Education Department Botches College Financial Aid. Again.

     The Education Department administers the Free Application for Federal Student Aid (FAFSA) to provide students and families with scholarships and loans. This year, the FAFSA formula was altered which has led to some glitches in the system. The Education Department stated that 200,000 of the 1.5 million applications shared with schools and states need to be recalculated. They miscalculated financial aid opportunities for students who reported their own financial assets on the FAFSA. The miscalculated reports omitted these assets in their calculations leading schools to offer more aid than students actually qualify for. 

    This mishap adds even more uncertainty to both schools and families trying to make an admissions decision. Justin Draeger, CEO of the National Association of Student Financial Aid Administrators, states that "there's a general distrust that there won't be more errors found." The Education Department has declared that only records sent out before March 21 are affected. Additionally, they stated they will reprocess those students whose reports were miscalculated though no official timeline has been declared. 

    The Education Department have told schools that they can manually calculate tentative financial aid packages for the students affected by the miscalculations. Dawn Medley of Drexel University shared that her team are working 12-14 hour days navigating these errors in order to share financial aid offers with admitted students by April 1. Justin Draeger commented that "it's unrealistic for the government to think schools' financial-aid offices have the resources to run hand calculations on this volume of student files." The FAFSA mishap adds to the many challenges that schools and families already face throughout the admissions process.

https://www.wsj.com/us-news/education/education-department-college-financial-aid-snags-b1b362f6?mod=us-news_lead_pos4

The apple Monopoly

 The Apple company (AAPL) is being sued as of today by the Justice Department and 17 other states. They allege that the tech giant blocked software developers and mobile gaming companies from offering better options than the iPhone, resulting in higher product prices.  The government filed an antitrust suit in New Jersey federal court, alleging that Apple controls the iPhone to prevent competitors from offering new innovative services. It also states that Apple makes it difficult for users to switch over from Apple products to others such as Androids. Attorney General Merrick Garland said, Apple “has maintained its power, not because of its superiority, but because of its unlawful exclusionary behavior.” In response to this Apple said, “This lawsuit threatens who we are and the principles that set Apple products apart in fiercely competitive markets,” they also continued to state that, “If successful, it would hinder our ability to create the kind of technology people expect from Apple—where hardware, software, and services intersect.” Apple is the latest giant tech company to face an antimonopoly lawsuit. Companies such as Amazon, Google, and Meta are all facing these as well.

https://www.wsj.com/tech/apple-antitrust-lawsuit-16066694?mod=hp_lead_pos1

Fed Weighs Future Rate Cuts as Inflation Picture Looks Murky

At the beginning of the year, The Federal Reserve began the year with optimism, supported by the belief in positive inflation reports and promising interest rate cuts. However, recent data raises concerns as “inflation came in hotter than expected” surpassing inflation expectations for January and February. Meanwhile; policymakers are preparing for their March meeting and are unsure whether or not this is a seasonal glitch or the beginning of something more problematic. One thing is certain, inflation rates will not reach an all-time high, but there is worry about whether or not it will stabilize at a slightly elevated level. To ease people’s worry, Federal Reserve Chair, Jerome H. Powell has emphasized the importance of monitoring economic developments before making any decisions. However, some economists disagree and wonder if the Fed might need to adjust its understanding of inflation. This is because economists measure inflation in various ways. For example, some officials prefer to strip out more volatile categories like food and energy to get a “core” reading of inflation. While goods inflations have decreased, service inflations have continued to go up. Housing as well continues to be a significant factor in overall inflation but the feds expect cuts in this area soon. Financial markets are anticipating cuts by June, but that could change depending on future inflation reports.

Overall the Federal Reserve faces challenges trying to navigate the pressure from inflation. This comes as a concern as the future is yet unpredictable. The Federal Reserve does not have a clear idea of what is going on. The best thing for Americans to do is just wait and see what happens with the market. This is scary as the market is unpredictable, the Fed may cut interest rates to help boost the economy, or inflation may become more problematic and cause the market to slow down for a while.  

https://apple.news/AhDqHiOTBQdabydR5tFoPbQ

Turkey continues to tighten monetary policies

 Turkey is attempting to curb its climbing inflation rates by furthering their tightening monetary policies. The central bank told lenders to put portions of their lira reserves in blocked accounts to reduce lending. In addition to this, they increased loan rates as well as decreased the sizes of loan limits on some banks. After the news of this, bank stocks in Turkey dipped. Consumer price inflation in February was 67.07% leading to this tightening decisions. Local elections are in March as well which is putting more pressure on the government officials. 

https://www.cnbc.com/2024/03/15/turkey-opts-for-new-tightening-strategy-after-signaling-pause-to-hikes.html

AI and The Job Market

 The impact on the Job Market is a multi-faceted thing. AI-driven automation is expected to help with operations and increase efficiency across various sectors. For example, KPMG estimates that associates may be saved 15 hours a week of work due to AI helping with writing emails, analyzing data, and quality assurance. This allows for employees to get more done and advance further in that saved time. AI will also create new job opportunities. Positions such as data scientists and AI trainers will be more sought after. AI technologies will also allow for improved research, development for companies that are looking to invest in factors of production. There are however some issues with AI's potential to have biases, as well as there are concerns for data safety that can raise red flags for companies and could be tool used by hackers to get into specific companies confidential information or even personal information.

The Fed’s Tightening Dilemma

     With a resilient economy, the Federal Reserve faces a challenging decision regarding tightening monetary policy. This Tuesday and Wednesday, Fed officials will decide whether, when, and by how much to cut rates. As interest rates went up, builders were concerned, but some of them achieved record profits due to a shortage of existing homes. Combined with consumers' resilience, this success suggests that monetary policy may not be as restrictive as it seems. It is important for the Federal Reserve, however, to carefully assess its policies as the federal-funds rate is relatively high, and there are signs of a possible economic slowdown.

    According to some experts, solid growth implies that rates may not be significantly higher than neutral. The Minneapolis Fed president compares the situation to having one foot on the brake rather than two, which may explain the limited reduction in demand despite rate increases. Also, historically low mortgage rates and government spending have affected sectors, like housing, less negatively than interest rate increases. Despite this, delinquencies are rising and commercial real estate values are falling, which are weakening indicators, raising concerns.

    Because the Fed is also concerned about inflation and economic expansion, its decision-making process regarding interest rates ends up being complicated. There may be a need to adjust interest rates downward if inflation continues to decrease.But it becomes less clear the need for policy changes if the economy continues to grow solidly. In determining the appropriate course of action for the Fed, these factors must be balanced.

Biden's No-Funding Pledge for Fossil Fuels Broken with $4.2B Loan for Gas Project

This article examines the inconsistency between President Biden's commitment to stop public funding for oil and gas projects and the US Export-Import Bank's recent decision to guarantee loans for a $4.2 billion natural gas project in Bahrain. Despite Biden's vow, the ExIm Bank continues to fund fossil fuel projects, notably the Bahrain project, raising concerns about the bank's independence and departure from US climate goals. The piece also underlines the ExIm Bank's enormous financial risk as a result of its engagement in oil and gas projects, which has sparked criticism from lawmakers and environmentalists. It also investigates the impact of political and business interests on the bank's decision-making process, as well as the obstacles of moving its focus to clean energy financing. 

https://www.motherjones.com/environment/2024/03/biden-promised-not-to-finance-fossil-fuels-so-why-is-the-us-backing-a-huge-gas-project/

U.S. Launches Economic Initiative to Boost Trade in Central Asia

 The United States is launching a new initiative to increase its influence in Central Asia. This initiative, called B5+1, focuses on economics and regional cooperation. The goal is to create a more favorable business environment and encourage trade among the countries in Central Asia. The United States hopes that this will make the region more prosperous and stable, and also less reliant on Russia and China.

The B5+1 initiative is a change from past US efforts in Central Asia, which focused on promoting democracy and human rights. The new initiative is more pragmatic and recognizes the importance of working with the region's authoritarian governments.

The success of the B5+1 initiative is uncertain. There are many challenges, such as the region's  rulers and the lack of cooperation among the Central Asian countries. However, the initiative has the potential to improve the lives of people in Central Asia and to make the region more stable.

https://oilprice.com/Energy/Energy-General/US-Launches-Economic-Initiative-to-Boost-Trade-in-Central-Asia.html

The Middle Class Is Getting Squeezed by Debt Costs

 Link: https://www.bloomberg.com/news/newsletters/2024-03-15/world-economy-latest-middle-class-squeeze

This Bloomberg article goes into detail about something a lot of papers and articles won't; they talk about how despite resilient economic numbers, consumers are showing signs of worrying under the surface trends that may show greater weaknesses than perceived. The main indicator of financial stress from consumers is that, while their spending is high, so is their debt. The main reason for consumer resiliency is that they are using debt to cover the rise in prices. The most worrying part of this high debt creation is that the rate of delinquency on credit is at its highest point ever. This shows more and more families are defaulting on the credit they take out to spend, something the economy has been even dependent on.