Economy ποΈ
π° Backbone of prosperity.
The Federal Reserve's shift towards higher interest rates is causing significant turmoil in financial markets, with major averages falling and Treasury yields reaching their highest levels in 16 years, resulting in increased costs of capital for companies and potential challenges for banks and consumers.
US stocks fell as investors worried about the impact of higher interest rates, with the Dow down nearly 1.5% and the S&P 500 and Nasdaq indexes also dropping. Concerns about the Federal Reserve's policy and its effect on the housing market and potential recession led to the market decline.
Banks are preparing for a potential recession as bond yields rise to their highest levels since before the 2007-2008 financial crisis, leading to potential yearly losses for bank stocks despite their high reserves.
Long-term interest rates have risen significantly in the US and Europe, posing challenges for governments and economies that are already slowing down, creating a double burden for governments who need to cover their budget deficits, while central banks are draining liquidity from the financial system to rein in inflation caused by the pandemic.
Bank of America predicts that the surge in spending on live entertainment will continue, attributing it to consumer spending shifts, social media promotion, and global marketing, which could sustain momentum for years to come.
India needs to increase women's participation in the workforce to 50% to achieve its goal of becoming a $5 trillion economy, according to the World Bank India director, Auguste Tano KouamΓ©. Increasing female labor force participation alone could add 1 percentage point to India's GDP growth.
Higher interest rates are making homes less affordable for potential buyers, leading to a lack of inventory and driving up prices in the housing market.
U.S. job openings unexpectedly increased in August, driven by demand for workers in the professional and business services sector, pointing to a tight labor market that could push the Federal Reserve to raise interest rates next month.
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Home prices in the U.S. rose by 3.7% in August, with New England states experiencing the largest growth, while Western states saw declines in home prices; California had the highest median sales price, and CoreLogic predicts a 3.4% annual home-price growth by August 2024.
Federal Reserve officials believe that the recent rise in yields on long-term U.S. Treasury debt is a sign that their tight-money policies are working, although they are not currently concerned about the impact on the economy.
The yen briefly fell below 150 against the dollar despite efforts by the Japanese government to prevent the decline, as investors anticipate the U.S. Federal Reserve to maintain high interest rates.
Amid economic uncertainty, Americans are saving less, but continuing to spend, which may help the economy avoid a recession; however, many are struggling financially and have little to no savings, relying on credit card debt to make ends meet, and experts recommend building a larger emergency fund to navigate through potential economic contractions.
The Federal Reserve is in a better position to deliver a soft landing for the U.S. economy due to facing different problems compared to the 2007-2008 financial crisis, according to F/m Investments CIO and President Alex Morris.
China is facing a "grinding" economic slowdown with a narrow path for policymakers to prevent further decline, as its property sector and growth rate enter into structural decline and stimulus measures can only partially offset the weakening consumption and investment. However, it is unlikely to experience a Japan-like stagnation but rather a "Sinification" scenario with 3%-4% GDP growth over the next few years.
Prime Minister Rishi Sunak and other government ministers made various claims at the Conservative party conference, including the assertion that reducing inflation is a tax cut, HS2 costs 10 times more in the UK than in France, the UK has decarbonized faster than any other country in the G7, unleashing gas supplies would lower energy bills, and the UK is the second largest contributor of military aid to Ukraine after the US.
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The Portuguese government has announced the end of a tax relief scheme for new residents, citing fiscal injustice and unsustainable housing prices as reasons for discontinuing the program.
The selloff in Treasuries has intensified as yields reach multiyear highs on speculation that the Federal Reserve will continue raising interest rates, causing losses for investors and impacting stock valuations.
Inflation is impacting Americans across the country, with the Miami-Fort Lauderdale-West Palm Beach metro area experiencing the highest increase in consumer prices at 7.8%, followed by Denver, Atlanta, Seattle, and Detroit, according to WalletHub. Housing prices are a major driver of high inflation in cities like Miami, and while experts anticipate a gradual cool-down of prices, patience is needed.
Bank of Canada deputy governor Nicolas Vincent states that businesses in Canada are increasing their prices more often and by larger amounts, contributing to higher-than-expected inflation.
China's property crisis poses significant challenges for an economy heavily reliant on real estate, although there are some sectors that may benefit from the situation.
Older Millennials Bear the Brunt of Financial Stress Due to Economic Turmoil and Lack of Safety Nets
Older millennials, specifically those aged 35 to 44, are the least likely to feel financially secure, with 80% reporting high levels of financial stress due to factors like inflation, challenging economic circumstances, student debt, childcare bills, and soaring housing prices.
Job openings rose in August after three consecutive months of decline, with 9.6 million job openings recorded, indicating a tightening labor market and potential impacts on inflation and interest rates.
CNBC LLC, a division of NBCUniversal, provides real-time snapshots, delayed data, global business and financial news, stock quotes, market data, and analysis.
U.S. job openings unexpectedly increased in August, suggesting a tight labor market that could prompt the Federal Reserve to raise interest rates next month.
Canadian Prime Minister Justin Trudeau stated that his government does not intend to escalate tensions with India after reports emerged that India had asked over 40 diplomats to leave the country.
Thousands of protesters in Accra, Ghana are demanding the removal of the central bank governor for the mismanagement of the economy during a severe debt crisis, reflecting growing frustration with rising living costs and joblessness.
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Central Europe's economies, with their cost competitive manufacturing base and clean-burning power systems, are positioned for greater prominence as companies consider shifting production to the region due to lower operating costs and cleaner power sources compared to Germany.
France's debt has skyrocketed from β¬1 trillion in 2003 to β¬3 trillion in 2023, but the government aims to reduce it through the 2024 budget plan; the debt is primarily owed to foreign entities and reducing it would require significant public spending cuts.
JPMorgan CEO Jamie Dimon warns of potential storm clouds on the horizon for the US economy, including the fallout from pandemic stimulus and geopolitical risks, predicting choppy financial markets and the possibility of stagflation.
The Russian ruble briefly fell past 100 against the dollar, indicating weaker spending power for Russians due to slower economic growth and higher inflation amidst the war in Ukraine.
India's factory activity expanded at a slower pace in September, but strong demand and business confidence remained high, despite increased inflationary pressures.
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Federal Reserve Chair Jerome Powell faced public concerns about inflation and economic uncertainty during a tour in Pennsylvania, as residents and business leaders expressed their struggles with rising prices and lack of predictability.
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The Australian government predicts that global commodity prices will decrease, leading to lower earnings from commodity exports despite expected increases in volume.
Grocery prices in the UK decreased by 0.1% in September due to price cuts on various products and slower food inflation, although overall prices are still around 10% higher compared to last year.
Portugal's prime minister plans to end the country's non-habitual resident (NHR) regime, which has attracted digital nomads, in response to concerns over a housing crisis and unequal tax policies.
Javier Milei, an Argentine congressman and presidential candidate, is gaining popularity for his radical free-market agenda, which includes abolishing the central bank, replacing the peso with the dollar, and implementing massive tax cuts and government spending reductions in order to restore economic prosperity to Argentina.
Despite Texas leading the nation in job growth, its unemployment rate has remained at 4.1% for four consecutive months, which experts attribute to the state's expanding labor force and rising domestic migration.
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The American Dream has become elusive and tenuous for many, as the cost of living, student loan debt, and child-rearing expenses continue to rise, leading younger generations to redefine success and prioritize financial stability on their own terms.
The World Bank has raised its forecasts for Sri Lanka's economy, expecting growth of 1.7% in 2024 and a smaller contraction of 3.8% this year, citing progress in reducing inflation and increased tourism revenue, but also cautioning about significant uncertainty and downside risks.
Drought and extreme heatwaves in Spain have led to a 50% reduction in olive oil production, resulting in a significant increase in prices, which is impacting both farmers and consumers.
Germany's economy, the largest in the EU, is expected to contract by 0.6% this year due to a slowdown in exports and years of under-investment in infrastructure and technology, posing long-term challenges for growth and requiring significant investment and reforms to address them.
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The International Monetary Fund (IMF) will review Pakistan's economic performance and discuss reforms, with the country set to receive a $700 million installment after completion.
Turkish annual consumer price inflation rises for the third consecutive month, reaching 61.53% in September due to recent tax hikes and lira weakness, just below expectations; economists predict inflation to reach 70% by year-end.
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The World Bank predicts a growth rate of 5.1% for China's economy this year, but has downgraded its growth forecast for 2024 due to China's faltering post-COVID bounce, elevated debt, weakness in the property sector, and structural factors.
UK food prices have fallen by 0.1% in September, the first monthly drop in over two years, driven by a supermarket price war and easing inflationary pressures, according to the British Retail Consortium.
Indian households are saving less than they have in 50 years, with net household savings declining to 5.1% of GDP in 2022-23, which poses a problem for India's long-term growth strategy that relies on debt-fueled household consumption and government investment.
India has demanded that Canada repatriate 41 diplomats by October 10th amidst a deepening diplomatic dispute caused by Canadian suspicion of India's involvement in the murder of a Sikh separatist leader.
India has asked Canada to recall around 40 diplomats amid escalating tensions over the killing of Hardeep Singh Nijjar, a Sikh separatist leader, with Canada suspecting Indian government involvement in the murder.
