Cuba requesting assistance from the US

    The Cuban government requested emergency assistance due to the damage and impact of Hurricane Ian. Talks have included discussion on how much aid would be needed and where it would go and the main places of need were hospitals, water pumping facilities and infrastructure. There has been no response yet but Cuba reaching out is quite surprising considering past relations with the US.

    

    It is interesting seeing how situations like Hurricane Ian can impact relations in countries and how even though Cuba's GDP may be struggling due to damage alongside the US' is also going to be impacted due to Hurricane Ian. I am curious to see how much having the potential economic ally of Cuba and how it may help them and us benefit as well as how it may impact GDP by giving them financial aid and repairing the damage from the hurricane.

Cuban government asks US for aid in rare request following Hurricane Ian damage despite chilly relationship between the two nations, per WSJ (msn.com)

Is the energy tie that binds Russia and Europe ready to break?

 On April 27, Russia cut off natural gas deliveries to Poland and Bulgaria due to their refusal to pay in rubles under pressure from Western financial, and economic sanctions, and NATO backing for Ukraine's defense. Due to a 20 percent increase in European gas prices despite the export restrictions, Russia may see a short-term increase in revenue. The most recent phenomenon also may increase the shock of energy prices for European consumers at little expense to Russia, possibly supporting its strategy that consumers will put pressure on European leaders to reconsider their shift away from Russian energy and support Ukraine.

Before the virus and the conflict in Ukraine, oil accounted for 40% of Russian exports and 25% of total government earnings in 2019; natural gas was a less important source of income at that time. Additionally, the Bundesbank forecasts a drastic drop in the economy and a significant impact to the German chemical industry if Russia does cut off natural gas supplies to Germany. Russian vulnerability to its reliance on oil revenue is growing despite the fact that COVID-19 is out of control in parts of an under-vaccinated China likely with more urban lockdowns, economic stress in commodity-importing emerging economies, Europe is heading for a sharp slowdown, and US monetary policy is about to tighten a lot. 

To maintain its togetherness,  I think Europe must strengthen its resistance to these increasingly likely energy trends. This includes more attempts to access alternate oil and natural gas supplies, such as US and international liquefied natural gas supplies, and accelerating energy efficiency and the switch away from fossil fuels while providing targeted transfers to help financially strapped households.

https://www.piie.com/blogs/realtime-economic-issues-watch/russia-europe-energy-bind-about-unravel

Was FEMA Prepared for Hurricane Ian?

As we see the damages and tragedy Hurricane Ian has caused Florida, many people are wondering, how those affected by this are being taken care of. Peoples lives have been flooded and washed away with the hurricane, leaving them cold, hungry, tired and homeless. Luckily, there is an agency called FEMA (the Federal Emergency Management Agency), apart of the US Department of Homeland Security. Their purpose is "to serve our country before, during and after disasters." They have billions in funding and direct aid, millions of units of food and water, and plenty of temporary housing

The new head of FEMA, Deanne Criswell, has had a lot on her plate since fulfilling this role in April 2021. While the last head of FEMA was ridiculed for his lack of preparation concerning Hurricane Katrina as well as other incidents such as, misplacing $250 million in food and supplies for Puerto Rico after hurricanes, Irma and Maria. 

While the agency doesn't have the greatest track record, Criswell and Biden worked closely and extensively on prepositioning supplies ahead of Hurricane Ian's arrival. Indeed food, water and shelter are important for these people in this time of need, they will still need money to recover all of the damages. 

Kentucky governor, Andy Beshear, had many complaints about FEMA's efforts during a flooding there this past summer. He was concerned for his people as "not enough people were being approved" for aid claims. While Hurricane Katrina accumulated about $186.3 billion in damages, Hurricane Ian is only looking to be about $25-40 billion, which is still a crazy number but not even close to Katrina. I believe FEMA had the proper amount of time and resources to be prepared for this tragedy, but I am interested to see how ready they actually were. 

Sources:

https://www.msn.com/en-us/news/us/in-hurricane-ian-s-aftermath-new-head-of-fema-faces-historic-challenge/ar-AA12slXp?ocid=EMMX&cvid=e290a7c86c1f497683ff8b05aa5a31a8

https://www.washingtonpost.com/climate-environment/2022/09/30/hurricane-ian-historical-ranking-florida/

Mortgage rates hit a high of 6.7% which we haven't seen since 2007.

         Mortgage rates are at a high of 6.7% in September and it is not expected to slow down just yet. We are currently seeing daunting inflation within the economy due to the repercussions of COVID-19. When covid hit many people lost their jobs or were fired to eventually be re hired down the road. However, in-between the time of jobless ness we saw an increase in government spending on unemployment insurance, and an increase in stimulus packages. This was a necessary action at the time but are seeing the effects of inflation as a result. 

         To combat this high inflation the fed have slowly been raising interest rates month after month in order to decrease consumer spending, to see demand fall. With the increase in interest rates we have now seen another drop in the market within recent weeks as the Dow Jones fell 1.5 % or to be specific it dropped roughly 450 points. The Nasdaq has also fallen but at a higher rate than the Dow Jones at 2.8%. These market crashes are directly related to the interest rate produced by the federal reserve. It is assumed by economist that when interest rates rise people take their money invested from stocks and put it into government bonds as it is a much safer return when in times of uncertainty. Which is what is occurring. 

    With an increase in interest rates by the fed, mortgage rates follow. As mentioned mortgage rates are at a high of 6.7% since 2007 and is a up about 3.69% from just over a year ago in September of 2021. This is ridiculous for people who are looking to become home owners and it is unfortunate to say that it might not be over just yet. Interest rates were raised .75% in the month of September alone and it is expected to rise around two more times before the end of 2022. Until we see Interest rates lower in the economy we wont expect mortgage rates to see a fall yet either. Lastly, we can expect the market to continue to slow down week after week as people take there money into government bonds.

https://www.washingtonpost.com/business/2022/09/29/mortgage-rates-fed/ 

                                                                                                        - Ryan Stefancin

Russian Unemployment is at a Record Low

    Russian Unemployment just reached 3.8% in August, making it the lowest in the country since 1992. The mobilization order sent out by Vladimir Putin has created an increase in jobs in the county that hasn't been seen since the Soviet Union days. Many men in the country are being "drafted" to fight for the Russian in Ukraine. Although this order is increasing the number of people employed in the country, it is not effecting any other sectors in the Russian economy. In fact, Russia is seeing decreases in in many of the sectors of their economy.

    Retail Sales, which shows the demand of consumers in Russia, has fell 8.8% just in August. Russia's real wages fell 3.2% in July and Average Nominal Wages fell in June as well. Based off of what we learned in class, this should not make any sense in a normal economy. But Russia's economy depends on what they can export to other countries like manufacturing and natural gases. Since the war in Ukraine has started, many countries have boycotted trade with Russia and it has caused a recession in the economy. 

    I suspect that this trend in the Russian economy will continue until the country backs out of Ukraine. No other country wants to associate with Russia because of what they are choosing to do and it is affecting their economy in a large way. Either Russia will run out of money to supply the war efforts in Ukraine, or they will back out of the war ridden country in order to retain their main source of income.

https://finance.yahoo.com/news/russian-unemployment-rate-hits-record-163259319.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAI8_kSlZQ_yKwQ4y1ZWAF3xwLdOP4dhvKaxc5-Roz6tB729FbtSaUBlMx_rtqlws0ErT_k5talhmeDqZyvaPOIrNNZtaPq_Xos-nXDPdS5w0Inxku8GUiVyylhH4DTwyjW0l6AkTYcF71iNBp9--2TAVxnRgEyvLYzMcy4Ugxacq

Increased Interest Rates Aren't Working

     The central bank this past week raised interest rates 75 points for the third consecutive week, and it is looking like the 'soft landing' that the Fed has been preaching will not be happening. The Fed was hoping that raising interest rates will slow down economic demand. It is looking like the US economy may be headed for a recession instead, yet it is unclear how bad the recession may be if it does hit. It depends mostly on how quickly price inflation and wages comes down, and if more labor supply enters the economy. 

    There was a 486-point sell off this past Friday which ended the week at its lowest point since the coronavirus pandemic in 2020. Bond rates have risen to decade high numbers, showing that investors think the economy is going to face hardships in the short term. Inflation is causing widespread hardship and uncertainty for not just Americans, but for other citizens around the world because our economy is so large. The housing market is one side of the economy that is already starting to see a hit from rising interest rates and current inflation. Mortgage rates have already hit double of what they were last year and sales of existing homes continue to plummet. Congress and the Fed have pumped the economy with huge fiscal and monetary stimulus, and after the invasion of Ukraine in February, energy prices and overall inflation began to trend upward.

    The US's GDP was revised downward for 2022 and the Fed is predicting that it will continue to operate "below trend growth" until 2025. New inflation data came out just today and numbers have gotten no better and continue to trend down. For now, we have to just sit back and strap in for a bumpy ride.

URL: https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-ahead-of-key-inflation-data-tesla-stock-ai-day/ 

U.S. weekly jobless claims hit five-month low; economic picture darkening

This article discusses how despite the Fed’s policies, the unemployment claims in the United States have fallen to their lowest level in the last 5 months. The Fed is continuing to use monetary policy in an attempt of decreasing inflation. They are increasing interest rates and showing no signs of slowing down soon. Normally this would lead to employers cutting back on hiring, however, due to the current labor market situation economists are seeing an increasing trend of companies hoarding labor. They mention the current strength of the labor market despite an economy that is struggling. Continuing jobless claims are dropping consistently, by about 65,000 in the period between August and September surveys, while the unemployment rose from 3.5% to 3.7% in August.

            After emphasizing the strength of the tight labor market, the article discusses the current struggles facing the economy. First of all, they mention the Thursday release of a report from the Commerce Department where the gross domestic product decreased at an unrevised 0.6% annualized rate in the second quarter. Further details mentioned are that the consumer spending portion of GDP is better off than what was previously thought, however, they state that corporate profits and wages were revised to be lower than initially expected. Due to this GDI was corrected to an increase of 0.1% rather than the previous estimation of 1.4%. The article further compares GDP and GDI, mentioning the revisions in data and the economic recovery since Covid-19.

            Finally, the article references the business inventory troubles of recent times, stating that now companies have larger inventories than they originally thought or intended they would. In most cases, inventory is paid for with borrowed money, and having larger inventories makes them increasingly sensitive to the Fed’s policies. This can create issues for the company and the economy as companies will be looking to cut back on inventory.

US Consumers Boosted August Spending as High Inflation Spread

U.S. consumers are having to spend more to cover the rising costs of basic fees such as rent and utilities. Today, the Commerce Department reported that household spending rose by 0.4% compared to 0.2% in July. This continued increase indicates the effects of inflation within the U.S. economy.  The PCE price index, which omits volatile food and energy costs reported a 4.9% year-over-year increase this month.  U.S. stocks have dipped after the release of these consumption and inflation figures.

The labor market has aided in households' ability to retain some purchasing power in spite of inflation. Employers continue to seek more workers which has resulted in low unemployment and firings in the economy. With that being said KPMG chief economist Diane Swonk stated that consumers should spend "on what they have to", citing the importance of purchasing "necessities, not niceties." 

The personal saving rate this month was 3.5% for the second month in a row. Last year, this estimate was 9.5% for August of 2021. This again reflects the growing effects of inflation as households are unable to commit as much of their wages to savings. Many economists are forecasting a recession in 2023 due to such declines in the economy. 

https://www.wsj.com/articles/inflation-consumer-spending-personal-income-august-2022-11664484435

German Inflation

   Red hot inflation is inescapable everywhere in the U.S. It is discussed daily on the news and experienced at gas stations, supermarkets, and just about everywhere money is spent as prices continue to rise. It is one of the most serious dilemmas that the country is facing at the moment. However, increasing rates of inflation is not just a U.S. problem, it is plaguing Europe as well. The article, "German Inflation hits 70 year high as economist warn of recession risk", highlights Germany's annual inflation rate has risen 10% in September year over year, from 7.9% in August exceeding economist's estimates of a 9.5% increase. This level of inflation hasn't been seen since the aftermath of World. War II. 

    This inflation should come as no surprise. Russia's invasion of Ukraine paired with global supply chain issues that have been felt since the start of the COVID-19 pandemic, have caused prices to skyrocket. Energy prices have risen 43.9% in September year over year, while food prices have increased 18.7% year over year. 

    As rationing of remaining Russian energy continues, it is likely that this economic hardship will persist. The German government is advising its population to save energy as much as possible to endure the winter, citing that gas consumption by consumers and businesses has, on average, risen by 14.5% as temperatures drop in Germany each winter over the past four years. However, this article states "heightened risk" of rationing and shortages can be avoided if Germany reduced its gas consumption by 20% and increased its gas imports. The downside to this strategy would be a lower GDP for the foreseeable future as imports grow. 

    The Europeans have taken an almost identical approach to lowering inflation as the U.S. According to Carsten Brzeski an economist for the Dutch bank ING, the European central bank will continue to raise interest rates in order to combat this soaring inflation. However, as gas scarcity grows across Europe, inflation is likely to continue to rise. 

    

https://www.ft.com/content/877ecb30-b884-42d0-afc4-17b7d404a5a1

Jobless claims hit 5 month low despite FED's efforts to slow labor markets

 

 Initial fillings for unemployment claims fell last week to their lowest level in 5 months despite pressure by the FED to slow down the labor market. Jobless claims for the week totaled 193,000, a decrease of 16,000 from the previous week’s downwardly revised total. This is the first time since May that claims fell below 200,000. With inflation being the highest since the 1980s, the FED's policies have definitely put the economy in a slow down, everything seems to be affected apart from the labor market.

 Furthermore, the CPI index showed a 7.3% year over price gain in Q2. This gain was above 7.1% in the prior Q2 estimates. Excluding food and energy, the core PCE inflation for 4.7%, 0.3% higher than the previous estimates but below the 5.6% increase in Q1. The FED has raised interest rates 5 times in 2022 which totals 3% points, this increase is starting to show as inflation is slowly going down in September and it goes along with a decrease in gas prices. The Cleveland FED's inflation gauge showed a 8.2% increase in the CPI and 6.6 increase in the core prices compared to 8.3% and 6.3% in August.

 The Bureau of Economic Analysis estimated for Q2 GDP remained at negative 0.6, which was unchanged from the previous estimate. This was the second straight quarter of negative GDP which is a indicator of a possible recession in the near future. 

Source: cnbc.com 

Mortgage Rates Continue to Climb as 'Seller's aren't Selling'

Mortgage rates have nearly hit 7% as home sellers are discouraged to sell due to the rapid cool down of the current housing economy. This discouragement has driven the demand for homebuying down. The rate of a 30-year fixed mortgage has risen to 6.7%, this rate making affordability of homebuying the worst it has been in almost 37 years. With the low supply and the affordability of homebuying making it hard on the market, this is making would be buyers become renters, but renters are finding a comfort zone as the average rent price is around $2,039, about an 11% increase from last year. 

And with all of this going on, pending home sales have decrease for the third time in a row, this time more than expected as it dropped 2% last month. Compared to the years prior's numbers, pending sales went down by 24.2%. And with the supply of houses still being low, this has also slowed the price growth of homes. First American Deputy Chief Economist Odeta Kushi predicts that the house preceding market will experience a slow down of prices to "a more reasonable pace".

I find this interesting because as the article will show, the mortgage rates that we are experiencing are almost as bad as the issue we faced in the 2008 Financial Crisis. The article cites that the rates that we are experiencing now is a 15 year high and it has been a very quick growth at that. One of the graphs from the article shows the slow build up in 2008 with mortgage rates, while if you look at the current rate and the build up to it, it was quite fast and large in how much it increased by. This is definitely something to keep an eye on as the year comes to a close here soon.

https://finance.yahoo.com/news/housing-sellers-mortgage-rates-climb-173946424.html

 

US labour market starting to crack

Main news sources make the public believe that the US labor market is as strong as it has  ever been but if you were to take a close look at the statistics relating to the labor market it shows that it may not be as strong as the media says. A huge crack in the labor market is the unemployment rate, there has been a surge in the amount people that hold two or more jobs in the recent year and because of how the household survey is counted it is very possible that those people that have more than one job can be counted as a separate person per job causing the national unemployment number to be inaccurate. Another problem that has been overlooked regarding the unemployment rate is the amount of full time jobs shrinking by nearly 500,000 in just a three month period. In a recent survey there was a gain in 442,000 jobs, and over half of them were considered part-time jobs.

The Job opening and turnover survey (JOLTS) is a measure on how the labor market is doing and where it stands, JOLTS states that job openings are a key measure on how the market is doing. The issue regarding the statistics with the survey is the job openings are only compared to people that are unemployed and do not consider people who are looking for jobs that currently have one, this shows that the job market may not have as many jobs and there might be more workers than suggested. 

Real wage growth is still in the negative due to the high rate of inflation and with the Labor market getting weaker the Fed believes the only way to solve this issue is to put an end to the swell in inflation. If inflation goes down interest will also drop bringing prices down. What this will do for the economy could cause the hiring process to slow down and more workers could eventually be laid off. This could start another economic disaster that could eventually lead to a crisis that was faced similar to covid where a majority of the working population was out of work with no job in sight. 

Source:

https://www.ft.com/content/133b7e8b-3c43-48b6-9bb1-ef8a6a3cd44a

Student Loan Forgiveness

 In Reuter's, "Biden Administration Changes Student Loan Guidance, as Republican-led States File Lawsuit," I read about the pushback President Biden has faced since announcing his plan to cancel portions of student debt.  One of the major issues that came to light almost after the announcement in August was that there are some 4 million people whose loans were issued and managed by private banks, but guaranteed by the federal government.  The federal government and Department of Education has required that these loans be consolidated to Direct Loans in order to qualify for loan forgiveness.  The states argue that the banks will lose significant customer base, and therefore, revenue.  The loan forgiveness plan has received a lot of criticism for the inflationary impact it may have, but the federal government insists that the impact will be minimal as we are on track to decrease this year's deficit by $1.7 trillion.  Ultimately, this lawsuit will probably have minimal impact on the policy itself so much as help determine the ways in which certain refunds will be distributed. The lawsuit may also make clearer, or bring to light, the limitations as to what the government can and cannot do in relation to financial intermediaries.  Banks trend in periods of varying degrees of regulations, so this could be a very good indicator as to an upcoming recession given that banks are typically more highly regulated during recessions.

https://www.reuters.com/world/us/six-states-sue-halt-bidens-bid-forgive-student-loans-2022-09-29/

Hurricane Ian could cripple Florida's home insurance industry

Hurricane Ian and its damages have dominated the news cycle over the past week. Now that the hurricane has hit, the clean up efforts have started. With all the rebuilding and repairs that need to place on properties across the state, Florida's insurance agencies are feeling the pressure. 

Due to the relatively high degree of risk that comes with living in Florida, the state's insurance agencies are already a mess. The COVID-19 pandemic started a wave of closures for insurance agencies. There have been over twelve agencies close and dozens are in danger of going out of business. This problematic trend is exacerbated by the unwillingness of large insurance agencies to work in the area.  

The estimated cost to repair the damage from Hurricane Ian is $250 billion. With this large estimate, Floridians face two major issues. First, insurance agencies may not have enough to insure all their client's damage. Second, the declining supply of insurance in the state will cause people to have to pay more for coverage. Currently, Florida has some of the highest insurance rates in the country with many stipulations on benefits. Governor DeSantis and President Biden have worked together to alleviate some of the economic pressure that may result from Hurricane Ian. They have employed a "disaster declaration" across most of the state. Under this declaration, Floridians will have the opportunity to receive grants to help fund temporary housing and repair costs. They will also be able to obtain loans to help with damages that will not be covered by insurance. 

It appears that Hurricane Ian is shaping up to cause horrific damage to Florida's economy. To exacerbate this damage, the current climate of insurance agencies is tense and inflation is causing prices to rise. It will be interesting to see how Florida responds to this major supply and demand imbalance they face. 

https://www.yahoo.com/gma/hurricane-ian-could-cripple-floridas-164500343.html 

Unemployment Claims Hit 5 Month Low

As of this week, Unemployment fillings hit a 5 month low according to CNBC. For the week ending Sept 24th 2022, unemployment claims dipped to 193,000. That number is 16,000 less than the previous weeks unemployment fillings, and 22,000 less than the Dow Jones estimation. This shows that the labor market is getting much stronger and recovering from the recent inflation and COVID surges this summer. Unemployment fillings have not been below 200,000 since early May this past year. Unemployment reaching a 5 month low is a great sign for the economy. It shows us that more people are getting out to work compared to how many people are loosing work, which will have many good effects on the rest of the economy and hopefully reduce inflation, however this could also lead to lower productivity because of a underutilization of the economy's resources.

 https://www.cnbc.com/2022/09/29/jobless-claims-hit-five-month-low-despite-feds-efforts-to-slow-labor-market.html

The Battle Against Inflation

     The hottest topic of the U.S. economy right now is the inflation. For the annual period ending August 2022, the inflation rate was as high as 8.3%. Ideally the Fed wants inflation to be a quarter of the current rate, roughly 2%. This high rate of inflation is causing many people to feel uneasy, and rightfully so. Inflation can be good for a number of reasons but high inflation can mean trouble for the job market and the economy in general. So, the Fed is declaring war on the inflation in the market.

    I read the article The Fed Intensifies Its Battle Against Inflation published by the New York Times and written by Jeanna Smialek. The article detailed how the Fed is attempting to combat the inflation rate and force it down. Recently, the Fed increased the interest rate by three quarters of a percentage point, leaving the interest rate to be 3% to 3.25%. This is a major increase from the past and yet the Fed is planning to keep raising the interest rate at roughly the same amount unless inflation takes a turn. The chair of the Federal Reserve, Mr. Powell, understands that the increased inflation will lead to pain for many people. However, he knows that is necessary. He's quoted for say "We need to get this inflation behind us, I wish there were a painless way to do that; there isn't". This shows just how exactly the Fed views this inflation: as an enemy that must be eliminated. We can only assume that the tactics by the Fed will only get more and more aggressive to face this inflation, which is truly for the best. No matter how difficult, these things must be done. Inflation is a dangerous thing so it only makes sense that combating it is a painful process.

The Fed Intensifies Its Battle Against Inflation

Economy Insight from FedEx

 Do business trends from a leading package distribution company tell the story of our current and future economy?

FedEx has people on Wall Street concerned of the current and future status of our economy. Many have noticed the package distribution behemoth has slowed its delivery services, but look further to the stock and performance of the company in its latest earnings report. Since the last report, the company's stock decreased by 20%+ compared to competitors in the same sector. The last report that forecasts future earnings was not submitted by the company due to a "volatile operating environment". FedEx as a company blames the large economic climate surrounding its business for its recent downturn, suggesting that the challenges in the economy and problems stemming from COVID-19 have greatly hurt the company. 

Currently the company is removing trucks and planes from service and stepping up fees for delivery. But what can we take from FedEx's withdraw from their sector as companies like Amazon, and UPS stay more constant than FedEx. An analysis of FedEx's past figures suggest that this behavior has been consistent with past economic trends. Specifically the last 3 big recessions that we have has in the United States have followed these withdrawing behavioral patterns of FedEx. 

Economic analysts look to see if FedEx is really declining its business and being conservative with expenses due to Economy, or whether a shift in CEO after 50+ years of business could be a second source for change. All in All in terms of global companies, FedEx has a good lay of the land when it comes predicting the economy. 

Ultimately, it's up to conversation surrounding the company whether other businesses and economists choose to use this information to their benefit. 

Source:

fedex-federal-express-inflation-shipping-stocks-selloff-recession-supply-chain

Fed unsure of economy’s direction as Wall Street meltdown worsens

Federal Reserve Chair Jerome H. Powell came out this week and said that there are some things the fed does not know about the U.S. economy. A few things he does not know are whether or not the US will fall into a recession, how long high inflation will last, and doesn't know if healthier supply chains will be any help. 

The Fed's anti-inflation fight is only making slow progress, causing a surge of criticism of the industry. In response to COVID,  the Fed flooded the US economy with large amounts of stimulus and liquidity to keep it afloat but did not focus on carefully reducing that money supply over time. The M2 supply of money, a broad measure of money supply that includes cash and deposits, has been growing by double digits in the past three years. Now the growth of the M2 money supply is slowing too rapidly and that could send the economy into a recession. 

The Fed is supposed to be the best source as to what is going on in the economy. It is supposed to have all the information and has no political reason to hide certain information. Right now, the Fed is just as blind as everyone else as to why our economy is the way it is now. This is an economy that the world has never experienced before. Snarled supply chains. Global food and fuel prices are through the roof due to Russia's invasion. The unpredicted pandemic caused an unprecedented amount of factory shutdowns, and now inflation is at rates we haven't seen in years. The Fed does not expect annual inflation to return to its 2-percent price-stability target before 2025. 

The Fed also released some of the top officials' quarterly forecasts specified down to 1/10 of a percentage point to clear some of the fog among analytics. The Fed is known for predicting where the economy will be in the future very poorly. For example, the median projection for the Fed's preferred inflation called for a raise of 2.6 percent, instead, the latest estimate now calls for inflation to be 5.4 percent. All Powell is trying to do is show that the evolution of the economy is changing and that almost everything is uncertain. 

The Fed has plans to fight consumer price inflation of 8.3 percent. They plan to raise interest rates until the economy slows. This has already caused the housing market to a steep decline, meaning if we want to beat inflation, we will have to suffer in other categories. With weakness in the economy, employers will begin laying off workers. The Fed expects unemployment to raise to 4.4 percent from 3.7 percent. Since interest rates started rising, global stock markets have lost $12 trillion in value.  

Article Link

Workers' Changing Attitudes Tighten Labor Market

 

I read the article "Workers' changing attitudes tighten labor market" in the Wall Street Journal. It talks about the relationship between workers and their jobs, how workers care about how they're treated and have others things to do with their time. As social attitudes have changed over time, so have attitudes toward work. Which is shown through strikes, such as the recent railroad strike and the Minnesota nurses walk off. Workers want a higher wage and to be treated better, whether it's through the amount of sick days they have or not having to work in unsafe conditions. The effect of these changing attitudes is shown through how in recent years labor has become more expensive and scarcer. Sometimes these changes are from an event, like WW2 causing a big boost in women's labor force participation. The COVID-19 pandemic changed what workers were willing to do, for how long, and for how much. The willingness to work is changed by the alternatives becoming more appealing and by the work itself becoming more unpleasant. With covid pushing the workforce to work from home, many workers could feel that quitting is better than having to go back to an office. As they have enjoyed the time spent at home with family or maybe because working in person is too much of an risk. While the unemployment rate of 3.7% is similar to pre-covid times, the amount of vacant jobs is still high and has not gone down. The participation rate had a sharp drop with the pandemic and has not recovered since. The Fed does surveys that asks how many those who reply would like to work, and that number dropped for not only full time workers but for part time and those out of the labor force. With industry's like nursing homes, the pandemic amplified the staffing crisis as the feeling of being underpaid and overworked existed before covid. The downfall in the supply of workers shows that people are no longer willing to tolerate the conditions for the same pay. The attitude toward work though is always changing, and is starting to move again. As the desired work hours, labor force participation rate, and even number of workers in the office all move towards pre-covid levels. A high unemployment rate can reverse views on work, but as we transition into a period of time after covid the attitude toward work changes with it. The changing work attitude is how the industry grows and adapts to what the labor force wants and needs to join. This recent attitude may be already moving back, but the impact left should hopefully have an positive effect on the relationship between workers and their jobs.

 

 https://www.wsj.com/articles/workers-changing-attitudes-tighten-labor-market-11663765201

Britain's New Prime Minister is attempting to implement Reaganomics into Britain

Reaganomics is known as the series of neoliberal economic policies promoted by US President Ronald Reagan during his time in office in the 1980s. When Reaganomics was first implemented into the US, it was during a time of economic recession and was meant to counter the recession and improve the economy; which it did temporarily. Inflation and unemployment both dropped significantly, millions of new jobs were created, and the GNP saw a strong increase. 

Britain is currently seeing about a 9.9% inflation and the Bank of England just raised interest rates by .5% on September 22nd. Prime Minister Truss is laying out a huge fiscal stimulus that is expected to have large tax cuts and provide subsidies for energy bills. The Bank of England is expected, however, to raise inflation rates again in response to this fiscal stimulus faster than it otherwise would. Britain's currency, the pound, is also falling quite a bit which means the Bank of England will not be able to offset the fiscal stimulus using currency markets. When Reaganomics was implemented in the United States, it was accompanied by a strengthening dollar which greatly helped its success.

While Reaganomics were relatively successful in the United States, it does not guarantee a similar result for Britain. Britain's economy is structured differently and it relies more heavily on imports than the United States does. With the pound already weakening, this dependency on imports means trouble for Britain. It will be interesting to see the results of the fiscal stimulus in Britain's economy when so many are expecting it to fail.

Existing housing market sales dip for the 7th month in a row

 

I read the article “Existing home sales dip slightly in August, for the 7th month in a row” and it talked about the decreasing pricing on the housing market. For the 7th month in a row the price of homes in the housing market has dropped .4 percent in August which is worse than predicted. Down 19.9 percent from one year ago today the housing sector has taken a hit making peoples houses worth less and less. The article states that “ the housing sector is most sensitive to and experiences the most immediate impacts from the federal reserve's interest rate policy changes. And with interest rates continuing to rise another .75 points the housing market will keep being affected in a negative way. It states that more recently mortgage rates have climbed because they are anticipating fed rates to grow as well. With the housing sector being so closely tied to the Fed's interest rates as we see the feds increase the interest rate more to try and slow the consumption in the U.S you will see the housing market go down more and more for the next couple of months. And in another article I read “Jerome Powell in the spotlight as Fed expected to raise interest rates again” states that aggressive interest rates will work to calm down the inflation in the country, and with this they are expected to have another big raise. After the last two directly affecting the current housing sector I believe this will do the same, and that is why I believe we will continue to see a drop in housing prices.

https://www.usnews.com/news/economy/articles/2022-09-21/jerome-powell-in-the-spotlight-as-fed-expected-to-raise-interest-rates-again

https://www.usnews.com/news/economy/articles/2022-09-21/existing-home-sales-dip-slightly-in-august-7th-month-in-a-row