dollar.   If the world begins to shift from the using the dollar as the main form of trade, the dollar will depreciate and will begin the rise of other hegemonic powers. This shift will of course happen gradually and not all at once. 

https://www.aljazeera.com/amp/features/2023/3/7/will-russia-sanctions-dethrone-king-dollar

  

Disney CEO Announces Plan to Invest $17 Billion in Disney World

On Monday April 3, The Walt Disney Company's CEO Bob Iger announced the media and entertainment conglomerate plans to invest over $17 billion in its Disney World Park, in Florida, over the next ten years. Disney's domestic parks generated $6.07 billion of revenue in the first quarter of 2023, a 21% increase year-over-year. During the Walt Disney Company's recent shareholder meeting, Iger stated this investment will lead to the creation of roughly 13,000 new jobs as well as "attract more people to the state and generate more taxes". This announcement comes at a critical time for Disney, as earlier this year Florida State Legislature passed legislation that individuals on the board of the tax district which Disney World is located must now be appointed by Florida Governor Ron DeSantis, the latest development in a roughly yearlong back and forth between Disney and the state of Florida, which began after former Disney CEO Bob Chapek publicly opposed the new Parental Rights in Education Law signed by DeSantis. Current CEO, Bob Iger, believes this new legislation passed by the state of Florida is Governor DeSantis's way of punishing Disney for their stance on the Parental Rights and Education Law. "Our point on this is, any action that thwarts those efforts simply to retaliate for a position the company took sounds not just anti-business but anti-Florida", said Iger at the company's most recent shareholder meeting. 

https://www.foxbusiness.com/markets/iger-reveals-disney-planning-17-billion-investment-walt-disney-world

Ukraine Farms Attract Money and Help From Allies, Top Food Companies

 In spite of the country's ongoing conflict with Russia, Ukraine's agricultural sector is attracting investment and support from global international food corporations. Due to its rich soil and agricultural resources, Ukraine has long been referred to as the "breadbasket of Europe," and now, some of the top food companies worldwide are investing in Ukrainian farms and processing facilities in order to secure their supply chains. For example, Cargill, the largest privately held company in the US, recently invested $100 million in a grain processing facility in Ukraine. Bunge, another prominent food firm, has also made major investments in the country's agricultural sector. Along with the private sector, Ukraine's allies, the US and Canada have contributed financial and technical support to help the nation modernize its agricultural methods and boost exports. Ukraine's agricultural industry has survived in the face of the conflict with Russia and ongoing political unrest, and it is anticipated that this growth will continue in the years to come. The nation, which is already among the top grain exporters in the world, is currently attempting to increase the production of other crops like soybeans and sunflowers. However, corruption and inefficient land use remain issues in Ukraine's agriculture sector.

https://www.wsj.com/articles/ukraine-farms-attract-money-and-help-from-allies-top-food-companies-61c65dd2?mod=economy_lead_pos2 

Oil prices surge after OPEC+ producers announce surprise cuts

On Monday, April 3rd,  OPEC+ announced that they were cutting oil production and output. This immediately caused the global cost of a barrel of oil to go up 5.31% to $84.13 while also driving up the U.S. barrel cost by 5.48% leaving the price at $79.83. Earlier this year oil prices sunk as low as $73 and $67 a barrel due to the collapse of the Silicon Valley Bank (SVB) on March 10th. 

Many Economists are now concerned with how this might affect inflation in the long run. After all, now that we are seeing continuous inflation reflected in the value of oil we can expect overall consumption to decrease. Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown states, “The development comes as a blow for inflation,” and.“Markets are aware that if the pressure continues, central banks will need to extend or strengthen their interest rate hiking cycles.”

OPEC+ plans to continue these voluntary oil cuts from May 2023 to the end of the year in January. In October OPEC voluntarily cut out oil production by almost 2 million barrels a day and plans to cut production by another half a million barrels per day. 

However, they are not the only country to participate in a voluntary cut in oil production.  Iraq plans to cut 211,000 barrels per day, and UAE plans to cut 144,000 barrels per day. Countries such as Kuwait, Algeria, and Oman will also reduce oil output by 128,000, 48,000, and 40,000 barrels per day. In conclusion, the United States can surely expect a surge in price, even larger than the current surge. This now seems to be a global trend, and I am curious to see how the federal reserve will respond in terms of Interest Rates and other monetary policies to slow certain inflation.

https://www.cnn.com/2023/04/02/business/opec-production-cuts 

Supply shortages threaten U.S. infrastructure and war efforts

Link to the article: https://www.reuters.com/business/ongoing-supply-shortages-threaten-us-infrastructure-

war-efforts-2023-03-29/

Tight supplies of microchips and cement are causing difficulty for manufacturers of everything, from pickup

trucks to homes and this can also translate into higher costs and delays for the US government's effort

to help the Ukraine's war and to rebuild its own infrastructure

It is reported that supply shortages are easing for retail-focused industries but are still ongoing for growth

sectors like autos, machinery, defense and non-residential construction where demand is seen as strong.

The shortage of semiconductors also affects the defense industry as well as war-weapon makers

experience disruption in production not just for the US defense system but also for Ukraine.

However, the shortage also dissipated for personal computers after kids returned to school and parents to

their office, recorded by high sales of new computers.