ECONOMY Fed can’t tame inflation without ‘significantly’ more hikes that will cause a recession, paper says (for Feb.)

 https://www.cnbc.com/2023/02/24/the-fed-cant-tame-inflation-without-more-hikes-paper-says.html

The fed is not able to lower the inflation rate without raising the interest rates. While everyone thinks that inflation rates will begin to go down, the fed is not able to lower the inflation without the raising. Since the inflation rate has not been this high in over 41 years, the fed has been implementing high interest rate bursts to help what the inflation. As opposed to the past where the government would watch and see how the inflation affects everything, the fed said they are trying to jump on it quick and avoid long term issues. I think this is the best idea as of now. Even though it is hard times as of now, it is better to get over the hard times now and try to get it back down to a reasonable interest rate. 

NCAA March Madness expected to have $6.5 million economic impact on Milwaukee

 In the upcoming month of march madness, Milwaukee is supposed to hold about 18,000 college fans from all over the world. The event is expected to have a $6.5 million economic impact on the area, according to VISIT MilWhen the NCAA Men’s Basketball Tournament rolls into central Indiana in a few weeks, venues will be allowed to have up to 25% capacity, including a limited number of fans. It will be a huge economic boost to central Indiana hotels and restaurants. The high inflow of non-residents to the city will likely increase spending on area hotels, resturants, retail vendors, and rental car companies, in addition to public transportation and parking services. Higher inflow spending in the city means higher tac revenues for the local government, which is a positive for service boosting for local residents. Higher spending will also increase demand for labor, boosting employment opportunities and wages in the labor force. Higher employment and wages are expected as well because the workers spending their income on goods and services. 

Future of business owners in East Palestine

East Palestine is made up of a lot of small business in which the owners live in the community. Several business owners were surveyed and all talked about how they felt about the train crash. These people were owners of a greenhouse and hot dog shop, an insurance company owner, a man who started an escape room and a woman who sells rubber bracelets. Many of these owners already getting feedback from people that they’re not coming to there business for fear of what’s happening. They are all concerned about the future and the stigma that will hang over East Palestine for a long time.

Business believe they need a tremendous marketing campaign. The village is looking for a new village manager. That person has to be somebody who’s on top of marketing, who understands business, who understands how to get out of the situation they are name. Business owners in East Palestine, Ohio, have hit out at rail operator Norfolk Southern over the company's response to one of its trains derailing in the town on February 3. Plenty of companies have "lost a lot of business" due to the derailment, one business owner added: "I'm just concerned about the aftermath, what's going to happen months or years down the road. The real estate in East Palestine has hit rock bottom. Nobody's buying in this town, and you can't sell anything since the accident.

Do you think business will be able to bounce back from this environmental disaster?

Money Doesn’t Make America’s Economy Go Around

Some people believe that the amount of money in circulation is what primarily determines the US economy. They hold that decreasing the money supply will stop inflation, which was brought on by the Federal Reserve's recent increase in the money supply. This viewpoint, however, is inaccurate and oversimplified.

One factor that has an impact on the economy is the money supply, but there is little correlation between it and actual economic results. The willingness of both individuals and financial institutions to borrow money is crucial. Money's velocity, or how quickly it moves around, is influenced by the actions of numerous financial intermediaries and their clients

In 2008, the Fed changed its monetary policy, further complicating the relationship between bank reserves and the cost of credit. Because of this, even though the money supply increased significantly during the Fed's quantitative easing programs, inflation didn't spike.

Various factors, such as changes in demand, fiscal stimulus, and low interest rates, contribute to inflation. While quantitative easing helped to boost the economy, its influence on inflation has been overstated. The impact of quantitative tightening on inflation will also be minimal, and short-term interest rates play a bigger role in determining people's propensity to borrow and spend money.

Source: https://www.bloomberg.com/opinion/articles/2023-02-28/money-supply-doesn-t-explain-us-inflation

Hikelandia Inflation

An article from the Economist tracks monetary policy in where they call "Hikelandia", which is Brazil, Chile, Hungary, New Zealand, Norway, Peru, Poland and South Korea. In these countries, central banks have started raising interest rates before and more forcefully than America’s Federal Reserve. They found that there was very little evidence that this lowered inflation rates. Core inflation hit a high of 10% while output is shrinking. Core inflation in Brazil is actually falling, but in Hungary, core inflation rose from 19% to 25% in a five month period. They are estimating that that the prices of more than one-fifth of Hikelandia’s inflation basket are rising by 15% or more.

https://www.economist.com/finance-and-economics/2023/02/02/super-tight-policy-is-still-struggling-to-control-inflation

 

MLB average salary rose 14.8% to record $4.22M last season.

    This season, the MLB's average salary per player increased by 14.8%, it is now at an all-time high of $4.22 million dollars. This is the largest jump in salary since a 17.7% increase in 2000 to $1.61 million. The average had dropped in each of the previous four seasons before 2022, sparking player anger that was expressed by the union during a 99-day lockout that ended last March. Payrolls, which are a more complete reflection on spending, rose 12.6% to $4.56 billion from $4.05 billion. The Mets have boosted their payroll to a projected $370 million, well past the previous record of $297.9 million of the 2015 Los Angeles Dodgers. Some owners are arguing for significant change to lessen payroll disparity when the current labor contract expires after the 2026 season. The MLB has assigned another group this month to examine the economics of the league. MLB had $10.8 billion in revenue last year.

    Union head Tony Clark said, "A salary cap is the ultimate restriction on player value and player salary. We believe in a market system. The market system has served our players, our teams and our game very well." Clark suggested some teams maintain low payrolls as strategy rather than because of lack of revenue. He also goes on to say, 'Can or won't is a valid question to ask when teams in an industry that has grown are still in a world where their payrolls are half of what they may have been 10 or 15 years ago." The level of excitement brought from this past offseason of trades, and signings should only help increase the league earnings, so that is expected to jump as well.

Link: MLB average salary rose 14.8% to record $4.22M last season (ksby.com)

U.S. Economy - America Is Trying to Electrify

As demand for renewable energy increases and people try to transition to more sustainable energy sources, electricians, an essential part of the transition process, are in short supply. The new climate law is expected to increase demand for car chargers and heat pumps, putting several hundred billion dollars worth of incentives into the economy designed to accelerate the energy transition. 

The lack of available electricians is most severe in the Northeast and California, where demand for green energy products is highest, and many electricians have retired during the pandemic. As a result, the average annual electrician salary rose from $50,000 to $60,000, with some electricians raising prices and wages due to labor shortages. Industry analysts say it will be challenging to meet that demand. The current total of over 700,000 electricians is expected to grow only 7% over the next decade, slightly faster than the nationwide average of 5%. 

To help address the shortage of workers, the government is trying to introduce tax credits and incentives for apprentices. Also, product makers are trying to make simpler electrical products that won't require an electrician to install, reducing the demand for electricians. Current owners of Electrical Services groups emphasize the need to train apprentices since their work requires training and specific knowledge. 

Source: https://www.wsj.com/articles/america-is-trying-to-electrify-there-arent-enough-electricians-4260d05b?mod=economy_lead_story 

What war has done to European Economy

 European officials anticipated that 2023 would mark the return of the "old continent" to its previous norm of acceptable growth and inflation below 2%. The economy of Europe is undoubtedly slowing down. However, the new normal is much less appealing than economists had anticipated.

On the plus side, since prices surged last summer, gas is currently less expensive than it was before the conflict. Partly as a result of the abnormally warm weather, governments were not forced to ration energy as had been initially feared. After reaching a record 10.6% in October, headline inflation is now declining.

Neither has industry collapsed due to gasoline prices, as conspiracy theorists prophesied. Since the start of the war, energy-intensive factories in Germany have suffered a reduction in output of a fifth as imports have replaced domestic production. By the end of the year, however, overall production had decreased by barely 3%, in accordance with the pre-pandemic norm. The most recent ifo survey reveals that manufacturers are still confident about the future.

The giant job market in Europe can increase inflation. Pay demands are rising as a result of high costs and labor shortages, which are anticipated to get worse as baby boomers retire and fewer young people join the workforce. After only increasing by 3.3% in 2022 and 2.1% in 2021, salaries in the Netherlands increased by 4.8% in January compared to a year earlier. The unions in Germany's public sector are threatening additional strikes. 

In the year to January, the consumer price index increased by 7% without accounting for food and energy. According to the PMI poll, expenses are rising rapidly for services in particular, which could result in more price hikes. The European Central Bank is thus forced to maintain its high-interest rates. Markets anticipate a summertime increase from 2.5% to 3.7%. So, funding for businesses and people is likely to become more expensive, which would hurt investment. According to the bank's lending survey, credit criteria are already becoming stricter.

https://www.economist.com/finance-and-economics/2023/02/23/what-war-has-done-to-europes-economy

Jobs during "rollin recessions"

 "Rolling recession" is the term being popularly used for the U.S. economic slowdown since early 2022. It also means that easier employment will be available in some industries. Although not being in an official recession, some sectors will feel like they are in a contraction. Economists say that the labor market remains tight compared to pre-pandemic levels, but has seen gradual decreases and will continue to do so for the upcoming months. 

It will be easier to find jobs in government administration, education, and consumer services. Industries like tech, entertainment, information and media, professional services, retail, and financial services will have moderately tighter markets. Extremely tight labor markets include accommodation, oil and gas, hospice and health care. 

No slowdown is expected in "recession proof" industries: government, utilities, education and consumer services. Even though the labor market demonstrates strength and overall healthiness, economists still believe in an approximating recession; with no significant impact on labor markets.

https://www.cnbc.com/2023/02/12/heres-where-the-jobs-will-be-during-the-rolling-recessions.html

Europe Has Weathered an Energy Crisis, For Now

 Europe has maneuvered their way through an energy crisis over the last year since the start of the Russian-Ukraine dilemma. For now, a reliance on Russian energy that seemed more like a chokehold a year ago has significantly loosened. Russian gas supplies to Europe have been drastically reduced, and the region seems to be weathering recent bans on most Russian oil without a hiccup. Where do most EU countries rely on their oil and gas now?

Luckily, European nations have made quick decisions on their energy supplies since their former supplier in Russia was hit with many sanctions from the UN. Russia is a large energy (Oil and Natural Gas) supplier. Now, Europe is battling their energy shortages by importing from Qatar, Norway, and the Texas shale oil fields (source rock). 

Representatives have spoke out on behalf of the great EU nations explaining that they may not be out of the woods just yet. Ultimately, as a global society and the overall history of human beings on Earth, we have stumbled upon nothing short of "magic" to a earlier human. We are depleting our ancient energy supplies 10 million times faster than it was sequestered from the time ancient sunlight put in on our planet. Does this pose the question more broad than just the the EU, that are civilizations have become too reliant on this "magical" energy otherwise known as coal, oil, and natural gas? How much is left on Earth (peak oil), and will our renewable energy sources be able to prop up a global economy reliant on constant (infinite growth)? 

Europe has seen only a glimpse into the future...will energy crisis's become common in the near to short-term future?