"An Inflation-Driven Midterm Will Not Change Biden’s Economic Focus"

 The New York Times released on November 10th that Democrats lost fewer chairs in the House and Senate than pollsters anticipated.  In response, President Biden feels confident about the approximately $1 trillion worth of government programs geared towards a transition away from fossil fuels and increasing domestic manufacturing.  Considering the decrease in the rate of inflation that came out in October (7.7%, a significant decrease from the September statistic of 8.2%), many are hopeful for a continued trend, but that is unlikely as the fourth quarter is typically the quarter with the high recorded GDP each year.  A continued increase in aggregate demand will, unfortunately, continue to be paired with high inflation only further exacerbated by the increase in government spending.  Finally, the Fed has continued to increase interest rates and appears to have no intention of slowing this process until the unemployment levels settle back to a more realistic rate.  

https://www.nytimes.com/2022/11/10/us/politics/biden-economy-midterms.html 

US warns Europe a conflict over Taiwan could cause global economic shock

    The US has warned European countries that a conflict over Taiwan would trigger a huge global economic shock, in an effort to step up contingency planning amid rising concern about military action in the Indo-Pacific. Research from the state department estimates that a Chinese blockade of Taiwan would result in $2.5 trillion in annual economic losses. The US and their partners are beginning to think about how they could use sanctions against China over any military action against Taiwan. Washington is hoping that their report will stress to European countries that a Taiwan conflict would have significant implications for them.

    Some US and European officials believe huge global economic damage from a Taiwan conflict is necessary to rally international support for deterring China. US officials and military officers have increasing talked about the threat to Taiwan as there are reports that China has moved up its timeline for "reunification" with Taiwan. President Biden and Xi Jinping are expected to discuss Taiwan when they hold their first in-person meeting as leaders in Bali on Monday on the sidelines of the G20 summit. Over the past year, Biden has said on four occasions the US would defend Taiwan from an unprovoked Chinese attack.

    The report said Taiwan would suffer the biggest hit but the economic blow to China would also be immense, and that the fallout would reverberate throughout the global economy. Overall, south-east Asia - a region where many countries want to avoid taking sides and argue that a China-Taiwan conflict has nothing to do with them - would see heavy economic damage.

    In terms of industries, supply chains dependent on semiconductors led by automobile, server and PC and cell phone sectors would suffer the biggest disruption. Also, the report warns that trade finance for Chinese companies would dry up the moment Beijing crossed the line to conflict over Taiwan, dealing a severe shock to global trade. Due to the importance of China as an economic partner for developing countries, such a shock could push more than a dozen emerging markets into economic crisis.

Link : US warns Europe a conflict over Taiwan could cause global economic shock | Financial Times (ft.com)

"Employers Added 261,000 Jobs in October, Beating Estimates"

    Economy is averaging 400,000 jobs a month this year. Employers added 261,000 jobs during the month of October. This exceeded employment growth expectations. The labor market is rather tight and we are experiencing higher interest rates (with an economic slow down). The unemployment rate did climb to 3.7%.

    Many of these new jobs are in healthcare, tech services, and manufacturing. The job growth is slow and steady and workers are successfully navigating difficulties. The Federal Reserve this week reiterated its desire to see employers cut down on hires to alleviate some pressures of rising wages (and in attempt to bring interest rates down from the current 8.2% to the goal of around 2%). Jerome Powell says the labor market is "out of balance" and doesn't think this 2% interest rate can really happen.

    Labor statistics and unemployment are playing a role in the battle with inflation in today's economy so it is important to pay attention to them. Since there is decreased labor force participation, the higher wages are increasing consumer spending and increasing inflation which is causing interest rates to continue rising. The overall jobs added in 2022 per month was ~407,000 which is less than 2021's average of 562,000 a month.

    There is somewhat of a battle going on between the tight labor force and those who are attempting to slow down demand for workers to ease inflation. Powell says that it is premature to establish or discuss rate changes. It is believed that some businesses may be reluctant to lay off workers as activity decreases because hiring is so difficult after covid. When workers are harder to hire, companies are more reluctant to laying them off.

https://www.usnews.com/news/economy/articles/2022-11-04/employers-added-261-000-jobs-in-october-beating-estimates