Consumers are griping about economic pressures, but do their actions match their words?

 In a recent report, LegalShield revealed an interesting trend: while many Americans complain about economic pressures like high housing costs and grocery prices, few actually seek legal help to address these issues. This disconnect suggests a more positive outlook for the economy and could influence the upcoming presidential election.

LegalShield tracks consumer behavior, focusing on the volume of people seeking legal assistance. They found that lower legal stress levels in battleground states could favor the incumbent party, like President Biden.

Despite widespread grumbling, overall consumer stress remains relatively low, according to LegalShield's data. While some areas, like young adults struggling with Buy Now, Pay Later programs, show challenges, key indices like bankruptcies and housing issues are stable or improving.

This disparity between voiced complaints and legal action highlights the complexity of consumer behavior. It also underscores the importance of understanding economic trends for predicting political outcomes.

By analyzing real-time data, economists can gain valuable insights into the economy's health and its potential impact on politics and policy.

https://www.usatoday.com/story/money/business/economy/2024/05/05/consumer-sentiment-over-economy-doesnt-match-their-actions-report-says/73504709007/

Understanding U.S. Banks’ Loan Trends

A recent survey conducted by the Federal Reserve provides valuable insights into the lending behavior of U.S. banks, offering key observations that could shape future economic developments.

Key Trends: The survey indicates a notable decline in demand for industrial loans and household credit, signaling potential challenges for economic growth in the near term. This decline in loan demand may reflect uncertainties among businesses and consumers, impacting investment and spending decisions.

Monetary Policy Impact: Against the weakening loan demand, the FED’s decision to maintain interest rates underscores concerns about inflationary pressures. By keeping rates steady, the Fed aims to balance the need for economic stimulus with the imperative of controlling inflation, recognizing the delicate balancing act required in monetary policy.

Consumer Sentiment: The tightening of standards for auto loans and the decline in demand for household loans reflect cautious consumer behavior. Consumer sentiment plays a pivotal role in driving economic activity, and these trends may impact consumption patterns and overall economic growth prospects.

Future Outlook: Understanding the implications of U.S. banks' loan trends is crucial for policymakers as they navigate the economic landscape. Proactive measures may be necessary to address challenges related to weakening loan demand and credit accessibility, ensuring sustained economic growth and stability in the long run.

In summary, the insights gleaned from the survey of U.S. banks' loan trends offer valuable guidance for policymakers as they strive to foster economic resilience and growth in a fast-changing economic environment.

US banks report weaker loan demand, Fed survey says (yahoo.com)

Apple's Stock Goes Up Despite Revenue Drop

Apple's recent earnings report showed a slight drop in revenue, but it was better than expected, causing Apple's shares to surge. Despite iPhone sales decreasing by 10%, the company's overall revenue for the first quarter of 2024 was $90.75 billion, surpassing analysts' estimates. Even sales in China, an area of concern for investors, were slightly better than anticipated.

Investors reacted positively to the news, with Apple's shares rising by about 6% after the earnings report. Apple also announced plans for additional share repurchase and raised its quarterly dividend, further boosting investor confidence.

Looking ahead, Apple remains optimistic, forecasting growth in its hardware business and strong performance in services like the App Store. CEO Tim Cook highlighted the potential of new generative artificial intelligence features to boost hardware sales.

Analysts are hopeful about Apple's future, expecting the company to reveal new products and features, potentially at upcoming events like the developers' conference in June. Despite recent challenges, including regulatory pressure and declining iPhone sales in China, Apple remains focused on innovation and shareholder value, as evidenced by its  share repurchase program and dividend increase.

https://www.ft.com/content/935fcc5e-d8e4-4620-927d-ae7e1dfcfda1?accessToken=zwAAAY_Vjca0kdOTX8xe2ORGINOSfa5-Hfz9oQE.MEUCIHHyNHaOb2U_qBaxmG2-G2WKR6jj23b-Mw8X46M8DWEaAiEAl8qmcxhT38qf4HwMjNmfSR16KkMVcj8ZkAPSTAypH8o&segmentId=7d4bcc2e-e664-92ba-62e3-5590579f1902

https://open.spotify.com/episode/2NFBwyHijmjQN40RwshBKJ?si=3bb1193b771b4da8

Eurozone exits recession as ‘big four’ economies beat forecasts

 The Eurozone has been in a Technical Recession for a while, but have escaped it after the "big four" beat forecasts. Cut interest rates, along with decreasing inflation and an increase in real wage sparked more economic activity as compared to 2023. The big four of Germany, France, Italy and Spain grew by 0.2%, 0.2%, 0.3% and 0.7% respectively. Inflation in the Eurozone has been 2.4% for the past two months. A rebound in construction helped to boost the end to this small recession in the Eurozone. Lastly, the mortgages for the month of march by the Bank for England increased by 800 which reached its highest since September 2022.

March Home Sales Surpass Expectations

 According to data from Freddie Mac, mortgage rates reached a 5 month high this past week (Article from Thursday, April 25th).

Pending home sales in March were reportedly the best they had performed in a year while existing home sales plunged. Expected inflation in the coming months has been extremely high which has increased bonds yields. The 30-ytear mortgage rose to 7% the week of April 25th and economists are predicting a decline in rates in the coming months. Due to this pending home sales will likely decrease in the coming months as well.

Not only have mortgage rates shot up, but affordability of homes is becoming less and less. There are less available homes on the market as well which is contributing to the higher home prices. According to the author of this CNN article, the median price of a U.S. home was $393,500 in March which is up 4.8% from last year.

Knowing all of this-it was interesting to read in this article that demand has still remained steady in the housing market. I wonder for how long it will stay like this before demand decreases and consumers can no longer afford high mortgage rates and high home prices. Single family homes are becoming less prevalent and construction is less frequent for this style of housing; it fell drastically in March. 

 https://www.cnn.com/2024/04/25/economy/us-pending-home-sales-march/index.html

China May Be Preparing to Deploy Economic 'Nuclear Option'

 China's recent surge in commodities purchases has sparked concern about its economic ambitions. Some analysts believe China is mulling the "nuclear option" of currency devaluation, which could boost exports but raise global trade tensions.

Some view the country's acquisition of gold and oil reserves as a strategic attempt to diversify assets in the face of geopolitical uncertainty. This might also protect China from financial losses like what Russia experienced with the Ukraine invasion.

China's rising crude oil purchases, particularly through its relationship with Russia, indicate efforts to secure critical supplies while bolstering Moscow's economy. While some view China's resource stockpiling as a defensive measure amid economic challenges, others see a more ominous motive. The buildup of strategic reserves, including petroleum and food, could indicate preparation for international backlash, particularly in the context of Taiwan tensions.

As speculation about a potential Chinese invasion of Taiwan persists, the significance of China's resource strategy looms large. Whether defensive or signaling more aggressive intentions, these actions highlight the intricate interplay of economics, geopolitics, and national security on the global stage.

https://www.msn.com/en-us/money/markets/china-may-be-preparing-to-deploy-economic-nuclear-option/ar-AA1nUySZ

European Stocks End April with First Monthly Loss Since October

     European stocks closed lower on Tuesday, marking their first negative month since October. The Stoxx 600 index ended the day 0.6% lower, with major bourses across the region seeing declines. Most of the sectors declined, with the auto sector decreasing to 4.3 percent and basic resources falling to 1.14. Only the health care stocks managed to slightly increase by 0.2 percent. Preliminary data showed that euro zone inflation remained steady at 2.4 percent in April and core inflation came in at 2.7 percent. Meanwhile, U.S. stocks also fell due to disappointing earnings and inflation data. For the future, investors are closely observing earning reports from major companies like HSBC as well as economic indicators to get insights about the health of the European economy.

Link: https://www.cnbc.com/2024/04/30/european-markets-live-updates-euro-zone-inflation-gdp-and-earnings.html

Employment Growth and Wage Increases

 In a recent article released by the New York Times, job growth and increased employment has been thoroughly discussed in regards to the past couple of months. The previous month there has been an increase of 303,000 jobs, making it the thirty ninth consecutive month of growth. Additionally, last month the unemployment rate decreased by 0.10 percent from the previous month, 3.9% to 3.8%. While this may not seem that significant, hourly wages have also been rising ahead of inflation as of late which has been a great deal to many working class families in America. However, while this is good progress, levels of disposable income have not yet reached where they once were pre-pandemic.While it is safe to assume that many consumers and businesses are still frustrated with higher prices over the past three years, the economy is still overall in a healthy state.

Source: https://www.nytimes.com/2024/04/05/business/economy/jobs-report-march-2024.html

Investor Pulled $218M from Bitcoin ETFs as US Economic Growth Slows

 In recent months, Bitcoin exchange-traded funds (ETFs) have been a hot topic in the world of finance, with billions of dollars flowing into these products. However, a recent shift in investor sentiment has led to a notable change in this trend.

According to data from Farside Investors, investors withdrew approximately $218 million from Bitcoin ETFs yesterday. This significant cash outflow comes at a pivotal moment, coinciding with a federal economic report indicating slower-than-expected growth in the American economy during the first quarter. The prospect of high interest rates, following recent increases by the Federal Reserve to combat inflation, has dampened enthusiasm for risk-on assets like Bitcoin.

In January, the Securities and Exchange Commission approved 11 Bitcoin ETFs, allowing investors to access the cryptocurrency market through traditional brokerage accounts. However, after a continuous influx of funds lasting 71 days, yesterday marked a significant change, with no new investments entering IBIT.  The decline in Bitcoin ETFs is mirrored by a downturn in the price of Bitcoin itself. Currently trading at $62,313, Bitcoin has experienced a 2.62% decrease in the past 24 hours and a 5.27% decline over the past week. Furthermore, it is down 15.16% from its all-time high of $73,750 reached on March 14, 2024.

https://finance.yahoo.com/news/investor-pulled-218m-bitcoin-etfs-053731699.html?guccounter=1

Asian Markets Climb Amid U.S. Economic Concerns

In an interesting twist in global financial markets, Asian stock indices mostly saw gains today despite ongoing concerns about the U.S. economic outlook and inflation pressures both domestically and globally. This resilience in Asian markets underscores the complex interplay between regional economic activities and global financial dynamics.

Steady Hand at the Bank of Japan

The Bank of Japan (BoJ) concluded its latest policy meeting without altering its benchmark interest rate, which remains between 0 and 0.1%. This decision comes on the heels of a modest rate hike in March from -0.1% to 0%, a move motivated by inflation reaching the central bank’s target of approximately 2%. The BoJ's steady policy stance seems to signal a cautious optimism that Japan can maintain its economic stability without further stimulus at the moment.

The Currency Conundrum

The Japanese yen's position against the U.S. dollar has been relatively stable, trading around 155.54 yen to the dollar. While a weaker yen typically benefits major Japanese exporters by enhancing the value of repatriated earnings, there are growing concerns among some Japanese officials about the long-term drawbacks of a depreciated currency. Finance Minister Shunichi Suzuki has voiced worries that an overly weak yen could ultimately harm the broader Japanese economy.

Wall Street's Woes

Contrasting with the mostly positive performance in Asia, Wall Street experienced a downturn, led by a sharp decline in Meta Platforms, despite the company reporting higher-than-expected profits. Investors seem jittery, focusing more on Meta’s significant future investments in artificial intelligence and a revenue forecast that didn't meet expectations. This reaction highlights the heightened sensitivities in U.S. markets to both corporate forecasts and broader economic indicators.

Economic Growth and Inflation: A Delicate Balance

Recent data indicating a slowdown in U.S. economic growth to a 1.6% annual rate in the first quarter, down from 3.4% in the final quarter of 2023, has stirred concerns. This slowdown, coupled with persistent inflation, challenges the notion of a "soft landing" for the U.S. economy. The hope that the economy could avoid a severe recession while managing inflation is becoming increasingly tenuous, as indicated by rising Treasury yields which suggest reduced expectations for rate cuts by the Federal Reserve.

Energy Markets and Forward Outlook

In early trading, oil prices saw a slight increase, with U.S. crude oil rising to $83.76 a barrel and Brent crude reaching $89.23 a barrel. The movement in oil prices often serves as a barometer for broader economic expectations and could influence investor sentiment in the coming days.

Conclusion

Today’s financial landscape presents a mixed bag of outcomes, with Asian markets showing resilience in the face of global economic uncertainty, while U.S. markets grapple with economic slowdowns and inflation challenges. Investors and policymakers alike will need to navigate these turbulent waters with a keen eye on both immediate pressures and long-term economic stability. As always, the global financial markets remain a complex web of interdependent factors, where regional events can have far-reaching effects.

 

GDP growth slowed to a 1.6% rate in the first quarter, well below expectations

 GDP numbers came out for the first quarter, and people are not pleased with the 1.6% drop. This drop, in addition to a rise in inflation caused the Dow Jones Industrial Average to drop 400 points. These two drops could signal that we may have a recession coming soon. This is because we have been predicting a recession over the last year, and now the GDP is down more than we thought. and inflation is up more than we predicted. As regards to the inflation rates, Jeffery Roach says, “Savings rates are falling as sticky inflation puts greater pressure on the consumer. We should expect inflation will ease throughout this year as aggregate demand slows, although the path to the Fed’s 2% target still looks a long way off.” It looks as if we are heading towards a recession, and I predict GDP will drop another 1.5% next quarter, and inflation will rise another 0.5%.

Link for article: https://www.cnbc.com/2024/04/25/gdp-q1-2024-increased-at-a-1point6percent-rate.html

FTC Adopts Final Rule Banning Employers From Entering Non-Competes

 On April 23rd the FTC voted to approve the Non-Compete Clause rule, which will prohibit almost all non-compete clauses.  A non-compete is a contractual agreement between an employee and an employer that prevents the employee from working for or creating a competing business after they no longer work for the original employer. These agreements often mean employees cannot work in a similar position for another company, even when they were laid off rather than quitting. The agreements are used for all levels of employment, including fast food workers and retail workers. The ruling will prohibit such agreements and requiring existing ones to be rescinded. The FTC claims that the ruling will result in worker earnings increasing by up to $488 billion over the next decade along with the creation of greater than 8,500 businesses yearly. The reason the FTC issued this ruling is because noncompetes limit worker's opportunities and also block them from changing jobs, which ultimately drives down wages. Those against the ruling claim the FTC is not able to issue such a ruling under federal law about anticompetitive practices. They also claim noncompetes are key to protecting trade secrets. If the ruling stays in place, it will be interesting to see how it effects the unemployment rate, as this action would make the labor market even tighter than it already is. 

https://www.reuters.com/world/us/us-agency-poised-ban-worker-noncompete-agreements-2024-04-23/

How far could America’s stockmarket fall?

This article discusses a recent downturn in the U.S. stock market after a period of significant gains, specifically noting a major drop in Nvidia's share price despite no immediate bad news. It attributes the market's nervousness to high stock valuations and the realization that interest rates are likely to remain elevated, which makes stocks less attractive compared to government bonds. The cyclically adjusted price-earnings (CAPE) ratio is highlighted as being exceptionally high, similar to levels seen before previous market crashes, suggesting low expected future returns for stocks. The gap between the earnings yield of stocks and real yields on government bonds is currently narrow, indicating a lower risk premium, which historically suggests a potential for significant market corrections. Despite some optimism that earnings could grow, possibly fueled by advancements in artificial intelligence, the article suggests caution, as historically low earnings yields have tended to predict poor returns.

Source: Link

US first-quarter auto sales grew 5.1% despite high interest rates, but EV growth slows further

 https://apnews.com/article/auto-sales-strong-electric-vehicle-sales-slow-70a663fbc0719ebda7a4ca814c2827d2

In the first quarter of 2024, U.S. auto sales experienced a notable increase of 5.1% despite high interest rates, with nearly 3.8 million vehicles sold, corresponding to an annual sales rate of 15.4 million. This growth occurred as inventories approached pre-pandemic levels, leading automakers to reduce prices to stimulate demand. According to J.D. Power, the average sales price in March dropped by 3.6% from the previous year to $44,186, marking the largest decline recorded for the month. Automaker discounts were significantly higher, with lease deals becoming increasingly available.

However, the growth in electric vehicle (EV) sales slowed considerably, increasing only by 3.3% to reach nearly 270,000 vehicles for the quarter. This slowdown was a departure from the previous year's 47% growth, suggesting that the early enthusiasm among adopters concerned about environmental impacts might be plateauing as mainstream buyers remain hesitant due to concerns about EV range and insufficient charging infrastructure. Notably, Tesla's sales dipped by nearly 9% globally, attributed to factory adjustments and logistical issues. This broader trend underscores the challenges facing the automotive industry as it navigates high interest rates and shifting consumer preferences amidst ongoing economic uncertainty.

U.S. Growth Slowed in First Quarter, but Inflation Remained a Bug

https://www.nytimes.com/2024/04/25/business/economy/us-economy-gdp-growth.html

The NY Times article on the U.S. economy in the first quarter of 2024 highlights several critical aspects of economic performance. Notably, the U.S. gross domestic product (GDP), adjusted for inflation, grew at a 1.6% annual rate during this period, marking a significant slowdown from the 3.4% growth rate recorded at the end of 2023 and falling below forecasters' expectations. This slowdown was largely attributed to shifts in business inventories and international trade, which are known to fluctuate. However, underlying demand indicators remained strong, suggesting a resilient economy.

A key concern emerging from the quarter's data is the acceleration of inflation. Consumer prices increased at a 3.4% annual rate, a substantial rise from 1.8% in the previous quarter, with core inflation (excluding food and energy) climbing to 3.7%. This acceleration indicates that inflation remains a persistent issue, complicating the Federal Reserve's efforts to stabilize prices.

The persistent inflation is likely to influence the Fed's monetary policy, with expectations now leaning towards maintaining or even increasing interest rates rather than cutting them. This scenario suggests a challenging period ahead as the Fed navigates high inflation and its impact on economic stability and consumer spending, which remains robust particularly among higher income groups despite broader financial strains across the economy.

Consensys Sues SEC over Ethereum Blockchain Regulations

Consensys, a cyrpto software firm based in Fort Worth, Texas has sued the SEC amid an SEC investigation into Ethereum. Consensys was founded in October of 2014 and now carries a valuation of over $7 billion and base most of their revenue off of the Ethereum blockchain. Over the past year the SEC has demanded information from many various crypto companies over Ethereum and how it acts. The SEC is trying to determine if Ethereum can be classified as a security which would then allow the agency to regulate the crypto currency and the blockchain Ethereum trades in. SEC Chair Gary Gensler has claimed that many cryptocurrencies are acting as unregistered securities that should be under SEC regulation. Ethereum, one of the most popular and valuable cryptocurrencies, has yet to be defined as a security or not by the SEC. Consensys believes that the SEC will take action against them. Joseph Lubin, Co-founder of Consensys, wrote adamantly in this statement to the press, "They’ve made (The SEC) extensive requests for documents and testimony regarding our involvement with the code and the asset... Absent any indication from the SEC otherwise, we have no reason but to believe an action against Consensys regarding Ether to be imminent.” SEC regulation of Ethereum may prove to be an imminent threat to companies like Consensys, who act as regulators and builders of the asset themselves. Consensys has been issued a Wells Notice by the SEC, which essentially draws out all the charges that the SEC plans to bring upon Consensys for not registering Ethereum as a security.

Consensys is arguing in their suit against the SEC in Federal Court that Ethereum is not a security and should not be regulated by the agency. If the court rules alongside Consensys it could be a groundbreaking victory for Ethereum and other cryptocurrencies that aim to be separate from generic securities such as stocks and bonds. On the other hand if the court sides with the SEC this could be catastrophic for the blockchain and cryptocurrencies that have been acting as unregulated, but freely traded assets/currencies.

Cryptocurrencies and the blockchain present a problem for the SEC, it is hard to determine if each one can be considered a security, an asset, or a shady investment. Cryptocurrencies have brought on much wealth to the few who can understand it, or those who got lucky, but for most people it remains a mysterious market that is widely misunderstood. 

https://finance.yahoo.com/news/crypto-firm-sues-sec-fend-194957126.html 

Balancing Act: The Fed's Rate Cuts and Inflation Targets in a Turbulent Economy

As the world's largest money manager, BlackRock's CEO Larry Fink has a unique perspective on the global financial landscape, and his recent comments provide valuable insights into the challenging road ahead for the U.S. Federal Reserve.

According to Fink, despite the widespread expectation earlier this year of multiple interest rate cuts by the Fed, he believes only two cuts are likely to occur. This prediction comes at a time when inflation remains stubbornly high, with recent reports indicating a 3.5% annual rate, well above the Fed's target of 2%.

The idea that the Fed might lower rates in the face of such inflation seems counterintuitive to traditional economic strategies. Typically, rate cuts are used to stimulate spending and investment but can also exacerbate inflation. Fink's comments suggest a cautious approach, aiming to balance the need for economic stimulation with the imperative to control inflation.

What's particularly interesting is Fink's notion of accepting a "stable inflation" rate slightly higher than the target—between 2.8% to 3%. This represents a pragmatic approach to monetary policy, recognizing that the ideal of 2% might not be feasible in the current economic climate. Such an admission implies that the Fed might have to recalibrate its expectations, setting a new, realistic goal that factors in global economic pressures, supply chain issues, and ongoing geopolitical tensions.

Moreover, Fink's commentary came on the heels of BlackRock's report of a record $10.5 trillion in assets under management, underscoring the significant influence his views have on market movements and investor sentiments.

As we look ahead, it's clear that the Federal Reserve faces a delicate balancing act. It must navigate the choppy waters of rate cuts and inflation management, aiming to foster economic growth while keeping price increases in check. Investors and policymakers alike will need to remain nimble, ready to adapt to a financial landscape that continues to evolve rapidly.

This scenario is a perfect illustration of why it's crucial to stay informed and understand the broader economic implications of such decisions. As Fink suggests, sometimes settling for a less-than-ideal but stable inflation rate might be the victory we need in uncertain times. 

CNBC article

Beyoncé bounce: Western boot sales jump more than 20% week over week since ‘Cowboy Carter’ launch

 Since Beyoncé dropped her new album "Cowboy Carter", western boot sales have increased over 20%. Between the drop of this country album and Taylor Swift's tour, western American boots saw major boosts in sales. This inspired Louis Vuitton to reveal an American Western line during Paris Fashion week. Retailers and industries have already taken notice of the trend. Williams trading analysts Sam Poser upgraded his rating on Boot Barn and raised his price target $33 to $113, a 12% increase. This shows why it is important to keep up with trends, even when it comes to fashion and music, because the celebrities influence on the public can effect the economy in many different ways. 

EU-Mercosur: So Much More Than a Dead Deal

This article discusses the EU-Mercosur Trade Agreement, negotiations for which began in 1999 and reached an agreement in principle 20 years later. However, almost five years after the agreement, it remains in limbo, with experts questioning its viability. The agreement is significant, as the EU represents 450 million people and Mercosur over 280 million. The new free trade area would account for around 20% of the world's GDP. 

The article also highlights challenges, including the EU's bilateral trade deficit, which presents a new obstacle. It also discusses the role of China and other external powers in the deal's strategic significance. Many Europeans believe cultural ties will maintain relations, but geopolitical competition requires more. The article notes opposition within both blocs and the broader strategic interests, especially for the United States.

It discusses the challenges within Mercosur, including Argentina's internal politics, Brazil's stance, and other member states' interests, like Bolivia and Paraguay. The EU's internal dynamics, especially concerning agriculture and trade, are also analyzed. The article concludes that the EU's commitment to trade and international integration is tested by the Mercosur deal's fate. If it fails, it could signal broader challenges for the EU's trade agenda and global influence.

Source: https://www.csis.org/analysis/eu-mercosur-so-much-more-dead-deal 

Paris Olympics: Rental Challenges Ahead

 https://www.ft.com/content/e8493911-7f29-4119-9cf8-6bafad313075?accessToken=zwAAAY-cZ7WJkdPoSTkRfylBGdOc-GuvrTEwdQE.MEQCICakV3ePtjBnSGwMzjmvWbvLP8XcM-G_edDK1qSIxJ-RAiBj-bJfR6MngOWox5cb92e5mO8clR5-_-EhCitkqp7yfA&segmentId=7d4bcc2e-e664-92ba-62e3-5590579f1902

https://open.spotify.com/episode/3n9deMMMMMsitZfd5nAzMf?si=1580eccd4a144536

As the Paris Olympics draw near, locals looking to rent out their apartments are facing unexpected hurdles. With a flood of listings hitting the market, prices are dropping, and only a third of available Airbnb rentals have been booked so far for the Games. This surge of listings, along with many residents leaving the city during the event, means there are more apartments available than people looking to rent them, leaving many hosts struggling to find renters.

One such host is Stefania, a banker in Paris, who usually rents out her studio on Airbnb. Despite raising her prices for the Olympic period, she's had trouble finding renters. Many hosts like her are reconsidering their pricing strategies, as the average prices for booked accommodations during the Olympics are much lower than what they initially asked for. With hotels also competing for guests, securing bookings has become a real challenge for Airbnb hosts.

While the short-term rental market faces uncertainties, some experts see a bright side. Short-term rentals offer more flexibility compared to building new hotels, but the current surplus of rentals could lead to disappointment for many hosts. As prices continue to drop and competition heats up, hosts will need to be flexible and plan strategically to navigate these changes in the rental landscape.

Powell Dials Back Expectations on Rate Cuts

     Fed Chairman Jerome Powell spoke out last week for the first time since the new inflation numbers came in higher than expected, for the third month in a row. 

    While the Fed had previously planned to cut interest rates this summer, the stronger-than anticipated inflation indicators have shaken up those plans. This is a clear shift in the outlook of the Fed, as they would like to see these numbers go down before cutting interest rates.

    According to Jerome Powell, they would like more time to see the restrictive policies work. The current state of the workforce is strong, and inflation is slowly coming down. Powell also said that there would be no plans of raising interest rates. If the economy were to take a sharp downturn, Powell did say they would lower interest rates.

    Most of the financial sector took a hit after the PCE and CPE numbers came out for the month. While Jerome Powell addressed the public, the S&P 500 fell slightly, and 2-year Treasury note yields briefly hit over 5% for the first time since November.

Link: Fed Chair Jerome Powell Dials Back Expectations on Interest-Rate Cuts - WSJ

Mexico Economy to Keep Growing Steadily After June Presidential Vote: Reuters Poll

 

A Reuters poll indicates Mexico's economy is poised for steady growth post-June's presidential election, aligning with favorable performance in the United States, despite upcoming fiscal challenges for the incoming government. The current administration's increased spending ahead of the election has made for concerns about inflation among some central bank policymakers. Leading the electoral race is Claudia Sheinbaum, the ruling party candidate, who has advocated for measures such as minimum wage hikes and support for state-owned energy firms, although detailed fiscal plans remain pending. Analysts project a GDP growth of 2.2% for 2024 and 1.9% for 2025, with the main drivers being robust macroeconomic indicators in the U.S. and increased remittance flows. However, uncertainties persist, compounded by recent volatility in the local currency market and Mexico's regulatory framework, which restricts investments. Despite the fiscal deficit being the highest since 2015, plans to reduce it by almost half by 2025 are contingent on meeting current economic team targets, though questions remain about addressing Pemex's debt. Moreover, elevated inflation and the U.S. Federal Reserve's policy shifts have led some central bank members to advocate for a cautious approach, with expectations of further rate cuts throughout 2024 and 2025, all while constrained by Fed actions.

https://money.usnews.com/investing/news/articles/2024-04-22/mexico-economy-to-keep-growing-steadily-after-june-presidential-vote-reuters-poll

Russia is expected to grow faster than all advanced economies this year

Russia is expected to grow faster than all advanced economies this year

This article is about Russia's expected growth in the next year and how the International Monetary Fund predicts that it will be the fastest to grow in the coming calendar year. The growth is expected to be 3.2% in 2024 and would be greater than all other larger economies including the United States. This forecast is surprising to Western nations who had hoped to isolate the Russian economy after invading Ukraine in 2022. The article then discusses the self-sufficiency of Russia and how expanded during the war. From a political standpoint, the International Monetary Fund touches on the predicted impacts of the war with Ukraine and affects the political and social standing of Putin as he promises Russians to raise their living standards. Similar to what we discussed in class, Putin plans to raise living standards by spending money on education, healthcare, and public infrastructure which we learned are effective ways of raising the standard of living of a country.

Link: https://www.cnbc.com/2024/04/17/russia-forecast-to-grow-faster-than-advanced-economies-in-2024-imf.html

How to Plan for a Recession

The idea of experiencing a recession in the future is something that most Americans are used to, especially after everything that has happened in the last four years. This article dives into how to combat such economic downturns so that readers can understand what can be done to escape the negative effects that go along with recessions. The first way to handle the decrease in money supply would be putting your extra cash in a high interest insurance account. Securing an emergency fund, will help with keeping the value of your savings high and reducing the likelihood of needing to borrow because of its liquidity. It is important to note that living within you means during good economic stability will help reduce the need to borrow when food and gas prices rise in economic downturns. The article suggests that trying to live off of one payroll instead of two for married couples is a good habit that will help reduce spending and increase savings for emergencies. Diversifying your income streams was another suggestion which can help increase job security by having multiple places that one can put their extra time into for pay. Next is investing, and just like any good financial advisor this article preaches about investing in the long run and diversifying your portfolio. Diversifying helps with managing risk within the market, making sure you do not invest in one particular section of the economy mitigates the risk of completely loosing everything if that section collapses. They also emphasized the importance of investing for the long run, saying that you haven’t lost the money until you sell, so it is important to be aware that panic is what often leads to even worse situations. When prices are down it is almost like they are on sale, so in some situations it can be beneficial to take advantage of that if you have the means. As long as you are not invested in one place, this will help mitigate any major losses seen throughout the entire economy. As someone who plans to be a part of the workforce in the next two years, I thought this article was helpful in outlining some of the priorities I should be setting for myself. 

7 Ways to Recession-Proof Your Life

U.S. economy will see ‘more things break’ in 2025 if rates stay high, strategist says

 

In this article, it explains how traditional monetary policy is broken in the sense that it takes longer for the economy to see real effects. Another problem that was mentioned is if interest rates stay high into 2025 there could be major problems as many people and companies will be refinancing around that time causing them to feel the effects of high interest rates which on analysis suggested could cause large problems.

https://www.cnbc.com/2024/04/16/us-economy-will-see-more-things-break-in-2025-if-rates-stay-high-strategist.html

US March's Retail Sales Rise Much More Than Expected

Retail sales surge 0.7% in March as Americans seem unfazed by higher prices with jobs plentiful

March paints a picture of resilience in consumer spending, surpassing economists' expectations despite ongoing inflationary pressures. Retail sales increased by 0.7% in March, nearly double the forecasted rate, following a 0.9% rise in February. Even after excluding gas prices, which have been climbing, retail sales still showed a solid increase of 0.6%. While retail sales provide insight into consumer spending, they don't cover services like travel and hotel stays. However, the restaurant category saw a modest uptick of 0.4%.

Retail sales figures aren't adjusted for inflation, which rose by 0.4% from February to March. Despite this, retailers still saw solid gains in sales, indicating genuine consumer demand. Inflation remains a concern, driven by factors like higher gas prices, rents, and auto insurance. That as well the strong retail sales report will likely delay a cut by the Federal Reserve to interest rates that many had anticipated at the next meeting. Andrew Hunter, deputy chief U.S. economist at Capital Economics, doesn't think any rate cut will happen until September. 

Consumer behavior remains robust in spending due to reduced optimism about economic prospects, high living costs, and borrowing expenses. Consumers are becoming more selective in their purchasing decisions, focusing on value and essentials.

Unraveling Market Responses Amid Geopolitical Tensions: A Closer Look at Recent Financial Movements

In a week marked by significant geopolitical events, financial markets have responded with a mixture of anticipation and caution. The recent airstrike by Iran on Israeli soil has not only heightened tensions in the Middle East but also sent ripples through global financial systems, underscoring the intricate relationship between geopolitical stability and economic predictability.

The Immediate Impact on Oil and Gold

The attack, which targeted Israeli military facilities, spurred a notable shift in commodity markets. Oil prices, which had peaked on Friday in response to rising hostilities, saw a dip with Brent crude falling below $90 a barrel and US WTI crude dropping by 1% to $84.50. This fluctuation reflects the market's nervousness about potential disruptions in oil supply, a critical concern given the Middle East's pivotal role in global oil production.

Conversely, gold, a traditional safe haven in times of uncertainty, saw its price increase. Spot gold rose by 0.3% to $2,349 per ounce, nearing its all-time high, driven by investors' flight to safety amid escalating fears of further conflict.

Global Stock Market Reactions

The stock markets have exhibited mixed responses. Europe’s Stoxx 600 index modestly increased, while major indices like Germany’s DAX and France’s CAC 40 also saw gains. However, the FTSE 100 in London declined slightly by 0.4%. In Asia, the Hong Kong Hang Seng Index and Japan's Nikkei 225 both experienced declines, whereas the Shanghai Composite Index in China bucked the trend with a rise of 1.3%.

This divergence highlights the global nature of financial markets and their varying sensitivity to geopolitical events. Markets closer to the epicenter of the conflict showed more pronounced negative reactions, whereas others seemed to benefit from reallocations within the global investment landscape.

The Role of International Bodies

The International Energy Agency (IEA) has remarked on the increased volatility in oil markets, emphasizing the importance of oil security in the current climate. The agency's insights are a stark reminder of the broader implications of regional conflicts on global economic stability.

Strategic Moves by Nations and Corporations

In the wake of these developments, Israel's government has been deliberative in its response, with strategic meetings to decide the next course of action. Meanwhile, the U.S. has opted for a cautious stance, choosing not to engage directly in military retaliation, which has offered some reassurance to the markets, as indicated by a modest uptick in U.S. stock futures.

Looking Ahead

As investors and analysts watch these unfolding events, the key takeaway is the interconnectedness of global markets and geopolitical stability. The immediate future of the markets will heavily depend on the progression of this conflict and the strategic decisions made by key global players.

In these volatile times, investors are advised to stay informed and consider hedging risks by diversifying their investment portfolios, not only across different financial instruments but also geographically. As history has shown, turbulence is often short-lived, but the lessons learned about the resilience of global markets can provide valuable insights for future strategies.

This dynamic scenario serves as a critical case study for both economic and political analysts, as it combines elements of international relations, market psychology, and strategic economic planning, illustrating just how globally intertwined our modern world has become.


Source - https://www.cnn.com/2024/04/14/markets/asian-markets-gold-oil-iran-attack-israel-intl-hnk/index.html

 

When will Americans see those interest-rate cuts?

Link:https://www.economist.com/finance-and-economics/2024/04/10/when-will-americans-see-those-interest-rate-cuts

In the wake of robust growth, this article says inflation is only looking stickier. For multiple months now, inflation has come in higher than forecasted and at this rate inflation at the end of the year will be hitting 4% rather than the Fed’s target 2%. Because of this the Fed is still not going to cut rates. The Fed not cutting rates will remain consistent with Powell’s approaches to the past and remain data-dependent before any decisions are made in terms of monetary policy. It will be interesting to see how the PCE, when it comes out, is interpreted. 

In terms of discussion that we’ve had in class about how politics can affect decisions made, I thought it was interesting that the article talked about how this might look for Biden with the election coming up. 

To perfectly sum up what this may mean for our near and distant future the article concluded with this quote: “The general conclusion today is that although growth has remained impressively strong, it now appears to be bumping up against the economy’s supply limits, and is therefore translating into persistent inflationary pressure. That calls for tight, not loose, monetary policy. The Fed, already cautious about cutting rates when inflation figures were more co-operative, is likely to be even more wary now.”

Soft Landing or No Landing? Fed’s Economic Picture Gets Complicated.

     In the article “Soft Landing or No Landing? Fed’s Economic Picture Gets Complicated” published in The New York Times by Jeanna Smialek, it delves into the topic of stubborn inflation and strong growth that could keep the Federal Reserve wary about interest rate cuts. 

    The article discusses unexpected economic trends in 2024, contrary to previous predictions of a "soft landing" marked by declining inflation and moderate growth. Instead, the economy is booming with prices rising more quickly than anticipated. This challenges the Federal Reserve's goal of controlling inflation at a steady 2 percent, potentially leading to prolonged high-interest rates. Recent data shows stubborn inflation, prompting caution among Fed officials about rate cuts. Despite initial expectations of three rate cuts in 2024, investors now anticipate fewer cuts, reflecting the economy's resilience. Fed Chair Jerome H. Powell emphasizes patience, citing strong growth, while some policymakers suggest no rate cuts at all this year.

This cautious approach may delay rate cuts until later in the year or even prompt a rate increase if inflation remains stagnant. The article highlights the potential impact on households and President Biden's political standing ahead of the 2024 election. Overall, it underscores the uncertainty surrounding future Fed policy and its implications for the economy.

Soft Landing or No Landing? Fed’s Economic Picture Gets Complicated. - The New York Times (nytimes.com)

Market Turbulence: Dow Dives and Treasury Yields Soar Amid Inflation Concerns

In a notable market event on April 9, 2024, the financial world witnessed significant volatility as stocks took a plunge following the release of March's inflation data, which came in stronger than many had anticipated. This unexpected rise in inflation figures has led to a reconsideration of the timing of anticipated interest rate cuts by the Federal Reserve, impacting investor sentiment and market dynamics.

The Numbers Speak Volumes

The Dow Jones Industrial Average faced a substantial decline, dropping 577 points or 1.5%, while both the S&P 500 and Nasdaq Composite saw decreases of 1.3% each. This downturn was not isolated to specific sectors; all major sectors within the S&P 500 painted the market red, with real estate experiencing the most significant loss at about 4%.

This market reaction comes on the heels of a strong first quarter for the year, where the S&P 500 rallied 10% for its best first-quarter gain in five years. The optimism was momentarily dampened as the Consumer Price Index (CPI) for March reported a 0.4% rise for the month and a 3.5% increase year-over-year, slightly above the forecasts. Similarly, the Core CPI, which excludes volatile food and energy prices, accelerated more than expected.

Fed Rate Cut Expectations Adjusted

The strong inflation data has led to a shift in expectations regarding the Federal Reserve's monetary policy moves. According to the CME FedWatch Tool, the likelihood of a rate cut at the Fed's June meeting has now diminished to just 20.6%. Market participants are recalibrating their bets, with many now anticipating that any potential rate cut could be delayed until the Fed's September meeting.

Treasury Yields on the Rise

The treasury yields, particularly the 10-year and 2-year yields, have responded to the inflation news with significant spikes. The 10-year Treasury yield surged back above 4.5%, while the 2-year yield approached nearly 5%. These movements underscore the market's anticipation of a more aggressive stance by the Federal Reserve to combat inflation, which remains stubbornly high.

Sectoral Impacts and Investor Sentiment

The impact of the inflation data and adjusted expectations for Federal Reserve policy was felt across various sectors. Financial stocks such as JPMorgan Chase and industrial giants like Honeywell saw declines, reflecting concerns over the impact of higher rates on economic growth. Technology stocks, a sector that had been on a hot streak, also experienced pullbacks, with giants like Microsoft and Apple each retreating by 1%.

 Looking Forward

Despite the day's downturn, market analysts and investors are keeping an eye on the broader picture. Many see this as a temporary adjustment rather than a signal of a longer-term bear market. The upcoming release of the Fed's meeting minutes and further inflation reports will be closely watched for indications of future policy directions and their implications for the markets.

As we navigate through these volatile times, the importance of monitoring inflation trends and Federal Reserve policy decisions remains paramount. The market's reaction to the latest inflation data serves as a reminder of the intricate balance between monetary policy, investor expectations, and the real economy.


Source - https://www.cnbc.com/2024/04/09/stock-market-today-live-updates.html

How to build a global currency

 The article discusses the evolution of the Indian rupee's international standing over the past decades, contrasting its historic presence in the global market with its current marginal role. Despite India's economic stature as the world's fifth-largest economy, the rupee accounts for less than 2% of international currency transactions. Prime Minister Narendra Modi has expressed a desire to elevate the rupee's global prominence, urging policymakers to enhance its accessibility. However, historical precedent suggests that while leaders often advocate for their currency's global recognition, enacting the necessary reforms remains a challenge.

The piece explores the potential benefits and challenges associated with establishing a currency's international prominence, drawing parallels with the experiences of other countries such as Japan and China. While India has taken strides to bolster the rupee's international appeal, notably through inclusion in global financial indices and facilitating foreign investment, significant barriers remain. The article suggests that achieving global currency status requires extensive economic reforms, akin to those undertaken by Japan in the past, which may entail considerable disruption to existing economic structures. Without internal impetus for change, the prospect of India's rupee ascending to global currency status remains uncertain, with the article underscoring the need for domestic initiative in driving such transformation.

https://www.economist.com/finance-and-economics/2024/04/04/how-to-build-a-global-currency

“The Fed and Political Independence: It’s Complicated”

This article discusses how Joseph Sternberg, who writes for the Wall Street Journal, thinks the Fed has created the worst inflation in over forty years through excessive tightening. He states that “the central bank could cast the economy into a recession for no good reason” and feels that the Fed should be held accountable similarly to elected officials. Sternberg believes that the Fed should be held politically responsible by having state governors appoint Fed regional bank boards (which then appoint the regional bank president) and empower “the US president to fire at will members of the Board of Governors.” Moreover, the article's author, Alexander William Salter,  agrees with Sternberg and believes that Congress should change the Fed’s mandate to focus solely on price stability. He states that the Fed should be required to target the price level or nominal GDP. The Fed can choose the metric, but it must stick with it, and its leaders must be accountable for hitting the target on an ongoing basis. The author believes that failure should result in punishment, up to and including dismissal, and that the Fed’s strategy of using interest paid on reserves to implement monetary policy gives it too much power. The Fed can arbitrarily increase its balance sheet, giving it control over credit allocation. Essentially, the Fed pays banks not to lend, incentivizing banks to keep more significant reserve balances in their Fed accounts. The author gives more instances to regulate the Fed and remove some of its power. 

https://www.aier.org/article/the-fed-and-political-independence-its-complicated/

Employees seeking purpose at work; How it is impacting economy

    According to new survey studies by managment consulting firm McKinsey and Company, 82% of employees believe it is important for their company to have a purpose. There are many reports of people leaving their jobs unless they are to get more from the job, but not neccessarily in terms of a raise or more money. Business Insider report shows that companies who have "disengaged emplyoees could cost the economy upwards of 2 trillion dollars and are 18% less productive than those that are engaged (resulting in loss of one full workday of productivity). Other research states that 34% of employees would quit because of a toxic work environment and 48% would resign if a job "prevented them from enjoying their life.

    Now more than ever employees are valuing their time and what their job has to offer to them in terms of fulfillment. People do want to work, its just a matter of feeling purpose and engagement at all times. Employers need to recognize that these expectations have changed and will continue to change with the time. Specifically, in order to have a positive impact, companies must upgrade work culture, honor a work/life balance, ask about personal purpose, and clarify their purpose consistently. 

 Link to video article 

U.S. job growth totaled 275,000 in February but unemployment rate rose to 3.9%

The February jobs report showed stronger than expected job creation with 275,000 new jobs, surpassing Wall Street's expectation of 198,000. However, the unemployment rate rose to 3.9%, and revisions to December and January figures resulted in 167,000 fewer jobs than initially reported. Wage growth was minimal at 0.1% for the month and 4.3% year-over-year, slightly below expectations. Key sectors contributing to job growth included health care, government, and the hospitality industry. Despite the increase in part-time positions and a slight rise in the "real" unemployment rate to 7.3%, the report indicates that the job market remains robust. Average hourly earnings and hours worked suggest inflationary pressures may be easing, potentially influencing the Federal Reserve's future interest rate decisions. The mixed data reflects ongoing economic resilience amid uncertainties, including recent high-profile layoffs in the tech sector and mixed signals from Fed officials on the timing of potential rate cuts.

Link

Silver Lake's Endeavor Takeover: A Strategic Leap

In a strategic move that's causing quite the stir in the entertainment sector, Silver Lake has announced its plan to take the entertainment behemoth Endeavor Group Holdings private, offering $27.50 per share. This deal pegs Endeavor's equity at a whopping $13 billion. The significance of this acquisition is twofold. Firstly, it underscores Silver Lake's confidence in Endeavor's potential for growth and innovation. Endeavor, known for its talent agency WME, brand licensing, and event promotions, has recently expanded into sports betting with the acquisition of OpenBet and divested from IMG Academy, demonstrating its strategic diversification.

Moreover, this deal has implications for the broader entertainment industry, highlighting a trend towards consolidation and private investment. With Endeavor maintaining its majority stake in TKO Group Holdings, the parent company of UFC and WWE, the transaction ensures that Endeavor's influence in sports and entertainment continues unabated, albeit under a private banner. This move could signal a new chapter for Endeavor, focusing on growth and expansion without the scrutiny of public markets. As the deal is expected to close by the end of the first quarter of 2025, industry watchers are keenly observing how this acquisition will reshape the landscape of entertainment and media.

Paraguay records highest economic growth in the region in 2023

 Paraguay's Central Bank (BCP) reported a regional milestone with the country achieving the highest growth rate in the last quarter of 2023, marking a significant 4.9% expansion. This growth surpassed the previous quarter's 3.7% and the 1.8% recorded in the last quarter of 2022. The BCP's Quarterly National Accounts report highlighted positive performances in various sectors, including manufacturing, agriculture, and services.

Despite the overall positive outlook, challenges persist, particularly in construction, which saw its seventh consecutive negative quarter. Additionally, the agriculture sector faced difficulties due to lower production levels of key crops like corn, sunflower, and tobacco. Moreover, the rise of the dollar against the local guaraní raised concerns about inflationary risks, prompting calls for action from the BCP to control possible financial speculations and mitigate the impact on imports such as fuel and other basic inputs.

Source: https://en.mercopress.com/2024/04/01/paraguay-records-highest-economic-growth-in-the-region-in-2023 

California Holds Highest Minimum Wage for Fast Food Workers

 As of Monday, April 1st, California's state minimum wage jumps from 16 dollars per hour to 20 dollars per hour putting California at the top spot in terms of state minimum wage. 

For some, this is a great step in the right direction of making minimum wage more live-able, but for others it means potential loss. This article focuses on Mr. Bynum, a franchise owner of a small barbeque restaurant in Southern California. For him, this jump in minimum wage means a huge increase in monthly expenses and an inevitable increase in his prices which he has found in the past few years has significantly dropped the amount of customers. 

Restaurant owners are not the only ones concerned. An employee of the Californian barbeque joint shared his concerns of a more competitive job market as the minimum wage rises. 

The billion dollar Fast Food Industry can afford this raise according to the article, and it appears that it will be beneficial for many people. But the small businesses and employees of those small businesses will suffer. Some owners may have to cut costs, reduce employee's hours or even shut down because they cannot budget for thousands of dollars more in wages a month. 

A Professor of Economics at University of California, Irvine remarked that while the higher minimum wage creates winners, it also creates losers. Many appreciate the higher wage and it will improve their industry, but for others, it raises the cost of living and just isn't sustainable. 

https://www.nytimes.com/2024/03/28/business/economy/fast-food-minimum-wage-california.html

HDI and Measuring Living Standards

 In the article, the topic of change in living standards for the past four years is discussed. While there has been significant improvement in standards of living in the past couple of decades, the Human Development Index (HDI) has taken a significant hit within the past couple of years. This is largely due to the “unpredictable” events that have shaken the world, two examples include the pandemic in 2020 and the war between Russia and Ukraine.  D

The HDI gauges progress in terms of societal outcomes, such as life expectancy, childbirth, average years of schooling, and gross income per person. The economic measure was established in 1990 and has seen constant annual growth until its first drop in 2020 and 2021. The latest report published on March 13th indicated growth in the previous year. However, the HDI has still not reached the levels that it once was before the pandemic. This is simply because the pandemic has caused a permanent setback.

This setback has further increased the gap between countries with the highest and lowest HDIs. Historically, in the past 20 years, that gap was becoming more narrow as the years progressed.

https://www.economist.com/graphic-detail/2024/03/13/which-countries-have-the-best-and-worst-living-standards?utm_medium=cpc.adword.pd&utm_source=google&ppccampaignID=17210591673&ppcadID=&utm_campaign=a.22brand_pmax&utm_content=conversion.direct-response.anonymous&gad_source=1&gclid=CjwKCAjwtqmwBhBVEiwAL-WAYWocR7bKnAqVlU5bGQiVFbJgAGq1olME9cQ9yENq5VVyKMei944G9xoCLzgQAvD_BwE&gclsrc=aw.ds

More Volatility Ahead: BOJ Ends Negative Rates, Yen's Future Uncertain

The Bank of Japan (BOJ) ended its decade-long policy of negative interest rates on Tuesday. This is likely to cause the yen to become more volatile. The yen has been a popular currency for carrying trades because of its stability. However, with the BOJ raising interest rates, the yen is no longer as attractive for carry trades. This could lead to a decrease in demand for the yen and cause it to depreciate.

In the long run, the BOJ's decision could lead to the yen appreciating. This is because the Japanese economy is expected to improve in the coming years. However, in the short term, the yen is likely to be more volatile.

The BOJ's decision is also likely to impact investors, companies, and governments. Investors who were using the yen for carry trades will need to find a new currency to use. Companies that were using cheap yen funding to expand overseas may no longer be able to do so. And governments that have issued yen-denominated bonds may find it more expensive to pay back their debt.

Overall, the BOJ's decision to end negative interest rates is likely to have a significant impact on the yen and the global financial markets.

https://www.ft.com/content/7648a877-a693-4bf8-ab9f-ea71805b4401?accessToken=zwAAAY8a5HA-kc92SKh3ppNL-NOrn-pxgFtEAQE.MEYCIQCquTd_OQRic1D04uMTHMyQtcPeeO5biaLT8Q95UKpPKgIhAP_rbh_3MXOxtOHhw4kkWmugMHvbrBYp5j3qmCm2p8X7&segmentId=7d4bcc2e-e664-92ba-62e3-5590579f1902

Cost of the Baltimore Bridge Collapse

The Francis Scott Key Bridge in Baltimore, Maryland collapsed on Tuesday after being struck by a cargo ship. The port closure could cost up to $15 million per day that it is closed. The port of Baltimore, which is the ninth largest port in the United States, handles up to $80 billion worth of goods a year. The port is expected to be delayed by 24 days which could result in major disruption in US imports and exports.  The bridges' collapse is expected to result in a multi-billion dollar insurance loss and be the largest marine insurance loss in history. The port also supplies 15,000 jobs locally, and its closure may result in job loss and loss of wages. 

link: https://www.aljazeera.com/news/2024/3/30/what-is-the-economic-cost-of-baltimores-key-bridge-collapse

Key Fed inflation gauge rose 2.8% annually in February, as expected

 Inflation rose to the amount that the Fed had predicted for the month of February. The PCE index had increased by 0.3% from the previous month. It should be noted that the fed targets around 2 percent inflation annually but has not been below that in years. These numbers were not the best but are obviously not surprising based on the last months forecast for the number. Typically, the forecasts are not a good indicator, but this past month the fed seemed to predict it on the money. Part of the reason is due to the rising energy costs in the United States. Consumer spending and goods also increased with inflation, which were both major contributors to the increase. Another note was that personal income increased slower than predicted.

Disrupted Supply Chains: Baltimore Bridge Collapse

           The recent collapse of the Francis Scott Key Bridge in Baltimore on Tuesday disrupted crucial supply chains and threatened economic stability. This was a pivotal point for trading as it connected the Port of Baltimore to the mainland. With the collapse of the bridge, there was a suspension of vessel traffic, raising concerns about the flow of essential goods. Since the Port of Baltimore is the 17th largest in the nation, its suspension caused a huge disruption in supply chains. It handled 52.3 million tons of foreign cargo which was worth 81 billion dollars in 2023 and created more than 15,000 jobs. Additionally, the coal industry mainly relied on the Port of Baltimore for export. Because of the collapse, they need to reroute shipments and handle other complications. The coal industry is only one of the many that have been affected by the bridge collapse. As the region grapples with the consequences of the bridge collapse, efforts have started towards rebuilding it however, it will require significant time, resources, and coordination. 

Link: https://www.washingtonpost.com/business/2024/03/27/baltimore-port-economy-disruption-bridge-collapse/