Inflation and Wages continue to rise rapidly

                     In an economy it is known that wages and inflation are very much considered to be one as when one goes up then the other follows. The economy must work this way because otherwise labor would look for work elsewhere if they were not given a raise when their expenses have gone up. The turnover rate would shoot through the roof. Right now the federal reserve is doing what they can to slow down the rate of inflation. Current inflation rates are about 8.2% and is up about 5.1% from last year, keep in mind that Jerome Powells goal is 2% inflation throughout the year and we are 4 times above that goal. With that being said it is unanimous that the federal reserve will yet again raise interest rates another .75 percentage points at their next meeting in the first week of November. They do this in hopes to combat the high inflation rates so there will be a cooldown for demand in the market as demand is what is causing this inflation. However, this is not the only issue in the economy. It has not been publicly confirmed however by the definition of what a recession means then we have just gotten through one as Q1 and Q2 GDP saw a decline. This is an issue due to the fact that when trying to combat a recession you would like to see consumer spending increase which would increase GDP, but currently demand is too high. The federal reserve raising interest rates will cause a decrease in consumer spending, and business investment and will see an overall increase in savings. This will likely lower GDP, and bring us back to that recession level that we were technically in during Q2.    

                    So how does the federal reserve go about this? They would like to decrease demand by raising interest rates but in doing so will decrease GDP and bring us back to the same spot we were before in Q2. Well unfortunately there is really no right answer. The federal reserve is going to have to do what they have to do in order to combat the main target which is inflation and it is likely we will not see the effects of these higher interest rates until further down the road when demand has finally cooled off, lowering inflation rates and when wages have followed that same trend. We must also note that the market is currently down along with stocks and when interest rates rise then we see a decrease in demand for stocks and index's but an increase in demand for bonds. Yet another reason why saving rates will continue to rise and consumer spending will decrease, ultimately putting ourselves back into the recession that we have been trying to get out of.

https://www.nytimes.com/2022/10/28/business/fedeal-reserve-inflation-wages.html 

"The American economy is still growing, but not for the reasons you think"

Will Daniel analyzes the recent economic report for the third quarter. In the report, there were promising signs that the economy was healthy and concerns of a recession were going down. The main factor in this reaction was a 2.6% increase in GDP. Daniel cautions that we should not get excited too quick about this growth. 

The growth in GDP can be attribute to a change in the trade balance. Last quarter, exports severely exceeded imports, leading to a jump in GDP. Furthermore, other statistics warned that the economy is not as healthy as the GDP predicts. For example, the personal savings rate was 3.3%, which is about 6% below the average and is reaching historical lows. Micheal Gapen - the chief U.S. economist for Bank of America - explained his theory that these statistics are forecasting some form of recession in 2023. Daniel ends the article with a bit of good news; it is predicted that the worst of the inflation has occurred. This claim is supported with an approximate 3% decrease in PCE during the third quarter. A decreasing PCE signals that people are spending less, which means prices are decreasing.   

In November, the FED is still expected to increase prices by 75 basis points in order to combat the United State's economic concerns. 

https://finance.yahoo.com/news/american-economy-still-growing-not-193736097.html  

GDP in the 3rd Quarter

    The GDP numbers for the third quarter of 2022 recently came out, showing growth of 0.6%. After two consecutive quarters of GDP decline in the first half of 2022, it appears that GDP is finally making an upturn. By simple definition, two consecutive quarters of negative GDP growth means that the economy is in a recession. This means that (once again by simple definition) this past quarter has brought us out of a a very short-lived recession. However, many economists believe it's more complicated than this.

    One of the main reasons for this growth in GDP is a continuous increase of consumer spending (one of the main determinants of GDP). However, economists believe that this increase in consumer spending will soon catch up with consumers. Consumer spending has been on the up and up because consumers are continuing to spend the money they saved during the pandemic so they could do all the vacationing, eating out and other activities that the pandemic prevented consumers from doing. Consumers are going all out in spending on these activities, as a matter of fact, savings the past few quarters has been way down. This most likely means that the mass consumer spending will come to a sudden halt when consumers run out of savings to fund these ventures. The recent inflation will only expedite the draining of consumer funds. So it's speculated that this very small GDP growth will lead back into quarters of negative growth in the near future. It's only a matter of time.

Source: https://www.nytimes.com/2022/10/27/business/economy/us-economy-gdp.html

Amazon could run out of workers in 2024

 A New York Times report found a 150% turnover rate for hourly rate employees at Amazon each year. If they keep doing business as they are and treating employees as they are they may not have anyone to work for them by 2024 and this has people looking into the way amazon treats their employees. In these leaked memos by high executives within the company they say these predictions on labor were 94 percent accurate when predicting where they will run out of employees. 

    This has been seen as a wake up call to Amazon saying " if they keep doing business as usual" then they will run out, showing that they need to make a change in what they are doing. But originally this was Owner Jeff Bezos plan, he wanted a high turnover rate because he thought that long term employees would lack in work ethic and slack off then creating a "march to mediocracy" thinking that they will not work as hard and he wont produce as much or as well with long term employees then if he had new ones coming in all the time. But in a letter to his shareholders he stated he had to "do a better job" with their employees stating amazon will commit to being "eats best employer and earths safest place to work." 

    Amazon pushes their employees to the limit as they track every single thing they do throughout the day to get the most production out of each person possible while not letting much of anything slide if that is writing them up for time off task or other things that could lead to termination. One employee says they walk 15 miles or more per shift as a picker and he has to pick and carry heavy items all day as well. The quotas for a work day are not a recommendation but a requirement and you are written up if you do not hit these quotas. With this treatment they are having a hard time hiring people as this is a low unemployment time and if they dont make a change this might be a bigger problem for them.

https://www.theguardian.com/technology/2022/jun/22/amazon-workers-shortage-leaked-memo-warehouse

UK Prime Minister Liz Truss Resigns after 45 days and Worsening UK Economic Crisis

 On October 20th, Liz Truss resigned from being the Prime Minister of the UK after a disastrous few weeks in office. Truss' main policies and goals when entering the position were to introduce large tax cuts and provide energy subsidies to counter the growing energy crisis in Europe. Britain was already facing economic problems when Truss entered the economy, but her policies made it worse.

Truss' announcement with her plans for major tax cuts spooked the markets and raised questions about how it would be paid for and the already soaring public debt. The response to this saw an increase in interest rates, the pound depreciating in value, and increased yields on government bonds. Mortgage costs have also significantly increased in this time as well making it extremely difficult for individuals to make their payments. A week before Truss resigned, the Minister of Finance announced the tax cuts would not be taking place and resigned a few days later. Despite all the issues with the tax cuts, the plan to provide energy subsidies did pass and is expected to be in effect for two years.

Financial markets are expected to continue to remain volatile until the government releases its new economic plan. Soaring public debt is a major concern and it is expected that combating that issue will be a large part of the new plan. The Bank of England's emergency intervention to protect markets is coming to an end, but unease among the financial markets and the public is expected to continue for quite some time.