UK firms report surge in orders amid signs of economic recovery

 Demand is rising for UK businesses, raising hopes for economic recovery following what could be a recession by the end of 2022. A survey of more than 900 businesses by the Institute of Directors revealed growth in all industries, raising the possibility that the economy will perform better than expected in the first quarter of 2023. 50% of businesses report that order books are in better shape now than they were at the end of 2022. Despite regional variations in annual inflation rates, this high demand could result in inflation remaining higher than anticipated. The UK avoided entering a technical recession in the second half of 2022, according to the Office for National Statistics, despite the economy contracting by 0.1% and increasing by 0.1% in both the third and fourth quarters. The UK economy has remained largely flat since early 2022 despite revisions, and it is still 0.6% smaller than it was before the Covid-19 pandemic.

Source: https://www.theguardian.com/business/2023/mar/31/uk-avoids-recession-as-economy-stronger-than-first-thought-at-end-of-2022

PlayStation 5 Sales Dominate the Competition

 PlayStation 5's are one of the most popular and fast selling consoles of today's current generation of consoles. The sales for Sony's console are only increasing as they start to become more available in general stores. Although sales are starting to climb, PS5 sales at, 32 million units, are still behind PS4 sales that were sitting at 37 million units in the same time period.

    The early shortages of the gaming console showed just how high the demand was for it, and how much more production would be needed for the console. Now with more production sales have dramatically increased with 7.1 million consoles sold compared to the 3.9 million in the previous year's quarter. The PlayStation 5's success is no surprise, as the PS4 outsold every other gaming console, including the Xbox One, at a rate of 2 PlayStation's to 1 Xbox. The estimates for console sales were PlayStation 4's at 117 million, Xbox One's at around 51-58 million, and Nintendo selling around 114 million since the year 2017.

    Sony's consoles are one of their strong suites and will more than likely continue to dominate competitors for a couple of years with the PlayStation 5. The Xbox Series X is not being as sold out as bad as the Xbox One, but is down 12 million units currently. Although it is important to note that Xbox does have over 25 million subscribers to their Xbox game pass. With this in mind the gap will probably only increase as time goes on and more bundles and discounts come out for the PlayStation 5.

It’s 32 Million PS5 Sales To How Many Xbox Sales, Exactly? (forbes.com)

    

The Fall of Credit Suisse

     Those of us in America have most likely already heard about the collapse of SVB bank, but this was not the only financial institution who hit a roadblock, as the global investment bank Credit Suisse also ran into hard times. Unlike SVB, Credit Suisse is still operating, but only after massive help from the Swedish central bank, and after being bought out by UBS Group AG (another large bank based in Sweden). In the end, over 15 billion dollars in bonds will be defaulted on. While the cause of this financial trouble is not 100% known, this article takes the controversial view of placing the blame on government regulations, specifically a drastic increase in the money supply and the adoption of low interest rates (sometimes even negative) for too long of a period. As the article states, the central banks set the stage "for a collapse by creating untenable economic conditions in the form of an artificial boom fueled by a drastic increase in the money supply," combined with, "The SNB’s [Swiss National Bank] near-fifteen-year suppression of interest rates," leading to, "all kinds of financial absurdities, such as negative-yielding 50-year government bonds, 0 percent unsecured corporate bonds, and near–0 percent mortgages." These policies, "have resulted in Swiss markets pricing themselves upon the lowest rates seen in five thousand years." The house of cards starting to collapse in the second quarter of 2022 when Sweden started to see a rise in their CPI, causing them to finally raise their interest rates and trim their balance sheet. Now, less than a year later, "with interest rates having barely risen above 0 percent from the previous negative percent rates, economic growth is pointing toward imminent recession, and the country’s second largest bank just required a central bank–sponsored rescue." Unfortuanatley, the author also doesn't see this as a one-off issue, stating that, "The dissolution of Credit Suisse is far from the end of this business cycle’s financial crisis, as negative interest rate policies were not unique to Switzerland, having been implemented across Europe and in Japan. Other 'too big to fail' megabanks will likely face the same fate as Credit Suisse, pushing central banks to intervene in order to provide just enough moral hazard to ignite another artificial boom." 

https://mises.org/wire/credit-suisse-collapsed-because-government-intervention-not-despite-it

Positive Economic Impact For NYC During 2023 MLB Season

 According to a press release by the NYCEDC, the 2023 Major League Baseball (MLB) regular season is expected to generate over $900 million in economic activity for the city of New York. This is including activities such as ticket sales, local businesses, tourism, as well as job opportunities. The city is also getting the opportunity to host the 2023 MLB All-Star Game. Additionally, the NYCEDC is looking for a new baseball stadium in the Bronx, which could boost economic activity in the area. The economy can also benefit in ways such as:

Increased tourism: Local hotels, restaurants, and other tourism-related businesses are likely to experience increased demand, leading to higher revenue and job creation.

Boost to local businesses: Retail stores, restaurants, bars, and entertainment venues, as fans spend money on food, drinks, souvenirs, and other items.

Job creation: The NYCEDC estimates that the 2023 MLB regular season will create thousands of new jobs in different areas, including hospitality, transportation, and security, 

Increased tax revenue: The economic activity generated by the MLB regular season is likely to result in increased tax revenue for the city, which can be used to fund public services and infrastructure projects.

https://edc.nyc/press-release/nycedc-announces-over-900-million-economic-activity-nyc-2023-mlb-regular-season

Americans are starting millions of businesses despite economic strain

 As the economy continues to falter, Americans are continuing to start their own businesses. Many employers had been overworking and under paying their employees, and when COVID hit, those same employees realized they may be able to create their own business. 

 Many have recently taken the leap to create their business, which may be a contributing factor to worker shortages. Laziness could also be a contributing factor to shortages after the pandemic. Americans say they have been "earning more money than ever" through their own businesses.

These businesses have been creating new jobs and keep spurring on the economy despite the Fed pushing back with the increase in interest rate. We will see in the coming months if the Fed will be able to successfully slow down the economy, and how that will affect these new businesses.

https://www.cbsnews.com/news/americans-starting-new-businesses-burn-out-inflation/

Train Derailment

It is no secret that the Ohio train derailment in early February shocked many individuals…well those who heard about it. This was a major event that had a huge negative effect on the environment. The train was holding hazardous chemicals, yet the way the government chose to handle the problem is interesting. By handling the problem…I mean completely putting it off as it was not a big deal. The way the government has downplayed an event that could cause harm to individuals who are ingesting these chemicals shows two things. Those things are the government's ineffective economic and social governance. The safety regulations that should have prevented the event were nowhere to be found. This is simply because the United States government can not afford to keep up with these regulations. The government also can not afford to address the derailment, therefore making it an issue for the companies involved with the train. It is interesting how the government chooses to care about the environment when it is related to its political campaign. Yet, when one of the biggest chemical disasters in the United States happens it is not a huge issue. It is even more frustrating to find out that a situation like this happened in the state you are living in and it still does not receive enough coverage. If the government wants to talk about the pollution they should seriously consider the economic and social problems that also are involved. When the economy is not the best the government seems to pick and choose what events they think are worth talking about.  

Sources:

• Times, G. (n.d.). Ohio train disaster exposes chronic problem in US economic and Social Governance. Global Times. Retrieved March 30, 2023, from https://www.globaltimes.cn/page/202302/1285594.shtml  

South Korea's Birthrate Sinks to Fresh Record Low as Population Crisis Deepens

During the past few years, South Korea has experienced a boom in economic expansion as the country has been within the top 5 Asiatic countries with the largest nominal GDP and 13th in the world. However, despite growing economic success in the fourth largest Asiatic country, death has exceeded the number of births for the third year in a row (2020-22). There was a significant decrease in the country's birth rate, as it fell 4.4% in just one year--an alarming statistic to be considered by the future generations of South Koreans. 

The overall high cost of raising children in the capital city of Seoul (where most South Koreans aspire to live), poor job opportunities amid a worldwide economic slowdown, significantly rising real estate prices, and some women prioritizing their "personal freedom" over marriage and starting a family--are all reasons that have been causing the declining birth rate. 

Although the South Korean government has been implementing initiatives to encourage an increase in birth rates, such as cash handouts and assistance with fertility treatments/medical expenses, they have not been enough to account for very high living costs and the changing attitudes towards gender roles and work-life balance. In addition, the government is seeking to loosen regulations on migrant labor to tackle an even more significant population decline in the long-run. 

https://www.theguardian.com/world/2023/feb/22/south-koreas-birthrate-sinks-to-fresh-record-low-as-population-crisis-deepens

Job Uncertainty Among 2023 Graduates

 The Class of 2023 is now looking to enter a market that is less eager to hire as companies are preparing for an upcoming recession. College career officials have said that employers are delaying their date of entry up to six months as they seek spending reductions. Consequently, 97% of college seniors surveyed have said that they are considering jobs outside their major, gig work, and graduate school. Although students don't seem to be panicking, they are working harder on applications and applying to a wider range of positions than typical. 

The unemployment rate for college graduates aged 20 to 24 has doubled since December 2021. Students graduating this year face high competition as people who graduated in recent years are also seeking for jobs. Upcoming graduates must build their network, gain experience through internships, and be flexible toward their entry-level jobs. Entrepreneurship can increase due to the competitive market, which will also increase jobs. Graduates must adapt to the hand they are dealt and consider increasing their human capital through higher education.

https://www.wsj.com/articles/jobs-new-college-graduates-2023-labor-market-openings-7195e28?mod=economy_lead_pos3

"Jobless" Claims Increase - Unexpected

Data came out this week that shows that jobless claims and reported unemployment has unexpectedly increased since last quarter period, as of data release March 25th. 

While the current unemployment rate for 2023 only sits at 3.6% many economists are predicting unemployment for 2023 to hit 4.5%. Despite jobless claims increasing to 198,000 as of March 25th there has not been a significant increase in unemployment. The data from March 25th shows a 7,000 increase since last period and falls slightly above the estimate of 195,000. 

This data also allows economists to compare data from 2022 - showing that while, there was a slight increase in GDP for the past quarter - growth elsewhere is slightly less than 2022 numbers. 

This data will be interesting to track throughout 2023 - monthly and quarterly data will allow economists and businesses to gauge growth/changes as current events like the layoffs from tech companies, bank failures, and policy changes occur throughout 2023. 

https://www.cnbc.com/2023/03/30/jobless-claims-edge-up-to-198000-higher-than-expected-.html

The GDP shows an economic growth of 2.6% this quarter compared to the massive growth in 2022.

    As the first three months of 2023 come to a close, the GDP for the first quarter has just been released as a economic growth of 2.6%. This was a little bit slower than the predicted rate of growth being 2.7%. In addition to slowing consumer spending, downturns in exports, non-residential fixed investment, and state local government spending also led in to the step back in growth. When looking back at 2022 though, this year was known as a year of transition as people finally started returning to their normal lives of going out, shopping, traveling, and spending, and the economy continued to recover vastly from the pandemic. Imbalances in trade and inventories had an outsized effect on the GDP data in the earlier parts of the year, while the second-half growth was fueled by consumer spending. In 2022, everything almost seemed new again as people finally were able to get back to their lives again so everyone wanted to spend more and was more excited vs in 2023 now everything is getting back to just feeling normal again, which explains the only 2.6% GDP economic growth. 

https://www.cnn.com/2023/03/30/economy/us-gdp-4q-final 

Federal Reserve raises interest rates by a quarter-point, keeping inflation in crosshairs - Rylee Anspach

 https://www.nbcnews.com/business/economy/inflation-federal-reserve-bank-collapse-fears-rcna75736

    The Fed is planning on raising the key interest rate another .25% in efforts to fight against inflation and bring it down to its target percentage of 2. This will be the 9th time in a row that the interest rate will rise. With this interest rate rising, it will make borrowing and investing more expensive, like mortgage and car payments, which does not make people happy. It is also said that these rate hikes could happen all the way through 2025, as well as a continuous higher rate in 2023. 

    There were numerous concerns about the banking sector, but Powell, one of the experts, assured that the funds that are deposited by people are safe and that the Fed will continue to do what they can to fight off more problems. Though Treasury Secretary, Janet Yellen, said "that while officials could backstop more deposits to avoid a broader contagion — as they did twice recently — the federal $250,000 insurance limit remains in effect." 

    This is interesting to see go on, frustrating but in the long run it will help us out, hopefully. Though it is projected to be going on through 2025, the Fed is doing the best they can to not let things get way out of control. 

College tuition and fees up 4.7 percent since February 2020

        Colleges adjust their prices to look and be more competitive, although the prices have been rising a lot more overall. College tuition and fee costs rose by 4.7% between February 2020 and February 2023. This increase was lower than the 15.7% overall price increase over the same time span. Tuition and fee costs for technical and business schools increased by 5.2 percent between February 2020 and February 2023.

Private primary and high school tuition and fees increased by 8.6% between February 2020 and February 2023, while the cost of child care and preschool increased by 10.3% during the same period. These price hikes were greater than those for technical and business school tuition and fees as well as college tuition and fees, but they were less than the overall price hike. The statistics I used are not regularly adjusted and come from the Consumer Price Index program.

One of the bigger factors influencing this rise is the overall economic climate. A lot of post-recession states have less money to fund their institutions due to mandatory spending programs such as Medicaid, resulting in higher prices. There are other reasons why this is happening that can't all be blamed on the economy but for high school graduates and those looking to further their education, it's an unfortunate situation. 

https://www.bls.gov/opub/ted/2023/college-tuition-and-fees-up-4-7-percent-since-february-2020.htm

Countries continue to seek Alternative to U.S. Dollar

 As more countries around the world look to lower their dependence on the United States financially, more and more countries have started to stop using the U.S. dollar in trade and overall. Places are looking to become more independent economically as there is major concern about a possible war with the U.S. with China and Russia, and the U.S. economy hasn't been on a very great track ever since the beginning of the [pandemic which leaves many countries worried. While this decrease in dollar usage is happening it certainly isn't being completely dropped as it is estimated that around three-fifths of exchange, reserves are in U.S. dollars.

One of the most notable events that have happened recently regarding the lack of usage of the U.S. dollar is Saudi Arabia's statement on oil. They have begun to look into new forms of payment for their oil outside of the U.S. dollar, something that hasn't been done in nearly half a century up till now. Saudi Arabia is one of the major capitals in the world for oil, making their possible departure from the dollar a huge deal economically for the U.S. Along with Saudi Arabia places like India, Singapore, and Brazil have been in talks individually to switch their usage of the U.S. dollar to a currency founded in their respective countries. 

While the problem of the U.S. dollar being eliminated from other places around the world has been an issue for some years now it has never been taken to the extremes it has as of 2023. Ever since the Woods agreement of 1944 the U.S. dollar has been the leading currency by a landslide. This could all change as countries continue to reform and change which could be detrimental to the U.S. economy as a whole.

Article:https://elements.visualcapitalist.com/de-dollarization-more-countries-seek-alternatives-to-the-u-s-dollar/

Russian Economy is Seeing Labor Shortage Being Intensified by War

 Russia is starting to see a labor shortage in many sectors as Putin has decided to call hundreds of thousands of people into war effort. Last year alone saw an increase of 400,000 service members and that happened on top of an already high unemployment rate. The Kremlin has already requested another 400,000 recruits to raise their military from 1.15 million people to 1.5 million. 

Russia is also seeing that many draft age citizens are fleeing the country in order to avoid the war. Predictions are saying that the working-age population may see a 6.5 percent decrease in the next decade. While the Russian military may be gaining strength their overall economy outside it is weakening tremendously. 

-https://www.bloomberg.com/news/articles/2023-03-29/putin-s-war-is-intensifying-labor-shortages-in-russia-s-economy?leadSource=uverify%20wall   

Is the economy at risk of a recession?

Through much of 2022, investors braced for the potential onset of a recession in response to focused efforts by the Federal Reserve (Fed) to slow economic growth and curb inflation. While the economy slowed significantly, a recession has, to this point, been avoided.

As measured by Gross Domestic Product (GDP) growth, the economy in 2021 grew at an annualized rate of 5.9%, the fastest rate of growth in a calendar year since 1984. The economy slowed significantly in 2022, with GDP increasing at an average rate of just 2.1%. After being in negative territory in the first two quarters of 2022, the economy bounced back modestly in the second half of the year. Consumer spending and corporate profit growth proved resilient in a more challenging environment.

If the economy does go into a recession this year (2023), they don't think it will be severe.

https://www.usbank.com/investing/financial-perspectives/market-news/economic-recovery-status.html 

Stop Worrying About Disney Layoffs

Disney, like many other big companies right now, is starting its pruning process. It has been reported that the company has disbanded its metaverse strategies unit, a roughly 50-person task force and is expected to abolish more than 7,000 other jobs in the next few months. Along with job cuts, the CEO, who is only on a two-year deal, is attempting to also shave roughly $3 billion on what it spends on produced and licensed content outside of live sports programming. 

The underlying expectation of this article is that Disney is working its way toward increasing its stock. As well as resuming the semi-annual dividend distributions that it suspended at the onset of the pandemic three years ago. It was take a few years, and the turn around will not be quick, but its current decisions to lay workers off should not worry its stockholders. 

Link: https://www.fool.com/investing/2023/03/28/stop-worrying-about-disney-layoffs/ 

Goldman Sachs Reduces GDP Forecast due to Stress on Small Banks

 This past Wednesday Goldman Sachs lowered its forecast for 2023 economic growth. The main cause of this change in expectations was said to be a reduction in lending from both small and medium sized banks due to instability in the overall financial system. The firm lowered its forecast to 1.2%, a decrease of 0.3 point, expecting banks to attempt to keep more liquidity in preparation for withdrawals. These tighter lending standards will likely affect aggregate demand causing GDP growth to be lower than initially projected.

The firm noted that banks with less than $250 billion in assets account for significant portions of all lending, specifically 50% of commercial and industrial lending and 80% of commercial real estate lending. The analysts now expected that small banks that have a low share of FDIC covered deposits will reduce lending by 40% and other small banks will reduce lending by 15% causing total bank lending to decrease by 2.5%. The effects of this tightening of lending is expected to have the same impact on growth as an interest rate increase of 25 to 50 points.

Source - https://www.cnbc.com/2023/03/15/goldman-sachs-cuts-gdp-forecast-because-of-stress-on-small-banks.html