Economic Data Dashes Hopes for Near-Term Fed Rate Cuts As Inflation Stays High and Jobs Market Tight
The Federal Reserve's plan to cut interest rates is further complicated by high inflation and a strong job market, making a rate cut before June unlikely.
Canada and the U.S. have similar levels of debt relative to their economies, but their paths to reaching those levels were different, with the U.S. experiencing a surge before the 2008 financial crisis and Canada seeing a slower increase since 2015.
Markets continue to believe that the Federal Reserve will cut interest rates in June, despite February's inflation data, due to concerns about rising inflation and economic data forcing the Fed to be cautious; however, there is a belief that the economy is strong and the Fed may not cut rates.
US government bond yields rise to the highest levels in over a week following a report on wholesale prices that dampens expectations for Federal Reserve interest-rate cuts.
The US is facing a high probability of a recession with potential spikes in unemployment and a drop in consumer spending, warns Joe LaVorgna, the chief economist of SMBC Nikko Securities, citing recession warnings from various indicators such as the Leading Economic Index and the inverted 2-10 Treasury yield curve.
The IMF has expressed displeasure over the Ministry of Finance announcing that it had met all targets before completing the review process, raising the possibility of additional prescriptions from the IMF such as raising taxes and addressing the circular debt in the energy sector.
Wholesale prices in the United States rose in February, indicating that inflation pressures in the economy remain elevated and may not cool as quickly as desired by the Federal Reserve or the Biden administration.
Generation X, often referred to as the “Lost Generation," is facing a challenging financial situation with 47% having more credit card debt than emergency savings, putting them behind millennials and Gen Z but behind baby boomers who have the highest percentage of emergency savings.
One in three children under 2 in Gaza is acutely malnourished, reaching unprecedented levels, as a result of the ongoing humanitarian crisis caused by Israel's campaign and displacement of the population.
A recent survey conducted by the Center for Community Solutions revealed that rising costs have led seniors in Cuyahoga County to cut back on food, transportation, utilities, and housing, with 33% also giving up medicine or medical care, causing isolation and deteriorating mental health.
U.S. stocks are slipping from their records as a combination of mixed economic data and hotter-than-expected inflation dampens hopes of interest rate cuts by the Federal Reserve, causing the S&P 500 to be 0.3% lower and the Nasdaq composite to fall 0.2%.
Immigration may be contributing to the strength of the US economy, with labor market gains and an increase in the number of Americans working, according to a Brookings Institution report.
The head of the International Monetary Fund (IMF) asserts that tackling inequality is crucial in achieving a ninefold increase in global living standards and economic growth, emphasizing the need to address climate change, responsibly implement AI technology, and reduce economic inequality.
Mortgage rates have fallen for the second consecutive week, but experts do not anticipate significant decreases in the near future, as high inflation and low inventory continue to impact the housing market and affordability.
The Paris Club has announced the cancellation of 99% of Somalia's debt, providing a major boost to the country's fragile economic recovery from a long-standing conflict and allowing for the creation of fiscal space for basic public services.
Inflation Pressures Surge, Prompting Investors to Scale Back Expectations of Near-Term Fed Rate Cuts
The unexpected surge in inflation in the U.S. economy challenges the possibility of rate cuts, as higher-than-expected inflation reports could affect the Federal Reserve's plans moving forward. This has led to a rebound in the U.S. dollar and a decline in bonds, stocks, gold, and Bitcoin.
The average long-term U.S. mortgage rate dropped to its lowest level since early February, providing good news for prospective homebuyers as the spring homebuying season begins.
Mortgage rates have dropped for the second week in a row, but a major drop should not be expected as rates are expected to remain high due to sticky inflation in the market.
Retail sales for building materials and gardening equipment rebounded in February by 2.2 percent, signaling that Americans are preparing for warmer seasons, while overall retail sales only marginally increased by 0.6 percent, driven by improved sales in autos and electronics.
Volcanology professor Ármann Höskuldsson believes that the next volcanic eruption on the Reykjanes peninsula in Iceland may not occur until autumn, and he expects the volcanic activity to shift to Eldvörp, resulting in a longer eruption and potentially different behavior.
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U.S. retail sales rebounded less than expected in February, indicating a slowdown in consumer spending in the first quarter due to rising inflation and high borrowing costs, but the Federal Reserve is unlikely to cut interest rates before June.
Americans who have returned to the office after the COVID pandemic are less likely to bring packed lunches due to changes in routines, the desire for intentional breaks, and the need for social interaction, leading to an increase in buying grab-and-go options despite rising costs.
The Advance Report on Monthly Sales for Retail & Food Services in February 2024 suggests a potential significant slowdown in the US economy, with real retail sales growth below the historical median. The 3-month annualized growth rate for retail sales has decelerated, indicating a weak trend in consumer demand. However, the data also points towards a soft landing scenario rather than a no-landing scenario for the US economy, which could be bullish for equities.
U.S. stocks are fluctuating around record levels as mixed economic data on inflation and softening in the economy create uncertainty about potential interest rate cuts by the Federal Reserve.
Labor disputes and concerns over productivity are casting a shadow over Germany's economic outlook, with railway workers, like locomotive driver Jens Höngen, calling for shorter workweeks and improved conditions.
Weekly jobless claims in the US remained historically low, with 209,000 Americans filing for unemployment benefits, despite elevated interest rates and recent layoffs in the technology and media sectors.
The naira to dollar reached convergence across all markets at N1,615 to a dollar after President Tinubu ordered the reopening of Nigeria's land and air borders with the Republic of Niger, although the dollar's quote at the Nigerian Autonomous Foreign Exchange Market (NAFEM) caused the naira to lose 0.78% of its value.
A USA Today poll reveals that a third of Americans now think the economy is in recovery, contrary to previous beliefs, as President Biden tries to alleviate economic concerns ahead of the November election.
The Federal Reserve is likely to cut interest rates in June despite mixed inflation news, but uncertainty about the timing is increasing due to various factors.
Wall Street rallied after receiving the latest inflation report, but rising investor caution led to a decline the following day; questions arise regarding the longer-term outlook, timing of Fed rate cuts, status of Treasury yields, and the stickiness of inflation.
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Wholesale inflation in the US rose more than expected in February, indicating that price pressures in the economy remain elevated and difficult to control.
U.S. retail sales rebounded in February, driven by increases at auto dealerships and gasoline service stations, but consumer spending is slowing as households grapple with inflation and higher borrowing costs.
India has made improvements in its gender inequality, life expectancy, education, and gross national income, as per the United Nations Human Development Index data.
China has launched a large-scale trade-in scheme to upgrade its industrial equipment and boost spending on consumer goods, but it is uncertain whether private manufacturers and households will participate in the initiative.
Despite facing multiple challenges, including rising interest rates, the COVID-19 pandemic, and geopolitical tensions, America's economy has defied expectations and experienced remarkable growth, largely due to generous pandemic stimulus and a flexible labor market; however, the future of the economy depends on the next president's recognition of the importance of free markets and innovation.
A record number of Americans are making emergency withdrawals from their 401(k) retirement plans to cover financial hardships caused by high inflation, with 3.6% of workers participating in such plans making a hardship withdrawal in 2023, the highest level since 2004, according to new data from Vanguard Group.
Akinwumi Adesina, Managing Director of African Development Bank, urges African leaders to stop exchanging their resources for loans from creditors due to challenges in pricing assets and power imbalances in negotiations.
China's efforts to boost auto sales through lower downpayments on car loans may not be successful due to a price war and consumer caution, with only a few brands like Tesla and Nio expected to benefit, analysts say.
U.S. equity futures rise as investors await the release of the latest inflation gauge, while Foxconn reports strong profit growth and TikTok faces political pressure in the U.S.; oil prices near four-month highs due to tighter fuel supplies.
Good news for the economy can be bad news for stocks due to the impact on interest rates, as positive economic developments tend to drive stocks higher in the long run, but recent months have shown the importance of interest rates to the stock market.
China's growing assertiveness and rapid economic growth is a historical trend that has led to geopolitical tensions, according to a Deutsche Bank report, with China's catch-up to the US in terms of GDP being a major factor in the strained US-China relationship. However, the report also warns that tensions between rising and ruling powers have historically resulted in wars, and the interconnectedness of the global economy today would make a global conflict highly detrimental.
Russia is turning to rail transportation to bypass Western sanctions and establish new trade routes with countries in the Persian Gulf and India, enabling the country to maintain imports amid the sanctions.
Haiti's capital city is calm after Prime Minister Ariel Henry announced his resignation and a transitional council takes over, but the United States and the United Nations are withdrawing staff due to concerns about the sustainability of peace.
The question of whether millionaires are considered middle class depends on various factors, such as location, lifestyle, assets, and debts, highlighting the complexity of defining middle-class status in today's economy.
Major cocoa plants in Ivory Coast and Ghana have stopped or reduced processing due to the high cost of buying cocoa beans, leading to a potential increase in global chocolate prices. The price of cocoa has doubled in the past year, resulting in a shortage of beans for processors and prompting chocolate-makers to raise prices for consumers.
The UK economy showed signs of recovery with a 0.2% growth in January, indicating a potential emergence from a minor recession, although the broader picture still reflects stagnation with declining GDP and living standards. The economy will need two more months of growth to officially escape recession, but economists believe this is unlikely. While there are some positive factors such as falling inflation and resilient wage growth, economic growth is expected to remain low as households adjust to higher living costs and productivity challenges persist.
Chinese leaders are optimistic about the country's economic growth, projecting a growth rate of "around 5%" in 2024, but achieving this target will be challenging due to factors such as declining property market, shrinking budget deficit, and limited data transparency.
Pensioners Facing Deepening Cost-of-Living Crisis with Incomes Falling Far Short of Minimum Standard
A new report by the Centre for Ageing Better has found that state pensioners in the UK are £50-£80 short a week to maintain a socially accepted standard of living, with the shortfall doubling for couples and quadrupling for single pensioners since the start of the cost of living crisis. The report also highlights the struggles faced by older Britons due to rising costs, with many pensioners reducing their food intake, avoiding healthcare and cutting back on social interactions to save money. The Centre for Ageing Better is calling for the creation of an independent Commissioner for Older People and Ageing to address the needs of the ageing population and to prevent further disenfranchisement of older people by raising the state pension age.
