Economic News

economic news

Economic news has been more than a little challenging lately. The China property sector is pulling growth down, the Fed is slowing its pace of rate hikes and Inflation is not as hot as many economists expect. Plus, credit card and personal-loan delinquencies are likely to rise to the highest levels in a dozen years.

Inflation slowing more than many economists expected

The annual inflation rate dropped slightly to 7.1% in November, after a 7.7% increase in October and the fifth straight decline. While this means inflation is slowing more than most economists expected, it still remains elevated.

Experts say that a number of factors are combining to push prices higher. High labor costs and lingering supply bottlenecks are a primary culprit, but new inflationary pressures are coming from energy and food costs.

Meanwhile, energy demand is slowing as the global economy slows. Gasoline prices have declined for three consecutive months, but are still higher than last year.

Core inflation, which strips out volatile food and energy costs, rose 0.2 percent in September, up from a 0.2% increase in August. But core services prices climbed 0.5%.

Russia may cut oil output by 5%-7% in early 2023

Russia may cut oil output by 5% to 7% in the first half of 2023, the Deputy Prime Minister said on Friday. Novak made the announcement in a state television interview, adding that Russia may also halt sales to countries that join the price cap.

In a bid to limit the amount of money Russia can spend on the war in Ukraine, the Group of Seven nations agreed to a $60 per barrel price cap on Russian seaborne crude oil. The price cap will be in effect from December 5.

While the oil price cap will not cause major losses for Russia’s economy, it will reduce revenue. Moreover, cutting oil production will reduce the total volume of crude in the market, which could lead to a rise in prices of non-Russian crude.

Credit card and personal-loan delinquencies likely to rise in 2023 to the highest in a dozen years

Credit card and personal-loan delinquencies are expected to rise to the highest level in a dozen years in 2023, according to a report from credit-reporting firm TransUnion. The TransUnion report projects that credit card and serious personal-loan delinquencies will reach 2.6% and 4.3%, respectively, at the end of the year.

Despite the high-profile rise in consumer debt, it’s not expected to affect the economy. In fact, economists say that higher rates of unemployment could make it harder for consumers to get credit in future years. But, in the meantime, credit-card and personal-loan originations will remain strong.

One in four Americans plan to apply for a new credit card in the next 12 months, while more than half expect to seek other credit types, such as auto loans or home equity loans. While consumers’ confidence in the economy is strong, they should borrow responsibly.

Wall Street expects the impact of the Federal Reserve’s most aggressive year of rate hikes in at least three decades to continue

The Federal Reserve has raised interest rates at a rapid pace in recent months. While the effects of this move are not fully evident, Wall Street expects the effects to continue in the future.

Earlier this year, the Fed raised its key short-term rate from a near-zero level. Today, the federal funds rate ranges from 3.75% to 4%. These increases have made many loans more expensive. They have also pushed bond yields higher, making risk assets more appealing.

Inflation has been rising for much of this year. Economists have expected core CPI to increase 6.1% in November. However, inflation has slowed down in the last few months.

Bank of America slowing hiring as fewer employees leave in an attempt to manage its headcount

While Bank of America is not putting a whole lot of money on the table right now, it is making a concerted effort to cut costs and reduce headcount in anticipation of a recession. And it is not alone in its endeavor. Across the board, the Big Blue has been trimming its ranks, laying off hundreds of employees in its home mortgage, commercial banking and business banking divisions.

A couple of the company’s senior executives have even taken the plunge themselves. One is relocating to another financial institution, while another has taken a shot at entrepreneurship, starting a venture backed by TPG. Still, there is no denying that the largest and newest bank on the block is a major player in a crowded industry.

China’s property sector has dragged on growth

China’s property sector has been a significant drag on growth. A quarter of the country’s GDP is devoted to real estate. The industry’s slowdown has been caused by government restrictions on excessive borrowing by developers.

The clampdown has led to a fall in new construction starts, as well as a collapse in property sales. As a result, China has entered the first half of 2023 with a weak growth forecast.

The government has taken several steps to ease the liquidity crunch affecting the sector. Some cities have reduced the urban hukou requirement for buying a home. However, it is a systemic problem that needs to be addressed for long-term stability.