Oil Prices Stabilize After Omicron- Driven Friday Selloff; Crude's recent volatility has been sparked by worries that Covid-19 travel restrictions will weaken the global economy

    Oil prices stabilized on Monday, clawing back some of their losses after a new variant of the coronavirus fueled crude's worst trading session since April 2020. Oil fell 13 percent on Friday (Nov 26) but is still up about 45 percent for the year, ending the day at $69.95 a barrel. Crude's recent volatility marks the latest big swing in energy markets sparked by worries that Covid-19 travel restrictions will weaken the global economy and sap demand for fuel. In the past 20 months, oil has frequently fallen sharply when new variants and travel restrictions emerge, only to later rebound when demand picks up and large producers instill confidence in their supply curtailments. Some analysts expect a similar pattern to play out after scientists detected the new, fast-spreading Omicron variant. While new travel restrictions could dent the recent recovery in fuel demand, some traders now expect the Organization of the Petroleum Exporting Countries and allies to delay projected supply increases. 

    Brent crude, the global benchmark of oil prices, added 1% to $73.44 a barrel on Monday (Nov 29). Both U.S. crude and Brent are roughly 15 percent below multiyear highs that they hit in October, potentially offering some relief to consumers and businesses who are facing some of the highest costs for fuel and other products in years entering the winter. Worries about high inflation prompted the U.S. and other countries to recently tap strategic reserves to increase crude supply, though many analysts doubt the inventory releases will meaningfully affect prices. Many analysts expect the path of the global demand recovery and the response by producers to continue swinging prices. Investors will be monitoring the latest travel restrictions caused by the Omicron variant and holiday fuel demand in the coming weeks. 

        

Link: Oil Prices Stabilize After Omicron-Driven Friday Selloff; Crude's recent volatility has been sparked by worries that Covid-19 travel restrictions will weaken the global economy - The Wall Street Journal - ProQuest

December’s Jobs Numbers Might Be an Early Christmas Present for the Economy

 December’s Jobs Numbers Might Be an Early Christmas Present for the Economy

https://www.usnews.com/news/economy/articles/2021-12-02/decembers-jobs-numbers-might-be-an-early-christmas-present-for-the-economy 

The Labor Department posted today the number of jobs created in November. It is predicted that it will be a high number to continue the job growth seen in October. Currently there is a tight market for labor, and many people are leaving their jobs because they are confident that they will find a new one. In the current market there are too many jobs and not enough workers to fill them. Since the economy and job market is growing, the employees have more control than they had in the past. Although the economy and job market is not yet back to where it was before the pandemic, the Fed is moving forward with plans to withdraw their economic support. The economy is strengthening and the GDP is expected to increase by 5%.  The job market though is likely to remain tight throughout 2022. 

Muddled November US Job Report

Recently, the jobs report for the month of November has been released and gives a muddled but hopeful picture for the future of the economy. After many worries of labor market disruptions plaguing the U.S. supply chain, there appears to still be justified fears of this issue as the jobs added in the month missed expectations by almost half. Expected jobs added was 500,000 while in reality, only 210,000 jobs were added. This has also been somewhat disappointing as economists were hopeful that a strong Black Friday and e-commerce sale would pull the economy upwards. However, it has not come to fruition entirely. However, there are still hopeful signs that the economy is making progress to fully recover from the pandemic. Firstly, many industries that were badly affected by COVID-19 continue to grow back in hopes of achieving productivity levels seen before 2020. Industries include hospitality, travel, airlines, and retailers. Job growth for these respective sectors have continued to rise moderately which suggests that the economy is still expanding in certain areas even as other sectors overheat or begin to slow down. Another sign of recovery is the increase in women returning to work after the sudden transition of schooling to online classes at the outset of the pandemic. Especially with a fragile economic situation during 2020, it made it even harder for women to find work that could align with their family life. In the short term, I think this job report shows that there may be more turbulence to be expected as the economy begins to slow down. Coupled with the current supply chain issues, inflationary pressure has begun to creep in and has already increased the prices of everyday goods. But I am hopeful for the future as the U.S. slowly recovers from this hiccup in growth and continues to ride the wave of this historic recovery. Credit: https://thehill.com/policy/finance/economy/584297-five-things-to-know-about-the-november-jobs-report  

Biden: Fact-checking claims about US economic progress

Disclaimer: This blog should not be interpreted in any political way. It does not represent anyone’s political view on Biden’s presidency, but rather a comparative evaluation for his performance in the economy using data from reliable sources.

1.     Biden: “we're experiencing the strongest economic recovery in the world”.

Indeed, there has been much good news about economic recovery on the news lately. Strong retail sales, falling unemployment, the near-record stock market (until the Omicron News broke), growth rate at pre-pandemic level, etc. However, data shows that a large part of the recovery happened under former president Donald Trump.

2.     Biden: “Our economy has created a record 5.6 million jobs since I became president”.

The US Bureau of Statistics shows that the US economy added 5,583,000 jobs since the inauguration of President Biden. Indeed, this is the highest number of jobs created in the first 10 months of any presidency since records began in 1939. But taking into account of the low base point of jobs during the pandemic, the number is not all that impressive. Controlling for the 22 million jobs lost during the pandemic, only around 3 million new jobs are created during the first 10 months of Biden’s presidency.

3.     Biden: “Wages are rising”

Data shows that workers' wages are up to 4.9% this October compared with the same time last year. One reason could be the recent spike in the shortage of workers in the United States. But inflation has also been rising, which means that the cost of living is going up. The Labor Bureau of Statistics estimated that wages actually decreased 1.2 % after controlling for inflation.

All GDP, unemployment, inflation are essential macroeconomic indicators, and all of them discredits President Biden’s claim about the "historic progress" that the U.S. had made on the economy in the last 10 months. Therefore, it is reasonable to conclude that the economic recovery has been progressing, but just not as impressive as what the current administration claims to be. 

Credit: https://www.bbc.com/news/59402975

Omicron Keeps World Jittery as More Information Drips Out

 As we discussed briefly in class today, there is still a significant amount of new information emerging regarding the omicron variant of COIVD. It is not well known if this variant is stronger than the others, or if it has weakened. This article discusses how the news of the arrival of the new strain of the infection has sprouted new "jitters" for the world. It states that the delta variant is the dominant strain and how it has continued to unsettle nations, especially those located in Europe. Many countries are still dealing with large infection surges and hospitalizations and are considering mandatory vaccinations.

As mentioned before, there is much still unknown about omicron including how contagious it is and whether it can evade vaccines. Nonetheless, governments have rushed to impose restrictions they had hoped they wouldn't have to use again. The first known cases were seen in West Africa and the Gulf region and there are already further reports in Japan by a man who came from Peru via Qatar. The article discusses how the United States is working toward requiring that all air travelers to the country be tested for COVID within a day before boarding their flight while those who are fully vaccinated may present a test taken within three days of boarding. There are still significant concerns regarding the delta variant and any new variant of COVID including the new omicron strain. I wonder how much longer global economies can continue to survive with the supply chain crisis, decreased tourism income, and many other forms of income revenue.

https://www.usnews.com/news/business/articles/2021-12-01/japan-suspends-new-reservations-on-all-incoming-flights

Biden’s Attempt to Lower Gas Prices

As we all know, gas is extremely expensive right now. President Biden realizes what this is doing to American consumers and has finally put his foot forward to help. 

Biden authorized the release of 50 million barrels of oil from the Strategic Petroleum Reserve. Biden also said that he released the reserve at the same time as leaders in Japan, South Korea, India and the United Kingdom, which would also release their own reserves. 

This effort will have no effect on gas prices overnight, but eventually will affect the rising prices. 

Biden later said that the release from the reserve was intended to relieve high prices in the short term. However, a strategy to transition to other fuel sources would be more effective in the long term.

U.S. Energy Secretary Jennifer Granholm said the White House hopes to see gas prices drop down to pre-pandemic levels. 

Article : https://www.houmatoday.com/story/business/2021/11/27/president-joe-biden-opens-strategic-petroleum-reserve-oil-gas-prices/8764402002/

U.S. Job Growth Rebounded in October

 

The unemployment rate fell to 4.6%, as the U.S. added 531,000 jobs in October. In the past two months, job growth was stronger than anticipated. In September the unemployment rate was 4.8%, and in October there was a 0.2% drop in unemployment. According to the report, the labor market and economy is recovering after the contagious delta variant of the COVID-19. Strong demand from consumers are rapidly increasing wages, and employers are desperate to hire to meet the strong demand. Employers are also offering more flexible hours and bonuses to attract employees. Households are spending their savings, which has been boosted by federal stimulus and extra unemployment benefits. All these benefits are attracting people back into the labor force. As employers are entering to holiday shopping season, they need to hire more employees to meet the needs of the consumers. As a result, higher demand may lead to higher prices and higher wages could lead to higher inflation, and if firms raise their prices, The Federal Bank has approved plans this week to buy back its bond due to inflationary concerns.

 

 

https://www.wsj.com/articles/october-jobs-report-unemployment-rate-2021-11636061282?mod=hp_lead_pos1

Afghanistan's economic crash since the Taliban takeover

 Since the Talibans takeover of Afghanistan in mid-August, the economy has seen a major crash. The Afghanistan economy has been said to all but collapsed at this point and has led to a bigger problem being a humanitarian crisis. Before there was aid from other countries that essentially propped up the economy, but now that money has vanished, and state assets are frozen along with economic sanctions have isolated the economy from global banking. This has led to a cash shortage that is leading to the demise of many businesses and banks. This has also led to prices sky rocketing leading to the bigger problem being the humanitarian crisis that it is triggering. A report from the WHO warned around 3.2 million children would likely suffer from malnutrition in Afghanistan. To add to it, 1 million of the 3.2 are even predicted to die as temperatures drop. Countries such as the United States have provided aid, but to the near borders in other countries. It will be interesting to see how the new leadership in the Taliban look to deal with both of these problems, if they deal with them at all. The biggest issue is first the humanitarian crisis, but if they don't fix the economic system the system may never be able to be the same and the humanitarian crisis might just continue to get worse. 

Afghanistan's economic crash

The Fight Over the Hybrid Future of Work

 https://www.economist.com/the-world-ahead/2021/11/08/the-fight-over-the-hybrid-future-of-work

With the lockdowns from the Covid-19 pandemic, it lead to a change in the way the world went through their everyday life. Almost everything went virtual in the blink of an eye. In the spring of 2020, about 60% of total working hours were conducted from peoples living rooms, kitchens, and home offices. It was an experiment that has never been done before. 

Employers found that workers reported higher levels of satisfaction and happiness when they were able to work from home. Surveys suggest that workers would like to work from home 50% of the time compared to a 5% of the time before the pandemic. 

Managers done seem as happy about remote working. Firms expect that 15% of the work is to be done from home which is half of what workers would actually like. This is because of the perception that workers are more productive in the office and it creates a better company culture.

The answer to this is a 'hybrid' approach. Research suggests that a mixture of home and office can actually create the highest efficiency and productivity. Firms have many incentives to offer hybrid work especially fighting to retain talent (human capital). The shift to hybrid work will now require a different set of skills for workers/managers. It will be essential that workers/managers are able to communicate well using digital tools.

There are already signs of hybrid paying off. Surveys by Gallup found that employee engagement is near an all-time high. Further changes will also be made in 2022 to encourage employees to come into the office more by creating a better working environment and perks such as fitness centers and better food. Overall this will create a better environment for workers.

Hope for Afghanastan

 Under the latest economic summit that took place in Turkmenistan, several Asian countries have vowed to provide economic assistance and relief Afghanistan. Some of these countries include Iran, Pakistan, and Turkey, which plan to help prevent the economic and social collapse of Afghanistan. These nations, which are all primarily Islamic, have the citizens in mind, which have struggles since the Taliban took over earlier this year. By providing relief in the form of aid, investment, and other resources, these countries plan to bring badly needed physical and social infrastructure, which would in turn spike foreign direct investment. 

The pressure on Afghanistan to accept these aid efforts and attempt to form a legitimate state is heavy. Given fashion in which the US pulled out of Afghanistan, it is highly unlikely that the US would provide centralized aid in any fashion. Along with this, other western nations have the memory of a terrorizing Taliban fresh in their mind, so a united global outreach is very unlikely. 

Source: https://news.yahoo.com/asian-leaders-economic-summit-vow-185744122.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAClRtJ-r4HRKBE9Y1GThAiFb98NbFn9ltjo0nbOj5rD5JwZF7dfvrxqeSX5BsAhBGWhRe_e7V5_FvP8f9Vg1ra7dDPGRSbh0ymqwEDz_yYvmbtjT7uvPdOj_WOyo__yOABrP_TohydzlCleO6dF1BYbsM2lsJlFx6m2YR2xI-dDx

Taiwan sends jets after 27 Chinese planes enter buffer zone

 Over the past couple of months, there has been an ongoing conflict of sorts between China and Taiwan which has been partly field by the United States. About two months ago the United States president Joe Biden said that the United States would come to Taiwan's aid if China were to attack it and while this may have seemed like a fever dream, the war between these two countries might be closer than once thought. 

Today Taiwan reported that twenty-seven Chinese planes have entered Taiwan's "buffer zone" which is just the latest in a series of Chinese incursions as part of China's pressure on the self-ruled island. Taiwan warned China about entering the buffer zone but was only met with 27 planes that entered the southern part of the island. These twenty-seven planes were a part of a series of events ordered by Chinese president Xi Jinping to "Support and strengthen the armed forces",  this also serves as a warning as China has democratic control over the island and will use force if necessary to remind them that they are as such. China  "refuses to recognize the island’s government "  and will continue to do so as long as Taiwan exists. While it only seemed like a dream, this is real and war between these two countries is more realistic and closer than one would think.