Connect with us

Economy

Why does it feel like the world economy is out of whack? – CNN

Published

 on


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

(CNN)The supply chain is persistently clogged. There’s a full-on energy crisis spreading around the world. Prices for everyday goods are rising. And there aren’t enough workers to go around.

The global economy is out of whack and governments aren’t sure what to do.
The evidence is in a daily churn of headlines that lend themselves to alarming pronouncements.

Prices are rising. Inflation doesn’t seem to be going anywhere.

On Wednesday, the government’s Consumer Price Index confirmed what anybody who has been to the grocery store already knew: US prices are up.
“Rising prices for food and shelter contributed more than half of this increase, while prices for new cars, household furnishings and car insurance also climbed,” writes CNN’s Anneken Tappe, adding that new car prices had their biggest one-year jump since 1980. The price of gas is up more than 40% in a year.
Read more
The roughly 70 million US Social Security recipients will get their largest cost of living adjustment since 1982, the government announced Wednesday — a $92 per month boost next year to an estimated average of $1,657 to help cover the rising costs.
Not everything is more expensive. Plane tickets have dipped a bit.
But everyday costs like rents are rising. Home prices are expected to continue to go up, according to Goldman Sachs. The investment bank projects more and more people will be forced out of the home market by high prices only to be pressured by high rents.
What’s the fix for high home prices? Perhaps relaxed zoning laws. Goldman Sachs noted that California has abolished single-family zoning in the state, which could add housing units. Read more on housing from CNN’s Anna Bahney.

Workers are quitting their jobs

A record number of Americans — 4.3 million workers, or nearly 3% of the total workforce — quit their jobs in August. That’s the highest quit rate in the history of the government survey that tracks the data, which has been around since 2000.
CNN’s Matt Egan writes that workers want higher pay, better conditions and more flexibility. And companies are so desperate for workers that people aren’t worried about seeing what else is available.
This is not the sappy hyperdrama of disillusioned hard workers all giving up and moving away that Ayn Rand wrote about in “Atlas Shrugged.”
It’s a problem for companies grappling with a worker shortage.
But it’s also a potential “golden age” for American workers, writes Egan. He talked to Joe Brusuelas, the chief economist at the consulting firm RSM, who said we’re in the midst of a pivotal moment as the US and the rest of the world overcome Covid-19.
“This is what happens after great wars or depressions,” Brusuelas said. “It’s hard to spot while you’re in it, but we’ve gone through a shock that has elicited an unexpected change upon the population. And it will take some time to sort through.”
“People are making different decisions, they’ve moved to different places,” JPMorgan Chase CEO Jamie Dimon said Wednesday. “Covid has affected their mindset. There’s more churn. That’s OK and that will normalize over time,” Dimon said.
But it’s not all tales of worker empowerment. And it’s not just American workers that matter to the US economy. Read this report on an open letter from transportation industry groups calling for more freedom of movement in the world for transportation workers and access to Covid-19 vaccines to avoid a transportation industry collapse.
We’ve all seen photos of container ships in lines. The story describes seafarers on cargo ships who haven’t been allowed to go on shore in 18 months. It also outlines how a truck driver shortage in Europe has been complicated by mandatory Covid-19 testing in some countries there.

The supply chain is not unclogging

In an effort to clear those container ships crowded off US shores, President Joe Biden announced Wednesday that certain US ports would operate 24/7 to begin to alleviate supply chain issues. That won’t fix the capacity problems at US ports and on interior transportation routes. Meanwhile, the bill to increase infrastructure spending can’t quite get over the finish line on Capitol Hill.
Separately, the US will slowly end some restrictions at US borders and allow fully vaccinated travelers into the country.
So much of the preceding elements — the worker shortage and inflation — are also tied to the supply chain.
The International Monetary Fund on Tuesday downgraded its growth forecast for the US, citing the supply chain. Egan writes about a Moody’s report suggesting the supply chain will impede the economy’s recovery. Other analysts are not as worried and think companies will adjust and the supply chain will eventually begin working again.

The energy crisis is real

Energy problems are more focused in Europe, where the price of natural gas is through the roof, and in China, where it’s the increasing expense of coal. There’s a spillover that has US gas prices at a seven-year high.
A spike in fossil fuel prices should be just the right thing to convince more people that now is the time to transition toward greener and renewable energy sources needed to combat climate change — but the Democrats’ proposals to do just that are looking less and less likely in Washington. The real-world effect of higher fossil fuel prices could be to hit people and businesses in the wallet and drive inflation even higher.
Bottom line: “I think it’s about how all of this shows just how big of a shock Covid delivered to the whole planet,” said Egan. “Entire systems that we all used to take for granted, like a supply chain that works behind the scenes to get goods from factories to our front doorsteps, have broken down. Our assumption that there are always enough workers to drive trucks and work at ports have been thrown into disarray. And while the pandemic happened quickly, there is no reason to think these problems will go away overnight. It’s going to take time to sort through them all.”

In-depth: Which workers are quitting and why?

Which workers are quitting, exactly?
I asked CNN’s Tami Luhby what we know about who is quitting and why. Here’s what she said:
More than half of that jump came from the lodging and food services sector, which saw 157,000 people leave … These jobs tend to be lower wage so some workers may be lured away by the signing bonuses, pay increases and other incentives that businesses are offering to fill their openings.
Also, 26,000 people in the wholesale trade sector, which includes truck drivers and sales representatives, quit their jobs, as did 25,000 people in local government education.
The number of quits increased in the South and Midwest.
But a couple of sectors saw reductions in the number and rates of people quitting. Fewer workers in the real estate/rental/leasing sector said goodbye to their jobs, for instance. Quits fell by 23,000.
Are unemployment benefits to blame? And is it still possible to argue, as many Republican governors and business owners previously did, that expanded unemployment benefits — which have now expired — are to blame for the worker shortage?
Luhby: It’s becoming increasingly clear that the end of pandemic unemployment benefits is not prompting the jobless to rush back to work. The labor force shrank last month for the first time since May, signaling that more people were opting to sit on the sidelines and not actively look for jobs.
Also, employment did not grow substantially faster in the two dozen states (all but one led by Republicans) that opted to terminate benefits in June or July, previous studies and government data have found.
The enhanced unemployment benefits may have had a small negative impact on people’s interest in looking for work, but other factors — including child care issues, virus fears and workers’ reevaluation of their life goals — played a major role.
That said, experts caution against drawing firm conclusions on just one or two months of data.
The jobless typically have to apply to positions on a regular basis to qualify for unemployment payments, so ending the benefits may prompt some to stop looking, at least temporarily. And others may be searching for new employment, but it takes time to find the right match.

Adblock test (Why?)



Source link

Continue Reading

Economy

Canada criticizes proposed U.S. EV tax credit, says could harm auto sector

Published

 on

The Canadian government on Friday warned that U.S. Legislative proposals to create new electric vehicle tax credits for American-built vehicles could harm the North American auto industry and run afoul of trade agreements, according to a letter seen by Reuters.

Canadian Trade Minister Mary Ng told U.S. lawmakers proposed credits if approved “would have a major adverse impact on the future of EV and automotive production in Canada, resulting in the risk of severe economic harm and tens of thousands of job losses in one of Canada’s largest manufacturing sectors. U.S. companies and workers would not be isolated from these impacts.”

 

(Reporting by David Shepardson in Washington and David Ljunggren in Ottawa; Editing by Chris Reese)

Continue Reading

Economy

Province Invests in Midland Automotive Parts Manufacturer to Boost Local Economy | Ontario Newsroom – Government of Ontario News

Published

 on


[unable to retrieve full-text content]

Province Invests in Midland Automotive Parts Manufacturer to Boost Local Economy | Ontario Newsroom  Government of Ontario News



Source link

Continue Reading

Economy

UK's economy gathers speed, inflation pressures mount – PMIs – Financial Post

Published

 on


Article content

LONDON — Britain’s economy unexpectedly regained momentum in October and cost pressures rose by the most in more than 25 years, according to a survey on Friday that could encourage the Bank of England to raise interest rates for the first time since the pandemic.

The preliminary “flash” IHS Markit/CIPS flash Composite Purchasing Managers’ Index rose by the largest amount since May to hit 56.8 from September’s 54.9. By contrast, a Reuters poll of economists had pointed to a further slowdown to 54.0.

Advertisement

Article content

“The UK economy picked up speed again in October, but the expansion is looking increasingly dependent on the service sector, which in turn looks prone to a slowdown amid the recent rise in COVID-19 cases,” said IHS Markit’s chief business economist, Chris Williamson.

The rise in the PMI was driven by Britain’s services firms as consumers and businesses picked up their spending. Travel firms benefited from a relaxation of COVID-19 travel rules.

Service sector activity outpaced manufacturing output by the widest margin since 2009 as factories struggled again with shortages of supplies and staff and recorded barely any growth.

A rise in overall employment was close to August’s record high, despite problems in filling vacancies.

Advertisement

Article content

Higher wages and the worsening supply shortages resulted in the fastest increase in average costs since the combined composite index was launched in January 1998. Separate PMIs for the services and manufacturing sectors showed prices charged by firms rose by the most since these series began in 1996 and 1992 respectively.

With inflation set to hit more than double its 2% target soon, the BoE is expected to raise borrowing costs soon as it tries to make sure that rising inflation expectations do not become embedded in British businesses’ pricing decisions.

The Confederation of British Industry said on Thursday that manufacturers were raising prices by the most since 1980 in the face of some of the biggest increases in costs and labor shortages since the 1970s.

Advertisement

Article content

The PMI for the services sector rose to 58.0, its highest in three months, while the manufacturing PMI’s output component – which IHS Markit says currently gives a better picture of the sector than the headline index – sank to its lowest since February at 50.6.

Despite the improved picture for most companies, many consumers are concerned about the outlook for the economy.

A survey published earlier on Friday showed Britons were their most downbeat since they February, when they were under lockdown, and are increasingly worried about the year to come as prices and COVID cases rise. (Reporting by William Schomberg; Editing by Hugh Lawson)

Advertisement

Comments

Postmedia is committed to maintaining a lively but civil forum for discussion and encourage all readers to share their views on our articles. Comments may take up to an hour for moderation before appearing on the site. We ask you to keep your comments relevant and respectful. We have enabled email notifications—you will now receive an email if you receive a reply to your comment, there is an update to a comment thread you follow or if a user you follow comments. Visit our Community Guidelines for more information and details on how to adjust your email settings.

Adblock test (Why?)



Source link

Continue Reading

Trending