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Second Winter of Woe Threatens Global Economy: Eco Week Ahead – BNN

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(Bloomberg) — The world economy is approaching the northern hemisphere winter in disarray, unable to shake off the coronavirus crisis amid persisting supply disruptions, soaring prices and resurgent outbreaks.  

Global surveys of purchasing managers this week are likely to point that way. Among the outcomes anticipated by economists are slowing manufacturing and services activity throughout the euro zone and the U.K., and only modest improvement in the U.S.

With parts of Europe confronting renewed restrictions to contain another wave of the virus, China’s rebound fading and rising infections taking hold in America too, much of the global economy is now staring at the threat of a second northern winter of woe, compounded by a cost-of-living squeeze amid surging gas prices and supply bottlenecks. 

Europe is at the sharper end of the advanced-world wedge. Record infections in Germany might push authorities to announce new lockdowns, and Austria has already done just that. The continent as a whole is enduring a painful peak in consumer prices. 

In the U.S., meanwhile, former Treasury Secretary Lawrence Summers said he sees no more than a 15% chance that “it’s all going to work out well,” with the probabilities much greater for either stubbornly high inflation or a slump in growth. 

The extent to which such outcomes play out will inform monetary policy deliberations on the speed of stimulus withdrawal across the Group of Seven, culminating in a grand finale of decisions in mid-December. That’s when central banks, including the U.S. Federal Reserve, hold their final meetings of the year. 

What Bloomberg Economics Says:

“Much of Europe is retreating again in the face of a fourth wave of Covid-19, and survey data next week should give some early clues about the economic impact of rising infection rates.”

–For full analysis, click here

Elsewhere this week, monetary officials in New Zealand and South Korea may raise interest rates, and minutes of the most recent meetings of the Fed and the European Central Bank will be released. 

Click here for what happened last week and below is our wrap of what’s coming up in the global economy.

U.S. 

A pre-holiday feast of economic data and a possible announcement on President Joe Biden’s choice to lead the Federal Reserve will be laid out for investors over the coming week. 

The government’s report on personal income and spending, which includes an inflation measure tracked by the Fed, will be the main course on data-heavy Wednesday before markets close the following day for Thanksgiving. 

Other releases on Wednesday include durable goods orders, revised third-quarter economic growth, new-home sales, merchandise trade, and a final read on consumer sentiment. Existing home purchase data and surveys on November manufacturing and services will surface earlier in the week.

Also on Wednesday, the Fed will release minutes of its early-November policy meeting in which the U.S. central bank announced it would start reducing asset purchases. 

Meantime, the White House says Biden will announce whether he’ll renominate Jerome Powell to a second term as chair of the central bank, or opt for Fed Governor Lael Brainard instead.

  • For more, read Bloomberg Economics’ full Week Ahead for the U.S.

Asia

The Reserve Bank of New Zealand and the Bank of Korea are both expected to raise interest rates for the second time since the pandemic as they lead the pack in Asia taking action to step back from full-throttle stimulus and get ahead of the curve in stemming any inflation risks. 

Preliminary South Korean trade figures should back up the case for a hike even if they show signs of stabilizing from stellar year-on-year gains. 

Reserve Bank of Australia officials will be speaking on panels and may shed some light on how strongly the central bank will stick with its back-of-the-rate-hike-pack stance. 

Tokyo inflation figures at the end of the week will show if Japan is seeing more signs of a pickup in prices as energy costs soar. China sets its loan prime rate on Monday and Sri Lanka sets rates on Thursday.

  • For more, read Bloomberg Economics’ full Week Ahead for Asia

Europe, Middle East, Africa

With more than two weeks left before ECB officials enter the quiet period before their all-important decision on the future of stimulus, comments from several of them may rivet investors. President Christine Lagarde will be among the policy makers speaking. 

The ECB will also release an account of its previous meeting in October, when Lagarde and colleagues struggled to convince financial markets that bets on an interest-rate hike in 2022 to tame inflation were probably misplaced. 

Aside from the monthly purchasing manager survey results due across the continent, Germany’s Ifo index on Wednesday will provide another snapshot of Europe’s biggest economy —  just as it reels from ongoing supply interruptions, new infections, and a political system in flux amid continued coalition negotiations. 

The Bank of England’s decision in December looks laden with suspense on whether policy makers will raise interest rates. Public remarks in the coming week by Governor Andrew Bailey and a couple of colleagues might therefore attract attention. 

Sweden’s central bank will make its final monetary decision of the year on Thursday. With the Riksbank expected to keep its interest rate unchanged at zero for some time, the focus is likely to be on whether it will signal a hike by the end of 2024.

Further afield, Israel is expected to keep borrowing costs on hold on Monday due to strong growth and slowing inflation, driven in large part by the shekel. 

In Russia, weekly inflation on Wednesday will be watched closely for any clues on whether price pressures are beginning to ease, as many economists have forecast. 

Policy makers in Ghana are expected to leave interest rates on hold on Monday, after inflation accelerated to a 15-month high in October. Nigeria’s central bank is also expected to stand pat on Tuesday, as inflation moderates and after economic growth slowed in the third quarter. 

  • For more, read Bloomberg Economics’ full Week Ahead for EMEA

Latin America

Argentina’s budget balance data due Monday should underscore the challenge of putting its debt back on a path to sustainability. Falling case numbers in Mexico have seen same-store sales rebound, a likely harbinger of stronger September retail sales readings out Tuesday.

Economic activity in Argentina has been surprising analysts to the upside since mid-year, and has returned to its pre-pandemic level. Analysts see additional growth in the September figures.

Look for Brazil’s mid-month consumer price data out Thursday to push higher from mid-October’s 10.34% print. Yet after a sustained rise since May 2020, some deceleration is seen ahead: Economists surveyed by the central bank see year-end inflation at 9.77%, while the central bank puts it at 9.5%.

In Mexico, final third-quarter output data is expected, with all indications still pointing to a solid 2021 rebound. Economists see mid-month inflation rising sharply, consistent with Banxico Deputy Governor Jonathan Heath’s view that it may hit 7.3% by year-end.

Lastly, Banxico posts the minutes of its Nov. 11 meeting where it hiked the key rate a quarter-point for a fourth straight time to 5%.

  • For more, read Bloomberg Economics’ full Week Ahead for Latin America

©2021 Bloomberg L.P.

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Nobody seems to know what's going on with the economy – CNN

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A version of this story appeared in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.

(CNN)If you’re confused by the US economy, which simultaneously shows signs of strength and cause for concern, you’re not alone.

The economy is on the road to recovery from the coronavirus pandemic, reeling from inflation or a source of disappointment on jobs creation, depending on who you’re talking to.
It’s probably all three, and what happens from month to month seems to be something of a surprise. That element of unpredictability might be the most normal possible thing given the shock of the pandemic — the extraordinary government intervention to save the economy is unlike anything anybody alive today has ever seen.
It’s hard to decide how important any single thing is.
Let’s look today at jobs.
Government data released Friday showed the US economy gained 210,000 jobs in November and the unemployment rate fell to 4.2%. A low rate traditionally signals full employment, meaning that nearly everyone who wants a job has one.
And yet!
Most stories about the November jobs report described it as “disappointing” in the first sentence, but also proof that the pandemic recovery is moving along.
Why the disappointment? Tappe wrote: “Economists had expected more than double the number of jobs created in November, forecasting a continuation of the buoyant economic recovery over the past two months. Instead, the November jobs gain was more reminiscent of the pre-pandemic economy, when employers added a smaller but steady number of positions, at least on the face of it.”
At the same time, there’s the good news. The jobs report suggests the pandemic recovery is progressing. The country has created more than 6 million jobs this year, and labor force participation increased to 61.8%, the highest level since the pandemic hit.
Much of the disappointment stems from expectations. The jobs report is based on two surveys — one of businesses with payrolls and one of households about their economic situation — that are conducted by the government mid-month and released by the Bureau of Labor Statistics in tandem on the first Friday of each month.
“Weird jobs numbers,” tweeted Jason Furman, who led the Council of Economic Advisors during the Obama administration.
“Very strong household survey: unemployment down to 4.2% & labor force participation up as employment up 1.1 million,” he tweeted. “But the normally more reliable payroll survey shows only 210K jobs added.”
He’s not sure what’s going on: “Some explanations may emerge but it may just be measurement error.”
Where do expectations come from? Leading up to the monthly release, economists and banks publish their own expectations for what the surveys will find. If the government data doesn’t hit those expectations, disappointment follows.
I talked to Elise Gould, a senior economist at the Economic Policy Institute, about what we do and do not learn from these reports.
She said they need to be viewed as pieces of information, not the full picture, in part because the surveys can overstate things and miss the changing composition of the workforce.
Revisions to jobs reports from recent months have confirmed stronger job growth than what was shown by the surveys.
Still, it’s best to know the latest information, even if we know it’s likely to change, she said.
Also, the pandemic. There is also the pandemic element to confound economic expectations, just like it has confounded people’s lives.
“Everyone in this economy today and the people that are making these predictions have never lived through a pandemic that hit the labor market so strong,” said Gould. “And so their models are not necessarily capturing the ebbs and flows of the pandemic.”
I asked David Goldman, managing editor of CNN Business, for his thoughts on why these reports seem to confound expectations each month. He came back with three points:
  • This is a particularly unusual environment. It is making predictions really difficult for economists. The labor shortage, supply chain crisis, energy crunch, inflation and Covid-19 situations all wrapped into one make for a delicate balancing act. We should cut economists a break.
  • Right in the long run. Economists actually have been proven correct over the past several months when they initially were thought to be wrong. That’s because the reports keep getting revised higher in subsequent months as Labor Department economists get more data. It’s not only hard for economists at Goldman Sachs and JPMorgan to figure out — it’s hard for the government, too.
  • Don’t focus on expectations. The forecasts aren’t the important thing here — it’s the actual data. And one month doesn’t a trend make. We’ve had some shockingly good jobs data in recent months, and November wasn’t all that bad — just not quite as good as we had expected.
There’s uncertainty elsewhere. Leaders at the Federal Reserve, like Chairman Jerome Powell, had been preaching that inflation was temporary — calling it “transitory,” meaning it wouldn’t permanently affect the economy.
But in a signal that inflation may last a little longer than expected, Powell told lawmakers this week the Fed may end some of its pandemic stimulus efforts — they call it “tapering” — earlier than expected.
“At this point the economy is very strong and inflationary pressures are high and it is therefore appropriate in my view to consider wrapping up the taper of our asset purchases … perhaps a few months sooner,” Powell said.
One wrench thrown into the economy has been the resilience of the coronavirus. We may not quite understand how the surge of the Delta variant over the summer and fall arrested progress.
CNN’s Tappe and Nathaniel Meyersohn wrote about the Delta effect back in August.
Now that the Omicron variant is emerging, it, too, could send things in a new direction.

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Omicron Variant May Be Good For Economy – Forbes

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The omicron variant of Covid-19 has sparked great fear. With time, we may find the fear to have been justified, but we may find the opposite: that this is good news for the economy.

It’s still early days for our knowledge of omicron. Waiting to learn more seems to make sense, but consider this: Business decisions are being made every day. Any person who waits for perfect certainty—about the economy, technology or Covid-19—will never make a single decision. In many areas decisions have to be made this week. So it’s worthwhile to consider how omicron may be good for the economy.

Omicron seems to be displacing the delta variant in South Africa. Ted Wenseleers showed that delta’s share of total Covid-19 cases in South Africa has plummeted while omicron has surged. Because the early indications show that omicron was highly transmissible, it could well displace the delta variant around the world.

So far omicron has triggered a surge in infections in South Africa, but not a comparable increase in deaths. There’s good reason for the virus to mutate to be less dangerous. Bugs that kill their hosts don’t replicate as much as bugs that allow their hosts to remain alive. Many viruses in the past have evolved to be milder. We cannot take this idea too far, however.

The omicron virus may have mutated so that it has greater ability to infect those who already had been exposed to earlier variants. That’s no surprise to South African scientists, who have observed a very high past infection rate in their population. The virus could not get ahead by finding people never exposed to any version of Covid-19, so it found a way to infect the previously ill, this theory goes.

BioNTech CEO Ugur Sahin said recently that current vaccines probably help protect against severe illness from the omicron variant, and that new vaccines are under development that would be more targeted against omicron. Given the speed with which our vaccines were developed, we may have new versions being tested in the lab right now. The question will be how long we have to wait for regulatory approval.

From an economic forecasting viewpoint, business leaders should consider the upside potential of omicron. Although it is way too early to be sure, we may find that the disease becomes dominated by a less dangerous mutation. Illness would continue if this happens, but with fewer deaths and hospitalizations. People would come to feel more comfortable dining out, traveling and seeking routine non-Covid healthcare tests and procedures. The rosy view is far from certain, but current evidence is not more pessimistic.

Companies that that are especially sensitive to the Covid pandemic should try to delay big decisions. We’ll have better information in the coming weeks. But decisions that cannot be delayed should probably consider the possibility of a stronger economy rather than greater Covid problems.

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Can the global economy battle through another COVID-19 setback? – Aljazeera.com

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Video Duration 26 minutes 00 seconds

From: Counting the Cost

A new coronavirus variant has forced governments to impose travel bans just as economies were starting to recover.

Last week, after scientists in South Africa identified a new coronavirus variant, borders were suddenly closed off to passenger travel from Southern African countries, oil prices fell more than 10 percent, and stock markets took a hit.

Markets and economies are expected to face weeks of uncertainty as investors closely watch for updates on Omicron. What comes next largely depends on what scientists discover and how quickly they do so.

Also, green hydrogen has been hailed as the energy of the future; can it help decarbonise economies?

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