Job openings declined in January but still far outnumber available workers

https://www.cnbc.com/2023/03/08/job-openings-declined-in-january-but-still-far-outnumber-available-workers.html 

The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) has shown that there exist 10.824 million job openings, down by about 410,000 from December of 2022, with 1.9 job openings per available worker, with a total gap of 5.13 million between workers and job openings.

The JOLTS report further stated that hiring was brisk for the month, with employers bringing on 6.37 million workers, the highest total since August. The payroll processing form ADP reported that companies added 244,000 workers for February, despite Fed rate hikes.

Federal reserve officials take the JOLTS report closely as they formulate monetary policy, with Jerome Powell calling the jobs market "extremely tight," and cautioned that recent data showing resurgent inflationary pressures could push interest rates higher. 

Total separations didn't experience much change, but quits, a signal of worker confidence in mobility fell to 3.88 million, which is the lowest since May 2021. layoffs rose up sharply, up 241,000, or 16%

There existed some other signs of softness in the job market, however, with construction openings falling by 49% (240,000), with an additional 16000 jobs being lost in February. The Leisure and Hospitality sector also saw a decline of 194,000 in January. 

According to the article, the markets will gain a more comprehensive overview of the jobs market with the Labor department's nonfarm payroll report released on Friday, but economists surveyed by Dow Jones expect payrolls to increase by 225,000, with unemployment remaining constant at 3.4%

People Of Color See Higher And Rising Unemployment In Possible Signs Of Softening Economy

    Despite the labor market showing overall strength, communities of color are still struggling with higher unemployment rates, which could be a possible sign of a softening economy, according to this article in Forbes. For instance, the unemployment rate for Black workers was 5.7%, and for Latino workers was 5.3%, compared to 3.4% for Asian workers and 3.2% for white workers. These gaps have persisted even as the labor market recovered from the pandemic-induced recession, and in recent months, the gap in unemployment has even increased for some communities of color. The unemployment rate for Latinos rose from a recent low of 3.9% in September 2022 to 5.3% in February, and for Asian workers, it increased from 2.5% to 3.4% during those months. Digging deeper into the data for Latino workers, the rise in unemployment is especially pronounced among Latino men, whose seasonally unadjusted unemployment rate increased from 4.6% in February 2022 to 6.4% a year later, while the unemployment rate for Latina women barely increased from 5.1% to 5.4% during that year. The article also highlights the risks of a slowdown or even a recession, as Republicans are refusing to give the federal government the ability to pay its bills, while the Federal Reserve seems poised to raise its key interest rates further. When economic growth falls, many more people of color are likely to feel the economic pain of unemployment and financial distress before white people will.


https://www.forbes.com/sites/christianweller/2023/03/11/people-of-color-see-higher-and-rising-unemployment-in-possible-signs-of-softening-economy/?sh=42af98e841cb

Here’s how the second-biggest bank collapse in U.S. history happened in just 48 hours

 Link to article: https://www.cnbc.com/2023/03/10/silicon-valley-bank-collapse-how-it-happened.html

Silicon Valley Bank (Ticker: SIVB) surprised its investors on Wednesday with news saying it needed to raise $2.25B to help support its balance sheet. Then on Friday, regulators seized its deposits, which means that this is the largest bank failure since the Financial Crisis in 2008s

The reason for this collapse is thought to stem from dislocation caused by high interest rates. As startups started withdrawing money from the bank to keep their companies afloat in an environment that is harsh for fundraising and for IPO, the bank soon found itself short of capital. The bank was forced to sell all its bonds at $1.8B loss.

After the call with that announcement that Thursday, the stock plummeted by 60% and customers withdrew a total of $42 billion at the end of that day. 

As far as I know, this is one of the largest negative side-effects of the Fed's decision. I am interested to see how the Fed would react to this dilemma where if they stop raising rates when inflation will be out of control but would doing so cause other banks to fail as well?

In just a few minutes this week, Powell changed everything on market’s view of interest rates

 Link to article: https://www.cnbc.com/2023/03/09/powell-changed-everything-this-week-on-markets-view-of-interest-rates.html

Before the Fed Chairman's speech, the market initially expected a 0.25 percentage point increase in the benchmark interest rates. However, after Jerome Powell's appearances where he cautioned that if inflation data remains strong, he expects rates to go "higher than previously anticipated", which then led the market to change its expectation to a half-point increase in March.

The reason behind his remark is attributable to the January higher-than-expected inflation data as well as a strong sign of the labor market despite the Fed's effort to slow it down. The unemployment rate at the moment is 3.4%, which is still considered quite low for a tightening monetary policy.

After this change in expectation, the market, especially equites, experienced more sell-off as investors became more nervous about the future rate hikes as nothing seems to be certain right now. 

The age of the grandparent has arrived

    In reading the Economist article "The age of the grandparents has arrived," I learned about the declining and aging population across the globe and the potential implications that the presence (or lack thereof) a grandparent has on the grandchild(ren).  

    To begin, it is no surprise that the current population is living longer than those 50 or even 20 years ago due to increased access to medication and a higher standard of living for many parts of the world.  The article states that the "global life expectancy has risen from 51 to 72 since 1960."  The article then comments on the decreasing family size; a woman's expectation for children has been cut in half.  Therefore the ratio of grandparents to grandchildren is steadily declining across the globe.  

    The article goes on to compare the impact that the presence of a grandparent in the life of their grandchild can have.  The results vary from country to country which is extremely significant for this class because the ways in which the culture and society organizes itself has direct effects on the importance of grandparents' roles.  Some key examples were Senegal, Mexico, Britain, and Sweden.  

    In Senegal, the presence of a grandparent, especially a maternal grandmother, in the household increased the rate of mother's returning to or entering the workforce--thereby increasing the financial stability and wellbeing of the family.  The rate at which children stay in school is also increased with the presence of at least one grandparent in the home.  As discussed previously in the course, the externalities surrounding education are very high for a society, so a lower rate of drop outs from children to take care of their siblings or help their parents work is lowered.

    In Mexico, the main source of non-parental childcare are grandmothers.  The grandmothers are very close with their grandchildren and pass down important aspects of the history and culture.  The mother is then able to work while the grandmother cares for the children to better support the family than a family in which the mother cares for her children.  Furthermore, care from a grandmother is also more trustworthy (culturally) than with the strangers at a daycare.

    In Britain, the presence of grandparents as caregivers actually increase the rate of childhood obesity, but it is unclear of the exact reason for this correlation.  There is also proof that grandparents are also more likely than daycare workers to leave the children with fire hazards.  Furthermore, the use of grandparents in place of traditional daycare limit the parents' ability to move for work therefore lowering the potential for a higher-paying job.

    Sweden, by contrast, has very few grandparents caring for grandchildren because of subsidized daycares and extensive maternity and paternity leave.  This allows grandparents to continue working in the formal sector for a longer period of their life because they do not have to quit in order to babysit.  However, the lack of "need" for grandparents as caretakers forces the grandparents to be continually isolated from the family which often leads to loneliness and depression.  However, in this system, the country is able to gain the most productivity and economic success because more of the population can work because of supports in place.  

    Despite the vast array of effects of having a grandparent in the house, we will continue to see a decline in the number of grandchildren meaning a grandparent would be able to give more attention to the few grandchildren that they do have.  Economically, the shrinking population will impact the output of a country, but given the increasing longevity of humans, we can expect that working years will likely be expanded.

 https://www.economist.com/international/2023/01/12/the-age-of-the-grandparent-has-arrived

The US Department of Justice Sues JetBlue Over Pending Spirit Airline Acquisition

 The US Department of Justice (DOJ) filed a lawsuit to prevent JetBlue Airways from acquiring Spirit Airlines. The DOJ argued that the purchase is monopolistic in that it would reduce competition and increase fares. Additionally, the DOJ is worried that the increase in fares would ruin the affordability that Spirit Airlines has long been known for. In contrast, JetBlue argues the merger would create a strong competitor to the top four carriers (American, Delta, United, and Southwest), which make up 80% of the market for domestic air travel. For perspective, JetBlue and Spirit make up roughly 9% of the domestic air travel market. This is not the first lawsuit the administration has brought against JetBlue. Back in 2021, the administration sued to eliminate a limited partnership between JetBlue and American Airlines. There has not been a ruling yet, however the decision will likely hold some precedent to the most current lawsuit. 

Article: https://finance.yahoo.com/news/us-sues-block-jetblue-buying-155819060.html

UK Economy Isn't Faltering Like Originally Thought.

    The recent numbers for the UK economy were released and the main point was the 5% contraction in GDP. A British asset manager contests that that number doesn't paint the whole picture. He uses many anecdotes to support his point such as: seeing people still buying houses and purchasing goods. He also points to companies increasing dividend payouts which is a sign of increased profitability. Business investment also increased the period by 4.8%. It seems as if within the UK there is a positive outlook on the future as compared to the people on the outside looking in. Most firms are having success but are uncertain, leading to a lack of debt taking on and a large number of reserves. Once the UK can encourage more business activity the economy should see an upsurge that counteracts the GDP contractions. The point of this all is to say that one indicator cannot encapsulate the complexities and intricacies of an entire economy.

https://www.cnbc.com/2023/02/23/uk-economy-in-a-lot-better-shape-than-bleak-figures-suggest-fund-manager-says.html

Sri Lankan Crisis

Sri Lankan Crisis

Sri Lanka's central bank has raised its interest rates in an effort to control inflation and relax its currency. This move is to secure a bailout package of $2.9bn from the International Monetary Fund (IMF) to help the country through its worst financial crisis since gaining independence from the United Kingdom in 1948. The country's economy has been hit by the financial crisis, with growth contracting by an estimated 9.2% last year and inflation that hit 50% in February.  Sri Lanka has increased interest rates, taxes, and electricity prices, among other measures, which has generated protests from citizens who were already struggling to make ends meet. The IMF has asked Sri Lanka to fulfill all the "prior actions" in order to finalize the IMF Extended Fund Facility arrangement. Sri Lanka is seeking IMF approval under a special policy called Lending Into Official Arrears, which allows the lender to approve the program without formal prior financing assurances from China.. Central bank Governor P Nandalal Weerasinghe said that with the rate increase, all "prior actions" have been fulfilled, and he was hopeful that the IMF package would be approved within this month. Despite the increase in rates, the central bank expects market rates will continue to reduce, while, in terms of currency, the country will gradually move towards a market-driven exchange rate country. 

https://www.aljazeera.com/opinions/2023/3/9/the-g20-could-help-fix-sri-lankas-debt-crisis-will-it-step

Is the Entire Economy Gentrifying?

     The title of this New York Times article is bold and definitely an eye catcher; but the authors tweak the definition of gentrification to better fit what's happening in the economy right now. Wealthy people aren't pushing poorer consumers out of the market, the producers are. The word premiumization has been the new term used to describe how companies are making their products more desirable to wealthier people by focused marketing and raising the prices of their products. Since the economy has cooled off and the Fed has been increasing the interest rate, companies have found that this process is the way to keep a high profit.

    One of the groups effected heavily from this is the poorer consumers. An example of this given in the article was American Express, who was open about saying that they choose to accept people with more wealth for their business. The "premium consumer base" is handling the economic downturn better than anyone else, so the credit card company is limiting their focus to likewise individuals.

    Another group effected could be the economy as a whole. The Fed is raising the interest rate to battle the ever rising inflation. If companies continue to raise their prices to get as much profits as they can from wealthy consumers, it could lead to a slower economic growth and less overall demand. The goal from these companies is to produce less while still holding the pricing power in the market.

    Competition could always come into the market and compete with the companies doing this with lower priced products, but this takes time. Unless a current company decides to break of the market trends and produce lower priced products, we should expect to see higher costs, interest rates, and inflation.

https://www.nytimes.com/2023/03/04/business/economy/premium-prices-inflation.html?auth=linked-google1tap

After seven years of Brexit talks, Europe has emerged as the clear winner

 Ursula von der Leyen, was invited to meet King Charles III at Windsor Castle this past week to be dubbed a “World Leader”. This came after she finally reached an agreement with Rishi Sunak, the prime minister, on how to handle issues pertaining to Northern Ireland, and how it would be included in the Brexit deal and not cause any sort of conflict with where the border would be placed. So for the first time in 3 years, it is easier to envision. Mr. Sunak is the fifth prime minister since the referendum of Brexit, which shows that it has been no small task, nor easy to deal with. Ms von der Leyen by contrast is just the second person in her job in the time since Brexit was first announced, and will probably get another five-year term next spring. On top of this, most Brits agree that Brexit was a bad idea, and wish that it would not have happened.

In the article it states that no country in the EU could honestly think that they would be better off by leaving. This is a debate that was brought up in class about Greece. Joining the EU was tough for Greece because they were not ready to be on the same playing field as Germany with the same currency. So although it was not that easy for Greece to join, I will agree that they could not be better off by leaving as this article states because they would have a very rapid inflation and lose currency value. Every person would run to take their money out of the bank, and banks would fail.

https://www.economist.com/europe/2023/03/02/after-seven-years-of-brexit-talks-europe-has-emerged-as-the-clear-winner

Metals Feel Chill as Beijing Shies Away From Major Stimulus

In the wake of a moderate 5% annual growth target set by the Chinese government, commodity prices, from iron ore to copper, fell. The target, unveiled at the National People's Congress (NPC), was below what most economists expected, due to the fact that China missed the previous growth target by a rather wide margin. 

The official documentation states that authorities aren't keen on any massive economic boost after the pandemic, and local government bond sales, which form the backbone of Chinese infrastructure development, were also modest. 

The NPC stated that the government merely aims to stabilize the economy, and doesn't aim to issue a massive stimulus, which sent Iron ore prices dropping 3.2%, with shares of major iron ore mining firms falling by 1.1% (BHP Group), and 2.2% (Rio Tinto), and Copper fell 0.8%, with zinc, aluminum, Brent oil, and gold moving 1.4%, 0.3%, 0.6%, and 0.3% respectively, in the wake of overseas investors having a bullish outlook on commodities, due to a higher stimulus effort expected from the government. China has harvested 686.55 million tons of grain in 2022, with a grain harvest of greater than 650 million tons since 2015, according to Chinese state media.

The NPC did, however, deliver good news for the Chinese agricultural sector, with a proposed push to increase grain production capacity by 50 million tons annually, in an effort to ensure greater food security. This news comes in the wake of the 0.4% rise in soymeal prices, and a 0.1% decrease in corn prices. 

The UK economy in "a lot better shape" than the bleak figures suggest

 Link to article: https://www.cnbc.com/2023/02/23/uk-economy-in-a-lot-better-shape-than-bleak-figures-suggest-fund-manager-says.html

The UK economy only contracted by 0.5% in December 2022, leading the country out of a widely anticipated recession.

Bank of England has projected that UK has entered a shallow recession at the start of 2023 that will last for 5 quarters but oil prices remain high and rising interest rates restricts spending.

However, Brough, a British asset manager, said that there is more resilience from consumers as they are still spending, which is quite the opposite from what people would expect from a recession. He also warned that people should not take this information as the contraction of the current market as most of the businesses w doing "okay". 

He still sees companies making dividend increases and providing good earnings statements, which means the market is in a lot better shape than what the GDP number is saying. He also mentioned that "out of 7 wonders of the world, calculating GDP growth is the 8th", implying how complicated it is only to get the GDP number.

Central Banks are struggling to control inflation in a growing economy

 The global economy shows signs of growth and recovery, with some countries seeing record growth rates and falling unemployment. However, this positive economic news is bad news for central bankers, who are struggling to control inflation and prevent the economy from overheating. 

The article argues that in order to prevent economic instability and inflation, central bankers need to start focusing on other tools like fiscal policy. They risk triggering a recession or financial crisis if they continue to rely on traditional tools such as interest rate hikes. 

The economic growth being seen around the world is fragile and could be threatened by factors like rising debt levels, trade tensions, and geopolitical risks. Central bankers must remain vigilant and use a wide range of tools to ensure sustainable economic growth and stability. 

Bangladesh urges G-20 to force companies making profit from Ukraine war to compensate poor nations

On March 2nd, Bangladesh’s foreign minister said companies making “runaway profit” from the war in Ukraine should compensate affected, less developed nations. Bangladesh has been harshly affected by the Russian-Ukrainian war as they get most of their energy sources from these areas. The Ukrainian war has already had economic analysts concerned about the effects it could have on the global economy. Last year, a United Nations report highlighted the fallout from Ukraine’s war could dramatically worsen the economic outlook for developing countries already grappling with debt financing related to the Covid-19 pandemic. Countries like Bangladesh could use those profits that companies are making to fuel and boost their own economic systems. Energy and Defense companies are the two biggest industries gaining this runaway profit from the war, which are the industries that countries like Bangladesh are short on due to the war. As the war has continued on, not only has it been harder for these less developed countries to get resources, but when they do the price is astronomically higher, making it harder for these countries to obtain these resources for their citizens, further worsening the economic situation. “For many developing countries already at high risk of debt distress, the spillover effects of the war may further worsen debt vulnerabilities due to the increasing balance-of-payments and fiscal pressures,” the UN said. This war has been discussed in class frequently and the various economic damage it is doing to countries outside of Ukraine and Russia, it is important to note how now these companies have the power to aid countries like Bangladesh but are choosing not to so they can keep their profits from the war. Bangladesh has already received a $4.7 billion financial aid package from the International Monetary Fund in January to help cushion these effects and cushion the looming financial crisis to come to less developed countries.

https://www.cnbc.com/2023/03/02/bangladesh-foreign-minister-ukraine-war-fallout.html

Eurozone Inflation, and Pressure on Prices

 Consumer prices in European nations have been rising at an unprecedented rate. Throughout the beginning of 2023, consumer prices in the 20 countries that use the Euro as currency rose at an annual rate of 8.5 percent during the month of February. This was down only 0.1% from the consumer prices in January of 8.6%. Although these rates are still concerningly high, they are down significantly from the 10.6% consumer prices that we saw in the month of October of 2022. However, there is a significant imbalance in consumer price when food and energy are included. Inflation is also significantly high in many European countries at the moment. In the month of February, France reached an inflation rate of 7.2%, and in Spain, inflation grew at an annual rate of 6.1%. Germany, as Europe's largest economy, currently has a growing inflation rate of 9.3%. This could mean severe risk of a deep recession in European nations. This rise in inflation and consumer prices could likely be attributed to the war in Russia and Ukraine, who are notable exporters of energy and agriculture. In addition, some of the inflation pressures can be attributed to the governments pull back from policies like price controls and subsidies that blunted the impact of rising energy prices for individual households. When there is a lack of intervention with these kind of regulatory policies, we can see a direct impact in the rates of inflation, and the consumer prices across dozens of nations. 

https://www.nytimes.com/2023/03/02/business/economy/eurozone-inflation-february.html 

China sets modest growth target of 5%

 Article Link: https://www.reuters.com/world/china/chinas-economy-government-revamp-focus-parliament-set-open-2023-03-04/

Summary: 

Bejing is setting a modest growth rate of 5% for 2023 before the start of the annual session of its National People's Congress, which is expected to implement one of the biggest government shake up in a decade.

During 3 years of strict Covid Control, China was only able to have a 3% GDP growth rate. The need for economic stability and consumption expansion is emphasized. The Chinese government plans to create around 12 million urban jobs. Risks still remain in the real estate sector.

While having a higher GDP growth rate tends to be considered good, the Chinese government have thought otherwise: "setting a higher GDP growth target would require massive stimulus, which would worsen the structural imbalances that China is trying to solve.

The goal is to bring more low-income earners to the middle class not through stimulus packages (cash handouts) but more through more spending in infrastructure (fiscal policy).

China's spending on military is expected to go up by 7% this year, exceeding the growth rate of GDP. While the country maintains a peaceful stance with Taiwan, China remains opposed to the country's independence.

Mysterious Russian Oil Fleet

 

The western world tried to deprive Russia of profit from it’s oil exports, but Russia has found a way around that. They have a growing fleet that is continuing to transport oil. This is significant because the sanctions imposed by countries aren’t effective in cutting of or curbing Russian oil export. This means Russia has no reason to stop the war in Ukraine because they are still profiting. What’s even more concerning is that there isn’t much public knowledge about the tankers Russia is using for oil transport. This raises many safety and security concerns. 

Another impact of this Russian fleet, is that it has split the oil market into two, those that get their oil from Russia and those that don’t . This is significant since Russia is the second largest exporter of crude oil. Hence why gas prices increased as a result of the Russian invasion on Ukraine. 

https://www.cnn.com/2023/03/01/business/russia-oil-shadow-fleet/index.html?utm_term=1677718902022353b62d4264e&utm_source=cnn_Nightcap+-+03.01.2023&utm_medium=email&bt_ee=Hvh6rqT2U0nRbbHk%2FvSp1nsUqACxFPwFsvyBm9FELasnc3sFqflW%2B1YvcbA6r5cE&bt_ts=1677718902024

Stocks Drop, Send Wall Street to Its Worst Week of the Year

 Stocks are continuing to drop through February as reports are showing that everything is continuing to climb more than expected like spending by households, and inflation to the job market. With rates climbing it can be helpful because it drives down inflation but at the same time it can run the risk of a recession because these factors slow the economy. Cost for food, and energy has been reported almost 5% higher since January and is predicted to continue to rise even more. Shoppers are buying less expensive items overall and reports are saying that every month prices will continue to rise with the possibility of a recession. 

This is a shocking article to read because the general consensus is that the market is doing really well and we are finally getting back to prices before covid. In class on Friday we were just discussing how shipping container costs have finally gone down. 

https://www.usnews.com/news/business/articles/2023-02-24/asia-stocks-mixed-after-wall-st-breaks-losing-streak

Biden is Betting on Government Aid to Change Corporate Behavior

   The Biden administration plans on using around $40 billion in order to aid domestic production of semiconductors in Arizona. This policy is meant to turn manufacturing away from China and to begin beefing up our own manufacturing industry. This policy by the Biden administration will work in cohesion with the CHIPS act of 2022. This semiconductors are extremely valuable to the tech industry so not only will domestic production of semiconductors decrease our imports of semiconductors, the US will probably export many as well. So, obviously, a semiconductor factory would be a win-win. This policy is aimed to assist firms in bringing semiconductor manufacturing onto our own soil. However, it's not a free ride, the companies must still do their own part. The aid is just aid, meant to get companies onto their own feet. It's quite perfect timing since we just talked about industrial policy in class and on homework. This (as well as the CHIPS act) is a perfect example of how the US is using industrial policy today in order to aid the economy. Sure there could be tradeoffs for this government aid. In a perfect world, government intervention would just reduce efficiency. However, we don't live in a perfect world and industrial policies like these will help our economy stay strong especially in light of potential future conflicts.

Source: Biden Is Betting on Government Aid to Change Corporate Behavior    -New York Times

Treasury Secretary Janet Yellen Visits Ukraine in Show of U.S.'s Economic Support

 On Monday, February 27, U.S. Treasury Secretary and former Chairwomen of the Federal Reserve Janet Yellen made a surprise visit to Ukraine to show the United States' continued aid of the country shorty after the one-year anniversary of Russia's invasion. During her press conference, Yellen Announced a $9.9 billion civilian aid package for Ukraine as it enters the second year of war with Russia. Yellen also noted that sanctions continue to be critical in countering Russia's "military industrial complex", bust also acknowledged Russia's ability to purchase goods, such as microchips, through neutral countries have allow it to work around current U.S. and NATO sanctions. 

Many feel that the sanctions placed on Russia are not harsh enough, and that efforts spear headed by the U.S. to place price caps on Russian oil and fuel products are less effective than initially thought. Observers also identified that if the U.S. and NATO are going to sanction Russia, they must target those funding the war effort. "There are Russian companies, oligarchs, and organizations contributing to the Russian war effort that the U.S. hasn't sanctioned yet", according to Mykola Murskyj, director of government affairs at Razom for Ukraine. 

https://www.npr.org/2023/02/27/1159719607/janet-yellen-ukraine-us-aid

Chinese Arms Could Revive Russia's Failing War

With Russia's lack of success in its invasion of Ukraine, they are turning to other countries such as China to help aid them. The two have had strong relations with each other as Russia has supplied on average $2 billion worth of arms each year between 2001 and 2010, and $7 billion in 2017. 

Now Russia is relying on the support of China to aid them, as they have suffered significant losses of over 9,400 pieces of equipment including more than 1,500 tanks. Russia requested aid from China since the beginning of the war, but China has only sent non-lethal aid. It is believed that China could potentially step in and aid Russia with lethal arms such as attack drones and ammunition. 

If China decides to intervene, it could significantly impact the war and potentially prolong it. Additionally, this would significantly impact China's trade relations with many European countries and the United States. The European Union's Foreign-Policy Chief, Josep Borrell, has warned that providing lethal aid would cross a "red line". China's top diplomat Wang Yi, stated that China "will not provide arms to Russia." However, it is known that China regularly sends arms to countries at war. It will be interesting to see how China will proceed in the coming months as the war prolongs. 

Source: Chinese Arms Could Revive Russia's Failing War

U.S. falls to #25 in Annual Global Economic Freedom Index

 The annual global economic freedom index measures the economies of 184 nations around the world by looking at their current situation and policies during the measuring time. This measurement took place between July 1, 2021, to June 30, 2022. Once everything was measured it was released on March 1st that the U.S. ranks 25th on the list. This is a drop of 5 spots from the previous year and the lowest the country has been in twenty years. In terms of the U.S. overall economic freedom score, the one that put them at 25th, it is actually the lowest it has ever been since the start of the index at 70.6.

The main cause of this drop to 25th was due to what was "mounting deficit and debt burdens" according to the index itself. We can see this activity in our economy as interest is currently rising at record rates and many are still experiencing the financial negative effects of the pandemic even still today. These index numbers will most likely continue to drop as it is estimated that the U.S. will have around 19 trillion dollars in added debt over the next 10 years.

The overall average score of the index has decreased this year as well to 59.3 compared to the 60.0 it was last year. This score is the lowest average the index has ever had following the same trend as the U.S. which I'm sure has had a major part in this decrease. Singapore is currently first on the index being known as the current most economically free country in the world with Switzerland in second.

Article- https://www.msn.com/en-us/money/markets/were-no-25-us-slips-again-in-annual-global-economic-freedom-index-amid-mounting-deficit-and-debt-burdens/ar-AA185MCz

The U.S. Supreme Court Questions The Legality of Biden's Student-Loan Plan

The US Supreme Court has signaled its skepticism regarding the legality of President Biden's proposed student loan forgiveness plan. The court's conservative majority raised concerns about the plan during a recent hearing, suggesting that it may be an overreach of "executive emergency powers". Specifically, it potentially violates the Heros Act, which allows the secretary to waive debts in times of national emergency. The Biden administration is using the Heros Act to justify the student-loan program. The Biden administration has proposed forgiving up to $20,000 in federal student loan debt, arguing that it is necessary to provide relief to struggling borrowers due to COVID-19. The plan would cost $400 billion over a 30 year span. Additionally. the secretary of education found that a significant number of individuals would default on their student loans without relief. However, opponents of the plan argue that it is too large and Congress should be the one to decide on such matters. I think we all would love to have our student debt reduced, however there will always be drawbacks. Do you guys think the potential negative consequences outweigh the benefits of this program? 

Article: https://finance.yahoo.com/news/supreme-court-signals-skeptical-bidens-183600240.html

Ford Layoffs

An article that I found is about how Ford anticipates cutting jobs in order to have stronger production with electrical vehicles. This article states that, “intends to cut 3,800 jobs in Europe over the next three years to adopt a ‘leaner’ structure as it focuses on electric vehicle production.”. With this drastic change of layoff, these will happen in areas such as Germany, UK and other European countries that hold Ford production. Ford is trying to change their production systems because it was stated in the article that their fourth-quarter production was very low therefore they want to make a change to strengthen their production. Overall, this change in production and layoffs will impact Ford and the employees. Ford could have a great turnout with this system of layoffs and production or it could make them fall into another low production quarter. All in all, this is a big discussion that is happening in Ford that can impact a lot of people. 

Article:

https://www.cnbc.com/2023/02/14/ford-to-eliminate-3800-engineering-administration-jobs-in-europe.html 

Australia Recession Risk Rises as RBA Seen Hiking More Than Fed

     There is now a one in three chance that there will be a recession in Australia in the coming 12 months. The updated probability came after a jump in inflation that has pushed the Reserve Bank of Australia (RBA) to continue hiking rates for longer than expected. Traders in Australia are now pricing in four more interest rate hikes, while the Federal Reserve is expecting only three more hikes. In comparison to the Federal Reserve, RBA started its tightening two months after the Fed and moved less aggressively because it thought once the supply chain was fixed so would the economy. Not only did the RBA start two months later than the Fed, but they also downshifted to 25bps increases in October while the Fed was still increasing by 75bps. Another reason the RBA moved less aggressively is that the job market was so strong, and they didn't want to weaken the market, but now they need to start acting aggressively while the job market is becoming weak. 

    Problems could arise in the housing market as well in Australia. In the USA, most home buyers take out a 30-year mortgage to help protect them from changing interest rates. In Australia, most home buyers take out a variable rate mortgage which floats with the RBA rates. This could lead to issues with defaults and other problems, especially with unemployment on the rise. With the higher interest rates, people will be less likely to purchase new homes, further impacting the housing market. 

    Australia does have a slight economic impact on the rest of the world and could cause a ricochet effect of economic issues if they plunge into recession.

https://finance.yahoo.com/news/australia-recession-risk-rises-rba-180000084.html

Economic Uncertainty On Tap for the Week

A mix of economic reports this week is unlikely to provide any clarity on the strength of the economy, or the stickiness of inflation. Last week, Wall Street experienced its worst performance of the year as it became evident that inflation was persisting more than expected, which could result in the Federal Reserve keeping interest rates higher for longer. This week, a variety of economic reports will provide insight into the state of the economy, including reports on the housing market, manufacturing and services sectors, auto sales, and consumer confidence. The economy is currently experiencing uncertainty, with factors such as economic growth, job growth, and inflation fluctuating. However, the economy is holding up better than expected, especially the job market (adding up 517,000 jobs in January). The article also notes that pending home sales for January are expected to have a modest gain, but affordability challenges may persist, resulting in a less active spring season for homebuyers. The Institute of Supply Management’s manufacturing index is expected to show a slight contraction in January, and the services sector index is expected to show growth but slightly below the rate of December. Auto sales for February may show a dip but to around the 15 million annual level. The article concludes that the data from this week's reports may provide insight into the state of the economy and may materially alter the trend of continued interest rate hikes, slowing inflation, and a resilient labor market.

https://www.usnews.com/news/economy/articles/2023-02-27/uncertainty-over-inflation-and-economic-slowdown-likely-to-continue-this-week

Why are Koreans getting unhappier despite economic prosperity?

 Since the 1950s, South Korea has seen rapid economic growth. In 1953, the GDP per capita of South Korea was $67 and in 2021 it was just north of 35,168. However, despite this growth and continuing prosperity, many South Korean citizens have a rather grim outlook on the future. 

The article in The Korean Times offers a couple of interviews with very different types of people from South Korea. All of the interviewees describe feelings of anxiety and hopelessness. These somber feelings of the interviewed individuals are also reflected in data. South Korea scored a 5.9/10 on OECD life satisfaction scale is below the average 6.7/10.

The author of the article offers a few reasons why South Koreans are feeling grim about the future. One main concern is a lack of a social safety net. Many countries have strong institutions in place to take care of their elderly citizens post-retirement. Many Koreans citied the fact that the current safety net makes them skeptical about the idea of being able to take care of themselves and their families when they retire. 

Another concern of Korean citizens is intense competition and comparison with others. Several people have said that for too long, the country has prioritized economic growth. Many of the older citizens often measure their success only in economic terms, but this is likely due to the fact that growing up, they often experienced intense poverty. The prior generation was forced by circumstance to work long, hard hours and jobs. Many people today however, would like to live in a society with a better work-life balance. 

Many say they would like to see the country shift its policy focuses away from economic growth and more towards the support of the people. 

https://www.koreatimes.co.kr/www/biz/2023/02/488_345943.html

US Spending Surge

 US Spending Surge

US consumer spending rose in January due to an increase in wages and salaries. The increase of 1.8% was the highest since March 2021 and outperformed the predicted 1.3% increase. Spending was likely caused by seasonal fluctuations at the start of the year and a cost of living adjustment for more than 65 million Social Security beneficiaries, which increased income. Purchases of long-lasting manufactured goods, such as motor vehicles, household furnishings, and equipment, increased as well as spending on dining out and recreation. The personal consumption expenditures (PCE) price index rose by 0.6% in January, the largest increase since June 2022, and the PCE price index increased by 5.4% in the 12 months t. The Fed has raised its policy rate by 450 basis points since last March from near zero to a 4.5%. Financial markets are expecting another increase in June. Personal income increased by 0.6%, the majority of which is a result of strong wage growth. Consumers increased their savings while spending, as the saving rate increased to 4.7%, the highest in a year. The Fed is expected to deliver two additional rate increases of 25 basis points in March and May.

https://www.aljazeera.com/economy/2023/2/24/us-consumer-spending-surges-in-january-inflation-heats-up

Ukraine finds stepping up mobilization is not so easy

     Now that a year has passed since the invasion of Ukraine, the country is frantically looking for an increase in troops as they anticipate needed to mobilize more troops in the coming months.  This has been a tough task for the country as they move further away from legitimate means of drafting soldiers.  There have been several reports of people unable to participate in war being called to participate.  The example given in the article is a man with no hands who then shared his discontent on Facebook.  As the military became more desperate, they began stationing recruiters in city centers and malls to pressure more people into signing up for the draft.  However, as more people are called to war, more people are finding ways to avoid being on the frontlines.  Exemptions are made for married men with three or more children or single-parent homes, students can defer participation, and certain professions are able to avoid being deployed by working pro-bono towards military efforts in surveillance, intelligence, engineering, and similar fields.  Many have resorted to faking marriages with multiple children or paying a few thousand dollars to be smuggled across the border.  Several lawyers are working to support those who cannot be asked to participate in the military (such as the disabled), and other lawyers are working to protect the rights of those who were forced to sign up by intimidating and vigilant recruiters.

    Given the information above, we cannot expect the war in the Ukraine to end soon.  We also can expect more lives will be taken and conditions will worsen for the soldiers.  The military can expect backlash for their intimidation and illegitimate tactics for recruiting soldiers.  Europe will suffer further as the oil prices will remain high.  Ukraine has been asking for more resources for months now, and the pressure for NATO to send more artillery and ammunition will only grow.  This will continue to cause prices to rise across the globe, and unfortunately, we cannot expect an end in sight.

https://www.economist.com/europe/2023/02/26/ukraine-finds-stepping-up-mobilisation-is-not-so-easy 

How a Ukrainian dog food company survived and thrived during a year of war

     On the first anniversary of the Russian-Ukrainian war, journalist Patricia Cohen traveled to Lviv and Prylbychi to write a story for The New York Times on a positive externality that was caused by the war. This is the Ukrainian pet food company Kormotech, which not only survived the war but thrived.

    When the war first started, Kormotech shut down due to several factors. One was that they could not get the imports needed into the country and their exports out. The second was that many of their factory workers went to fight in the war, so they didn't have the workforce needed to maintain operations. There also was one of the biggest issues of all is that Kormotech's biggest export market was Belarus, which is a well-known ally of Putin.

    Despite these factors working against the company,  Kormotech was able to overcome the odds. Last year, the majority of Ukranie's small family-owned businesses like Kormotech had to shut down permanently due to the war. One of the biggest factors that aided them was that after the pandemic and the issues that arose in having to leave their factories and having no inventory as a backup so this time they were prepared. They had two months of inventory and they were able to sell this to countries such as the U.S. This gave them time to reorganize and prepare another facility to be used for production. They found a company that had never made pet products before and taught them what to do. Over time, they were able to get back to full capacity and were able to give over a thousand jobs to Ukrainian civilians who could not fight in the war as well as provide income and taxes when Ukraine needed them most.

    Throughout all of these hardships, Kormotech persevered and despite all of the hardship that Ukraine is experiencing right now, it felt good to find an article that showed how people were able to make it out of the dark that is the war and flourish in the harshest of conditions.

https://www.nytimes.com/2023/02/23/business/economy/ukraine-company-kormotech.html

The US economy may be inching closer to the cliff edge given these 4 troubling signs, Larry Summers says

    In this article, Larry Summers believes that the U.S. economy is close to entering a massive recession. He believes that the positive economic news that we have been receiving is misleading Americans into being too optimistic about the economic outlook for 2023. 

    He claims that our economy is way too tough to read and that there may be good news regarding a growth in stock prices or high consumption rate over the last month. He also mentions that inflation is a huge contributor to future issues and that the negatives outweigh the positives. 

    He notes that inventories relative to sales has increased and he also thinks companies are overstaffed while consumers seem to continue spending regardless of the massive price increases we have seen. Summers fears our economy can have a Wile E. Coyote moment where the economy is moving along and then all of a sudden, the economy crashes very sharply. 

    More rationale for Summers' pessimist approach comes from the efforts from central banks as the hike in rates has failed to bring inflation down as prices are continuing to surge at a ridiculously high rate. He thinks that if the U.S. gets aggressive with another hike, then we can see a Wile E. Coyote moment with the markets. He also thinks that if no interest rate hikes are made, then inflation will continue to outrun the speed of the economy. 

    I agree with Summers as I do think that our economy is in a lose-lose situation. The effect of all of the money we printed during covid has been huge as we as a nation are all over leveraged. We have a huge debt crisis and the continued irresponsibility of all actors in the economy has doomed us. The fact that the FED can have an unlimited budget is disturbing and has cost us today. Overall, I think that we will see a continued drop in the markets as inflation will continue to rise while consumers will eventually realize they cannot spend like they have.

LINK: https://markets.businessinsider.com/news/stocks/us-economy-outlook-troubling-signs-larry-summers-recession-2023-2

Ukraine prepares for the biggest reconstruction project since WWII

It has been exactly a year now since Russia initially invaded Ukraine, where they were met with destruction and violence. Ukraine's economy is in shambles due to the destruction of many buildings, homes, schools, and hospitals. 

In 2022, the World Bank estimated that Ukraine's GDP fell an enormous 35% and that the population share of income that is below the national poverty line would likely take a large hike to 60%. This is up 40% since the most recent data in 2021. With these numbers in mind, the World Bank had taken the initiative in 2022 to help finance Ukraine during their efforts in a war they did not want. The emergency fund was roughly $13 billion dollars and was paid through grants, guarantees, and linked parallel financing. For reference, parallel financing is where multiple banks finance the same project and expenditures. 

The International Monetary Fund (IMF) calculated that inflation in Ukraine ended at 26.6% in 2022. Given what we know about wars, it is very typical for inflation to sore during times of high government spending. Managing Director at IMF, Kristalina Georgieva, visited Ukraine last week and mentioned that she saw "an economy that is functioning, despite the tremendous challenges". She noticed that businesses were open and people were walking around; the economy was recovering slowly but surely. Georgieva restated her commitment towards Ukraine's war efforts and has streamed together $2.7 billion in emergency loans. At a G-20 meeting on Thursday of last week, the IMF is looking to move towards an even larger emergency fund of $10 billion in hopes to see a more "swift" recovery in Ukraine.

The United States is also committed to the recovery of Ukraine and has provided $76.8 billion in military and economic aid. Around $46.6 billion of it are grants, loans, and weapons and security assistance.  The United Kingdom has given $5.1 billion in emergency loans and the European Union gave $3.3 billion in loans. But how much loan help is too much? When should Ukraine stop accepting these contributions from other countries? This answer will come down to a political decision within Ukraine.

Overall, we can expect Ukraine to slowly start its journey to a full economic recovery but it will not be easy. Ukraine is in a condition in which they will accept all the help they can get, and surrounding countries are showing their working efforts through loans and grants. We can expect GDP to grow in Ukraine within this upcoming year along with a decrease in inflation from a large 26.6%. 

https://www.cnbc.com/2023/02/24/ukraine-prepares-for-the-biggest-reconstruction-since-world-war-ii.html 

Russian budget deficit rising, but Moscow won't drain the war chest anytime soon.

Source: https://www.cnbc.com/2023/02/15/ukraine-economists-say-moscow-and-putin-wont-drain-war-chest-any-time-soon.html

 Russian fiscal deficit has hit a record 1.8 trillion rubles ($24.4 million) in January of 2023, with spending growing by 58% compared to the previous year, amidst revenues falling by more than a third. 

All of this comes amidst World Bank, IMF and OECD reports stating that the Russian GDP dropped by at least 2.2%, and at most 3.9% in 2022, with further contractions expected in 2023. Industrial production and retail sales in December fell to their worst year-on-year contractions since the pandemic, with retail consumption falling by 10.5%, and industrial production dropping by 4.3% on a year-on-year basis. 

The Russian finance ministry and central banks, however, state this all of this is within their models, and that several unique circumstances and accounting technicalities could explain the scale of the January deficit, according the Chris Weafer, CEO of a Macro Advisory based in Moscow.

The drops in tax revenue were accounted for by changes in the tax regime since the beginning of January, according to the Russian finance ministry, which stated that the previous bi-monthly tax system for companies has been changed to a single, consolidated payment plan once a month, on the 28th. The finance ministry then went on to suggest that a large portion of January tax payments had not yet been accounted for by January 31, and will instead be reflected later, in February or March.

Another point that was highlighted was the fact that a change in Russian oil tax maneuvers that came into force in January needs some kinks ironed out, and that due to the nature of Russian public spending, most of it is heavily concentrated at the very end of a year, increasing the fiscal deficit. 

Some other factors that may have distorted the deficit figure would be the fact that this was the first report since the Russian crude oil embargoes, which went into force on December 5, which led to Russia buying up tankers and gaining access to more ships in their fleet to re-route the seaborne export trade overnight, after Europe stopped purchasing Ural crude, which also caused a fall in the Ural crude pride, averaging a measly $46.8 per barrel from mid-December to mid-January, according to the Russian finance ministry. Pre-payment from the public sector to the military industrial complex for the war in Ukraine also contributed to the deficit.

However, as of now, with Ural crude prices rising back up to $50 a barrel, and the ramping up of Russian sales of Chinese yuan as energy revenues decline, which is expected to amount to roughly 160.2 billion rubles' worth of FX between Feb 7 and Mar 6, Russia seems to have "plenty left in the tank", according to Christopher Granville, MD of global political research at TS Lombard, and that the Kremlin would not let its yuan reserves to be fully exhausted before  it resorts to other methods of fund procurements. 

Several reports suggest that Moscow is set to invest in another wave of yuan and other "friendly" currency reserves, in the event of acceptable oil and gas revenues, and that it has plans to issue debt domestically, allowing banks to buy government debt. 

The unique nature of the Russian economy, in which a substantial portion of its GDP is generated by state-owned enterprises, allows Russian domestic life and war effort appear to be relatively unaffected by sanctions, at least at face value. The private sector, however, faces fat greater volatility, as seen by the woes of the Russian automotive production sector. The Russian economy is not set to collapse under the weight of sanctions, as some may suggest.

These sanctions, however, are going to lead to diminished technology access, and according to Demarais, author of a book on the global impact of U.S. sanctions, the most significant long-term damage to the Russian economy will stem from its exclusion from the international technology sharing sphere, as it faces further ostracization from the international community, leading to a large gap between western and Russian technological capabilities in the coming years.

AI Reshaping the Economy

    The increasing development of AI has provided many implications for every corner of the economy. AI is changing the game across a wave of different industries, from retail to transportation. Some of the most prominent industries effected by this include farming, manufacturing, financial services, retail, and transportation. 

    The most intriguing technology in my eyes is the transformation of the farming industry. With technologies that collect and analyze data used to improve the health of crops and increasing yields will improve productivity and profitability within the market. Not to mention the ease of which AI products can analyze the data. 

    Another advancement falls within the retail industry. As the article mentions, a third of retail jobs are projected to be displaced by 2030. With automated tills, warehouse robotics, and AI-based planning tools affecting companies already in the UK. We have already seen retail jobs decrease with the onset of the Covid-19 pandemic and the use of self-checkout technologies, but analysts believe there is more to come. The checkout free store has already been tested with Amazon Fresh and we might soon see this technology across many stores worldwide. 

    As ChatGPT takes over the market, AI technologies are something everyone needs to invest knowledge in because it will soon take over many industries. With both positive and negative effects on our economy, the world is changing very fast. 

https://www.theguardian.com/technology/2023/feb/18/from-retail-to-transport-how-ai-is-changing-every-corner-of-the-economy

Consumer debt hits record $16.9 trillion as delinquencies also rise

Article: https://www.cnbc.com/2023/02/16/consumer-debt-hits-record-16point9-trillion-as-delinquencies-rise-as-well.html

Consumer debt reached an all-time high of $16.9 trillion at the end of 2022, a 1.3 trillion dollar increase from 2021. Delinquency rates were also seen to be rising for many loan categories, according to the NY Federal Reserve.

Mortgage originations for new home loans and refinancings fell to $498 billion, a drop of $145 billion from Q3 of 2021, and an almost 50% drop from Q4 of 2021. Despite this, however, mortgage balances rose to $11.9 trillion, an almost $250 billion increase from Q3 of 2021, and an almost $1 trillion increase from a year ago. 

Mortgages that are considered to be in serious delinquency (delinquency of 90 days or more) rose to a rate of 0.57%, nearly double compared to the rates at the same time last year. Automotive loan debt delinquencies rose by 0.6% to reach 2.2%, and credit card debt rose to 4%, a 0.8% increase. Student loan debt also increased for this month, after staying at a constant rate throughout most of the pandemic, with student loan balances hitting $1.6 trillion in Q4 of 2022. 

This news comes in the wake of rising inflation and climbing interest rates, even as employment level remain robust, with the Federal Reserve following an aggressive rate-hiking campaign to combat 41-year high inflation rates, with the Federal Reserve increasing target rates seven times during 2022. 

This increase in consumer debt arrives during this ongoing Federal government borrowing situation, with US Government debt standing at $31.5 trillion, up from 29.6 trillion at the end of 2022, according to data from the Treasury Department.

With eye on Russia, Greece and Bulgaria expand gas deal

    Since the country I picked for my final term project is Greece, I decided to focus my newsletter on big news coming out of the country. In an effort to reduce ties and reliance on Russian supplies, Greece completed a deal Bulgaria to use their gas storage facilities in trade for their own gasoline supply. This deal was made four months after the two countries connected a natural gas pipeline, allowing for easy distribution between the countries. This will also eventually be made available to the other Baltic countries, reducing the regions reliance on the natural gas powerhouse of Russia. 

    Russia cut their deliveries of gas to Bulgaria two months after the country invaded Ukraine, and Greece has also been buying less gas from Russia since they invaded Ukraine. Many Baltic countries have done this, so by Bulgaria and Greece starting to grow their own distribution greatly helps the region. The EU and America support this project as well, because of the negative impact it would have to Russia's income and influence in the area. The Baltic region has historically relied on other for help or because they were under the USSR empire. This new move by Greece and Bulgaria decreases the dependency on other countries and will bring valuable income to the region.

https://apnews.com/article/europe-greece-bulgaria-athens-business-4e5636c5b850393440df6b61086c80a8

Dollar bounces back as US economy defies doubters

The US dollar has gained 3% against a basket of other currencies since the start of February as economic data suggests that the US economy remains strong, as the US dollar has recovered from a 10-month low as investors increase their projections for US interest rates after seeing signs of stubborn inflation and strong economic activity. This comes after the currency had fallen more than 11% since October. Investors have raised their forecasts for US interest rates after seeing signs of stubborn inflation and strong economic activity. The US economy added more than half a million jobs in January, and inflation fell to 6.4%, a smaller decrease than expected. While some investors doubt the dollar's rally has much longer to run, the currency is expected to continue to rise this quarter. This increase in the dollar is due to a flurry of economic data that suggested the US economy is still healthy.

https://www.ft.com/content/8f94ecfc-a2f9-4f24-aabf-d700cee981fb

Consumer Debt and Delinquencies rise

 Consumer debt increased across all categories to a total of $16.9 trillion, which is $1.3 trillion greater than a year ago.  Mortgage balances alone increased by $1 trillion from last year despite the drop off in originations.  The mortgage loans in "serious delinquency" almost doubled from a year ago.  While auto loan delinquencies increased by 0.6 percent and credit card delinquencies rose by 0.8 percent, to a total of 4 percent.  According to an economic research advisor for the New York Fed, credit card balances are growing more heavily than mortgages and auto loans, which reflects the pre-pandemic levels.  Although low unemployment rates usually mean a strong financial situation for consumers the high prices and interest rates have been making it difficult for people to repay their debts.

PPI Increases (impact on inflation)

    The producer price index rose 0.7% in January which is slightly higher than the predicted 0.4%. This means that the prices suppliers charge firms for raw materials went up by 0.7%. If production costs increase, this will eventually be reflected in the prices firms charge consumers. The CPI (prices consumers pay for goods) also increased by 0.5%. . Both of these numbers are higher than predicted. One explanation the article gives for the in crease of these economic indicators is that it’s a relatively warm winter which leads to high energy costs which affects production and consumer spending. These increases indicate that inflation is still a problem in our economy. This is significant because the Fed is still trying to combat inflation. The Fed is still expected to continue to increase interest rates in the following month. 

https://www.cnbc.com/2023/02/16/producer-price-index-january-2023-.html

Inflation Persists

 Despite the Federal Reserve's unyielding attempts to slow inflation down by increasing interest rates, inflation still remains unusually high. Inflation was +6.4% in January, which is a decrease of .1% from December but inflation is still around 3 times as high as what it was before the pandemic hit. The issue is as simple as this: the economy won't cool off. The job markets are still booming with extremely low unemployment rates and the economy just keeps growing. The purpose of the Fed increasing the interest rates is to cool off the economy, slowing it down so that inflation will settle. Prices continue to rise at a rate we haven't seen since the 90's and inflation is to blame. We can only anticipate that the Fed will continue their harsh attempts to raise interest rates in order to get a hold on inflation in the near future.

Source: https://www.nytimes.com/2023/02/14/business/economy/january-cpi-inflation-report.html