President Biden cheered the report in a statement Thursday morning. “For months, doomsayers have been arguing that the U.S. economy is in a recession, and congressional Republicans have been rooting for a downturn,” he said. “But today we got further evidence that our economic recovery is continuing to power forward.”

By one common definition, the U.S. economy entered a recession when it experienced two straight quarters of shrinking G.D.P. at the start of the year. Officially, however, recessions are determined by a group of researchers at the National Bureau of Economic Research, who look at a broader array of indicators, including employment, income and spending.

Most analysts don’t believe the economy meets that more formal definition, and the third-quarter numbers — which slightly exceeded forecasters’ expectations — provided further evidence that a recession had not yet begun.

But the overall G.D.P. figures were skewed by the international trade component, which often exhibits big swings from one period to the next. Economists tend to focus on less volatile components, which have showed the recovery steadily losing momentum as the year has progressed. One closely watched measure suggested that private-sector demand stalled out almost completely in the third quarter.

Mortgage rates passed 7 percent on Thursday, their highest level since 2002.

“Housing is just the single largest trigger to additional spending, and it’s not there anymore; it’s going in reverse,” said Diane Swonk, chief economist at the accounting firm KPMG. “This has been a stunning turnaround in housing, and when things start to go really quickly, you start to wonder, what are the knock-on effects, what are the spillover effects?”

The third quarter was in some sense a mirror image of the first quarter, when G.D.P. shrank but consumer spending was strong. In both cases, the swings were driven by international trade. Imports, which don’t count toward domestic production figures, soared early this year as the strong economic recovery led Americans to buy more goods from overseas. Exports slumped as the rest of the world recovered more slowly from the pandemic.

Both trends have begun to reverse as American consumers have shifted more of their spending toward services and away from imported goods, and as foreign demand for American-made goods has recovered. Supply-chain disruptions have added to the volatility, leading to big swings in the data from quarter to quarter.

Few economists expect the strong trade figures from the third quarter to continue, especially because the strong dollar will make American goods less attractive overseas.

Jim Tankersley contributed reporting.

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A Strong Dollar Is Wreaking Havoc on Emerging Markets. A Debt Crisis Could Be Next.

The average household in Ghana is paying two-thirds more than it did last year for diesel, flour and other necessities. In Egypt, wheat is so expensive that the government has fallen half a billion dollars short of its budget for a bread subsidy it provides to its citizens. And Sri Lanka, already struggling to control a political crisis, is running out of fuel, food and medical supplies.

A strong dollar is making the problems worse.

Compared with other currencies, the U.S. dollar is the strongest it has been in two decades. It is rising because the Federal Reserve has increased interest rates sharply to combat inflation and because America’s economic health is better than most. Together, these factors have attracted investors from all over the world. Sometimes they simply buy dollars, but even if investors buy other assets, like government bonds, they need dollars to do so — in each case pushing up the currency’s value.

That strength has become much of the world’s weakness. The dollar is the de facto currency for global trade, and its steep rise is squeezing dozens of lower-income nations, chiefly those that rely heavily on imports of food and oil and borrow in dollars to fund them.

But much of the damage is already behind us.

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  • “We are in a fragile situation,” Mr. El-Erian said. “Country after country is flashing amber, and some are already flashing red.”

    Many lower-income countries were already struggling during the pandemic.

    Roughly 22 million people in Ghana, or a third of its population, reported a decline in their income between April 2020 and May 2021, according to a survey from the World Bank and Unicef. Adults in almost half of the households with children surveyed said they were skipping a meal because they didn’t have enough money. Almost three-quarters said the prices of major food items had increased.

    Then came Russia’s invasion of Ukraine. The war between two of the world’s largest exporters of food and energy led to a big surge in prices, especially for importers like Ghana. Consumer prices have gone up 30 percent for the year through June, according to data from the research firm Moody’s Analytics. For household essentials, annual inflation has reached 60 percent or more this year, the S&P data shows.

    To illustrate this, consider the price of a barrel of oil in dollars versus the Ghanaian cedi. At the beginning of October last year, the price of oil stood at $78.52 per barrel, rising to nearly $130 per barrel in March before falling back to $87.96 at the beginning of this month, a one-year increase of 12 percent in dollar terms. Over the same period, the Ghanaian cedi has weakened over 40 percent against the dollar, meaning that the same barrel of oil that cost roughly 475 cedi a year ago now costs over 900 cedi, almost twice as much.

    Adding to the problem are large state-funded subsidies, some taken on or increased through the pandemic, that are now weighing on government finances.

    Ghana’s president cut fuel taxes in November 2021, losing roughly $22 million in projected revenue for the government — the latest available numbers.

    In Egypt, spending on what the government refers to as “supply commodities,” almost all of which is wheat for its long-running bread subsidy, is expected to come in at around 7 percent of all government spending this year, 12 percent higher — or more than half a billion dollars — than the government budgeted.

    As costs ballooned throughout the pandemic, governments took on more debt. Ghana’s public debt grew to nearly $60 billion from roughly $40 billion at the end of 2019, or to nearly 80 percent of its gross domestic product from around 63 percent, according to Moody’s.

    It’s one of four countries listed by S&P, alongside Pakistan, Nigeria and Sri Lanka, where interest payments alone account for more than half of the government’s revenues.

    “We can’t forget that this is happening on the back end of a once-in-a-century pandemic in which governments, to try and support families as best they could, did borrow more,” said Frank Gill, an analyst at S&P. “This is a shock following up on another shock.”

    In May, Sri Lanka defaulted on its government debt for the first time in its history. Over the past month, the governments of Egypt, Pakistan and Ghana have all reached out to the International Monetary Fund for a bailout as they struggle to meet their debt financing needs, no longer able to turn to international investors for more money.

    “I don’t think there is a lot of appetite to lend money to some of these countries,” said Brian Weinstein, co-head of credit trading at Bank of America. “They are incredibly vulnerable at the moment.”

    That vulnerability is already reflected in the bond market.

    In 2016, Ghana borrowed $1 billion for 10 years, paying an interest rate of just over 8 percent. As the country’s financial position has worsened and investors have backed away, the yield — indicative of what it would now cost Ghana to borrow money until 2026 — has risen to above 35 percent.

    It’s an untenable cost of debt for a country in Ghana’s situation. And Ghana is not alone. For bonds that also mature in 2026, yields for Pakistan have reached almost 40 percent.

    “We have concerns where any country has yields that calls into question their ability to refinance in public markets,” said Charles Cohen, deputy division chief of monetary and capital market departments at IMF.

    The risk of a sovereign debt crisis in some emerging markets is “very, very high,” said Jesse Rogers, an economist at Moody’s Analytics. Mr. Rogers likened the current situation to the debt crises that crushed Latin America in the 1980s — the last time the Fed sought to quell soaring inflation.

    Already this year, more than $80 billion has been withdrawn from mutual funds and exchange-traded funds — two popular types of investment products — that buy emerging market bonds, according to EPFR Global, a data provider. As investors sell, the United States is often the beneficiary, further strengthening the dollar.

    “It’s by far the worst year for outflows the market has ever seen,” said Pramol Dhawan, head of emerging markets at Pimco.

    Even citizens in some of these countries are trying to exchange their money for dollars, fearful of what’s to come and of further currency depreciation — yet inadvertently also contributing to it.

    “For pockets of emerging markets, this is a really challenging backdrop and one of the most challenging backdrops we have faced for many years,” Mr. Dhawan said.

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    Europe Looks at Italy’s Giorgia Meloni With Caution and Trepidation

    BRUSSELS — The victory in Italian elections of the far-right and Euroskeptic leader Giorgia Meloni, who once wanted to ditch the euro currency, sent a tremor on Monday through a European establishment worried about a new right-wing shift in Europe.

    European Union leaders are now watching her coalition’s comfortable victory in Italy, one of its founding members, with caution and some trepidation, despite reassurances from Ms. Meloni, who would be the first far-right nationalist to govern Italy since Mussolini, that she has moderated her views.

    But it is hard for them to escape a degree of dread. Even given the bloc’s successes in recent years to agree on a groundbreaking pandemic recovery fund and to confront Russia’s aggression in Ukraine, the appeal of nationalists and populists remains strong — and is spreading, a potential threat to European ideals and cohesion.

    said in a Twitter message: “In these difficult times, we need more than ever friends who share a common vision and approach to Europe’s challenges.”

    Europe’s concerns are less about policy toward Ukraine. Ms. Meloni has said she supports NATO and Ukraine and has no great warmth for President Vladimir V. Putin of Russia, as her junior coalition partners, Matteo Salvini and Silvio Berlusconi, have evinced.

    Still, Mr. Berlusconi said last week that Mr. Putin “was pushed by the Russian population, by his party, by his ministers to invent this special operation.” The plan, he said, was for Russian troops to enter “in a week to replace Zelensky’s government with a government of decent people.”

    Italian popular opinion is traditionally sympathetic toward Moscow, with about a third of seats in the new Parliament going to parties with an ambiguous stance on Russia, sanctions, and military aid to Ukraine. As the war proceeds, with all its domestic economic costs, Ms. Meloni may take a less firm view than Mr. Draghi has.

    Mr. Kupchan expects “the balance of power in Europe will tilt more toward diplomacy and a bit less toward continuing the fight.” That is a view more popular with the populist right than with parties in the mainstream, but it has prominent adherents in Germany and France, too.

    “These elections are another sign that all is not well with mainstream parties,” said Mark Leonard, director of the European Council on Foreign Relations, and spell a complicated period for the European Union.

    Even the victory a year ago of Olaf Scholz in Germany, a man of the center left, was ensured by the collapse of the center-right Christian Democrats, who had their worst showing in their history, while in April, France’s long-dominant center-right Republicans fell to under 5 percent of the vote.

    “People in Brussels are extremely anxious about Meloni becoming an E.U. prime minister,” Mr. Leonard said. “They’ve seen how disruptive Orban can be from a small country with no systemic role in the E.U. Meloni says she won’t immediately upend the consensus on Ukraine, but she could be a force for a much more virulent form of Euroskepticism in council meetings.”

    One or two troublemakers can do a lot of a damage to E.U. decision-making, he said, “but if it’s five or six,” it becomes very hard to obtain coherence or consensus.

    When the leftist, populist Five Star Movement led Italy from 2018 to early 2021, before Mr. Draghi, it created major fights inside Brussels on immigration and asylum issues. Ms. Meloni is expected to concentrate on topics like immigration, identity issues (she despises what she calls “woke ideology”), and future E.U. rules covering debt and fiscal discipline, to replace the outdated growth and stability pact.

    But analysts think she will pick her fights carefully, given Italy’s debt mountain — over 150 percent of gross domestic product — and the large sums that Brussels has promised Rome as part of the Covid recovery fund. For this year, the amount is 19 billion euros, or about $18.4 billion, nearly 1 percent of Italy’s G.D.P., said Mujtaba Rahman, Europe director for the Eurasia Group, with a total over the next few years of some 10.5 percent of G.D.P.

    “Draghi has already implemented tough reforms to satisfy Brussels, so there is no reason for her to come in and mess it up and agitate the market,” Mr. Rahman said. But for the future, there are worries that she will push for an expansionist budget, looser fiscal rules and thereby make the more frugal countries of northern Europe less willing to compromise.

    For Mr. Rahman, the bigger risk for Europe is the loss of influence Italy exercised under Mr. Draghi. He and President Emmanuel Macron of France, “were beginning to create an alternative axis to compete with the vacuum of leadership now in Germany, and all that will be lost,” Mr. Rahman said. Italy will go from a country that leads to one that Europe watches anxiously, he said.

    There was a sign of that anxiety just before the election, when Ursula von der Leyen, the president of the European Commission, warned that Brussels had “the tools” to deal with Italy if things went in a “difficult direction.” It was seen as a hint that the European Commission could cut funds to Italy if it were deemed to be violating the bloc’s democratic standards.

    Mr. Salvini, seeing an opportunity, immediately responded: “What is this, a threat? This is shameful arrogance,” and asked Ms. von der Leyen to “respect the free, democratic and sovereign vote of the Italian people” and resist “institutional bullying.”

    Instead, Mr. Stefanini, the former diplomat, urged Brussels to be patient and to engage with Ms. Meloni. “The new government should be judged on facts, on what it does when in power,” he said. “The real risk is that by exaggerated overreactions the E.U. makes legitimate concerns self-fulfilling prophecies.

    “If she’s made to feel rejected, she’ll be pushed into a corner — where she’ll find Orban and other soulmates waiting for her, and she’ll team up with them,” he continued. “But if she’s greeted as a legitimate leader, democratically elected, it will be possible for the E.U. to do business with her.”

    Luuk van Middelaar, a historian of the bloc, also urges caution. European leaders know two things about Italian prime ministers, he said. First, “they are not very powerful at home, and two, they tend not to last very long” — since World War II, an average of about 18 months.

    “So they will wait and see and not be blown away,” Mr. van Middelaar said. If she lasts longer, however, she could energize other far-right Euroskeptics in other big countries like France, he said, “and that would make a real difference.”

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    Bank Of England Raises Rates But Avoids Bolder Hike Like Fed

    By Associated Press
    September 22, 2022

    Surging inflation is a worry for central banks because it saps economic growth by eroding people’s purchasing power.

    The Bank of England raised its key interest rate Thursday by another half-percentage point to the highest level in 14 years, but despite facing inflation that outpaces other major economies, it avoided more aggressive hikes made by the U.S. Federal Reserve and other central banks.

    It is the Bank of England’s seventh straight move to increase borrowing costs as rising food and energy prices fuel a cost-of-living crisis that is considered the worst in a generation. Despite facing a slumping currency, tight labor market and inflation near its highest level in four decades, officials held off on acting more boldly as they predicted a second consecutive drop in economic output this quarter, an informal definition of recession.

    The bank matched its half-point increase last month — the biggest in 27 years — to bring its benchmark rate to 2.25%. The decision was delayed for a week as the United Kingdom mourned Queen Elizabeth II and comes after new Prime Minister Liz Truss’ government unveiled a massive relief package aimed at helping consumers and businesses cope with skyrocketing energy bills.

    The new measures have eased uncertainty over energy costs and are “likely to limit significantly further increases” in consumer prices, the bank’s policymakers said. They expected inflation — now at 9.9% — to peak at 11% in October, lower than previously forecast.

    “Nevertheless, energy bills will still go up and, combined with the indirect effects of higher energy costs, inflation is expected to remain above 10% over the following few months, before starting to fall back,” the monetary policy committee said.

    The bank signaled it is prepared to respond more forcefully at its November meeting if needed. Its decision comes during a busy week for central bank action marked by much more aggressive moves to bring down soaring consumer prices.

    The U.S. Federal Reserve hiked rates Wednesday by three-quarters of a point for the third consecutive time and forecast that more large increases were ahead. Also Thursday, the Swiss central bank enacted its biggest-ever hike to its key interest rate.

    Three of the British bank’s nine committee members wanted a similar three-quarter-point raise but were outvoted by five who preferred a half-point and one who voted for a quarter-point.

    The decision “suggests the Bank of England is concerned about the U.K.’s economic deteriorating outlook amid the looming threat of recession,” said Victoria Scholar, head of investment at interactive investor. “The timid increase will do little to stem the slide in sterling but may avoid inadvertently inducing unnecessary pain for the economy which is already grappling with slowing demand and deteriorating confidence.”

    Surging inflation is a worry for central banks because it saps economic growth by eroding people’s purchasing power. Raising interest rates — the traditional tool to combat inflation — reduces demand and therefore prices by making it more expensive to borrow money for big purchases like cars and homes.

    Inflation in the United Kingdom hit 9.9% in August, close to its highest level since 1982 and five times higher than the Bank of England’s 2% target. The British pound is at its weakest against the dollar in 37 years, contributing to imported inflation.

    To ease the crunch, Truss’ government announced it would cap energy bills for households and businesses that have soared as Russia’s war in Ukraine drives up the price of natural gas needed for heating.

    The Treasury is expected to publish a “mini-budget” Friday with more economic stimulus measures, and the bank said it won’t be able to assess how they will affect inflation until its November meeting..

    The Bank of England expects gross domestic product to fall by 0.1% in the third quarter, below its August projection of 0.4% growth. That would be a second quarterly decline after official estimates showed output fell by 0.1% in the previous three-month period.

    The weakness partly reflects a smaller-than-expected rebound after an extra June holiday to celebrate the queen’s 70 years on the throne and the impact of another public holiday Monday for her funeral, officials said.

    The bank avoided pressure to go bigger even as other banks around the world take aggressive action against inflation fueled by the global economy’s recovery from the COVID-19 pandemic and then the war in Ukraine.

    This month, Sweden’s central bank raised its key interest rate by a full percentage point, while the European Central Bank delivered its largest-ever rate increase with a three-quarter point hike for the 19 countries that use the euro currency.

    But British policymakers signaled they will “respond forcefully, as necessary” if there are signs that inflationary pressure is more persistent than expected, “including from stronger demand.”

    The bank said it’s also moving ahead with plans to trim its bond holdings built up under a stimulus program, selling off 80 billion pounds ($90 billion) worth of assets over the next year to bring its portfolio down to 758 billion pounds.

    Additional reporting by The Associated Press.

    Source: newsy.com

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    Treasury Recommends Exploring Creation Of A Digital Dollar

    By Associated Press
    September 16, 2022

    The Atlantic Council nonpartisan think tank says many other countries already are exploring or have created a central bank digital currency.

    The Biden administration is moving one step closer to developing a central bank digital currency, known as the digital dollar, saying it would help reinforce the U.S. role as a leader in the world financial system.

    The White House said on Friday that after President Joe Biden issued an executive order in March calling on a variety of agencies to look at ways to regulate digital assets, the agencies came up with nine reports, covering cryptocurrency impacts on financial markets, the environment, innovation and other elements of the economic system.

    Treasury Secretary Janet Yellen said one Treasury recommendation is that the U.S. “advance policy and technical work on a potential central bank digital currency, or CBDC, so that the United States is prepared if CBDC is determined to be in the national interest.”

    “Right now, some aspects of our current payment system are too slow or too expensive,” Yellen said on a Thursday call with reporters laying out some of the findings of the reports.

    Central bank digital currencies differ from existing digital money available to the general public, such as the balance in a bank account, because they would be a direct liability of the Federal Reserve, not a commercial bank.

    According to the Atlantic Council nonpartisan think tank, 105 countries representing more than 95% of global gross domestic product already are exploring or have created a central bank digital currency. The council found that the U.S. and the U.K. are far behind in creating a digital dollar or its equivalent.

    Treasury, the Justice Department, the Consumer Finance Protection Bureau, the Securities and Exchange Commission and other agencies were tasked with contributing to reports that would address various concerns about the risks, development and usage of digital assets. Several reports will come out in the next weeks and months.

    On Capitol Hill, lawmakers have submitted various pieces of legislation to regulate cryptocurrency and other digital assets.

    The director of the National Economic Council, Brian Deese, told reporters that “we’ve seen in recent months substantial turmoil in cryptocurrency markets and these events really highlight how, without proper oversight, cryptocurrencies risk harming everyday Americans’ financial stability and our national security.”

    “It is why this administration believes that now more than ever,” he said, “prudent regulation of cryptocurrencies is needed.”

    Additional reporting by The Associated Press.

    Source: newsy.com

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    Why Are We Scared Of A Recession?

    Americans are worried about another potential recession, largely because of the effects on job security.

    Americans are increasingly anxious of a possible recession. Two out of three say they’re expecting one.  

    Peter Ricchiuti, an economist from Tulane University, tells Newsy all the talk around a recession often leads to people worrying about getting laid off. 

    “A recession is when your neighbors out of work, and depression is when you’re out of work. And that’s what people are afraid of, losing their job,” said Ricchiuti. “Maybe we worry ourselves into a recession. Just by talking about it.”

    And he adds headlines popping up on news or social media feeds may create more unnecessary fear.  

    “I think we overplay it. It makes good news. I know we’re in the news business, but you have one executive say that an economic hurricane is on its way, and people play on that,” said Ricchiuti.   

    Last June, the Financial Times found nearly 70% of macro-economists believe the U.S. economy will tip into a recession next year. But are we already in a recession? 

    Government numbers in late July revealed U.S. Gross Domestic Product dropped for the second quarter in a row. 

    GDP is a key economic indicator that measures the value of a nation’s economy. 

    Traditionally, two successive quarters of a GDP decline defines a recession. But that definition is not official. 

    A panel of eight economists at the National Bureau of Economic Research announce whether the U.S. is or isn’t in a recession.  

    And they’ve yet to do that. That may be due to some positive economic signs.  

    Gas prices dropped below $4 a gallon on average for the first time since March. 

    The economy added more than half a million jobs in July. 

    And unemployment is at a low not seen since before the pandemic. 

    But renewed fears of layoffs have American workers worried. 

    An August survey found half of employers expect to cut jobs in the next six to 12 months. 

    Ricchuiti says if the U.S. were to enter a recession it wouldn’t be a huge surprise. Let history be a guide. 

    “We get a recession about every five to seven years and an average recession will last about 12 months. You get an economy that grows and grows and then it overheats and then it has to be lowered back down again,” said Ricchuiti. 

    And that’s where the American economy is at; too hot from growing at record rates in 2021.  

    The problem this year is inflation also grew and the Federal Reserve’s tool of raising interest rates to cool inflation could trigger a recession. And how long it could last or how severe it will be is hard to predict.  

    “The last recession was during the pandemic, and it only lasted about two months, but it was very severe. The longest was 18 months which was the ’07-’08 recession, which was almost a depression,” said Ricchuiti. “A lot of people remember that ’07-’08 recession as being so dramatic and they don’t all look like that.” 

    While Americans don’t want history to repeat itself, one thing to count on is to proceed with caution and watch the headlines as we all watch the state of the economy unfold the rest of the year. 

    Source: newsy.com

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    Chile Votes on Constitution That Would Enshrine Record Number of Rights

    SANTIAGO, Chile — Voters in Chile on Sunday could transform what has long been one of Latin America’s most conservative countries into one of the world’s most left-leaning societies.

    In a single ballot, Chileans will decide whether they want legal abortion; universal public health care; gender parity in government; empowered labor unions; greater autonomy for Indigenous groups; rights for animals and nature; and constitutional rights to housing, education, retirement benefits, internet access, clean air, water, sanitation and care “from birth to death.”

    It is perhaps the most important vote in the 204-year history of this South American nation of 19 million — a mandatory, nationwide plebiscite on a written-from-scratch constitution that, if adopted, would be one of the world’s most expansive and transformational national charters.

    legalized divorce only in 2004, would suddenly have more rights enshrined in its constitution than any other nation. If they reject it, Chile would have little to show for what had once been seen as a remarkable political revolution.

    the new administration of President Gabriel Boric, a tattooed, 36-year-old former student-protest leader who took office in March, but has quickly faced plummeting approval ratings amid rising inflation and crime. The constitution would enable Mr. Boric to carry out his leftist vision, while rejection could mire his term in more political fighting about what to do next.

    A year ago, most Chileans would have bet that the country would embrace the proposed constitution. There has long been widespread discontent with the current constitution, which has roots in the brutal dictatorship of Gen. Augusto Pinochet, who ruled from 1973 until 1990.

    In 2019, nationwide protests that left 30 people dead led Chile’s political leadership to grant a referendum on the constitution. A year later, nearly four out of five Chileans voted to replace it.

    banned all forms of abortion until 2017, when it legalized the procedure only in cases of rape, an unviable fetus or a threat to the mother’s life.

    some of the most expansive rights for Indigenous people anywhere, according to experts.

    protesting in a Pikachu costume. Seventeen seats also went to Indigenous people.

    Leftists won more than two-thirds of the convention’s seats, putting them in full control of the process since a two-thirds majority was necessary to add measures.

    The motley crew deciding Chile’s future drew unwanted attention at times. There was the woman who gave a speech bare-chested and the man who left his camera on while showering during a remote vote. Many voters felt that the convention was not taking the process seriously.

    “The behavior of the convention members pushed people away the most,” said Patricio Fernández, a leftist writer who was a convention member.

    In recent months, Chileans have been bombarded with marketing from the “apruebo” and “rechazo” campaigns, some of it misleading, including claims that the constitution would allow abortion in the ninth month of pregnancy and ban homeownership.

    On Thursday night, each side held closing rallies. Hundreds of thousands of “apruebo” supporters packed downtown Santiago and watched concerts by famous Chilean music acts, from rap to Andean folk.

    “I’ve already lived, but I want deep change for the children of Chile,” said María Veloso, 57, who runs a food stand.

    In a wealthier part of town, in a hillside amphitheater named after the Chilean poet Pablo Neruda, a much smaller crowd gathered to mark their campaign to reject the leftist text. (Mr. Neruda, ironically, was a communist.) Hundreds of people waved Chilean flags and danced to an act impersonating the flamboyant Mexican singer Juan Gabriel.

    “Here in Chile, they’re defending dogs more than babies,” said Sandra Cáceres Ríos, 50, an herb seller.

    Regardless of the vote’s outcome, there is more political negotiating ahead. In the case of approval, Chile’s Congress, which is ideologically split, will be tasked with figuring out how to implement many of the changes. Lawmakers could try to significantly limit the scope or impact of some policies, such as abortion or Indigenous rights, by passing laws interpreting the constitution’s language in a narrow way.

    Ultimately, the real effect of many provisions would probably be determined by the courts.

    If the text is rejected, Mr. Boric, Chile’s president, has said that he would like to see a new convention draft another proposed charter.

    He would, in other words, like to try it all again.

    Pascale Bonnefoy and Ana Lankes contributed reporting from Santiago, Chile.

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    U.S. Hiring Slows As Employers Add Just 315,000 Jobs In August

    The August hiring gain was down from 536,000 jobs added in July, and fell below the average gain over the previous three months.

    America’s employers added a healthy number of jobs last month, yet slowed their hiring enough to potentially help the Federal Reserve in its fight to reduce raging inflation.

    The economy gained 315,000 jobs in August, a still-solid figure that pointed to an economy that remains resilient despite rising interest rates, high inflation and sluggish consumer spending. Friday’s report from the government also showed that the unemployment rate rose to 3.7%, up from a half-century low of 3.5%. Yet that increase was also an encouraging sign: It reflected a long-awaited rise in the number of Americans who came off the sidelines and started looking for work.

    Prices are rising at nearly the fastest pace in 40 years, which has handed congressional Republicans a hammer to use against Democrats in the fall congressional elections. Texas Republican Rep. Kevin Brady noted Friday that rising wages aren’t keeping up with inflation, leaving Americans with “shrinking paychecks.”

    The White House, in turn, has claimed credit for a robust pace of job growth. On Friday, Brian Deese, a top economic adviser to President Biden, said in an interview on CNBC that the economy is shifting to a more sustainable path.

    “We want to see a transition from a very strong economy to one of stable growth,” he said.

    The August hiring gain was down from 526,000 jobs added in July, and it fell below the average gain of the previous three months. Wage growth also weakened a bit last month, which could also serve the Fed’s inflation fight. Average hourly pay rose 0.3% from the previous month, the smallest gain since April. Businesses typically pass the cost of higher wages on to their customers through higher prices, thereby fueling inflation.

    The Fed is rapidly raising interest rates to try to cool hiring and wage growth, which have been consistently strong. Fed officials hope that by raising borrowing costs across the economy, they can reduce inflation from a near-40-year high. Some economists fear, though, that the Fed is tightening credit so aggressively that it will eventually tip the economy into recession.

    Most industries added workers last month, with the biggest increases in professional and business services, which gained 68,000 jobs. That sector includes architects, engineers and some tech workers. Health care added 61,500 jobs, retailers 44,000.

    Job openings remain high and the pace of layoffs low, indicating that most businesses still want to hire. The broadest measure of the economy’s output — gross domestic product — has shrunk for two straight quarters, meeting one informal definition of a recession. Yet another measure, focused on incomes, indicates the economy expanded in the first half of the year, albeit slowly.

    Chair Jerome Powell, in a high-profile speech last week, made clear that to curb inflation, the Fed was prepared to continue raising short-term interest rates for the foreseeable future and to keep them elevated. Powell warned that the Fed’s inflation fight would likely cause pain for Americans in the form of a weaker economy and job losses.

    The Fed chair also said the job market is “clearly out of balance,” with demand for workers “substantially exceeding” the available supply. Friday’s jobs figures and a report earlier this week that the number of job openings rose in July after three months of declines, suggested that the Fed’s rate hikes so far haven’t restored any such balance. There are roughly two advertised job openings for every unemployed worker.

    Wages are rising at their fastest pace in decades as employers scramble to fill jobs at a time when fewer Americans are working or seeking work in the aftermath of the pandemic. Average hourly pay jumped 5.2% in July from a year earlier. Still, that was less than the 5.6% year-over-year in March, which was the largest annual increase in 15 years of records outside of the spring of 2020, when the pandemic struck.

    Some skeptics warn that the Fed may be focusing excessively on the strength of the job market when other indicators indicate that the economy is noticeably weakening. Consumer spending, for example, and manufacturing have slowed. The central bank might raise rates too far as a result, to the point where it causes a deeper recession than might be needed to conquer inflation.

    The economic picture is highly uncertain, with the healthy pace of hiring and low unemployment at odds with the government’s estimate that the economy shrank in the first six months of this year, which is one informal definition of a recession.

    Yet a related measure of the economy’s growth, which focuses on incomes, shows that it is still expanding, if at a weak pace.

    Additional reporting by The Associated Press.

    Source: newsy.com

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    Inflation Eases As Consumer Prices Rise 6.3% In July, Down From June

    By Associated Press
    August 26, 2022

    Consumer prices were up 6.3% in July from a year earlier, down slightly from an annual 6.8% increase in June, according to the Commerce Department.

    Inflation eased slightly last month as energy prices tumbled, raising hopes that the surging costs of everything from gasoline to food may have peaked.

    According to a Commerce Department report Friday that is closely watched by the Federal Reserve, consumer prices rose 6.3% in July from a year earlier after posting an annual increase of 6.8% in June, the biggest jump since 1982. Energy prices made the difference in July: They dropped last month after surging in June.

    So-called core inflation, which excludes volatile food and energy prices, rose 4.6% last month from a year earlier after rising 4.8% in June. The drop — along with a reduction in the Labor Department’s consumer price index last month — suggests that inflationary pressures may be easing.

    On a monthly basis, consumer prices actually fell 0.1% from June to July; core inflation blipped up 0.1%, the Commerce Department reported.

    Inflation started rising sharply in the spring of 2021 as the economy rebounded with surprising speed from the short but devastating coronavirus recession a year earlier. Surging customer orders overwhelmed factories, ports and freight yards, leading to delays, shortages and higher prices. Inflation is a worldwide problem, especially since the Russian invasion of Ukraine drove up global food and energy prices.

    On Friday, regulators in the U.K. said that residents will see an 80% increase in their annual household energy bills.

    In the United States, the Commerce Department’s personal consumption expenditures (PCE) index is less well known than the Labor Department’s consumer price index (CPI).

    But the Fed prefers the PCE index as a gauge of inflationary pressures, partly because the Commerce index attempts to measure how consumers adjust to rising prices by, for example, substituting cheaper store brands for pricier name brands.

    There is evidence just in the last several months that that is happening.

    CPI has been showing higher inflation than PCE; Last month, for instance, CPI was running at an 8.5% annual pace after hitting a four-decade-high 9.1% in June. One reason: The Labor Department’s index gives more weight to rents, which have soared this year.

    The Commerce Department also reported Friday that Americans’ after-tax personal income rose 0.3% from June to July after adjusting for inflation; it has fallen in June. Consumer spending rose 0.2% last month after accounting for higher prices.

    The Fed was slow to respond to rising inflation, thinking it the temporary result of supply chain bottlenecks. But as prices continued to climb, the U.S. central bank moved aggressively, hiking its benchmark interest rate four times since March.

    Fed Chair Jerome Powell was scheduled to give a speech Friday at an economic conference in Jackson Hole, Wyoming, where he was expected to shed light on the Fed’s plans for future interest rate hikes.

    “Admittedly, with headline PCE inflation still at 6.3% and core PCE inflation at 4.6%, we don’t expect the Fed suddenly to announce a pivot at Jackson Hole,” Paul Ashworth, chief North America economist at Capital Economics, said in a research note. “But even better news on inflation over the coming months is likely to convince the Fed to change course next year, despite any hawkish rhetoric coming from officials now.”

    Price pressures may be easing as the U.S. economy slows. Gross domestic product — broadest measure of economic output — shrank in the first half of 2020 as borrowing costs increased. The housing market has been hit especially hard. And supply chain backlogs have started to unsnarl.

    Additional reporting by The Associated Press.

    Source: newsy.com

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    Biden Formalizes U.S. Support For Finland, Sweden Joining NATO

    By Associated Press

    and Newsy Staff
    August 10, 2022

    NATO rules require the consent of all of its 30 existing members before Finland and Sweden can officially accede into the alliance.

    President Joe Biden formally welcomed Finland and Sweden joining the NATO alliance Tuesday as he signed the instruments of ratification that delivered the U.S.’s formal backing of the Nordic nations entering the mutual defense pact, part of a reshaping of the European security posture after Russia’s invasion of Ukraine.

    “In seeking to join NATO, Finland and Sweden are making a sacred commitment that an attack against one is an attack against all,” Biden said at the signing as he called the partnership the “indispensable alliance.”

    The U.S. became the 23rd ally to approve NATO membership for the two countries. President Biden said he spoke with the heads of both nations before signing the ratification and urged the remaining NATO members to finish their own ratification process “as quickly as possible.”

    The Senate last week approved the two, once-non-aligned nations joining the alliance in a rare 95-1 vote that President Biden said shows the world that “the United States of America can still do big things” with a sense of political unity.

    The countries sought out NATO membership earlier this year to guarantee their security in the wake of Russian President Vladimir Putin’s offensive in Ukraine. The North Atlantic Treaty Organization’s rules require the consent of all of its 30 existing members before Finland and Sweden can officially accede into the alliance, which is expected in the coming months.

    The candidacies of the two prosperous Northern European nations have won ratification from more than half of the NATO member nations in the roughly three months since the two applied. It marks one of the speediest expansions of the pact of mutual defense among the United States and democratic allies in Europe in its 73-year history.

    U.S. State and Defense officials consider the two countries net “security providers,” strengthening NATO’s defense posture in the Baltics in particular. Finland is expected to exceed NATO’s 2% gross domestic product defense spending target in 2022, and Sweden has committed to meet the 2% goal.

    Sweden and Finland applied to join NATO in May, setting aside their longstanding stance of military nonalignment. It was a major shift of security arrangements for the two countries after neighboring Russia launched its war on Ukraine in late February. President Biden encouraged their joining and welcomed the two countries’ government heads to the White House in May, standing side by side with them in a display of U.S. backing.

    The U.S. and its European allies have rallied with newfound partnership in the face of Putin’s military invasion, as well as the Russian leader’s sweeping statements this year condemning NATO, issuing veiled reminders of Russia’s nuclear arsenal and asserting Russia’s historical claims to territory of many of its neighbors.

    Additional reporting by The Associated Press.

    Source: newsy.com

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