How inflation has been disproportionately hurting women

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

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

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

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

Growth of the US in the last quarter

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

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

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

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

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

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

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

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

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

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

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

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

The case for an environmentalism that builds

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

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

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

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



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

Denouncing the Dollar

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

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

  

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

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

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

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

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

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

Oil prices surge after OPEC+ producers announce surprise cuts

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

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

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

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

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