Former Treasury Secretary Larry Summers Highlights Overlooked Factor in Economic Sentiment: The Cost of Money

The widely followed measure used by the government to gauge the cost of living tracks various expenses each month, but a significant factor is overlooked: the cost of borrowing money itself. This omission could lead to an understatement of the financial strain experienced by many Americans when interest rates rise, impacting expenses such as purchasing a home, securing a car loan, or managing credit card balances.

Former Treasury Secretary Larry Summers presents this argument in a recently published working paper titled “The Cost of Money is Part of the Cost of Living.” He suggests that this oversight might help explain why despite positive economic indicators, a substantial portion of the population remains dissatisfied. Summers points out the discrepancy using the example of the “misery index,” which traditionally combines unemployment and inflation rates. Despite reaching its lowest point since the 1980s, Summers contends that this index fails to capture the true sentiment of consumers.

Summers notes that although there has been some improvement in public perceptions of the economy, a pessimistic outlook persists. Despite robust economic growth, significant job gains, and wages outpacing inflation for a considerable period, a January Gallup poll revealed that 45% of Americans perceive the economy as poor, with 63% believing it’s deteriorating.

Summers humorously remarks, “The economy is booming and everyone knows it — except for the American people.” This contradiction between positive government data and negative public sentiment is likely to become increasingly scrutinized in the lead-up to the November election.

Summers emphasizes the importance of considering the cost of credit, which has surged due to the Federal Reserve’s efforts to raise interest rates to levels not seen in two decades. He argues that the expense of borrowing money should be viewed as part of the overall cost of living. Previously, the consumer price index (CPI) incorporated financing expenses until 1983, measuring housing costs by tracking monthly mortgage payments. However, the current CPI assesses housing costs differently, primarily by examining rental prices. While there were valid reasons for this change, Summers believes it fails to fully capture the financial impact on individuals. He suggests that incorporating interest rates into the calculation is essential for understanding people’s subjective well-being.

Summers suggests that if the pre-1983 CPI formula were still in use, it would have shown even higher inflation rates in 2022, around 15% instead of 9.1%, and inflation would not have decreased as rapidly in 2023.

As a prominent figure in economic discussions, Summers, who served in both the Clinton and Obama administrations, has consistently voiced his opinions. He was among the first to warn about the risk of runaway inflation in 2021 and predicted that a sustained period of high unemployment would be necessary to stabilize prices the following year.

The Federal Reserve has hinted at potential interest rate cuts later this year, which Summers believes could contribute to an improved economic outlook. He observed a positive correlation between decreased mortgage rates in December and January and a notable surge in economic sentiment.

“Insofar as interest rates come down, that’s likely to contribute to improved sentiment,” Summers concluded.

Yale New Haven Health Appoints Katherine Heilpern as President Amidst Leadership Transition and Ongoing Developments

Amid its efforts to acquire three hospitals from Prospect medical and recent criticism over closing a daycare facility, Yale New Haven Health system declared Katherine Heilpern as the new president of Yale New Haven Hospital last week. Heilpern, formerly the chief operating officer of the Weill Cornell Division at NewYork-Presbyterian Hospital and chair of the emergency medicine department at Emory University School of Medicine, is set to assume her new role on March 11. Concurrently, Pamela Sutton-Wallace SPH ’97, previously the interim president of YNHH, will ascend to lead the entire system.

Heilpern, expressing her perspective, stated, “I’ve had leadership positions that have served on both sides of the academic healthcare coin… [which] gives me the opportunity to really understand life at the frontline, and the care that’s being delivered by the providers and how it feels on the side of patients and families.”

Arjun Venkatesh, the chair of emergency medicine, sees Heilpern’s appointment as a significant shift in YNHH’s leadership, especially since she will be one of the few women heading a hospital of its size, which is among the largest in the United States.

Regarding the ongoing developments, Heilpern mentioned that she is unaware of the controversy surrounding daycare closures and views the acquisitions as beyond her current role.

Despite concerns about the expansion, several YNHH officers express confidence in Heilpern and her ability to lead. Venkatesh believes her background as an emergency physician will provide a valuable perspective, emphasizing the importance of clinical experience in hospital leadership.

Alan Friedman, the chief medical officer, believes Heilpern’s clinical acumen will enhance patient care, emphasizing the need for high-quality, safe care. Venkatesh further highlights that Heilpern’s experience may help address overcrowding issues and other systemic challenges.

In an interview, Heilpern outlined her goal of delivering more accessible care and developing an efficient care continuum. She also aims to foster collaboration between various schools within the system to ensure quality care delivery.

With over 5000 medical personnel and nearly 15,000 staff members, Yale New Haven Hospital remains a significant healthcare institution amidst these changes.

Child Tax Credit Expansion Bill Gains Momentum in Bipartisan Push Through Legislative Channels

Child tax credits are poised to see an increase for eligible families as a bipartisan bill progresses through the legislative pipeline.

The Tax Relief for American Families and Workers Act of 2024, currently advancing to the Senate, aims to elevate the refundable portion cap of the child tax credit from $1,800 to $1,900 to $2,000 per tax year from 2023 to 2025. This bill has already cleared the House of Representatives.

Missouri Republican Rep. Jason Smith, chairman of the House’s tax committee, and his Senate counterpart, Oregon Democrat and finance Chairman Ron Wyden, crafted the $78-billion package. Both were contacted for comment by Newsweek, albeit outside regular working hours.

The legislative journey began in January when lawmakers struck a bipartisan deal to broaden child tax credits, enhance low-income housing tax credits, and bolster certain business tax credits.

Under this bill, access to the child tax credit would expand, with a gradual increment in the refundable segment slated for 2023, 2024, and 2025. Moreover, penalties for larger families would be eliminated. Before securing passage in the House, the House Ways and Means Committee voted 40-3 in mid-January to advance the legislation.

President Joe Biden supports the potential legislation. White House spokesman Michael Kikukawa conveyed Biden’s appreciation for the efforts of Chairmen Wyden and Smith in boosting the child tax credit for millions of families and aiding hundreds of thousands of additional affordable homes. Kikukawa’s statement was seen by Newsweek.

The bill received a strong endorsement from the Republican-led House of Representatives, which voted 357-70 on January 31 to approve it, subsequently forwarding it to the Senate.

However, some lawmakers advocate for alterations to the bill. West Virginia Republican Sen. Shelley Moore Capito emphasized the need for the bill to go through the finance committee and undergo an amendment process without predetermined decisions. She stressed the importance of providing opportunities for input during policy-making.

Indiana Republican Sen. Todd Young expressed his desire for changes to be made to the bill before it reaches the floor, without specifying what amendments he seeks, as per NC Newsline.

To pass in the Democrat-led Senate, the bill requires 60 votes. The schedule for a vote remains undecided. Wyden, the Senate’s tax-writing committee chairman, stated his intention to discuss potential amendment votes with Senate leader Chuck Schumer, according to NC Newsline.

Regarding implementation timelines, the Internal Revenue Service (IRS) mentioned that disbursement could commence within six to 12 weeks of the bill’s potential passage. IRS Commissioner Danny Wefel urged taxpayers not to delay filing their tax returns, assuring that any additional refunds due to legislative changes would be processed seamlessly.

An analysis by the Center on Budget and Policy Priorities (CBPP) estimates that approximately 16 million children will benefit from the bill in its first year, including 3 million children under the age of 3. George Fenton, senior policy analyst at CBPP, highlighted that once fully effective in 2025, the expansion could lift over half a million children above the poverty line and extend financial support to about 5 million more children from families with incomes below the poverty line.

Chuck Marr, vice president of federal tax policy at CBPP, emphasized the significance of the bipartisan proposal in targeting the nearly 19 million children currently excluded from the full child tax credit due to their families’ low incomes. Marr noted that the proposal would augment the credit for over 80 percent of these children, potentially lifting hundreds of thousands of children above the poverty line in the inaugural year and reducing the poverty levels of an additional 3 million children.

India Showcases Wedding Destination Diversity: Consulate General in New York Hosts Webinar

The Indian Consulate General in New York recently organized a webinar titled ‘Wedding Destinations in India’ on February 17. The purpose of the session was to introduce various locations across India that offer a rich blend of music, local customs, culture, and a diverse range of settings including desert, forest, mountain, beach, palace, and spiritual locales, along with options for meditational retreats.

The event was graced by the presence of Consul General of India in New York, Binaya Srikanta Pradhan, Deputy Consul General of India, New York, Dr. Varun Jeph, and Parthip Thyagarajan, the CEO of WeddingSutra, a company specializing in providing comprehensive wedding information and inspiration to couples.

Dr. Jeph referred to Indian Prime Minister Narendra Modi’s initiative, “Wed in India,” which encourages affluent families, both within the country and abroad, to choose India as the venue for their family weddings.

CGI Pradhan emphasized India’s status as an ideal wedding tourism destination, stating, “When it comes to wedding tourism, I would say, India probably is the ideal destination.” He highlighted India’s diverse offerings suitable for weddings of all religions and budgets, ranging from the Himalayas and Kerala’s backwaters to Rajasthan’s forts and Orissa’s lakes, as well as the emerging tourism sector in the North East.

Thyagarajan outlined several popular wedding destinations and properties across India. He particularly emphasized the appeal of spiritual sites among Non-Resident Indians (NRIs), such as the Golden Temple in Amritsar and the UNESCO World Heritage Site, the Shore Temple in Mahabalipuram. Thyagarajan also discussed the popularity of temple towns like Tirupati in Andhra Pradesh and Guruvayur in Kerala for weddings on auspicious days, noting that while they offer budget-friendly options, they come with challenges like limited room availability and dining choices.

Additionally, Thyagarajan highlighted Bengaluru’s growing popularity as an ideal wedding destination due to its favorable weather year-round and the availability of quality properties within a short distance from the airport, making it convenient for guests who prefer shorter travel times.

According to a report by WedMeGood, the wedding tourism industry surpassed the $75 billion mark during the 2023-2024 period. In 2023, the Ministry of Tourism launched a wedding tourism campaign aimed at promoting India as a preferred wedding destination and boosting tourism in the country.

Japan Slips to Fourth in Global Economy Rankings as Growth Stalls: Challenges and Prospects Ahead

Japan’s economy has slipped to the fourth position globally, falling behind Germany, as it experienced contraction in the final quarter of 2023. The government’s latest report indicates a 0.4% shrinkage in the economy from October to December, marking the second consecutive quarter of decline. This consecutive contraction signals a technical recession. Despite this setback, Japan saw a 1.9% growth for the entirety of 2023, although it had contracted by 2.9% in the July-September period.

Until 2010, Japan held the position as the world’s second-largest economy, a title it lost to China. Last year, Japan’s nominal GDP reached $4.2 trillion, slightly trailing behind Germany’s $4.4 trillion, or $4.5 trillion depending on currency conversions. The depreciation of the Japanese yen significantly contributed to this decline in ranking, as comparisons of nominal GDP are conducted in dollar terms. Economists attribute Japan’s relative weakness to factors such as a declining population, lagging productivity, and reduced competitiveness.

Real gross domestic product (GDP) serves as a measure of a nation’s goods and services’ value. The annual rate provides insight into the hypothetical outcome if the quarterly rate were to extend over a year. Historically, Japan was celebrated as an “economic miracle,” rapidly recovering from the aftermath of World War II to become the second-largest economy after the United States. However, over the past three decades, Japan’s economic growth has been modest, often stagnant following the burst of its financial bubble in 1990.

Both the Japanese and German economies benefit from robust small and medium-sized businesses with solid productivity levels. Similarly, Germany experienced a contraction of 0.3% in its economy during the last quarter of the previous year, marking it as one of the worst-performing economies globally in that period.

Like Japan, Britain also faced economic contraction in late 2023, entering a technical recession with a 0.3% shrinkage in GDP from October to December. This decline followed a 0.1% fall in the preceding quarter.

Japan’s demographic landscape, characterized by a shrinking and aging population, stands in contrast to Germany’s growing population, nearing 85 million, partly due to immigration compensating for a low birth rate. Tetsuji Okazaki, an economics professor at the University of Tokyo, highlights the implications of Japan’s diminishing influence globally, stating that even sectors like the auto industry, once a stronghold for Japan, face challenges with the rise of electric vehicles.

The increasing parity between developed nations and emerging economies is evident, with India poised to surpass Japan in nominal GDP in the coming years. Despite this, the United States maintains its dominance as the world’s largest economy with a GDP of $27.94 trillion in 2023, while China follows at $17.5 trillion. India’s GDP stands at approximately $3.7 trillion, with a rapid growth rate of around 7%.

Japan’s labor shortage issue could potentially be addressed through immigration, yet the nation has been criticized for its reluctance to accept foreign labor on a permanent basis, opting instead for temporary solutions. Robotics offer another avenue, albeit not yet fully utilized to offset the labor deficit.

Stagnating wages and a negative household savings rate contribute to Japan’s sluggish growth, compounded by businesses diverting investments to faster-growing economies abroad rather than the domestic market. Private consumption declined for three consecutive quarters in 2023, signaling ongoing economic challenges. Marcel Thieliant of Capital Economics predicts a further slowdown in GDP growth, projecting a decrease from 1.9% in 2023 to approximately 0.5% in the current year.

Tax Season Alert: IRS Audit Risks and Red Flags for American Filers

As Americans submit their tax returns this season, there’s a growing concern about IRS audits amidst the agency’s efforts to enhance service, technology, and enforcement.

Recent IRS actions have targeted affluent individuals, large corporations, and intricate partnerships. However, ordinary taxpayers might still find themselves under audit, with specific issues drawing greater IRS scrutiny, experts note.

Ryan Losi, an executive vice president at CPA firm Piascik, cautioned against the risks of the “audit lottery.” He emphasized the importance of accuracy in tax reporting to avoid potential audit triggers.

Audit rates for individual income tax returns have declined across all income brackets from 2010 to 2019 due to decreased IRS funding, according to a Government Accountability Office report. Syracuse University’s Transactional Records Access Clearinghouse reported that in fiscal year 2022, the IRS audited 0.38% of returns, down from 0.41% in 2021.

However, Mark Steber, chief tax information officer at Jackson Hewitt, believes that many Americans might feel overly secure about their audit risk.

Here are some key factors that could raise red flags for IRS audits:

1.Unreported Income: The IRS can easily detect unreported income through information returns sent by employers and financial institutions. Income from freelancing or investments, reported via forms like 1099-NEC or 1099-B, can be particularly scrutinized.

  1. Excessive Deductions: Claiming deductions significantly higher than what’s typical for your income level could draw attention. For instance, if your reported deductions are disproportionate to your income, especially in areas like charitable deductions, it might trigger scrutiny.
  2. Rounded Numbers: Filing with rounded figures, especially for significant deductions, may increase the likelihood of an audit. Experts advise against using rounded estimates and emphasize the importance of accurate reporting.
  3. Earned Income Tax Credit (EITC): This credit, designed for low- to moderate-income earners, has historically attracted scrutiny due to improper payments. While higher-income earners are more likely to be audited, EITC claimants face a substantially higher audit rate due to issues with improper payments.

Despite this, the IRS has announced plans to reduce correspondence audits for EITC claimants starting in fiscal year 2024.

While audit rates have decreased overall, taxpayers should remain vigilant about potential audit triggers and ensure accurate reporting to avoid unnecessary scrutiny from the IRS.

US Inflation Slows in January, Easing Pressure on Federal Reserve Amid Economic Growth

Consumer prices experienced a 3.1% increase in January compared to the previous year, a notable deceleration from the prior month but falling short of the anticipated larger cooldown, according to a report released on Tuesday by the Bureau of Labor Statistics. The slowing inflation trend brought some relief for the Federal Reserve as it evaluates potential interest rate adjustments.

Core inflation, a significant metric that excludes volatile food and energy prices, rose by 3.9% over the year ending in January, matching the slowdown observed in the previous month. This report contrasts with a slight uptick in price hikes seen in December.

The Federal Reserve had been navigating a complex landscape due to the earlier acceleration in inflation, which complicated its strategy to ease its inflation battle through a series of interest rate cuts. Recently, the central bank opted to maintain interest rates at their current levels, choosing to monitor further economic developments before reversing a nearly unprecedented streak of rate hikes initiated last year.

The January slowdown in inflation offers a positive signal for the Fed as it approaches its upcoming rate decision in March. Despite a significant decline from last year’s peak, inflation remains nearly one percentage point above the Fed’s target.

Despite the Federal Reserve’s efforts to temper economic growth by increasing borrowing costs for households and businesses, the U.S. economy has largely resisted these measures. Last month, the economy surpassed expectations by adding 353,000 jobs while maintaining the unemployment rate at a historically low 3.7%, according to data released earlier by the U.S. Bureau of Labor Statistics.

Moreover, recent reports indicate that the gross domestic product (GDP) performed better than anticipated at the end of last year, while consumer sentiment soared in January. However, this remarkable performance may pose challenges for policymakers at the Federal Reserve in their fight against inflation.

The Fed faces the risk of inflation rebounding if it moves too swiftly in cutting interest rates, as heightened consumer demand could fuel a resurgence in price increases. Fed Chair Jerome Powell, speaking in Washington, D.C., last month, acknowledged the consistent decline in inflation over recent months and the robust hiring trends accompanying it. However, he cautioned against an overheated economy.

“We’re not looking for a weaker labor market,” Powell emphasized. “We’re looking for inflation to continue to come down, as it has been coming down for the last six months.”

He further noted, “We’re not declaring victory at this point. We think we have a ways to go.”

Fiscal Forecast: CBO Projects Temporary Dip in Deficit, Long-Term Challenges Loom

The Congressional Budget Office (CBO) released a report on Wednesday, projecting a decrease in the federal budget deficit by $188 billion for this fiscal year, down to $1.5 trillion. However, this dip is expected to be temporary, with forecasts indicating a likely increase in the deficit over the next nine years. The decline in this year’s deficit is attributed to two specific factors, both of which are one-off events, highlighting the ongoing challenge for policymakers to reconcile tax revenues and expenditures.

One factor contributing to the decrease is the timing of the fiscal year, which began on an October weekend, resulting in payments being recorded in fiscal 2023 without corresponding revenues. Additionally, tax revenues are projected to rise due to improved returns on financial investments and the collection of taxes postponed from the previous year due to natural disasters.

Looking ahead, the cumulative budget deficits over the next decade are expected to be 7% smaller than previously forecasted by the nonpartisan CBO. This adjustment is primarily due to an agreement reached between President Joe Biden and Congressional Republicans last summer. This agreement temporarily lifted the statutory debt ceiling in exchange for imposing restrictions on government spending. Economic growth is also anticipated to be stronger than previously predicted, with an increase in the number of people employed.

However, despite these improvements, deficits remain a concern for lawmakers in the years ahead. Challenges include the burden of servicing the total debt load, an aging population leading to increased costs for Social Security and Medicare, and rising healthcare expenses.

The report also warns that the nation’s publicly held debt is projected to escalate from 99% of the gross domestic product (GDP) at the end of 2024 to 116% of GDP by the end of 2034, marking the highest level ever recorded. This increase is fueled by persistent gaps between tax revenues and government expenditures, resulting in borrowing from investors.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, emphasized the need for policymakers to address the severity of the situation and commit to taking necessary actions. While acknowledging that the debt ceiling agreement was a positive step, MacGuineas stressed that more substantial efforts are required.

The CBO’s projections are subject to uncertainties, as laws can change, and economic performance may differ significantly from expectations. For example, last year’s projection of a 4.7% unemployment rate in 2023 contrasts with the current rate of 3.7%. The CBO anticipates a 4.4% unemployment rate by the end of 2024.

Persistent disagreements between Democrats and Republicans regarding the causes and solutions for the national debt have made it a recurring topic in political discourse without leading to comprehensive solutions. Republicans criticize Democrats for excessive spending during President Biden’s administration, while Democrats attribute costs to tax cuts implemented during Donald Trump’s presidency.

Bill Hoagland, senior vice president at the Bipartisan Policy Center, highlighted the uncertainty injected into the economic outlook by political brinkmanship. Hoagland stressed the necessity of bipartisan efforts to address entitlement reform, revenue generation, and the budget process.

The CBO’s 10-year deficit projections may be overly optimistic, assuming the expiration of many tax cuts signed into law by Trump by the end of 2025. Republicans advocate for retaining and potentially expanding these tax cuts, which could reduce expected revenues while simultaneously increasing spending.

Federal Reserve Chair Jerome Powell underscored the unsustainable nature of the growing debt relative to the economy during a recent interview on CBS’s 60 Minutes. Michael A. Peterson, CEO of the Peter G. Peterson Foundation, echoed the urgency of the situation, calling for a bipartisan fiscal commission to propose solutions for placing the country on a more sustainable fiscal trajectory.

Fed Chair Warns of US Dollar’s Unsustainability Amid Global Economic Shift

Fed Chair Raises Concerns About Future of US Dollar Amid Global Economic Shift

In recent times, the Federal Reserve of the United States has pursued an assertive tightening strategy, aiming to elevate interest rates to combat inflation. However, questions have emerged about the sustainability of these measures over the long term. Against the backdrop of BRICS nations’ efforts to reduce dependence on the dollar, Fed Chair Jerome Powell expressed apprehension about the trajectory of the US Dollar.

During an interview with 60 Minutes on CBS News, Powell delved into the broader economic challenges facing the United States. Against the backdrop of 2024 witnessing a global trend away from the US dollar, Powell’s remarks paint a somber picture. As alternative currencies and digital assets gain traction, doubts are cast upon the greenback’s status as the global reserve currency.

“Powell’s assertion that the US Dollar is on an ‘unsustainable’ path underscores the precariousness of the current situation,” the CBS News program highlighted.

The growing influence of the BRICS bloc over the past year has been noteworthy, signaling its ambition to foster a multipolar world. Consequently, as it endeavors to diminish international reliance on the US dollar, the stability of the greenback is increasingly in question.

Chairman Powell’s sentiments mirrored concerns about the US Dollar’s fragility. Against the backdrop of BRICS nations’ de-dollarization initiatives, Powell highlighted the vulnerable state of the country’s escalating debt.

“In the long term, the US is on an unsustainable fiscal trajectory,” Powell emphasized. “This implies that the debt is expanding at a faster rate than the economy, effectively borrowing from future generations.”

Powell’s statement serves as a stark warning, particularly regarding the uncontrolled growth of US debt. This should raise significant concerns for nations relying on the greenback for international trade.

For the BRICS bloc, shifting away from the US dollar was seen as a means of self-preservation. However, it also foreshadowed an imminent decline that could materialize in the coming years. Consequently, as this decline looms, the economic alliance has offered a viable alternative through its de-dollarization efforts. This convergence of factors poses a significant threat to the global reserve status of the world’s most dominant currency.

Visualizing the $105 Trillion World Economy in One Chart

By the end of 2023, the world economy is expected to have a gross domestic product (GDP) of $105 trillion, or $5 trillion higher than the year before, according to the latest International Monetary Fund (IMF) projections from its 2023 World Economic Outlook report.

In nominal terms, that’s a 5.3% increase in global GDP. In inflation-adjusted terms, that would be a 2.8% increase.

ℹ️ Gross Domestic Product (GDP) measures the total value of economic output—goods and services—produced within a given time frame by both the private and public sectors. All numbers used in this article, unless otherwise specified, are nominal figures, and do not account for inflation.

The year started with turmoil for the global economy, with financial markets rocked by the collapse of several mid-sized U.S. banks alongside persistent inflation and tightening monetary conditions in most countries. Nevertheless, some economies have proven to be resilient, and are expected to register growth from 2022.

Ranking Countries by Economic Size in 2023

The U.S. is expected to continue being the biggest economy in 2023 with a projected GDP of $26.9 trillion for the year. This is more than the sum of the GDPs of 174 countries ranked from Indonesia (17th) to Tuvalu (191st).

China stays steady at second place with a projected $19.4 trillion GDP in 2023. Most of the top-five economies remain in the same positions from 2022, with one notable exception.

India is expected to climb past the UK to become the fifth-largest economy with a projected 2023 GDP of $3.7 trillion.

Here’s a look at the size of every country’s economy in 2023, according to IMF’s estimates.

Here are the largest economies for each region of the world.

  • Africa: Nigeria ($506.6 billion)
  • Asia: China ($19.4 trillion)
  • Europe: Germany ($4.3 trillion)
  • Middle East: Saudi Arabia ($1.1 trillion)
  • North & Central America: U.S. ($26.9 trillion)
  • Oceania: Australia ($1.7 trillion)
  • South America: Brazil ($2.1 trillion)
Ranked: 2023’s Shrinking Economies

In fact, 29 economies are projected to shrink from their 2022 sizes, leading to nearly $500 billion in lost output.

A bar chart showing the amount of nominal GDP shrinkage for several countries.

Russia will see the biggest decline, with a projected $150 billion contraction this year. This is equal to about one-third of total decline of all 29 countries with shrinking economies.

Egypt (-$88 billion) and Canada (-$50 billion) combined make up another one-third of lost output.

In Egypt’s case, the drop can be partly explained by the country’s currency (Egyptian pound), which has dropped in value against the U.S. dollar by about 50% since mid-2022.

Russia and Canada are some of the world’s largest oil producers and the oil price has fallen since 2022. A further complication for Russia is that the country has been forced to sell oil at a steep discount because of Western sanctions.

Here are the projected changes in GDP for all countries facing year-over-year decline

More recently, producers have been cutting supply in an effort to boost prices, but concerns of slowing global oil demand in the wake of a subdued Chinese economy (the world’s second-largest oil consumer), have kept oil prices lower than in 2022 regardless.

The Footnote on GDP Forecasts

While organizations like the IMF have gotten fairly good at GDP forecasting, it’s still worth remembering that these are projections and assumptions made at the beginning of the year that may not hold true by the end of 2023.

For example, JP Morgan has already changed their forecast for China’s 2023 real GDP growth six times in as many months after expectations of broad-based pandemic-recovery spending did not materialize in the country.

The key takeaway from IMF’s projections for 2023 GDP growth rests on how well countries restrict inflation without stifling growth, all amidst tense liquidity conditions.

Grocery Prices Surge 30% in Four Years: Consumers Bear the Brunt of Industry’s Profit Drive

The cost of groceries has surged by 30% over the past four years, marking a significant departure from the industry’s foundational aim of providing affordable and abundant food supplies post-World War II. The pandemic-induced disruptions in supply chains have been exploited by the grocery sector to inflate prices substantially, yielding substantial profits despite selling less food. This trend not only burdens consumers’ budgets but also underscores ongoing policy shortcomings within the Biden Administration.

The U.S. grocery market, valued at $1.03 trillion, has seen prices soar nearly 30% across all categories and channels since 2019, even as unit volumes remain stagnant. This translates to consumers spending more while obtaining fewer goods. Corporate dominance in various grocery segments, particularly by a select few consumer packaged goods (CPG) giants, accentuates the market’s lack of competition.

Soft drinks exemplify this consolidation, with Coca-Cola, Pepsico, and Keurig Dr. Pepper controlling around 90% of the market. Despite a 2% decline in unit volumes, soda sales surged by 56%, with prices spiking by 59%. Pepsico, for instance, witnessed a 21% surge in operating profit, primarily driven by consecutive double-digit price hikes over two years.

Similarly, Kraft Heinz, commanding 65% of the packaged cheese market, prioritizes profitability over volume, leading to a 21% price hike despite a mere 6% increase in unit volumes. Chocolate candy sales soared by 34%, accompanied by a 46% price surge, largely dictated by the top three companies—Hershey’s, Mondelez, and Mars—controlling over 80% of the market.

The trend extends to beef, where unit volumes plummeted by 14%, while prices skyrocketed by over 50% in four years, enabling major meat processors like Tyson Foods to double profits through strategic pricing actions.

In the diaper market, unit volumes dropped by 11.7%, yet prices surged by 38%, exceeding $13 per pack, as industry giants like Proctor & Gamble and Kimberly Clark monopolize 70% of the sector.

Further analysis of NIQ data unveils a consistent pattern: processed commodities experience sharper price hikes than their base ingredients. For instance, milk prices surged by 23.8% with a 5.8% decline in unit volumes, while yogurt prices soared by over 47% despite a 10% drop in volumes.

Shrinkflation, a practice of reducing pack sizes while maintaining prices, further exacerbates consumer woes, affecting various categories like household paper products, salty snacks, and cleaning products.

Experts attribute much of this pricing surge to sellers’ inflation, driven by supply shocks that enable tacit collusion among corporations to hike prices and maximize profits.

While conventional wisdom often blames labor costs and consumer demand for inflation, the math doesn’t align. Corporate profits have soared to historic highs, while workers’ share of national income has dwindled. Labor shortages, although garnering media attention, have minimal impact on grocery prices.

Despite widespread consumer outcry and economic strain, initiatives to address corporate price gouging remain limited. However, opportunities abound for regulatory intervention, including summoning food executives to Capitol Hill, scrutinizing anti-competitive practices, and potentially implementing price controls to ensure affordability.

Failure to seize these opportunities could perpetuate high prices, exacerbating food insecurity and economic hardship for millions of Americans. As such, the era of cheap food appears to be nearing its end unless significant policy changes are enacted promptly.

BRICS Welcomes Saudi Arabia, Sparking Interest from 34 Developing Nations in Alliance

Saudi Arabia has officially joined BRICS, the alliance of emerging economies, a move that has piqued the interest of numerous developing nations. This development has sparked discussions about the potential ramifications for global trade dynamics, particularly regarding the dominance of the US dollar.

The inclusion of Saudi Arabia has led to a surge in interest from other developing countries to become part of the BRICS alliance. The reasons behind this growing attraction towards BRICS lie in concerns over mounting U.S. dollar debt and the imposition of sanctions by the White House on emerging economies.

The prospect of more countries settling trade in their local currencies, as advocated by BRICS, poses a significant threat to the supremacy of the US dollar. A shift of this nature would have profound implications for various sectors in the United States.

According to CNN, a total of 34 countries have expressed their desire to join BRICS as of February 1, 2024. South Africa’s Foreign Minister, Naledi Pandor, confirmed this development during a recent press conference. However, specific details regarding the identities of these countries were not disclosed during the joint press briefing.

The mounting interest from developing nations to align with BRICS reflects their eagerness to adapt to evolving financial landscapes. BRICS is leading a global transition away from reliance on the US dollar towards prioritizing transactions in local currencies. This paradigm shift poses a direct challenge to the established financial order traditionally dominated by Western powers.

The overarching goal of the BRICS bloc is to establish a new world order characterized by multipolarity, effectively sidelining the US dollar. Consequently, the forthcoming years will be crucial in determining the fate of the US dollar, with developing countries increasingly prioritizing their own currencies. The next decade could witness a significant struggle as the US dollar fights to maintain its status as the global reserve currency.

India Surpasses Hong Kong to Become Fourth-Largest Stock Market Globally: Bloomberg Report

India’s stock market has achieved a significant milestone, surpassing Hong Kong to claim the title of the fourth-largest equity market globally, as per a report by Bloomberg.

As of January 22, the combined value of shares listed on Indian exchanges reached $4.33 trillion, edging past Hong Kong’s $4.29 trillion. This development highlights India’s growth trajectory, positioning it prominently within the global financial arena. Notably, the United States, China, and Japan hold the top three spots in the world’s largest stock markets hierarchy.

The Bloomberg report underscores the significance of India’s achievement, stating, “India’s stock market overtakes Hong Kong’s for the first time in another feat for the South Asian nation whose growth prospects and policy reforms have made it an investor darling.”

The journey leading to India’s ascent as the fourth-largest stock market globally can be attributed to various factors, including investor-friendly policy reforms and the sustained economic growth of the nation.

The market crossed the $4 trillion mark on December 5, 2023, and continued its upward trajectory owing to several contributing factors. These include a burgeoning retail investor base, consistent inflows from foreign institutional investors (FIIs), strong corporate earnings, and a consumption-driven macroeconomic landscape.

India’s stock market landscape is characterized by the presence of seven official operating stock and commodity exchanges, all regulated by the Securities and Exchange Board of India (SEBI). However, the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE) emerge as the two primary authorities in the country’s stock market arena.

The BSE, headquartered in Mumbai, has contributed significantly to the Indian stock market with a market cap of $3.3 trillion. Meanwhile, the NSE boasts a market cap of $3.27 trillion, further solidifying India’s position as a major player in the global equity landscape.

 

India’s Remarkable Rise to 10th Position in Global 5G Speed Rankings: A Paradigm for Digital Transformation

In a remarkable stride towards technological supremacy, India has swiftly ascended to the 10th position in global 5G speed rankings within just a year of launching its 5G network, boasting a median download speed of 312.26 Mbps, as per a recent Ookla report. This not only surpasses stalwart tech nations like the UK and Japan but also underscores a significant leap from its previous ranking, highlighting India’s prowess in the realm of high-speed connectivity.

Ookla, a leading global authority in mobile and broadband network intelligence, has lauded India’s strategic approach to enhancing its 5G network performance. The nation’s successful implementation of strategic traffic offloading, a model now gaining global recognition, effectively addresses the ubiquitous challenge of network congestion in the telecom industry. As countries grapple with high user density and limited spectrum, they are increasingly turning to India’s template to improve network efficiency and service quality.

India’s efficient spectrum utilization in 5G technology provides a blueprint for global digital partners. By transitioning traffic to 5G, nations can optimize their spectrum resources, serving more users with higher data speeds, a crucial aspect in the data-driven global economy. The impact is being felt globally, with digitally advanced countries like Japan aiming to replicate India’s success in providing faster data speeds and lower latency directly benefiting end-users.

Investment in infrastructure, including the deployment of new 5G base stations and upgrading existing networks, positions India as a guide for other nations in their 5G rollout endeavours. The emphasis on investing in fiber technology for improved backhaul capabilities, replicated globally, underscores the importance of effective backhaul for delivering high-speed connectivity in 5G networks.

India’s achievement is particularly noteworthy when compared to other countries in the Asia-Pacific region, surpassing their European counterparts in 5G speed. The introduction of 5G has not only boosted speeds but also elevated customer satisfaction levels, evident in higher Net Promoter Scores for 5G users compared to 4G users. The deployment of 5G Fixed Wireless Access (FWA) services has further augmented broadband connectivity, particularly in areas where fiber deployment is impractical.

Despite these successes, challenges loom, especially in maintaining and enhancing these speeds. The eventual introduction of 5G pricing will play a pivotal role in shaping consumer perceptions and decisions regarding network upgrades.

India’s telecom giants, including Bharti Airtel and Reliance Jio, have played a pivotal role in the rapid expansion of 5G networks across the country. According to Ericsson’s Mobility report, India is expected to reach 130 million 5G subscribers by the end of 2023, with projections soaring to 860 million by 2029. This anticipated growth rate is among the highest globally, positioning India as a major player in the 5G landscape.

India’s 5G speed of 312.26 Mbps stands out, especially considering the global median speed increase of 20% in Q3 2023, reaching 203.04 Mbps. This progress places India ahead of neighboring nations in South Asia and some G20 countries, creating extensive market opportunities for international telecom equipment manufacturers, service providers, and tech innovators.

India’s burgeoning 5G user base sets the stage for the country to emerge as a global hub for 5G innovation, fostering research and development in critical areas such as the Internet of Things (IoT), smart city technologies, and industrial automation. The global ripple effect is evident as many countries adopt India’s approach in manufacturing core 5G equipment and developing essential supporting technologies.

India’s 5G regulation and policy-making approach are gaining visibility as a potential model for other nations, particularly those in the developing world. Key aspects, including spectrum allocation, network security, and pricing strategies, may set valuable precedents for global telecommunications policy.

The 5G era journey reflects a harmonious blend of technological prowess and strategic market operations. As India continues to expand its 5G footprint, it stands as a key player in the global telecom landscape, showcasing the potential of emerging markets in defining the future of connectivity. In the words of Ookla, India’s rise is not just a leap in speed but a paradigm shift in the global digital landscape.

India’s Economy: A Beacon of Growth in a Turbulent World

Amidst a choppy global landscape, India’s economic trajectory shines with the vibrancy of a beacon, defying headwinds and emerging as one of the fastest-growing major economies in FY22/23 with a remarkable 7.2% growth rate. This feat, as highlighted by the World Bank’s India Development Update (IDU), positions India as a testament to resilience, surpassing global benchmarks and offering valuable lessons for the world.

The IDU underscores India’s economic fortitude in the face of significant global challenges, citing the nation’s growth rate as the second-highest among G20 countries, nearly double the average for emerging market economies. This commendable achievement, the report suggests, stems from India’s robust domestic demand, substantial public infrastructure investment, and the strengthening of the financial sector.

“India’s economic performance is truly remarkable,” declares Kristalina Georgieva, Managing Director of the International Monetary Fund. “Showcasing its robust domestic engine amidst global uncertainties, this growth story, fueled by smart policy interventions and a vibrant private sector, offers valuable lessons for the world.”

Bank credit growth, a pivotal indicator of economic vitality, surged to 15.8% in the first quarter of FY23/24, compared with 13.3% in the corresponding period of FY22/23, indicating a robust financial landscape supporting economic expansion.

India’s economic ascent is far from over. By capitalizing on its strengths, mitigating future challenges, and adopting smart policy measures, India has the potential to become a global economic powerhouse. As Auguste Tano Kouame, World Bank’s Country Director in India, aptly states, “Tapping public spending to attract private investments will create favorable conditions for India to seize global opportunities and achieve even higher growth.

In addressing the spike in headline inflation, the report notes adverse weather conditions as a contributing factor. Headline inflation rose to 7.8% in July, primarily due to increased prices of food items like wheat and rice. Senior Economist and lead author of the report, Dhruv Sharma, anticipates a gradual decrease in inflation as government measures boost the supply of key commodities, ensuring a conducive environment for private investment.

The report also sheds light on India’s fiscal consolidation, projecting a decline in the central government fiscal deficit from 6.4% to 5.9% of GDP in FY23/24. Public debt is expected to stabilize at 83% of GDP, indicating prudent fiscal management. On the external front, the current account deficit is anticipated to narrow to 1.4% of GDP, supported by foreign investment flows and robust foreign reserves.

“India’s handling of the pandemic has been a masterclass in crisis management,” observes Hardeep Puri, Director-General of the World Trade Organization. “Its proactive approach, combined with decisive policy measures, helped mitigate economic damage and paved the way for a faster rebound.”

As the world grapples with economic uncertainties, India’s economic story serves as a testament to the nation’s resilience, foresight, and strategic economic policies. The international community recognizes India’s steadfast commitment to sustaining growth even amidst unprecedented challenges. In the words of global leaders, the remarkable growth of India’s economy stands as a beacon of hope and inspiration for nations around the world, reaffirming India’s status as a key player in the global economic landscape.

India’s Economic Ascent: Poised for a $10 Trillion Dawn by 2030

Davos, Switzerland: India’s economic trajectory has ignited global fervor, with the World Economic Forum (WEF) President Borge Brende predicting a meteoric rise to a $10 trillion economy by 2030. This ambitious feat, if achieved, will propel India from its current fifth-place ranking to the coveted third, surpassing economic giants like Germany and Japan.

Brende’s optimism rests on a bedrock of compelling factors:

  • Robust Growth: Despite global headwinds, India is projected to register an 8% growth rate in 2024, dwarfing the anemic 0.8% global trade growth. This resilience emanates from a thriving service-oriented economy and a digital revolution that is metamorphosing at twice the pace of the rest of the economy.
  • Digital Dynamism: India’s breakneck adoption of digital technologies positions it at the vanguard of the global digital service trade boom. This sector, a goldmine of future job creation and economic expansion, holds immense promise for propelling India’s ascent.
  • Geopolitical Advantage: Amidst a turbulent global landscape, India’s relative geopolitical stability stands out. Coupled with its unwavering focus on bolstering internal infrastructure and research & development, India emerges as an attractive investment haven, further fueling its economic engine.

World leaders have resonated with Brende’s optimism, showering India’s economic potential with accolades:

  • Kristalina Georgieva, Managing Director of the International Monetary Fund: “India is now a beacon of hope for the global economy.”
  • Shinzo Abe, former Prime Minister of Japan: “India’s rise will be one of the defining stories of the 21st century.”
  • Elon Musk, CEO of Tesla and SpaceX: “India is on track to become a true economic powerhouse.”

However, this rapid ascent is not without its own set of challenges:

  • Job displacement: AI and automation pose a potential threat to traditional job markets, necessitating proactive reskilling and upskilling initiatives to ensure a future-proof workforce.
  • Inequality: The widening chasm between the rich and the poor demands urgent attention. Inclusive growth strategies and robust social safety nets are crucial to bridge this gap and ensure shared prosperity.
  • Environmental sustainability: Balancing rapid economic growth with environmental responsibility is paramount for long-term success. Sustainable practices and a green economy are key to securing a future for generations to come.

Brende underscores the criticality of global collaboration and trust-building in navigating these challenges and achieving sustainable prosperity. The WEF 2024 theme, “Rebuilding Trust in a Fractured World,” resonates deeply with India’s journey. As it aspires to solidify its position as a leading economic power, India’s commitment to democracy, inclusivity, and responsible governance will be instrumental in shaping a future of shared progress for itself and the world.India's Economic Ascent Poised for a $10 Trillion Dawn by 2030

Beyond the headline figures, a closer look reveals the driving forces behind India’s economic surge:

  • Government initiatives: Programs like “Make in India” and “Digital India” are fostering innovation, attracting foreign investment, and boosting domestic manufacturing.
  • Policy reforms: Streamlining regulations, simplifying taxes, and investing in infrastructure are creating a conducive environment for businesses to flourish.
  • Young population: India’s demographic dividend, with a burgeoning youth population eager to contribute, presents a vast pool of talent and entrepreneurial spirit.
  • The potential ramifications of India’s economic rise extend far beyond its borders:
  • Regional trade dynamics: India’s economic resurgence is poised to reshape regional trade patterns, making it a key player in South Asia and beyond.
  • Global economic landscape: India’s emergence as a major economic power will undoubtedly redefine global trade partnerships and investment flows.

By harnessing its inherent strengths, embracing technological advancements, and prioritizing responsible governance, India’s $10 trillion dream by 2030 is not just a possibility, but a distinct probability. This economic ascent promises not only to transform India’s own destiny but also to contribute to a more prosperous and equitable world for all.

India’s Diaspora Emerges as a Global Economic Force: Leading the 2023 Global Remittance List with a Record $125 Billion

In a landmark achievement, India has ascended to the summit of the global remittance charts in 2023, registering an astounding $125 billion, according to the latest World Bank report. This financial milestone not only underscores the strength of India’s diaspora but also highlights their pivotal role in shaping the economic landscape of their home country.

The Indian diaspora, dispersed across the globe, has emerged as a significant workforce in key nations, including the United States, the United Kingdom, Singapore, and the Gulf Cooperation Council nations. Their unparalleled contribution to India’s economy is evident in the record-breaking remittance figure, solidifying India’s position at the forefront of South Asian remittances.

The World Bank’s Migration and Development Brief, released on December 18, 2023, reveals that the total remittance flow to low- and middle-income countries reached a staggering $669 billion in 2023. India’s share of $125 billion represents a substantial increase from the previous year’s $111.22 billion, showcasing a remarkable 66% contribution to South Asian remittances in 2023, up from 63% in 2022.

Key contributors to India’s remittance influx are the United States, the United Kingdom, Singapore, and the Gulf Cooperation Council countries, particularly the United Arab Emirates. Collectively, these nations account for 36% of India’s total remittances, with the UAE alone contributing 18%.

Government initiatives have played a pivotal role in bolstering these remittances. The integration of India’s Unified Payments Interface (UPI) with Singapore’s payment systems and collaborations with the UAE, involving the use of local currencies for cross-border transactions, have streamlined the flow of remittances.

Furthermore, India’s implementation of non-residential deposit programs has attracted substantial foreign currency. As of September 2023, non-residential deposits in India amounted to $143 billion, marking a $10 billion increase from the previous year, as per the World Bank report.

The report underscores the role of remittance costs in these financial flows. South Asia, particularly the remittance corridor between India and Malaysia, boasts the lowest remittance costs globally, standing at just 1.9%. This, coupled with robust labor markets and declining inflation in high-income source countries, has been instrumental in the surge of remittances to India.

However, the World Bank cautions against potential risks, including a projected decline in real income for migrants in 2024 due to global inflation and low growth prospects. Despite these concerns, remittances to low- and middle-income countries are expected to grow, albeit at a slower pace, in the coming years.

Crucially, this report sheds light on the multifaceted impact of these financial inflows on the Indian economy. Beyond the monetary value, it signifies a complex interplay of global migration, economic policy, and the pivotal role of the Indian diaspora. As India continues to lead the charge in global remittances, the diaspora’s influence on the nation’s economic trajectory becomes increasingly undeniable.

IMEC: Paving the Way for Global Prosperity through Economic Connectivity

Economic corridors are emerging as transformative agents, capable of fostering increased trade, foreign investment, and societal improvement across participating nations. The India-Middle East-Europe Economic Corridor (IMEC) stands out as a beacon of economic integration, promising to revolutionize interactions among India, the Middle East, and Europe. As we delve into the details of IMEC, its potential as a catalyst for global prosperity becomes increasingly apparent.

At its core, IMEC seeks to establish a multi-modal transport network, seamlessly integrating sea and rail routes, accompanied by innovative infrastructural components like hydrogen pipelines and advanced IT connections. The corridor’s game-changing potential is highlighted by its ability to significantly reduce transit times for goods, offering a more efficient alternative to the Suez Canal and projecting a 40% reduction in transit times. This efficiency not only expedites trade but also renders it more cost-effective, setting the stage for robust economic growth and expanded trade opportunities.

U.S. President Joe Biden’s characterization of IMEC as a “game-changing investment” underscores its potential to influence not only the regions it directly connects but also the global community. The Memorandum of Understanding (MoU) emphasizes the establishment of a “reliable and cost-effective cross-border ship-to-rail transit network,” showcasing the corridor’s potential to reshape global supply chains and international trade dynamics.

European Union President Ursula von der Leyen further emphasizes the corridor’s significance, branding it the “quickest link between India, the Middle East, and Europe.” This accolade positions IMEC as a major catalyst in reducing logistical costs and streamlining trade routes.

Beyond its role in trade facilitation, IMEC holds the promise of driving industrial growth and employment in participating regions. By providing an efficient mechanism for transporting raw materials and finished goods, the corridor is poised to stimulate industrial activity, addressing prevalent employment challenges. The correlation between enhanced transportation infrastructure and economic growth suggests that IMEC’s impact on job creation and industrial development could be substantial.

IMEC’s strategic importance extends to energy security and environmental sustainability. Access to the Middle East’s abundant energy resources is enhanced, bolstering the energy security of participating nations. The corridor’s emphasis on clean energy transportation aligns with global efforts to reduce greenhouse gas emissions, presenting a model for sustainable development.

Furthermore, IMEC’s potential to attract foreign investment and strengthen diplomatic ties positions it as an alternative to China’s Belt and Road Initiative, reshaping global trade dynamics and reducing dependency on traditional maritime routes. The corridor’s focus on cultural integration fosters connections among diverse cultures and civilizations, contributing to enhanced regional connectivity and peace.

IMEC is evidence of India’s strategic realignment towards the Middle East, particularly the Gulf Cooperation Council Countries (GCCs), under Prime Minister Narendra Modi’s leadership. This evolving relationship encompasses security cooperation, cultural ties, and technological exchanges, transcending a simplistic framework of oil trade and market access.

In the context of a shifting global landscape, IMEC represents a transition from a unipolar or bipolar world to a more multipolar system. By knitting together diverse economic, cultural, and political strengths, the corridor contributes to a balanced and resilient global system.

However, the success of IMEC is contingent upon the geopolitical stability of the Middle East. The region’s historical political unrest underscores the global necessity for peace in the Middle East. A stable Middle East is vital for ensuring secure trade routes, reliable energy resources, and unhindered knowledge and people exchange. It creates an environment conducive to the economic and technological collaborations envisioned by IMEC and contributes to global economic stability.

In conclusion, IMEC stands as a testament to the transformative power of economic connectivity, promising to shape a more prosperous and interconnected world. As leaders and nations come together to support this initiative, the potential for IMEC to catalyze global prosperity becomes increasingly tangible, fostering a future of shared economic growth, cultural integration, and geopolitical stability.

Chinese Stock Market Faces Ongoing Turmoil: Economic Challenges and Policy Concerns Spark Investor Anxiety

Chinese stocks have experienced a challenging start to 2024, extending the rough period that began in February 2021, marked by a steady decline since their most recent peak. Over the past three years, approximately $6 trillion, roughly twice the annual economic output of Britain, has been wiped off the value of Chinese and Hong Kong stocks.

The Hang Seng index has plummeted by 10% in the current year alone, accompanied by declines of 7% and 10% in the Shanghai Composite and Shenzhen Component indexes, respectively. These staggering losses, reminiscent of the 2015-2016 Chinese stock market crash, underscore a crisis of confidence among investors who harbor concerns about the country’s future.

Goldman Sachs analysts expressed the challenges faced by investors in Chinese equities over the past three years, stating, “China … [is] currently trading at suppressed valuations and decade-low allocations across [investment] fund mandates.”

China’s economic landscape is marred by a myriad of problems, including a record downturn in real estate, deflation, escalating debt, a declining birthrate, a shrinking workforce, and a shift towards ideology-driven policies that have unsettled the private sector and deterred foreign firms.

Amid a global stock market rally led by Wall Street and Japan, Chinese markets have emerged as the worst performers in 2024, prompting concerns from the Chinese government. Reports suggest that Beijing has taken measures such as requesting banks to sell dollars to support the yuan and preparing for direct intervention to stabilize stocks. Chinese Premier Li Qiang has ordered officials to implement “forceful and effective measures” to stabilize the markets, raising questions about the restoration of investor confidence.

Investors’ apprehensions stem from the perceived lack of effective policies from Beijing to stimulate a sustainable economic recovery. China’s economy, which grew at 5.2% in 2023, experienced its slowest pace of expansion since 1990, with expectations of further slowdown to around 4.5% this year and dropping below 4% in the medium term. This deceleration, considered structural and challenging to reverse, raises concerns about potential decades of stagnation.

Nomura analysts highlighted the confusion surrounding Beijing’s economic policy stance, citing the central bank’s failure to cut its benchmark lending rates and officials’ reluctance to pursue short-term growth at the expense of long-term risks.

The People’s Bank of China’s decision to maintain its medium-term lending facility rate and Loan Prime Rate, contrary to market expectations, has further dampened hopes for a policy shift. Goldman Sachs analysts assert that conventional macro policy easing has fallen short, advocating for a more aggressive, big-bang approach to overturn the negative market narrative.

The real estate crisis, a central driver of China’s economic challenges, necessitates an “effective government backstop” to support failing property developers and stimulate housing demand, according to Goldman Sachs analysts. Additionally, concerns about China’s commitment to reform have intensified due to the crackdown on Big Tech, emphasis on national security, and the increasing dominance of the state sector in key industries, all of which have discouraged investment.

US-China tensions have further prompted US investors to significantly reduce their exposures to and ownership of Chinese equities, contributing to the ongoing market downturn.

In response to the stock market crash, Premier Li has pledged to take action to boost the stock market and improve liquidity. However, the specifics of these measures remain undisclosed. State-owned banks have reportedly supported the Chinese yuan to prevent rapid depreciation, while authorities are considering a direct intervention by mobilizing a stock market stabilization fund of 2 trillion yuan ($282 billion). The fund would purchase mainland China-listed shares through the Hong Kong stock exchange, with an additional 300 billion yuan ($42 billion) earmarked for local funds to invest in mainland Chinese shares.

The Tuesday Bloomberg report suggesting these potential interventions temporarily halted further declines, with the Hang Seng index closing 2.6% higher and the Shanghai Composite up 0.5%.

The stock market rout has triggered public anger on Chinese social media, where over 220 million individuals, accounting for 99% of the total investor base, are invested in China’s stock markets. Topics related to the “market plunge” and “China’s stock market rescue” were trending on Weibo on Tuesday, even prompting influential figures to call on regulators to take effective measures to stem the decline.

Former editor-in-chief for the state newspaper Global Times, Hu Xijin, expressed concern about the continuous decline in the stock market, emphasizing its impact beyond the capital market. He urged Beijing to take immediate action to rescue small investors, citing a personal loss of more than 70,000 yuan ($9,857) since he began investing in the stock market last June.

Millennials Navigate Economic Challenges: Reevaluating the American Dream Amidst Soaring Prices, Housing Dilemmas, and Shifting Priorities

Rachael Gambino and Garrett Mazzeo meticulously followed the financial playbook: education, debt reduction, aggressive savings, marriage, homeownership, and starting a family—a quintessential American dream. However, seated at the kitchen table of their suburban Pennsylvania home, a property they both appreciate and feel somewhat ensnared by, they reflect on their journey, expressing reservations about doing it all over again the same way.

The couple, parents to nine-month-old Miles, has a different perspective for their son. Rachael, 33, observes, “I think a lot of Millennials were forced into saying, ‘you need a four-year degree in order to be successful,’” emphasizing the burden of significant student loan debt taken on at a young age. Concerned about this narrative, she adds, “At 18, you’re signing up to be $100,000 in debt before you even really know how to make the best decisions for yourself. I think we need to change that narrative.”

Rachael and Garrett acknowledge their fortune, both maintaining steady employment and temporarily residing with Rachael’s sister, Kristen Gambino, who helps with the mortgage. Despite these advantages, the couple feels precarious, managing their daily lives meticulously through a budget where Garrett, 35, monitors every dollar flowing in and out. Rachael questions, “This is the American Dream. But at what cost? What are we paying for the American Dream now?”

The Vibecession

In post-Covid America, an odd paradox exists: the economy appears robust, yet a pervasive sense of discontent prevails. A recent CNN poll revealed that a staggering 71% of Americans deemed economic conditions “poor,” with 38% describing them as “very poor.” This sentiment has improved marginally since the summer of 2022 when 82% perceived the economy as poor.

Various factors contribute to this economic dissatisfaction, including soaring prices, a challenging housing market, persistent inequality, and escalating debt. While inflation, reaching decades-high levels, is gradually receding, the aftermath is a landscape of elevated prices for essentials and indulgences deferred during the pandemic, such as concert tickets and vacations.

Despite Millennials making significant strides in wealth accumulation over the past four years, they endured over a decade of stagnant wages and relatively flat wealth growth. Brendan Duke, senior director for economic policy at the Center for American Progress, highlights that Millennials are the most educated generation in U.S. history, but this education came at a substantial cost. Between 1987 and 2017, the cost of attending a public four-year college surged by over 200%, leaving the average student debt for those aged 25 to 34 at $32,000.

Generational Wealth Gap

Millennials, now aged 27 to 42, have struggled to match the wealth accumulation of their Baby Boomer parents and Gen X counterparts. Raised during the economic boom of the 1990s, they entered adulthood during the Great Recession, a period that scarred their early professional lives. The recession not only made entry-level jobs scarce but also delayed the retirement plans of older workers, hindering career progression for the younger generation.

By 2016, families led by Millennials born in the 1980s were approximately 34% below their “wealth expectations.” While this gap has diminished, with Millennials now only 11% below these expectations, they face the highest debt burden across demographics, making them particularly susceptible to economic shocks, such as a pandemic.

The Myth of the Nest Egg

The quintessential American Dream often centers around homeownership as the key to wealth building. However, in the Covid-era economy, this dream has transformed into more of a fantasy. Low housing inventory, a lingering effect of the 2007 housing bubble collapse, combined with remote work trends, led to a surge in home prices between 2021 and 2022.

For Rachael and Garrett, who aimed for a 20% down payment to secure a home in 2022, the rapidly rising home prices and interest rates dealt a painful blow. Missing the low-rate window, they find themselves with a monthly mortgage payment consuming 40% of their take-home income. While interest rates are anticipated to decrease, offering a chance to refinance, the couple currently navigates a challenging financial landscape.

Renting, once seen as less favorable than buying, is now a more financially viable option. A report from Attom, a real estate data company, indicates that renting a three-bedroom home is more affordable than owning a similarly sized unit in nearly 90% of local markets in the U.S. Despite this, homeownership remains a priority for many Millennials, ingrained in them as a fundamental part of the American Dream.

Rachael and Garrett, though acknowledging their relative fortune, harbor concerns about potential financial instability. The fear of job loss or unexpected medical bills looms large, and the eventual departure of Rachael’s sister, currently a tenant, adds another layer of uncertainty to their financial planning.

Silver Linings

The economic challenges faced by consumers in the previous year, marked by rapidly rising prices and interest rates, have been taxing. However, some relief is on the horizon. Wages have outpaced prices since 2019, with Millennials experiencing an average wage increase of 14%, adjusted for inflation, between ages 29 and 38.

While this wage growth is a positive development, Brendan Duke notes that it may not fully alleviate the financial strain on workers who have become parents during the same period. The high cost of childcare often offsets wage increases, emphasizing the need for societal investments in areas like parental leave and affordable housing.

For Rachael and Garrett, the reality of childcare costs prompted a reassessment of their family planning timeline. Rachael expresses the desire to have children close in age, but financial constraints dictate a delay of at least four years before expanding their family.

Rachael and Garrett’s story reflects the broader struggles of Millennials as they navigate the complex economic landscape. The American Dream, once a straightforward path to prosperity, now demands a nuanced approach and a critical examination of the traditional narratives surrounding education, homeownership, and financial stability.

The Global Dance of Currencies: Forbes Unveils Top 10 Strongest Currencies and Their Economic Significance

Currency, often described as the lifeblood of global trade, serves as a pivotal indicator of a country’s economic vitality. The strength of a nation’s currency not only reflects its stability but also showcases a robust financial health that resonates internationally, attracting investments and fostering crucial global partnerships. In essence, a strong currency becomes a shield, enabling nations to weather economic storms and fortify their positions in the intricate web of global commerce. Officially recognized by the United Nations, there are 180 legal tender currencies worldwide. However, the popularity and widespread use of certain currencies don’t necessarily correlate with their actual value or strength.

The delicate dance of currency strength is orchestrated by the interplay of supply and demand, with influences ranging from interest rates and inflation to geopolitical stability.

“A robust currency not only enhances a country’s purchasing power but also underlines its credibility on the world stage,” states a report. Investors seek refuge in currencies that stand firm, setting off a ripple effect that molds financial markets worldwide.

Forbes recently unveiled a list detailing the 10 strongest currencies globally, comparing them with the Indian Rupee and USD, shedding light on the factors contributing to their prominence.

Topping the list is the Kuwaiti Dinar, with one Kuwaiti Dinar equivalent to ₹ 270.23 and $3.25. Following closely is The Bahraini Dinar, valued at ₹ 220.4 and $2.65. The Omani Rial (Rs 215.84 and $2.60), Jordanian Dinar (Rs 117.10 and $1.141), Gibraltar Pound (Rs 105.52 and $1.27), British Pound (Rs 105.54 and $1.27), Cayman Island Dollar (Rs 99.76 and $1.20), Swiss Franc (Rs 97.54 and $1.17), and the Euro (Rs 90.80 and $1.09) make up the rest of the prestigious list.

Notably, the US Dollar, despite its global popularity and status as the most widely traded currency, finds itself at the bottom of the list, with one USD valued at ₹ 83.10. Forbes explains that the US Dollar, while holding the position of the primary reserve currency globally, ranks 10th among the world’s strongest currencies.

According to the exchange rates published on the International Monetary Fund’s (IMF) website as of Wednesday, India holds the 15th position with a value of 82.9 per US Dollar.

The Kuwaiti Dinar, which claims the top spot, has consistently been recognized as the world’s most valuable currency since its introduction in 1960. The success of this currency is attributed to Kuwait’s economic stability, driven by its abundant oil reserves and a tax-free system.

Forbes also highlights the Swiss Franc, the official currency of Switzerland and Liechtenstein, as widely regarded as the most stable currency globally.

It’s crucial to note that the list is based on currency values as of January 10, 2024, and comes with a disclaimer acknowledging the potential for fluctuations in these values.

The unveiling of Forbes’ list not only provides insight into the current strength of global currencies but also emphasizes the intricate relationship between economic stability, natural resources, and taxation systems in determining the strength of a nation’s currency. As the world continues to navigate the complex landscape of international trade, these currency dynamics play a pivotal role in shaping the interconnected web of global commerce.

White House Proposes Overdraft Fee Reduction to Alleviate Financial Strain on Consumers

The White House has unveiled a proposal aimed at significantly lowering the cost of overdrawing a bank account, potentially reducing it to as little as $3. This move, announced by the Consumer Financial Protection Bureau (CFPB), is part of the Biden administration’s ongoing efforts to tackle what it perceives as excessive fees burdening American consumers, especially those living paycheck to paycheck.

President Joe Biden expressed his concerns, stating, “For too long, some banks have charged exorbitant overdraft fees — sometimes $30 or more — that often hit the most vulnerable Americans the hardest, all while banks pad their bottom lines. Banks call it a service — I call it exploitation.”

The proposed rule from the CFPB suggests that banks should only charge customers an amount equal to their cost of providing overdraft services. This would necessitate banks to disclose the operational costs associated with their overdraft services, a requirement that many financial institutions may find challenging.

Alternatively, banks could opt for a benchmark fee applicable across all affected financial institutions. The proposed benchmark fees range from $3 to $14, with the CFPB seeking industry and public input to determine the most suitable amount. The suggested figures are derived from an analysis of the costs incurred by banks in recovering losses from accounts with negative balances that were never repaid.

Another option presented in the proposal is for banks to offer small lines of credit, functioning similarly to credit cards, to allow customers to overdraft. Some banks, such as Truist Bank, already provide such services.

The average overdraft fee, according to Bankrate’s research in August, was $26.61, with certain banks charging as much as $39. Despite various changes made by banks in recent years, the largest banks in the nation still generate around $8 billion annually from overdraft fees, disproportionately impacting low-income households and communities of color.

President Biden, in line with his economic agenda leading into the 2024 election, aims to eliminate what he terms as “junk fees,” with overdraft fees being a major focus. The regulations proposed by the CFPB would exclusively apply to banks with assets exceeding $10 billion, approximately 175 banks that constitute the majority of financial institutions Americans engage with. Smaller banks and credit unions, which often rely more heavily on overdraft fees, would be exempt.

The roots of overdraft services trace back to decades ago when banks initially offered a niche service to allow certain checking account customers to go negative to avoid bouncing paper checks. However, with the surge in popularity of debit cards, overdraft fees became a substantial profit center for banks.

Despite industry changes in response to public and political pressure, the proposed regulations are expected to face strong opposition from the banking sector. The regulations could potentially lead to a prolonged legal battle, with the Supreme Court being the final arbiter. If adopted and successfully navigates political and legal challenges, the new rules are anticipated to take effect in the autumn of 2025.

Acknowledging industry concerns, Lindsey Johnson, President and CEO of the Consumer Bankers Association, warned that the proposal might have unintended consequences, stating, “If enacted, this proposal could deprive millions of Americans of a deeply valued emergency safety net while simultaneously pushing more consumers out of the banking system.”

Despite some banks having introduced measures like reducing fees and adding safeguards to prevent overdrafts, concerns persist that increased regulations might prompt banks to eliminate the service altogether. The fate of the proposal will likely have significant implications for both consumers and the banking industry, setting the stage for a contentious debate on financial regulations and consumer protection.

Google Pay and NPCI Collaborate to Propel India’s UPI onto the Global Stage, Streamlining International Payments and Redefining Digital Payment Infrastructures Worldwide

Alphabet Inc.’s Google Pay is teaming up with the National Payments Corporation of India (NPCI) to propel India’s innovative mobile payment system, the Unified Payments Interface (UPI), onto the global stage.

The collaboration between Google India Digital Services and NPCI aims to streamline international payments for Indian travelers and contribute to the establishment of UPI-like digital payment infrastructures in other countries. This aligns with NPCI’s goal to elevate India’s standing in the global digital payment arena and simplify remittances by reducing reliance on traditional money transfer systems.

Ritesh Shukla, CEO of NIPL, expressed excitement about the potential of this partnership, stating, “UPI has demonstrated to the world the change that happens in economies with the introduction of interoperable, population-scale digital infrastructure, and each economy that joins such networks will create an impact beyond the sum of parts.”

Under the leadership of Prime Minister Narendra Modi, the Indian government has actively promoted the international expansion of UPI. In a significant move last year, India and Singapore merged their systems, enabling real-time monetary transfers. Ongoing explorations for collaborations with countries like Sri Lanka and the United Arab Emirates are indicative of India’s commitment to expanding UPI’s global reach.

According to recent statistics from India’s central bank, in November alone, UPI processed transactions worth approximately $209 billion. The new partnership with Google Pay is expected to further amplify UPI’s reach and influence in the international digital payments sphere.

Google Pay’s alliance with NPCI marks a strategic move to propel UPI onto the global stage, benefiting Indian travelers with simplified international payments and aiding the development of similar digital payment infrastructures worldwide. The enthusiasm expressed by NIPL’s CEO underscores the transformative potential of interoperable digital infrastructure, while the Indian government’s initiatives, under Prime Minister Modi’s leadership, continue to drive UPI’s international expansion. The impressive transaction volumes in November highlight UPI’s current significance, with the collaboration set to enhance its impact in the global digital payments landscape.

 India Takes Center Stage at Davos: Showcasing Innovation, Growth, and Global Business Potential

Along the Davos Promenade, participants of the World Economic Forum encounter the WeLead Lounge, a repurposed storefront highlighting India’s female leadership and talent, and the India Engagement Center, showcasing the country’s growth story, digital infrastructure, and burgeoning startup ecosystem.

In another part of the forum, technology and consulting giants from India, including Wipro, Infosys, Tata, and HCLTech, are making a significant presence to exhibit the country’s prowess in crucial technologies, particularly artificial intelligence, a topic at the forefront of discussions.

The heightened visibility of India at Davos comes after it surpassed China as the world’s most populous country last year. India is now keen on showcasing its evolving strength as an innovative nation and a global business hub, attracting the attention of some of the world’s wealthiest and most influential figures.

Ravi Agrawal, editor-in-chief of Foreign Policy and former CNN India bureau chief, emphasized the significance of India’s presence, stating, “India’s presence is certainly sizable — it has some of the most sought-after spots on the main promenade for tech companies.” He added, “As China’s economy slows down, India’s relatively rapid growth stands out as a clear opportunity for investors in Davos looking for bright spots.

China’s GDP increased by 5.2% last year, a significant improvement from 3% in 2022 but a decline from the 8.1% recorded the year before. In contrast, India achieved a growth rate of 7.2% in the last fiscal year, slightly lower than the just over 9% recorded a year earlier.

India has been actively positioning itself on the global stage, especially in the realms of technology and business. States such as Maharashtra, Tamil Nadu, Telangana, and Karnataka have established their presence at Davos, positioning themselves as leading tech hubs for manufacturing and AI.

“In that sense, the separate state pavilions send a message — that various regions in India are competing with each other to offer global companies the best access,” said Agrawal, an experienced Davos attendee and author of “India Connected,” which explores how smartphones led to a more connected and democratic India.

However, India faces several challenges, including a consistent net migration out of the country and a weakened rupee against the dollar, influenced by high U.S. interest rates and volatile oil prices. The International Trade Administration identifies “price sensitivity” among consumers and businesses as a key risk for doing business in India.

Agrawal raised concerns, stating, “The challenge, as always, is whether India can actually make it easier to do business there, and whether India’s domestic consumers can spend enough to make continued global investment worth it.”

Despite these challenges, foreign direct investment in India has surged, rising from $36 billion in 2014, when Prime Minister Narendra Modi first took office, to $70.9 billion in 2023. Major international manufacturers like Dell, HP, Lenovo, and others are committing to local production in India under the country’s production-linked incentive scheme.

Apple, a notable example, has shifted its production from China to India, opening its first store, Apple BKC, in Mumbai last year. Apple CEO Tim Cook highlighted India’s significance, stating, “We had an all-time revenue record in India. It’s an incredibly exciting market for us and a major focus of ours.”

India is actively courting U.S. chipmakers, hosting the SemiconIndia event last year to showcase investments and announce new ones. AMD plans to invest around $400 million in India over the next five years, including a new campus in Bangalore. Micron also announced plans to invest up to $825 million in setting up a semiconductor assembly and testing facility in Gujarat.

Jack Hidary, CEO of SandboxAQ, emphasized the accelerating adoption of technology in India, particularly in areas like healthcare, due to inefficiencies in public services. He sees AI as an opportunity for India to distinguish itself, noting, “This is a transformation that is well beyond even the mobile phone.” Hidary believes that Mukesh Ambani’s smartphone company, Jio, will bridge the digital gap for about 600 million people in India through a $12 device.

As India positions itself at Davos, 2024 is set to be a crucial year for the country, with general elections scheduled between April and May. During Modi’s tenure, major U.S. tech companies, including Alphabet, Meta, and Amazon, have made substantial investments in India. The country’s stability, popular leadership, and strong growth make it an attractive prospect.

Ian Bremmer, president and founder of Eurasia Group, highlighted India’s positive prospects, saying, “The good thing about India is the fact that it’s a stable country, with a very popular leader.” He contrasted India with the U.S., noting its decentralized nature and predicting individual U.S. states adopting a similar approach in the future.

“It’s not inconceivable to me that in five years time at Davos, you would see individual U.S. states deciding to do the same thing,” Bremmer said. “Texas would be mopping up on fossil fuels and sustainable energy if they had a storefront in Davos this year. And you know, California, frankly, would, too.”

India’s Economic Growth Outlook for 2023-24: NSO Estimates 7.3% Real GDP Growth, but Concerns Linger

India’s economic landscape for the fiscal year 2023-24 is anticipated to witness a growth of 7.3%, surpassing the 7.2% recorded in the previous year, according to the initial advance estimates of national income released by the National Statistical Office (NSO) on Friday. This projection indicates a more optimistic outlook compared to the 7% growth recently projected by the Reserve Bank of India (RBI).

In the first half of the current year, GDP growth stood at a robust 7.7%, providing a positive momentum that the NSO’s advance estimates suggest will continue into the second half, with a growth range of approximately 6.9%-7%. These estimates, relying on data from the first six-eight months of the year, play a crucial role in formulating the Union Budget.

Notably, the NSO anticipates a slight easing in the growth of Gross Value Added (GVA) for the economy, from 7% in the fiscal year 2022-23 to 6.9% in the current year. Furthermore, the nominal GDP growth is projected at 8.9%, falling short of the earlier Budget estimate of 10.5%. Economists caution that this could potentially result in the fiscal deficit exceeding the targeted 5.9% of GDP, possibly reaching around 6%.

Of specific concern is the expected significant drop in GVA growth for the farm sector, plummeting from 4% in the previous year to a mere 1.8% in the current fiscal year. Similarly, Trade, Hotels, Transport, Communication, and Services are projected to experience a notable deceleration in GVA growth, dropping from 14% in 2022-23 to 6.3%. Some economists express skepticism, suggesting these estimates might even be overly optimistic, particularly as concerns about consumption spending emerge.

“The concerning aspect in the GDP data is the weak consumption growth at 4.4%. This would be the slowest consumption growth in the past two decades barring the pandemic year of 2020-21,” cautioned Rajani Sinha, chief economist at CareEdge Ratings.

The NSO highlights that the share of private final consumption expenditure in GDP is expected to decrease to 56.9% this year, the lowest in at least three years, down from 58.5% in 2022-23. While the investment rate is anticipated to rise to nearly 30% of GDP, driven by government capital expenditure, higher consumption growth is deemed vital for private investments to assume the responsibility of stimulating the economy.

Manufacturing GVA growth is forecasted to accelerate to 6.5% in 2023-24 from a mere 1.3% the previous year, demonstrating a positive trend. Additionally, mining GVA is expected to rise to 8.1% from 4.6% in 2022-23, and construction GVA growth is predicted to remain solid at 10.7% this year, building on the 10% uptick recorded in the previous fiscal year.

Providing a numerical perspective, the NSO states, “Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated to attain a level of ₹171.79 lakh crore, as against the Provisional Estimate of GDP for the year 2022-23 of ₹160.06 lakh crore, released on 31st May, 2023.”

In parallel, the Reserve Bank of India (RBI) has taken a proactive stance to prevent potential risks to India’s accelerated growth. Governor Shaktikanta Das has pegged the third-quarter real GDP growth for this financial year at 6.5%, with a possible moderation to 6% in the January to March 2024 quarter.

It is essential to note that these projections by the NSO are preliminary, and factors such as improved data coverage, actual tax collections, expenditure on subsidies, and data revisions by source agencies could lead to subsequent revisions. The NSO underscores, “Users should take this into consideration while interpreting the figures.”

The First Revised Estimates for the fiscal year 2022-23 are scheduled for release on February 29, potentially influencing any revisions in the growth rates presented in the advance estimates released earlier.

Critics of the optimistic growth projections voiced their concerns. Aditi Nayar, chief economist at ICRA, highlighted, “The growth assumed for the second half is quite high, given the tepid outlook for agriculture amidst the weak kharif output and ongoing lag in rabi sowing, as well as the feared temporary slowdown in capex ahead of the General Elections.” She believes that agriculture and construction GVA growth for the second half may fall below the NSO estimates, suggesting a more cautious perspective.

Madan Sabnavis, chief economist at Bank of Baroda, echoed these sentiments, stating, “This growth estimate is much higher than what has been projected by the RBI and our estimate of 6.6%-6.7%.” He attributes the anticipated weak agriculture GVA growth to the projected drop in Kharif crop and the sluggish pace of Rabi sowing.

While the NSO’s initial estimates paint an optimistic picture of India’s economic growth for the fiscal year 2023-24, cautionary voices emphasize the potential challenges, particularly in sectors like agriculture and consumption spending. The coming months will reveal the extent to which these estimates align with the evolving economic reality on the ground.

Gautam Adani Resumes Position as Asia’s Wealthiest Person Amidst Legal Respite

In a dramatic turn of events, Gautam Adani has swiftly reclaimed his title as Asia’s wealthiest individual, marking a remarkable resurgence in his financial standing. This resurgence comes on the heels of a recent Supreme Court decision, which declared no further investigations were necessary into the bombshell allegations made by Hindenburg Research against Adani’s conglomerate.

According to the Bloomberg Billionaires Index, Adani’s net worth experienced a staggering surge of $7.7 billion in just one day, reaching an impressive $97.6 billion. This surge allowed him to overtake his Indian counterpart Mukesh Ambani, the Chairman of Reliance Industries Ltd., who found himself trailing by a narrow margin with a net worth of $97 billion.

The roller-coaster ride that Adani endured in the wealth rankings over the past year has been nothing short of extraordinary. Despite vehemently denying Hindenburg’s allegations of corporate fraud, the Adani Group witnessed a substantial erosion of market value, exceeding $150 billion at one point in the previous year. In response, Adani and his conglomerate embarked on a comprehensive strategy to win back investors, address regulatory concerns, repay debts, and restore confidence in their operations.

The turning point for Adani’s fortunes occurred as the Supreme Court intervened, directing the local markets regulator to conclude its investigation into the conglomerate within three months. Furthermore, the court explicitly stated that no additional probes were necessary, effectively bringing closure to the protracted short-seller saga that had plagued Adani Group for the past year.

The market responded positively to this legal reprieve, triggering a remarkable $13.3 billion wealth gain for Adani. This achievement stands as the most significant wealth surge recorded globally this year, an impressive reversal of the substantial wealth losses.

USCIS Announces Premium Processing Fee Hike for H-1B Visa Applications

The United States Citizenship and Immigration Services (USCIS) is set to implement an increase in premium processing fees for H-1B visa applications, effective February 26, 2024.

Under the revised premium processing fee structure, adjustments have been made for forms I-129, I-140, I-539, and I-765. These forms encompass crucial elements of the immigration process, including the immigrant petition for alien worker (I-140), application to change or extend non-immigrant status (I-539), and employment authorization (I-765).

The fee increments are notable, with certain premium processing fees experiencing an uptick from US$1,500 to US$1,685, US$1,750 to US$1,965, and US$2,500 to US$2,805. This represents a 12 percent increase in processing fees for H-1B visas, resulting in a final fee of US$2,805, according to USCIS sources.

These changes are in accordance with the USCIS Stabilization Act, which not only established the existing premium processing fees but also granted the Department of Homeland Security (DHS) the authority to adjust these fees biennially.

“The Department will use the revenue generated by the premium processing fee increase to provide premium processing services, make improvements to adjudication processes, respond to adjudication demands, including reducing benefit request processing backlogs, and fund USCIS adjudication and naturalization services,” stated an official USCIS spokesperson.

In quoting the USCIS Stabilization Act, the premium processing fees have been designed to play a pivotal role in enhancing various aspects of the immigration system. This includes facilitating premium processing services, streamlining adjudication processes, addressing increased adjudication demands, and mitigating the backlog associated with processing benefit requests.

The decision to increase fees, as outlined by the USCIS, is a strategic move to bolster operational capabilities and enhance overall efficiency. The funds generated through the fee adjustments are earmarked for critical areas, including premium processing services, which are expected to benefit from the additional resources.

While some stakeholders may express concerns over the fee hike, the USCIS asserts that these adjustments are imperative for meeting the growing demands and challenges within the immigration system. The agency aims to allocate resources judiciously to ensure a more streamlined and responsive process for handling immigration-related petitions and benefit requests.

It’s essential to note that the premium processing fee increase is part of a broader strategy outlined in the USCIS Stabilization Act, which empowers the DHS to periodically review and adjust fees to align with the evolving needs of the immigration system.

The USCIS, in justifying the fee adjustments, emphasizes the positive impact they will have on reducing processing backlogs and improving the overall adjudication process. The revenue generated from the fee increase is intended to be a proactive measure in addressing the complexities associated with the influx of immigration-related requests.

The USCIS premium processing fee hike for H-1B visa applications is a carefully considered adjustment aimed at fortifying the agency’s capabilities to manage an ever-evolving immigration landscape. As the changes take effect on February 26, 2024, the increased fees will play a pivotal role in enhancing premium processing services, addressing adjudication demands, and ultimately contributing to the efficiency and responsiveness of the USCIS in fulfilling its mission.

President Xi Acknowledges Economic Struggles in New Year Speech: China Grapples with Downturn, Job Woes, and Heightened Tensions Over Taiwan

President Xi Jinping, in his New Year’s Eve speech, acknowledged the economic challenges faced by China’s businesses and job seekers, marking the first time he addressed such issues in his annual messages since 2013. This acknowledgment comes at a crucial time for the world’s second-largest economy, grappling with a structural slowdown characterized by weak demand, rising unemployment, and diminished business confidence.

Xi openly admitted the difficulties faced by some enterprises and individuals in finding jobs and meeting basic needs, stating, “Some enterprises had a tough time. Some people had difficulty finding jobs and meeting basic needs.” His televised remarks, widely circulated by state media, emphasized the gravity of the situation: “All these remain at the forefront of my mind. We will consolidate and strengthen the momentum of economic recovery.”

In sync with Xi’s speech, the National Bureau of Statistics (NBS) released its monthly Purchasing Managers’ Index (PMI) survey, revealing a decline in factory activity in December to the lowest level in six months. The official manufacturing PMI dropped to 49 last month, down from 49.4 in November, indicating a contraction in the manufacturing sector for the third consecutive month.

China’s massive manufacturing sector had been experiencing weakness throughout 2023, with a brief pickup in the first quarter followed by a contraction for five months until September. The economic challenges were further compounded by a prolonged property downturn, record-high youth unemployment, weak prices, and financial stress at local governments.

In response to the economic downturn, Beijing has implemented various measures to revive growth and spur employment. Despite these efforts, the government’s increasing emphasis on state control over the economy, at the expense of the private sector, has unsettled entrepreneurs. The crackdown on businesses in the name of national security has also deterred international investors.

A recent development highlighting this trend was the People’s Bank of China’s approval of an application to remove controlling shareholders at Alipay, the widely used digital payment platform run by Jack Ma’s Ant Group. This move officially marked Ma’s relinquishment of control over the company, part of his broader withdrawal from online businesses. Ma’s companies were among the initial targets of Beijing’s crackdown on Big Tech, viewed as having gained excessive power.

President Xi’s New Year’s speech also included a pledge regarding Taiwan, emphasizing China’s longstanding stance on the self-ruled island democracy. Xi stated, “China will surely be reunified, and all Chinese on both sides of the Taiwan Strait should be bound by a common sense of purpose and share in the glory of the rejuvenation of the Chinese nation.” This comes just two weeks before Taiwan’s presidential elections on January 13.

Xi’s comments on Taiwan were more assertive compared to the previous year, reinforcing his commitment to making Taiwan an integral part of his broader goal to “rejuvenate” China’s global standing. The Communist Party claims Taiwan as its own territory and has not ruled out the use of force to bring the island under its control. The upcoming election in Taiwan, where Vice President Lai Ching-te is seen as a frontrunner, has heightened tensions, with accusations from Taipei about Chinese influence operations ahead of the polls.

India’s Economic Surge Faces Dilemma as Investment Lags

India’s economic landscape is experiencing a remarkable upswing, with soaring stock prices and substantial government investments in critical infrastructure projects. The nation’s gross domestic product (GDP) is projected to grow by 6 percent this year, surpassing the rates of economic giants like the United States and China. However, a notable concern looms large: domestic investment by Indian companies is not keeping pace, posing potential challenges for sustained growth.

In contrast to the robust performance of India’s stock markets, there is a discernible slowdown in long-term investments from both domestic and foreign sources. The disparity raises questions about the sustainability of the current economic boom, especially as the government may need to curtail its extensive spending in the near future.

India’s ambitious goal of becoming a developed nation by 2047, coupled with its continually expanding population, demands a more vigorous growth trajectory, ideally between 8 and 9 percent annually. Prime Minister Narendra Modi, amidst a re-election campaign and rallying public support, faces the challenge of addressing the sluggish investment scenario.

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Picture: The NewYork Times

Sriram Viswanathan, managing partner at Celesta, a Silicon Valley venture capital fund, sees an opportunity for India amid China’s economic slowdown and geopolitical tensions. He notes, “Investors [are] wanting to fill the vacuum that has been created in the supply chain. That, I think, is the opportunity for India.”

The World Bank acknowledges India’s commitment to infrastructure spending during the pandemic, emphasizing the need for a corresponding surge in corporate investments. The concept of a “crowd-in effect,” where government spending attracts private investment, is deemed crucial for sustained economic growth. Auguste Tano Kouamé, the World Bank’s country director for India, underscores the necessity for deeper reforms to encourage private sector investments.

Despite the booming stock markets in Mumbai, valued at nearly $4 trillion, there is a noticeable decline in foreign direct investment, dropping from an annual average of $40 billion to $13 billion in the past year. Foreign investors appear hesitant, cautious about the stability of India’s economic environment.

A key factor contributing to this caution is Modi’s government, which, while pro-business and stable in leadership, tends to intervene in the economy abruptly. Instances of sudden import restrictions on laptops and retroactive taxes on online betting companies have created uncertainty and impacted businesses. The success of conglomerates like Reliance Industries and the Adani Group, closely associated with Modi’s political circle, further raises concerns about fair business practices.

Arvind Subramanian, an economist at Brown University and former chief economic adviser under Modi’s government, highlights the vulnerability felt by domestic investors, particularly those not affiliated with major conglomerates. He acknowledges the positive aspects of the Modi government’s achievements in improving various aspects of the business environment but points out persistent challenges, including bureaucratic red tape.

Foreign officials responsible for attracting investment to India express concerns about lingering difficulties in doing business, citing red tape as a major obstacle. The slow pace of legal processes and enforcement further deters long-term investments.

The underlying weakness in India’s growth story lies in the skewed distribution of consumer wealth. While a small segment of the population can afford luxury goods, the majority grapples with inflation in essential commodities. Banks, though extending credit to consumers, remain cautious about providing the same support to businesses fearing a prolonged belt-tightening phase for the majority of customers.

Subramanian remains cautiously optimistic, citing the annual growth rate, albeit below 6 percent, and the potential for improved infrastructure to attract more private investment. The uneven distribution of consumer wealth, over time, could contribute to raising overall incomes.

The wildcard in India’s economic trajectory is its ability to capture a substantial share of global business from China. Apple’s gradual shift of its supply chain away from China to India serves as a prominent example. While Apple’s market share in India is currently modest, the intention to increase the production share to 25 percent by 2025 could open up significant possibilities for India on the global stage.

India’s economic success is at a crossroads, with the need for a substantial increase in domestic and foreign investments to sustain the current momentum. While challenges persist, the nation’s potential to capitalize on global economic shifts and ongoing reforms could pave the way for a more robust and inclusive growth trajectory. As the world watches, India stands on the precipice of a transformative economic future.

Surge in International Interest as India’s Stock Market Hits Record Highs

Fund manager Abhay Agarwal is witnessing an unexpected surge in calls from international investors, expressing a keen interest in India’s financial landscape. Agarwal, the founder of Mumbai-based Piper Serica Advisors, noted that these inquiries are coming from family offices in Europe and significant investors in the US who had previously shown little inclination towards investing in India. The nature of their questions reveals a newfound seriousness, as Agarwal explains, “For the first time, I find them to be very serious and they’re calling and asking questions such as, ‘Look, will my money be safe? And is there a rule of law here?'”

This heightened interest coincides with India’s stock market reaching historic highs, with the market value of listed companies surpassing $4 trillion in late November, according to Refinitiv. India boasts two major exchanges: the National Stock Exchange of India (NSE) and the BSE, Asia’s oldest bourse, formerly known as the Bombay Stock Exchange. The NSE has now overtaken Hong Kong to become the seventh-largest bourse globally, based on daily transaction value, as per data from the World Federation of Exchanges.

Abhay Agarwal reflects on the changing dynamics, stating, “People are getting excited about India.” International investors contacting him are eager to understand if India can deliver returns similar to China’s performance in the early 2000s. Notably, Agarwal observes a shift in investor profiles, with long-term strategic and financial investors now taking a 10-year perspective rather than a short-term outlook.

India’s benchmark indices, the Sensex and Nifty 50, have seen robust growth, climbing over 16% and 17%, respectively, this year. Additionally, the country is experiencing a surge in Initial Public Offerings (IPOs), with 150 listings in the first nine months of 2023, outpacing Hong Kong’s 42, as reported by Ernst & Young.

The surge in India’s stock market is indicative of the strength and potential of the world’s fastest-growing major economy. The International Monetary Fund (IMF) projects India’s growth at 6.3% this year, with some economists anticipating a closer figure of 7%. The country’s economy expanded by 7.6% in the quarter ending September 30, surpassing estimates by the central bank, prompting Citigroup and Barclays to revise their annual GDP projections for India to 6.7%.

In contrast, China faces challenges, with weak consumer demand and a protracted real estate crisis affecting its markets. China’s Shanghai Composite is down 7% this year, and Hong Kong’s Hang Seng Index has plummeted nearly 19%. The divergent growth trajectories of India and China are becoming crucial in the battle for emerging market investments.

Goldman Sachs, in a November report, highlights India’s resilience, citing its limited economic linkage to China’s end demand. The report notes, “Moreover, Indian equities exhibit the lowest price sensitivity to slowing China growth in the region.” Domestic institutional and retail investors in India are gaining influence, making the country less sensitive to global economic risks. Nomura echoes this sentiment in a December note, stating that India is “less exposed to (a) global trade slowdown” and could act as a counter-weight to North Asia in case of a slowdown in the West and continued disappointment in China.

India’s appeal extends beyond its economic strength, with companies diversifying their supply chains away from China. Apple, for instance, has significantly expanded its production in India, addressing supply chain challenges experienced in mainland China. A survey by the Japan Bank for International Cooperation identifies India as the “most promising medium-term business destination” for Japanese manufacturers, surpassing China due to its economic slowdown and rising tensions between Washington and Beijing.

Looking ahead, foreign investors may exhibit caution in the first half of 2024, coinciding with India’s general election expected in April and May. Goldman Sachs notes that election-related uncertainty and the challenging global macro environment could keep foreign flows weak for the next 3-6 months. However, optimism prevails, with expectations that foreign flows will pick up after the election uncertainty fades, especially if Prime Minister Narendra Modi’s ruling Bharatiya Janata Party secures victory, ensuring political stability.

Not all economists share the same level of optimism regarding India’s prospects. Some anticipate a slowdown, expressing concerns about the sustainability of private consumption, which has been strong but partly debt-fueled. Alexandra Hermann of Oxford Economics warns that this year’s spending may have repercussions next year, particularly as the labor market faces challenges. Additionally, critics argue that the current buoyancy of the stock market may not accurately reflect India’s broader economic challenges, such as job creation for its vast working-age population and the need for sustainable and inclusive growth.

Former central bank governor Raghuram Rajan and economist Rohit Lamba, in their recently-released book “Breaking the Mould,” point out that the profitability of large firms is on the rise, while small and informal businesses face difficulties. They caution that the stock market’s performance offers a misleading picture of the broader economy, with high-employment sectors like apparel and leather experiencing contractions in recent years.

Indian External Affairs Minister Jaishankar Embarks on Crucial Diplomatic Mission to Russia, Focusing on Bilateral Ties and Key Global Issues

India’s External Affairs Minister, S Jaishankar, is poised to embark on a significant five-day diplomatic mission to Russia, commencing on December 25. The objective of this visit is strategically designed to strengthen and augment bilateral relations between the two nations.

The External Affairs Ministry, in a statement released on Sunday, announced that Jaishankar’s itinerary will encompass substantial meetings with top Russian leadership in Moscow, as part of the ongoing high-level exchanges between India and Russia. The visit, scheduled from December 25 to 29, aims to catalyze discussions on various fronts.

During his stay, Jaishankar is scheduled to engage with Russia’s Deputy Prime Minister, Denis Manturov, who also serves as the Minister of Industry and Trade. The focal point of discussions with Manturov will revolve around matters pertaining to economic engagement and trade cooperation between the two nations.

Furthermore, the External Affairs Minister is set to engage in talks with his Russian counterpart, Sergey Lavrov. The agenda for these discussions encompasses a wide spectrum of issues, including bilateral, multilateral, and international topics.

Underscoring the enduring cultural and people-to-people ties between India and Russia, Jaishankar’s visit will encompass engagements in both Moscow and St Petersburg. The External Affairs Ministry emphasized the stability and resilience of the India-Russia partnership, characterizing it as a “Special and Privileged Strategic Partnership.”

The significance of Jaishankar’s visit is highlighted by the absence of the annual leaders’ summit between India and Russia this year. The last summit occurred in New Delhi in December 2021, and travel restrictions on Russian President Vladimir Putin have been in place since the onset of the Ukraine conflict in February 2022.

Key issues anticipated to be addressed during the meetings in Moscow include trade, connectivity, the expansion of the Brazil-Russia-India-China-South Africa (BRICS) grouping, cooperation at multilateral platforms like the United Nations and Shanghai Cooperation Organisation, defense collaboration, and the ongoing situation in Ukraine. Insiders familiar with the matter have suggested that these discussions are pivotal in navigating the evolving geopolitical landscape and fostering a robust partnership between the two nations.

Quoting the External Affairs Ministry, the original article states, “Jaishankar’s itinerary will include significant meetings with top Russian leadership in Moscow,” highlighting the importance of the diplomatic engagements at the highest levels. This aligns with the broader objective of reinforcing bilateral ties.

The article further notes that during his stay, Jaishankar is expected to meet Russia’s Deputy Prime Minister, Denis Manturov, who also serves as the Minister of Industry and Trade. The paraphrased version retains the focus on economic engagement and trade cooperation as central themes of the discussions with Manturov.

In parallel, the paraphrased article maintains the information regarding talks with Russian Foreign Minister Sergey Lavrov, covering a broad spectrum of issues, including bilateral, multilateral, and international topics. This mirrors the comprehensive nature of the diplomatic discourse between the two nations.

The enduring cultural and people-to-people ties between India and Russia are emphasized in both versions of the article. Jaishankar’s engagements in Moscow and St Petersburg are highlighted, underscoring the multifaceted nature of the visit.

The paraphrased article, like the original, accentuates the stability and resilience of the India-Russia partnership, characterizing it as a “Special and Privileged Strategic Partnership.” This reinforces the enduring and strategic nature of the relationship between the two countries.

The absence of the annual leaders’ summit between India and Russia in the current year is noted in both the original and paraphrased versions, with the latter maintaining the context of travel restrictions on Russian President Vladimir Putin since the onset of the Ukraine conflict in February 2022.

Crucial issues expected to be addressed during the Moscow meetings, such as trade, connectivity, BRICS grouping expansion, cooperation at multilateral platforms, defense collaboration, and the situation in Ukraine, are retained in the paraphrased article. The insight from individuals familiar with the matter, emphasizing the discussions’ significance in navigating the evolving geopolitical landscape and fostering a robust partnership, is also preserved.

The paraphrased article encapsulates the key information and quotes from the original, maintaining the integrity of the content while presenting it in a rephrased and concise manner, adhering to the specified word limit.

India Resumes Venezuelan Crude Oil Imports After Three-Year Hiatus Amid Eased US Sanctions

India’s Petroleum Minister, Hardeep Singh Puri, announced that India is set to resume crude oil imports from Venezuela after a three-year hiatus, citing the readiness of several Indian refineries to process heavy crudes. With the United States easing sanctions on Caracas in October, Puri emphasized that India, as a major global consumer of crude oil, is open to purchasing oil from any country not under sanctions.

Puri stated, “Many of our refineries, including (IOC’s) Paradip (refinery), are capable of using that heavy Venezuelan oil, and we will buy…We always buy from Venezuela. It’s when Venezuela came under sanctions that they were not able to supply.” This move comes as at least three Indian refiners—Reliance Industries (RIL), Indian Oil Corporation (IOC), and HPCL-Mittal Energy (HMEL)—have reportedly booked Venezuelan oil cargoes, expected to arrive in India over the next few months. Bharat Petroleum Corporation (BPCL) is also exploring the possibility of resuming oil imports from Venezuela.

India, specifically private sector refiners RIL and Nayara Energy (NEL), was a regular buyer of Venezuelan crude before the imposition of US sanctions in 2019, which led to a cessation of oil imports from Venezuela. According to data from commodity market analytics firm Kpler, the last time India imported Venezuelan crude was in November 2020. In 2019, Venezuela was India’s fifth-largest oil supplier, contributing nearly 16 million tonnes of crude, valued at $5.70 billion, according to India’s official trade data.

With Washington easing sanctions on Venezuela’s oil sector in October, allowing unlimited oil exports for six months, India is looking to capitalize on the opportunity. Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC) and possessing the world’s largest proven oil reserves, is keen to expand its crude sales in major markets. India, being the world’s third-largest consumer of crude oil and heavily reliant on imports to meet over 85 percent of its demand, remains committed to procuring oil from cost-effective sources amid the volatile global oil markets.

The recent developments also shed light on Venezuela’s strategy to offer substantial discounts to Chinese independent refiners, historically its primary buyers during the sanctions. However, reports suggest that these discounts have narrowed in recent weeks due to the easing of sanctions and the interest of other buyers in acquiring Venezuelan oil. Caracas appears motivated to diversify its crude sales by extending discounts to attract buyers in other major markets.

Reliance Industries Chairman Mukesh Ambani Envisions India as a $40 Trillion Economy by 2047, Emphasizes Clean Energy Transition and Youth’s Role in a Sustainable Future

Reliance Industries Chairman Mukesh Ambani has expressed unwavering confidence in the trajectory of the Indian economy, projecting its ascent to a staggering $40 trillion by 2047, a substantial leap from its current standing at $3.5 trillion, according to reports from PTI.

Ambani, speaking at the convocation of Pandit Deendayal Energy University (PDEU) in Gandhinagar, Gujarat, highlighted India’s position as the world’s third-largest energy consumer. He foresaw a doubling of the country’s energy needs by the close of this decade. Emphasizing the necessity for copious amounts of energy to propel this growth, he underscored the imperative nature of ensuring it is clean and green, safeguarding the environment in the pursuit of human progress.

“In fact, India’s energy requirement is set to double just by the end of this decade,” Ambani asserted, addressing the audience at PDEU. He envisioned an unparalleled explosion of economic growth in the next 25 years, portraying it as a crucible for transforming the vision of a cleaner, greener, and sustainable future into a tangible reality.

Ambani posed three pivotal questions as India races to fortify its energy infrastructure: How can universal access to affordable energy be ensured for every citizen and economic activity? How can a swift transition from fossil fuel-based energy to clean and green alternatives be accomplished? And, crucially, how can the expanding needs of the fast-growing economy be shielded from the volatility of the external environment? He coined these queries as the “Energy Trilemma.”

The business magnate, also the wealthiest individual in India, contended that the transition of energy sources holds the utmost significance in propelling India towards becoming a global leader in green, sustainable, and inclusive development.

Demonstrating faith in India’s capability to navigate this trilemma with smart and sustainable solutions, Ambani credited the nation’s exceptionally talented youth for their commitment to combat the climate crisis. He envisioned these young minds designing breakthrough energy solutions that would not only contribute to a robust and self-reliant India but also foster a safer and healthier planet.

Addressing the students, Ambani imparted a message of fearlessness and unwavering confidence in their abilities. “Courage is the ship that can safely sail you across the stormiest seas. You will commit mistakes. But let that not worry or deter you. The one who succeeds in life is the one who corrects his mistakes and continues on his mission boldly,” he asserted.

Reflecting on his own journey, Ambani attributed his success to India, to Bharat. He urged the graduates to contribute wholeheartedly to the greatness and glory of the country, emphasizing that being young in today’s India is a true blessing. He concluded on an optimistic note, proclaiming that the 21st Century is unequivocally poised to be India’s Century as the nation strides forward with confidence.

India Plummets in Global Talent Competitiveness Index, Ranking 103rd – Lowest Among BRICS Nations

The Global Talent Competitiveness Index has witnessed a significant decline for India, plummeting from the 83rd position a decade ago to the 103rd rank in the latest report released earlier this month. Among 134 countries evaluated, India finds itself positioned between Algeria, ranked 102, and Gautemala, ranked 104, both categorized as lower-middle-income countries. This places India well below the median score of the countries assessed. Notably, India’s current standing in the index is the lowest among BRICS nations.

Developed by the renowned chain of business schools, INSEAD, the Global Talent Competitiveness Index serves as a measure of how countries and cities grow, attract, and retain talent. The index comprises two sub-indices: input, which assesses regulatory and business environments, as well as efforts to foster and retain talent, and output, which evaluates the quality of talent.

India’s decline in the GTCI is particularly worrisome, considering the government’s frequent reference to scores on various business indices such as ‘Ease of Doing Business’ and the controversial World Bank-led ‘Doing Business’ scores to bolster its case. Notably, the World Bank Report on ‘Doing Business’ was discontinued due to irregularities in its measurement.

India’s performance in the GTCI stands in stark contrast to other emerging countries that have shown improvement on this index. China, Indonesia, and Mexico, in particular, have been highlighted for their noteworthy progress. China, for instance, has transitioned from being a talent mover to a talent champion, while Indonesia has made significant strides in talent competitiveness over the past decade. Mexico has transformed from a talent laggard to a talent mover, and Brazil is on track to potentially categorize as a talent mover.

In the context of BRICS nations, China leads the group with a rank of 40, followed by Russia at 52, South Africa at 68, and Brazil at 69. In contrast, India’s rank of 103 is the lowest among BRICS countries.

The report emphasizes that India’s talent competitiveness witnessed an increase up to 2020 but has regressed in each of the three subsequent years. A primary factor contributing to this decline is a downturn in business sentiment, significantly impacting the ability to attract talent, with India now ranked 132nd out of 134 in this aspect. This decline extends to both attracting talent from overseas (127th in External Openness sub-pillar) and within the country (129th in Internal Openness).

The report also highlights an increased skills mismatch and greater difficulty in finding skilled employees, positioning India at 121st in both the ‘Employability’ sub-pillar and the ‘Vocational and Technical Skills’ pillar. However, it does acknowledge India’s strength in the ‘Global Knowledge Skills’ category, where innovation and software development contribute to its 69th position in the Talent Impact sub-pillar.

In terms of global rankings, Singapore, Switzerland, and the United States hold the top three positions. European countries continue to dominate the ‘Top 25’ rankings, with Japan dropping out for the first time, and South Korea ascending to take its place.

Despite the debates surrounding India’s position on various business indices, experts argue that focusing on whether the current situation can be labeled a genocide is a misplaced emphasis. Some scholars, like Verdeja, express the view that debates on this matter divert attention and time from addressing the ongoing crisis, stating, “Proving whether something is a genocide takes time and does not actually stop people from being killed.” Hinton concurs, asserting that the fixation on defining a specific moment as genocide can lead to a rigid focus, obscuring the broader perspective of addressing the immediate challenges and finding solutions.

In the broader context, scholars note the significance of using the term genocide to describe specific situations. Segal cites the example of the U.S. government’s refusal to label crimes against the Hutus in Rwanda as genocide, as doing so would have obligated intervention. This lack of action allowed the massacre to continue unabated. Segal emphasizes the importance of naming a situation for what it is, stating, “Without sticking to the truth, we’ll never have a truthful reckoning of how we arrived at the seventh of October, and how we go forward.”

Foreign Businesses Retreat from China Amid Economic Uncertainties

In recent months, foreign businesses have been withdrawing capital from China at a pace surpassing their investments, according to official data. The apprehension stems from a combination of factors, including China’s economic slowdown, low interest rates, and heightened geopolitical tensions with the United States. The upcoming meeting between Chinese leader Xi Jinping and US President Joe Biden is eagerly anticipated, as it may offer insights into the future economic landscape. However, businesses are already exhibiting caution, expressing concerns about geopolitical risks, policy uncertainty, and slowing growth.

Nick Marro from the Economist Intelligence Unit (EIU) highlights the prevailing sentiments, stating, “Anxieties around geopolitical risk, domestic policy uncertainty, and slower growth are pushing companies to think about alternative markets.”

The data reveals a noteworthy shift, with China recording a deficit of $11.8 billion (£9.6 billion) in foreign investment in the three months ending September – a first since records began in 1998. This suggests a trend where foreign companies are not reinvesting their profits in China; instead, they are choosing to relocate their funds elsewhere.

A spokesperson for Swiss industrial machinery manufacturer Oerlikon, which withdrew 250 million francs ($277 million; £227 million) from China last year, emphasized the need for corrections in the face of China’s economic slowdown. Despite the challenges, China remains a vital market for Oerlikon, with close to 2,000 employees, representing over a third of its sales.

Oerlikon’s spokesperson remarked, “In 2022, we were one of the first companies to transparently communicate that we expect the economic slowdown in China to impact our business. Consequently, we began early to implement actions and measures to mitigate these effects.”

The impact of the pandemic has added another layer of complexity for businesses operating in China, the world’s largest market. The stringent “zero-Covid” policy implemented by China disrupted supply chains, affecting companies like Apple, which diversified its production to India. The tensions between China and the US, with fresh export restrictions on critical materials for advanced chips, have also contributed to the shift in business strategies.

While established multinational firms may not be exiting the Chinese market, there is a noticeable reassessment in terms of new investments. Nick Marro notes, “We aren’t seeing many companies pulling out of China. Many of the big multinational firms have been in the market for decades, and they’re not willing to give up market share that they’ve spent 20, 30 or 40 years cultivating. But in terms of new investment, in particular, we are seeing a reassessment.”

Interest rates play a significant role in this reassessment. While many countries raised rates sharply last year, China took a different path by reducing the cost of borrowing to support its economy and struggling property industry. This, coupled with a depreciation of the yuan by over 5% against the dollar and euro, has prompted businesses to redirect their funds overseas for higher investment returns.

The European Union Chamber of Commerce in China emphasizes this trend, stating, “Those with excess cash and earnings in China have been increasingly transferring these funds overseas, where they will earn a higher investment return compared to investments in China.”

Michael Hart, president of the American Chamber of Commerce in China, notes that the withdrawal of profits does not necessarily indicate dissatisfaction with China but rather signifies the maturation of investments. He views it as encouraging, indicating that companies can integrate their China operations into their global operations.

Canada-based aerospace electronics company Firan Technology Group exemplifies this trend. Having invested up to C$10 million ($7.2 million; £5.9 million) in China over the past decade, the company withdrew C$2.2 million from the country last year and in the first quarter of 2023. Firan’s president and chief executive, Brad Bourne, clarifies, “We are not exiting China at all. We are investing and growing our business there and taking out any excess cash to invest elsewhere in the world.”

As uncertainties loom over future interest rates and China-US ties, analysts anticipate potential moves by China’s central bank to lower interest rates further to support the economy. However, this decision comes with challenges, as lowering interest rates could exert additional pressure on the depreciating yuan.

The business community remains cautiously optimistic about the upcoming meeting between Presidents Xi and Biden. Nick Marro suggests, “Direct meetings between the two presidents tend to exert a stabilizing force on bilateral ties.” However, he also notes that until companies and investors feel confident navigating the uncertainties, the drag on foreign investment into China is likely to persist.

The evolving economic landscape in China, coupled with geopolitical tensions and global economic shifts, has prompted foreign businesses to reassess their investments. While established companies may not be abandoning the Chinese market, the trend of redirecting funds overseas reflects a cautious approach influenced by economic uncertainties and a desire for higher investment returns. The upcoming meeting between leaders Xi and Biden is anticipated to provide some clarity, but until then, businesses remain vigilant in navigating the complex dynamics of the Chinese market.

Mortgage Rates Experience Significant Drop, Easing Burden on Homebuyers

In a notable turn of events, mortgage rates witnessed the most substantial one-week decline since November of the previous year. This marks the second consecutive week of rate reduction following seven weeks of consecutive increases. The 30-year fixed-rate mortgage averaged 7.50% in the week ending November 9, down from the preceding week’s 7.76%, as reported by Freddie Mac.

A year ago, the 30-year fixed-rate had reached 7.08%, hitting its peak in 2022. This week’s decline of 26 basis points from the previous week’s rate is the most significant one-week drop since November. Sam Khater, Chief Economist at Freddie Mac, attributes this decline to the decrease in Treasury yields. He emphasizes the potential consequences of the rising household debt, urging significant decreases in mortgage rates for the housing market to avoid stagnation.

Khater stated, “Many consumers are feeling strained by the high cost of living, so unless mortgage rates decrease significantly, the housing market will remain stagnant.”

The average mortgage rate is based on data from Freddie Mac’s thousands of lenders across the nation, focusing on borrowers with a 20% down payment and excellent credit. Notably, the rates for current buyers may differ. Lower mortgage rates could potentially encourage hesitant homebuyers to re-enter the market.

The Mortgage Bankers Association reported a 2.5% increase in all loan applications compared to the previous week, with a 3% rise specifically in applications for home purchase loans. However, despite this uptick, Joel Kan, MBA’s Vice President, and Deputy Chief Economist highlighted that applications for both purchase and refinance loans remain at relatively low levels. The purchase index lags more than 20% behind last year’s pace, indicating a cautious approach by potential homebuyers waiting for increased inventory.

The recent decision by the Federal Reserve to maintain existing interest rates provided a brief reprieve for homebuyers grappling with soaring mortgage rates. Yet, the possibility of an additional Fed rate hike remains uncertain.

Jiayi Xu, an economist at Realtor.com, commented on the need for more economic indicators to determine the adequacy of current policies in addressing inflation. The October jobs report, revealing moderate job growth and reduced wage pressures, might influence policymakers’ confidence in the economy’s continued easing, affecting the upcoming December 12-13 meeting of the Federal Reserve.

Despite the dip in rates, the monthly cost of buying a home has reached a record high due to unaffordability. Realtor.com found that the median home price in October remained similar to the previous year. However, with mortgage rates exceeding 7% since mid-August, the monthly cost to buy a home increased by over $166, marking a 7.4% year-over-year rise—a new record.

While mortgage rates are still relatively high, the difference between current rates and those of a year ago has narrowed. Lisa Sturtevant, Chief Economist at Bright Multiple Listing Service, noted that market conditions are comparable to last November, with consumers adjusting their expectations about mortgage rates. She anticipates that some buyers will act swiftly when rates dip, while others may wait until after the first of the year, hoping for lower rates and increased inventory.

Sturtevant also remarked that while rates are expected to decrease in 2024, they are not projected to return to pre-pandemic levels. She stated, “We are in a new era for mortgage rates, where prospective homebuyers can expect rates to settle above 6%.”

Blooming BRICS: Former White House Economist Warns of Dollar’s Growing Challenge

The US dollar could encounter a formidable challenge from BRICS countries due to their expanding size and influence in global trade, warns former White House economist Joe Sullivan.

Sullivan, in a recent op-ed for Foreign Policy, highlighted the rising concerns that BRICS nations might introduce a currency to rival the US dollar in international trade. This potential currency could potentially displace the dollar from its current dominant position in global trade markets and as the primary reserve currency.

Although BRICS officials have denied the existence of such a rival currency, Sullivan cautioned that the bloc of emerging market countries, which has recently welcomed Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, poses a threat to the greenback based on its growing influence.

Sullivan also pointed out the substantial influence of the BRICS bloc in commodities markets. Saudi Arabia, Iran, and the United Arab Emirates are among the world’s leading exporters of fossil fuels, while Brazil, China, and Russia are significant exporters of precious metals.

The inclusion of Saudi Arabia, in particular, could provide BRICS+ with a significant advantage, as the Middle Eastern nation holds over $100 billion in US Treasury bonds, contributing to the total holdings of US Treasurys by BRICS countries surpassing $1 trillion, according to Sullivan.

Sullivan argued, “The BRICS+ nations do not need to wait until a shared trade currency meets the technical conditions typical of a global reserve currency before they swing their newly enlarged economic wrecking ball at the dollar.”

He also highlighted the growing prominence of China’s yuan in global trade, as Beijing’s trading partners increasingly use the renminbi.

Sullivan further warned that these trends could eventually place the US dollar in a position similar to that of the British pound in the 1800s when it lost its international dominance.

He explained, “The BRICS+ states do not even necessarily need to have a shared trade currency to chip away at King Dollar’s domain. If BRICS+ demanded that you pay each member in its own national currency to trade with any of them, the dollar’s role in the world economy would diminish. There would not be a clear replacement for the dollar as a global reserve. A variety of currencies would gain in importance.”

However, some economists hold a different view, suggesting that the US dollar’s role as the world’s primary trading and reserve currency will likely persist for an extended period. The data from the Bank of International Settlements and the International Monetary Fund show that the greenback continues to outperform rival currencies in international trade and central bank reserves by a significant margin. The yuan has only recently made modest gains in central banks’ holdings.

Economic Surge in Late Summer and Early Fall Shows Robust Growth

During late summer and early fall, the US economy experienced a significant upswing, marked by strong consumer spending. Recent data revealed that the gross domestic product (GDP) expanded at an annual rate of 4.9% in the months of July, August, and September. This growth rate was more than double that of the previous quarter and represented the highest quarterly growth since the final quarter of 2021.

This robust economic performance is noteworthy, especially considering the concurrent rise in interest rates, which have reached their highest level in over two decades. The driving force behind this growth was the American consumer, who continued to open their wallets and indulge in various expenditures, including the purchase of cars, dining at restaurants, and even buying tickets for events like Taylor Swift concerts. Moreover, an increase in exports and heightened government spending contributed to the overall economic expansion.

Potential Challenges Ahead

However, despite the recent economic boom, analysts and forecasters are cautious about the sustainability of this rapid growth rate in the upcoming months. It is anticipated that economic growth will decelerate as the effects of elevated interest rates begin to take hold. Already, higher interest rates have had a dampening effect on the housing market and could potentially impede other consumer spending as well.

The key question is the extent to which the economy will slow down. Earlier in the year, there were concerns that increased borrowing costs might push the economy into a recession. While those fears have subsided, they are not entirely eliminated, as various challenges continue to loom over the economy. These challenges include the uncertainties arising from a volatile global environment.

A Closer Look at the Strong Economic Performance

The GDP growth rate of 4.9% for the months of July, August, and September showcases the robust state of the US economy during that period. This figure is particularly impressive as it represents a growth rate more than twice as fast as the previous quarter. Notably, it is the highest quarterly growth rate recorded since the final quarter of 2021, signifying a remarkable rebound and strengthening of the US economy.

Consumer spending has played a pivotal role in driving this growth. Americans have been actively contributing to economic expansion by increasing their expenditures. This has encompassed various sectors, such as the automotive industry, where car sales have surged, and the hospitality sector, with a notable increase in restaurant dining. Furthermore, even the entertainment industry benefited, with a surge in demand for events like Taylor Swift concerts.

Additionally, it’s worth highlighting the positive impact of increased government spending on the economy. As government initiatives and projects gained momentum, they provided a supplementary boost to economic growth. Moreover, a rise in exports further bolstered the economy’s performance during this period.

Challenges Ahead for Sustaining Growth

Despite the impressive performance, economic forecasters have sounded a note of caution regarding the sustainability of such a brisk pace of growth. The impending challenge lies in the form of higher interest rates. It is expected that the cumulative effect of these interest rate hikes will eventually curtail economic growth. In fact, the housing market has already experienced a slowdown due to these elevated rates, and this trend might extend to other consumer spending areas.

The critical question centers around the extent to which the economy will decelerate. Earlier in the year, there were concerns that the increased cost of borrowing might push the economy into a recession. While such fears have somewhat receded, they have not disappeared entirely. The economy faces a complex set of challenges, including the uncertainties stemming from the tumultuous global economic landscape. This unpredictability can potentially hinder the pace of economic recovery and growth in the near future.

The economic landscape, despite its recent strength, remains subject to a multitude of external factors, and it will be crucial to monitor these closely in the coming months to assess the durability of the ongoing recovery.

The Top Economies in the World(1980-2075)

As per a new report from Goldman Sachs, the equilibrium of worldwide financial power is projected to move decisively in the next few decades.

In the realistic above, we’ve made a knock diagram that gives a verifiable and prescient outline of the world’s best 15 economies at a few achievements: 1980, 2000, 2022, and Goldman Sachs projections for 2050 and 2075.

Projections and Features for 2050

Rank Country Real GDP in 2050 (USD trillions)
1  China $41.9
2  US $37.2
3  India $22.2
4  Indonesia $6.3
5  Germany $6.2
6  Japan $6.0
7  UK $5.2
8  Brazil $4.9
9  France $4.6
10  Russia $4.5
11  Mexico $4.2
12  Egypt $3.5
13  Saudi Arabia $3.5
14  Canada $3.4
15  Nigeria $3.4

The accompanying table shows the extended top economies on the planet for 2050. All figures address genuine Gross domestic product projections, in light of 2021 USD.

A significant subject of the beyond a very long while has been China and India’s inconceivable development. For example, somewhere in the range of 2000 and 2022, India bounced eight spots to turn into the fifth biggest economy, outperforming the UK and France.

By 2050, Goldman Sachs accepts that the heaviness of worldwide Gross domestic product will move significantly more towards Asia. While this is somewhat because of Asia beating past figures, it is additionally because of BRICS countries failing to meet expectations.

Prominently, Indonesia will turn into the fourth greatest economy by 2050, outperforming Brazil and Russia as the biggest developing business sector. Indonesia is the world’s biggest archipelagic state, and right now has the fourth biggest populace at 277 million.

The Top Economies On the planet in 2075

The accompanying table incorporates the fundamental numbers for 2075. Yet again figures address genuine Gross domestic product projections, in light of 2021 USD.

Rank Country Real GDP in 2075 (USD trillions)
1  China $57.0
2  India $52.5
3  US $51.5
4  Indonesia $13.7
5  Nigeria $13.1
6  Pakistan $12.3
7  Egypt $10.4
8  Brazil $8.7
9  Germany $8.1
10  UK $7.6
11  Mexico $7.6
12  Japan $7.5
13  Russia $6.9
14  Philippines $6.6
15  France $6.5

Projecting further to 2075 uncovers a radically unique world request, with Nigeria, Pakistan, and Egypt breaking into the main 10. A significant thought in these evaluations is quick populace development, which ought to bring about a huge workforce across each of the three countries.

In the mean time, European economies will keep on slipping further down the rankings. Germany, which was once the world’s third biggest economy, will sit at 10th behind Brazil.

It ought to likewise be noticed that China, India, and the U.S. are supposed to have comparative GDPs at this point, recommending fairly equivalent monetary power. Accordingly, how these countries decide to draw in with each other is probably going to shape the worldwide scene in manners that have sweeping ramifications.

India’s IIT Graduates in High Demand Globally

A significant portion, one-third, of graduates from India’s esteemed engineering institutions, specifically the Indian Institutes of Technology (IITs), choose to move abroad. A substantial 65% of these highly-skilled individuals make up the migrants bound for the United States, as revealed in a working paper (pdf) by the National Bureau of Economic Research (NBER).

A striking statistic shows that 90% of the top performers in the annual joint entrance examination for IITs and other renowned engineering colleges have migrated. Furthermore, 36% of the top 1,000 scorers have followed suit, according to the paper released this month.

Many IIT graduates have become leading executives and CEOs in the US. The majority of these immigrants initially move to the US as students and later join the workforce. The NBER paper discovered that “83% of such immigrants pursue a Master’s degree or a doctorate.”

The report highlights the role of elite universities in shaping migration outcomes, stating, “…through a combination of signaling and network effects, elite universities in source countries play a key role in shaping migration outcomes, both in terms of the overall propensity and the particular migration destination.”

There are 23 IITs spread across India, with acceptance rates at many of these prestigious institutions being lower than those of Ivy League colleges. This is especially true for the most sought-after IITs at Kharagpur, Mumbai, Kanpur, Chennai, and Delhi. In 2023 alone, a staggering 189,744 candidates registered for the JEE, competing for a mere 16,598 seats.

Highly skilled Indians are in high demand across global economies

The NBER report highlights the US graduate program as a crucial migration pathway to attract the “best and brightest.”

In a similar vein, the UK’s High Potential Individual visa route allows graduates from the top 50 non-UK universities, including the IITs, to live and work in the country for a minimum of two years. For those with doctoral qualifications, the work visa extends to at least three years.

The report also mentions that recent IIT graduates seeking to move abroad benefit from a network of accomplished alumni and faculty members already settled overseas. Some of these connections even grant access to specific programs where they hold sway over admissions or hiring decisions.

The intriguing example of Banaras Hindu University (BHU) is worth noting

In 2012, this century-old institution, also India’s first central university, was granted IIT status. Interestingly, this elevation took place without any alterations to the staff, curriculum, or admission system at the Varanasi-based institute in Uttar Pradesh.

The NBER report examined 1,956 BHU students who graduated with BTech, BPharm, MTech, or integrated dual degrees between 2005 and 2015. The study found a remarkable 540% increase in migration probability among graduates following the IIT status designation.

The report observed that “…the quality of education/human capital acquired by the students in the cohorts before and after the change remained constant, while only the name of the university on the degree received differed.”

Google Addresses AI Job Loss Concerns with New Courses and Entrepreneur Programs

As an early innovator in artificial intelligence, Google has been striving to keep up with competitors like Microsoft and OpenAI, who have gained ground with advancements such as ChatGPT. Recognizing the need for individuals to develop skills for future job opportunities, Google is taking action to address this pressing issue.

The tech giant has officially introduced its new generative AI learning path, consisting of ten courses aimed at helping the average person gain a deeper understanding of AI and machine learning, particularly as these technologies begin to replace jobs. For investors, it’s always encouraging when prominent Big Tech companies adopt a long-term vision regarding AI.

Google’s new generative AI learning course was announced through a blog post, revealing that seven free courses were initially launched, with three more added to the platform recently. These courses cover topics such as the distinction between AI and machine learning, an introduction to Google’s Vertex AI training platform, and the ethical considerations surrounding responsible AI development.

The course serves as a starting point for users to grasp generative AI, its role within the broader AI landscape, and where to find additional learning resources to help them transition into AI-centric careers. Some may argue that this initiative is merely a strategy to attract potential AI enthusiasts to Google’s training system, ultimately leading them to use Google software for building their own AI and machine learning models and solidifying Google’s position in the AI race.

However, creating AI models requires expertise. The US Bureau of Labor Statistics has projected a 36% growth rate in data scientist roles over the next decade. As such, these new courses are not only practical but also crucial for companies like Google, which will undoubtedly require a vast number of AI-focused data scientists in the future.

AI’s impact on the future of work has generated excitement, with major companies like Microsoft, Amazon, and Nvidia investing billions in AI technologies. However, there is a pressing concern: the potential job losses resulting from AI automation. A recent Goldman Sachs survey estimates that up to 300 million jobs could be lost, with two-thirds of existing roles experiencing a reduction in workload due to AI. On the bright side, AI is expected to contribute $7 trillion to the global economy in the next decade, and 60% of today’s jobs didn’t exist in 1940.

A more optimistic Microsoft survey involving 30,000 workers and business leaders worldwide revealed that 70% of respondents would delegate specific tasks to AI. Business leaders were twice as focused on using AI to boost productivity rather than reducing headcount. Nevertheless, companies like IBM and BT are planning to cut thousands of jobs in favor of AI.

Google’s recent AI initiatives go beyond new courses. The company launched the Google for Startups Growth program in Europe, a three-month course for European AI entrepreneurs focusing on health and wellbeing. Since OpenAI’s ChatGPT debut, Google has been working on its own Bard version for users. The tech giant also announced significant changes to its search function, where it holds approximately 85% market share.

Google, Meta, and TikTok have faced criticism regarding AI-generated content labeling after the European Commission warned about the rapid spread of misinformation. Additionally, AI safety has become a significant concern, as evidenced by Dr. Geoffrey Hinton, one of AI’s founding figures, leaving Google to raise awareness on the subject. Alphabet CEO Sundar Pichai addressed these concerns in a recent Financial Times op-ed, stating, “AI is too important not to regulate, and too important not to regulate well.”

Alphabet’s share price has increased nearly 17% in the past month and over 41% since the beginning of the year. Google’s cloud computing division experienced a 28% YoY revenue growth last quarter. By focusing on upskilling future data scientists and empowering entrepreneurs to develop AI companies, Google is considering the bigger picture, leveraging its dominant search engine market share.

In summary, Google aims to bridge the knowledge gap in AI with new courses and tools, helping the company find skilled engineers and scientists for future AI projects. The stock price outpacing Microsoft may indicate that Google has regained an advantage. These learning courses form part of a strategy that increases reliance on Google’s AI products, attracting investors’ attention as they recognize the shift.

Student Loan Repayments Set to Resume with Potential Debt Forgiveness, New Repayment Plan, and Loan Servicer Changes

Following a hiatus of over three years, federal student loan payments are set to resume in the coming months. The recent debt ceiling agreement, signed into law by President Joe Biden, includes a clause that effectively ends the suspension of federal student loan repayments and may make it more difficult for the U.S. Department of Education to prolong the pause. Consequently, around 40 million Americans carrying education debt can expect their next payment due in September.

During the pandemic, the Biden administration has been actively revamping the federal student loan system. As borrowers return to repayment, they may encounter several modifications either already implemented or in the pipeline. Here are three notable changes:

Potential lower payments due to forgiveness

In August, President Biden introduced a groundbreaking proposal to eliminate $10,000 in student debt for tens of millions of Americans, or up to $20,000 for those who received a Pell Grant during their college years. However, legal challenges led to the closure of the application portal within a month.

The Supreme Court is currently reviewing two lawsuits against the plan, with a ruling expected by the end of the month. If approved, around 14 million individuals, or one-third of federal student loan borrowers, would have their entire balances forgiven, according to higher education expert Mark Kantrowitz.

These borrowers “likely won’t have to make a student loan payment again,” he said. For those with remaining balances, the Education Department plans to “re-amortize” their debts, recalculating monthly payments based on the reduced amount and remaining repayment timeline.

A new income-driven repayment option

The Biden administration is developing a more affordable repayment plan for student loan borrowers. This new program, called the Revised Pay as You Earn Repayment Plan, would require borrowers to contribute 5% of their discretionary income toward undergraduate loans, instead of the current 10%.

According to Kantrowitz, this revamped plan could significantly reduce monthly payments for many borrowers. The payment plan is expected to become available by July 2024, but it may be implemented earlier if circumstances permit.

A new servicer handling loans

During the pandemic, several prominent federal student loan servicers, including Navient, Pennsylvania Higher Education Assistance Agency (also known as FedLoan), and Granite State, announced they would no longer manage these loans. Consequently, around 16 million borrowers will likely have a different company handling their loans when payments resume.

Kantrowitz warned that “whenever there is a change of loan servicer, there can be problems transferring borrower data.” Borrowers should be prepared for potential glitches and will receive multiple notices about the change in lender, according to Scott Buchanan, executive director of the Student Loan Servicing Alliance. If a payment is mistakenly sent to the old servicer, it should be forwarded to the new one.

Saudi Arabia to Slash Oil Production by 1 Million Barrels per Day

Saudi Arabia has revealed its plan to reduce oil production by 1 million barrels per day starting in July, with the intention of promoting “stability and balance” in the global oil market. Despite not basing production decisions on crude oil prices, this action is widely perceived as an effort to bolster oil prices amid worldwide economic instability and potential declines in international demand.

The announcement followed an OPEC+ meeting in Vienna, although Saudi Arabia’s additional production cuts are being implemented independently. The country has stated that these reductions will persist for at least one month and may be prolonged.

OPEC+ nations also consented to extend the oil production cuts initially declared in April until the end of 2024. This decision will decrease the volume of crude oil they contribute to the global market by over 1 million barrels per day. Notably, OPEC+ countries account for approximately 40% of the world’s crude oil production.

Several African nations and Russia had been urged to diminish production, while the United Arab Emirates plans to augment its crude output. Worldwide oil production currently hovers around 100 million barrels per day.

According to Saudi Arabia’s Ministry of Energy, the nation will now produce 9 million barrels of crude oil daily, a reduction of 1.5 million barrels per day compared to earlier this year. These cuts coincide with the end of Memorial Day in the United States and the beginning of the bustling summer travel season, during which crude oil prices typically impact gasoline costs.

In the previous summer, President Biden visited Saudi Arabia—a nation he once labeled a “pariah” state—to request increased oil production from its leaders. Contrarily, OPEC+ members announced a 2 million barrels per day cut in October, which the White House deemed “shortsighted.”

To counteract rising gas prices, the Biden administration has been tapping into the Strategic Petroleum Reserve since last year, releasing millions of barrels of oil.

Economic Growth, Rising Manufacturing and Exports Propel Nation Towards Top Global Economy Rankings

In the past decade, India has experienced 10 transformative changes that are now driving the nation towards doubling per capita income, export market share, increasing manufacturing’s share, enhancing corporate profits, and significantly improving other economic health indicators, according to Morgan Stanley. Their recent report, ‘How India has Transformed in Less than a Decade,’ credits policy changes such as Direct Benefit Transfers (DBTs), supply-side policy reforms, and adjustments to the Insolvency and Bankruptcy Code (IBC) for bringing about overwhelmingly positive shifts in India’s macroeconomic situation, global standing, and local stock markets.

Ridham Desai, Managing Director of Morgan Stanley India, refuted the widespread belief that India has underperformed: “We run into significant skepticism about India, particularly with overseas investors, who say that India has not delivered its potential… and that equity valuations are too rich.” Desai added that this perspective “ignores the significant changes that have taken place in India, especially since 2014.” The report highlights ten crucial changes with extensive implications for both the economy and the market to support his argument.

The ten changes highlighted by Morgan Stanley are:

  1. Supply-side Policy Reforms
  2. Formalisation of the Economy
  3. Real Estate (Regulation and Development) Act
  4. Digitalizing Social Transfers
  5. Insolvency & Bankruptcy Code
  6. Flexible Inflation Targeting
  7. Focus on FDI
  8. India’s 401(k) Moment
  9. Government Support for Corporate Profits
  10. MNC Sentiment at Multi-year High

The consequences of these changes on the economy

The main effect of these transformations is the consistent growth of manufacturing and capital expenditure as a percentage of GDP. Morgan Stanley forecasts that each will increase by 5 percentage points. Furthermore, India’s export market share is predicted to reach 4.5% by 2031, nearly doubling from 2021 levels, while per capita income is anticipated to reach $5,200 in the next ten years. “This will have major implications for change in the consumption basket, with a boost to discretionary consumption,” the report stated, adding, “We expect India’s real growth to average 6.5% in the next 10 years, making India the third-largest economy at nearly $8 trillion by 2031, up from fifth-largest currently.”

This structural shift will impact saving-investment dynamics, strengthening the nation’s external balance sheet and consequently narrowing the current account deficit (CAD). Domestic profits could potentially double, which, although explaining high equity valuations, will result in “a major rise in investments, a moderation in the CAD, and an increase in credit to GDP to support the coming profit growth.”

“Indian companies will likely witness a major increase in their profits share to GDP. Triggered by supply-side reforms by the government, we expect a major rise in investments coupled with a moderation in the current account deficit and an increase in credit to GDP to support this rise,” said Morgan Stanley.

Implications on the stock markets

Upon realizing these consequences, there will likely be a reduced correlation with oil prices and the US recession. This could also prompt a revaluation in domestic stock market valuations. “This reflects persistent domestic demand for stocks and higher growth for longer. India is trading at a premium to long-term history, albeit well off highs and in line with recent history,” the report noted. Additionally, the report observed that India’s beta to emerging markets has decreased to 0.6, a result of enhanced macro stability and a reduction in reliance on global capital market flows to finance the CAD.

Wendy Cutler On The Indo-Pacific Economic Framework Meeting

The U.S.-led Indo-Pacific Economic Framework (IPEF) concluded its meeting on Saturday, with trade ministers from the 14 participating countries agreeing on a deal to coordinate supply chains.

Wendy Cutler, Vice President of the Asia Society Policy Institute, offers the commentary below on the outcomes of the IPEF meeting.

“The 14 IPEF members should be commended for making progress on three pillars of their work, and achieving “substantial conclusion” of  their supply chain work. Reaching agreement among 14 countries, with different levels of development, different priorities and different needs is no small feat. That said, it’s still an open question whether meaningful outcomes can be achieved by the November target date of completion. The challenge of achieving high standards while securing the buy-in of all participants already seems to be impacting the talks, as evidenced by the largely process-oriented announcement on supply chains.  Once released, the final text of the supply chain agreement may shed more light on whether substantive commitments were agreed upon.

“The announcement on the Trade Pillar suggests that while work has ‘advanced,’ the negotiations still face significant hurdles. This is not surprising, given the topics included and lack of offers of market access to allow for traditional trade-offs. Of note, is that work on technical assistance and economic cooperation is singled out as an area where “substantial progress” has been made. Hopefully, this will pave the way for more progress on the tough issues of digital, labor and the environment.

“The Clean Economy Pillar statement language suggests that while IPEF members agree on the importance of the transition to a sustainable economy, there is no meeting of the minds on how IPEF can contribute in concrete terms. The announcement notes that many ideas and proposals are being discussed, but is vague on where the work may be headed in concrete terms.

“On the Supply Chain Pillar,  Ministers announced the ‘substantial conclusion’ of negotiations. Given the importance of supply chain resiliency to individual, regional and the global economy, the IPEF supply chain outcomes are welcome, albeit modest and largely process- oriented.

“The statement lays out nine important objectives of the agreement, including promoting a collective understanding of supply chain risks, minimizing disruptions, and ensuring the availability of skilled works in critical sectors. But these goals, many of which mirror the initial negotiating mandate of this pillar, do not  appear to be translated into rules, commitments or initiatives.   

“Rather, the announcement focuses on three new bodies to help flesh out and operationalize the objectives, including a Council, a crisis response mechanism, and a labor advisory board. In essence, the IPEF members have established a framework within a framework to address supply chain concerns, with much of the substantive work yet to be discussed and agreed upon.  Curiously, the new bodies are ‘contemplated,’ and apparently not yet agreed upon, suggesting that there were some last-minute hitches in even setting up this structure.

“Finally, the Fair Economy pillar points to ‘good progress’ on negotiation of the text on anticorruption and tax matters. Based on this characterization, this pillar’s work is likely to be the next candidate for an early harvest agreement.”

USIBC Plans 2023 India Ideas Summit In Washington

The summit will explore the U.S.-India economic partnership across sectors.
The United States India Business Council (USIBC) announced that its 2023 India Ideas Summit will be held on June 12-13, 2023 on the sidelines of its 48th Annual General Meeting at the U.S. Chamber of Commerce headquarters in Washington D.C.
In a statement, USIBC shared the summit themed ‘Trust, Resilience, and Growth’ – will focus on how these three organizing principles underpin the U.S.-India economic partnership across sectors. “As the Summit is the flagship event of USIBC, and the premier convention of government, industry, and thought leaders in the U.S.-India Corridor, USIBC’s annual India Ideas Summit has become an institution,”it said.
This year’s summit carries an additional significance as it will take place about ten days in advance of PM Modi’s state visit to the US scheduled to begin from June 22, 2023, in an effort to strengthen bilateral relations.
Every year, the bilateral trade council hosts conversations that explore important technological developments, chart an agenda for the trade relationship, and highlight how India-US commercial ties serve shared strategic and economic interests.\
Formed in 1975 at the request of the U.S. and Indian governments, the U.S.-India Business Council is the premier business advocacy organization in the U.S.-India corridor, composed of more than 200 top-tier U.S. and Indian companies advancing U.S.-India commercial ties. The Council aims to create an inclusive bilateral trade environment between India and the United States by serving as the voice of industry, linking governments to businesses, and supporting long-term commercial partnerships that will nurture the spirit of entrepreneurship, create jobs, and successfully contribute to the global economy.

India Emerges As Top Alternative To China For MNCs

IMA India recently disclosed through its 2023 Global Operations Benchmarking survey that nearly 80 percent of global CEOs choose India as their top destination over China.

The 2023 Global operations benchmarking survey, conducted by IMA India, showed the country as an emerging destination for MNCs. A poll of 100 CEOs who largely represent international B2B-focused companies stated that India is the top destination that multinational enterprises are looking for as an alternative to China.

As per the study, 88 per cent of CEOs who surveyed companies with a presence in India, chose India as their top option over China due to its growing geopolitical aggressiveness, dubious trade and commercial practices, and rising labour prices.

“In the last five years, foreign MNCs have increased their on-ground presence in India, partly as a result of diversification away from China. In particular, the IT & ITES companies are ramping up the share of their global workforce that is based in India,” said Suraj Saigal, Research Director, IMA India.

In the last three years, over 70 per cent of the companies, according to a study based on the poll, have seen significant changes in their business strategy based on-the-ground operations in China. Comparatively speaking, the industrial sector exhibits a more pronounced pullback than the services sector. The percentage of people making adjustments has declined in 41 per cent of cases, while 56 per cent have cut down on investments and sourced less from China.

While a handful of enterprises have quit the industry, 6 per cent have reduced their market participation. In addition, taking into consideration recent changes in commercial and geopolitical tactics, the study looked at how corporations are recognising and seizing India’s business possibilities.

India’s predicted worldwide workforce share climbed from 22.4 per cent to 24.9 per cent between FY18 and FY23 in mean percentage terms, while its revenue share increased from 14.8 per cent to 15.8 per cent. These numbers show India’s gradual rise in the world scene throughout this time.

However, even those that choose India listed infrastructure, legal restrictions, and skill-related problems as major obstacles. The study determined that the worldwide trend away from multilateral commerce towards bilateral trade connections was the cause for the rising popularity of friend-shoring. The emergence of ‘deglobalization,’ protectionism, and nationalism has forced governments to cooperate with nations with which they already have cordial bilateral connections rather than depending on international or regional trade accords.

Biden Signs Debt Ceiling Bill, Averting Government Shut Down

President Joe Biden on Saturday, June 3rd signed the debt ceiling bill, a capstone to months of negotiations that pushed the U.S. to the brink of default. Biden signed H.R. 3746, the “Fiscal Responsibility Act of 2023,” two days before Monday’s default deadline, on which the U.S. would run out of cash to pay its bills, according to a White House release.

Biden thanked House Speaker Kevin McCarthy, Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell “for their partnership.” Biden tweeted: “I just signed into law a bipartisan budget agreement that prevents a first-ever default while reducing the deficit, safeguarding Social Security, Medicare, and Medicaid, and fulfilling our scared obligation to our veterans. Now, we continue the work of building the strongest economy in the world.”

The House of Representatives and the Senate passed the legislation this week after Biden and House of Representatives Speaker Kevin McCarthy reached an agreement following tense negotiations.

The Treasury Department had warned it would be unable to pay all its bills on Monday if Congress had failed to act by then.

Biden, who had experienced the 2011 debt limit crisis, refused to make any concessions for what he considered Congress’s basic duty. However, McCarthy, encouraged by conservatives seeking significant changes to federal spending, was determined to use the nation’s borrowing power as leverage, even if it risked pushing the U.S. towards default.

The ensuing events demonstrated how two influential figures in Washington, both of whom believe in the importance of personal connections despite not having a strong relationship themselves, managed to prevent an unprecedented default that could have seriously damaged the economy and carried unpredictable political repercussions.

However, the standoff was primarily provoked by Republicans who believed that threatening the debt limit was necessary to curb federal spending. Despite a decisive 314-117 House vote and a 63-36 Senate vote, this episode has put McCarthy’s speakership to the test and challenged his capacity to control his party’s rebellious far-right faction.

“IT’S ALL ABOUT THE ENDGAME”

McCarthy now feels empowered and remains undaunted. Reflecting on his election as speaker after the House passed the debt limit package, he mentioned his arduous journey to secure the gavel in January. He stated, “Every question you gave me (was), what could we survive, what could we even do? I told you then, it’s not how you start, it’s how you finish.”

This narrative of the prolonged process through which Washington resolved the debt limit crisis is based on interviews with legislators, senior White House officials, and high-ranking congressional aides, some of whom requested anonymity to disclose private negotiation details.

Key to overcoming the obstacles were Biden and McCarthy’s five negotiators, who brought policy expertise to the table and received full support from their leaders. Republicans particularly appreciated the involvement of presidential counselor Steve Ricchetti, who speaks on behalf of Biden like no one else, and Shalanda Young, the current director of the Office of Management and Budget, who gained invaluable experience as a respected senior congressional aide overseeing the intricate annual appropriations process.

Young and Rep. Patrick McHenry of North Carolina, one of McCarthy’s negotiators, developed such a close rapport that they phoned each other every morning during their respective day care drop-offs. Additionally, Young and the other GOP negotiator, Rep. Garret Graves, playfully debated who had the better gumbo recipe while discussing the debt limit during a White House celebration for the national champion Louisiana State University women’s basketball team.

The five negotiators – Graves, McHenry, Ricchetti, Young, and legislative affairs director Louisa Terrell – convened daily in an elegant office on the Capitol’s first floor, adorned with frescoes by 19th-century muralist Constantino Brumidi. In these meetings, they focused intently on priorities and non-negotiables to determine how they could reach an agreement.

HITTING PAUSE AND A ‘BACKWARD’ PROPOSAL

By May 19, the negotiations were becoming shaky. Republicans grew impatient as the White House seemed unwilling to compromise on reducing federal spending, which was a non-negotiable demand for the GOP.

During a morning meeting that Friday, White House officials urged McHenry and Graves to present a formal proposal. However, the frustrated Republicans opted to go public instead. They informed reporters that the talks had temporarily halted. As he hurried through the Capitol, Graves said, “We decided to press pause because it’s just not productive.” He later explained that he and McHenry were tired of playing games.

Tensions didn’t subside. When negotiations resumed that night, McHenry and Graves presented a new proposal that not only revived numerous rejected provisions from the GOP’s debt limit bill but also incorporated the House Republicans’ border-security bill. A White House official labeled the proposal “regressive.”

The White House expressed its own frustrations as the discussions seemed to be faltering, starting with a lengthy statement from communications director Ben LaBolt and followed by Biden’s comments at a press conference in Hiroshima, Japan, where he was attending a summit of leading democracies. The president stated, “Now it’s time for the other side to move their extreme positions. Because much of what they’ve already proposed is simply, quite frankly, unacceptable.”

HOPE, LONG HOURS, AND GUMMY WORMS

Despite the escalating public rhetoric, there were indications that the talks were improving. Biden called McCarthy from Air Force One as he left Japan, and the speaker appeared more hopeful than he had been in days. Fueled by coffee, gummy worms, and burritos, negotiators worked exhausting hours, primarily at the Capitol but once at the Eisenhower Executive Office Building, where they enjoyed Call Your Mother bagel sandwiches provided by White House Chief of Staff Jeff Zients.

One session lasted until 2:30 a.m., and Graves showed reporters an app tracking his sleep, revealing an average of three hours per night during the final stretch. McCarthy sent lawmakers home over Memorial Day weekend, which McHenry believed was helpful. He said, “The tone of the White House negotiators became much more serious and much more grounded in the realities they were going to have to accept.”

PROMOTING THE AGREEMENT

On May 27, Biden and McCarthy announced a deal in principle and began the task of convincing others. The night before the vote, McCarthy assembled House Republicans in the Capitol’s basement, provided pizza, and explained the bill while challenging Freedom Caucus members to use the same aggressive language they had employed at an earlier news conference. By the meeting’s end, it was evident that McCarthy had quelled the rebellion.

Meanwhile, the White House had its work cut out for them in appeasing rank-and-file Democrats. Biden and McCarthy displayed contrasting styles throughout the negotiations, with the speaker discussing the debt limit talks openly and frequently, while the president remained quiet, wary of jeopardizing the deal before it was finalized.

Biden had been privately addressing his party’s concerns even as the agreement was being finalized. After the Congressional Progressive Caucus criticized the few known details, particularly regarding stricter requirements for federal safety-net programs, Rep. Pramila Jayapal received a call from Biden. He assured her that his negotiators were working diligently to minimize the Republican-drafted changes to food stamp and cash assistance programs.

In a statement after the vote, Biden expressed gratitude and relief, saying, “This budget agreement is a bipartisan compromise. Neither side got everything it wanted. That’s the responsibility of governing.”

Top Battery Stocks Set to Thrive as Global EV Demand Skyrockets and Lithium Prices Rebound

Leading battery stocks are set to stand out as the demand for electric vehicles surges. The International Energy Agency predicts that one in every five cars globally will be electric this year, significantly impacting EV battery demand.

In fact, Fortune Business Insights estimates that the global EV battery market could expand from $37.9 billion in 2021 to nearly $98.9 billion by 2029, benefiting these three battery stocks.

Albemarle (ALB)

A prime investment opportunity in the electric vehicle battery boom lies in lithium stocks, such as Albemarle (NYSE:ALB). Firstly, the company announced a $1.3 billion investment in a new lithium hydroxide plant in South Carolina to address battery demand. Secondly, the facility is expected to generate around 50,000 metric tons of battery-grade lithium, with the capacity to double production.

Thirdly, this output could facilitate the manufacturing of 2.4 million electric vehicles annually. Adding to the potential growth, lithium prices are recovering. Citigroup analysts even suggest that the downturn in lithium prices may have ended, with an anticipated increase of up to 40% by year-end.

Furthermore, Albemarle has now partnered with Ford, providing battery-grade lithium hydroxide for the automaker’s EVs. Under the agreement, Albemarle will supply over 100,000 metric tons of battery-grade lithium hydroxide to power roughly 3 million future Ford EV batteries. The five-year supply contract commences in 2026 and runs through 2030.

Solid Power

Although the chart might not look promising, Solid Power (NASDAQ:SLDP) should not be dismissed. Needham analysts recently reinstated their buy rating for the stock with a $5 price target, referring to SLDP as a “well-funded call option.” Solid Power is also working to strengthen its partnership with BMW (OTCMKTS:BMWYY) through a joint development agreement, which contributed to the company’s $3.8 million revenue in Q1 2023, an increase of $1.6 million YoY.

Moreover, the company has two significant milestones this year: anticipated improvements in key cell performance metrics and the expected delivery of EV cells to partners by late 2023.

Amplify Lithium & Battery Technology ETF (BATT)

With a 0.59% expense ratio, the Amplify Lithium & Battery Technology ETF (NYSEARCA:BATT) offers investors access to international companies involved in lithium battery technology.

As lithium prices recover, the BATT ETF is also gaining momentum. In fact, with the aggressive increase in lithium prices, the BATT ETF has risen from a recent low of $11.60 to $12.59 per share. Moving forward, it would be ideal for the BATT ETF to retest the $14 per share mark.

High-Income Earners Struggle with Pay check-to-Pay check

Despite a slight easing in inflation, a considerable number of consumers continue to feel the pinch. The proportion of adults who feel financially stretched remained nearly constant at 61% as of April, as per a recent LendingClub report.

Interestingly, the report reveals that high-income earners are experiencing increased pressure. Among those with six-figure incomes, 49% now live paycheck to paycheck, up from 42% last year. On the other hand, individuals earning less than $100,000 saw either a steady percentage or a decline in those living paycheck to paycheck during the same period.

Your financial status might be influenced by where you reside

Anuj Nayar, LendingClub’s Financial Health Officer, explains that “a $100,000 income may not stretch that far” depending on your location. A separate study by SmartAsset examined how far a six-figure salary stretches in the 25 largest cities in the United States. In New York City, for instance, $100,000 is equivalent to just $35,791 after accounting for taxes and the high cost of living.

In contrast, a $100,000 salary goes much further in Memphis, equating to approximately $86,444 thanks to a lower cost of living and no state income tax. LendingClub found that 69% of city dwellers live paycheck to paycheck, which is 25% more than their suburban counterparts. Nayar highlights, “where you live appears to be almost equally important in factoring whether a consumer is living paycheck to paycheck.”

Rising mortgage rates, home prices, and rents in many cities across the country contribute to these financial challenges, as evidenced by the latest data from rental listings site Rent.com. As of the previous month, 29 of the 50 most populous U.S. cities registered year-over-year rent increases.

Jon Leckie, a researcher for Rent.com, notes that compared to two years ago, rents have surged by over 16%—equivalent to a $275 hike in monthly rent bills. He adds, “That kind of growth over such a short period of time is going to put a lot of pressure on pocket books.”

Escaping the paycheck-to-paycheck cycle

It can be challenging, especially for high earners and city dwellers who often fall victim to “lifestyle creep,” according to Carolyn McClanahan, CFP and founder of Life Planning Partners in Jacksonville, Florida.

As people’s incomes increase, their spending habits tend to follow suit, particularly when it comes to dining out, using food delivery services like DoorDash, and subscribing to additional services. McClanahan warns that it’s easy to “fall into the trap of too much convenience spending.”

To overcome this cycle, McClanahan, who is also a member of CNBC’s Advisor Council, recommends evaluating convenience spending and identifying areas that don’t bring value. She advises, “the first thing to do is look at convenience spending and figure out ways to cut the spending that is not bringing them value.” Redirect the money saved from cutting unnecessary expenses towards building an emergency fund.

Once you’ve accumulated three to six months’ worth of expenses in your emergency fund, shift your focus to saving for other financial goals.

Report Reveals Staggering Disparity Among Global Top 1%: Monaco Tops the List, India Ranks 22nd

Many people associate wealth with owning a luxurious home, an extravagant car, and other valuable possessions. However, the top one per cent of the world’s wealthiest individuals possess far more than most can fathom.

Global real estate consulting firm Knight Frank recently published its updated Wealth Report, which discloses the amount of wealth required to become part of the elite one per cent in various countries. Monaco leads the pack, where entering the top tier necessitates a net worth of at least eight figures. According to Knight Frank’s findings, the starting point for Monaco’s wealthiest one per cent is $12.4 million.

Wondering about India? The country ranks 22nd on the list of 25 nations featured in the wealth report, with a minimum requirement of $175,000 (Rs 1.44 crore) to join the top one per cent. India places higher than South Africa, the Philippines, and Kenya.

Knight Frank’s 2022 report highlights that the number of ultra-high-net-worth individuals in India grew by 11 per cent, driven by thriving equity markets and a digital revolution. Among Asian countries, Singapore boasts the highest entry threshold, with $3.5 million needed to join the top one per cent, slightly ahead of Hong Kong’s $3.4 million.

Forbes’ 2023 list of billionaires includes 169 Indians, up from 166 the previous year. Mukesh Ambani retains his title as the richest person in both India and Asia, despite an eight per cent decrease in his wealth over the past year.

Knight Frank’s findings emphasize how the pandemic and rising living expenses have exacerbated the divide between affluent and impoverished nations. The entry-level for Monaco’s wealthiest is over 200 times greater than the $57,000 required to be part of the top one percent in the Philippines, which ranks among the lowest in Knight Frank’s study.

IRS To Launch Free Online Tax-Filing System

The IRS has revealed plans to initiate a trial of a complimentary, direct online tax-filing system for the 2024 tax season. This decision is based on significant taxpayer interest and a relatively low cost associated with the system.

In their eagerly awaited report, the IRS disclosed that they have developed a prototype system which will be introduced through a pilot program. The program will involve a limited number of taxpayers and offer restricted functionality, enabling the Treasury Department to assess how users engage with the system, according to IRS and Treasury officials.

Laurel Blatchford, who leads the Treasury Department’s office responsible for implementing the Inflation Reduction Act, stated, “Dozens of other countries have provided free tax-filing options to their citizens, and American taxpayers who want to file their taxes for free online should have an acceptable option.”

The Inflation Reduction Act increased IRS funding by $80 billion and mandated the agency to evaluate the feasibility of a direct tax-filing system. If implemented, this program could potentially allow taxpayers to prepare and submit their taxes without relying on popular tax preparation companies, which have invested millions to oppose similar proposals in the past.

IRS considers revamping tax filing process

The IRS has identified a strong demand for a complimentary tax-filing service, now referred to as “Direct File.” Laurel Blatchford mentioned, “Seventy percent of the public is interested in a free option deployed by the IRS, so we think there will be excitement there.” The Treasury Department’s decision to proceed with the pilot program was influenced by evident taxpayer interest.

An IRS-conducted survey revealed that 72 percent of taxpayers expressed high or moderate interest in using the direct file service. Additionally, 68 percent of those who prepare their returns stated they would be highly or moderately likely to switch to the IRS’s free online tool.

Significant impact with minimal expected cost

The report estimates the direct file system’s cost to be only a small portion of the $80 billion budget increase the IRS obtained through the Inflation Reduction Act, most of which is designated for enhanced enforcement capabilities. The report found that “Annual costs of Direct File may range from $64 million (assuming 5 million users and a narrow scope of covered tax situations) to $249 million (assuming 25 million users and a broad scope of covered tax situations).”

Funding for this initiative will be sourced from the IRS’s technology and products budget, as well as its customer support budget. IRS Commissioner Danny Werfel also suggested that systems modernization funds allocated in the Inflation Reduction Act could be utilized to strengthen the system.

Understanding Direct File

The report suggests that taxpayers’ confidence in using the IRS system stems from the fact that the IRS already has access to their personal information. However, Danny Werfel, the IRS Commissioner, stated that the direct file prototype would not likely utilize pre-populated forms to further automate interactions with government software, explaining, “Given that it will be limited in scope, we do not expect pre-population or predetermining tax obligations to be part of it.”

This implies that the prototype software will likely adopt a question-and-answer format, similar to many commercial software options, as indicated by the IRS’s recent strategic operating plan for its expanded budget.

Direct File eligibility

Tuesday’s report outlines various scenarios that the Direct File system could accommodate, ranging from basic wage income taxed with the standard deduction to more complex situations involving state returns. Werfel mentioned that the pilot program would further determine the specific taxpayer cases that could utilize the system.

With nearly 90% of all filers using the standard deduction and wages and salaries being taxed at 99% compliance, the Direct File system might handle the majority of common tax situations. This has led to recommendations for a direct file option from the Government Accountability Office, the National Taxpayer Advocate, and numerous tax experts over the years.

Since the early 2000s, the IRS’s Free File program, an agreement between the IRS and a group of private tax preparation companies, has offered free commercial software to lower-income individuals. However, only a small percentage of eligible taxpayers have used it, resulting in accusations of deceit and a $141 million settlement paid by TurboTax maker Intuit to taxpayers across nine states.

Lawmakers’ opinions on IRS e-filing

Rep. Brad Sherman (D-Calif.) wrote a letter to Werfel this week, encouraging the adoption of an e-filing program and stating, “The IRS established the free e-filing program in 2003, but it did so in partnership with major tax preparation software companies that frequently mislead taxpayers into paying for their services.”

Werfel recently asserted that his agency has the legal authority to proceed with the report’s conclusions, despite opposition from Senate Finance Committee Republicans. He also mentioned being open to other legal interpretations if questions about authority arise.

Both Republican and Democratic administrations have supported the idea of more direct tax filing methods in the past. Kitty Richards, former director of State and Local Fiscal Recovery Funds at the U.S. Department of the Treasury, highlighted proposals from Presidents Ronald Reagan and George W. Bush for voluntary return-free systems and an easy, no-cost online filing option, respectively. However, she noted that the tax preparation industry recognized the threat a free government tax preparation and filing process would pose to their profits.

Global Economies Seek to Break Free from US Dollar Dominance

Nations worldwide are embarking on an irreversible course to break away from the US dollar, according to seasoned investment expert Matthew Piepenburg. In a recent interview at the Deutsche Goldmesse conference with the Soar Financially YouTube channel, Piepenburg, partner at emerging markets-focused Matterhorn Asset Management, claims that major economies are now evidently trying to distance themselves from dollar dominance.

He asserts that the US Federal Reserve’s interest rate hikes are driving countries like China and Russia to adopt settlement systems that don’t depend on the USD. In addition to China and Russia, both members of the BRICS coalition, Piepenburg reveals that 41 other nations are following suit, possibly concerned about how the US has treated Russia during its conflict with Ukraine.

Piepenburg explains, “So when that dollar gets higher, because Powell is raising the rates, that becomes more onerous and painful for the rest of the world and they begin to break ranks.” He further adds, “Asia in general, China and Russia in particular are very big rank-breaking nations. And, of course, they’re bringing 41 other countries alongside to have trade settlements outside the US dollar.”

The BRICS group, representing the economically-aligned nations of Brazil, Russia, India, China, and South Africa, is considering launching a global currency that does not rely on the US dollar. Several nations reportedly want to participate, including Saudi Arabia, Iran, Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain, Indonesia, two unnamed East African countries, and one from West Africa.

While Piepenburg doesn’t foresee the yuan or any other currency replacing the dollar as the world reserve currency in the near future, he does identify a “clear trend” of countries worldwide bypassing the dollar as the primary, trusted medium of trade. He concludes, “The clear trend of breaking ranks with the US dollar as a trusted, reliable, dependable trade currency and payment system is now I think irrevocable.”

The World Health Organization (WHO) advises against using sugar substitutes for weight loss, as new guidelines reveal that non-sugar sweeteners (NSS) do not provide long-term benefits in reducing body fat for adults or children. Francesco Branca, director of WHO’s Department of Nutrition and Food Safety, stated, “Replacing free sugars with non-sugar sweeteners does not help people control their weight long-term.” The guidance applies to everyone except those with preexisting diabetes.

While the review identified potential undesirable effects from long-term sugar substitute use, such as a mildly increased risk of type 2 diabetes and cardiovascular diseases, Branca clarified that the recommendation doesn’t comment on the safety of consumption. He added, “What this guideline says is that if we’re looking for reduction of obesity, weight control or risk of noncommunicable diseases, that is unfortunately something science been unable to demonstrate.”

The Deadline Looms For Debt Ceiling

The US federal government is on the brink of being unable to make debt payments, and it’s up to Congress to vote on raising the nation’s borrowing cap, also known as the debt limit. However, House Speaker Kevin McCarthy (R-Calif.) and President Biden are currently at odds over Republican demands to link the debt limit to spending caps and other policy requirements. Treasury Secretary Janet Yellen has cautioned that the country could exhaust its borrowing authority by June 1, leaving little time for negotiators to reach a consensus.

In a recent meeting with McCarthy, House Democratic Leader Hakeem Jeffries (D-N.Y.), Senate Majority Leader Chuck Schumer (D-N.Y.), and Senate Minority Leader Mitch McConnell (R-Ky.), Biden aimed to find a way forward. Although they didn’t reach an agreement, staff-level discussions continue in an attempt to avert default.

Debt ceiling

You might have some questions about the debt ceiling and the ongoing debate. The debt ceiling, or debt limit, is a restriction on the amount of debt the federal government can accumulate. As Jason Furman, a former economic advisor to President Obama and current economics professor at Harvard, explains, “It used to be that every time you did a Treasury auction where you borrowed, Congress would pass a new law just for that one auction.” However, in 1917, during World War I, Congress opted for a more streamlined approach, allowing the government to borrow up to a specified amount before needing to request an increase. Since 1960, Congress has raised or suspended the debt limit 78 times, according to the Treasury Department.

How do experts know when the government has really run out of funds?

Picture : NBC

Experts determine when the government is nearing its funding limit by examining expected tax revenue, the timing of those payments arriving in Treasury accounts, and scheduled debt payments. This analysis helps establish a timeframe, referred to as an X-Date, when the debt authority might be depleted.

Nonetheless, the Treasury Department has several options, known as extraordinary measures, to prevent default. These measures involve reallocating investments and using accounting techniques to redistribute funds. The federal government technically reached the debt limit in January, but these extraordinary measures have maintained payment flows since then. While experts cannot pinpoint an exact date for when funds will be exhausted, they can estimate a general range, which currently falls between early June and potentially as late as July or August.

Why is there a fight over it?

Debt has generally been viewed unfavorably in American politics, and lawmakers often hesitate to be seen as endorsing more federal borrowing or spending. Additionally, they tend to attach unrelated priorities to must-pass legislation, making the debt limit a prime target for political disputes.

As Maya MacGuineas, president of the Committee for a Responsible Federal Budget, explains, “Everybody uses [bills to increase] the debt ceiling for their favorite policies.” The real issue arises when discussions about defaulting become more serious. Historically, votes to raise the debt limit were relatively uneventful; however, the situation changed in 2011 when the US came dangerously close to default.

Mark Zandi, an analyst at Moody’s Analytics, notes that while there have been previous political battles over the debt, none were as risky or significant as the 2011 conflict. At that time, Republican House Speaker John Boehner (R-Ohio) and President Obama were in a standoff over spending. Republicans demanded deep spending cuts and caps on future spending growth, while Obama insisted on raising the debt limit without any extraneous policies – a clean increase.

Ultimately, Congress reached an agreement to increase the debt limit along with caps on future spending, but not before Standard & Poor’s downgraded the nation’s debt for the first time in history. Today’s situation bears a striking resemblance to the 2011 political struggle, raising serious concerns about the possibility of a default.

What could happen if it’s not raised?

If the debt ceiling is not raised, the Treasury Department would be unable to fulfill its due payments, resulting in a default. This would occur regardless of the type or size of the missed payment.

Some Republicans have proposed a system called payment prioritization, in which certain debts are selected for repayment. However, this would require Congress to pass new legislation, which is politically improbable. Moreover, most experts believe that implementing such a system could be practically unfeasible, and it is not currently being considered as a serious solution.

Has the U.S. ever failed to make these debt payments?

No, the U.S. has never failed to make its debt payments. This reliability is a significant reason why the federal government can easily sell Treasury bonds to investors worldwide and why the U.S. dollar is one of the most trusted currencies.

As MacGuineas points out, “Treasuries are the debt vehicle that are most trusted in the entire world, even if there is an economic crisis that originated in the U.S., people come and buy treasuries because they trust them.” If that trust is jeopardized due to a default or missed interest payment, the U.S. would likely struggle to regain its previous status as the world’s most trusted debtor.

Would capping or cutting spending now resolve the problem?

No, capping or cutting spending now would not resolve the problem, as the debt limit pertains to money already spent due to laws previously passed by Congress. Furman emphasizes that “this borrowing isn’t some unilateral thing that President Biden wants to do… It is in order to accomplish what Congress told him to accomplish.”

Some of the current debt accumulation even results from laws enacted under former presidents, such as Donald Trump. Spending caps and other changes proposed by House Republicans are separate policies designed to address future debt accumulation rather than the immediate need to raise the debt limit.

What else could be affected by a default?

The possibility of a U.S. default may result in a domino effect of negative outcomes across the worldwide financial landscape. The nation’s credit rating could suffer long-term damage, diminishing the value of U.S. treasuries and making it a less attractive investment destination. MacGuineas expressed deep concern, stating, “I am truly concerned there is an actual chance of default and that is so dangerous and such a sign that the U.S. is not able to govern itself in a way that is functioning.”

Zandi cautioned that the fallout might extend beyond merely investment and borrowing rates. He advised, “Don’t worry about your stock portfolio, worry about your job,” emphasizing the potential loss of employment and increased unemployment rates. He added, “This will certainly push us and, you know, it’s going to be about layoffs. Stock portfolios will be the least of people’s worries.”

Furman compared the potential crisis to the 2008 financial meltdown caused by Lehman Brothers Bank’s collapse, suggesting it could be even more severe. “It could be worse than Lehman Brothers, where everyone basically demands their money back because they don’t believe the collateral anymore,” he explained. “And you have the equivalent of a run on the global financial system.”

Is default the same thing as a shutdown?

Default and shutdown are not the same thing. A government shutdown transpires when Congress does not pass annual spending bills before the fiscal year concludes on September 30. Although these two matters may be connected at times, this is because legislators have, on occasion, deliberately synchronized the debt limit extension with the end of the fiscal year to prompt more comprehensive spending debates in conjunction with debt authorization.

Are there other ways this problem could be fixed, aside from just increasing the debt limit?

Apart from merely raising the debt limit, there are alternative solutions to address the issue, as the existing process is widely considered ineffective. MacGuineas from the Committee for a Responsible Federal Budget believes that while Congress should reassess debt and spending priorities, the current debt limit mechanism fails to compel them to make decisions. She stated, “The debt ceiling is a terrible way to try to impose fiscal responsibility,” describing it as a “dumb approach.”

Instead, MacGuineas proposes a system where the debt limit is increased in line with the passage of legislation by Congress. Some economists have even suggested eliminating the debt limit entirely.

Other less conventional ideas involve minting a $1 trillion platinum coin to cover the debt or elevating the limit to such an extent that subsequent debates would be postponed for years or even decades.

India Phases Out ₹2,000 Notes, Sets September 30 Deadline for Exchange

New Delhi: The Reserve Bank of India (RBI) has announced its decision to phase out ₹ 2,000 notes and has set a deadline of September 30 for people to exchange or deposit them in their bank accounts. Starting May 23, the RBI’s 19 regional offices and other banks will accept ₹ 2,000 notes in exchange for lower denomination currency. It is important to note that these notes will continue to be considered legal tender, as stated by the RBI.

The RBI has instructed all banks to cease issuing ₹ 2,000 notes with immediate effect.

The introduction of the ₹ 2,000 note took place in November 2016 after Prime Minister Narendra Modi’s sudden demonetization move, which rendered high-value ₹ 1,000 and ₹ 500 notes invalid overnight.

The RBI explained its decision, stating, “The purpose of introducing ₹ 2,000 banknotes was fulfilled once banknotes of other denominations became sufficiently available. Consequently, the printing of ₹ 2,000 banknotes was discontinued in 2018-19.”

To ensure convenience and minimize disruption to regular banking operations, the RBI has allowed the exchange of ₹ 2,000 notes for lower denomination notes, up to a limit of ₹ 20,000 at a time, at any bank beginning May 23, 2023. This facility will be available until September 30, allowing individuals to either exchange or deposit their ₹ 2,000 notes.

Sources informed NDTV that the RBI might extend the deadline beyond September 30 if necessary. However, even after the current deadline, ₹ 2,000 notes will remain valid as legal tender.

The RBI highlighted that approximately 89% of ₹ 2,000 denomination banknotes were issued before March 2017 and are reaching the end of their expected lifespan of four to five years. The total value of these notes in circulation decreased from ₹ 6.73 lakh crore at its peak on March 31, 2018 (comprising 37.3% of the currency in circulation) to ₹ 3.62 lakh crore, representing only 10.8% of the currency in circulation as of March 31, 2023.

The central bank emphasized that the ₹ 2,000 note is not commonly used for transactions. Similar measures were taken by the RBI in 2013-2014 when certain notes were phased out of circulation.

How America Sustains High Deficits Without Economic Collapse

The United States has consistently maintained a high trade deficit for decades, raising questions about how the country manages to avoid economic repercussions that typically accompany such imbalances. This article delves into the factors that enable the US to sustain these high deficits without experiencing financial collapse.

Picture : The Blance

One of the primary reasons the US can maintain high trade deficits is the dominance of the US dollar as the world’s reserve currency. Central banks across the globe hold their foreign exchange reserves in dollars, contributing to the currency’s stability and demand. This status allows the US to run persistent trade deficits without causing a depreciation in its currency value.

Another factor that enables the US to support high trade deficits is the inflow of foreign investments. International investors view the US as a safe haven for their capital due to the country’s strong and stable economy. These investments help finance the trade deficit by providing an influx of foreign funds, which offsets the negative effects of the deficit on the US economy.

The US economy is driven primarily by domestic consumption, which accounts for approximately 70% of its GDP. This strong demand for goods and services helps offset the trade deficit by creating a robust market for imports. As a result, the US can continue importing goods from other countries without significantly harming its own industries.

The US is a global leader in innovation and technological advancements, which contribute to the country’s overall economic strength. These innovations attract foreign investments and facilitate the export of high-value goods and services, such as software, pharmaceutical products, and aerospace technology. This, in turn, helps to mitigate the impact of the trade deficit on the US economy.

The US government’s fiscal policies also play a role in managing the trade deficit. By implementing policies that promote economic growth, the government can stimulate demand for goods and services. Additionally, the US Federal Reserve’s monetary policies influence interest rates and the money supply, which can impact the trade deficit indirectly.

Despite maintaining a high trade deficit, the United States has managed to avoid the economic pitfalls often associated with such imbalances. Factors such as the US dollar’s status as a global reserve currency, foreign investment, strong domestic demand, innovation, and government fiscal policies all contribute to the country’s ability to sustain these deficits. However, it is essential to continue monitoring the trade deficit and its potential long-term impacts on the US economy.

Turbotax Customers Can Claim $141M Settlement Money

(AP) — Millions of Americans who qualified for free tax services — but were instead deceived into paying TurboTax for their returns — will soon get settlement checks in the mail.

In a settlement last year, TurboTax’s owner Intuit Inc. was ordered to pay $141 million to some 4.4 million people across the country. Those impacted were low-income consumers eligible for free, federally-supported tax services — but paid TurboTax to file their federal returns across the 2016, 2017 and 2018 tax years due to “predatory and deceptive marketing,” New York Attorney General Letitia James said.

All 50 states and the District of Columbia signed the May 2022 settlement, which was led by James.

Consumers eligible for restitution payments do not need to file a claim, the New York Attorney’s General Office said Thursday. They will be notified by an email from Rust Consulting, the settlement fund administrator, and receive a check automatically.

Checks will be mailed starting next week, and continue through the month of May. The amount paid to each eligible consumer ranges from $29 to $85 — depending on the number of tax years they qualify for.

“TurboTax’s predatory and deceptive marketing cheated millions of low-income Americans who were trying to fulfill their legal duties to file their taxes,” James said in a Thursday statement. “Today we are righting that wrong and putting money back into the pockets of hardworking taxpayers who should have never paid to file their taxes.”

At the time of the May 2022 settlement, James said her investigation into Intuit was sparked by a 2019 ProPublica report that found the company was using deceptive tactics to steer low-income tax filers away from the free, federal services they qualified for — and toward its own commercial products instead.

Under the terms of last year’s settlement, Intuit Inc. agreed to suspend TurboTax’s “free, free, free” ad campaign. According to documents obtained by ProPublica, Intuit executives were aware of the impact of advertising free services that were actually not free for everyone.

“The website lists Free, Free, Free and the customers are assuming their return will be free,” an internal company PowerPoint presentation said, per ProPublica. “Customers are getting upset.”

When contacted by The Associated Press on Friday, Inuit pointed to the company’s May 2022 statement following the settlement agreement.

“Intuit is pleased to have reached a resolution with the state attorneys general that will ensure the company can return our focus to providing vital services to American taxpayers today and in the future,” Kerry McLean, Intuit’s executive vice president and general counsel, said at the time.

Biden Administration Warns About Growing Risks Of Medical Loans And Medical Credit Cards

The Biden administration has issued a warning to Americans concerning the financial risks associated with medical credit cards and other loans for medical bills. In a recent report, the Consumer Financial Protection Bureau (CFPB) estimated that Americans paid $1 billion in deferred interest on medical credit cards and other medical financing between 2018 and 2020. The agency found that interest payments can increase medical bills by almost 25 percent, which can deepen patients’ debts and threaten their financial security.

CFPB’s Director, Rohit Chopra, stated that “lending outfits are designing costly loan products to peddle to patients looking to make ends meet on their medical bills. These new forms of medical debt can create financial ruin for individuals who get sick.” Nationally, KFF Health News found that approximately 100 million people, including 41 percent of adults, have healthcare debt. This large scale problem is feeding a multibillion-dollar patient financing business, with private equity and big banks looking to capitalize on the situation when patients and their families are unable to pay for care. The profit margins in the patient financing industry top 29 percent, according to research firm IBISWorld, which is seven times what is considered a solid hospital profit margin.

One of the most prominent financing options is credit cards like CareCredit offered by Synchrony Bank which is often marketed in physician and dentist waiting rooms to help pay off medical bills. These cards typically offer a promotional period where patients pay no interest, but if the patient missed a payment or could not pay off the loan during the promotional period, they could face interest rates that rise as high as 27 percent, according to the CFPB. Patients are also increasingly drawn into loans administered by financing companies such as AccessOne.

These loans, which often replace no-interest instalment plans that hospitals once commonly offered, can add hundreds or thousands of dollars in interest to the debts patients owe. Hospital and finance industry officials insist that they take care to educate patients about the risks of taking out loans with interest rates. However, federal regulators have found that many patients remain confused about the terms of the loans.

According to the CFPB, the risks are particularly high for lower-income borrowers and those with poor credit. About a quarter of people with a low credit score who signed up for a deferred-interest medical loan were unable to pay it off before interest rates jumped. By contrast, just 10% of borrowers with excellent credit failed to avoid the high interest rates. Regulators found that many patients remained confused about the terms of the loans and that patients often didn’t fully understand the products’ terms and found themselves in crippling financing arrangements.

Despite this, the new CFPB report does not recommend new sanctions against lenders. The study cautioned that the system still traps many patients in damaging financing arrangements. It also stated that “consumers complain that these products offer confusion and hardship rather than benefit, as claimed by the companies offering these products.” The report concluded that “many people would be better off without these products.”

The growth of patient financing products pose risks to low-income patients. Patients should be offered financial assistance to pay large medical bills, but instead, they are funnelled into credit cards, debt consolidations or personal loans that pile interest on top of medical bills they cannot afford.

An investigation conducted by KFF Health News with NPR explored the scale and impact of the nation’s medical debt crisis. They found that 41% of adults have some form of healthcare debt. In the patient financing industry, profit margins are over 29%, which is nearly 7x higher than what is considered to be a solid hospital profit margin. A UNC Health public records analysis found that after AccessOne began administering payment plans for the system’s patients, the percentage of people paying interest on their bills increased from 9% to 46%.

According to the CFPB, “Patients appear not to fully understand the terms of the products and sometimes end up with credit they’re unable to afford.” Federal regulators warned that patient financing products pose another risk to low-income patients. They should be offered financial assistance with large medical bills, but instead, they are being routed into credit cards or loans that pile interest on top of medical bills they cannot afford.

Medical credit cards and other loans for medical bills can deepen patients’ debts and threaten their financial security. The number of people with healthcare debts is increasing, and many patients remain confused about the terms of the loans. Profit margins in the patient financing industry are high, and patients are often funnelled into credit cards rather than offered financial assistance with large medical bills. This can lead to confusion and financial ruin for those who get sick. The report concluded that “many people would be better off without these products.”

Is Recession Imminent?

As fears of a looming recession rise, David Rosenberg, president of Rosenberg Research and former chief North American economist at Merrill Lynch, suggests that a recession might be imminent. Despite recent GDP figures showing growth, Rosenberg forewarns that the leading indicators hint that a recession could start as early as this quarter.

With inflation on the rise, Americans are struggling with wages that cannot keep up with the increasing cost of living. Should a recession occur, it could cause worse financial difficulties for many. Rosenberg explains a recession as a “haircut to national income” that is comparable to “the whole country taking a pay cut.” The effects of a recession will not only impact individuals but could also spell trouble for the stock market.

The outbreak of the pandemic, coupled with variations, broke the world’s economy, and a recession was just one of many repercussions. Even as the world struggled to recover from the pandemic’s impact, the United States Federal Reserve began hiking interest rates in early 2022. This move caused fears among investors as rates influence the economy and the stock market. Although the GDP figures indicate an expanding economy, Rosenberg warns that a recession might be closer than anticipated.

An economic recession could lead to increased unemployment, lower wages, and volatile stock markets, further exacerbating the gap between the rich and the poor. Therefore, policymakers must put measures to prevent such economic shockwaves, as a recession has far-reaching impacts on the nation’s livelihood and global economies.

Bear Market

According to David Rosenberg, he believes that he is bearish on equities as he’s not confident that all recessions are fully priced in, given the current valuations. He asserts that investing in investment-grade corporate bonds could be a plausible route to take due to the attractive yields on offer with debt offering priority over equity in a company’s capital structure. Among other opportunities, private credit investments have also emerged which offer a higher yield for investors who are looking to diversify their portfolios, but aren’t satisfied with most conventional savings accounts or certificates of deposit (CDs).

The S&P 500 took a bad hit in 2022, plunging 19.4%, and although it has experienced some revival in 2023 with a 9% uptick year-to-date, Rosenberg doesn’t believe this will be long-lived. On account of valuation, he highlights that there is a pressing concern regarding the 19 forward multiple. In his view, this will only result in a 5.3% earnings yield, whereas, he could “pick up 5.4% in single-A triple-B corporate credit” to “wind up in a better part of the capital structure”.

While bondholders will be given the first bite of the cherry, David Reilly, Chief Investment Officer at Nuveen’s Global Private Markets Group, highlights that these investors will often come with other expenses. The cost of investing in corporate credit to access these desirable yields could potentially see investors being forced to invest in leveraged loans or more higher-risk credit. Regardless of the obstacles, it is evident that there is a lot of funds in this space, given the record low-interest rates and a thirst for yield.

Furthermore, while commercial real estate has been enjoying high rewards too, there is significant debate concerning its future given flexible working now being the norm over an office-based environment. Consequently, alternative forms of profitable investments continue to shine and could serve as an alternative means for investors to access the exposures they desire.

From Weak Hands To Strong Hands

David Rosenberg has predicted that the S&P 500 will see a drop of around 23% due to a forthcoming recession in the US economy. His prediction, which is based on an assumption of a “classic 20% hit to earnings” and multiples falling to 15 or 16, puts the target price at 3,200. While the prospect of a significant downturn is not generally good news for investors, Rosenberg believes that those who have “dry powder and liquidity” will have an opportunity to purchase assets at better prices. This is because during a recession, assets tend to fall from weaker hands to stronger ones. The cleansing effect of the recession on the market means that it could be a good time to invest, providing the investor has the necessary liquidity. Rosenberg’s portfolio is currently underweight in equities, with the lowest weighting since 2007. Instead of stock investments, he has turned to bonds, gold, and alternative investments as uncorrelated supports to GDP.

Individuals looking to prepare for an economic downturn can invest in alternative assets, such as real estate. With as little as $100, those without extensive investment portfolios can diversify their holdings and potentially gain consistent income. Several assets offered today are well suited to taking advantage of trends in real estate, including real estate investment trusts, which provide periodic income and portfolio diversification. Investors can also turn to private real estate funds that invest in various types of property, such as commercial or residential, to further diversify their portfolio. Those with an entrepreneurial spirit can even take part in crowdfunding campaigns, which give access to small, high-yielding, long-term projects.

Despite the fears of market downturns, many investors are still seeing opportunities for growth and expansion. The current market conditions do not predict immediate economic disaster, and the ability to protect wealth and diversify through alternative assets offers investors a resilient portfolio. As we continue further into the 21st century, alternative asset classes will become an increasingly important component of investment portfolios.

Warnings Of Potential Cash Shortage By June 1st, If Debt Ceiling Not Raised

US Treasury Secretary Janet Yellen has issued a warning that the United States could run out of cash by 1 June if Congress fails to raise or suspend the debt ceiling. The country reaching the debt ceiling means the government would be unable to borrow any further money. On Monday, Yellen urged Congress to act quickly to address the $31.4 trillion debt ceiling. In response, President Joe Biden has called a meeting of congressional leaders to discuss the issue on May 9th.

The debt ceiling has been raised, extended, or revised 78 times since 1960. However, in this instance, House Republicans are demanding drastic spending cuts and a reversal of some aspects of President Biden’s agenda, including his student loan forgiveness program and green energy tax credits, in exchange for votes to raise the debt ceiling. This has resulted in objections from Democrats in the Senate and from President Biden himself, who stated last week that the issue is “not negotiable.”

The president is coming under increasing pressure from business groups, including the US Chamber of Congress, to discuss Republican proposals. A default, which would be the first in US history, could disrupt global financial markets and damage trust in the US as a global business partner. Experts have warned that it could also lead to a recession and rising unemployment. It would also mean that the US would be unable to borrow money to pay the salaries of government employees and military personnel, social security checks, or other obligations such as defense contractor payments.

In addition, even weather forecasts could be impacted, as many rely on data from the federally-funded National Weather Service. In a letter to members of Congress, Yellen stated that “We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.”

Yellen added that it is impossible to know for sure when exactly the US will run out of cash. Her announcement came on the same day as the Congressional Budget Office (CBO) reported that there is a “significantly greater risk that the Treasury will run out of funds in early June.” The CBO report said that “The projected exhaustion date remains uncertain, however, because the timing and amount of revenue collections and outlays over the coming weeks are difficult to predict.”

The Treasury plans to increase borrowing through the end of the quarter ending in June, totalling about $726 billion – about $449 billion more than projected earlier this year. Officials have said that this is partly due to lower-than-expected income tax receipts, higher government spending, and a beginning-of-quarter cash balance that was lower than anticipated.

In a joint statement, Democratic Senate Majority Leader Chuck Schumer and House Democratic Leader Hakeem Jeffries said that the US “does not have the luxury of waiting until June 1 to come together, pass a clean bill to avoid a default and prevent catastrophic consequences for our economy and millions of American families.” The statement also accused Republicans of attempting to impose their “radical agenda” on America.

On the Republican side, House Speaker Kevin McCarthy accused President Biden of “refusing to do his job” and “threatening to bumble our nation into its first-ever default.” He further stated that “The clock is ticking… The Senate and the President need to get to work — and soon.”

In another letter sent to members of Congress in January, Yellen stated that the Treasury Department had begun “extraordinary measures” to avoid a government default. It is important to resolve this issue as soon as possible to avoid negative consequences for the US economy and its citizens.

Ajay Banga Confirmed as New World Bank President: An In-Depth Look into the Future of the Global Development Lender

Ajay Banga has been appointed as the next president of The World Bank, as the development lender faces increasing pressure to reshape its role in order to better address climate change. Mr. Banga is due to take over from David Malpass on June 2, for a five-year term, and has been tasked with leading the bank through a difficult period for the world economy, characterized by slowing global growth and high interest rates in many major economies. Mr. Banga will also be required to play a leading role in driving forward the lender’s evolution plans, which aim to allow it a $50bn lending boost over the next decade, helping it to address global challenges like climate change.

The appointment of Mr. Banga is significant not only because he will be leading The World Bank through a challenging period, but also because the appointment comes at a time when there have been growing calls from emerging and developing economies for the US to relinquish its grip on the presidency of the lender. As a US citizen himself, Mr. Banga’s appointment has been met with a mixture of anticipation and skepticism, with many voices in the developing world demanding that the appointment does not dilute the bank’s focus on the pressing economic development needs of developing economies.

One of Mr. Banga’s key priorities, according to a statement from the bank, will be to work with the private sector to help tackle financing for global problems. “There is not enough money without the private sector,” he said, adding that the World Bank should set up a system that could share risk or mobilize private funds to achieve its goals.

In recent years, there has been growing concern about the ability of low-income countries to cope with the double shock of higher borrowing costs and a decline in demand for their exports due to the tough economic conditions prevailing in many developed economies. The IMF’s chief Kristalina Georgieva warned last month that this situation could fuel poverty and hunger, and called for urgent action to address it. It is hoped that Mr. Banga’s experience in bringing together governments, the private sector and non-profits to deliver on ambitious goals will help The World Bank to meet this challenge.

Mr. Banga himself has acknowledged the difficult conditions facing the global economy, but has expressed his confidence that The World Bank will be able to rise to the challenge. “These are all tools in the toolkit and I’m going to try and figure it out,” he said.

One of the most pressing challenges facing The World Bank is the need to address climate change, conflict and the pandemic, which the bank estimates will require developing countries to find $2.4tn every year for the next seven years. Plans to reform the bank have been broadly welcomed, but there is concern that new objectives could relegate the pressing economic development needs of member countries. “We want to make sure that the development agenda is not diluted in the climate agenda,” said Abdoul Salam Bello, a member of The World Bank’s executive board representing 23 African countries.

Despite these concerns, many experts believe that Mr. Banga’s appointment marks a turning point for The World Bank, and that his leadership will be instrumental in helping the lender to take a more decisive approach to the global challenges facing it. The appointment of Mr. Banga is just one step along the way for The World Bank, but it is an important one, and if he can navigate the many challenges facing the lender, he could leave behind a lasting legacy.

GOP-Led Congress Passes “Limit, Save, Grow Act of 2023”

The U.S. House of Representatives on Wednesday, April 26, 2023 passed the Limit, Save, Grow Act of 2023 as the debt ceiling debate continues in the nation’s capital. House speaker Kevin McCarthy introduced the legislation on April 19, which would “limit federal spending, save taxpayer dollars,” and “grow the economy.”

The legislation passed 217-215. Four Republicans voted against the bill, which did not get a single vote from a Democrat.

The vote allows the US to raise the nation’s debt limit for one year and limit federal spending growth to 1% annually. The plan, titled the “Limit, Save, Grow Act of 2023,” would increase the debt limit by $1.5 trillion, or until March 31, 2024, whichever comes first.

McCarthy also plans to repeal key parts of Democrats’ signature legislative package and President Biden’s college student debt cancellation program. The GOP bill would also remove $80 billion that Democrats approved last year to improve the Internal Revenue Service (IRS). However, the Congressional Budget Office estimated that repealing the measure would increase the deficit.

McCarthy said on the House floor that limiting government spending would reduce inflation and restore fiscal discipline in Washington. He added that if Washington wants to spend more, it will have to find savings elsewhere, as every household in America does. McCarthy noted that Medicare and Social Security would not be impacted by the cuts. The framework also includes work requirements for adults without dependents enrolled in federal assistance programs.

According to a press release, the legislation would specifically:

  • “End the Era of Reckless Washington Spending
  • “Reclaim Unspent COVID Funds
  • “Defund Biden’s IRS Army
  • “Repeal ‘Green New Deal’ Tax Credits
  • “Prohibit [President Joe] Biden’s Student Loan Giveaway to the Wealthy
  • “Strengthen the Workforce and Reduce Childhood Poverty
  • “Prevent Executive Overreach and Restore Article I
  • “Lower Energy Costs and Utilities”

The plan also includes “a responsible debt limit increase.”

However, Democrats remain critical of any efforts to link debt ceiling negotiations to legislation that would require work requirements for those on assistance programs. David Scott, the House Agriculture Committee ranking member, said that holding food assistance hostage for those who depend on it in exchange for increasing the debt limit is a nonstarter.

The US hit its current debt limit of $31 trillion in January. The Treasury Department is employing what it refers to as extraordinary measures to essentially act as a band-aid for several months. Those measures are set to run out in early summer. Should Congress fail to raise the debt limit by then, there would be an unprecedented debt default, something that would throw worldwide financial markets into dire straits and likely lead to a recession.

In a speech, McCarthy blasted the president for not meeting with him to negotiate. The pair last met in February and remain at odds over how to address the debt limit. Biden has repeatedly said he wants to sign a clean debt limit bill. Senate Majority Leader Chuck Schumer has also said that efforts to address spending cuts “belong in the discussion about budget, not as a precondition for avoiding default.”

The proposal is likely to face opposition in the Democratic-controlled Senate. Passing the bill would require bipartisan support, which may be difficult given the current political climate. Nonetheless, McCarthy remains optimistic that the proposal will succeed.

“Limited government spending will reduce inflation and restore fiscal discipline in Washington,” McCarthy said. “If Washington wants to spend more, it will have to come together and find savings elsewhere — just like every single household in America.”

“Our plan ensures adults without dependents earn a paycheck and learn new skills,” he said. “By restoring these commonsense measures, we can help more Americans earn a paycheck, learn new skills, reduce childhood poverty and rebuild the workforce.”

“By including these radical proposals as a lever in debt limit negotiations, Speaker McCarthy and his extreme Republican colleagues are ensuring their failure,” David Scott, D-Ga., House Agriculture Committee ranking member, said of McCarthy’s proposal for work requirements.

“President Biden has a choice: Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation’s history,” McCarthy said.

Warren Buffett Worried About Nuclear Threats And Pandemics

Warren Buffett, the billionaire investor, expressed that he is not worried about the success of his company, Berkshire Hathaway, despite current economic headwinds such as banking failures and rising interest rates. Speaking on CNBC’s “Squawk Box,” the 92-year-old said, “I never go to bed worried about Berkshire and how we’ll handle a thing.” He added that, at his age, he has other things to worry about, such as “the nuclear threat” and “a pandemic in the future.”

Berkshire Hathaway, under Buffett’s leadership since 1965, has become one of the world’s largest companies with a market capitalization above $707 billion. Its portfolio of investments includes Geico, Dairy Queen, Duracell, and Fruit of the Loom. Buffett’s history of optimism is well-documented, with data scientists identifying a surplus of positivity in his annual letters to shareholders.

Buffett’s investment strategy is to choose investments he believes in, regardless of their current price, and take advantage of stock drops to buy more of companies he trusts. During a volatile market period in 2016, he advised investors not to watch the market closely when stocks are down. He is known to be supremely self-confident, with “99 and a fraction percent” of his net worth invested in Berkshire, along with several family members.

When confronted with scary issues that are outside of his control, such as nuclear war or future pandemics, Buffett attempts to reduce his stress by focusing on situations and tasks that he can actually solve himself. “I worry about things nobody else worries about, but I can’t solve them all,” he said. “But anything that can be solved, I should be thinking about that.”

Regarding Berkshire’s future, Buffett has already selected the company’s next CEO, Greg Abel, who has stated that he does not plan to diverge from Buffett’s successful formula. Buffett trusts the leaders of Berkshire’s portfolio companies to make the right business decisions and expects Abel to do the same. “I am not giving [Abel] some envelope that tells him what to do next,” but Berkshire Hathaway is “so damn lucky” to have Abel taking the reins, Buffett said.

In conclusion, Warren Buffett’s optimism and confidence have helped him build and sustain one of the world’s largest companies. Despite economic headwinds, he remains unworried about the future of Berkshire Hathaway and instead focuses on things he can control. With a trusted successor in place, Buffett is confident that the company’s success will continue long after he steps down.

NITI Aayog Vice Chair Suman Bery Leads Discussion On Indian Economy In New York

The Indian Consulate in New York held a Round Table on India’s economy on April 20, 2023, which was led by India’s Vice Chairman of Niti Aayog Suman Bery, who is on a visit to the United States.

The Round Table was entitled, Indian Growth Story: Speed, Scale, and Opportunities, and it was attended by high-profile guests from the business sector such as Deepak Raj, managing director of private investment firm Raj Associates and Padma Shri recipient Dr. Sudhir Parikh, chairman of Parikh Worldwide Media.

Caption: Vice Chairman of India’s NITI Aayog Suman Bery, speaking at the Round Table on India’s economy held April 20, 2022, at the Indian Consulate in New York. PHOTO: Indian Consulate.

“It was a pleasure participating in the roundtable discussion on the Indian Growth Story: Speed, Scale and Opportunities at the Consulate General of India, New York (@IndiainNewYork) last evening,” Bery, an economist who took over at NITI last year in May, tweeted after the meeting.

The event was attended by approximately 50 corporate leaders from various sectors such as IT, technology, finance, healthcare, high-level executives, and policymakers.

Picture : The Hindu

Dr. Sudhir Parikh, chairman of Parikh Worldwide Media, asking a question at the April 20, 2023, Round Table on India’s economy with Vice Chairman of NITI Aayog Suman Bery, held at the Indian Consulate in New York. Also seen are other high profile participants, as well as India’s Deputy Consul General Dr. Varun Jeph, right. PHOTO: Indian Consulate

Among the subjects discussed were the markers of India’s economic growth making it one of the world’s fastest-growing economies; elements of India’s energy transition, New Delhi’s Free Trade Agreements which give a strong push to Indian trade, India’s G20 leadership, women’s empowerment, etc.

Businessman from New Jersey Deepak Raj, addressing India’s NITI Aayog Vice Chairman Suman Bery (not in picture) at the April 20, 2023, Round Table on India’s economy, held at the Indian Consulate in New York. PHOTO: Indian Consulat

The International Monetary Fund estimates India’s growth projections at 5.9 percent in 2023, and 6.3 percent in 2024, compared to the much lower World Output at 2.8 percent in and 3.0 percent, Bery noted accompanied by a visual table.

India has signed 13 Free Trade Agreements and 6 preferential pants so far with its trading partners for ensuring greater market access for domestic goods and promoting exports, Bery pointed out, with appropriated visual representations. The most recent FTAs signed are with Mauritius, UAE, and Australia.

More than 50 high- profile attendees were present at the April 20, 2023, Round Table on the Indian economy, held at the Indian Consulate in New York, with Vice Chair of India’s NITI Aayog Suman Bery. PHOTO: Indian Consulate

India is also actively engaged in FTA negotiations with countries like United Kingdom, European Union, and Canada.

India’s energy transition includes elements of – increasing electrification; higher penetration of cleaner fuels in energy mix; accelerated adoption of energy-efficient technologies; rising digitalization, among other efficiencies, Bery noted.

On the same day, April 20, Bery was the chief guest at a Student Roundtable and Lunch in Columbia University’s Center on Global Energy Policy at the School of International and Public Affairs.

Before being appointed Vice Chair at NITI Aayog, Bery served in various capacities – Senior Visiting Fellow at the Centre for Policy Research, New Delhi; a Global Fellow in the Asia Program of the Woodrow Wilson International Centre for Scholars in Washington D.C.; and a non-resident fellow at Bruegel, an economic policy research institution in Brussels.

In 2012 until mid-2016, Bery was Shell’s Global Chief Economist, where he advised the board and management on global economic and political developments. He was also part of the senior leadership of Shell’s global scenarios group.

Prior to that, Bery served as Director-General of the National Council of Applied Economic Research, one of India’s leading socioeconomic research institutions.

Bery also served at various times as a member of the Prime Minister’s Economic Advisory Council, of India’s Statistical Commission, and of the Reserve Bank of India’s Technical Advisory Committee on Monetary Policy.

He also worked at the World Bank, engaged in research on financial sector development and country policy and strategy, focusing on Latin America and the Caribbean.

Do The Rich Pay Their ‘Fair Share’?

Tax Day has recently passed and according to a recent Pew Research poll, Americans’ frustration with the tax code has reached its highest point in recent years. The majority of Americans, 56%, say they pay “more than their fair share” of taxes, with the number having increased from 51% from 2019.

It is also no surprise that almost two-thirds of Americans believe that the wealthy do not pay enough taxes, with 61% supporting the idea of raising taxes on households earning over $400,000. However, the definition of what constitutes a “fair share” of taxes is subjective and many Americans may not understand how much of the tax burden the rich bear.

In 2020, the top 1% of taxpayers paid $722 billion in income taxes, which accounted for 42.3% of all income taxes paid – the highest percentage in modern history. In contrast, the bottom 90% of taxpayers paid $450 billion in income taxes, or just 26.3% of the total, representing their lowest percentage of the tax burden in decades. This means that the top 1% of taxpayers pay a far greater share of the nation’s tax burden than 142 million of their neighbors combined.

Picture : Federal Budget

The wealthy do not pay a larger amount solely because they earn the most money. In 2020, the top 1% of taxpayers earned 22% of all adjusted gross income, while their 42.3% share of income taxes is nearly twice their income share. The opposite is true for the bottom 90%, who earned more than half of the nation’s income but paid only 26.3% of the taxes, representing roughly half of their share of the nation’s income. This was not the case in 1980, where the tax burden was more evenly shared. The bottom 90% earned 68% of the nation’s income and paid 52% of the income taxes, while the top 1% earned 9.6% of the nation’s income and paid 17% of the income taxes.

One of the reasons for the progressive tax system in the United States is the massive expansion of social programs delivered through the tax code over the past three decades. Many of the most significant programs aimed at lower-income families and those with children, such as the Child Tax Credit and the Earned Income Tax Credit, are run through the IRS, which deliver roughly $180 billion in benefits each year, much of which is refundable. Since the mid-1990s, tax credits have multiplied, with credits for adoption, child care, senior care, college tuition, buying electric cars or solar panels, and buying health insurance, among other things. However, these responsibilities are beyond the capacity of a tax collection agency, making it difficult for the IRS to function.

Record numbers of taxpayers now pay no income taxes after claiming their credits and deductions, with 34% of tax filers paying no income taxes due to generous credits and deductions in the tax code. In 2019, 54 million tax filers, equal to 34%, paid no income taxes because of the tax code’s generous credits and deductions. In 1980, only 21% of tax filers paid no income taxes due to credits and deductions.

Despite politicians’ rhetoric about ensuring the fair share of taxes, the burden on top earners continues to climb. If the wealthy were indeed able to use loopholes to avoid paying taxes, many of them would need better accountants.

How Ajay Banga Could Reshape World Bank To Tackle Climate Change

World Bank shareholders are gathered in Washington this week for their annual spring meetings, while the global financial institution is poised for new leadership that could change how it approaches climate and other global crises. Business executive Ajay Banga is expected to be confirmed as the bank’s president in the coming weeks.

Richard T. Clark is a political scientist who studies policymaking at the World Bank and the International Monetary Fund. Clark says Banga could push the World Bank to tackle climate change more aggressively in three ways, but that each approach carries risk.

Clark says:

“The World Bank is at an inflection point – Ajay Banga is slated to take over for current President David Malpass, who has been labeled a climate-skeptic by some observers. Banga, who was nominated by the United States, faces pressure to reorient the World Bank’s lending portfolio to tackle climate change more aggressively. He could do this in several ways, but each has its pitfalls.

“First, he could ask member states, who fund the organization, for additional resources, but Janet Yellen – the U.S. Treasury Secretary – said the U.S. would not back such a move. Given that the U.S. is the Bank’s largest shareholder, this makes a capital increase unlikely.

“A second option is for Banga to ease capital requirements by expanding the Bank’s lending portfolio without additional funds from member states, but this could put the Bank’s AAA credit rating at risk, especially given that many of the Bank’s debtors are experiencing debt crises of their own, limiting their ability to repay future debt.

“Third, Banga could reallocate funds traditionally offered to developing countries for poverty reduction and physical infrastructure towards climate and clean energy initiatives – for instance, lending to middle-income countries to help them transition away from coal. Unsurprisingly, the world’s poorest nations oppose such a move since it limits their ability to draw on the Fund’s resources to promote growth. More generally, developing nations have long been frustrated with the fact that the World Bank is governed primarily by rich Western countries who may put their own needs ahead of those of the developing world.”

The Rising Cyber Weapons Market Forecast, 2021-2031

Allied Market Research published a report, titled, “Cyber Weapons Market by Type (Defensive, Offensive), by Application (National Defense System, Public Utility, Automated Transportation system, Smart Power Grid, Industrial Control System, Financial System, Communication Network, Others), by End User (Government, BFSI, Corporate, Other): Global Opportunity Analysis and Industry Forecast, 2021-2031.” According to the report, the global cyber weapons market was valued at $9.2 billion in 2021 and is estimated to generate $23.7 billion by 2031, witnessing a CAGR of 10.1% from 2022 to 2031.

The use of cyber weapons has grown significantly as the U.S. attempts to develop new tools and capacities for national security and defence. The National Security Agency (NSA) and Cyber Command are at the center of the American government’s significant investments in the creation of cyberweapons. The development of cyber weapons has been fueled by both the rise in reliance on digital infrastructure and the threat of cyberattacks from other countries, criminal groups, and other entities. The U.S. government accessed crucial data from other countries using cyber weapons.

According to Interesting Engineering, in September 2022, the U.S. National Security Agency’s (NSA) cyber-warfare unit used 41 different types of weapons to steal critical technology data from a Chinese space and aviation university. This data included the configuration of critical network equipment, network management information, and critical operational information. Specific information regarding their creation and use is not made available to the general public because the use of cyber weapons by the U.S. is highly classified. Also, it is evident that cyber weapons have grown in importance as a tool in the U.S. national security strategy, which has fueled the growth of the cyber weapons business in the country.

On the basis of application the global cyber weapons market, is segmented into national defense systems, public utility, automated transportation systems, smart power grid, industrial control systems, financial systems, communication networks, and others. The development of international trade and the improvement of living standards have been facilitated by transportation infrastructure. Communities all over the world are connecting more than ever because of huge advancements in the flow of people and things. Yet, the presence of various control systems and auxiliary systems is increasing the interconnection and complexity of transportation networks.

The use of communications and IT has increased the effectiveness and functionality of transportation networks, but it has also raised the possibility of vulnerabilities. Attacks using cyber weapons on transportation networks can take a variety of shapes and have a range of possibilities and outcomes. A popular attack method that overburdens the system and causes a denial-of-service (DoS) for the entire system is traffic redirection to the server. A different type of cyber weapon effect is the theft of personal information, which can result in the displacement of expensive and/or dangerous commodities like explosives, radioactive agents, chemical, and biological chemicals, which is problematic for the transportation industry. Terrorists might utilise these materials, if they were stolen, to make bombs and other deadly weapons. Automated transportation systems that integrate cyber weapons are used to prevent or respond to such incidents, which supports the market’s growth.

Luxury Jewelry Market Size Is Projected To Reach USD 95.8 Billion By 2030

The Global Luxury Jewelry Market is anticipated to grow at a 7.85% CAGR and is estimated to be worth USD 95.78 Billion by the end of 2030.

Luxury Jewelry is well-known for its sophisticated designs and utilization of the most precious and uncommon unrefined substances. The Luxury Jewelry Market is vigorous and quickly developing. It’s also exceptionally divided and determined by buyer conduct and style. In the nearing years, huge market development is normal, from increasing extra cash and amplifying buyer consumption of extravagant merchandise. Assimilating the luxury gems industry with diversion and allure businesses has set new open doors for the market.

One of the main points herding the Luxury Jewelry Market is boosting discretionary cash flow. When the population’s discretionary cash flow develops, so does their purchasing power, bringing about amplified interest and utilization of luxury gems. Also, the traditions embracing extravagant metals are necessary components driving the interest in extravagant adornment pieces.

Amplifying interest in men’s adornments addresses viable freedom for the development of the market over the figure time frame. Generally, ladies are more minded than men toward buying luxury gems. Be that as it may, this pattern is remodelling, inferable from expanding the focal point of men on self-grooming and graceful allure.

The Global Luxury Jewelry Market is segmented into five regions; North America, Asia Pacific, Europe, Latin America, and the Middle East & Africa.

Europe represented the biggest portion of the global industry on the lookout, followed by North America. These areas comprise created nations with high per capita pay, just as significant luxury brands, filling the market development. Also, the high female workforce interest rate in these countries is a significant factor that adds to the development of the market. Besides, the Asia- Pacific area is expected to have a high CAGR during the estimated time frame.

Asia Pacific dominated the market for luxury jewelry and was considered for the largest revenue share of 65.4% in 2021. China and India are the two largest markets for luxury jewelry in the region. The latest styles and the requirement for high-quality jewelry among top customers are two eloquent drivers driving the market for luxury jewelry in this region.

The region is anticipated to see an increase in the popularity of online distribution. The majority of luxury jewelry is bought for special occasions or events like marriages and engagements. Further, due to continuous restrictions on international travel and the augmentation of domestic duty-free zones in China, demand from younger customers as well as those who shop domestically is anticipated to climb.

The global Luxury Jewelry Market’s prominent key players are Buccellati Holding, Italia SPA, Chopard International SA, Mikimoto & Co. Ltd., Bulgari S.P.A., Graff Diamond Corporation, Companies Financiere Richmond S.A., Tiffany & Co., Societe Cartier, Harry Winston Inc., Guccio Gucci S.P.A., Chanel, LVMH Moet Hennessy, Signet Jewellers, Cartier International SNC, Rajesh Exports Ltd.

Global Economy Heading For Weakest Period Of Growth Since 1990

The global economy is heading for the weakest period of growth since 1990 as higher interest rates set by the world’s top central banks drive up borrowing costs for households and businesses, the head of the International Monetary Fund has warned, a media outlet reported.

Kristalina Georgieva, the IMF’s managing director, said that a sharp slowdown in the world economy last year after the aftershocks of the Covid pandemic and the Russian invasion of Ukraine would continue in 2023, and risked persisting for the next five years, The Guardian reported.

In a curtain raiser speech before the fund’s spring meetings in Washington DC next week, she said that the global growth would remain about 3 per cent over the next five years – its lowest medium-term growth forecast since 1990.

“This makes it even harder to reduce poverty, heal the economic scars of the Covid crisis and provide new and better opportunities for all,” Georgieva said.

In a downbeat assessment as the world grapples with the worst inflation shock in decades, she said economic activity was slowing across advanced economies in particular. While there was some momentum from developing nations – including China and India – low-income countries were also suffering from higher borrowing costs and falling demand for their exports, the media outlet reported.

Ahead of the IMF publishing revised economic forecasts next week, Georgieva said global growth in 2022 had collapsed by almost half since the initial rebound from the Covid pandemic in 2021, sliding from 6.1 per cent to 3.4 per cent. With high inflation, rising borrowing costs and mounting geopolitical tensions, she said global growth was on track to drop below 3 per cent in 2023 and remain weak for years to come.

As many as 90 per cent of advanced economies would experience a decline in their growth rate this year, she warned, with activity in the US and the eurozone hit by higher interest rates, it added.

Comparing the challenge to “climbing one ‘great hill’ after another”, Georgieva said there were still more problems to overcome: “First was Covid, then Russia’s invasion of Ukraine, inflation and a cost of living crisis that hit everyone.”

“So far, we have proven to be resilient climbers. But the path ahead – and especially the path back to robust growth – is rough and foggy, and the ropes that hold us together may be weaker now than they were just a few years ago,” she was quoted as saying by the media outlet. (IANS)

India, China To Account For Half Of Global Economic Growth In 2023

The period of slower economic activity will be prolonged, with the next five years witnessing less than 3 per cent growth.

The IMF chief on Thursday said that the world economy is expected to grow at less than 3 per cent this year, with India and China expected to account for half of global growth in 2023.

International Monetary Fund (IMF) managing director Kristalina Georgieva warned that a sharp slowdown in the world economy last year following the raging pandemic and Russia’s military invasion of Ukraine would continue this year.

The period of slower economic activity will be prolonged, with the next five years witnessing less than 3 per cent growth, “our lowest medium-term growth forecast since 1990, and well below the average of 3.8 per cent from the past two decades,” she said.

“Some momentum comes from emerging economies — Asia especially is a bright spot. India and China are expected to account for half of global growth in 2023. But others face a steeper climb,” she explained.

“After a strong recovery in 2021 came the severe shock of Russia’s war in Ukraine and its wide-ranging consequences — global growth in 2022 dropped by almost half, from 6.1 to 3.4 per cent,” Georgieva said.

Georgieva said slower growth would be a “severe blow,” making it even harder for low-income nations to catch up.

“Poverty and hunger could further increase, a dangerous trend that was started by the COVID crisis,” she explained.

Her comments come ahead of next week’s spring meetings of the IMF and the World Bank, where policy-makers will convene to discuss the global economy’s most pressing issues.

The annual gathering will take place as central banks around the world continue to raise interest rates to tame galloping inflation rates.

About 90 per cent of advanced economies are projected to see a decline in their growth rates this year, she said.

For low-income countries, higher borrowing costs come at a time of weakening demand for their exports, she said.

Georgieva added that while the global banking system had “come a long way” since the 2008 financial crisis, “concerns remain about vulnerabilities that may be hidden, not just at banks but also non-banks. “Now is not the time for complacency.”

New Leaders At World Bank And BRICS Bank Have Different Outlooks

US President Joe Biden announced that the United States had placed the nomination of Ajay Banga to be the next head of the World Bank, established in 1944. There will be no other official candidates for this job since—by convention—the US nominee is automatically selected for the post. This has been the case for the 13 previous presidents of the World Bank—the one exception was the acting president Kristalina Georgieva of Bulgaria, who held the post for two months in 2019. Georgieva is currently the managing director of the IMF.

In the official history of the International Monetary Fund (IMF), J. Keith Horsefield wrote that US authorities “considered that the Bank would have to be headed by a US citizen in order to win the confidence of the banking community, and that it would be impracticable to appoint US citizens to head both the Bank and the Fund.” By an undemocratic convention, therefore, the World Bank head was to be a US citizen and the head of the IMF was to be a European national . Therefore, Biden’s nomination of Banga guarantees his ascension to the post.

A month later, the New Development Bank’s Board of Governors—which includes representatives from Brazil, China, India, Russia, and South Africa (the BRICS countries) as well as one person to represent Bangladesh, Egypt, and the United Arab Emirates—elected Brazil’s former president Dilma Rousseff to head the NDB, popularly known as the BRICS Bank.

The BRICS Bank, which was first discussed in 2012, began to operate in 2016 when it issued its first green financial bonds. There have only been three managing directors of the BRICS Bank—the first from India (K.V. Kamath) and then the next two from Brazil (Marcos Prado Troyjo and now Rousseff to finish Troyjo’s term). The president of the BRICS Bank will be elected from its members, not from just one country.

Banga comes to the World Bank, whose office is in Washington, D.C., from the world of international corporations. He spent his entire career in these multinational corporations, from his early days in India at Nestlé to his later international career at Citigroup and Mastercard. Most recently, Banga was the head of the International Chamber of Commerce, an “executive” of multinational corporations that was founded in 1919 and is based in Paris, France.

As Banga says, during his time at Citigroup, he ran its microfinance division, and, during his time at Mastercard, he made various pledges regarding the environment. Nonetheless, he has no experience in the world of development finance and investment. He told the Financial Times that he would turn to the private sector for funds and ideas. His resume is not unlike that of most US appointees to head the World Bank.

The first president of the World Bank was Eugene Meyer, who built the chemical multinational Allied Chemical and Dye Corporation (later Honeywell) and who owned the Washington Post. He too had no direct experience working on eradicating poverty or building public infrastructure. It was through the World Bank that the United States pushed an agenda to privatize public institutions. Men such as Banga have been integral to the fulfillment of that agenda.

Dilma Rousseff, meanwhile, comes to the BRICS Bank with a different resume. Her political career began in the democratic fight against the 21-year military dictatorship (1964-1985) that was inflicted on Brazil by the United States and its allies. During Lula da Silva’s two terms as president (2003-2011), Dilma Rousseff was a cabinet minister and his chief of staff.

She took charge of the Programa de Aceleração do Crescimento (Growth Acceleration Program) or PAC, which organized the anti-poverty work of the government. Because of her work in poverty eradication, Dilma became known popularly as the “mãe do PAC” (mother of PAC). A World Bank study from 2015 showed that Brazil had “succeeded in significantly reducing poverty in the last decade”; extreme poverty fell from 10 percent in 2001 to 4 percent in 2013. “[A]pproximately 25 million Brazilians escaped extreme or moderate poverty,” the report said.

This poverty reduction was not a result of privatization, but of two government schemes developed and established by Lula and Dilma: Bolsa Família (the family allowance scheme) and Brasil sem Misería (the Brazil Without Extreme Poverty plan, which helped families with employment and built infrastructure such as schools, running water, and sewer systems in low-income areas). Dilma Rousseff brings her experience in these programs, the benefits of which were reversed under her successors (Michel Temer and Jair Bolsonaro).

Banga, who comes from the international capital markets, will manage the World Bank’s net investment portfolio of $82.1 billion as of June 2022. There will be considerable attention to the work of the World Bank, whose power is leveraged by Washington’s authority and by its work with the International Monetary Fund’s debt-austerity lending practices.

In response to the debt-austerity practices of the IMF and the World Bank, the BRICS Health/Sciencecountries—when Dilma was president of Brazil (2011-2016)—set up institutions such as the Contingent Reserve Arrangement (as an alternative to the IMF with a $100 billion corpus) and the New Development Bank (as an alternative to the World Bank, with another $100 billion as its initial authorized capital).

These new institutions seek to provide development finance through a new development policy that does not enforce austerity on the poorer nations but is driven by the principle of poverty eradication. The BRICS Bank is a young institution compared to the World Bank, but it has considerable financial resources and will need to be innovative in providing assistance that does not lead to endemic debt. Whether the new BRICS Think Tank Network for Finance will be able to break with the IMF’s orthodoxy is yet to be seen.

De-Dollarization Gaining Momentum As Countries Seek Alternatives To Dollar

The U.S. dollar has dominated global trade and capital flows over many decades. However, many nations are looking for alternatives to the greenback to reduce their dependence on the United States.

This graphic catalogs the rise of the U.S. dollar as the dominant international reserve currency, and the recent efforts by various nations to de-dollarize and reduce their dependence on the U.S. financial system.

The global de-dollarization campaign is gaining momentum, as countries around the world seek alternatives to the hegemony of the US dollar.

The global de-dollarization campaign is gaining momentum, as countries around the world seek alternatives to the hegemony of the US dollar. China, Russia, Brazil, India, ASEAN nations, Kenya, Saudi Arabia, and the UAE are now using local currencies in trade.

The Dollar Dominance

The United States became, almost overnight, the leading financial power after World War I. The country entered the war only in 1917 and emerged far stronger than its European counterparts.

As a result, the dollar began to displace the pound sterling as the international reserve currency and the U.S. also became a significant recipient of wartime gold inflows.

The dollar then gained a greater role in 1944, when 44 countries signed the Bretton Woods Agreement, creating a collective international currency exchange regime pegged to the U.S. dollar which was, in turn, pegged to the price of gold.

Picture : Elements of visual capitalist

By the late 1960s, European and Japanese exports became more competitive with U.S. exports. There was a large supply of dollars around the world, making it difficult to back dollars with gold. President Nixon ceased the direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.

Although it has remained the international reserve currency, the U.S. dollar has increasingly lost its purchasing power since then.

Russia and China’s Steps Towards De-Dollarization

Concerned about America’s dominance over the global financial system and the country’s ability to ‘weaponize’ it, other nations have been testing alternatives to reduce the dollar’s hegemony.

As the United States and other Western nations imposed economic sanctions against Russia in response to its invasion of Ukraine, Moscow and the Chinese government have been teaming up to reduce reliance on the dollar and to establish cooperation between their financial systems.

Since the invasion in 2022, the ruble-yuan trade has increased eighty-fold. Russia and Iran are also working together to launch a cryptocurrency backed by gold, according to Russian news agency Vedmosti. In addition, central banks (especially Russia’s and China’s) have bought gold at the fastest pace since 1967 as countries move to diversify their reserves away from the dollar.

How Other Countries are Reducing Dollar Dependence

De-dollarization it’s a theme in other parts of the world as well. In recent months, Brazil and Argentina have discussed the creation of a common currency for the two largest economies in South America.

In a conference in Singapore in January, multiple former Southeast Asian officials spoke about de-dollarization efforts underway. The UAE and India are in talks to use Rupees to trade non-oil commodities in a shift away from the dollar, according to Reuters.

For the first time in 48 years, Saudi Arabia said that the oil-rich nation is open to trading in currencies besides the U.S. dollar. Despite these movements, few expect to see the end of the dollar’s global sovereign status anytime soon. Currently, central banks still hold about 60% of their foreign exchange reserves in dollars.

India Now Has Third Highest Number Of Billionaires In The World

India, which has the third-most billionaires, with 169, had a more mixed year. Indian billionaires as a group – worth $675 billion – are $75 billion poorer than in 2022, as per the Forbes World’s Billionaires List 2023.

As per the list, Mukesh Ambani, Chairman and Managing Director, Reliance Industries Ltd (RIL) is the richest India with a net worth of $63.4 billion. Ambani is the 9th richest in the world as per the list.

The Us still boasts the most billionaires, with 735 list members worth a collective $4.5 trillion. China (including Hong Kong and Macau) remains second, with 562 billionaires worth $2 trillion, followed by India, with 169 billionaires worth $675 billion.

Nearly half of all billionaires are poorer than they were a year ago, as per the Forbes World’s Billionaires List 2023.

Falling stocks, wounded unicorns, and rising interest rates translated into a down year for the world’s wealthiest people.

Globally, the list counted 2,640 ten-figure fortunes, down from 2,668 last year. Altogether, the planet’s billionaires are now worth $12.2 trillion, a drop of $500 billion from $12.7 trillion in March 2022.

Nearly half the list is poorer than a year ago, including Elon Musk, who falls from No. 1 to No. 2 after his pricey acquisition of Twitter helped sink Tesla shares.

Bernard Arnault, head of luxury goods giant LVMH, takes his place as the world’s richest person, marking the first time a citizen of France leads the ranking.

Despite a down year in the markets, rising inflation and war in Eastern Europe, more than 1,000 billionaires are actually richer than they were on Forbes’ 2022 list – some by tens of billions of dollars.

Luxury goods tycoon Arnault has had the best run. His net worth surged by $53 billion since last year, a bigger gain than anyone on the planet. Shares of his LVMH, which owns brands like Louis Vuitton, Christian Dior and Tiffany & Co, rose by 18 per cent on the back of strong demand. Now worth $211 billion, Arnault has taken the top spot on the World’s Billionaires ranking. It’s his first time at No 1 – and the first time a citizen of France has led the list.

Michael Bloomberg is ranked 7th on the list with a net worth of $ 84.5 billion. (IANS)

Bernard Arnault Tops Forbes’ Annual Billionaires List

Elon Musk has officially been dethroned from the top of Forbes’ annual “World’s Billionaire’s List.”  The Tesla and Twitter chief is now the second-richest billionaire, worth an estimated $180 billion, which is $39 billion less than the previous year. The top spot has been awarded to Bernard Arnault, the chairman of French luxury goods giant LVMH. His net worth increased more than $50 billion in the past year to $211 billion.

This shouldn’t come as a surprise to Musk, whose position wobbled on the Forbes’ “Real-Time Billionaires” list, which is updated daily, for the past several months. He and Arnault often switch places.

However, Tuesday’s list tracks his wealth annually. Forbes explained that Musk’s wealth had fallen because his $44 billion Twitter purchase, funded by Tesla shares, scared investors and sent Tesla stock sinking sharply last year. Tesla gained much of those losses back this year but is still significantly lower than before Musk bought Twitter.

Picture : Bussiness Insider

Forbes said that “Musk has mostly tweeted himself out of the top spot on the ranks” because Tesla shares are down 50% since his Twitter takeover a year ago. SpaceX is a bright spot for the billionaire, the magazine notes, since its valuation has increased $13 billion to $140 billion over the past year.

Amazon founder Jeff Bezos lost the most amount of money of any billionaire on the list ($57 billion), knocking him down from second position to third. The loss can be attributed to Amazon shares losing nearly 40% of their value last year.

As for Arnault, Forbes said the Frenchman had a “banner year” in 2022 because of record-high profits at the luxury conglomerate, which comprises Louis Vuitton, Christian Dior and Tiffany & Co. Shares of LVMH have climbed 25% over the past year and the patriarch has recently unveiled succession plans to his children.

Forbes said that the total number of billionaires on this year’s list fell to 2,640 (down from 2,668), marking the second-straight year of decline.

“It’s been another rare down year for the planet’s richest people,” said Chase Peterson-Withorn, Forbes senior editor of wealth, in a release. “Nearly half the list is poorer than they were 12 months ago, but a lucky few are billions — or even tens of billions — of dollars richer.”

More than 250 people who were on last year’s list didn’t appear on this year’s, including Kanye West, who lost his Adidas deal, and embattled FTX founder Sam Bankman-Fried, who lost 94% of his wealth in one day.

Money Can Buy Happiness, Scientists Say

People get happy as they earn more, according to a new study which overturns the dominant thinking that money cannot buy happiness.

The study published in Proceedings of the National Academy of Sciences paper, shows that, on average, larger incomes are associated with ever-increasing levels of happiness.

Two prominent researchers, Daniel Kahneman from Princeton University and Matthew Killingsworth from the University of Pennsylvania, surveyed 33,391 adults aged between 18 and 65 who live in the US, are employed and report a household income of at least $10,000 a year.

For the least happy group, happiness rose with income until $100,000, then showed no further increase as income grew. For those in the middle range of emotional well-being, happiness increases linearly with income, and for the happiest group the association actually accelerates above $100,000.

“In the simplest terms, this suggests that for most people larger incomes are associated with greater happiness,” said lead author Killingsworth.

“The exception is people who are financially well-off but unhappy. For instance, if you’re rich and miserable, more money won’t help. For everyone else, more money was associated with higher happiness to somewhat varying degrees,” he added.

The researchers said that the study shows both a happy majority and an unhappy minority exist.

For the former, happiness keeps rising as more money comes in; the latter’s happiness improves as income rises but only up to a certain income threshold, after which it progresses no further.

These findings also have real-world implications, according to Killingsworth.

For one, they could inform thinking about tax rates or how to compensate employees. And, of course, they matter to individuals as they navigate career choices or weigh a larger income against other priorities in life, Killingsworth said.

However, he adds that for emotional well-being money isn’t all. “Money is just one of the many determinants of happiness,” he says. “Money is not the secret to happiness, but it can probably help a bit.”  (IANS)

Biden’s $5 Trillion Tax Gambit Catches Congress By Surprise

President Biden went big in his $6.8 trillion annual budget proposal to Congress by calling for $5 trillion in tax increases over the next decade, more than what lawmakers expected after the president downplayed his tax agenda in earlier meetings.  It’s a risky move for the president as he heads into a tough reelection campaign in 2024.

Senate Democrats will have to defend 23 seats next year, including in Republican-leaning states such as Ohio, Montana and West Virginia, and Americans are concerned about inflation and the direction of the economy.

Republicans say Biden’s budget plan marks the return of tax-and-spend liberal politics; they warn higher taxes on corporations and the wealthy will hurt the economy.  Biden, however, thinks he can win the debate by pledging that he won’t raise taxes on anyone who earns less than $400,000 a year.

Sen. Mike Crapo (R-Idaho), the ranking member of the Senate Finance Committee, called Biden’s ambitious tax plan “jaw-dropping.”

“This is exactly the wrong approach to solving our fiscal problems,” he said of the $5 trillion aggregate total of proposed tax hikes. “I think this sets a new record, by far.”

Grover Norquist, the president of Americans for Tax Reform, a group that advocates for lower taxes, said “in dollar terms, it’s the largest tax increase in American history.”

A surprise and a ‘negotiating position’

Many lawmakers were expecting Biden to propose between $2 trillion and $2.5 trillion in tax increases, based on what he said in his State of the Union address on Feb. 7 and on what media outlets reported in the days before the White House unveiled its budget plan.

The $5 trillion in new tax revenues is more than what the president called for last year, when Democrats controlled the House and Senate.

In October of 2021, when Biden was trying to nail down a deal with Sen. Joe Manchin (D-W.Va.) on the Build Back Better agenda, he proposed a more modest $2 trillion in tax increases.

The headline number even surprised some Democratic policy experts, though they agree the federal government needs to collect more revenue.

“I didn’t expect to see a number that big, but I’m not alarmed by it. I think it’s a negotiating position,” said Jim Kessler, the executive vice president for policy at Third Way, a centrist Democratic think tank.

Biden told lawmakers at his State of the Union address that his budget plan would lower the deficit by $2 trillion and that he would “pay for the ideas I’ve talked about tonight by making the wealthy and big corporations begin to pay their fair share.”

The president then surprised lawmakers with a budget proposal to cut $3 trillion from deficit over the next decade and to do it almost entirely by raising tax revenues.

Biden has called for a 25 percent tax on the nation’s wealthiest 0.01 percent of families. He has proposed raising the corporate tax rate from 21 percent to 28 percent and the top marginal income tax rate from 37 percent to 39.6 percent. He wants to quadruple the 1 percent tax on stock buybacks. He has proposed taxing capital gains at 39.6 percent for people with income of more than $1 million.

Kessler noted that Biden’s budget doesn’t include significant spending cuts nor does it reform Social Security, despite Biden’s pledge during the 2020 election to reduce the program’s imbalance.  Kessler defended the president’s strategy of focusing instead on taxing wealthy individuals and corporations.

“The amount of unrealized wealth that people have at the top dwarfs anything that we’ve ever seen in the past,” he said.  “These are opening bids” ahead of the negotiations between Biden and Speaker Kevin McCarthy (R-Calif.) to raise the debt limit.

Senate Republicans are trying to chip away at Biden’s argument that his tax policy will only hit wealthy individuals and companies. “It’s probably not good for the economy. Last time I checked, most tax increases on the business side are passed on to consumers, and I think we need to control spending more than adding $5 trillion in new taxes,” said Sen. Lindsey Graham (R-S.C.).

Norquist, the conservative anti-tax activist, warned that if enacted, raising the corporate tax rate would reverberate throughout the economy.  “The corporate income tax, 70 percent of that is paid by workers and lower wages,” he said.

He said raising the top marginal tax rate and capital gains tax rate would hit small businesses that file under subchapter S of the tax code. “When you raise the top individual rate, you’re raising taxes on millions of smaller businesses in the United States,” he said. “Their employees end up paying that because that’s money they don’t have in the business anymore.”

How does Biden compare to predecessors?

Norquist noted that Obama and Clinton both cut taxes during their administrations, citing Clinton’s role in cutting the capital gains rate and Obama’s role in making many of the Bush-era tax cuts permanent.  “Both of them ran a more moderate campaign. This guy is going Bernie Sanders,” he said of Biden, comparing him to the liberal independent senator from Vermont.

Biden’s budget is a significant departure from the approach then-President Obama took 12 years ago, when he also faced a standoff with a GOP-controlled House over the debt.

In his first year working with a House GOP majority, Obama in his fiscal 2012 budget proposed cutting the deficit by $1.1 trillion, of which he said two-thirds should come from spending cuts and one-third from tax increases.  Obama later ramped up his proposal in the fall of 2011 by floating a plan to cut the deficit by $3.6 trillion over a decade and raise taxes by $1.6 trillion during that span.

Concerning for some Democrats

Republican strategists say they’ll use Biden’s proposed tax increases as ammunition against Democratic incumbents up for reelection next year.  National Republican Senatorial Committee Chairman Steve Daines (Mont.) said Biden’s budget provides “a contrast” ahead of the election.

Sen. Jon Tester (D-Mont.), who faces a tough re-election in a state that former President Trump with 57 percent of the vote, said he’s leery about trillions of dollars in new taxes.

Asked last week if he’s worried about how Montanans might react to Biden’s proposed tax increases, Tester replied: “For sure. I got to make sure that will work. I just got to see what he’s doing.”

McCaul says Jan. 6 tapes not going to show ‘tourism at the Capitol’  Porter on Silicon Valley Bank collapse: ‘You can’t bet on’ interest rates staying low forever

Manchin, who is up for reelection in another red state, has called on his fellow Democrats to focus more on how the federal budget has swelled from $3.8 trillion in 2013 to $6.7 trillion today.

“Can we just see if we can go back to normal? Where were we before COVID? What was our trajectory before that?” he asked in a CNN interview Thursday.   “How did it grow so quickly? How do we have so many things that are so necessary that weren’t before?” he said of the federal budget and debt.

The White House branded the House Freedom Caucus’ deficit plan as “tax breaks for the super wealthy and wasteful spending for special interests,” as the two sides continued to trade jabs amid an escalating debt ceiling battle.

“MAGA House Republicans are proposing, if spread evenly across affected discretionary programs, at least a 20 [percent] across the board cut,” White House Communications Director Ben LaBolt said in an initial analysis of the proposal.

LaBolt pointed to several typically Republican issue areas that would be impacted by such cuts, including law enforcement, border security, education and manufacturing.

“The one thing MAGA Republicans do want to protect are tax cuts for the super-wealthy,” he added. “This means that their plan, with all of the sacrifices they are asking of working-class Americans, will reduce the deficit by…$0.”

The Freedom Caucus on Friday unveiled its initial spending demands for a possible debt ceiling increase, as the potential for default looms this summer. The proposal would cap discretionary spending at fiscal 2022 levels for 10 years, resulting in a $131 billion cut from current levels. Defense spending would be maintained at current levels.

LaBolt claimed that the proposal would also defund police and make the border less secure, turning around two accusations that Republicans have frequently lobbed at the Biden administration.

Such spending cuts would, according to LaBolt’s analysis, eliminate funding for 400 state, local and tribal police officers and several thousand FBI agents and personnel and “deny the men and women of Customs and Border Protection the resources they need to secure our borders.”

He also criticized the Freedom Caucus’s calls to end President Biden’s student loan forgiveness plan and to rescind unspent COVID-19 and Inflation Reduction Act funds, claiming they would increase prescription drug and energy costs and ship manufacturing jobs overseas.

The analysis also accused the group of hard-line conservatives of making plans that would actually increase the federal deficit by $114 billion, and allow “the wealthy and big corporations to continue to cheat on their taxes.” Biden’s $6.8 trillion budget released on Thursday included tax hikes on the wealthy.

LaBolt’s 20 percent number represents a slight adjustment from Biden’s claim on Friday that the plan would require a 25 percent cut in discretionary spending across the board.

“If what they say they mean, they’re going to keep the tax cuts from the last president … no additional taxes on the wealthy — matter of fact reducing taxes — and in addition to that, on top of that, they’re going to say we have to cut 25 percent of every program across the broad,” Biden said during remarks on the economy. “I don’t know what there’s much to negotiate on.”

House Freedom Caucus Chairman Scott Perry (R-Pa.) hit back at the president on Friday, accusing him of misrepresenting their proposal. “For him to mention things like firefighters, police officers and health care — obviously, either he didn’t watch the press conference, he can’t read, or someone is, you know, got their hand up his back and they’re speaking for him, because those are just abject lies,” Perry told The Hill. “It’s the same old, you know, smear-and-fear campaign by the Biden administration.” (Courtesy: CNN)

Indian Startups With Millions Of Dollars Stuck In Silicon Valley Bank Failure

Indian startups that have millions of dollars stuck with the troubled Silicon Valley Bank are waiting for business hours in the US to resume Monday and could withdraw all their money from the bank en masse. The only thing that could stop that is if the US government manages to find a buyer for the beleaguered bank, reports said.

Courtesy a maneuver of the US government on March 12th, businesses with accounts at Silicon Valley Bank (SVB) will have full access to their deposits, unlike a previous measure where only an insured amount of $250,000 would have been immediately accessible. As of December 2022, SVB had $209 billion in total assets and about $175 billion in total deposits.

SVB collapsed Friday morning after a stunning 48 hours in which a bank run and a capital crisis led to the second-largest failure of a financial institution in US history. The chaos instigated by high interest rates led to an old-fashioned bank run on Thursday, in which depositors yanked $42 billion from SVB.

When the FDIC took control of the bank Friday, it said it would pay customers their insured deposits on Monday, which only covers up to $250,000. But there’s a lot of money – and influence – at stake. SVB provided financing for almost half of US venture-backed technology and health care companies. At the end of 2022, the bank said it had $151.5 billion in uninsured deposits, $137.6 billion of which was held by US depositors.

Though a lot of money may have come out during the bank run and customers could receive some uninsured funds as the government liquidates SVB, they are still unsure if they can recover all their cash.

Fearing a larger fall out from the bank collapse, the United States government mobilized immediately in response to the collapse of Silicon Valley Bank (SVB) and Signature Bank, working over the weekend to insure depositors who had more than $200 billion of venture capital and high-tech start-up money stored in the two banks.

But unlike the 2008 financial crisis, during which Congress passed new legislation in order to salvage the country’s largest banks, the current rescue plan is smaller in scale, pertains to only two banks, and isn’t additional taxpayer money — for now.

In order to make sure depositors can still withdraw funds from their accounts — the vast majority of which exceeded the $250,000 limit for standard insurance from the Federal Deposit Insurance Corporation (FDIC) — regulators say they’re pulling from a special fund maintained by the FDIC called the deposit insurance fund (DIF).

“For the two banks that were put into receivership, the FDIC will use funds from the deposit insurance fund to ensure that all of its depositors are made whole,” a Treasury official told reporters on Sunday night. “In that case the deposit insurance funded is bearing the risk. This is not funds from the taxpayer.”

Where the money comes from

The money in the DIF comes from insurance premiums that banks are required to pay into it as well as interest earned on funds invested in U.S. bonds and other securities and obligations.

This is why some observers have been saying that the term “bailout” shouldn’t be used in reference to the current government intervention — because it’s bank money plus interest that’s being used to insure depositors, and it’s only being administered by the federal government.

But standing behind the DIF is the “the full faith and credit of the United States government,” according to the FDIC, meaning that if the DIF runs out of money or encounters a problem, the Treasury could call on taxpayers as a next resort.

This is not an impossibility. The DIF had a $125 billion balance as of the last quarter of 2022 and SVB reported $212 billion in assets in the same quarter. Treasury officials sounded confident on Sunday night the money in the DIF would be more than enough to cover SVB’s deposits.

The Fed steps in for backup

To settle fears of a potential shortfall, the Federal Reserve announced an additional line of credit known as a Bank Term Funding Program, offering loans of up to one year to banks, credit unions, and other types of depository institutions. For collateral, the Fed will take U.S. bonds and mortgage-backed securities, and the line of credit will be backed up by $25 billion from the Treasury’s $38 billion Exchange Stabilization Fund.

“Both of these steps are likely to increase confidence among depositors, though they stop short of an FDIC guarantee of uninsured accounts as was implemented in 2008,” analysts for Goldman Sachs wrote in a Sunday note to investors.

“The Dodd-Frank Act limits the FDIC’s authority to provide guarantees by requiring congressional passage of a joint resolution of approval, which is only marginally easier than passing a new legislation. Given the actions announced today, we do not expect near-term actions in Congress to provide guarantees,” they wrote.

Even as the US government scrambles to find a buyer for the bank, SVB’s UK arm was sold to HSBC for £1, the Bank of England and the British government announced Monday morning. Sheila Bair, former chairperson of the US Federal Deposit Insurance Corporation (FDIC) – which took over the bank after it was shut down –told the US press that finding a buyer for SVB was “the best outcome.”

India impact

While the British arm of SVB has managed to find a buyer in the UK, that is unlikely to calm Indian startups since they primarily have deposited their money with the US-based SVB, which is headquartered in New York.

The fallout of SVB’s collapse could be far-reaching. Startups may be unable to pay employees in the coming days and venture capital firms may be unable to raise funds. The tech industry is the biggest customer of SVB with a large number of Indian startups, especially in the SaaS (software as a service) sector that services US clients, having accounts at the bank.

Additional loans

Instead of a total government bailout that would have required taxpayer money, the United States’ Federal Reserve announced that it would make available additional loans to eligible depository institutions to help assure that banks have the ability to meet the needs of all their depositors.

A new entity called the Bank Term Funding Program (BTFP) will be created and it will offer loans of up to one year in length to banks, savings associations, credit unions, and other eligible depository institutions. Those taking advantage of the facility will be asked to pledge high-quality collateral such as Treasuries, agency debt and mortgage-backed securities.

While relatively unknown outside Silicon Valley, SVB was among the top 20 American commercial banks, with $209 billion in total assets at the end of last year, according to the FDIC. It’s the largest lender to fail since Washington Mutual collapsed in 2008.

$8.8 Bn Lost To Scams In 2022

The consumers in the US lost nearly $8.8 billion to scams in 2022, an increase of more than 30 per cent over the previous year, a new report has shown. According to the US Federal Trade Commission (FTC), consumers reported losing more money to investment scams — more than $3.8 billion — than any other category in 2022.

That amount more than doubles the amount reported lost in 2021.  Moreover, the report showed that imposter scams caused the second-highest loss amount — $2.6 billion, up from $2.4 billion in 2021.

Prizes, sweepstakes, lotteries, investment-related scams, and business and job opportunities rounded out the top five fraud categories.  Nearly 2.4 million consumers reported fraudulent activity on their accounts last year, most commonly imposter scams, followed by online shopping scams, the report said.

Earlier this month, the FTC released a similar report, saying romance scammers received a hefty payout last year, involving 70,000 victims who lost a combined $1.3 billion.

The report showed that romance scammers often use dating apps to target people looking for love.  Nearly 40 per cent of people who lost money to a romance scam last year, said the contact started on social media, while 19 per cent said it started on a website or app.

Many people mentioned that the scammer then quickly moved the conversation to WhatsApp, Google Chat or Telegram. (IANS)

When Is The US Recession Expected?

(AP) — A majority of the nation’s business economists expect a U.S. recession to begin later this year than they had previously forecast, after a series of reports have pointed to a surprisingly resilient economy despite steadily higher interest rates.

Fifty-eight percent of 48 economists who responded to a survey by the National Association for Business Economics envision a recession sometime this year, the same proportion who said so in the NABE’s survey in December. But only a quarter think a recession will have begun by the end of March, only half the proportion who had thought so in December.

The findings, reflecting a survey of economists from businesses, trade associations and academia, were released Monday.

A third of the economists who responded to the survey now expect a recession to begin in the April-June quarter. One-fifth think it will start in the July-September quarter.

The delay in the economists’ expectations of when a downturn will begin follows a series of government reports that have pointed to a still-robust economy even after the Federal Reserve has raised interest rates eight times in a strenuous effort to slow growth and curb high inflation.

In January, employers added more than a half-million jobs, and the unemployment rate reached 3.4%, the lowest level since 1969.

And sales at retail stores and restaurants jumped 3% in January, the sharpest monthly gain in nearly two years. That suggested that consumers as a whole, who drive most of the economy’s growth, still feel financially healthy and willing to spend.

At the same time, several government releases also showed that inflation shot back up in January after weakening for several months, fanning fears that the Fed will raise its benchmark rate even higher than was previously expected. When the Fed lifts its key rate, it typically leads to more expensive mortgages, auto loans and credit card borrowing. Interest rates on business loans also rise.

Tighter credit can then weaken the economy and even cause a recession. Economic research released Friday found that the Fed has never managed to reduce inflation from the high levels it has recently reached without causing a recession.

G-20 Finance Ministers To Address Global Economic Concerns In Bengaluru

(AP) Top financial leaders from the Group of 20 leading economies are gathering in Bengaluru this week to tackle myriad challenges to global growth and stability, including stubbornly high inflation and surging debt.

India is hosting the G-20 financial conclave for the first time in 20 years. Later in the year it will convene its first summit of G-20 economies. The meetings offer the world’s second most populous country a chance to showcase its ascent as an economic power and its status as a champion of developing nations.

The gathering of finance ministers and central bank governors takes place just a year after Russia invaded Ukraine, setting off a cascade of shocks to the world economy, chief among them decades-high inflation. U.S. Treasury Secretary Janet Yellen is expected to address the global economic impacts of the war while at the G-20 meetings.

India is among the countries treading lightly between the Western nations and Russia, eager to claim more global sway but wary of becoming embroiled in antagonisms as its economy benefits from purchases of discounted Russian crude oil.

“India has a growing leadership role globally,” Information Minister Anurag Thakur, said Wednesday, reiterating Indian Prime Minister Narendra Modi’s stance that “today’s era is not of war. Dialogues and discussions are the only way forward.”

As host of more than 200 G-20 meetings in 28 cities leading up to the summit in November, Modi is expected to use that role to burnish India’s stature as a leader in fighting climate change and to act as a bridge between the interests of industrialized nations and developing ones.

₹ 305 Crore Of Jewelry Seized From Joyalukkas

The Enforcement Directorate has seized assets worth ₹ 305.84 crore of the popular jewellery chain Joyalukkas on Friday, days after five of the company’s premises were raided by the probe agency. The ED has accused the jewellery chain of violating provisions of the Foreign Exchange Management Act.

The case relates to a huge amount of cash transferred to Dubai from India through Hawala channels and subsequently invested in Joyalukkas Jewellery LLC, Dubai which is 100 per cent owned by Joy Alukkas Verghese. On Tuesday, the company had withdrawn its ₹ 2,300 crore initial public offering or IPO saying it needed more time to incorporate substantial changes to its financial results.

The attached assets include 33 immovable properties valued at ₹ 81.54 crore consisting of land and a residential building in Shobha City, Thrissur. Three bank accounts valued at ₹ 91.22 lakh, three fixed deposits amounting to ₹ 5.58 crore and Joyalukkas shares worth 217.81 crores have also been seized by the Enforcement Directorate.

The company had plans to refile its IPO documents “at the earliest, subject to market conditions,” Chief Executive Baby George told Reuters on Tuesday, without elaborating further.

Post a comment The jewellery retailer, which focuses mainly on Southern India, is the latest to delay or pull its IPO plans amid market volatility and stubbornly high inflation. The company operates showrooms across roughly 68 cities.

US Supreme Court Hears Case On Students Loan Forgiveness

(AP) — The United States Supreme Court won’t have far to look if it wants a personal take on the “crushing weight” of student debt that underlies the Biden administration’s college loan forgiveness plan. Justice Clarence Thomas was in his mid-40s and in his third year on the nation’s highest court when he paid off the last of his debt from his time at Yale Law School.

Thomas, the court’s longest-serving justice and staunchest conservative, has been skeptical of other Biden administration initiatives. And when the Supreme Court hears arguments Tuesday involving President Joe Biden’s debt relief plan that would wipe away up to $20,000 in outstanding student loans, Thomas is not likely to be a vote in the administration’s favor.

But the justices’ own experiences can be relevant in how they approach a case, and alone among them, Thomas has written about the role student loans played in his financial struggles.

A fellow law school student even suggested Thomas declare bankruptcy after graduating “to get out from under the crushing weight of all my student loans,” the justice wrote in his best-selling 2007 memoir, “My Grandfather’s Son.” He rejected the idea.

It’s not clear that any of the other justices borrowed money to attend college or law school or have done so for their children’s educations. Some justices grew up in relative wealth. Others reported they had scholarships to pay their way to some of the country’s most expensive private institutions.

Picture : TheUNN

Of the seven justices on the court who are parents, four have signaled through their investments that they don’t want their own children to be saddled with onerous college debt, and have piled money into tax-free college savings accounts that might limit any need for loans.

Chief Justice John Roberts and Justice Neil Gorsuch have the most on hand, at least $600,000 and at least $300,000, respectively, according to annual disclosure reports the justices filed in 2022. Each has two children.

Justices Amy Coney Barrett, who has seven children, and Ketanji Brown Jackson, who has two, also have invested money in college-savings accounts, in which any earnings or growth is tax free if spent on education. None of the justices would comment for this story, a court spokeswoman said.

Thomas wrote vividly about his past money woes in his up-from-poverty story, recounting how a bank once foreclosed on one of his loans because repayment and delinquency notices were sent to his grandparents’ house in Savannah, Georgia, instead of Thomas’ home at the time in Jefferson City, Missouri.

Thomas was able to take out another loan to repay the bank only because his mentor, John Danforth, then-Missouri attorney general and later a U.S. senator, vouched for him.

Thomas noted that he signed up for a tuition postponement program at Yale in which a group of students jointly paid for their outstanding loans according to their financial ability, with those earning the most paying the most.

At the time, Thomas’ first wife, Kathy, was pregnant. “I didn’t know what else to do, so I signed on the dotted line, and spent the next two decades paying off the money I borrowed during my last two years at Yale,” Thomas wrote.

When he was first nominated to be a federal judge in 1989, Thomas reported $10,000 in outstanding student loans, according to a news report at the time. The Biden administration has picked the same number as the amount of debt relief most borrowers would get under its plan.

Personal experience can shape the justices’ questions in the courtroom and affect their private conversations about a case, even if it doesn’t figure in the outcome.

“It is helpful to have people with life experiences that are varied just because it enriches the conversation,” Justice Sonia Sotomayor has said. Sotomayor, like Thomas, also grew up poor. She got a full scholarship to Princeton as an undergraduate, she has said, and went on to Yale for law school, as Thomas did.

Keeping people from avoiding the kinds of difficult choices Thomas faced is a key part of the administration’s argument for loan forgiveness. The administration says that without additional help, many borrowers will fall behind on their payments once a hold in place since the start of the coronavirus pandemic three years ago is lifted, no later than this summer.

Under a plan announced in August but so far blocked by federal courts, $10,000 in federal loans would be canceled for people making less than $125,000 or for households with less than $250,000 in income. Recipients of Pell Grants, who tend to have fewer financial resources, would get an additional $10,000 in debt forgiven.

The White House says 26 million people already have applied and 16 million have been approved for relief. The program is estimated to cost $400 billion over the next three decades.

The legal fight could turn on any of several elements, including whether the Republican-led states and individuals suing over the plan have legal standing to go to court and whether Biden has the authority under federal law for so extensive a loan forgiveness program.

Nebraska and other states challenging the program argue that far from falling behind, 20 million borrowers would get a “windfall” because their entire student debt would be erased, Nebraska Attorney General Michael Hilgers wrote in the states’ main Supreme Court brief.

Which of those arguments resonate with the court may become clear on Tuesday.

When she was dean of Harvard Law School, Justice Elena Kagan showed her own concern about the high cost of law school, especially for students who were considering lower-paying jobs.

Kagan established a program that would allow students to attend their final year tuition-free if they agreed to a five-year commitment to work in the public sector. While that program no longer exists, Harvard offers grants to students for public service work.

At the time the program was created, Kagan said she wanted students to be able to go to work where they “can make the biggest difference, but that isn’t the case now.” Instead, she said: “They often go to work where they don’t want to work because of the debt burden.”

Ajay Banga Nominated By Biden To Lead World Bank

President Joe Biden has nominated a former boss of Mastercard with decades of experience on Wall Street to lead the World Bank and oversee a shake-up at the development organization to shift its focus to the climate crisis.

Ajay Banga, an American citizen born in India, comes a week after David Malpass, a Donald Trump appointee, quit the role. The World Bank’s governing body is expected to make a decision in May, but the US is the Washington-based organisation’s largest shareholder and has traditionally been allowed to nominate without challenge its preferred candidate for the post.

Malpass, who is due to step down on 30 June, was nominated by Trump in February 2019 and took up the post officially that April. He is known to have lost the confidence of Biden’s head of the US Treasury, Janet Yellen, who with other shareholders wanted to expand the bank’s development remit to include the climate crisis and other global challenges.

Ajay Banga, former president and CEO of Mastercard and current vice chairman of the private equity firm General Atlantic, is Biden’s nomination as the next president of the World Bank.

Biden, in a statement Thursday, called Banga – a native of India and former chairman of the International Chamber of commerce – “uniquely equipped” to lead the World Bank, a global development institution that provides grants and loans to low-income countries to reduce poverty and spur development.

Biden touted Banga’s work leading global companies that brought investment to developing economies and his record of enlisting the public and private sectors to “tackle the most urgent challenges of our time, including climate change.”

The Biden administration is looking to recalibrate the focus of the World Bank to align with global efforts to reduce climate change.

Malpass, nominated by former President Donald Trump, still had a year remaining on his five-year term as president. Malpass came under fire when he said, “I’m not a scientist,” when asked at a New York Times event in September whether he accepts the overwhelming scientific evidence that the burning of fossil fuels has caused global temperatures to rise. Former Vice President Al Gore, who called Malpass a “climate denier,” was among several well-known climate activists to call for his resignation.

Banga was the top executive at Mastercard from 2010 to 2020. He has served as a co-chair of Vice President Kamala Harris’ Partnership for Central America, which has sought to bring private investment to the region.

Treasury Secretary Janet Yellen applauded Biden’s pick. She said Banga understands the World Bank’s goals to eliminate poverty and expand prosperity are “deeply intertwined with challenges like meeting ambitious goals for climate adaptation and emissions reduction, preparing for and preventing future pandemics, and mitigating the root causes and consequences of conflict and fragility.”

Banga still needs confirmation by the bank’s board to become president. It’s unclear whether there will be additional nominees from other nations.

Facing Economic Headwinds, AAHOA Members Urge Continued Support of Hotel Industry

Laura Lee Blake, President & CEO of the Asian American Hotel Owners Association (AAHOA), released the following statement in response to ongoing reports that economic headwinds could force more hotel owners into serious financial challenges, including bankruptcies – such as a recent filing by a leading Burger King Franchisee – and out-of-court restructurings this year:

“Our members have taken extraordinary steps over the past three years, and, in numerous cases, counted on pandemic relief aid to weather the worst of COVID-19. Many continue to operate on thin margins with smaller workforces. The tight labor market has made it difficult to hire.

“Hotels and other small businesses are the backbone of local economies, and AAHOA Members – the vast majority of whom are first- and second-generation immigrants – are resilient. However, staffing shortages, rising interest rates, and the possibility of a recession this year, even a mild one, are creating further strain on an industry that is still struggling to recover from a devastating pandemic.

Picture : Hospitality Net

The Chapter 11 bankruptcy filing by TOMS King reminds us that small businesses, including restaurants and hotels, continue to suffer long-term impacts from COVID-19 and an overall uncertain economic environment with high inflation and labor shortages. As President Biden noted in his State of the Union speech this week, the entrepreneurial spirit is very much alive with a record number of Americans starting small businesses. But the outlook for many of those businesses remains cloudy.

“AAHOA Members need certainty and continued federal assistance while these economic headwinds rage. While restaurateurs received grants from the Restaurant Revitalization Fund, hoteliers have not seen the same support. Many need solutions to address, among other things, the pending payments due on COVID-19 Economic Injury Disaster Loans (EIDLs) by waiving interest and/or deferring for another year.

“Additionally, the government should lift constraints on H2-B visas by expanding eligibility to include India so there are options available for addressing employers’ needs for additional seasonal workers. Finally, for all franchisees, the Federal Trade Commission should thoughtfully review the Franchise Rule, including extending the Rule beyond the presale disclosure to protect small-business owners’ investments. AAHOA Members also support the 12 Points of Fair Franchising to promote long-term, mutually beneficial relationships between Franchisors and Franchisees that will help sustain the franchise business model and grow the hospitality sector.”

AAHOA is the largest hotel owners association in the world, with Member-owned properties representing a significant part of the U.S. economy. AAHOA’s 20,000 members own 60% of the hotels in the United States and are responsible for 1.7% of the nation’s GDP. More than one million employees work at AAHOA member-owned hotels, earning $47 billion annually, and member-owned hotels support 4.2 million U.S. jobs across all sectors of the hospitality industry. AAHOA’s mission is to advance and protect the business interests of hotel owners through advocacy, industry leadership, professional development, member benefits, and community engagement.

Stocks Tumbles 20% After US Research Group Accuses Adani Group Of Stock Manipulation

Shares of Adani Enterprises plunged on Friday as a scathing report by a US-based short seller triggered a massive selloff in the conglomerate’s listed firms, casting doubts on the company’s record $2.45 billion secondary offering, reported news agency Reuters.

The selloff in Adani’s corporate empire accelerated on Friday, erasing more than $50 billion of market value in less than two sessions as Asia’s richest man struggles to contain the fallout, reported news agency Bloomberg.

Adani Group’s share prices of its seven listed companies nosedived last week, after Hindenburg Research stated that it assumed a short position, in particular securities of the conglomerate. In response, Adani Group dismissed the allegations as ‘baseless’, termed the report as ‘malicious combination of selective misinformation and stale,’ and is contemplating legal action against the American investor.

“If Adani is serious, it should also file suit in the U.S. where we operate. We have a long list of documents we would demand in a legal discovery process,” Hindenburg said while also asserting that it fully stands by its findings.

As per reports, Hindenburg Research said that the company hasn’t addressed a single substantive issue raised in the 32,000-word report. “At the conclusion of our report, we asked 88 straightforward questions that we believe give the company a chance to be transparent. Thus far, Adani has answered none of these questions,” the short seller has reportedly said.

The report alleges that the Indian group, headed by Asia’s richest man, Gautam Adani, had engaged in brazen stock manipulation and accounting fraud. It contains details of the Adani family’s alleged shell companies in tax havens across Mauritius, the United Arab Emirates, and the Caribbean, established for facilitating money laundering and tax evasion through siphoning money from the group’s listed entities.

Following the accusations, Adani Transmission shares crashed above 19 percent and Adani Gas tumbled 19.1 percent in their biggest downward trajectory since March 2020, while Adani Green Energy depreciated around 16 percent on the BSE during today’s early trading session. The share prices of Ambuja Cements, NDTV, and ACC, the Indian conglomerate’s recent acquisitions, also declined 7.71 percent, 4.98 percent, and 7.26 percent respectively, on Wednesday, according to reports.

The Adani Group announced on Jan 26, 2023, that it is considering taking legal action against Hindenburg Research for a report from January 23, 2023, that accused the Indian conglomerate of “brazen stock manipulation and accounting fraud scheme.”

Jatin Jalundhwala, legal head for Adani Group, said, “The maliciously mischievous, unresearched report published by Hindenburg Research on 24 Jan 2023 has adversely affected the Adani Group, our shareholders and investors.”

The report was released ahead of the Rs 20,000 crore follow-on public offer (FPO) by Adani Enterprises, the flagship company of the Adani Group. The FPO had raised Rs 5,984.9 crore from 33 anchor investors on Wednesday.

A foreign brokerage house has said that Indian banks have an exposure of Rs 81,200 crore to Adani Group, whose group debt is Rs 2 lakh crore (about $24 billion), according to media reports.

Analysts said the listed Adani firms lost more than Rs 3 lakh crore in market capitalisation on Friday and more than Rs 4.10 lakh crore since Wednesday.

The three companies recently acquired by the Adani group — Ambuja Cement, ACC and NDTV — also wilted. The tycoon has seen over $7 billion of his personal wealth wiped out since the start of the year, according to the Bloomberg Billionaires’ Index which has yet to factor in last week’s meltdown.

India Continues As World’s Fastest-Growing Economy With 5.8% Growth Rate

United Nations– India will remain the fastest-growing major economy recording a growth of 5.8 per cent this year, while the rest of the world will grow by a paltry 1.9 per cent, the UN said on Thursday.

The UN’s World Economic Situation and Prospects (WESP) report sliced off 0.2 per cent from the 6 per cent gross domestic product growth projection made last May without affecting India’s rank as the country faces headwinds from the global economy.

Overall, the report said: “Growth in India is expected to remain strong at 5.8 per cent, albeit slightly lower than the estimated 6.4 per cent in 2022, as higher interest rates and a global slowdown weigh on investment and exports.” Next year, the UN expects India’s economy to grow by 6.7 per cent.

Picture : Rediff.com

The WESP gave a positive picture of India’s jobs scene, noting that its “unemployment rate dropped to a four-year low of 6.4 per cent in India, as the economy added jobs both in urban and rural areas in 2022”. For the world, the WESP forecast is 1.9 per cent this year and rising to 2.7 per cent next year.

In New Delhi, India’s President Droupadi Murmu credited India’s economic performance to “its leadership. India has been among the fastest-growing major economies because of the timely and proactive interventions of the government. The ‘Aatmanirbhar Bharat’ initiative, in particular, has evoked great response among the people at large,” Murmu said in her Republic Day speech.

China, which came in second, is projected to grow by 4.8 per cent this year and 4.5 next year, after a 3% growth in 2022. The US economy, which grew by 2.9% this year is projected to grow by 0.4% this year and 1.7 per cent the next.

For South Asia as a whole, the report said the region’s “economic outlook has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities” and it forecast a 4.8 percent growth year and 5.9 percent next year.

This was buoyed by India as the report said: “The prospects are more challenging for other economies in the region. Bangladesh, Pakistan, and Sri Lanka sought financial assistance from the International Monetary Fund (IMF) in 2022.”

Rashid attributed the Indian economy’s growth to three factors: falling unemployment that signals strong domestic demand; easing of inflation, and lower import bills.

He said that the “unemployment rate has come down significantly in the last four years” to 6.4 per cent and “that means the domestic demand has been pretty strong”.

The WESP said that this occurred because “the economy added jobs both in urban and rural areas in 2022”.

“The inflation pressure also has eased quite significantly,” Rashid said with the year-on-year inflation rate to be 5.5 per cent this year and 5 per cent next year.

“That means that the central bank would not have to be aggressive over monetary tightening,” he said.

India has also benefitted to from lower imports, especially energy import cost that has been lower than in previous years, he added.

“I think this is a sustainable growth rate for India, given India also has a significant number of people living in poverty. So this would be a great boost if India can sustain this growth rate in the near term,” Rashid said.

He also pointed to two risk factors for India’s economy mainly emanating from the global situation.

One is from higher interest rates that would raise the debt servicing cost which has exceeded 20 per cent of the budget, he said.

“That is a significantly high debt servicing cost and that would probably have some drag on the growth prospect,” he said.

The second risk is from global external demands falling.

If Europe and the US go into a very slow growth mode resulting in lower global exports, the world economy may suffer, Rashid said.

“But on the balance, we believe that Indian economy is on a strong footing given the strong domestic demand in the near term,” he said.

For South Asia as a whole, the report said the region’s “economic outlook has significantly deteriorated due to high food and energy prices, monetary tightening and fiscal vulnerabilities” and it forecast a 4.8 per cent growth year and 5.9 per cent next year.

This was buoyed by India as the report said, “The prospects are more challenging for other economies in the region. Bangladesh, Pakistan and Sri Lanka sought financial assistance from the International Monetary Fund (IMF) in 2022.”

Bangladesh, Pakistan and Sri Lanka have gone to the International Monetary Fund for help. Rashid said, “We call for greater international support in this difficult time for countries, especially countries that are facing significant challenges with debt burden and again we call for more meaningful restructuring of debt.”

“It might be more prudent and may make more economic sense to re-profile the debt, reschedule the debt, (the) external debt burden,” he said. But he said that the assistance should not go into consumption, but into investment in “productive capacity (that) can be very important driver of both short-term recovery and long-term resilience”.

Richest 1% Have Two-Thirds Of New Wealth Created In The Last Two Years

Over the last two years, the richest 1% of people have accumulated close to two-thirds of all new wealth created around the world, a new report from Oxfam says.

A total of $42 trillion in new wealth has been created since 2020, with $26 trillion, or 63%, of that being amassed by the top 1% of the ultra-rich, according to the report. The remaining 99% of the global population collected just $16 trillion of new wealth, the global poverty charity says.

“A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 percent,” the report, released as the World Economic Forum kicks off in Davos, Switzerland, reads.

It suggests that the pace at which wealth is being created has sped up, as the world’s richest 1% amassed around half of all new wealth over the past 10 years.

Oxfam’s report analyzed data on global wealth creation from Credit Suisse, as well figures from the Forbes Billionaire’s List and the Forbes Real-Time Billionaire’s list to assess changes to the wealth of the ultra-rich.

The research contrasts this wealth creation with reports from the World Bank, which said in October 2022 that it would likely not meet its goal of ending extreme poverty by 2030 as the Covid-19 pandemic slowed down efforts to combat poverty.

Gabriela Bucher, executive director of Oxfam International, called for taxes to be increased for the ultra-rich, saying that this was a “strategic precondition to reducing inequality and resuscitating democracy.”

In the report’s press release, she also said changes to taxation policies would help tackle ongoing crises around the world.

“Taxing the super-rich and big corporations is the door out of today’s overlapping crises. It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else,” Bucher said.

Coinciding crises around the world that feed into each other and produce greater adversity together than they would separately are also referred to as a “polycrisis.” In recent weeks, researchers, economists and politicians have suggested that the world is currently facing such a crisis as pressures from the cost-of-living crisis, climate change, and other pressures are colliding

5% Of Indians Own More Than 60% Of The Country’s Wealth

Just 5% of Indians own more than 60% of the country’s wealth, while the bottom 50% possess only 3% of wealth, according to Oxfam India’s latest report ‘Survival of the Richest: The India story’, which will be released today at the World Economic Forum in Davos.

An appeal

Oxfam India, an NGO that works in the sectors of child education, women empowerment and addressing inequality, through this report, seeks to urge the Union finance minister to implement progressive tax measures, such as wealth tax, in the upcoming Union Budget, it said in a press statement.

India currently does not have any wealth tax – which essentially refers to tax levied on one’s entire property in all forms.

India used to have a system under which a tax was levied at 1% on the net wealth in excess of Rs 30 lakh under the Wealth Tax Act 1957 – which was abolished in 2015. The taxation system, however, was not progressive in nature, as it did not have any slabs to ensure that the percentage of tax increased with an increase in wealth beyond the flat mark of Rs 30 lakh.

India’s richest

The total number of billionaires in India increased from 102 in 2020 to 166 billionaires in 2022.

The report highlights that the combined wealth of India’s 100 richest has touched $660 billion (Rs 54.12 lakh crore) – an amount that could fund the entire Union Budget for more than 18 months.

“While the poor face severe hardships, the wealth of the top 10 richest in India stands at Rs 27.52 lakh crore ($335.7 billion) – an increase of around 32.8% compared to 2021,” the statement said.

The wealth of the top 10 richest can finance the Ministry of Health and Family welfare and Ministry of Ayush for more than 30 years, India’s Union education budget for 26 years, or can fund MGNREGA for 38 years, it said.

Factors That Could Determine How 2023 Shapes Up For Global Equity Markets

Optimists may point out that the rate-hiking peak is on the horizon, possibly in March, with money markets expecting the Fed to switch into rate-cutting mode by the end of 2023. A Bloomberg News survey found 71 per cent of top global investors expect equities to rise in 2023.

Vincent Mortier, chief investment officer at Amundi, Europe’s largest money manager, recommends defensive positioning for investors going into the New Year. He expects a bumpy ride in 2023 but reckons “a Fed pivot in the first part of the year could trigger interesting entry points”.

But after a year that blindsided the investment community’s best and brightest, many are bracing for further reversals. One risk is that inflation stays too high for policymakers’ comfort and rate cuts don’t materialise. A Bloomberg Economics model shows a 100 per cent probability of recession starting by August, yet it looks unlikely central banks will rush in with policy easing when faced with cracks in the economy, a strategy they deployed repeatedly in the past decade.

“Policymakers, at least in the US and Europe, now appear resigned to weaker economic growth in 2023,” Deutsche Bank Private Bank’s global chief investment officer Christian Nolting told clients in a note. Recessions might be short but “will not be painless”, he warned.

Big tech troubles

A big unknown is how tech mega-caps fare, following a 35 per cent slump for the Nasdaq 100 in 2022. Companies such as Meta Platforms Inc. and Tesla Inc. have shed some two-thirds of their value, while losses at Amazon.com Inc. and Netflix Inc. neared or exceeded 50 per cent.

Expensively-valued tech stocks do suffer more when interest rates rise. But other trends that supported tech’s advance in recent years may also go into reverse – economic recession risks hitting iPhone demand while a slump in online advertising could drag on Meta and Alphabet Inc.

In Bloomberg’s annual survey, only about half the respondents said they would buy the sector – selectively.

“Some of the tech names will come back as they have done a great job convincing customers to use them, like Amazon, but others will probably never reach that peak as people have moved on,” Kim Forrest, chief investment officer at Bokeh Capital Partners, told Bloomberg Television.

Earnings recession

Previously resilient corporate profits are widely expected to crumble in 2023, as pressure builds on margins and consumer demand weakens.

“The final chapter to this bear market is all about the path of earnings estimates, which are far too high,” according to Morgan Stanley’s Mike Wilson, a Wall Street bear who predicts earnings of $180 per share in 2023 for the S&P 500, versus analysts’ expectations of $231.

The upcoming earnings recession may rival 2008, and markets are yet to price it in, he said.

China, a turning point

Beijing’s early-December decision to dismantle stringent Covid curbs seemed like a turning point for MSCI’s China Index, whose 24 per cent drop was a major contributor to global equity market losses in 2022.

Options boom

Technicals are increasingly driving day-to-day equity moves, with the S&P 500 witnessing below-average stock turnover in 2022, but explosive growth in very short-term options trading.

Professional traders and algorithmic-powered institutions have piled into such options, which were until recently dominated by small-time investors. That can make for bumpier markets, causing sudden volatility outbreaks such as the big intraday swing after October’s hot US inflation print.

Finally, with the S&P 500 failing to break out from its 2022 downtrend, short-term speculation remains skewed to the downside. But should the market turn, it will add fuel to the rebound.

India’s Billionaire Club Shrinks To 120, Gautam Adani Tops Rich List

In comparison, Ambani, who topped the list last year, has seen a 2.5 per cent decline in his family’s net worth to $101.75 billion from $104.4 billion a year ago

The year 2022 saw many lose the ‘billionaire’ tag, though some of the richest Indian promoters have become even richer. According to the report, the number of promoters with a net worth of over $1 billion has declined to 120 this year from an all-time high of 142 at the end of 2021.

Picture : Bussiness Standard

The billionaire promoters’ combined wealth is down 8.8 percent to around $685 billion ( ₹56.5 trillion) from $751.6 billion ( ₹56.62 trillion) a year ago, said the report, although it added that the fall in rupee terms is not significant owing to the currency depreciating against the US dollar.

Gautam Adani has been an outperformer in 2022, replacing Mukesh Ambani as India’s richest person. Adani’s net worth stands at $135.7 billion, up 69.6 percent from $80 billion last year, it said, citing Bloomberg data, that also highlights that he is also the richest person in Asia and third-richest in the world.

Meanwhile, Ambani has seen a 2.5 percent decline in his family’s net worth to $101.75 billion from $104.4 billion a year ago, added the report.

In fact, only three of the top 10 billionaires – Adani, Dilip Shanghvi of Sun Pharma, and Sunil Mittal of Bharti Airtel – saw an increase in the net worth this year, as per the report.

Mittal’s gains can be attributed to a rise of Bharti Airtel, which benefited from tariff hikes announced by mobile services operators, clarity over regulatory issues, and a stable business environment, mentioned the report.

While, gains for Shanghvi were driven by factors like an improved performance of Sun Pharma, which benefited from a better show in its specialty business in North America and growth in its India formulations business, added BS.

Radhakishan Damani of Avenue Supermarts (DMart), who is India’s third-richest promoter, saw a 21 percent decline in the net worth at $23.8 billion in 2022.

Other promoters in the top 10 list include Shiv Nadar of HCL Technologies, Azim Premji of Wipro and Uday Kotak of Kotak Mahindra Bank.

World Economy To Face More Pain In 2023 After A Gloomy Year

After the Covid-induced economic crisis of 2020, consumer prices began to rise in 2021 as countries emerged from lockdowns or other restrictions  This was supposed to be the comeback year for the world economy following the Covid pandemic.

Instead, 2022 was marked by a new war, record inflation and climate-linked disasters. It was a “polycrisis” year, a term popularized by historian Adam Tooze. Get ready for more gloom in 2023.

Picture : The Grocer

“The number of crises has increased since the start of the century,” said Roel Beetsma, professor of macroeconomics at the University of Amsterdam “Since World War Two we have never seen such a complicated situation,” he told AFP.

After the Covid-induced economic crisis of 2020, consumer prices began to rise in 2021 as countries emerged from lockdowns or other restrictions.

Central bankers insisted that high inflation would only be temporary as economies returned to normal. But Russia’s invasion of Ukraine in late February sent energy and food prices soaring.

Many countries are now grappling with cost-of-living crises because wages are not keeping up with inflation, forcing households to make difficult choices in their spending.

“Everything has become more expensive, from cream to wine and electricity,” said Nicole Eisermann from her stand at the Frankfurt Christmas market.

Central banks played catch-up. They started to raise interest rates this year in an effort to tame galloping inflation — at the risk of tipping countries into deep recessions, since higher borrowing costs mean slower economic activity. Inflation has finally started to slow down in the United States and the eurozone.

Careful spending

Consumer prices in the Group of 20 developed and emerging nations are expected to reach eight percent in the fourth quarter before falling to 5.5 percent next year, according to the Organisation for Economic Cooperation and Development.

The OECD encourages governments to provide aid to bring relief to households.

In the 27-nation European Union, 674 billion euros ($704 billion) have been earmarked so far to shield consumers from high energy prices, according to the Bruegel think tank.

Germany, Europe’s biggest economy and the most dependent on Russia energy supplies, accounts for 264 billion euros of that total.

One in two Germans say they now only spend on essential items, according to a survey by EY consultancy.

“I am very careful but I have a lot of children and grandchildren,” said Guenther Blum, a shopper at the Frankfurt Christmas market.

Rising interest rates have also hurt consumers and businesses, though US Federal Reserve chairman Jerome Powell signalled last week that the pace of hikes could ease “as soon as” December.

He warned, however, that policy will probably have to remain tight for some time to restore price stability.

For her part, European Central Bank president Christine Lagarde sent a clear signal that the ECB would maintain its tightening policy, saying that eurozone inflation had yet to peak.

Economists expect Germany and another major eurozone economy, Italy, to fall into recession. Britain’s economy is already shrinking. Rating agency S&P Global foresees stagnation for the eurozone in 2023.

But the International Monetary Fund still expects the world economy to expand in 2023, with growth of 2.7 percent. The OECD is forecasting 2.2-percent growth.

The coronavirus pandemic, meanwhile, remains a wildcard for the global economy.

China’s zero-Covid policy restrained growth in the world’s second biggest economy, but the authorities have started to relax restrictions following nationwide protests.

Climate costs

But for Beetsma, the biggest crisis is climate change, which is “happening in slow motion”.

Natural and man-made catastrophes have caused $268 billion in economic losses so far in 2022, according to reinsurance giant Swiss Re. Hurricane Ian alone cost an estimated insured loss of $50-65 billion. Floods in Pakistan resulted in $30 billion in damage and economic loss this year.

Governments agreed at United Nations climate talks (COP27) in Egypt in November to create a fund to cover the losses suffered by vulnerable developing countries devastated by natural disasters.

But the COP27 summit ended without new commitments to phase out the use of fossil fuels, despite the need to cut greenhouse gas emissions and slow global warming.

“It is not an acute crisis but a very long-term crisis, protracted,” Beetsma said. “If we don’t do enough this will hit us in unprecedented scale.” (This story has not been edited by thenn.com  staff and is auto-generated from a syndicated feed.)

After Mass Layoffs, Facebook Offers Immigration Help To H-1B Visa Holders

As large-scale layoffs begin at Facebook’s parent company Meta, employees on work visas such as H-1Bs are now faced with uncertainty over their immigration status, with CEO Mark Zuckerberg acknowledging “this is especially difficult if you’re here on a visa” and offering support to those impacted.

Meta announced that it is laying off 11,000 employees or 13 per cent of its workforce, with Zuckerberg describing it as “some of the most difficult changes we’ve made in Meta’s history.” US-based technology companies hire a large amount of H-1B workers, the majority of whom come from countries such as India.

The H-1B visa is a non-immigrant visa that allows US companies to employ foreign workers in speciality occupations that require theoretical or technical expertise. Technology companies depend on it to hire tens of thousands of employees each year from countries like India and China.

“I’ve decided to reduce the size of our team by about 13 per cent and let more than 11,000 of our talented employees go. We are also taking a number of additional steps to become a leaner and more efficient company by cutting discretionary spending and extending our hiring freeze through Q1,” Zuckerberg said in a letter to employees.

“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,” he said.

Acknowledging that “there is no good way to do a layoff”, Zuckerberg said the company hopes to get all the relevant information to those impacted as quickly as possible and then do whatever it can to support them through this.

Among the measures being put in place by the company in the US to help those impacted by the layoffs is “immigration support”.

“I know this is especially difficult if you’re here on a visa. There’s a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration specialists to help guide you based on what you and your family need,” he said.

H-1B visa holders can stay and work in the US for a period of three years, extended by another three years.

They are then required to leave the country unless their employee sponsors them for permanent residency, known as the Green Card, the backlog for which runs into decades. If H-1B visa holders lose their jobs, they only have a “grace period” of 60 days to find an employee willing to sponsor their H-1B, failing which they will be required to leave the US.

A Washington-based reporter Patrick Thibodeau wrote on Twitter Monday that “Facebook layoffs may hit H-1B workers hard. Facebook is classified as H-1B “dependent,” meaning 15 per cent or more of its workforce is on the visa. When visa holders lose their job, they may have to leave the US if they don’t quickly find a new employer sponsor.” Other support measures announced by Meta include severance pay for 16 weeks of base pay plus two additional weeks for every year of service, with no cap; coverage of healthcare cost for people and their families for six months and three months of career support with an external vendor, including early access to unpublished job leads.

He said outside the US, support will be similar, and the company will follow up soon with separate processes that take into account local employment laws.

In his explanation of how the company got to the point where it had to undertake such drastic cost-cutting measures, Zuckerberg said the world rapidly moved online at the start of the Covid pandemic and the surge of e-commerce led to outsized revenue growth.

“Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected,” he said.

Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused Meta’s revenue to be much lower than he had expected. “I got this wrong, and I take responsibility for that,” he said.

Zuckerberg said in the new environment, the company needs to become more capital efficient.

“We’ve shifted more of our resources onto a smaller number of high-priority growth areas – like our AI (Artificial Intelligence) discovery engine, our ads and business platforms, and our long-term vision for the metaverse.

“We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go,” he said.

Stock Market Rally After Inflation Report Shows High Prices May Ease

Stocks surged in their biggest rally in two years last week, after a better-than-expected inflation report showed that the galloping price increases that consumers have endured all year are beginning to slow.

The Dow Jones Industrial Average rose 1200 points, or more than 3.7%, over the course of the day to close at 33,715.37, the highest since the middle of August. The Nasdaq soared more than 7% and the S&P 500 more than 5%.

Consumer prices in October were 7.7% higher than a year ago, according to the Labor Department. That’s a slower pace of inflation than September’s 8.2% rate. It’s also the smallest year-on-year increase in prices since January.

And the price hikes between September and October were significantly smaller than forecasters had expected.

Wall Street greeted the report as as a sign that the Federal Reserve may ease up on the gas in its current drive to contain inflation.

The Fed has been raising interest rates aggressively in an effort to tamp down demand and bring prices under control. After ordering jumbo rate hikes of 0.75 percentage points at each of its last four meetings, the Fed is widely expected to adopt a smaller increase of 0.5 points when policymakers next meet in December.

Wall Street analysts said that Thursday’s inflation reading will give the central bank good reason to go with a smaller hike.

Excluding volatile food and energy costs, annual inflation was 6.3% in October — down from 6.6% the month before.

Housing costs accounted for nearly half the monthly price increase, but rents showed their smallest increase in five months. Food costs rose at the slowest pace in 10 months. Gasoline prices rose 4% in October but remain well below their peak price in early summer.

“Today’s report shows that we are making progress on bringing inflation down,” President Biden said in a statement. “It will take time to get inflation back to normal levels – and we could see setbacks along the way – but we will keep at it and help families with the cost of living.”

While prices still rose a swift 7.7 percent over the past 12 months, the annual inflation rate was less than the 7.9 percent expected by economists and lower than the 8.2 percent rate seen in September. The 0.4 percent monthly increase in the consumer price index was also less than the 0.6 percent increase that economists had projected.

Inflation is still near levels not seen since the 1980s and hindering American households. Prices that have already shot up are continuing to rise for food, shelter and other basic needs, pinching the economy along the way.

But the October decline in inflation brought some relief to those struggling to get by.

Used car prices

One of the first pockets of the economy hit by the inflation surge is finally seeing prices come down.

“The run-up in prices for used cars is now unwinding as supply of cars is recovering and demand is hit hard by higher interest rates,” wrote Preston Caldwell, head of U.S. economics for Morningstar Research Services, in a Thursday analysis.

Prices for used cars and trucks fell 2.4 percent in October alone, marking the fourth straight month of declines. While prices are still far above pre-pandemic levels, Americans searching for a used car or truck may finally see relief after months of shortages and supply chain snarls.

Used car and truck prices soared throughout much of 2020 and 2021 as supply chain issues and shortages hindered automobile manufacturing around the world. But supply chains made progress in recovery, making it easier for buyers to trade in older cars for new ones.

Cheaper household supplies

Prices for a wide range of basic household goods fell in October as consumers spent more time bargain-hunting and less money on items once in higher demand.

Picture : WAMU

Household supplies and furnishings fell 0.2 percent in October broadly, with prices for appliances, dishware, furniture and bedding falling sharply. Many of these goods were popular among locked-down American households during the depths of the pandemic and limited by supply chain dysfunction, which boosted their prices.

“Retail promotions are a huge opportunity in inflation. Maybe it’s adjusting your promotions, eliminating profit-draining promotions altogether, or addressing lumpy inventory issues,” said Matt Pavich, senior director at consulting firm Revionics.

“Retailers are looking at all of their options right now to correct issues earlier in the supply chain,” he continued. “Pricing is the fastest lever to do this.”

Clothing and accessories

Prices for apparel dropped 0.7 percent in October after rising 4.1 percent over the past year. The biggest drops came in prices for jewelry, infant and toddler clothes, women’s outerwear and men’s formalwear.

The decline in apparel prices comes before a holiday shopping season that will be closely watched by economists for signs of fading consumer power.

The National Retail Federation expects spending from Nov. 1 to Dec. 31 could total as much as $960 billion, which would shatter records. Sales rose 13.5 percent between 2020 and 2021, but the group expects that pace of growth to slow after a booming year for the sector.

Household gas

Households with heating or cooking gas may have caught a break in October as prices for utility gas service plunged 4.6 percent. It was one of the few parts of the energy sector to see prices drop in October, a month when fuel oil prices shot up nearly 20 percent and gasoline prices rose 4 percent.

High prices for oil and gas have been one of the major forces behind the inflationary surge. While prices were destined to rise from 2020 levels — when global lockdowns curtailed energy usage — the war in Ukraine has fueled intense volatility in energy markets.

“We expect some easing in pipeline pressures and rather large negative base-year effects inside the energy complex that will bring down both headline and core inflation through the middle of next year,” wrote Joe Brusuelas, chief economist at audit and tax firm RSM, in a Thursday analysis.

A slower increase in food prices

Food prices are still on the rise, due largely to the war in Ukraine limiting the global supply of wheat and fertilizer. Prices for food are up 10.9 percent on the year, and groceries alone are up 12.4 percent since last October.

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The October inflation report showed that while prices are still increasing, they are moving up at a slower rate — the first step toward a plateau.

Prices for food rose 0.6 percent in October, down from increases of 0.8 percent in August and September and three straight months of increases of at least 1 percent from May to July.

Monthly inflation in groceries also fell from 0.7 percent in September to 0.4 percent in October.

IRS Announces New Tax Brackets And Standard Deduction For 2023

Inflations isn’t fun, but it could help lower your taxes in 2023. The IRS has announced the new 2023 tax brackets and the new standard deduction.

The Internal Revenue Service recently announced its inflation adjustments to the standard deduction and federal income tax brackets for 2023. Knowing these numbers can allow you to make some smart tax-planning moves before the year’s end. If you expect to be in a low bracket next year, you may want to try and delay some income to next year. On the other hand, if you expect to be in a high tax bracket in 2023, you may want to delay some tax deductions until next year.

New Standard Deduction For 2023

There is some good news for taxpayers regarding inflation; in 2023, the standard deductions will increase. For married couples filing jointly, the new standard deduction for 2023 will be $27,700. This is a jump of $1,800 from the 2022 standard deduction.

The 2023 standard deduction for single taxpayers and married filing separately will be $13,850. This is a jump of $900 from the 2022 standard deduction.

You may be wondering what is the standard deduction and what does it mean? The standard deduction is the number of tax deductions you can subtract from your income before you begin to owe taxes. For example, if you were a single filer and made $13,850 in 2023, you could take the standard deduction and not owe any federal income taxes. You may still owe payroll taxes and state taxes.

For taxpayers 65 or older, you can add $1,500 to your standard deduction for 2023 if you are married. This increases to $1,850 if you are unmarried or a surviving spouse (age 65 or older in 2023).

Changes To the Federal Tax Rates For 2023

The income that fits in each tax bracket for 2023 is the only change. Put more plainly; the federal marginal tax rates will remain the same in 2023. This is unless some new legislation was to change tax rates or brackets further. Each tax bracket has been adjusted for 2023 to account for inflation.

High inflation has led the IRS to increase the federal income tax brackets. This increase in tax bracket could help lower your 2023 taxes.

2023 Tax Brackets for Single Filers

37%: incomes higher than $578,125

35%: incomes over $231,250

32%: incomes over $182,100

24%: incomes over $95,375

22%: incomes over $44,725

12%: incomes over $11,000

10%: incomes of $11,000 or less

2023 Tax Brackets for Married Couples Filing Jointly

37%: incomes higher than $693,750

35%: incomes over $462,500

32%: incomes over $364,200

24%: incomes over $190,750

22%: incomes over $89,450

12%: incomes over $22,000

10%: incomes of $22,000 or less

The marriage penalty for federal income taxes doesn’t kick in until you reach the 37% tax bracket. If you are itemizing your tax deductions, there are other limitations to tax breaks you can benefit from, as well as more examples of the marriage penalty in the tax code. For example, the $10,000 SALT cap is the same whether you are single or married.

The higher your income, the more valuable proactive tax planning guidance can be. As a Los Angeles Financial Advisor, California residents can face a combined state and federal income tax rate beyond 50% on income that falls into the highest tax brackets. The tax burden can be tough on business owners who must pay both sides of the Social Security payroll taxes. Work with your tax pro and Certified Financial Planner™ to ensure you optimize your retirement plans and minimize taxes along the way.

Indian Economy Shows Great Resilience Post Covid; Marches Strongly Towards 2047 Goal

India has one of the most promising economies globally. India has surpassed Britain to become the world’s fifth largest economy. The manufacturing MSME- start-up ecosystem has boosted the economy and created new job opportunities.

As a result of these efforts, the Indian economy has recovered from the negative effects of Covid, and the country is on its way to becoming the world’s third and $5 trillion economy.

The good news is that the eight key industries that drive the country’s economy — coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement, and electricity — have grown by 4.5 per cent.

This simply means that the Indian economy has returned to normalcy and is progressing.

India has the big goal of becoming developed and self-reliant by 2047, when the country attains its 100th independence day.

The Indian economy has recovered from the pandemic and is back on track. In the first quarter of the current fiscal year, GDP increased by 13.5 per cent (April-June).

At constant prices, the country’s GDP was Rs 32.46 lakh crore in the first quarter of the fiscal year 2021-22, while it grew by 13.5 per cent to Rs 36.85 lakh crore in the first quarter of the current fiscal year.

Simultaneously, the common index of eight core industries, which contribute significantly to the country’s economy, has increased by 4.5 per cent since July 2021.

The final growth rate of the eight core industries was revised to 9.5 per cent in April 2022, up from 8.4 per cent previously.

Prime Minister Narendra Modi’s ongoing efforts to strengthen the economy are bearing fruit.

These latest figures show that the Indian economy has recovered from the pandemic’s negative effects.

The country is now rapidly moving towards becoming self-reliant.

Picture : Prescious Kashmir

India has surpassed Germany to become the world’s fourth largest automobile market. In 2021, India sold 37.6 lakh vehicles, while Germany sold 29.7 lakh vehicles. August is the fifth month in a row that more than 3 lakh cars have been sold in India.

In the global market, Indian products are now emerging as the first choice. India is the world’s leading exporter of electronics, petroleum, and engineering goods.

Exports of these products increased by 17 per cent this year compared to the same period in 2021 (April-August).

The Indian government recognised an important fact when Covid first appeared — the economic impact of this epidemic differed from the effect of the previous epidemic because the Covid epidemic was designed to have a negative impact on demand.

As a result, there was concern that the pandemic would have long-term economic consequences for the country.

However, the government’s tight machinery was in place to ensure that such a situation did not last long.

As a result, a number of reform initiatives were launched. Labour reforms, agricultural reforms, changing the definition of a micro, small, and medium-sized enterprise, and implementing the production-linked incentive scheme were among them.

These reforms attempted to formalise the country’s economy to a large extent.

The identification of shell units, the Insolvency and Bankruptcy Code and the goods and services tax were all critical steps in bringing the economy under a set of rules and regulations.

The benefit of this was that there was an attempt to shape the economy in terms of shape, type, and behavior. Simultaneously, a focus on job creating industries was sought.

The government had a clear vision that the country needed to address not only the immediate challenges but also ensure the recovery of economy and infrastructure development, both of which are critical to achieving the objectives.

The new generation of the country is now taking the risk of innovation, learning from mistakes, and getting involved with new energy.

Employment in MSMEs has increased by 116 per cent as compared to 2019-20.

It is the charisma of the growing youth power that drives the small scale industry, that is, India’s MSME and start-up ecosystem is growing at the fastest rate in the world. (IANS)

$2.04 Billion Powerball Jackpot Ticket Was Sold In California

A lone winning ticket for the record $2.04 billion Powerball lottery jackpot was sold in Altadena, California, lottery officials said Tuesday, making the lucky ticket holder the winner of the largest lottery prize ever, media reports stated.

The ticket was sold at a Joe’s Service Center, the California Lottery said on Twitter. Results posted to Powerball.com similarly said there was one winner who matched all six numbers in California – the odds of which were 1 in 292.2 million, according to the Multi-State Lottery Association.

The winning numbers, which were announced Tuesday morning after Monday night’s drawing was delayed, were 10-33-41-47-56 and the Powerball was 10, according to the association.

The odds of winning the jackpot in Monday’s draw are one in 292.2 million, according to Powerball. The premier lottery game has had no winner in more than three months after 40 consecutive drawings.

Here is what you need to know about the lottery and its big prize.

The previous world-record jackpot was set in 2016, when $1.59bn was split between three Powerball players.

“Like the rest of America, and the world, I think we’re all eager to find out when this historic jackpot will eventually be won,” Drew Svitko, the chair of the Powerball Product Group, said in a statement.

While no-one claimed Saturday’s winning prize, there were 16 tickets matching the five main numbers to win $1m each. Another ticket – drawn in Kentucky – won $2m , while 219 tickets across the US won $50,000 and 51 won $150,000.

Only one other Powerball jackpot reached 41 consecutive drawings. The 2021 drawing ended with a nearly $700m winner in California.

Picture: CBS

How do you play Powerball?

Powerball tickets cost $2 to buy, and a winner has the option to choose a lump sum payment, which is currently estimated at $929. Winners can also choose to receive the full amount in an annuity paid over 29 years, but almost all winners opt for the upfront cash option.

The game, which began in 1992, is played in 45 of the 50 US states, the capital city of Washington, and in the US territories of Puerto Rico and the Virgin Islands.

A ticket must match all six numbers drawn to score the jackpot. If multiple winners select the same combination of numbers in the draw, they will equally share the jackpot.

The winnings are subject to federal taxes of between 24% and 37%, and, in most cases, state taxes. Only 10 states do not have state taxes. In several locations – such as New York City – the winnings are also subject to municipal taxes.

According to BBC, the jackpot was last won on August 3rd, when the owner of the winning ticket opted for a lump sum payment of $206.9m. In July, a “Mega Millions” ticket sold in Illinois won $1.34bn.

Players have to be at least 18 years old, but some states have set the age limit at 21. Some states also allow winners to remain anonymous.

Why is there such a big jackpot?

This record-breaking jackpot is being attributed in part to changes the lottery made in 2015. To boost sales, it made smaller prizes easier to win – but the jackpot harder.

It tweaked the game, notably including having players choose five numbers from one to 69 instead of from one to 59 under the previous rules.

Players also select the Powerball – their sixth number – from one to 26, instead of the previous one to 35 .

That increased the odds for the grand prize from one in 175.2 million to the current 1 in 292.2 million.

It’s not the first time to lottery the game rules were adjusted – it has made regular changes in its 30-year history, and recently added the Monday night draw.

Can Powerball be played outside the US?

Powerball tickets can be purchased from abroad online. Participants do not need to be US citizens nor residents.

Winnings, however, need to be claimed in the state to which a ticket belongs.

For US residents, this means that those living in states that don’t participate in the Powerball would need to travel to buy a ticket and claim winnings.

Similar rules are in place for other lottery games.

In 2015, a 37-year old Iraqi man from Baghdad won a $6.4m (£5.5m) “Megabucks” jackpot in Oregon after purchasing the ticket through a Malta-based website.

Lottery winners have also been reported in a number of other countries, including Australia and El Salvador.

Who owns Powerball?

Powerball is coordinated by the Multi-State Lottery Association (MUSL), a US non-profit comprised of 38 state lotteries from across the US, Washington DC, Puerto Rico and the US Virgin Islands. It was formed in 1987 and launched its first game – Lotto America – the following year.

The organisation provides a number of services to its constituent members, such as game development, central accounting and the actual conduct of lottery drawings.

Money from tickets sales goes both towards the prize money and the rest to the government-run state lotteries that participate in Powerball, as well as to retailer commissions.

According to the North American Association of State and Provincial Lotteries, US lottery sales totalled over $91bn in the 2019 fiscal year.

10 Richest People Who Ever Lived

The likes of Elon Musk, Bill Gates and Gautam Adani may be worth billions, but their riches pale in comparison to the entrepreneurs, emperors and rulers of days past

Russia’s Catherine the Great and Joseph Stalin sat atop trillions, Mali’s Mansa Musa had insane amounts of gold, and Genghis Khan founded the world’s biggest empire – so who’s. 

Forbes estimates the serial tech entrepreneur’s fortune at be about US$220 billion, thanks to his portfolio of companies including electric car manufacturer Tesla, rocket producer SpaceX and tunnelling project The Boring Company.

Yet, despite his astonishing net worth, the 51-year-old’s billions don’t even come close to the wealth of the richest people in history – proportionally speaking.. Yup, that means Amazon’s Jeff Bezos, Microsoft’s Bill Gates and Indian tycoons Gautam Adani and Mukesh Ambani also don’t make the cut.

It is however important to note that the further we go back in time, the harder it is to put an accurate or fair figure on how relatively rich an individual was as, well, times were much different back then. Wealth was based on gold, land, salt and power – and not all academics agree on the valuations. But we’ve done our best stocktaking, and according to several sources, and the work of a number of historians, these are richest people to ever walk the earth – after factoring in inflation and the worth of commodities in the day – in 2022 dollars.

  1. John D. Rockefeller (1839-1937)

Estimated net worth today: US$340 billion

According to numerous sources including Celebrity Net Worth, John D. Rockefeller built up a fortune that would be worth around US$340 billion in today’s money.

The American business magnate and philanthropist established the Standard Oil Company in 1870, which controlled 90 per cent of US refineries and pipelines by the early 1880s, according to the website History. While the New Yorker faced controversy for monopolising of the industry, Rockefeller also played a big part in giving back to the community, donating about US$500 million to educational, religious and scientific causes through the Rockefeller Foundation.

  1. Andrew Carnegie (1835-1919)

Estimated net worth today: US$372 billion

Money.com states that this Scottish-born industrialist stacked up the equivalent of around US$372 billion by leading the expansion of the American steel industry in the 19th and early 20th century.

He eventually sold his Carnegie Steel company in 1901 to JP Morgan for US$480 million (in the currency of the day). Carnegie also donated 90 per cent of his earnings to philanthropic causes by the time of his death in 1919.

  1. Catherine the Great (1729-1796)

Estimated net worth today: US$1.5 trillion

The Russian monarch inherited and controlled a vast network of land, wealth and political power, after assuming the throne in 1762 – investments worth 5 per cent of Russian GDP, or the equivalent of US$1.5 trillion today, according to Luxuo.

  1. Augustus Caesar (63BC-14AD)

Estimated net worth today: US$4.6 trillion

the founder of the Roman empire needs no introduction as one of the greatest and most famous rulers in history.

Augustus Caesar’s empire produced around 25 to 30 per cent of the world’s global output, and around a fifth of that was his own personal wealth, according to Luxuo. That means he would have been worth around US$4.6 trillion today.

  1. Joseph Stalin (1878-1953)

Estimated net worth today: US$7.5 trillion

Money.com says that it’s virtually impossible to separate Stalin’s wealth from the wealth of the Soviet Union, with economists claiming that his complete control of the USSR makes him one of the richest people to ever live.

Data from The Organisation for Economic Co-operation and Development (OECD) indicates that in 1950, the USSR made up about 9.5 per cent of the global economic output (about US$7.5 trillion in today’s money).

Though Stalin didn’t technically “own” the money, he did have the power to “control the wealth of the country”, points out George O. Liber, a professor of history at the University of Alabama at Birmingham.

  1. Empress Wu (624-705)

Estimated net worth today: US$16 trillion

he first and only female emperor of China was intelligent, politically savvy – and famous for being ruthless when it came to bumping off her opponents. She ruled the country when the economy of China accounted for around 23 per cent of global GDP, which would be around US$16 trillion today. Despite her sometimes controversial methods of wielding power, she nevertheless built up the country’s wealth by trading tea and silk on the Silk Road, and oversaw the expansion of Imperial China into central Asia. Some call her the richest woman ever.

Genghis Khan, John D. Rockefeller, Mansa Musa, Empress Wu and Catherine the Great all had immense wealth. Photos: Handout; Shutterstock; @Dr_TheHistories/Twitter; Mary Evans Picture Library; @catherinee_thee_greatt/Instagram

  1. Akbar I (1542-1605)

Estimated net worth today: US$21 trillion

Akbar I lived far more extravagantly than European leaders with equivalent wealth at the time. 

Abu’l-Fath Jalal-ud-din Muhammad Akbar, popularly known as Akbar the Great, was the third emperor to rule the Mughal empire.

Thanks to his ability to extract wealth from the population, Money.com claims that he ruled over an empire valued at 25 per cent of the global GDP. Comparable to the wealth of Elizabethan England at the time, the extravagance of Akbar I’s lifestyle nevertheless easily “surpassed that of the European society”, according to economic historian Angus Maddison.

  1. Emperor Shenzong (1048-1085)

Estimated net worth today: US$30 trillion

The sixth emperor of China’s Song dynasty ruled over an immensely economically powerful empire worth 25 to 30 per cent of the world’s GDP at the time, according to Money.com. Historians claim that the kingdom was light-years ahead of European governments when it came to effective tax collection, and its technological innovations and centralised form of governance also added to their wealth.

  1. Genghis Khan (1162-1227)

Estimated net worth today: US$120 trillion

It is believed that Genghis Khan was so powerful, and his Mongol empire so wide-reaching, that his DNA can be found in as many as 16 million men today, according to a 2003 scientific report.

And, having created the largest empire of all time – which covered most of China and Central Asia during his lifetime, and stretched as far as Poland and Vietnam afterward – The Richest estimates that he would have been worth about US$120 trillion in today’s money.

It is believed that Genghis Khan was so powerful, and his Mongol empire so wide-reaching, that his DNA can be found in as many as 16 million men today, according to a 2003 scientific report.

And, having created the largest empire of all time – which covered most of China and Central Asia during his lifetime, and stretched as far as Poland and Vietnam afterward – The Richest estimates that he would have been worth about US$120 trillion in today’s money.

  1. Mansa Musa (1280-1337)

Estimated net worth … “Incomprehensible”

Mansa Musa is considered the richest man to have ever lived, according to historians.

Coming in strong at No 1 is a name that you may not even recognize. Mansa Musa was the ruler of the Mali empire, which was immensely rich in land, salt and gold. Historians estimate the Mali Empire was at one point the largest gold producer in the world, meaning its ruler was in possession of “incomprehensible wealth”. While Celebrity Net Worth has estimated his wealth to have been the equivalent of around US$400 billion, historians believe it’s virtually impossible to come to a conclusion on the real number.

The African ruler was famous for making the most extravagant pilgrimage to Mecca of all time, with the BBC reporting that the king left Mali with about 60,000 men, from royal officials to camel drivers and slaves. He spent so much gold in Cairo during his three month stay there that he destabilized the local economy, affecting the price of gold in the region for the next 10 years!

Today’s Richest

Right now, Elon Musk is by far the richest person on earth. Tesla boss Elon Musk’s immense fortune pales into insignificance compared to the richest people in history. 

Forbes estimates the serial tech entrepreneur’s fortune at be about US$220 billion, thanks to his portfolio of companies including electric car manufacturer Tesla, rocket producer SpaceX and tunnelling project The Boring Company.

Yet, despite his astonishing net worth, the 51-year-old’s billions don’t even come close to the wealth of the richest people in history – proportionally speaking.. Yup, that means Amazon’s Jeff Bezos, Microsoft’s Bill Gates and Indian tycoons Gautam Adani and Mukesh Ambani also don’t make the cut.

Amazon CEO Jeff Bezos is currently the second richest person on the planet – but not necessarily the second richest of all time. Photo: AP

It is however important to note that the further we go back in time, the harder it is to put an accurate or fair figure on how relatively rich an individual was as, well, times were much different back then. Wealth was based on gold, land, salt and power – and not all academics agree on the valuations.

But we’ve done our best stocktaking, and according to several sources, and the work of a number of historians, these are richest people to ever walk the earth – after factoring in inflation and the worth of commodities in the day – in 2022 dollars. (Courtesy: Forbes)

Picture: Life Byond Post

Chinese Yuan Becomes World’s Fifth Most Traded Currency, Survey Finds

The Chinese currency, yuan leaped over the Australian, Canadian and Swiss currencies to become the fifth most traded currency in the world, according to the Bank for International Settlements’ Triennial Central Bank Survey.

The Chinese yuan has become the world’s fifth most traded currency, jumping from eighth place three years ago, according to a Bank for International Settlements (BIS) report, as the renminbi continues to gain international traction amid heightened geopolitical tensions.

The Chinese currency was involved in 7% of all trades in 2022, compared with 4% three years ago, Basel-based BIS said in a report on Thursday. Meanwhile, total daily trades rose 14% to $7.5 trillion. 

The dollar maintained its decade-long place as the world’s most traded currency, accounting for one side of 88% of all transactions. The euro, yen and pound also held their spots in the top four.

According to Bloomberg News, the yuan is becoming a more important global currency as China takes steps to open its financial markets. This is reflected in an increase in yuan cross-border settlements as well as a higher share of yuan among global FX reserves.

Bloomberg says the increase in cross-border yuan settlements, as well as the higher share among global foreign exchange reserves, is due to Beijing’s moves to open up its financial markets.

The BIS survey covered more than 1,200 banks and other intermediaries worldwide. Russia, which accounted for less than 1% of the global total in 2019, was excluded this year, while Dubai was included for the first time.

The Forgotten 3 Billion People

By, Wolfgang FenglerHomi Kharas, and Juan Caballero

In his 1969 poem “The Poor,” Roberto Sosa writes “The poor are many /and so/ –impossible to forget.” At that time, over half of the global population lived in extreme poverty ( less than $1.90 per day per person). The World Bank estimates that around 8.5 percent of the world’s population (685 million people) could be extremely poor by the end of 2022, and that poverty is now declining at a very slow rate of only 2 percent a year.

Meanwhile, the rich—defined by World Data Lab as those in households spending more than $120 per day per person (2017 purchasing power parity)—numbering about 250 million worldwide, capture the most media attention. Oxfam’s “Inequality Kills” report shows that the richest 10 people made $810 billion between March 2020 and November 2021, and that the richest 1 percent are responsible for the same level of carbon emissions as the poorest 3.1 billion people.

In between the rich and poor, lives the middle class ($12-120 per day), numbering some 3.6 billion people. The 2022 OECD Economic Survey of the United States, described a “hollowing out” of the middle class. Their economic analysis has called on governments to help the struggling middle class for several years, and the attention given to inflation, taxes, trade, and energy policy all aims at generating a process of globalization that delivers greater prosperity to the middle class.

However, there are only 4.6 billion people in these three groups out of the 8 billion people on the planet. There are 3.4 billion people who are seemingly forgotten, not extremely poor, not part of the middle class, and not rich. Who are they?

The missing group is perhaps best described as the “vulnerable.” They are not poor enough to feature prominently in the poverty and inequality discourse, yet they have been seriously affected by the recessions caused by COVID-19, and by food and fuel shortages and price increases. Academics have long argued that the most vulnerable groups may not coincide with the poorest groups. For example, Whelan and Maitre look at the experience of Irish households and find that just over one-third of their vulnerable cluster is drawn from the poor, while two-thirds are drawn from the non-poor. They conclude that “poverty and economic vulnerability are obviously related but are still distinct.”

We look at vulnerability in terms of the risk of being pushed back into poverty and the risk of having expectations of entry into the middle class dashed. Both have significant welfare and behavior consequences.

Clearly, the risk of falling back into poverty, usually due to an economic, health, or conflict shock, depends upon a household’s distance from the extreme poverty line. The most vulnerable to this risk are those spending $2-5 per day per person. There are 1.3 billion people in this segment. The bulk of the 85 million people who may have fallen into poverty in 2020 came from this group.

At the other end of the spectrum is a group spending $8-12 per day per person. This group would have had reasonable prospects of joining the middle class in a few years. In normal times, over 100 million people move out of this group into the middle class. This has slowed to 90 million this year and a further loss of 5 million is expected in 2023, meaning that for tens of millions of people, the hope for entry into the middle class has been derailed.

In between, the group spending $5-8 is subject to both kinds of risk, although to a lesser extent. The chance of falling into poverty is smaller, and the prospects for advancing into the middle class are also smaller, so it is a more stable category. Nevertheless, it is a group where income volatility is high—a spell of unemployment, a poor crop, or a family health crisis can create proportionally large income losses. On the other side of the coin, a family member gaining meaningful employment, migrating and sending home remittances, or enjoying a good harvest can propel a family toward the middle class. Both the risk of something bad happening and something good not happening can affect these households significantly.

Figure 1. Global population living in different spending groups

Source: World Data Pro, World Data Lab 2022

Figure 1 shows how the vulnerable are distributed among these spending categories today and in 2030 based on current projections of growth and distribution. The figure shows that the vulnerable are evenly spread across the three categories we have identified. It also shows that there is not likely to be a significant reduction in the size of this group in the next few years.

Given the size of the vulnerable group, governments would do well to pay more attention to them. Targeting social assistance based on spending/income levels is only likely to exclude a substantial portion of the vulnerable group. Additional metrics, based on country-by-country risk characteristics, are needed to build a more resilient population.

This recommendation is particularly important for Asian countries. There, great inroads have been made in reducing the absolute number of extremely poor people, so the vulnerable group is less likely to overlap with those in poverty. At the same time, Asian countries are witnessing severe climate-related shocks, so the vulnerability of many households has increased. By contrast, in Africa, levels of extreme poverty remain high, and the overlap between the vulnerable and the poor is larger. Then, targeting based on poverty, as is commonplace in many social assistance programs, will also assist in building resilience against vulnerability.

Although Asian countries have reduced poverty considerably, most people are still vulnerable. In fact, more than half of the Asian population is still poor or vulnerable. It will take another two to three years for Asia to cross the point where the majority of its population is middle-class or rich.

We need to pay more attention to the forgotten 3 billion. They are vulnerable on many dimensions, and their hopes and aspirations are in danger of destruction in today’s slow-growth and volatile economies. Identifying vulnerabilities is more complex than simply adjusting income poverty lines, although it should be one component. But the three-plus billion vulnerable people are many, and so—they should be impossible to forget. (Courtesy: Brookings Instituite)

World Economy Battered By High Inflation And Stalling Growth

By, Eswar Prasad & Aryan Khanna

The post-COVID recovery has run out of steam and the global economy is stalling, with many countries already in or on the brink of outright recession amid heightened uncertainty and rising risks. The October 2022 update of the Brookings-Financial Times TIGER indexes shows that growth momentum, as well as financial market and confidence indicators, have deteriorated markedly around the world in recent months.

A series of self-inflicted wounds, ranging from China’s zero-COVID policy to the United Kingdom’s fiscal recklessness, piled on top of persistent supply chain disruptions and the protracted war in Ukraine, have severely constricted space for policy maneuver. High and persistent inflation worldwide, and the actions by central banks to rein it in, are depressing economic activity, dampening household and business confidence, and roiling financial markets.

Major advanced economies such as the eurozone, Japan, and the United Kingdom have been dented by various adverse external shocks, often compounded by sluggish and tepid policy responses, throwing their growth trajectories off kilter. Many developed markets are now facing the combination of steep currency depreciations (relative to the U.S. dollar), rising government bond yields, strained public finances, and tightening policy constraints that have long characterized periods of economic and financial stress in emerging market economies.

The U.S. economy is rife with conflicting signals. Consumer demand remains strong and employment has continued to grow at a reasonably healthy pace. At the same time, GDP growth is anemic while inflation remains high by any measure, leaving the Federal Reserve with little choice but to hike rates further despite the tightening of financial conditions resulting from the stronger dollar and falling values of financial assets.

Energy supply disruptions are fueling inflation and constraining growth in European economies, with prospects of energy shortages in the winter damaging private sector confidence. Emblematic of the stresses on the U.K. economy, the plunge in the pound sterling’s value reflects a combination of these adverse external circumstances, the ongoing fallout from Brexit, and undisciplined fiscal policies. Many European countries face added concerns about populist policies that could increase the risks to fiscal and financial stability.

Japan is the sole major advanced economy that has the luxury of keeping monetary policy loose as inflation remains contained. This could help maintain stable albeit low growth, with the yen’s rapid depreciation not having any appreciable negative effects thus far.

Emerging market economies are facing similar challenges as their advanced economy counterparts, including high inflation and depreciating currencies, but have generally better growth prospects. Still, weak demand worldwide and tighter financial conditions will increase pressure on developing economies with current account deficits. Barring a few exceptions such as Turkey, Sri Lanka, and Venezuela, where rampant economic mismanagement has precipitated currency collapses, emerging markets at large do not seem at imminent risk of balance of payments crises, however.

China is facing a raft of problems resulting from the government’s rigid adherence to a zero-COVID strategy, a faltering real estate sector, and financial system stresses boiling over. Inflation remains under control, though the renminbi’s depreciation relative to the dollar has limited the People’s Bank of China’s ability to cut interest rates. The government and the PBOC have invoked a number of fiscal and monetary stimulus measures, but these have had limited traction in boosting private consumption and investment. Export growth, meanwhile, is likely to be restrained by weak global demand. (Courtesy: Eswar Prasad and Aryan Khanna (Cornell), The Brookings Institution, October 2022)

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