On 28 July, the European Central Bank (ECB) ended eight unbroken years of negative interest rates by boosting its key rate from -0.50 percent to zero, double the increase it had previously signaled. It was the bank’s first rate hike in 11 years and the biggest since 2000. The bank will continue to “normalize” rates...
Category: TRENDS ON THE GLOBAL ECONOMIC FRONT
Post
EUROZONE BUSINESS ACTIVITY TURNS NEGATIVE IN JULY
Business activity in the 19-country Eurozone contracted in July for the first time since February 2021, according to S&P Global’s composite purchasing managers index (PMI). The index fell to 49.4 in July from 52.0 in June. Economists surveyed by Reuters had predicted a rating of 51. Ratings below 50 indicate contraction. The turn to contraction...
Post
GERMANY STALLS, OTHER EU ECONOMIES CLAIM GROWTH IN JULY
Germany’s economy, Europe’s largest, stalled in this year’s second quarter as international trade slowed under China’s anti-COVID lockdowns and Russia’s varying deliveries of natural gas hobbled industrial production. Germany gets about a third of its natural gas from Russia, which has variously slowed or halted deliveries in what most analysts assume is punishment for Germany’s...
Post
STRONG DOLLAR WEAKENS OTHER ECONOMIES, FORCES HIGHER RATES
The U.S. dollar has gained about 12 percent in value this year relative to other major currencies, in large part because the U.S. Federal Reserve has raised interest rates more aggressively than have the central banks of many other major economies. Also, fears of a global recession and geopolitical turmoil have spurred investors to seek...
Post
NEW WORLD DISORDER: IMF WARNS OF GLOBAL RECESSION
The world economy is teetering on the edge of recession, the International Monetary Fund (IMF) warned in its latest quarterly economic outlook report. The agency also cut its global growth forecast again, dropping it to 3.2 percent from 3.6 percent forecast in April. In 2023, worldwide economic expansion will be a modest 2.9 percent, the...
Post
EMPLOYERS FACE TRIPLE-WHAMMY: COVID-19 INFECTIONS, LABOR SHORTAGES, AND SUMMER VACATIONS
At this rate, it’s remarkable that anybody’s going to work at all. Employers are facing a confluence of issues that are leading to staffing shortages during the summer months ranging from a surge in COVID-19 infections, a lingering labor shortage, and vacations. According to data released by the Census Bureau, about 4 million people called...
Post
TOP TREND DRAGFLATION: GLOBAL BUSINESS ACTIVITY SLOWS SHARPLY IN JULY
Business activity slowed worldwide last month, according to surveys of purchasing managers. In the U.S., the composite purchasing managers index (PMI) encompassing both goods and services, sank to 47.5 in July, compared with 52.3 in June. Ratings below 50 indicate economic contraction. “The downturn signaled a further loss of momentum across the economy not seen...
Post
WHEN THE ECONOMY FALLS JOBS GO WITH IT
Inflation and interest rate hikes are causing companies in many sectors to lay off employees. To illustrate the employment trends and the socioeconomic implications, each week we will list job losses. Initial claims totaled 251,000 for the week ended July 16, up 7,000 from the week before and above the 240,000 Dow Jones estimate. The...
Post
SPOTLIGHT: BIGS GETTING BIGGER
CHINESE LITHIUM GIANT BUYS RIGHTS TO ARGENTINE DEPOSIT Ganfeng Lithium, the Chinese company ranked as the world’s biggest lithium producer by market capitalization, has agreed to buy Argentine mining company Lithea for $962 million. The deal hands Ganfeng rights to two brine deposits capable of producing the lithium carbonate essential to the batteries that power...
Post
SPOTLIGHT: CHINA
INVESTORS CIRCLE BACK TO CHINA In June, investors put more than $6 billion into 20 international funds focused on Chinese stocks, more than in any month since early 2021, according to Morningstar. Investors are betting on signs that China’s crackdown on its tech sector may be easing and that the worst of the country’s property...