French Prosecutors Raid Paris Big Banks In Tax Fraud Sweep

    If you thought the current unrest in France couldn't get worse, well, it has! Five French banks have been raided by authorities with the suspicion that they participated in a tax fraud scheme. The banks that were named were Societe Generale, BNP Parabis, HSBC's Paris office, Natixis, and BNP's Exane unit. More than 150 investigators were on the scene at the headquarters' and searched for evidence that the banks were in a "with-with trading" scheme in which suspects are accused of misappropriating hundreds of millions of euros by bilking the payment of French dividend taxes. 

    Investigators said that this case was opened up for investigation in 2021 and they were focused on looking at tax fraud and money laundering that ocurred in the form of dividend payouts. The strategy involved shareholders transferring stocks for a short period of time to investors abroad to avoid paying taxes on the dividends. Sometimes shareholders were able to get a tax refund. Investors then sold the shares back to the original owner, and both parties pocketed the savings. The rumored amount that was being laundered out was 1B euros and the French government wants to take that money back.

    German investigators from Cologne were also helping out the French and we can only suspect that these foreign parties may have been Germans. In the past there have been similar money laundering schemes made by bankers out of Germany. Past scams have defrauded citizens of billions of euros. Overall, this has occurred in many countries and it is not limited to France and Germany. 

    The timing of this conflict cannot be in any worse for the French as the citizens are already in riots and protests after Macron's draconian rule has seen the lives of millions of French people be a lot more miserable. The French are really upset right now about the retirement age rising from 62 to 64 which has gained a lot of resentment globally. These bank frauds have hurt the European economy too as we are entering a recession that sees the cost of living rise, and GDP slowing down. To add to this, we have seen 2 huge banks fall recently in SVB and Credit Suisse. I am curious to see how this all plays out and I wonder what else will break public news in the U.S. economy.

    

Link: https://www.foxnews.com/world/france-prosecutors-raid-paris-big-banks-tax-fraud-sweep

Germany at a standstill as huge strike halts planes and trains

Link to the article: https://www.reuters.com/world/europe/largest-strike-decades-leaves-germany-standstill-2023-03-27/

The 24-hour warning strike called by the Verdi union and railway and transport union EVG is the biggest one since 1992, bringing ground and air transportation to a halt on Monday, causing major disruption for millions of people.

This was followed by a 3-day wage talk as Verdi and the EVG union demanded double-digit wage increases (10.5% and 12% respectively). The action was believed to be the aftermath of higher prices, caused by Germany's being heavily dependent on Russia for its gas. 

According to the Airport Transportation ADV, around 380,000 passengers were affected by the flight suspension including those at two of German biggest airports in Frankfurt and Munich. Rail services were also cancelled by railway operator Deutsche Bahn.

While employers warned that higher wages could, in turn, lead to higher fares, the EVG chairman also warned that there would be further strikes in the future. 

Spring break is an economic nightmare for the hottest host cities

 College students are creating problems for cities and coastal towns that are dependent on tourism. 2.6 million Americans are expected to fly each day in March and April. Tourist towns dread these arrivals. This year, after 2 deadly shootings in Miami, the Mayor called for an emergency midnight curfew and no sales of takeaway liquor after 6 pm in Miami. The problem is that Spring Breakers are spending no money. They go to the cheapest accommodations and eat as cheap as possible to save money for booze. 

With these Spring Breakers comes some other non-college partiers (townies, as OWU likes to call it) who commit the most serious crimes in these parties. Over half of the people arrested in last year's Miami spring break were locals of Miami-Dade County. Although Miami would like to just boot the college kids, they cannot set limits because it is unfair to the businesses like bars and hotels and people who own Airbnbs. 

Although most of Florida would rather not have spring breakers, it is not like this everywhere. South Padre Island in Texas actually spent over $15,000 this year on college campuses to get students to travel there and spend their parents' money on spring break. 

https://www.economist.com/united-states/2023/03/23/spring-break-is-an-economic-nightmare-for-the-hottest-host-cities

Cuban Economy

Cuban Economy

Between 1989 and 1994, Cuba's trade with the Soviet Union fell by 89%, which led to a lack of domestic production and increased government control over the economy. The Cuban economy is still undiversified and relies heavily on commodities such as tobacco, sugar, and healthcare services. However, tourism is also a significant source of revenue, and the COVID-19 pandemic has hit the industry hard, causing a significant decline in foreign currency inflows. To deal with the loss of international reserves, the government was forced to unify Cuba's dual exchange rate system and devalue the Cuban peso, causing inflation and a scarcity of goods. This, along with the pandemic, led to social unrest and protests in 2021. The government introduced a second exchange rate for personal transactions in 2022, which eased import price pressures and decreased the demand for dollars. Cuba has also faced climate change-related shocks, including a lightning strike that caused a nationwide blackout and a hurricane that damaged infrastructure and agriculture. The government has attempted to expand private sector activity to boost output and relieve goods shortages. However, many Cubans are still leaving the country, with a record 220,000 caught at the US-Mexico border in 2022. The government is expected to maintain its policies while gradually opening up the economy in the future.

https://www.aljazeera.com/economy/2023/3/24/cubas-new-parliament-will-face-a-familiar-economic-hangover

China’s debt-heavy local governments look for new ways to raise cash

link: https://www.cnbc.com/2023/03/27/chinas-local-governments-finding-new-ways-to-raise-money-amid-debt-concerns.html

According to S&P Global Ratings analysts, Chinese Local governments' direct debt exceeding 120% of their revenue in 2022, a value greater than the unofficial debt level set by Chinese Authorities. The analysts further said that “The country’s provinces and municipalities have relied heavily on expanded bond issuance to carry them through a COVID-triggered economic slowdown and collapsed land-sale revenues.” 

IMF data paints a similar story, showing that China's explicit local government debt almost doubled over the last five years to 35.34 trillion yuan ($5.14 trillion), without including other categories of debt such as "local government financing vehicles (LGFVs), which allowed regional governments to tap into bank loans to complete infrastructure projects, which are also rapidly growing. This phenomenon may have been brought about by the real estate slump in China, along with the Covid-19 pandemic, which cut into local government revenue. 

The response from Beijing to this worrying growth in local government debt came in the form of an entire section in the annual work report dedicated to preventing and defusing major risks in real estate and local government debt, stating that "We (the government) should… prevent a build-up of new debts while working to reducing existing ones." This, coupled with the conservative 5% growth target set forth by Beijing may signal a shift in focus from high growth to tackling financial risk and hidden debt in local governments, an assumption further validated by recent key speeches from the Chinese president, Xi Jinping, calling on officials to address systemic risks in the Chinese economic system, along with tackling corruption at all levels of the government. The country's health spending increased by almost 18% in 2022, with revenue from land sales dropping by 23.3%, and all land is state-owned in the PRC.

Local governments will most likely turn to three channels to boost revenue, with them being taxes, asset sales, and transfers of funds from the central government. We can already see this phenomenon, with central government asset transfers increasing by 17.1% in 2021, with an additional 3.6% (10.06 trillion yuan) pm the way, according to the Chinese Ministry of Finance. Transfers to local governments accounted for about 60% of the increase in central government fiscal deficits, the S&P analysts said. 

A few local governments have resorted to other means of raising funds, by means of selling quotas for China's rapidly expanding bike-sharing industry for more than 45 million yuan in Zhangjiajie city, and 189 million yuan in Shijiazhuang.

Are We About to Feel the Economic Pain Powell Warned Would Be Coming?

     In August, while the Fed was hiking up interest rates to help combat the wildly high inflation, Jerome Powell said that these moves by the Fed would lead to some future pain. No one knew when this pain would hit the economy, but people are starting to suspect now is the time. Sine the Fed had to yet again raise the interest rates up .25 to around 4.75%-5%, banks are failing doe to bad business moves and customer mistrust, and less spending as a whole in the economy, there is much economic pain to go around.

    The Feds goal is to get the rate of inflation back down to 2%, which is a very plausible target. The problem is with the struggling banks creating more unrest in the economy. Predictions for the end of the year inflation rate have it being a little over 5%, which granted isn't much higher than where it is now but is a step in the wrong direction. Powell notes that less interest rate increases will be needed until the banking crisis is fixed because that problem will lead to the rate hike. 

    The big question for all of these things happening is if we are now entering a recession? Powell gives the politically correct answer of we will see. He was hoping for a soft landing from the economy by slowly bring the rates and economic actions back to normal, but one the economy gets close something like the banking crisis happens. He says it's too early to tell if the economy can still use a soft landing, but he isn't giving up hope. The possibility of a recession is definitely higher because of what has happened recently, but like Powell I have confidence that the economy will land on our feet eventually. 

https://www.morningstar.com/articles/1145583/are-we-about-to-feel-the-economic-pain-powell-warned-would-be-coming

Tiktok lobbying

With Tiktok coming under fire in the capital, the company has started to ramp up its lobbying efforts. They have hired over 20 influencers to come to the capital to persuade lawmakers to be in favor of supporting Tiktok and that it is safe and not selling information to China. At the same time the chief executive in being questioned in Congress on the safety of the app.  Their argument is that the app is safe and is also a job for many Americans. There are currently 150 million American users and many of them us the app for either an income or a way of connecting with other. It is more than just a dance app in their opinion but a tool for a generation. The question that arises for me is what will be the next app to take over Tiktok. It won't be on top forever and what happens when that app is not American made. Will they also try to regulate it as well? It will be interesting to see how this hearing turns out and the impact it has on current and future social media apps.

https://www.nytimes.com/2023/03/23/style/tiktok-stars-capitol-hill.html

Amazon Union Gets Favorable Finding on Warehouse Access for Organizing

    In recent history, Amazon has barred the use of work sites for off-duty workers. They had made a rule that no employee was allowed to remain on the work site beyond 15 minutes within their shifts. This posed an issue for the Amazon Labor Union. The Amazon Labor Union claimed that this rule interfered with their rights to reach out to coworkers about their own labor union, whether it be supporting their own union or to consider joining another. Amazon argued that the rule wasn't meant to directly affect the activities of the labor union. They meant for the rule to be an act towards security and employee safety. However, recently the National Labor Relations Board has found this rule put forth by Amazon to be illegal as it infringes upon Amazon workers' union rights.

    I believe it was a podcast we had listened to about markets a few months ago that had talked about how markets seem to weed out these seemingly unstoppable companies. Perhaps we're starting to see this in action. I don't think actions like these will bring down Amazon, however I do think that things are like this are going to put a stop to the idea that Amazon is untouchable. I remember during the pandemic everyone was so afraid of Amazon because that's what everyone relied on. Things like this along with their layoffs as of late just go to show that companies can't be truly all powerful in a market economy. Sure Amazon was the ultimate powerhouse for a while, when everyone is stuck at home and can't leave without a mask of course they're going to order stuff online. Amazon had a boom and now I believe we're starting to see it settle.

 

Source:  https://www.nytimes.com/2023/03/23/business/economy/amazon-labor-union-nlrb.html

Payroll Rose More Than Expected In February.

Despite the FED's efforts to bring down inflation and slow the economy, nonfarm payrolls rose by 311,000 for the month.  This is larger than the expected 225,000, with leisure and hospitality having the largest gain of the sectors.  Although it is a drop from the previous month, the unemployment market is still hot.  The unemployment rate rose to 3.6 from the expected 3.4, partially due to the increase in labor force participation.  The labor force participation is now at 62.5 percent which is the highest it has been since March 2020.  

There was also some good news on the inflation side, as average hourly earnings increased 4.6 percent from last year, below the estimate of 4.8 percent.  The monthly increase was also 0.2 percent lower than expected.

John Lynch, the chief investment officer at Comerica Wealth Management, said that easing of the wage pressure is the best news to come out of this report.  He also said "A drop in the largest costs for businesses is a welcome development. Nonetheless, 50 basis points is still on the table for the March policy meeting, given recent economic strength and dependent on next week's report.

UK inflation rises to 10.4% as food prices soar

 Across the world, and specifically in the UK. Consumer prices have jumped 10.4% as a result of the largest food inflation in over 45 years. Cost of living is also increasing at a rapid rate. Food prices have risen 18.2% in February as a result of severe shortages and rationing. There is also a severe rate of inflation in the UK at 11.1%. In addition, interest rates are rising to 4.25%, and continue to increase. But why is this occurring? This can be attributed to Brexit related labor shortages, trade barriers, high energy costs, and poor weather conditions in nations such as Spain and Morocco. This is a real world example of how prices can be such a significant signal for all of the other factors that are going wrong in the economy at the moment. As Britain now stands on its own, away from the EU, it is more difficult to resolve fluctuations in the market without the assistance from other nations within the EU. Inflation rises, prices increase, and shortages continue as continuous struggle to gain access to the proper resources and energy that they need in order to decrease prices nationally. 

https://www.cnn.com/2023/03/22/economy/inflation-uk-surprise-rise-february 

United States Workforce Fluctuation

An article that I found talks about how in the United States many workers are changing their jobs in order to have wage increases to be better off financially. A quote from the article states, “ roughly one-in-five workers say they are very or somewhat likely to look for a new job in the next six months, but only about a third of these workers think it would be easy to find one”. With the large amount of people seeking new jobs and higher wages it results in less job opportunities that are available at a higher level. Because of this there is a broken structure that could result from having too many higher positions and not enough supporting positions in companies. From the gender standpoint there are more women looking to quit their jobs than men. This will cause even more fluctuation in the gender pay gap and the way women are seen in the workforce. Overall, this article pinpoints many different aspects of why people are planning to quit their jobs more and the impact that it will have on the economy and workforces as a whole. 

Article: 

https://www.pewresearch.org/social-trends/2022/07/28/majority-of-u-s-workers-changing-jobs-are-seeing-real-wage-gains/ 

IMF chief warns global financial stability at risk from banking turmoil

The International Monetary Fund's (IMF) Managing Director, Kristalina Georgieva, warned that turbulence in the banking sector poses a risk to the global economy's financial stability. Rising interest rates have led to stress in leading economies, including among lenders, putting pressure on debts. She also highlighted the war in Ukraine and scarring from the COVID-19 pandemic as factors that could suffocate growth. The IMF chief predicts that the world economy will expand by just 3% this year and this warning comes as the European Central Bank (ECB) also expressed concerns over the impact of recent banking turmoil on business and growth.

The outlook for the UK, after Brexit, presents a challenging trade-off between low growth and high inflation, putting central bankers in a tricky position when it comes to increasing interest rates. Richard Hughes, the Chair of the UK's Office for Budget Responsibility, said Brexit would cause economic scars even deeper than the pandemic. As economic stress increases in the UK, EU, and the US, so-called shadow banks, could expose cracks in the financial system. Regulators in Switzerland continue to grapple with the fallout from the collapse of Credit Suisse, and public pressure has mounted on regulators after the vast package of support for the bank before its emergency merger with fellow Swiss bank UBS.



https://www.theguardian.com/business/2023/mar/26/imf-chief-kristalina-georgieva-global-economy-at-risk-turmoil-banking-financial-stability

Shrinking savings and rising debt leave consumers on shaky financial footing

 U.S. households have been winding down their savings and adding to their debts. This has put many households in a weaker position than the start of the year. Many have feared that the economy has slowed down and just recently those fears were brought back into the spotlight after Silicon Valley Bank was taken over by regulators just last week. The events have been compared to the 2008 financial crisis as this has been the largest US bank failure since 2008. This will likely cause banks to tighten up on lending which will put strain on consumers which will trickle down to people spending less and saving more. This will cause a decline in sales for firms. Those surveyed by Bloomberg put the odds of a recession happening at 60%. Many factors play into this percentage like inflation has hit its highest levels in decades, this has been able to be masked because consumers have been mostly able to keep up with spending.

This month has been an eye opening time for the U.S. After Silicon Bank was taken over many began to realize that the chances of a recession is more possible than what was thought. When labor markets start to show signs of cooling that will be a signal that household incomes have weakened.

https://www.nbcnews.com/politics/economics/shrinking-savings-rising-debt-leave-consumers-shaky-financial-footing-rcna75389

After Credit Suisse's Demise, Attention Turns to Deutsche Bank

Over the past few weeks, we have seen significant struggles from various investment banks, such as Silicon Valley Bank and Credit Suisse. After the recent struggles in America and Switzerland, attention is now turning to the German lender, Deutsche Bank. 

Disbelief has been on the minds of many euro-zone investors as banking turmoil is shifting toward European investment banks. The president of the European Central Bank, Christine Lagarde, has recently made comments ensuring that European banks were safe and had enough liquidity to withstand current market uncertainty. 

Recent market conditions have not benefited the German bank as investors have started selling the bank's stock at high rates, resulting in a decline of 14% in value. Additionally, the Euro Stoxx 600 has declined by 5%. The biggest difference between Credit Suisse and Deutsche was the insurance on deposits. Credit Suisse had no insurance on almost all deposits, resulting in a "lightning-fast" bank run. In comparison, Deutsche bank has insurance on roughly 70% of retail deposits. This is beneficial as the bank has access to highly liquid assets if needed. 

A big concern for Deutsche Bank comes from its significantly high holdings of commercial property. Currently, they own nearly $17 billion in assets, making them one of the most exposed banks in Europe. The bank has a lot of factors to consider moving forward. European banker, Corrado Passera, describes current market attitudes as "uncertainty that produces overreactions to weak signals". It will be very interesting to see how Deutsche Bank will move forward in an effort to not become another "Credit Suisse".

Source: After Credit Suisse's Demise, Attention Turns to Deutsche Bank

Concerns over Global Banking System decrease Treasury Yields

    Over the past month, U.S. treasury yields have been continuing to fall as the FED continues to worry many investors about the state of the U.S. economy and banking system. While this is a major issue in the U.S. it also has been effecting the rest of the world as places like the Deutsche Bank in Germany have been experiencing a reduction in its shares as well due to the same banking system concerns. The impact of these reduced treasury yields has caused prices in economies to fluctuate as they go hand in hand or in other words, are directly correlated with each other. To put it in perspective one basis point of a treasury yield is equal to a 0.01 percent change in prices of the yields and 10 year yields lowered 5 points and 2 year ones lowered 3 points. These are pretty substantial drops in hindsight even though they sound somewhat minimal at only a couple of a hundredth percents.

    Europeans don't seem to be as concerned about the issue as they believe to have a very liquid and strong economy that can correct the issues if need be by liquidating. The U.S. on the other hand is directly confronting the FED as they have been holding meetings about how to correct this yield problem. In their most recent meeting on 3/22/2023 they raised interest rates 25 basis points. While this could have an overall negative impact on the economy it is currently the best possible solution according to the FED. Hopefully, these basis point changes across the economy will slow down and the economy will be able to fully level out soon.

Article - https://www.msn.com/en-us/money/markets/treasury-yields-decline-as-investors-assess-economic-outlook-fed-policy-path/ar-AA191aum

Unexpected Decline in the Producer Price Index

    The PPI saw a 0.1% decrease for the month, which was unexpected, as compared to the 0.3% predicted increase in the Index. The PPI is simply an aggregate of all of the goods and services and the relative change in prices from the consumer's perspective. So, with the current pricing environment, it was quite a surprise that the PPI decreased. The article theorized that the cause of this drop is due to the 36% decrease in the price of eggs and chicken products. If this is the case, I am curious as to why the cost of poultry dropped so drastically 

    As a result, retail sales dropped by 0.4 percent. Some of that decrease is explained by the PPI drop but not all of it. There could be other factors involved like people saving more money because of the current economic fears due to pricing and banking issues. 

    This could signal a shift in the economy from the high pricing environment to decreasing inflation rates down the road. But, this might be too great of an assumption to make simply based on a slight decrease in the PPI. It was most likely a one-off due to extenuating circumstances.

   Regardless of the PPI shift, the FED will most likely be increasing interest rates this go around due to the silicon valley banking crisis. The banking crisis in silicon valley has caused much concern and is of higher importance than the PPI shift when weighing these events to determine the new interest rates.

 https://www.cnbc.com/2023/03/15/ppi-february-2023-.html

The Effects of a Year Long Fight to Curb Inflation

It’s been a year since the Fed began Open Market Operations to deal with high inflation. Through contractionary monetary policy, the  Fed has gotten inflation to decrease by 2.5% from 8.5% to 6%. This shows progress, but also indicates that inflation is still a problem because it’s still well above the target of 2%. It’s expected that the Fed will continue raising interest rates in an effort to continue curbing inflation. 

I wonder how the Fed’s response will change as a result of the SVB crisis. Will they still continue to increase interest rates, even though this is one of the main reasons the bank collapsed to begin with? Since inflation is still an issue, I think the Fed will just increase interest rates in smaller increments. The Fed should make sure that the hikes don’t cause prices to fall extremely low because that will affect the value of stocks and cause another panic in which people begin to sell and withdraw their money from the banks. I think that restoring consumer confidence will be beneficial in dealing with the aftermath of this banking crisis because that'll help along with whatever monetary policy the Fed decides to enact.

https://www.cnbc.com/2023/03/16/one-year-after-the-first-rate-hike-the-fed-stands-at-policy-crossroads.html

Russia and China working together - what could this mean for the global economy?

    This week, journalist Holly Ellyat wrote an article for CNBC entitled Nothing comes for free: What China hopes to gain in return for helping Russia. In this article, Ellyat discussed the meeting that is currently taking place between China's President  Xi Jinping and Russian president Vladimir Putin. 

    President Xi traveled to Moscow to President Putin this week. The two leaders are expected to come to some sort of agreement by the end of the week in terms of if they will work together moving forward. If they do create an alliance, that could send shockwaves throughout a multitude of global economies. 

    One of the most impactful ways would be in the war that Russia has begun against Ukraine. Currently, Russia is beginning to experience the economic repercussions of these actions and it is reported that the Russian government hopes to receive support in the form of military and economic assistance. 

    If this agreement does go through then China extend its dependency on Russia by receiving energy at a cheaper price. There is also the pressing issue that China may request Russia's help in the future with over-throwing Taiwan, which China does not recognize as a county. This similarity in this situation to what happened in Ukraine has many global leaders watching how the events of this meeting unfold with a watchful eye. 

https://www.cnbc.com/2023/03/21/what-does-china-want-from-russia-if-it-helps-it-with-ukraine.html

Mortgage Rates Fall as Uncertainty over Bank Failures Mounts

 In wake of several recent bank failures, mortgage rates have dropped this past week. However, continued uncertainty will likely dishearten many potential homebuyers and keep housing prices high. The current 30-year fixed-rate mortgage averaged 6.60% this past week, up 2.44% from one year ago. Rates had slowly begun to increase again since February, that is until the collapse of several banks over the past week, which has caused investors to place their bond in treasury bonds, generating lower yields, which mortgage rates have followed. Investors' recent turn to treasury bonds has led to a decline in its yields from 4% at the beginning of last week to 3.4% this week., which directly aligns with the drop in mortgage rates. While the Fed does not set rates that borrowers pay on mortgages directly, these rates act in accordance with yield on 10-year treasury bonds, which adjust in anticipation of the Fed's actions. 

    This slight drop in mortgage rates has caused some prospective homebuyers to act fast, leading to an increase in mortgage applications for the second week in a row. "Both home-purchase and refinance activity saw gains last week but remain below year-ago levels," said Bob Broeksmit, CEO of the Mortgage Bankers Association. "Anticipated further rate declines may spur additional application gains as the spring home buying season begins." A similar situation to what is currently transpiring happened back in December of 2022 and January of 2023, where lower mortgage rates spurred those quick on their feet to act fast and lock in lower mortgage rates. However, for a majority of prospective homebuyers, ongoing economic uncertainty stifles many from moving forward in the home buying process. 

https://www.cnn.com/2023/03/16/homes/mortgage-rates-march-16/index.html

The Fed Announces Its New Payment System "FedNow"

The Federal Reserve has recently announced the much-anticipated FedNow payment system is scheduled to launch July 2023. FedNow is a real-time payment and settlement service developed by the Federal Reserve System. It is designed to enable instant fund transfers between banks across the United States, operating continuously year-round.

Features of FedNow:

• Instant Payments: Probably the most significant advantage of the FedNow is the ability to process transactions in real-time. The system allows funds to be transferred between banks instantly, removing the need to wait for business days or delays due to weekends and holidays.
• Continuous Uninterrupted Availability: FedNow operates 24/7 year-round, ensuring that payments can be made or received at any time. This thereby provides greater flexibility/convenience for both businesses and consumers.
• Enhanced Security: FedNow incorporates advanced security measures to protect transactions, ensuring the highest level of safety and reliability.
• integrability: The system is designed to be compatible with existing payment platforms, facilitating seamless integration with other payment systems and services.
• Accessibility: FedNow aims to be accessible to all financial institutions, regardless of their size, enabling even small banks and credit unions to offer real-time payment services to their customers.

Overall, the FedNow system is expected to significantly benefit U.S. financial institutions. Specifically, it will help increase economic efficiency by allowing the easier flow of money, which will lead to greater productivity. Additionally, FedNow was designed with the aim of encouraging innovation by allowing financial institutions to build on the systems capabilities. What are your thoughts on the new payment system, do you think it’s as revolutionary as the Fed says? 

Article: https://www.federalreserve.gov/newsevents/pressreleases/other20230315a.htm

Reference: https://www.federalreserve.gov/paymentsystems/fednow_about.htm 

Home Sales Spike in February on a Dip in Mortgage Rates

 For the first time in 11 years, the median price of a home has dropped, according to the National Association of Realtors. On top of that the sale of existing homes has increased by 14.5% in the month of February, which is the largest monthly increase since July 2020. However, sales are still off by roughly 23% from 365 days ago.

In 2021, the median price of a home fell roughly 0.2%, which levels out to $363,000. Lawrence Yun, NAR Chief Economist states, "Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Lawrence also believes that the housing market is seeing the strongest sale gains in areas where home prices are decreasing and the local economy is adding jobs. 

It is important to note that the inventory of homes on the market for sale remains low, with less than a 3 month supply. Homeowners continue to sit on the low rate mortgages which is why they are not encouraged to sell their homes. This is because if they sell their home with an existing low-interest rate then the next home they purchase will be in line with current interest rates which are higher than they were 1-2 years ago. Any further drop in Interest rates will likely bring more buyers into the housing market.

Analyst Hannah Jones believes that there are two unknowns when coming into this spring housing market. One is the debate on what the Federal Reserve will do with IR (either increase or decrease). With an increase in the IR, homeowners are likely to keep their existing houses and people looking to enter the housing market will be hesitant. The second unknown is whether or not the job market will enter a period of slowdown. In this case, a decrease in the job market would also decrease the purchase of big-ticket items, including houses, cars, and college education. 

At this point in time, there are many things riding on the success of the economy, one of them being interest rates. The Federal Reserve must find a happy medium that continues its journey to 2% inflation but also take into consideration the many other factors that high-interest rates have on the economy.

https://www.usnews.com/news/economy/articles/2023-03-21/home-sales-spike-in-february-on-a-dip-in-mortgage-rates-though-prices-fall-for-first-time-in-11-years 

Senator Elizabeth Warren says she favors increasing FDIC’s deposit insurance cap

 With the recent crisis involving regional banks, there has been some discussion over the $250,000 coverage by the FDIC and if it is enough. Senator Elizabeth Warren is at the forefront of this discussion and believes we should look to increase the coverage provided by the FDIC. Warren is blaming the Federal Reserve, the Trump administration, and financial regulators for the crisis as she believes they laid the groundwork which made the situation possible. She specifically said that Jerome Powell "took a flamethrower" to banking regulations. 

       The government created this situation by coming out and saying that everybody who is a client of Silicon Valley Bank will be made whole, even if they are above the $250,000 threshold. By doing this, for every bank that fails from now on clients of said bank would point to SVB and say "If they were all made whole we should be too." Another conversation that ensues from limiting the coverage is how much will the level be raised, and also where would this money come from. 

    Wealthy people or companies who have more than $250,000 in a bank would try their best to make sure the bank they choose is safe so that they wouldn't lose their excess money. This in turn may make banks take on less risk so that wealthier people will bank with them, thus resulting in more deposits and ways to make the bank money. If the FDIC increases their insurance level, the risk banks take may increase as more people have over $250,000 than people who have $5 million for example. This may have an inverse effect where the FDIC will have to bail out more banks than they do currently.

https://www.bostonglobe.com/2023/03/20/business/senator-warren-says-she-favors-increasing-fdics-deposit-insurance-cap/ 

The $3B UBS & Credit Suisse Deal

 UBS has agreed to acquire its rival Credit Suisse for over $3 billion. This deal would dramatically change the global banking landscape and create one of the most powerful banks in the world. The combined market cap of these two companies would be over $60B. 

This UBS-Credit Suisse deal is seen as a move to restore confidence in the global banking system, which has been shaken by a number of recent scandals and crises (ex: Silicon Valley Bank). By creating a larger and more powerful institution, the acquisition could provide stability and reassurance to investors and customers. The deal is also expected to create efficiencies and cost savings that could improve profitability and strengthen the banks' financial position. 

This deal will almost certainly face regulatory hurdles as many people are concerned that the acquisition could lead to reduced competition and higher prices for consumers, particularly in the areas of wealth management and investment banking. 

Global banking crisis: What just happened?

 

    On March 10th, Silicon Valley Bank (SVB) collapsed and shut its doors. SVB falling makes it the largest US bank to collapse since Washington Mutual did in 2008. SVB had a liquidity crisis and was over-leveraged. To free up cash they decided to try and sell shares, but that ended up failing which then triggered a panic and customers were not able to get their deposits. The FDIC now has control of the bank and has ultimately considered it insolvent. 

    First Republic Bank has been struggling too over the last week and there have been aggressive efforts by other lenders and the U.S. government to avoid another bank run. So far other banks have lended out over $200 Billion to this cause. Jamie Diamond noted that banks still need a lot of money to solve their liquidity issues and that big banks like JPMorgan, Citi, and Bank of America will continue to lend money out to hopefully stop this issue.

    SVB got into this crisis by investing into a lot of long-term bonds when interest rates were super low. When inflation rose, the value of the bonds dropped and depositors wanted higher rates, so the bank was forced to sell off some bonds at a loss which caused them to lose liquidity. When this hit mainstream media, people panicked and SVB could not maintain the withdraws and a bank run occurred. Another part of it was that SVB also invested in risky Tech Venture Capital and the technology sector got crushed in 2022 which caused the bank to along with VC to get crushed. The bank managed the risks they had made poorly and their heavy involvement with technology ultimately hurt them in 2022 which caused SVB to collapse.

    In terms of the whole economy, this increases the odds of a recession because banks are supposed to have cash on hand and maintain a financial system. Customers are also afraid now due to them believing that they may not be able to collect their deposits. Most banks are over-leveraged with debt and GDP has gone down which can indicate a possible recession. Also the yield curve is inverted where short-term interest rates are significantly higher than the long-term interest rates. Contractionary policy and an illiquid economy make for a fearful situation. I think that we are guaranteed to enter a painful recession that will cause the banking system to rapidly change to avoid this issue again.  

Link: https://www.cnn.com/2023/03/17/business/global-banking-crisis-explained/index.html

Meta on the second route of massive layoffs

Meta, the parent company of Facebook and Instagram, is set to lay off around 10,000 employees, representing approximately 13% of its workforce. The job cuts will affect the company's recruiting team this week, with further restructuring to follow in April and May. In addition to cutting staff, the company is closing approximately 5,000 job postings that have yet to be filled. This marks Meta's second round of layoffs in six months, following a November 2022 announcement that saw 11,000 jobs lost. The company has been reducing unchecked growth and trimming employee perks since a global digital advertising slowdown. The move is part of the company's plan to streamline its operations and focus on efficiency, with CEO Mark Zuckerberg saying that he wants to reduce the number of middle managers.  Meta has struggled with the privacy changes to Apple's mobile operating system and increased competition from TikTok and is in the midst of a difficult transition to a "metaverse" company.

https://www.nytimes.com/2023/03/14/technology/meta-facebook-layoffs.html

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