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4 reasons the economy looks like it's crumbling — and what to do about it – CNN

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New York (CNN Business)The American economy is super weird right now.

Pretty much anyone who wants a job can have one. The economy is so hot that prices are surging faster than at any point since the 1980s. The housing market is on fire. Consumers are spending like crazy.
Yet we keep hearing the word “recession” like it’s 2007 all over again. What gives?
The truth is that we’re probably not in recession now (although it’s possible), but there are plenty of signs that one is around the corner.

Sign 1. The Fed is hiking rates

Inflation has been rampant, and the Federal Reserve’s tool to fight surging prices lies in its ability to set interest rates higher. That makes borrowing more expensive and slows the economy down — on purpose.
The problem is the Fed was super-duper late to raising rates. Inflation was a growing concern throughout 2021, but the central bank only began hiking rates in March 2022. So the Fed needs to play catchup — and take far more drastic action than it would if it had started raising rates last year.
Last week the Fed raised rates by a half-percentage point, the biggest single rate hike in 22 years.
Fed Chair Jerome Powell said this month the central bank would continue to raise rates by half a percentage point at the conclusion of each meeting until it’s satisfied inflation is getting under control — and then the Fed would continue to raise rates by a quarter-point for a while.
The Fed is convinced it can raise rates without plunging the economy into a recession. But that so-called soft landing has proven elusive in the past, and many Wall Street banks believe the Fed will engineer a recession to overcome inflation.

Sign 2. The stock market is in sell-everything mode

Extreme fear is the predominant sentiment on Wall Street this year. CNN Business’ Fear & Greed Index is at a measly six out of 100.
After hitting record highs in early January, the stock market has lost nearly a fifth of its value — plunging stocks near bear-market territory. The Nasdaq (COMP) is already deep into a bear market. More than $7 trillion has evaporated from the stock market this year.
Concerned that higher interest rates will erode companies’ profits, investors have been heading for the exits.
That’s bad news for people’s retirement plans. It’s also unwelcome news for a number of investors who rely on the market for income, including day traders who have counted on the stock market growing in a practically straight line for the better part of the decade. And it’s not great for consumer sentiment, either.
Although a minority of Americans actively invest in the stock market, when they see a sea of red next to CNN’s ticker or on their phone screens, that has historically given people pause. Consumer sentiment dropped to its lowest level in 11 years in May.
That’s potentially bad news for the economy, because consumer spending makes up more than two-thirds of America’s gross domestic product.

Sign 3. The bond market

When investors aren’t so hot on stocks, they’ll often switch to bonds. Not this time.
Safe US government Treasuries are selling off. When bond prices fall, yields rise — and yields on the 10-year Treasury topped 3% this month for the first time since 2018.
That typically happens when the Fed hikes rates — the higher cost of borrowing makes the bonds less valuable when they mature, so a higher interest payment on the bonds (the yield) will help compensate and make them more attractive to investors.
Bonds have also sold off as the Fed has decided to unwind its massive portfolio of Treasuries that it had been purchasing since the pandemic to shore up the economy.
As bonds sold off and investors grew more fearful of an economic downturn, the gap between short-term and long-term bond yields has been shrinking. Yields on the two-year Treasury note briefly rose above those on the benchmark 10-year note in March for the first time since September 2019. That so-called yield curve inversion has preceded every recession since 1955, producing a “false positive” just one time, according to the Federal Reserve Bank of San Francisco.

Sign 4. Chaos around the globe

None of this is happening in a vacuum. Russia continues its deadly invasion of Ukraine, which has choked off supply chains and sent energy prices through the roof. China continues to lock down some of its biggest cities as Covid cases remain high. And a labor shortage has sent salaries surging and hindered the normal flow of goods around the world.
Russia continues to threaten European countries by shutting off their energy shipments, which could plunge EU economies into a recession. China’s economy has slowed dramatically as it keeps workers home as part of its zero-Covid policy.
What happens abroad could spill over to the United States, too, hurting America’s economy at the worst possible time.

What to do

OK, so a recession could be coming soon. Here’s what not to do: Panic.
Even if a recession is inevitable, there’s no telling how severe it will be. But it never hurts to plan for the worst. Here are a few ways financial advisers say you can insulate your finances from a downturn.
Lock in a new job now: With ultra-low unemployment and plenty of openings, it’s a job seeker’s market. That could change quickly in a recession.
Cash in on the housing boom: If you’ve been on the fence about selling your home, now may be the time to list. Home prices in the United States are up nearly 20% year over year, but mortgage rates are also rising, which will eventually curb demand.
Set some cash aside: It’s always a good idea to have liquid assets — cash, money market funds, etc — to cover urgent needs or unexpected emergencies.
Finally, some sage advice for any market: Don’t let your emotions get the better of you. “Stay invested, stay disciplined,” says certified financial planner Mari Adam. “History shows that what people — or even experts — think about the market is usually wrong. The best way to meet your long-term goals is just stay invested and stick to your allocation.”
— CNN Business’ Allison Morrow and Jeanne Sahadi contributed to this report.

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Rural development grants to spark Nicola Valley economy – Global News

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The province announced on Friday a series of rural development grants in the Nicola Valley to support economic development and diversification.

This is the next step in the StrongerBC Economic Plan and the ongoing recovery efforts in Merritt following the floods in November last year.

“People in Merritt have been through a lot in the past year, and they know how important business recovery is for community rebuilding,” said parliamentary secretary for rural and regional development Roly Russell in a press release.

The provincial government is providing a $1-million rural development grant to the Small-Scale Meat Producers Association to build a community abattoir in the Merritt area.

Read more:

B.C. announces $228M to help farmers, ranchers impacted by floods

This will provide meat processing and cut-and-wrap services to local farmers and ranchers.

“This project represents significant job and economic opportunities for the region, while ensuring local ranches, abattoirs and businesses are part of a strong, resilient B.C. food system,” said minister of agriculture and food Lana Popham in a press release.

“With the recent changes to B.C.’s meat-licensing system and investments in facilities like the Nicola Valley community abattoir, this revitalization of the small-scale meat industry makes it easier to produce, buy and sell B.C. meat in our rural communities, and helps strengthen our food security and food resiliency.”

The abattoir will be a government-inspected licensed facility with a full range of services to process red meat.

According to the province, local producers have been impacted by the lack of processing capacity. Julia Smith who is a pork and beef producer in Merrit is hopeful this new facility will help her business as well as other local producers.

“My partner and I moved to the Nicola Valley in 2016 planning to expand our business to meet the growing demand for well-raised, local meat. But we soon found that the processors we relied upon were not able to keep up with our production and we had to scale the business back instead of growing it.”


Click to play video: 'More than 900 people still displaced following Merritt flooding last fall'



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More than 900 people still displaced following Merritt flooding last fall


More than 900 people still displaced following Merritt flooding last fall – Feb 25, 2022

“We were on the verge of giving up. But now we are ready to press on, because this facility will allow us, and other local family farms and ranches, to grow and thrive while providing greater food security for the community.”

The province is providing a $1-million rural development grant to the Scw’exmx Tribal Council toward Gateway 286 in Merritt.

“After an unbelievable year of fires, floods, and a pandemic, we welcome the B.C. government’s $1-million grant that will bolster our rural community, support good-paying jobs and much-needed economic development,” said Spayum Holdings LP director and Scw’exmx Tribal Council Terrence (Lee) Spahan in a press release.

“The Gateway 286 project is a 30-plus-year vision of past and present Nicola Valley Indigenous Chiefs and these monies will take our commercial and tourism development one more step closer to reality. This project will enhance the experience of the [traveling] public by providing much-needed services, and it will provide good-paying jobs and entrepreneurial opportunities for the residents of the Nicola Valley.”

Meanwhile, the City of Merritt is receiving a $500,000 grant related to economic recovery for communities that were affected by the flooding. The grant will go towards completing economic development projects and initiatives to support long-term economic recovery.

This is in addition to $329,000 in provincial funding for the City of Merritt to update flood-hazard mapping and develop new flood-mitigation plans.


Click to play video: 'Anger grows over Merritt evacuations'



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Anger grows over Merritt evacuations


Anger grows over Merritt evacuations – Nov 28, 2021

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China's Economy Contracts Sharply as Covid Zero Cuts Output – BNN

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(Bloomberg) — China’s economy contracted in April, with Covid outbreaks and lockdowns dragging the industrial and consumer sectors down to the weakest levels since early 2020 as millions of residents were confined to their homes and factories were forced to halt production. 

Industrial output fell 2.9% in April from a year ago, worse than the median estimate of a 0.5% increase in a Bloomberg survey of economists. Retail sales contracted 11.1% in the period, weaker than a projected 6.6% drop. The unemployment rate climbed to 6.1%, higher than the forecast of 6%.

China’s economy has taken an enormous toll from the government’s stringent efforts to keep the virus at bay. Beijing has insisted on sticking with its Covid Zero strategy to curb infections, even though the high transmissibility of omicron puts cities at greater risk of repeatedly locking down and reopening compared to earlier strains. 

“Covid outbreaks in April had a big impact on the economy, but the impact is short-term,” the National Bureau of Statistics said in a statement. “With progress in Covid controls and policies to stabilize the economy taking effect, the economy is likely to recover gradually.”

China’s benchmark CSI 300 stock index was down 0.3% as of 10:04 am local time. The onshore yuan was little changed at 6.7917 per dollar. The yield on the 10-year government bonds rose 1 basis point to 2.83%.

Fixed-asset investment increased 6.8% in the first four months of the year, largely in line with projected growth of 7%, likely supported by the government’s push to expand infrastructure spending.

The economic shocks from the zero-tolerance policy have pushed China’s ambitious full-year growth target of around 5.5% further out of reach, and is weighing on the global growth outlook. 

Beijing has signaled that policy makers will step up support for the economy, with Premier Li Keqiang recently urging officials to ensure stability through fiscal and monetary policy.

The People’s Bank of China took steps on Sunday to ease a housing crunch by reducing mortgage rates for first-time homebuyers. It left the interest rate on one-year policy loans unchanged on Monday, as inflation pressure and worries about capital outflows reduce the scope for more easing.  

Monetary stimulus is proving less effective because of the stringent virus restrictions, with data on Friday showing businesses and consumers had little appetite to borrow in April. Credit growth weakened sharply last month, with new yuan loans sinking to the lowest level since December 2017.

(Updates with comment from statistics office)

©2022 Bloomberg L.P.

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Economy

Potential of Seaweed on Economy Being Explored in Upcoming Webinar – VOCM

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A webinar on the potential of seaweed as an economic driver is coming later this month.

The webinar, put together by The Laurentic Forum Consortium, will look at how coastal communities can use an abundance of seaweed to boost the economy, as seaweed is being used as fertilizer, diet supplements, bioplastics, animal feed, pharmaceutical products, and much more.

Webinar moderator and the executive director of the Canadian Centre for Fisheries Innovation, Keith Hutchings, says seaweed farming could provide opportunities in Newfoundland and Labrador.

He says if utilized correctly, communities and regions can add one more industry to help sustain them.

The webinar is taking place May 19.

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