Scotland is dealing with a few issues regarding First Minister Humza Yousaf. Yousaf has been having issues with recent dissolutions of power sharing deals with Scottish Greens. These challenges have put immense strain upon the Minister, causing his consideration for resignation due to his unlikely and eventual loss of support from the Scottish Greens. The unprompted end to the power deal caused the strain within the Greens and is now causing a likely 2 ‘no confidence’ votes motioned after the ending of the deal. He is now awaiting unlikely support from the Greens and one vote from an opposition member in support, however unlikely they may come. He complicated his situation even more by now with knowledge of the ability to keep the deal in place, but his refusal to form an alliance with the Alba party.
Monday, April 29, 2024
Scotland's first minister may stepdown after power-sharing deal falls through
Sunday, April 28, 2024
Key Inflation Measure Rose 2.8% in March From a Year Ago
Inflation did not slow in March, with core personal consumption expenditures price index excluding food and energy being up 2.8% from a year ago. This is the same figure that was seen in February and is higher than the 2.7% estimate given by Dow Jones. Both PCE and core PCE increased 0.3% equaling the increase from February. Markets did not show a reaction to this as Wall Street opened higher and the probability of two rates cuts being seen this year increased to 44% according to the CME Group's FedWatch gauge.
Consumers increased personal spending by 0.8% on the month and the personal savings rate fell to 3.2% which is 2% lower than last year. This indicates households are saving less to keep up with their level of expenditure. It is believed with these reports that the Fed will hold interest rates high at least through the summer unless there are significant changes.
Source - https://www.cnbc.com/2024/04/26/pce-inflation-march-2024-key-fed-inflation-measure-rose-2point8percent.html
Challenges increase for international students as unemployment rises in Canada
In recent years, Canada has become one of the preferred destinations for international students seeking quality education and promising career opportunities. However, a tightening job market, primarily due to rapid job growth and immigration, has posed significant challenges to these students as most of them work part-time to support themselves while studying. With over 1 million foreign students in Canada, the competition for part-time jobs has increased. Furthermore, due to the increased cost of living in cities like Vancouver, international students have been struggling quite a bit. Canada's unemployment rate increased to 6.1 percent in March, with youth unemployment double the natural average. As a result, the government recently decided to place a cap on the number of foreign students admitted to universities in Canada to ease financial strain for residents. However, this has raised concerns about access to education for international students.
Link: https://www.voanews.com/a/rising-unemployment-hits-canada-s-international-students-especially-hard/7585796.html
India seen overtaking Japan in nominal GDP in 2025
According to recent estimates by the International Monetary Fund (IMF), India is projected to surpass Japan in nominal gross domestic product (GDP) in dollar terms by 2025. The IMF forecasts India's GDP to reach $4.34 trillion, slightly higher than Japan's projected $4.31 trillion. This shift is happening a year earlier than previously anticipated, largely due to the continued depreciation of the yen.
Japan's economy has been steadily slipping in global rankings. In 2023, it was surpassed by Germany, falling to the fourth-largest economy in the world. Factors contributing to India's rise include not only the weakened yen but also its robust economic growth, which outpaces Japan's. India's economy expanded by 7.8% in 2023, far surpassing Japan's 1.9% growth.
The key drivers of India's economic growth include its massive domestic demand, fueled by its population overtaking China's to become the world's largest in 2023. Additionally, India is attracting investment from advanced economies, while investment in China is slowing.
Experts attribute Japan's sluggish growth to government and central bank policies aimed at weakening the yen. They argue that relying on yen depreciation for economic growth has its limitations. Instead, there's a need to focus on boosting productivity through energy-saving initiatives and encouraging investment.
German Consumer Confidence Reaches Two-Year High
German consumer confidence has reached its highest level since May 2022, indicating a possible economic upturn. The GfK's consumer-climate index predicts a continued rise in consumer confidence for May 2024. This improvement is driven by increased income expectations and reduced inflation, enhancing household purchasing power. Additionally, the willingness to buy has grown, though there's also a greater inclination to save, reflecting some economic uncertainty. Despite this positive trend in consumer sentiment and business surveys, the overall economic recovery is still uncertain, with a modest growth forecast of 0.3% for 2024.
https://www.wsj.com/economy/central-banking/german-consumer-confidence-reaches-two-year-high-38e91927?mod=economy_feat1_central-banking_pos4
The U.S. Could See Another 1970's Stagflation Event
With the recent release of the first quality GDP numbers for the year, it has now become a concern the the US economy could be slowing down. First Quarter numbers show that the economy grew at an annualized rate of 1.6%, compared to the 3.4% growth the economy saw in the Forth Quarter of the year prior. While this has been a known condition from the Fed, the concern happens when we include inflationary data. The data suggest that the US economy is moving further and further away from our target inflation rate, which is 2%. Slowing GDP growth rate mixed with increasing inflation rate is a certain economic condition which is feared by investors and the government. Its called stagflation. According to JPMC CEO, Jamie Dimon, global and economic conditions are looking similar to the U.S. economy's last major period of stagflation, which was in the 70's when oil prices rose dramatically. With all the concern, the good news is the the United State's inflation rate and economic growth is in a better position than similar market economies such as the UK and Germany. Our recent GDP growth numbers are also going to be reviewed and finalized twice which way create a better story, as our economic slow down can be less severe than we think or not a concern at all.
Source: https://www.cnn.com/2024/04/25/economy/stagflation-us-economy-gdp/index.html
Even if the Fed Cuts, the Days of Ultralow Rates Are Over
Saturday, April 27, 2024
There are positive signs of a recovery in Germany's economy, especially in service sectors like tourism and hospitality. Business confidence is rising and a winter recession is likely to be avoided. This is good news for the government as rising wages, lower inflation, and potential interest rate cuts could boost the outlook and weaken the far-right AfD party.
However, the picture is not all good. Manufacturing is still struggling due to high energy costs and weak Chinese demand. This is a major concern as the sector is a significant driver of German growth. There are some signs of hope for the future though, with expectations of a pick-up in global trade and looser monetary policy. The government is also taking steps to address structural weaknesses in the economy, but it faces challenges in finding budget savings and implementing reforms.
https://finance.yahoo.com/news/germany-economy-shows-signs-life-050000459.html
Key Fed inflation measure rose 2.8% in March from a year ago, more than expected
Link: https://www.cnbc.com/2024/04/26/pce-inflation-march-2024-key-fed-inflation-measure-rose-2point8percent.html
Bad news from a key indicator's report on the 27th left the market with little hope of an interest rate drop this upcoming month, and core (excludes food & energy) personal consumption expenditure (PCE) numbers for March 2024 came in at 2.8% from a year ago (March 2023).
This is especially discouraging for investors as core PCE is an important indicator to the FED, as they have relied on it historically to base their rationale to decisions made by the board. The initial estimates aimed to have core PCE come in at 2.7%, and all-item PCE (less important) come in at 2.6%. The actual numbers from March were 2.8%, and 2.7%, respectively.
Other bad news came in from inflation reports with consumer spending coming in higher than expected, and the opposite happening for consumer savings. This will likely lead to the FED keeping interest rates where they are at, as necessary signs of inflation slowing have not shown yet.
Despite the results, shockingly usually reactive markets opened high Thursday morning, after coming off a bad week of decreases. I'd expect this to be a sign of market ignorance, as investors spent all of last week watching the market tumble, this is probably just investors in the market tired of the pitfalls, and blissfully turning away from the negative reports.
Friday, April 26, 2024
Alaska's seafood industry getting a bit rocky
The Alaska seafood industry, estimated at $6 billion in 2021-2022, is projected to suffer a price collapse in 2023 as a result of inflation and increased worldwide supply. Despite supplying 60% of US seafood, Alaska accounts for only 1.8% of the global market. Salmon and crab account for 40% and 9% of industry value, respectively, competing with farmed and Russian products. Employment fell to 48,000 jobs in 2021-2022, with the Arctic-Yukon-Kuskokwim region being hurt the hardest. A proposed task group attempts to solve these difficulties, such as market losses and plant closures, in order to ensure the industry's viability. This emphasizes the critical need for targeted actions to protect Alaska's significant fishing industry and assist the communities that rely on it.
Thursday, April 25, 2024
Global Recession Risk Minimal despite Geopolitical Concerns
The International Monetary Fund says that risk of a global recession is not indicated right now, while they are increasing their predicted global growth rate. They also talks about how the U.S. is having a strong economic performance as well as many different developing market economies. Europe is a mixed bag with the growth forecast decreasing for Germany, France, and Italy; but increasing for Spain, Belgium, the U.K, and Portugal. Tensions growing in the Middle East as well as Russia and Ukraine have led to uncertainty and issues with oil and energy prices and distribution. This is having an impact on global inflation. The IMF is also monitoring geopolitical concerns and says that this will continue to play a huge role in future economic forecasts.
https://www.cnbc.com/2024/04/17/risk-of-a-global-recession-is-minimal-imf-economist-says.html
Wednesday, April 24, 2024
Spain seeing economic boost from immigrant workers
Over the past few years, Spain has been struggling economically. It has had the highest unemployment rate out of any European country, and economic growth has slowed. However, recently Spain's economy has been performing much better, and immigrant workers are helping this boost. Many workers who have found their skillsets undervalued in other countries have gone to Spain where their skills are in much higher demand. Despite Spain's high unemployment rate in comparison to other countries in Europe, many immigrants coming from other countries find it much easier to find work in Spain than in their home country. Spain currently needs skilled workers to fill gaps in its labor markets, and has looked to immigrants to fill these gaps.
Monday, April 22, 2024
How the NHL playoffs Impact The Economy
Since the NHL playoffs starting a few days ago, I wanted to see if the cities/states with playoff teams saw any economic boost from their team making the playoffs. This article focuses around the New Jersey Devils and the economic impact they had on the city of Newark during last years playoff run.
The New Jersey Devils' resurgence in the NHL playoffs is not just a win for hockey fans but also for the economy, particularly in Newark and beyond. After years of underperformance, the team's success has revitalized local businesses and generated excitement in the community. Partnerships with New Jersey-based businesses have further boosted economic activity, with increased spending at restaurants, bars, and hotels during game nights.
The Devils' deep playoff run is expected to bring significant revenue through merchandise sales, sponsorship, and ticket sales. With a young roster and a strategic vision for sustainability, the team's success is seen as a long-term opportunity for economic growth in the region.
Aside from the Devils playoff run last year, the 2017 Nashville Predators generated an additional $50M in economic activity during their 11 additional home games during the playoffs that year. Although no economy should rely on a sports team to generate additional economic activity, its interesting to see the value of short term investment associated with the playoffs.
Source: https://www.njspotlightnews.org/2023/04/nj-devils-playoffs-brings-economic-boost-to-newark-region/
Sunday, April 21, 2024
Turkey restricts exports to Israel
As Israel has prevented Turkey from providing humanitarian aid to Palestinians suffering in Gaza, Turkey has chosen to begin restricting 54 exports to Israel. Announced on April 9th, 2024 by the Turkish Ministry of Trade, the restrictions will be imposed until a ceasefire is in effect and aid is provided to Palestinians. The majority of trade restricted by the Turkish is construction materials -- equipment and machinery, fuel and chemicals, and building materials such as iron and steel.
In response, Israeli Foreign Minister Israel Katz commented that Turkey was making a usual economic mistake by choosing to refrain from participating in the genocidal Israeli market. Additionally, he mentions that Israel will be calling their friends in the US Congress to encourage the United States to impose sanctions upon Turkey.
However, Turkey will not let up on their conviction to support the liberation of Palestinians. Turkey and Israel have long had a tumultuous relationship surrounding Palestine, and recent events have influenced the Turkish population to decrease trade and relations with Israel.
I find this interesting for a couple of reasons including: US involvement in foreign relationships, what the economy has to do with political issues, why does Turkey choose to prevent the trade of these products, etc. Let me know what you all think.
https://www.aljazeera.com/news/2024/4/9/turkey-restricts-exports-of-54-products-to-israel-until-gaza-ceasefire
Here's why economists are so worried about soaring US debt levels
The US has the biggest public debt in its history. As of this year, the federal debt balance hit 34 trillion dollars, and the government is on pace to rack up another 1 trillion in debt every 100 days. The rising debt will cause a multitude of economic problems, including higher inflation rates and lower quality of life, and can destabilize the financial system.
The US government's operations are heavily reliant on debt. This means that it's not just the government's problem-it's our problem. It's crucial that the government is able to sell its debt to a wide range of investors, including institutions, individuals, and other countries. However, the mounting debt levels have cast serious doubt on the government's ability to repay its loans, raising concerns about our collective financial security.
The US treasury had 22 trillion dollars in government bonds as of last year, but that number has shrunk significantly as of this year, suggesting very little demand for government assets. This leads to concerns about whether or not the government will be able to continue funding itself and paying its bills.
https://www.businessinsider.com/us-debt-problem-explained-deficit-gdp-inflation-economy-interest-rates-2024-4
Lack of Purchasing Power in the Housing Market Continues
The cost of buying a new house just hit a fresh record as mortgage rates rose to the highest level this year. Findings from Redfin show the combination of steep mortgage rates and elevated home prices has pushed the median monthly housing payment to a record $2775- an 11% increase from the same time last year. There are a number of driving forces behind the affordability crisis. Years of underbuilding fueled a shortage of homes in the country, a problem that was later exacerbated by the rapid rise in mortgage rates and expensive construction materials. Higher mortgage rates over the past three years have created a "golden handcuff" effect in the housing market. Sellers who locked in a record-low mortgage rate of 3% or less during the pandemic began have been reluctant to sell, limiting supply further and leaving few options for eager would-be buyers.
Wednesday, April 17, 2024
uk unemployment increases
Although the UK government has been praising itself on its low unemployment rate, there are worrying patterns. There has been an increase in the number of working-age individuals quitting their jobs early because of health issues, childcare obligations, or other reasons. The fact that this inactivity rate has been declining since the COVID lockdowns makes it even more concerning.
Experts think that this increase in inactivity is the result of government actions. They consider a mental health crisis, benefit cuts, and government battles with healthcare unions as the main causes of the the departure from the workforce. Many families are also being forced to work fewer hours themselves due to the high cost of residential care and growing childcare expenses.Investors increasingly expect 'no landing' for US economy
Tuesday, April 16, 2024
Charlotte saw nearly $80M economic impact from big 2023 sports events
The Charlotte Sports Foundation said $79.7 million was generated by the Jump man Invitational, the Duke’s Mayo Classic, the Ally Tipoff, and the Duke’s Mayo Bowl. In addition to the $79.7 million, CSF said $42.9 million was also generated in direct spending and $2.5 million in taxes. More than 70,000 hotel rooms were booked during those events and over 216,000 fans were in attendance. CEO of CRVA Steve Bagwell said, “Sporting events are a significant contributor to the region’s $7.3 billion visitor economy, with a large portion of the annual hotel room nights booked by the CRVA attributable to that market segment." He also continued, “Our partnership with the Charlotte Sports Foundation is tremendously important in creating positive economic activity for the community. Their industry connections and operational expertise are vital when we pursue and host strategic sporting events. The collaboration has been incredibly successful at drawing visitors, generating media exposure, and delivering fantastic experiences in the Queen City.” The Charlotte Sports Foundation said $2.7 million of the money generated was donated to charitable causes including Charlotte-Mecklenburg Schools.
link: Charlotte saw nearly $80M economic impact from big 2023 sports events - Yahoo Sports
Biden to forgive $7.4 billion more in student loan debt for 277,000 borrowers
The Biden administration has already authorized the cancellation of $153 billion in student loan debt for nearly 4.3 million people across America. That's more than 9% of all outstanding federal student loan debt.
The administration has been very on top of this topic as they’ve been making new announcements about debt relief monthly and they have another group of student debt relief proposals that could go into effect this fall. The Biden administration has made it easier to qualify for loan forgiveness for specific groups such as public sector workers. They have also launched a new plan to shorten the pathway to loan forgiveness for many low income borrowers, although the Republicans are pushing hard against this. They argue this cost is going to taxpayers who chose not to go to college or are already paying for it themselves.
$3.6 billion of this student debt relief will be delivered to people enrolled in the SAVE (Saving on a Valuable Education) program. Since it launched last year, almost 8 million borrowers enrolled and 360,000 people have seen their debt canceled.
There were previously repayment plans within the government in other presidencies but SAVE requires way less time to receive the debt relief. In addition, unpaid interest does not accrue as long as monthly payments are made in SAVE.
The Biden administration has canceled more student debt than any other President in history and it doesn’t look as if they’re done yet.
Sunday, April 14, 2024
Hong Kong Sovereignty Threatened
The traditional picture of Hong Kong from a western perspective is as an international financial oasis within the hostile Chinese market as Hong Kong, with its semi-independence from China, has for the past few decades served as a gateway between China and the west. This status, however, has come under scrutiny recently, as many western investors have left Hong Kong in the past few years due to COVID, China's crackdown on pro-democracy protests, and Chinas trade war with the United States. In addition, China imposed a national security law on Hong Kong back in 2020, and there are rumblings of further laws to come. This has caused the number of global companies with regional headquarters in Hong Kong to fall by 8.4% since 2019, with a particular emphasis on firms within the United States which have fallen by a third in the last four years. Other eastern countries, such as Singapore, have benefited from the decrease in activity in the Hong Kong market, however, analysis are not counting Hong Kong out just yet, predicting that they will continue to serve as a gateway to China, just less with the west and more with other Asian countries.
https://www.dw.com/en/hong-kongs-economy-feels-the-weight-of-chinas-crackdown/a-68453085
U.S. Monthly Mortgage Payments Hit New Record High Amid High Rates and Home Prices
For the second week in a row, U.S. mortgage rates rose followed by higher-than-expected inflation and unemployment. The 30-year fixed mortgage rate increased and averaged 6.88%, which increased by 62 basis points since the previous year with an average of 6.27%. The 15-year mortgage rose to 6.16%, an increase of 10 basis points compared to last week's 6.06% and an increase of 73 basis points from the previous year's 5.54%. Sam Khater, chief economist at Freddie Mac stated, “Mortgage rates have been drifting higher for most of the year due to sustained inflation and the reevaluation of the Federal Reserve’s monetary policy path.” While this may be disheartening news for new and eager homebuyers, there's a glimmer of hope as new listing activating jumped by 15.5% in March. Although higher rates erode housing affordability, the median monthly mortgage payment for a median-priced $378,250 home hit an all-time high of around $2800. Despite these challenges, there is optimism that the market might stabilize later in the year as mortgage rates and housing supplies adjust.
https://apple.news/ALQZineSJTPeR90DqEE5PhQ
Wholesale prices rose 0.2% in March, less than expected
Title- Wholesale prices rose 0.2% in March, less than expected
link- https://www.cnbc.com/2024/04/11/ppi-inflation-report-march-2024-wholesale-prices-rose-0point2percent-in-march.html
Thursday, April 11, 2024
Why few companies in Europe are hiring workers from abroad despite shortages
Many European companies, especially small and medium-sized enterprises (SMEs), are facing labor and skill shortages, particularly in roles requiring vocational training qualifications. This shortage has become a significant challenge across various sectors, affecting businesses in numerous countries.
Despite efforts to recruit from abroad, such as within the EU or from non-EU countries, the proportion of companies hiring foreign workers remains relatively small. Challenges in recruiting from abroad include language barriers and administrative obstacles.
The European Commission has proposed measures to address these issues, including making it easier to recognize professional qualifications and creating an EU Talent Pool to match European companies with non-EU jobseekers. Additionally, there are efforts to review rules to facilitate the movement of third-country nationals within the EU.
BusinessEurope, a confederation of industry associations in Europe, sees economic migration as a solution to labor and skills shortages and supports initiatives to increase worker mobility within the EU and attract skilled workers from outside the EU.
Overall, while labor and skill shortages persist, there are ongoing efforts at both the EU and industry levels to address these challenges and improve worker mobility across Europe.
https://www.thelocal.dk/20231204/why-few-companies-in-europe-are-hiring-workers-from-abroad-despite-shortagesDenmark Debt
The recent figures released by Denmark's central bank, Nationalbanken, reveal a positive trend in the country's finances. At the start of 2024, the national debt stands at 294 billion kroner, which is 28.6 billion kroner lower than the previous year. This places Denmark's debt at around 10.5 percent of its GDP, marking the lowest level since such records began.
According to Kristian Skriver, a senior economist with the Danish Chamber of Commerce, this achievement reflects the robustness of Denmark's public finances. Factors contributing to this include surpluses in public finances in recent years, driven by high employment, low unemployment, and strong consumer spending. Additionally, Denmark's political discipline in adhering to budget allocations prevents overspending.
The low national debt not only signals healthy finances but also allows for relatively low interest rates, enhancing economic stability. Denmark's ability to maintain low debt levels provides flexibility in borrowing during times of crisis, bolstering its economic resilience.
Comparatively, Denmark's national debt is notably lower than many other European countries, with only Estonia, Bulgaria, and Luxembourg having lower debt-to-GDP ratios. This underscores Denmark's strong position and fiscal responsibility within the European context.
Overall, Denmark's achievement of significantly reducing its national debt reflects a combination of economic factors and prudent fiscal management, positioning the country favorably in the global economic landscape.
https://www.thelocal.dk/20240123/denmarks-national-debt-at-lowest-level-for-25-years
Service Sector Leads Eurozone Recovery
There has been some optimism among European businesses recently, with their expectations reaching a level not seen since early 2022. Private sector activity in the eurozone increased last month, with southern European economies leading the charge, but Germany and France lagged behind. There has been a positive shift in the economy following a prolonged period of stagnation caused by the war between Ukraine and Russia. The conflict pushed prices soaring and damaged consumer and business confidence. Despite these challenges, evidence of recovery is beginning to emerge: inflation is beginning to slow down, and households are starting to recover spending power.
According to the latest Eurozone Composite PMI Output Index, which measures activity in the manufacturing and services sectors, the economy is showing signs of improvement. Since May of last year, the index rose above the growth threshold, suggesting that the economy may have expanded in the first quarter of the year following a period of stagnation in late 2023. In comparison, Germany and France have continued to contract, although at a slower pace than the Spanish and Italian economies.
In the past nine months, the services sector experienced its most significant expansion, being one of the key drivers of such a recovery. The manufacturing sector, however, continues to face challenges because of ongoing contractions. Spain's tourism sector contributed to its noticeable economic performance matching U.S. growth last year. Due to weak export demand, Germany, on the other hand, experienced difficulties regarding weak export demand, highlighting the difference between two of the major European economies. The article highlights that despite the challenges, there are encouraging signs for European countries. Consumer spending is strengthening and inflation is easing, increasing optimism about a more sustained recovery.
Monday, April 8, 2024
'Resilience' of Belgian Economy Supports Local Start-ups
With Belgium's economy now being among the fastest growing in the eurozone, young businesses appear to be flourishing. Belgium now has 15 businesses in the FT 1000 list, when added to the Netherlands' 29, is highlights the role of Benelux counties in such sectors as fintech, smart logistics, and advanced manufacturing. Economists at Belgian bank KBC emphasize the country's economic strength as its real GDP growth in the final quarter of 2023 was 0.4 percent, which was double their forecast. Economists say this positive surprise shows the continued resilience of the Belgian economy. Belgium is one of very few European countries that has not recorded a single negative quarterly growth rate since the beginning of 2022.
The main driver in growth seen has been in the Dutch-speaking region of Flanders. Unlike other regions, Flanders has little legacy of heavy industry, such as coal mining and steel making, and instead tends to host companies in high-margin industries. As Belgium is a federal state, Flanders has its own government which controls over half of state spending. Flander's economy is supported by a dedicated resilience plan, which aims to keep it competitive, and includes financial and administrative help for start-ups. The fastest-growing sectors include life science, automotive, media, and entertainment. Anthony de Bruyn, marketing director, says Belgium is a great place to start businesses, but adds that the biggest issues for start-up businesses are finding staff and investors to scale up.
Switzerland's Economic Outlook
The Swiss economy weathered the storms of the global pandemic admirably. Stringent health measures, coupled with a robust healthcare system and effective government support, helped mitigate the worst economic impacts. Despite facing adversity, Switzerland displayed remarkable resilience, with GDP growth bouncing back steadily in the post-pandemic era. Switzerland has and will continue to face various geopolitical tensions, trade uncertainties, and supply chain disruptions pose risks to its export driven economy. Aging population also is an area of concern. Switzerland's commitment to innovation has continued post-pandemic. The country sets entrepreneurship and technological advancement first. One differentiator is their desire to innovate in a sustainable manner. They have maintained an extremely adaptable while coupling with an innovative system.
Sunday, April 7, 2024
Immigration May be Key Factor in Economic Growth in the U.S
According to economist, it is believed that the recent surge in immigration following the 2021 pandemic is a driving reason behind the economic boost in the U.S. job market. All without causing significant inflation. The increase of immigration has caused employers to fill job positions at levels of pay that have not increased the overall price levels. In turn, the growth of the labor force has helped companies meet stronger consumer demand. Economist also believe that immigrants who are authorized to work within the U.S. spend a large portion of their pay which will further increase consumer demand.
Source:
https://www.nbcnews.com/business/economy/immigrants-are-helping-us-job-market-grow-without-affecting-inflation-rcna146570
Japan’s Real Wages Decline
Because inflation has surpassed wage growth, Japanese workers have seen a decline in their real wages for more than a year. Household spending has decreased as a result of this. Still, there are indications of improvement. The largest pay increase in more than thirty years was achieved through recent union negotiations, surpassing the anticipated rate of inflation. Furthermore, businesses are under pressure to increase wages due to Japan's competitive labor market.
Regarding these developments, the Bank of Japan is optimistic. They think that as wages rise, there may be a positive feedback loop that increases inflation and consumer demand, which would free them up to raise interest rates and ultimately normalize monetary policy. In their next inflation projections, the BOJ will be looking for validation of these trends.
Positive eclipse affects for Ohio towns
The Dayton Daily News reports that they expect to see a business surge for the solar eclipse on April 8th. As all Ohioans know, the state will be in totality for portions of the eclipse which has influenced travel to many of the areas affected. Local economies can expect full hotels and restaurants with bustling commerce for eclipse related items and essential travel products, like gasoline. Based upon numbers from the 2017 eclipse affect on Wyoming, Ohio can expect up to half a million visitors across the state. Additionally, Wyoming saw around $60 million in spending for goods and services related to the eclipse.
Many business in the area have prepared special events. Additionally bars and restaurants are promoting eclipse brews at bars to capitalize on the eclipse hype. Local business are also selling merchandise like t-shirts. But, the eclipse will not only affect downtown areas, rural areas have had to prepare for an influx of visitors. For many rural areas, they needed to prepare their infrastructure.
Shopping and commerce areas in Ohio will likely largely benefit from the event. Now, it is just for us to wait and see the final impact. Some officials say to watch for quarterly lodging tax checks to see a more tangible economic impact.
https://www.daytondailynews.com/local/area-businesses-hope-to-cash-in-on-monday-eclipse/CMYIRMUOSVHHPLYNMBMV43JOF4/#:~:text=Zeiler%20estimates%20Ohio%20will%20see,and%20lodging%20throughout%20the%20weekend.
Unknown When Interest Rates Will Drop
Interest rates have been expected to drop for some time, however, the federal reserve has yet to do so. This is due to the mixed economic signals they have been receiving. While job loss and unemployment have been on the rise, there has also been increased hiring and wages. This data makes the fed's decision making more difficult. With the fed still keeping interest rates high, people have began to question when they will finally drop. It all depends on future inflation data, as many fed officials have already advocated for rate cuts. Many experts have predicted a drop in interest rates around this coming June, but with mixed economic data, there is difficulty in predicting what will happen next.
https://www.marketplace.org/2024/04/04/when-will-rates-go-down-the-answer-rests-on-conflicting-economic-data/
How the eclipse has impacted short-term rentals like Airbnb
The upcoming solar eclipse on April 8th has spurred a surge in interest and travel plans across the United States. With the path of totality stretching across 14 states, millions are anticipated to witness the event, far exceeding the number of residents within the path. This has led to a significant increase in short-term rental bookings, particularly in areas along the eclipse's path, with an 88% rise in bookings observed.
Data from Yougov.com indicates that over half of the U.S. population has made plans to view the eclipse. Notably, demand for short-term rentals within the path of totality has skyrocketed, with occupancy rates peaking, as depicted in a trend map from Airdna.co. While rental bookings in states outside the path of totality have seen only a modest increase of about 4%, cities within the path have experienced a surge of over 200%.
Consequently, hosts in these areas have capitalized on the heightened demand by raising prices, with Missouri and New Hampshire witnessing substantial year-over-year increases of 338% and 514% respectively. This trend underscores the willingness of people to travel extensively for extraordinary natural phenomena.
Euro Zone Inflation Slows to 2.4% in March
The euro zone made up of 20 nations has seen its inflation drop down to 2.4% in the most recent reading. This increases the likelihood of seeing cuts to the interest rate in the upcoming summer. Not only was inflation reported at 0.2% lower than forecasts, core inflation also 2.9% which is below the 3.1% estimate. However, not all is perfect as wage growth has continued to show up in the constant 4% inflation in services.
The biggest economy within the euro zone is Germany which saw its lowest rate of inflation in three years this past month at 2.2%. Experts believe the euro zone inflation rate will fall below 2% at some point this summer, leading to general belief that a first rate cut will be seen in June. Some experts still believe there will be five rate cuts within 2024 even though there are some points of concern that remain within the European economy such as the continued inflation in services and the fall of food prices.
Source - https://www.cnbc.com/2024/04/03/euro-zone-inflation-march-2024.html
Economic Impact of Solar Eclipse.
The predicted possible economic impact of the solar eclipse on Monday is as much as a 6 Billion dollar boost to the economy. The path of the eclipse stretches over 115 miles in the U.S. and many people are expected to travel to see it. These people will be spending money on food, gas, accommodations, etc. This will provide a significant economic boost to towns and cities in the path. The hotel occupancy rate for the night before the eclipse is 92%. Paducah, Kentucky is actually in the path of totality for the second time in the past decade, which is providing them with yet another major boost and providing local business owners to opportunity to learn from their experiences last time.
https://www.investopedia.com/economic-impact-2024-solar-eclipse-8627476
Friday, April 5, 2024
The Rise of Sports Betting.
This weekend the best mens college basketball teams will face off competing for a spot in this years national championship. For fans, this will be amazing basketball and sport to watch but there is another side to it. These high-stakes matchups provide some of the most lucrative events for sports betting apps, with nearly $3 billion wagered on this years March Madness alone. 6 years ago sports betting was illegal under federal law, now sports betting is rapidly expanding throughout the nation and is continuing to grow. 38 states have legalized sports betting, and new states are seeming to follow by the day.
One large topic revolving legal sports betting is how it enables big business, which for sports betting sites includes advertisements. Draft Kings for example is a largely advertised site, and as long as it is not misleading or deceptive they can advertise legally. A pro of this is how it guides the average consumer away from illegal gambling markets to legal ones, which raises tax revenue for governments and helps consumers avoid fraud. But the downside that some consumers are complaining about is advertising convinces more people to gamble, most importantly underage consumers (under 21) and recovering gambling addicts. A recent study shows recovering addicts complain that the deluge of ads presents a constant temptation to place another bet.
So what is the right decision? The United States Government are seeing the tax revenue roll in ever since legalizing spots betting, but is it regulated enough? For example are professional athletes who see a line or their own prop bet going to play differently, or even wager on themselves illegally? Only time will tell and as the rise of sports betting continues to grow, more regulations will be put in place to ensure it is completely legal as well as engaging for the consumer and participating market.
Article from the New York Times: The Morning
Thursday, April 4, 2024
Private payrolls increased by 184,000 in March, better than expected, ADP says
Title- Private payrolls increased by 184,000 in March, better than expected, ADP says
Link- https://www.cnbc.com/2024/04/03/private-payrolls-increased-by-184000-in-march-better-than-expected-adp-says.html
Private sector job growth surged in March, marking the fastest pace since July 2023 and highlighting the robustness of the U.S. labor market, according to ADP. Companies added 184,000 workers, surpassing the February gain of 155,000. Wages for existing workers increased by 5.1% from a year ago, with job switchers seeing a 10% gain. Job gains were broad-based, led by leisure and hospitality, construction, and trade, transportation, and utilities. The South saw the largest gains regionally, adding 91,000 workers. The strong job market, along with improving inflation, has allowed the Federal Reserve to maintain a patient stance on monetary policy.
Wednesday, April 3, 2024
Taiwan earthquake briefly halts chip factories that power the global economy
The recent powerful earthquake in Taiwan briefly halted chip production at factories along the island's west coast, raising concerns in the tech industry given the world's reliance on semiconductor chips produced there. Taiwan Semiconductor Manufacturing Co. (TSMC) produces about 92% of the most sophisticated chips in the world. TSMC's factories are expected to resume production with only minor disruptions reported, despite being evacuated for inspections following the earthquake. Analysts caution that even small disruptions in Taiwan's chip manufacturing could cause major financial losses and delays in shipments. Experts have long noted that natural disasters could have a trillion-dollar economic impact on Taiwan's chip industry, making the global economy particularly vulnerable to such events.
https://www.npr.org/2024/04/03/1242564161/taiwan-earthquake-semiconductor-chips-tech
Fed’s Powell emphasizes need for more evidence that inflation is easing before cutting rates
Link: https://www.cnbc.com/2024/04/03/feds-powell-emphasizes-need-for-more-evidence-that-inflation-is-easing-before-cutting-rates.html
The CNBC article above details the comments of FED Chairman Jerome Powell, and his current, and the FED's current view on the high interest rates. It seems like for the last couple of months investors, consumers, and businesses have been praying for cuts to the interest rate every time the monthly inflation numbers come out. And more so, it seems like every time these figures come out, the FED says "we need to see more progress" every time they speak about cutting interest rates. On April 3rd, coming off a bright report on inflation the FED's Chairman Jerome Powell once again addressed speculation on interest rates, and surprise surprise, Powell, once again told the markets that they needed more sustained progress before cutting rates. His direct quote is provided below.
“We do not expect that it will be appropriate to lower our policy rate until we have greater confidence that inflation is moving sustainably down toward 2 percent” - Jerome Powell
Of course most likely markets will respond accordingly, dropping a little before continuing its climb up on the backs of AI and other tech sectors, and market columnists will keep claiming cuts will happen this year, as they push their previously disclosed timetable back yet another month. The markets seem to forget the big picture, and a couple months of cooling inflation does not mean the overall level of inflation is back to normal, but that won't stop wishful thinking and daydreams of cheap loans from banks.
I think the most interesting development this year was highlighted in the article. Powell got a lot of questions from reporters pertaining to his stance on the FED staying independent. As this year is an election year, the FED is already seeing pressure from both sides of the isle on cutting rates. Powell addressed concerns of political meddling in the FEDs decision-making by standing firm on the longstanding separation between the FED and the government, saying the FED won't allow the government to push them toward any rash decisions. I expect these talks and worries of political intervention to continue and heat up as the election draws closer and I even expect to see publicized pressure from members of the government on the FED to cut rates in the name of "helping the little guys".
How Immigration Explains Employment Discrepancies
It has puzzled economists why U.S. employment numbers have not matched unemployment rates, but a surge in immigration has emerged as a key factor. Besides explaining inconsistencies in job data regarding unemployment rates, it suggests that the economy can keep adding jobs without overheating.
To calculate employment figures, the Bureau of Labor Statistics uses two surveys, the establishment survey and the household survey. Recently, the disparity between them has increased significantly. The household survey, which contributes to the calculation of unemployment rates, may be affected by errors in population estimates supplied by the Census Bureau. A higher estimate of population growth by the Congressional Budget Office, which accounts for immigration increases, suggests that the labor market can support more jobs growth without overheating. According to economists, the economy could have added more jobs without tightening the labor market previously, resulting in a need for revised estimates for job and GDP growth. They also notice that it is also possible that the discrepancy can be attributed to reporting errors and nuances in survey methodology.
The chief economist at Goldman Sachs, David Mericle, points out that the increase in unemployment rates is mainly attributed to an increase in foreign workers' unemployment rates. As more immigrants enter the country, the pool of workers competing for typical immigrant jobs increases. Other indicators of the job market remain strong, with minimal layoffs and low unemployment claims attributed to the expanded workforce. Household surveys have previously underestimated job growth by significant margins due to historical discrepancies, such as those observed during the late 1990s due to unauthorized immigration.
According to UBS economist Jonathan Pingle, census estimates of immigration may be too conservative. He also questions the establishment survey's potential overestimation of job growth. Data conflicting with the immigration narrative, such as remittances from border states, further contribute to this uncertainty. In addition, Pingle expressed concern over the recent decline in household employment figures, suggesting a more serious problem than a slowdown in growth.
Euro Zone Inflation Slows to 2.4% in March
Inflation in the Euro zone eased in March with figures revealing that it slowed to 2.4% below the economic forecasts of 2.6%. Due to this, it is expected that there will be interest rate cuts during the summer months. The core inflation rate also decreased from 3.1% to 2.9%. Furthermore, the euro area unemployment rate in February remained stable at 6.5%, showing an improvement from the previous year. However, inflation in services, a key metric for the European Central Bank remained stuck at 4% for five straight months. Markets expect that that Euro zone's central bank will begin lowering borrowing costs in June. For this reason, there is going to be a monetary policy meeting on April 11. Though there are certain challenges, the overall trajectory suggests a potential dip in inflation below 2% in the coming months.
Link: https://www.cnbc.com/2024/04/03/euro-zone-inflation-march-2024.html
Business Schools Are Going All In on AI
AI is reshaping education, and universities have already begun to adapt their curriculum. At Wharton, Professor Ethan Mollick assigned students to automate some of their jobs using AI. Many top business schools are pushing their students to utilize artificial intelligence in their studies. David Marchick, dean of American University's School of Business stresses that "every young person needs to know how to use AI in whatever they do." The university is pushing to embed AI into every facet of the business program. For example, they have added a course for next semester on AI in human resource management.
At Columbia Business School, professors encourage students to use AI to formulate ideas and action plans. Professor Sheena Iyengar understands that "it's still up to people to make good decisions and ask the technology the right questions." She runs her class through an exercise where AI generates business pitches from the perspectives of different figures like Tom Brady or Barrack Obama. Like Iyengar, many professors feel that AI can be an effective learning tool in the classroom. Some feel they can cover more material with the assistance of AI in their courses. AI is reshaping the professional world and education is shifting alongside these patterns. Implementing AI in higher education is a necessary step forward to equip students with the tools they need to be successful in the workforce.
https://www.wsj.com/tech/ai/generative-ai-mba-business-school-13199631?mod=hp_lead_pos9
China has flooded the market with so many solar panels that people are using them as garden fencing
Chinese manufacturers are pumping out so many solar panels that the resulting prices have tanked dramatically. This overabundance of solar panels has made them so cheap that instead of being used for their made purpose they are being used as fence lining. Specifically, this practice is being done in Germany and the Netherlands, but it is also starting to take form in North America, the UK, and Australia.
The global solar panel supply is forecast to reach 1,100 gigawatts by the end of the year, which is three times more than the demand. So prices of solar panels have been steadily dropping, solar panel prices have already dropped by half in 2023 and are forecasted to drop another 40% by 2028.
This oversupply has led to international backlash and US government officials are going to be sent out to resolve the issue with China over a series of talks. China has mainly been doing this because of its overreliance on its real estate industry and the debt crisis it now has and has moved over to electric vehicles, lithium-ion batteries, and solar.
Source
https://www.businessinsider.com/china-flood-solar-panel-cell-market-garden-fence-overcapacity-yellen-2024-4
Sweet 16 of Women's Basketball March Madness brings projected $8.5M boost to Albany
Women's basketball has never been more popular, this March Madness has been great for the economy as well, especially in Albany. Discover Albany officials projected over $8.5 million spent in the region over the weekend. While they won't know exact numbers for about a month, they say that's a glimmer of how much of an economic boost March Madness brought. University of South Carolina Head Coach Dawn Staley said, "It means that women's basketball is in a really good place and for the people of Albany to embrace us." Discover Albany says hosting the men's tournament last year helped prepare the city to give spectators and the teams the best experience possible this year.
Mayor Kathy Sheehan said, "This is about the region, people were staying in hotels on Wolf Road there were people who were able to see and engage in this entire region and I think most people, the overwhelming majority walked away with a positive feeling about it." Jill Delaney also said: "We really got a playbook by doing that last year, we put in so much work and everything that we did for the men's team last year we would ask ourselves are we ready to do the same exact thing for the women or better because we, of course, want to make sure they are getting an equitable experience for their tournament and so the answer was always a resounding yes.
Tuesday, April 2, 2024
A Million Simulations, One Verdict for US Economy: Debt Danger Ahead
It is no surprise that America has struggled with its national debt, which has reached a staggering $34 trillion. The national debt has increased by 97% of last year’s GDP, and forecasts suggest that it may escalate further to 116%-123% of GDP by 2034. Shockingly, this surpasses the debt-to-GDP ratio during World War II, which was the most expensive war in United States History. According to Bloomberg, 88% of its simulations point to an unstable trajectory for America's national debt. Last summer, the yield on the treasury bills 10-year climbed to its highest level in five years by 5%. This increase highlights the growing concern surrounding America’s national debt and increasing unstable levels of debt.
The Biden administration and Congress are aware of the urgent need for change but face significant obstacles due to divisions in Congress. Republicans advocate for substantial spending cuts without specifying which departments will be getting cut; meanwhile, Democrats prioritize achieving debt stability through measures of interest rates and tax revenues. However, it is unlikely that any meaningful action will be taken until a crisis occurs.
Germany now the largest country in the EU to legalize marijuana
Germany's recent legalization of recreational marijuana has large economic repercussions. The new law permits adults to possess up to 25 grams of marijuana and store up to 50 grams at home. They can also produce up to three plants or join approved nonprofit growing cooperatives. Although the purchase and sale of cannabis remain illegal, the legislation is a positive step toward ending the persecution of cannabis users. The ruling party supports the bill, focusing on addiction treatment, youth prevention, and battling the illegal market. Germany's more liberal marijuana laws place it alongside other European countries with weak controls. Concerns have been expressed relating to the potential risks to youth health and the administrative challenges connected with overturning previous convictions. However, legalization offers economic benefits such as job creation, investment stimulation, tax revenue collection, and a possible increase in cannabis-related tourism. The long-term economic and societal implications of this legislative shift is unclear, but Germany's embrace of the growing cannabis business has the potential to significantly affect the country's economy.
https://www.washingtonpost.com/world/2024/04/01/germany-marijuana-legal-possession-cannabis/
Monday, April 1, 2024
Falling fertility rates pose major challenges for the global economy, report finds
This article explains that fertility rates are falling and that it is projected that by 2100 only six countries will be above the population replacement rate of 2.1 children per woman. These countries would be The African nations of Chad, Niger, and Tonga, the Pacific islands of Samoa and Tonga, and central Asia’s Tajikistan. With none of the global powerhouses expected to be above this rate, this could be considered, and one big thing that could change is the strictness of the immigration laws around the world to be more lenient to keep populations at a stable number. Also, this could mean diminishing labor forces which could lead to much lower output. I will be very interested in following this trend to see what this means for global production.
Friday, March 29, 2024
The wealth of the 1% just hit a record $44 trillion
The total net worth of the top 1% is defined by the Fed as those who have wealth over $11 million. The wealth of the top 1% just hit a record $44 trillion after shooting up two trillion in the 4th quarter thanks to gains from stock holdings.
This marked the latest addition to an unprecedented wealth boom that began in 2020 with the Covid-19 pandemic market surge. The wealth of the top 1% has increased by $15 trillion or 50% since 2020. The middle 50% to 90% of Americans saw their wealth increase by 50% over the same period.
Currently the top 10% of Americans own 87% of all individually held stocks and mutual funds while the top 1% of Americans own half of all individually owned stocks. The top 10% accounted for 67% of all wealth at the end of the fourth quarter and the top 1% accounted for 30% of all the nation’s wealth at the end of the fourth quarter.
This all comes in conjunction with a rising stock market that is in turn increasing consumer spending because inventors see holdings soar and feel more confident spending their money and taking on risk. Mark Zandi, Chief Economist of Moody’s Analytics says this points to the vulnerability of the economy if the stock market were to falter. It does also point to the fact that stock boosts typically and historically have helped the wealthy and not really middle or lower class as much. It has been proven that even though inequality dipped over the past two years, the wealth gap has since slightly crept back.