Bank of America CEO Confident in Rates Remaining the Same

    Bank of America CEO, Brian Moynihan, sat down with an interview with CNBC recently. During the interview he was asked about the current status of rate expectations for the near future. He announced that since the start of the year Bank of America members have spent much more throughout the first 40 days of the new year than in 2024.  For comparison, retail spending is up 6% than it was at the same time last year. Moynihan says that this increase is realistically caused by inflation. He claims that there is not more being bought, but instead everything is just more expensive. 

    During the month of January the Fed decided to keep the borrowing rate unchanged at a range of 4.25%-4.5%. The Bureau of Labor Statistics also came out and reported hotter-than-expected growth in the consumer price index; in line with the results that Bank of America are finding at the beginning of the year. Due to this "hotter-than-expected growth" in the CPI the markets are forced to recalibrate all rate expectations.  Recently back in September the Fed began to reduce rates for the first time since the pandemic in 2020, but the central bank is currently limited with how much it can reduce due to stubborn inflation.

    Moynihan concluded by stating that due to the rates being restrictive, there has not been enough progress made with inflation to cut the rates. The Bank of America analysts project the same with no rate reductions along with no increases all due to the elevated inflation that we are all experiencing.

https://www.cnbc.com/2025/02/12/bank-of-america-ceo-brian-moynihan-inflation-federal-reserve-rates.html 

Joann Fabrics to Close 500 Stores: The Latest Victim of the Retail Apocalypse

Joann Fabrics, the well known fabric and crafts retailer that began in Hudson, Ohio, is set to close approximately 500 of its stores in 49 states as part of its ongoing Chapter 11 bankruptcy proceedings. This decision came after the company filed for bankruptcy for the second time in less than a year, stating challenges such as sluggish consumer demand and inventory shortages. The closures will impact thousands of employees, including over 600 at corporate headquarters and additional fulfillment center jobs. 

Going-out-of-business sales are expected to begin on Saturday and may last for several months. While gift cards will still be accepted for in-store purchases, they will not be valid for online shopping. The Ohio-based company, which operates more than 800 stores, declared bankruptcy in March 2024 while reporting over $1 billion in debt. In court documents, Joann blamed higher costs from shipping overseas products and waning consumer demand. The closures are part of a broader restructuring effort aimed at maximizing the business's value as it seeks potential buyers amid rising operational costs and increased competition from larger retailers.

Joann's financial troubles have been clear in its stock performance. After going public in March 2021 at $12 per share, the company's stock steadily declined to below $1 by early 2024. Following its first bankruptcy filing, Joann was delisted from NASDAQ and briefly traded over-the-counter before emerging as a private company in August 2024. However, this restructuring proved insufficient, leading to the current second bankruptcy and massive store closure plan.

Joann now joins a growing list of struggling retailers forced to close locations or file for bankruptcy given changing consumer habits and economic pressures. Companies like Big Lots, Express, Party City, Macy's, JCPenney and Walgreens are also closing hundreds of stores this year as the retail industry faces experiences challenges from inflation, high operating costs, and declining discretionary spending. Over 15,000 stores are expected to close in 2025, more than double last year's total, marking what some call the "retail apocalypse".

Read the article here: Joann moves to close 500 of its stores across the US amid bankruptcy

South Korea's top think tank lowers economic growth projection, citing Trump's tariffs

    The Korea Development Institute (KDI) has revised South Korea's 2025 economic growth forecast downward to 1.6%, a 0.4 percentage point decrease from previous estimates. This adjustment is primarily due to the negative impact of increased U.S. tariffs under President Donald Trump, which have heightened trade uncertainties, especially in key export sectors like steel, aluminum, and semiconductors. Domestic factors, including slowing consumer spending and political instability following the impeachment of President Yoon Suk Yeol, have further contributed to the economic downturn. The political crisis has weakened domestic demand and increased external risks, prompting considerations for negotiations and international collaboration to mitigate these challenges.

https://apnews.com/article/south-korea-economy-growth-trump-trade-tariffs-4eef3c90e8ce98a9d7fb5fbfaa3405fb

Japan's trade deficit for digital service rose to record ¥6.6 trillion in 2024

    In 2024, Japan's digital trade deficit soared to a record ¥6.65 trillion, more than tripling since 2014. This deficit encompasses international transactions in digital-related services, including payments for music and video distribution, cloud computing services, and online advertising fees. The surge is attributed to the dominance of global IT giants like Microsoft and Google, leading to faster growth in imports compared to exports in Japan's digital sector. Despite an overall current account surplus of ¥29.26 trillion, bolstered by higher dividends and interest from abroad, the substantial digital trade deficit highlights challenges in Japan's digital economy.

https://www.japantimes.co.jp/business/2025/02/11/economy/japan-digital-trade-deficit/#:~:text=Japan's%20digital%20trade%20deficit%20hit,began%2C%20a%20government%20report%20shows.

Pig Butchering, Read Because It's Not What You Think

    Pig butchering, which is Chinese criminal slang, accounts for over 500 billion dollars stolen a year from victims all around the world. The name is derived from the process itself as the scammers build a sty (scamming center), pick the pig (find a target), raise the pig (gain trust), cut the pig (get their money), and finally butcher the pig (take every last drop of money). This is a fast growing industry that is only going to get more complex with the use of AI. In Singapore, scams have become the most common felony, while Cambodia and Myanmar employ nearly 250,000 scammer alone. Some estimates have the worldwide total of workers in the industry at 1.5 million. 

    Online scamming is being compared to the illegal drug industry, only that its scope is much larger and its operators are much harder to track down. People from all walks of life are possible victims as scammers prey on anyone who has wealth, is lonely, or innocent. Unlike narco states, scam states are much harder to deal with as corruption runs rampant. In many cases, profits from the scam states are used to buy protection from politicians and officials. Forming underground gig economies, scam groups are illusive and often unidentifiable. 

    As the United States and China continue to be in a constant state of disagreement about everything, including the modern era space race that is artificial intelligence. However, this seems like a better time than any to link forces to fight this war. Deep-fakes, voice impersonation and much more are just the tip of the iceberg when it comes to the future of the internet. China has taken some efforts to curb the problem, but they cannot achieve the end goal alone. The United States has an aging population that is subject to scams just like this, so they need no more incentives to set aside their differences, and move together towards a common good. 

https://www.economist.com/leaders/2025/02/06/the-vast-and-sophisticated-global-enterprise-that-is-scam-inc

Outrage after JD Vance claims judges are not allowed to check executive power

Outrage after JD Vance claims judges are not allowed to check executive power

Link: https://www.theguardian.com/us-news/2025/feb/10/jd-vance-judges-trump

Though this article is not inherently economic, I think it poses an interesting question in regard to rule of law which relates to some of our in-class analysis of the United States markets. 

Within this article, the Vice President of the United States JD Vance attempts to analogize judges telling generals how to conduct their armies in tactical strategy to that of judge’s checking executive power. While it is true that the President has the power to issue executive orders, it is also true that judges have the power to check them and strike them down if considered unconstitutional. For our purposes, we only need to turn to article III of the Constitution and if that doesn’t satisfy we have a nation’s history worth of lawful precedent.

This attempt to dismantle the court’s legitimacy in a time where things are already uncertain with a flurry of decisions flying out every day, is certainly just a political jab, but has far greater consequences. The courts and the rule of law derive their power from their legitimacy. Without it, there is truly no power. This is why countries with no rule of law score so low on human development indexes and companies choose to not operate here. Rule of law applies to everyone including the government. 

Additionally, yes it is true that court’s are not immune to folly or human error and thus it is the responsibility of the people to hold them accountable. However, this is not the case. A judge cannot simply strike anything they please down. What they’re doing is using the law and the safeguards/systems in place to ensure that orders comply with laws. 

Furthermore, like most people, Trump has gone out of his way to applaud the Court’s when they rule in his favor. The rule of law is not an institution one can pick and choose. I think the dismantling of Court legitimacy will have serious consequences in terms of the nation’s health and economy.

The Current State of the U.S. Economy

 With news organizations incentivized to create the most inflammatory headlines possible, it is hard to tell what the actual state of the U.S. economy is. GDP grew at a 2.3% annual rate in the fourth quarter of last year (adjusted for inflation). We have experience low unemployment and consistent wage growth. All of these things considered, it is safe to say that currently the economy is in a pretty decent state. However, with mass deportation policies and ever increasing tariffs on the horizon, we can not guarantee the economy will continue to grow at this steady pace. 

Automakers say Trump tariffs on Canada and Mexico will cause U.S. car prices to rise.

 

President Trump's proposed tariffs on imports from Canada and Mexico could impact the U.S. automotive industry. If tariffs are imposed, the cost of cars imported from these countries would rise, which could lead to higher prices for consumers. Automakers may pass these additional costs onto buyers, increasing vehicle prices. The pause on the 25% tariffs from Canada and Mexico has provided a temporary relief, but the uncertainty of a prolonged period of such tariffs is weighing heavily on auto manufacturers, including Ford. Jim Farley, the CEO of Ford, highlighted the potential negative consequences in his earnings call, indicating that while the company could handle a few weeks of tariffs, anything longer could lead to serious financial repercussions. In addition, Nolan's statement points to the significant and potentially unforeseen consequences of the tariffs, especially when considering the Mexican economy’s heavy dependence on the U.S. for automobile exports. If these tariffs lead to a collapse of the Mexican auto industry, it could trigger mass unemployment and a surge in illegal immigration, particularly in regions close to the U.S. border where many manufacturing jobs are concentrated. Therefore, the situation brings up the complexity of balancing trade policies, domestic manufacturing, and consumer affordability in the auto industry.

https://www.cbsnews.com/news/trump-tariffs-canada-mexico-car-prices-automakers-ford/

China's tariffs on $14bn worth of US goods take effect

    China has imposed retaliatory tariffs on $14 billion of U.S. products in response to U.S. President Donald Trump's move to impose an additional 10% on Chinese goods. The escalation heightens the trade war between the world's two biggest economies. Experts think China may be more ready for this resumption of trade hostilities than it was during Trump's first term. In other news, Trump is looking to drastically reduce the Pentagon's budget with the help of Elon Musk, amidst fears of possible conflicts of interest. Narendra Modi's party has won back control of Delhi's local government after almost three decades, emboldening Modi ahead of a meeting with Trump. Japanese government bonds have seen a record sell-off as interest rates and inflation rise. Italy's corporate world has been rocked by a high-profile AI voice scam. JPMorgan Chase and Evercore have replaced Morgan Stanley as Goldman Sachs' top competitors in dealmaking advisory. Moreover, China's urban villages are set to be transformed into high-tech clusters to spur economic growth. 

https://www.ft.com/content/f5b39ea3-7663-4354-93bd-cb4569d17389

U.S. economy added just 143,000 jobs in January but unemployment rate fell to 4%

    The U.S. economy added 143,000 jobs in January, falling short of expectations (169,000) and marking a slowdown from December’s revised 307,000 gain. Despite weaker job growth, the unemployment rate ticked down to 4%, with labor force participation rising slightly to 62.6%. Job gains were led by health care (44,000), retail (34,000), and government (32,000), while mining-related industries lost 8,000 jobs. The BLS also made significant benchmark revisions, lowering total job growth for the 12 months through March 2024 by 589,000. However, household survey adjustments showed 2.23 million more people at work due to population and immigration changes.

    Wages outpaced expectations, with average hourly earnings rising 0.5% for the month and 4.1% year-over-year (above forecasts of 0.3% and 3.7%). Markets remained steady, with investors skeptical that this report would push the Federal Reserve toward early rate cuts. While some expected California wildfires to impact hiring, the BLS found no significant effect. Economists are now watching how these trends might influence future Fed decisions.

Jobs report January 2025:

Flatlining industry spooks German politicians as elections loom

     As Germany approaches its 2025 national election, the country faces significant economic hurdles. After two years of mild recession, the projected GDP growth is a mere 0.3%. The industrial sector, especially manufacturing, is underperforming, with production levels below pre-pandemic figures. Chancellor Olaf Scholz's initiatives, including substantial investments in decarbonization projects like the Salzgitter steelworks, have encountered obstacles such as high energy costs and competition from nations like China and India. The upcoming election campaign offers the option between the current SPD-Green government, which favors higher public expenditure and more relaxed fiscal discipline, and the CDU, under the leadership of Friedrich Merz, which favors tax reductions, lowered state expenditure, and firm commitment to the "debt brake." Economists are doubtful about both plans, referring to excessively optimistic assumptions and budget deficits, along with structural challenges of demographic pressures and administrative inefficiencies. The political discourse reflects a tension between preserving Germany's traditional industrial strengths and embracing necessary modernization to remain globally competitive.

https://www.thetimes.com/world/europe/article/german-politicians-business-leaders-election-2025-0gs703mdm

The world isn’t close to breaking free from coal — in some countries, demand for it is surging

 Lately there has been drive to incentivize using more cleaner energy sources. In the year of 2025, coal has taken more action across the globe than it has in years. Coal has been a rising export from US mainly due to the demand in Asia. President Donald Trump believes coal is not going anywhere anytime soon. He says “nothing can destroy coal, not the weather or a bomb.” China has been having weather problems and hydro power just isn’t reliable enough. Which is why China is the top coal consumer for energy security. India is another top consumer of coal because of steel and cement production. What does all this mean for our air pollution? Coal is abundant and cheap, but what is to say about our environment? Or is the economy more important?

https://www.cnbc.com/2025/02/10/world-coal-demand-remains-at-record-high-as-power-demand-surges.html

United Kingdom Claims Inevitable Impact from U.S. Tariffs

     The Bank of England's Governor, Andrew Bailey, recently spoke about the impact that the tariffs will have on the United Kingdom's economy. He said that even if President Trump does not directly order tariffs to be placed on the trades between the United States and the United Kingdom there is no possible way for the English economy to avoid impacts from the tariffs. Bailey stated that the tariffs that will be placed on China, Mexico, and Canada will impact the rest of the world. This would likely result in fragmentation of the global economy which would negatively impact growth everywhere and would mainly impact inflation and trade relations.

    Even though no tariffs have been announced yet between the United Kingdom and the United States, there have been warnings of them in the foreseeable future. According to the Department of Business and Trade, the United Kingdom's largest trade partner is the United States. 17% of the United Kingdom's total trade is with the United States, so if the Trump administration were to put tariffs onto the UK it would most definitely impact both economies heavily.

    One of the main reasons that Trump would put tariffs onto the United Kingdom is because one of the goals that Trump has set for his term is to increase the amount of exports out of the States along with bringing production back to America. Currently, it is about even the amount of exports and imports that are exchanged between the two trade partners. Ever since the warnings of the potential tariffs the Bank of England reduced their growth expectation for the calendar year from 1.5% to 0.75%. Recently, the United Kingdoms GDP reading showed them flatlining during the third quarter with no growth to be shown for. 

https://www.cnbc.com/2025/02/06/bank-of-england-andrew-bailey-says-uk-cant-avoid-us-tariff-impact.html 

Republican Dispute Over Spending Levels is Holding Up Trump's Legislative Agenda

 

President Trump’s legislative agenda has run into an obstacle as congressional Republicans are split on spending levels. In the crossfire of this disagreement is a legislative package that includes tax cuts, energy policy, health care, and border security funds. GOP leaders in the House have proposed cutting several hundred billion dollars over the next 10 years, but this has been opposed by some hardline conservatives who want over $2 trillion in cuts. It will be interesting to see how the Trump administration goes about achieving its goal of lowering taxes and cutting spending. So far, it has been unclear how the administration plans to make up for the revenue lost from tax cuts, as well as where spending will be cut from the budget, as the GOP is looking to increase military and border security funding.

https://www.cnbc.com/2025/02/06/trump-tax-cuts-republican-house-senate-split.html

Trump Says He Spoke with Putin About Ending the War in Ukraine

    U.S. President Donald Trump revealed that he has spoken by phone with Russian President Vladimir Putin regarding efforts to end the war in Ukraine. This marks the first known direct conversation between Putin and a U.S. president since early 2022. Trump, who has repeatedly claimed he could bring the war to a conclusion, did not disclose the specifics of his discussions with Putin or how many times they have spoken. He described the war as a "bloodbath" and expressed a strong desire to stop the ongoing violence, but he has yet to publicly outline a concrete plan for achieving peace.

    The White House did not comment on Trump’s claims, while Kremlin spokesman Dmitry Peskov responded cautiously, stating that multiple channels of communication exist and that he could neither confirm nor deny the reports. Russian sources have indicated that preparations for a potential peace summit are already at an "advanced stage," with Saudi Arabia and the United Arab Emirates being considered as possible venues for such talks.

    Putin’s position on ending the war remains firm. He has demanded that Ukraine abandon its NATO aspirations and withdraw from four regions that Russia claims as its own. While he is reportedly open to discussions with Trump, he has ruled out making any major territorial concessions. Trump, known for his negotiation tactics as outlined in The Art of the Deal, has stated that he would meet with Putin to discuss a resolution but has not specified when or where such a meeting might take place.

    Additionally, Trump has indicated that he plans to meet with Ukrainian President Volodymyr Zelensky next week to discuss ending the conflict. Zelensky, in a separate statement, suggested that Ukraine could supply the U.S. with rare earth minerals in exchange for continued financial and military support. Trump reiterated his belief that he has a clear strategy for ending the war but refused to disclose further details, simply stating, "I hope it’s fast. Every day people are dying. This war is so bad in Ukraine. I want to end this damn thing."

    The situation continues to evolve, with speculation growing over whether Trump’s reported talks with Putin and a potential peace summit could lead to a breakthrough in the conflict. Meanwhile, Ukraine and its Western allies remain committed to resisting Russian aggression, with no immediate signs of compromise on key issues such as territorial control and NATO membership.

Link: https://www.reuters.com/world/trump-says-he-has-spoken-putin-about-ending-war-ukraine-new-york-post-reports-2025-02-09/

The Mission 300 Energy Summit

The Energy summit convened in Dar es Salaam, Tanzania on January 27-28, 2025. Where leaders of the African continent gathered to improve the future of their countries. The Mission 300 initiative focuses on mobilizing global partnerships to address Africa's energy challenges. The goal is to provide access to affordable and clean energy for 300 million people across the continent. It seeks to accelerate Africa's energy transition through investment, collaboration, and innovative solutions. The initiative also encourages partnerships between governments, financial institutions, and the private sector to drive sustainable energy development across the region.

The Mission 300 Energy Summit emphasized the power of global partnerships in advancing Africa’s energy transformation. A key highlight was a panel session that secured over $5 billion in new pledges. Discussions focused on co-financing opportunities and the role of international partners in accelerating the energy transition. The summit played a crucial role in fostering collaboration for Africa’s energy future.

After hearing Professor Kaboub highlight the potential that the global south specifically the African continent has at the Economic Outlook conference, I felt it was necessary to write about it. It was very rewarding to read about the summit that happened in my home country, especially after the questions and doubts that the audience had.

https://www.afdb.org/en/mission-300-africa-energy-summit