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.
Friday, April 22, 2022
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
Thursday, April 21, 2022
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
Tuesday, April 19, 2022
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
Monday, April 18, 2022
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.