Russia’s Attempt to Block Economic Data

 Vladimir Putin has ordered Russian authorities to stop publishing data on banks, oil and debt. Government debt, trade statistics, oil production, and more statistics will all be hidden from now on. Even Russian central banks have limited the data available to smaller banks in Russia as Putin takes the route of secrecy to protect his country from further Western sanctions,  which have proved to be effective. But, the secrecy of Russian economic data will be an added challenge for the U.S. to impose future sanctions, see Russian economic weak spots, and to analyze how the previous sanctions are affecting Russia. With Russia and Vladimir Putin scrambling to disarm Western sanctions, only time can tell if hiding data will ease future sanctions.

https://www.wsj.com/articles/russia-blocks-economic-data-hiding-effect-of-western-sanctions-11650677765

Rapid Inflation, Lower Employment: How the U.S. Pandemic Response Measures Up

 As the Fed is raising the interest rate, many expect that it will take a while for the inflation rate to come back to a normal level, because of the amount of spending the U.S. did during and after the covid-19 pandemic. Many consumers can feel the price increase in their day to day life, especially energy, like gas. The consumer price index has increased by 9.8 percent from March year earlier. Many economists think the package the U.S. government sent to its citizens during the pandemic was too large, and it is one of the primary contributors to the current inflation and rising prices. The current employment rate in the United States is 71.4%, just below 71.8% from this time last year. There are about 1.8 open jobs for every unemployed person in the U.S. , and wages are rising at the fastest pace in four decades, there is a very strong job market currently in the U.S.. The red hot job market could be a feeder for inflation, and the Fed will try to raise interest rates and use contractionary policies to try to slow down the economy, and bring supply and demand closer together.

Yellen Expects Biden to "Press" Congress For More Ukrainian Economic Aid

 Treasury Secretary Janet Yellen spoke during a news conference at the Treasury Department in Washington, Thursday, April 21, 2022. Yellen spoke on the $500 million economic aid package provided to Ukraine from the U.S. and acknowledged that it’s only a fraction of what the war-ravaged country will need and said the administration will seek more money from Congress. Yellen has said that Ukraine will get the aid needed, however Ukrainian officials estimate that could total $8 billion this month alone. That is no small sum of money. Ukrainian officials came to Washington this week seeking a $50 billion aid package from international allies as it braces for a massive financing shortfall over the coming months. Thinking of ways to fund the request, Yellen was noncommittal on whether the U.S. could use some of the hundreds of billions of dollars in foreign reserves from the Russian central bank, which the Biden administration and its allies have frozen. The size of the latest U.S. contribution and Yellen’s tentative comments on finding further economic aid underscore the challenges the administration faces in trying to help the Ukrainians survive the Russian onslaught, even as much of the world condemns Moscow’s actions.  

Germany at risk

 Recession on the doors

The German economy is about to go into recession if Russia-Ukraine continues. The country is expected to shrink at 2% if the Russia-Ukraine war does not stop. The recession would be because of the ban on Russian coal, oil, and gas which will restrict the power industry of Germany. Economists are trying to analyze the economic fall of Germany if the sanctions on Russia continue and there is a shortage of power resources in Germany because of the sanctions. Research institutes advising Germany said that there would be a loss of 220 billion-euros equal to 6.7% output decrease annually if the war continues and trade between Germany and Russia is restricted. The embargo on fossil fuels and surge on crude will increase the prices of coal and gas. The Bundesbank has said that any fluctuations in the financial market due to the war are not included in assessing the recession and the economic crisis can be stronger than what is expected if the war intensifies. The German central bank predicts that output will be 1.75% lower this year and inflation would be 1.5% higher this year. The economy of Germany is in the hands of the Russia-Ukraine war and the downfall percentage of the German economy heavily depends on the intensity of the war.

Sri Lanka’s Economy

 The economy of Sri Lanka is facing its worst economic crisis of all time. In these desperate times, the world bank has agreed to $300m to $600m over the next four months to help Sri Lank buy essential goods and services. Sri Lanka's finance minister Ali Sabri is in Washington Dc to negotiate a rescue package with the IMF. Many neighboring countries have extended their aid to Sri Lanka, India has promised to give $500m to buy fuel and additional $1bn aid from India is under progress. China has also extended their aid of $31m as emergency aid, and 5000 tonnes of rice, medicines, and raw materials. Despite all these aids, Sri Lanka is on the verge of declaring bankruptcy with $7bn out of its $25bn in foreign debt due for payment this year. There has been a shortage of food, medicines and raw materials for months in Sri Lanka. The sharp increase in fuel prices has increased the cost of transportation and prices of other goods and services. Due to the ongoing crisis, there are protests outside the president's office, demanding immediate resignation of the president and his family who are governing the country. Police opened fire on innocent protesters, who were protesting against the increasing prices of fuel, 1 person died and 13 were injured due to the shooting. The government condemned the act and has promised to start an inquiry of the incident. Many people blame China for the crisis, as the debt is accumulated because of the loan that Sri Lanka took from China to build projects but those projects never paid back. At this stage, it seems impossible for Sri Lanka to recover without any international aid.

Russia's war influences car production

 Russia's invasion of Ukraine already influenced different parts of the world. However, now the car industry is also suffering from the war. This war caused the auto industry to cut production and sales of cars for the next two years. One reason for this is that several car factories in Eastern Europe had to shut down. Some factories in Ukraine for example have tried to keep producing cars, however, workers had to stop their work in order to flee rocket fire. Another reason for the decrease in production is that the price of precious raw materials has increased tremendously . The S&P Global Mobility already reported that it is going to cut its global car production by 2.6 million in both 2022 and 2023. European car production is expected to fall by 9%. That is a 1 million decrease in production. The S&P Global Ratings forecasts that the global car sales in 2022 will drop by 2%. Some of these lost sales is because Russia and Ukraine will not be buying a lot of cars during the war. However, the greatest reason for the drop in production and sales is the shortage of raw materials. Russia produces one of the most palladium and nickel in the world. Palladium is used to clean vehicle exhaust, and nickel is used for electric vehicle batteries. With the lack of palladium and nickel in the car industry –due to the war–the production and prices of cars will be influenced negatively. 

https://www.cnbc.com/2022/04/16/how-russias-war-is-cutting-global-auto-production.html

US to give Ukraine Financial Aid, and Weapons

     On Thursday the Biden administration pledged $1.3 Billion to Ukraine in weapons and economic assistance, to help the struggling nation in it's fight against Russia. This is on top of the $2.6 Billion already given to Ukraine since the start of the war. The current package includes $500 Million of economic assistance, directly given to Ukraine; and $800 Million of military aid, in the form of artillery, weapons, ammunition, and drones. The administration also furthered sanctions on Russia by further barring Russian ships from US ports. 

    This spending has been met with support from congress, as aid to Ukraine has been a fairly bipartisan issue. The bill has been met with little pushback from either side of congress, with opponents of the bill wanting to spend more in the bill, and not less. The public however seems to be less enthusiastic about the US's involvement in the war, as support for the Ukrainian war has fallen. With 30% of polled adults saying they want the US to take a major role in the war, and 49% who want the US to take a small part in the war.

     It will be interesting to see how the FED and Government handle the bill, as the large spending will surely not help curtail inflation, an issue that the FED and government have been trying to prevent. Hopefully some policy will be used to counter the huge spending found in the bill, as it looks like the massive assistance packages given to Ukraine won't stop anytime soon. Ukraine has already asked the EU for financial help when the conflict is over, for rebuilding infrastructure, salaries, and other economic losses. Ukraine says it will need $7 Billion each month to make up these losses once the fighting is over. 

https://www.usnews.com/news/politics/articles/2022-04-21/biden-announces-heavy-artillery-other-weapons-for-ukraine

 

There are now a record 5 million more job openings than unemployed people in the U.S.

The COVID-19 crisis changed the way many Americans viewed their jobs and how satisfied they were with them. Thus, we saw an increasing amount of Americans flat out leave their job, leave to seek new employment, retire, or at least consider making a major life change change when it came to their careers. 

Now, there are a reported 5 million more job openings than unemployed people in the U.S. economy. The sectors with the largest levels of unfilled positions are education, health, and business and professional services, transportation, and utilities. The sector with the highest amount of workers who quit centered in the travel and hospitality sectors. This comes as no surprise seeing how COVID changed these areas for most of the foreseeable future. Many have termed this the "great resignation" as more and more workers leave positions for hopes of career betterment and improvements in their work lives.  The Federal Reserve attributes these glaring numbers in employment as factors in the rising rate of inflation. To combat this the FED raised interest rates. Couple these trends with other major macro events and the American and world economy is in a unique place. 

https://www.cnbc.com/2022/03/29/there-are-now-a-record-5-million-more-job-openings-than-unemployed-people-in-the-us.html

The World Bank Warns Against Growing Risks for a Coming World Recession

 Just recently the World Bank announced that it was declining the world's economic growth percentage from 4.1% to 3.2%, even lower than the original projected 5.5% in 2021.  

The 3 major crisis fueling this are the Pandemic, increasing inflation, and the crisis occurring in Ukraine.  A CNN article reads that all of the world's biggest economic engines are suffering from the supply shock that has been created by Russia's invasion of Ukraine.  Europe is at risk of losing its energy supply from Russia, China just experienced a 3.5% decrease in retail sales due to them locking back down in response to COVID outbreaks, and the United States' insanely high inflation is causing the country to teeter on the edge of high interest rates and recession.  

To add to the world's struggles, smaller countries were already in debt to larger ones, as a result of borrowing during the Great Recession and the COVID 19 pandemic.  As interest rates rise these loans are harder to pay back, along with the prices of food and fuel increasing as well.  For these countries, getting by is extremely expensive.

None of this is very promising for the future state of the economy- the same article states that the CNN Business Fear & Greed index is currently in "fear territory."

https://www.cnn.com/2022/04/19/investing/premarket-stocks-trading/index.html

 

Retail sales rose 0.5% in March amid inflation jump; import prices hit 11 year high 

Retail sales climbed 0.5 from the previous month, slightly less than the 0.6 Dow Jones estimate and a deceleration from the upwardly revised 0.8% gain in February. The move came with inflation rising 1.2% for the month as measured by consumer price index.Retail sales data is not adjusted for inflation. Consequently, the biggest gain in sales for the month was at gas stations, which saw an 8.9% increase in sales as gasoline prices rose 18.3% during the period. The sector has seen a 37% sales burst over the past year. By contrast, online sales slumped sharply, falling 6.4% for the month. General merchandise stores saw a gain of 5.4%, sporting goods and electronics stores both had 3.3% gains, and sales at food and beverage stores along with bars and restaurants rose 1%. Retail sales broadly rose 6.9% from a year ago, a period during which CPI inflation surged 8.5%, the highest level since December 1981. In other economic data, initial jobless claims rose to 185,000 for the week ended April 9, an increase of 18,000 from the previous week and above the estimate of 172,000. Continued claims, which run a week behind the headline number, fell by 48,000 to 1.475 million. Also, inflation continued to hit imports, with prices rising by 2.6%, the largest monthly increase since April 2011, the Bureau of Labor Statistics reported. That was higher even than the 2.2% estimate. On a 12-month basis, import prices jumped 12.5%, the largest such gain since September 2011.