Global trade growth turns negative after record year: UNCTAD

After record-high years, global trade has taken a dip. Energy prices are high, interest rates are through the roof, and inflation is taking its toll. This is not to mention the impact of Ukraine on many surrounding countries that relied on it. But, recently ports and many shipping companies have adjusted for the better, and new trade agreements have been signed 

The UN agency said, "trade in goods and services is expected to reach $25 trillion and $7 trillion respectively, by the end of the year." 

https://news.un.org/en/story/2022/12/1131657

The continued impact of Russia on Ukraine's economy

The war between Russia and Ukraine has continued on for a long time and it is sad to see how it impacts people but alongside that the impact on the economy is strong. there has been a contraction of 33% this year in the economy and people predict that it may contract by another 5% next year. The Russian invasion has destroyed tons of infrastructure and land and nearly 18 million Ukrainians need humanitarian aid. Alongside all of this while the EU and US have pledges over 30 billion dollars this is only a pledge and none of the money has been approved yet, and the aid promised this year was slow do Kyiv had to print money leading to a spike in inflation.

It is interesting and sad seeing the impact on the world and the economy that war has and while it's horrible what's happening, I hate to admit but it is very interesting to see in real-time what is happening because of the war and being able to understand what most of what is being said means unlike other situations in the past where I was too young and lacked the knowledge to understand what was really happening.

 Russia is destroying Ukraine’s economy, raising costs for U.S. and allies (msn.com)

Fed can't Reach Goal without 'Job-Destroying' Recession

     According to Hedge fund manager, Bill Ackman, the Fed will not reach it's goal on decreasing inflation to 2% unless the U.S. economy goes through "severe pain". He claims that it would take a "job-destroying" recession for the economy to reach that goal. He said in a tweet, "Even if it gets back to 2%, it won’t remain stable there for the long term. Accepting 3% +/- inflation is a better strategy for a strong economy and job growth over the long term". This is in response to the Fed raising interest rates up a half of a percentage point. Chairmen Jerome Powell says that there are going to be more hikes than just what we have experienced this year so far. There has been a 4.25% increase on interest rates this year alone, that being the highest its ever been since the 1980's. 

    The central bank is focusing it's resources to tightening the financial conditions so they can reach their inflation goal of 2%. Powell also went on to say that changing the goal is something they are not thinking about and will not think about. The Fed also is forecasting for unemployment to increase to 4.6% by the end of next year. PCE is also projected to fall as they are currently forecasted for 3.5%, while it currently sits at 6%. Ackman has expressed doubts before, but thanks to the economy not responding the way they want it to, he now doubts them even more and has started making these claims. 

https://finance.yahoo.com/news/bill-ackman-fed-inflation-recession-225552079.html

Why people in China are panic buying canned yellow peaches as COVID surges

The COVID crisis in China has surged over the last serval days, leading to over 2,000 symptomatic case being recorded. This has caused the Chinese people to start stockpiling a variety of medications and remedies. In addition to traditional cold and flu medications, canned yellow peaches have been the latest shortage. 

The economic impact of these surges is interesting. There are product shortages of medicines and remedies due to frantic buying patterns. However, pharmaceutical shock has experienced as rise in addition to an increased economic performance in the funeral industry. This shows that COVID is still causing many economies to experience shocks. 

https://www.cnn.com/2022/12/14/investing/china-covid-panic-buying-medicines-peaches-intl-hnk  

Powell Says Fed Still Has a 'Ways to Go' After Half-Point Hike

The Fed has just concluded their last meeting of the year with an additional hike in interest rates. Despite economic improvements, Powell feels additional increases in the interest rate are warranted. He maintains that the Fed will continue to enforce its contractionary policies into the new year. These contractionary policies are being enforced to combat inflation. This news has caused disruption in the markets and has led forecasters to heavily revise their 2023 economic projections. 

One interesting point in the article is that Powell is willing to let the economy "suffer" to avoid high inflation. This interests me because people are already really frustrated with rising prices. The unwillingness to decrease prices stem from anxiety over repeating mistakes made in the 1970s. It will be interesting to follow the results of the Fed's next meeting in February.  

https://finance.yahoo.com/news/fed-downshifts-half-point-hike-190001500.html

FED pledges more rate hikes despite fears of economy stalling

 The Federal Reserve raised interest rates by half a percentage point on Wednesday and projected at least an additional 75 basis points of increases in borrowing costs by the end of 2023 as well as a rise in unemployment and a near stalling of economic growth. The U.S. central bank's projection of the target federal funds rate rising to 5.1% in 2023. The Fed's policy rate, which began the year at the near-zero level, is now in a target range of 4.25% to 4.50%, the highest since 2007. Inflation, is seen remaining above the central bank's 2% target at least until the end of 2025, and will still be above 3% by the end of next year. Unemployment rate is seen rising to 4.6% over the next year from the current 3.7%, an increase that exceeds the level historically associated with a recession. GDP is seen growing by just 0.5% next year, the same as estimated for 2022, before rising to 1.6% in 2024 and 1.8% in 2025, a level considered to be the economy's long-run potential. The FED is has also said it has no plans of reducing interest rates until there is more 'evidence that inflation is on a downward path', we can expect more negative economic activity in coming months.

 

U.S. Inflation Eased in November, CPI Report Shows

Consumer prices rose last month at the slowest 12-month pace since December 2021, after closing out at the highest the inflation has been in 4 decades. The CPI has climbed to 7.1% for this past month of November.  This track is leading to the FED to increase the interest rates by .5%. This will be the seventh consecutive rate raise just this year. These have all been aimed at lowering inflation and slowing the economy down. Inflation soared in 2021 as the economy recovered from the Covid-19 pandemic. Prices kept increasing as consumer demand was fueled by low interest rates and the government stimulus, also while there were shortages across lots of sectors for goods. They are still combating this and resolving the issue. 

Central America is seeing an Economic Boom as Migrants flee their Home to the US

There are many migrants that are headed for the US, but first they must make their way through central America, and these countries are seeing an economic boom because of it. For Trojes, a small agricultural community in Honduras, the influx of migrants traveling through Central America has been an economic boon. Moto-taxi drivers are making more money, homes are being rented out, and vendors are doing brisk business. Many people are benefiting from the influx of money, with some calling it a blessing. However, there are also opportunists who are looking to capitalize on the migrants' needs, often charging them more than locals for goods and services.

While the influx of migrants has brought economic benefits to Trojes, it has also created challenges and dangers for the migrants themselves. Many of them are fleeing poverty, persecution, and violence in their home countries, and are willing to take on the perilous journey through Central America in the hope of finding a better life in the United States.

Despite the challenges, many migrants are taking advantage of an amnesty implemented by the Honduran government in August that absolves them from having to pay for a transit pass and allows them five days to travel through the country without fear of deportation. This has facilitated their travel through Honduras, although they still face challenges and dangers as they continue on their journey.

Overall, the influx of migrants has brought both economic benefits and challenges to Trojes, and is likely to continue shaping the town's political and economic dynamics in the coming months and years.

https://www.theguardian.com/global-development/2022/dec/13/central-america-migration-transformation-honduras-guatemala-nicaragua

Potential Ban on Tik Tok and its effects on the US Economy

A bipartisan group of U.S. lawmakers has introduced a bill that, if passed, would ban TikTok in the country. The ANTI-SOCIAL CCP ACT (Averting the National Threat of Internet Surveillance, Oppressive Censorship and Influence, and Algorithmic Learning by the Chinese Communist Party) names TikTok's parent company, ByteDance, as one of the companies subject to the restrictions in the bill. The proposed legislation follows years of concern from the Trump and Biden administrations about the potential for Chinese government influence on the social media platform. TikTok has repeatedly insisted that U.S. user data is stored safely outside of China and is therefore not subject to Chinese government access.the economic effects would depend on a number of factors, including how the ban is implemented and how the company responds. However, some possible economic effects of a TikTok ban could include raising tensions between the US and China which could have even more adverse effects effects on trade. The ban on tik tok would also diminish what tik tok contributes to the US economy and GDP- although this would give room for US based social media companies to contribute more. 

Dow closes more than 500 points higher to start the week as investors await Fed meeting, inflation data

     Today the Dow Jones Industrial Average jumped today by 528.58 points or 1.58% which is a significant change for an industrial average in just a day. This jump is partly due to the anticipation of CPI data that is set to release on December 13th, 8:30 AM. The Core CPI is expected to edge lower to 6.1% from 6.3% - 

Yung-Yu Ma, BMO Wealth Management chief investment strategist. “There’s probably some cautious optimism ahead of tomorrow’s CPI report, but also some underlying concern" The Dow has had a bearish outlook in the past weeks and this gives some hope to the economic future. 

The goal of the Fed recently has been to decrease inflation and are doing so with their Fed rate hikes and the accumulation of quantitative tightening. So the optimism comes from the Fed released data from the CPI to support their efforts of decreasing inflation. In my own belief we are not going to see the effects of the rate hikes and quantitative tightening until 2023 which I believe will be a recessionary year.

https://www.cnbc.com/2022/12/11/stock-market-news-futures-open-to-close-live-updates.html