The Federal Reserve has embarked on an aggressive campaign to raise interest rates as it tries to tame the most rapid inflation in decades, an effort the central bank sees as necessary to restore price stability in the United States.
But what the Fed does at home reverberates across the globe, and its actions are raising the risks of a global recession while causing economic and financial pain in many developing countries.
Other central banks in advanced economies, from Australia to the eurozone, are also lifting rates rapidly to fight their inflation. And as the Fed’s higher interest rates attract money to the United States — pumping up the value of the dollar — emerging-market economies are being forced to raise their own borrowing costs to try to stabilize their currencies to the extent possible.
Altogether, it is a worldwide push toward more expensive money unlike anything seen before in the 21st century, one that is likely to have serious ramifications.
warned the damage could be particularly acute in poorer nations. Developing economies had already been dealing with a cost-of-living crisis because of soaring food and fuel prices, and now their American imports are growing steadily more expensive as the dollar marches higher.
The Fed’s moves have spurred market volatility and worries about financial stability, as higher rates elevate the value of the U.S. dollar, making it harder for emerging-market borrowers to pay back their dollar-denominated debt.
It is a recipe for globe-spanning turmoil and even recession. Despite that, the Fed is poised to continue raising interest rates. That’s because the Fed, like central banks around the world, is in charge of domestic economy goals: It’s supposed to keep inflation slow and steady while fostering maximum employment. While occasionally called “central banker to the world” because of the dollar’s foremost position, the Fed goes about its day-to-day business with its eye squarely on America.
loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.
What causes inflation? It can be the result of rising consumer demand. But inflation can also rise and fall based on developments that have little to do with economic conditions, such as limited oil production and supply chain problems.
Is inflation bad? It depends on the circumstances. Fast price increases spell trouble, but moderate price gains can lead to higher wages and job growth.
Can inflation affect the stock market? Rapid inflation typically spells trouble for stocks. Financial assets in general have historically fared badly during inflation booms, while tangible assets like houses have held their value better.
The threat facing the global economy — including the Fed’s role in it — is expected to dominate the conversation next week as economists and government officials convene in Washington for the annual meeting of the International Monetary Fund and World Bank.
In a speech at Georgetown University on Thursday, Kristalina Georgieva, the managing director of the I.M.F., offered a grim assessment of the world economy and the tightrope that central banks are walking.
“Not tightening enough would cause inflation to become de-anchored and entrenched — which would require future interest rates to be much higher and more sustained, causing massive harm on growth and massive harm on people,” Ms. Georgieva said. “On the other hand, tightening monetary policy too much and too fast — and doing so in a synchronized manner across countries — could push many economies into prolonged recession.”
Noting that inflation remains stubbornly high and broad-based, she added: “Central banks have to continue to respond.”
The World Bank warned last month that simultaneous interest-rate increases around the world could trigger a global recession next year, causing financial crises in developing economies. It urged central banks in advanced economies to be mindful of the cross-border “spillover effects.”
“To achieve low inflation rates, currency stability and faster growth, policymakers could shift their focus from reducing consumption to boosting production,” David Malpass, the World Bank president, said.
Trade and Development Report said.
So far, major central banks have shown little appetite for stopping their inflation-busting campaigns. The Fed, which has made five rate increases this year, has signaled that it plans to raise borrowing costs even higher. Most officials expect to increase rates by at least another 1.25 percentage points this year, taking the policy rate to a range of 4.25 to 4.5 percent from the current 3 to 3.25 percent.
Even economies that are facing a pronounced slowdown have been lifting borrowing costs. The European Central Bank raised rates three-quarters of a point last month, even though the continent is approaching a dark winter of slowing growth and crushing energy costs.
according to the World Bank. Food costs in particular have driven millions further into extreme poverty, exacerbating hunger and malnutrition. As the dollar surge makes a range of imports pricier for emerging markets, that situation could worsen, even as the possibility of financial upheaval increases.
“Low-income developing countries in particular face serious risks from food insecurity and debt distress,” Ngozi Okonjo-Iweala, director-general of the World Trade Organization, said during a news conference this week.
Understand Inflation and How It Affects You
In Africa, officials have been urging the I.M.F. and Group of 20 nations to provide more emergency assistance and debt relief amid inflation and rising interest rates.
“This unprecedented shock further destabilizes the weakest economies and makes their need for liquidity even more pressing, to mitigate the effects of widespread inflation and to support the most vulnerable households and social strata, especially young people and women,” Macky Sall, chairman of the African Union, told leaders at the United Nations General Assembly in September.
To be sure, central bankers in big developed economies like the United States are aware that they are barreling over other economies with their policies. And although they are focused on domestic goals, a severe weakening abroad could pave the way for less aggressive policy because of its implications for their own economic outlooks.
Waning demand from abroad could ease pressure on supply chains and reduce prices. If central bankers decide that such a chain reaction is likely to weigh on their own business activity and inflation, it may give them more room to slow their policy changes.
“The global tightening cycle is something that the Fed has to take into account,” said Megan Greene, global chief economist for the Kroll consulting firm. “They’re interested in what is going on in the rest of the world, inasmuch as it affects their ability to achieve their targets.”
But many global economic officials — including those at the Fed — remain focused on very high inflation. Investors expect them to make another large rate increase when they meet on Nov. 1-2.
“We’re very attentive” to international spillovers to both emerging markets and advanced economies, Lisa D. Cook, a Fed governor, said during a question-and-answer session on Thursday. “But our mandate is domestic. So we’re very focused on inflation as it evolves in this country.”
Raghuram Rajan, a former head of India’s central bank and now an economist at the University of Chicago, has in the past pushed the Fed to take foreign conditions into account as it sets policy. He still thinks that measures like bond-buying should be pursued with an eye on global spillovers.
But amid high inflation, he said, central banks are required to pay attention to their own mandates to achieve price stability — even if that makes for a stronger dollar, weaker currencies and more pain abroad.
“The basic problem is that the world of monetary policy dances to the Fed’s tune,” Mr. Rajan said, later adding: “This is a problem with no easy solutions.”
Clean Is Mandatory barbershop partners with The Confess Project to teach barbers how to be mental health advocates for their Philly community.
People say getting their hair cut is like therapy. But in this Philadelphia barbershop, it’s not a joke.
“Looking at your hair, you’re looking in the mirror, you just feeling good,” said Andre Scott, owner of Clean Is Mandatory.
NEWSY’S BIANCA FACCHINEI: What is it about barbershops that make them an easy place to open up?
ANDRE SCOTT: They see you week in, week out for years and you build a relationship.
Scott has been a barber for over three decades. In that time, he’s done much more than cut hair.
“‘I’m just done. I’m ready to give up.’ When you hear that quitting, that anger … Those are some key words you need to jump on real fast,” Scott said.
He has always has a good relationship with clients. But it was The Confess Project — a nonprofit that trains barbers to be mental health advocates — that helped him take it a step further.
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“The more barbers we train, the more people we can get into counseling, get into a support group, or find other resources that we’ve been able to help people with — from housing, food and hunger and all the other things that come around mental and well-being challenges,” The Confess Project Founder Lorenzo Lewis said.
Lewis was inspired to make a difference after his own journey with depression and anxiety. He says he knew right off the bat that barbershops were the right place to start.
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“I knew very well what it felt like to be in beauty shops and barbershops, and knowing that my first barber was my mentor, it played a huge, huge role in my childhood,” Lewis continued.
It’s a theory backed by research.
A study from Harvard says, “Barbers can engage communities at their grassroots levels and provide an important piece to a puzzle that in some cases can mean the difference between life and death.”
Scott says he couldn’t agree more.
“I had a client come in my chair and ask for a haircut, a good haircut. So, he described to me the best haircut, and I said, ‘I got you. I’ll give you a good haircut any time.’ He said, ‘No, this is my last haircut.’ I figured he was moving or going to jail. I didn’t know what was going on. He enlightened me that he was going to take his own life,” Scott said. “I literally took off that day at work and was with him all day. All praises to God, he actually didn’t take his life. … That was definitely life-or-death because out of all the people in his life, he decided to open up to me.”
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That’s one of many examples Scott gave to demonstrate the impact he’s had on his clients. But he acknowledges it’s a two-way street.
“It’s not always the barber helping the client,” Scott said. “Sometimes it’s the client helping the barber.”
Newsy’s mental health initiative “America’s Breakdown: Confronting Our Mental Health Crisis” brings you deeply personal and thoughtfully told stories on the state of mental health care in the U.S. Click here to learn more.
In recent months, the U.S. government has taken some steps to improve food security for its service members — but there’s more to do.
Years after joining the Navy, Lisa Javenar still worries about having enough food for her family of five every month.
We first introduced you to Lisa in May. She’s the wife of Teddy Javenar, an electronics technician with the rank of petty officer third class. Some months, she doesn’t know how she’s going to feed her kids.
“We know what we signed up for,” Javenar said. “It doesn’t make it any easier. It’s still difficult. And so to have to deal with all of that and have to worry about how we’re going to feed our families. I mean, it’s just — it would be awesome to not have that extra stress.”
In tight months, Lisa, like thousands of other military families, helps feed her family by joining a line at the military equivalent of a food bank.
As Newsy reported, a bureaucratic oversight is costing thousands of military families critical benefits to keep them from going hungry, especially in high-rent cities like San Diego where the value of housing can easily put them over budget.
They get what’s called a basic allowance for housing to live off base. It covers the high rent, but also counts as income. It means they missed qualifying for SNAP benefits because on paper, they brought in too much money — by about $5 a month.
Related StoryMilitary Families Facing Hunger Look To Federal Programs For Help
The U.S. Department of Defense issued a roadmap this summer for strengthening food security in the force.
It references a survey done in 2020 that showed 24% of active-duty service members were food insecure. That’s around 300,000 people, plus their families.
“People are shocked when they hear that military families struggle with hunger in the first place at all,” said Josh Protas, an executive at aid group MAZON: A Jewish Response to Hunger. “And they should be shocked because there’s no reason that those who serve in our armed forces should have to struggle to put food on the table.”
The Department of Defense plan aims to increase access to healthy food, help military spouses with employment, look at pay, and more.
“It’s the first time that i know that a Secretary of Defense has spoken openly about this problem, and not tried to deflect blame onto the service members who are impacted, but to look at the systemic issues that are causing the problem,” Protas said.
There are other fixes in the works. Families may soon get what is called a basic needs allowance, a sort of pay bonus for low-income military families. It was part of last year’s bill that appropriates money for the Department of Defense.
The Congressional Budget Office estimates it will mean about $400 extra each month on average.
But like SNAP eligibility, this too counts the basic allowance for housing as income, disqualifying many families.
It does give the Secretary of Defense power to exclude the basic allowance for housing in high-cost areas.
A few members of Congress are working hard to fix this in the next defense spending bill. One effort cleared the House of Representatives but now must make it through the Senate this fall.
The Senate’s version made it out of committee. It doesn’t tackle the housing allowance issue but it does raise the financial limit for who qualifies for the basic needs allowance.
There are also other standalone bills to stop the housing allowance from being counted as income for SNAP eligibility, including one introduced by Sen. Tammy Duckworth, who we spoke to earlier this year.
“We have a real issue here,” Duckworth said. “The same people who protect and defend us should not be worried about whether or not their children are getting food.”
There’s a similar bill in the House.
Now, after Newsy’s report, some familiar faces on the veterans advocacy front are joining the fight.
John Feal fought alongside comedian and TV host Jon Stewart to get funding and benefits to 9/11 first responders, and most recently advocated for passing the PACT Act, which expanded care for veterans exposed to toxic burn pits in Iraq and Afghanistan.
The day after President Biden signed the PACT Act, Feal shifted his focus. He sent a tweet saying “24% of our military and their families are food insecure… D.C., I am coming back with a vengeance!”
“We’re going to get in their face,” Feal said. “We’re going to make them do what’s morally right. We’re going to make them put aside their politics and their ideologies and think like human beings and show some humanity. If we have to shame them and scorch the earth to do so, then we’ll do so. We come in peace until we can’t come in peace anymore.”
It’s still unclear whether other agencies, like the USDA, the Department of Defense, or even the White House, could legally fix this quickly. But Protas says there’s one group of people in D.C. that could.
“Congress shouldn’t wait for administrative action, whether or not that is forthcoming, but should do right by military families and not leave them stranded,” he said.
Bearded Taliban fighters, some hoisting rifles or the white banners of their movement, staged small victory parades on foot, bicycles and motorcycles.
The Taliban on Monday marked a year since they seized the Afghan capital of Kabul, a rapid takeover that triggered a hasty escape of the nation’s Western-backed leaders, sent the economy into a tailspin and fundamentally transformed the country.
Bearded Taliban fighters, some hoisting rifles or the white banners of their movement, staged small victory parades on foot, bicycles and motorcycles in the streets of the capital. One small group marched past the former U.S. Embassy, chanting “Long live Islam” and “Death to America.”
A year after the dramatic day, much has changed in Afghanistan. The former insurgents struggle to govern and remain internationally isolated. The economic downturn has driven millions more Afghans into poverty and even hunger, as the flow of foreign aid slowed to a trickle.
Meanwhile, hard-liners appear to hold sway in the Taliban-led government, which imposed severe restrictions on access to education and jobs for girls and women, despite initial promises to the contrary. A year on, teenage girls are still barred from school and women are required to cover themselves head-to-toe in public, with only the eyes showing.
Some are trying to find ways to keep education from stalling for a generation of young women and underground schools in homes have sprung up.
Natalia Kanem, executive director of the U.N.’s sexual and reproductive health agency, said in a statement that Afghan females must not be forgotten.
“As the world faces multiple, overlapping crises, we must not forget the women and girls of Afghanistan. When women’s and girls’ basic rights are denied, we are all diminished,” she said.
A year ago, thousands of Afghans had rushed to Kabul International Airport to flee the Taliban amid the U.S. military’s chaotic withdrawal from Kabul after 20 years of war — America’s longest conflict.
Some flights resumed relatively quickly after those chaotic days. On Monday, a handful of commercial flights were scheduled to land and take off from a runway that last summer saw Afghan men clinging to the wheels of planes taking off, some falling to their death.
Schoolyards stood empty Monday as the Taliban announced a public holiday to mark the day, which they refer to as “The Proud Day of Aug. 15” and the “First Anniversary of the Return to Power.”
“Reliance on God and the support of the people brought this great victory and freedom to the country,” wrote Abdul Wahid Rayan, the head of the Taliban-run Bakhtar News Agency. “Today, Aug. 15, marks the victory of Islamic Emirate of Afghanistan against America and its allies occupation of Afghanistan.”
During a gathering to mark the anniversary, the Taliban deputy prime minister, Abdul Salam Hanafi, offered congratulations to “the entire nation on the day of the conquest of Kabul, which was the beginning of the complete end of the occupation.”
In remarks broadcast live by state radio and TV, he boasted of what he described as “great achievements” under the Taliban, such as an alleged end of corruption, improved security and banned poppy cultivation.
On the eve of the anniversary, former Afghan President Ashraf Ghani defended what he said was a split-second decision to flee, saying he wanted to avoid the humiliation of surrender to the insurgents. He told CNN that on the morning of Aug. 15, 2021, with the Taliban at the gates of Kabul, he was the last one at the presidential palace after his guards had disappeared.
Tomas Niklasson, the European Union’s special envoy to Afghanistan, said the bloc of nations remains committed to the Afghan people and to “stability, prosperity and sustainable peace in Afghanistan and the region.”
“This will require an inclusive political process with full, equal and meaningful participation of all Afghan men and women and respect for human rights,” Niklasson wrote.
German Foreign Minister Annalena Baerbock said an international responsibility toward Afghanistan remains after the NATO withdrawal.
“A regime that tramples on human rights cannot under any circumstances be recognized,” she said in a statement. “But we must not forget the people in Afghanistan, even a year after the Taliban takeover.”
Dozier died “peacefully” Monday at his home near Scottsdale, Arizona, according to a statement from his family.
Lamont Dozier, the middle name of the celebrated Holland-Dozier-Holland team that wrote and produced “You Can’t Hurry Love,” “Heat Wave” and dozens of other hits and helped make Motown an essential record company of the 1960s and beyond, has died at age 81.
Dozier died “peacefully” Monday at his home near Scottsdale, Arizona, according to a statement issued by his family. The cause of death was not immediately determined. Duke Fakir, a close friend and the last surviving member of the original Four Tops, called Dozier a “beautiful, talented guy” with an uncanny sense of what material worked best for a given group.
“I like to call Holland-Dozier-Holland ‘tailors of music,’” he said Tuesday during a telephone interview. “They could take any artist, call them into their office, talk to them, listen to them and write them a top 10 song.”
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In Motown’s historic, self-defined rise to the “Sound of Young America,” Holland-Dozier-Holland stood out even compared to such gifted peers as Smokey Robinson, Stevie Wonder and Barrett Strong. Over a four-year period, 1963-67, Dozier and brothers Brian and Eddie Holland crafted more than 25 top 10 songs and mastered the blend of pop and rhythm and blues that allowed the Detroit label, and founder Berry Gordy, to defy boundaries between Black and white music and rival the Beatles on the airwaves.
For the Four Tops, they wrote “Baby I Need Your Loving” and “Reach Out (I’ll Be There),” for Martha and the Vandellas they wrote “Heat Wave” and “Jimmy Mack,” for Marvin Gaye “Baby Don’t You Do It” and “How Sweet It Is (To Be Loved by You).” The music lived on through countless soundtracks, samplings and radio airings, in cover versions by the Rolling Stones, Linda Ronstadt, James Taylor and many others and in generations of songwriters and musicians influenced by the Motown sound.
“Their structures were simple and direct,” Gerri Hirshey wrote in the Motown history “Nowhere to Run: The Story of Soul Music,” published in 1984. “Sometimes a song barreled to number one on the sheer voice of repetitive hooks, like a fast-food jingle that lurks, subliminally, until it connects with real hunger.”
Brian Wilson, Ronnie Wood and Mick Hucknall were among the many musicians offering tributes Tuesday. Carole King, who with then-husband Gerry Goffin was another leading hitmaker of the ’60s, tweeted that “striving to keep up with them made us better songwriters.”
The polish of H-D-H was ideally suited for Motown’s signature act, Diana Ross and the Supremes, for whom they wrote 10 No. 1 songs, among them “Where Did Our Love Go,” “Stop! In the Name of Love” and “You Can’t Hurry Love.” Expectations were so high that when “Nothing But Heartaches” failed to make the top 10 in 1965, Gordy sent a company memo demanding that Motown only release chart toppers for the Supremes, an order H-D-H obeyed with “I Hear a Symphony” and several more records.
Holland-Dozier-Holland weren’t above formulas or closely repeating a previous hit, but they worked in various moods and styles: the casual joy of “How Sweet It Is (To Be Loved by You),” the escalating desire of “Heat Wave,” the urgency of “Reach Out (I’ll Be There).” Dozier’s focus was on melody and arrangements, whether the haunting echoes of the Vandellas’ backing vocals on “Nowhere To Run,” flashing lights of guitar that drive the Supremes’ “You Keep Me Hanging On,” or the hypnotic gospel piano on Gaye’s “Can I Get a Witness.”
“All the songs started out as slow ballads, but when we were in the studio we’d pick up the tempo,” Dozier told the Guardian in 2001. “The songs had to be fast because they were for teenagers – otherwise it would have been more like something for your parents. The emotion was still there, it was just under cover of the optimism that you got from the up-tempo beat.”
The prime of H-D-H, and of Motown, ended in 1968 amid questions and legal disputes over royalties and other issues. H-D-H left the label, and neither side would recover. The Four Tops and the Supremes were among the acts who suffered from no longer having their most dependable writers. Meanwhile, H-D-H’s efforts to start their own business fell far short of Motown. The labels Invictus and Hot Wax both faded within a few years, and Dozier would recall with disbelief the Hollands’ turning down such future superstars as Al Green and George Clinton. H-D-H did release several hits, including Freda Payne’s “Band of Gold” and Honey Cone’s “Want Ads.”
Holland-Dozier-Holland were inducted into the Songwriters Hall of Fame in 1988 and the Rock and Roll Hall of Fame two years later. On his own, Dozier had a top 20 hit with “Trying to Hold on to My Woman,” helped produce Aretha Franklin’s “Sweet Passion” album and collaborated with Eric Clapton and Hucknall among others. His biggest success was co-writing Phil Collins’ chart-topping “Two Hearts,” from the 1988 movie “Buster,” a mid-tempo, Motown-style ballad that won a Grammy and Golden Globe and received an Oscar nomination.
H-D-H reunited for a stage production of “The First Wives Club,” which premiered in 2009, but their time back together was brief and unhappy. Dozier and the Hollands clashed often and Dozier dropped out before the show launched. “I can’t see us ever working with Lamont again,” Eddie Holland wrote in “Come and Get These Memories,” a memoir by the Hollands that came out in 2019, the same year Dozier published the memoir “How Sweet It Is.”
Dozier acknowledged that his early success conflicted with his family life, but he eventually settled down with Barbara Ullman, who died in 2021 after more than 40 years of marriage. His children included the songwriter-record producer Beau Dozier and composer Paris Ray Dozier.
Like so many Motown artists, Dozier was born in Detroit and raised in a family of singers and musicians. He sang in the choir of his Baptist church and his love for words was affirmed by a grade school teacher who, he recalled, liked one of his poems so much she kept it on the blackboard for a month. By the late 1950s, he was a professional singer and eventually signed with Motown, where he first worked with Brian Holland, and then Eddie Holland, who wrote most of the lyrics.
Some of Motown’s biggest hits and catchiest phrases originated from Dozier’s domestic life. He remembered his grandfather’s addressing women as “Sugar pie, honey bunch,” the opening words and ongoing refrain of the Four Tops’ “I Can’t Help Myself (Sugar Pie, Honey Bunch).” The Four Tops hit “Bernadette” was inspired by all three songwriters having troubles with women named Bernadette, while an argument with another Dozier girlfriend helped inspire a Supremes favorite.
“She was pretty heated up because I was quite the ladies’ man at that time and I’d been cheating on her,” Dozier told the Guardian. “So she started telling me off and swinging at me until I said, ‘Stop! In the name of love!’ And as soon as I’d said it I heard a cash register in my head and laughed. My girlfriend didn’t think it was very amusing: we broke up. The only ones who were happy about it were the Supremes.”
This past week brought home the magnitude of the overlapping crises assailing the global economy, intensifying fears of recession, job losses, hunger and a plunge on stock markets.
At the root of this torment is a force so elemental that it has almost ceased to warrant mention — the pandemic. That force is far from spent, confronting policymakers with grave uncertainty. Their policy tools are better suited for more typical downturns, not a rare combination of diminishing economic growth and soaring prices.
Major economies including the United States and France reported their latest data on inflation, revealing that prices on a vast range of goods rose faster in June than anytime in four decades.
China reported that its economy, the world’s second-largest, expanded by a mere 0.4 percent from April through June compared with the same period last year. That performance — astonishingly anemic by the standards of recent decades — endangered prospects for scores of countries that trade heavily with China, including the United States. It reinforced the realization that the global economy has lost a vital engine.
The specter of slowing economic growth combined with rising prices has even revived a dreaded word that was a regular part of the vernacular in the 1970s, the last time the world suffered similar problems: stagflation.
Most of the challenges tearing at the global economy were set in motion by the world’s reaction to the spread of Covid-19 and its attendant economic shock, even as they have been worsened by the latest upheaval — Russia’s disastrous attack on Ukraine, which has diminished the supply of food, fertilizer and energy.
“The pandemic itself disrupted not only the production and transportation of goods, which was the original front of inflation, but also how and where we work, how and where we educate our children, global migration patterns,” said Julia Coronado, an economist at the University of Texas at Austin, speaking this past week during a discussion convened by the Brookings Institution in Washington. “Pretty much everything in our lives has been disrupted by the pandemic, and then we layer on to that a war in Ukraine.”
Great Supply Chain Disruption.
meat production to shipping exploited their market dominance to rack up record profits.
The pandemic prompted governments from the United States to Europe to unleash trillions of dollars in emergency spending to limit joblessness and bankruptcy. Many economists now argue that they did too much, stimulating spending power to the point of stoking inflation, while the Federal Reserve waited too long to raise interest rates.
8 Signs That the Economy Is Losing Steam
Card 1 of 9
Worrying outlook. Amid persistently high inflation, rising consumer prices and declining spending, the American economy is showing clear signs of slowing down, fueling concerns about a potential recession. Here are other eight measures signaling trouble ahead:
Consumer confidence. In June, the University of Michigan’s survey of consumer sentiment hit its lowest level in its 70-year history, with nearly half of respondents saying inflation is eroding their standard of living.
The housing market. Demand for real estate has decreased, and construction of new homes is slowing. These trends could continue as interest rates rise, and real estate companies, including Compass and Redfin, have laid off employees in anticipation of a downturn in the housing market.
Copper. A commodity seen by analysts as a measure of sentiment about the global economy — because of its widespread use in buildings, cars and other products — copper is down more than 20 percent since January, hitting a 17-month low on July 1.
Oil. Crude prices are up this year, in part because of supply constraints resulting from Russia’s invasion of Ukraine, but they have recently started to waver as investors worry about growth.
The bond market. Long-term interest rates in government bonds have fallen below short-term rates, an unusual occurrence that traders call a yield-curve inversion. It suggests that bond investors are expecting an economic slowdown.
Now playing catch-up, central banks like the Fed have moved assertively, lifting rates at a rapid clip to try to snuff out inflation, even while fueling worries that they could set off a recession.
Given the mishmash of conflicting indicators found in the American economy, the severity of any slowdown is difficult to predict. The unemployment rate — 3.6 percent in June — is at its lowest point in almost half a century.
American consumers have enhanced fears of a downturn. This past week, the International Monetary Fund cited weaker consumer spending in slashing expectations for economic growth this year in the United States, from 2.9 percent to 2.3 percent. Avoiding recession will be “increasingly challenging,” the fund warned.
Orwellian lockdowns that have constrained business and life in general. The government expresses resolve in maintaining lockdowns, now affecting 247 million people in 31 cities that collectively produce $4.3 trillion in annual economic activity, according to a recent estimate from Nomura, the Japanese securities firm.
But the endurance of Beijing’s stance — its willingness to continue riding out the economic damage and public anger — constitutes one of the more consequential variables in a world brimming with uncertainty.
sanctions have restricted sales of Russia’s enormous stocks of oil and natural gas in an effort to pressure the country’s strongman leader, Vladimir V. Putin, to relent. The resulting hit to the global supply has sent energy prices soaring.
The price of a barrel of Brent crude oil rose by nearly a third in the first three months after the invasion, though recent weeks have seen a reversal on the assumption that weaker economic growth will translate into less demand.
major pipeline carrying gas from Russia to Germany cut the supply sharply last month, that heightened fears that Berlin could soon ration energy consumption. That would have a chilling effect on German industry just as it contends with supply chain problems and the loss of exports to China.
euro, which has surrendered more than 10 percent of its value against the dollar this year. That has increased the cost of Europe’s imports, another driver of inflation.
ports from the United States to Europe to China.
“Everyone following the economic situation right now, including central banks, we do not have a clear answer on how to deal with this situation,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Norway. “You have a lot of things going on at the same time.”
Understand Inflation and How It Impacts You
The most profound danger is bearing down on poor and middle-income countries, especially those grappling with large debt burdens, like Pakistan, Ghana and El Salvador.
As central banks have tightened credit in wealthy nations, they have spurred investors to abandon developing countries, where risks are greater, instead taking refuge in rock-solid assets like U.S. and German government bonds, now paying slightly higher rates of interest.
This exodus of cash has increased borrowing costs for countries from sub-Saharan Africa to South Asia. Their governments face pressure to cut spending as they send debt payments to creditors in New York, London and Beijing — even as poverty increases.
U.N. World Food Program declared this month.
Among the biggest variables that will determine what comes next is the one that started all the trouble — the pandemic.
The return of colder weather in northern countries could bring another wave of contagion, especially given the lopsided distribution of Covid vaccines, which has left much of humanity vulnerable, risking the emergence of new variants.
So long as Covid-19 remains a threat, it will discourage some people from working in offices and dining in nearby restaurants. It will dissuade some from getting on airplanes, sleeping in hotel rooms, or sitting in theaters.
Since the world was first seized by the public health catastrophe more than two years ago, it has been a truism that the ultimate threat to the economy is the pandemic itself. Even as policymakers now focus on inflation, malnutrition, recession and a war with no end in sight, that observation retains currency.
“We are still struggling with the pandemic,” said Ms. Haugland, the DNB Markets economist. “We cannot afford to just look away from that being a risk factor.”
As the rest of the world learns to live with Covid-19, China’s top leader, Xi Jinping, wants his country to keep striving to live without it — no matter the cost.
China won a battle against its first outbreak in Wuhan, Mr. Xi said last week, and “we will certainly be able to win the battle to defend Shanghai,” he added, referring to the epicenter of the current outbreak in China.
summarized it as “zero movement, zero G.D.P.” Multinational companies have grown wary of further investments in the country.
For more than two years, China kept its Covid numbers enviably low by doggedly reacting to signs of an outbreak with testing and snap lockdowns. The success allowed the Communist Party to boast that it had prioritized life over death in the pandemic, unlike Western democracies where deaths from the virus soared.
More transmissible variants like Omicron threaten to dent that success, posing a dilemma for Mr. Xi and the Chinese Communist Party. Harsher lockdowns have been imposed to keep infections from spreading, stifling economic activity and threatening millions of jobs. Chinese citizens have grown restless, pushing back against being forced to stay home or to move into grim, government-run isolation facilities.
politically important year for Mr. Xi, China’s censors have moved quickly to muffle calls for a change in course on Covid-19. The head of the World Health Organization, whose recommendations China once held up as a model, was silenced this week when he called on the country to rethink its strategy.
Photographs and references to Tedros Adhanom Ghebreyesus, the director general of the W.H.O., were promptly scrubbed from the Chinese internet after the statement. The foreign ministry responded by calling Mr. Tedros’s remarks “irresponsible,” and accusing the W.H.O. of not having a “proper understanding of the facts.”
China’s state-controlled media has also glossed over the draconian measures officials have deployed to deal with outbreaks. This week, as some authorities in Shanghai erected new fences around quarantine zones, boarded up more homes and asked residents not to leave their apartments, state media painted a picture of a city slowly returning to normal.
One article described the “hustle and bustle of city life” returning, while another focused on statistics for how many stores had reopened.
has not happened. Several Chinese companies are in the testing phase of a homegrown mRNA option, and China also recently approved for emergency use a Covid-19 antiviral pill made by Pfizer called Paxlovid.
Administering three vaccine shots, using antiviral therapies and offering more effective vaccines could help China find a path out of zero Covid, Mr. Ajelli said.
disappointing winter wheat harvest in June could drive food prices — already high because of the war in Ukraine and bad weather in Asia and the United States — further up, compounding hunger in the world’s poorest countries.
A pause on wealth redistribution. For much of last year, China’s top leader, Xi Jinping, waged a fierce campaign to narrow social inequalities and usher in a new era of “common prosperity.” Now, as the economic outlook is increasingly clouded, the Communist Party is putting its campaign on the back burner.
By one estimate, nearly 400 million people in 45 cities have been under some form of lockdown in China in the past month, accounting for $7.2 trillion in annual gross domestic product. Economists are concerned that the lockdowns will have a major impact on growth; one economist has warned that if lockdown measures remain in place for another month, China could enter into a recession.
European and American multinational companies have said they are discussing ways to shift some of their operations out of China. Big companies that increasingly depend on China’s consumer market for growth are also sounding the alarm. Apple said it could see a $4 billion to $8 billion hit to its sales because of the lockdowns.
struggle to find and keep jobs during lockdowns.
Even as daily virus cases in Shanghai are steadily dropping, authorities have tightened measures in recent days following Mr. Xi’s call last week to double down. Officials also began to force entire residential buildings into government isolation if just one resident tested positive.
The new measures are harsher than those early on in the pandemic and have been met with pockets of unrest, previously rare in China where citizens have mostly supported the country’s pandemic policies.
In one video widely circulated online before it was taken down by censors, an exasperated woman shouts as officials in white hazmat suits smash her door down to take her away to an isolation facility. She protests and asks them to give her evidence that she has tested positive. Eventually she takes her phone to call the police.
“If you called the police,” one of the men replies, “I’d still be the one coming.”
Isabelle Qian contributed reporting, and Claire Fu contributed research.
For the second year in a row, the World Economic Forum scrapped its annual meeting in the Alpine resort town of Davos, Switzerland, because of the pandemic.
The gathering is an essential stop on the annual circuit for the global elite, a weeklong schmoozefest where billionaires and autocrats mingle over canapés while activists protest in the frigid mountain air. Companies make climate pledges. Economists discuss inequality. Everyone walks on the same slippery, slushy roads.
the patrician founder of the World Economic Forum, said in a statement on Thursday.
So far, however, there is little sign that the pandemic is beginning to wane. And for a second year in a row, with Davos the event on hold, the town of Davos, Switzerland, is stuck in limbo.
a study by University of St. Gallen that was commissioned by the forum. The bulk of that, roughly $70 million, was spent in Davos, which has a year-round population of about 11,000 people. That number essentially doubles when the forum comes to town.
Hotels, and in particular the Steigenberger Grandhotel Belvédère, will feel the pain particularly acutely. During the annual meeting, the Belvédère has its own center of gravity, erecting temporary structures to accommodate additional meeting rooms, allowing television networks to set up on its roof and hosting a constant string of receptions in its various bars.
Normally, it is all but impossible to get a room there during the third week of January, with rooms ranging from $1,000 to $10,000, if they are available. Now, during what is usually its busiest time of the year, rooms at the Belvédère are available for less than $300 a night on Expedia.com.
“Davos Man” has come to describe individuals so wealthy and powerful that they play by their own set of rules, and write the rules for the rest of us. The annual meeting has come to define the place more than the mountains, the ski slopes or the mulled wine served in chalet taverns. Even onetime critics of the World Economic Forum have come around and now embrace its singular place in Davos.
“In my early days, I was demonstrating during the W.E.F. for better action against climate change and social justice,” Philipp Wilhelm, the mayor of Davos, told the Guardian after last year’s event was canceled. “Now, I am trying to get the W.E.F. back to Davos.”
Even if you didn’t experience the famine personally you must have been deeply aware of it and affected by it.
A thousand percent. First of all, you have to remember we come from massive families. My mom has 24 siblings. And you grow up very much aware of it. I grew up in a country where fuel was rationed, where food, sugar, toilet paper was rationed no matter who you are. It didn’t matter if you lived in Addis or outside of Addis. When toilet paper shortages happened during Covid and everybody was running to stock up, I was like, “I don’t know why you’re stocking up. I have like 80 rolls of toilet paper.”
People were like, “Why do you have 80 rolls of toilet paper?” And I was like, “Is that not how one lives in life? In fear that things might run out?” But it is how we were raised, very much aware that you can’t take anything for granted, that anything can disappear. We had neighbors that disappeared.
How did you wind up coming to the United States for college?
I studied really, really hard. I wanted to get out. My parents sacrificed absolutely everything to send us to the best school in the country, and I knew every day that my obligation to them was to do well, because they gave up most of their income to make sure we went to that school.
Also, my dad was born in an Italian prison. My grandfather orchestrated the plot to kill General Graziani when Mussolini tried to colonize Ethiopia, and it ended up costing his life. They assassinated my grandfather when my grandmother was pregnant with my dad, and they took her as a prisoner of war to Italy, and she gave birth to my dad in an Italian prison. So I was raised in a pretty strong family, in that fighting for survival kind of way, and I just felt like I owed it to my family to do well in life.
When you joined Morgan Stanleydid you figure you wanted to be in finance for the rest of your life, or were you saying, “I got to get out of here as fast as I can”?
I decided that the only job I would take in finance would be to work in commodities. It was the only section of finance that I felt was connected to the real world and all the things I cared about. One day I got up and I decided I was ready to trade. So I went to my boss and said, “Hey, you’re going to hire me to trade natural gas.” He was like, “I’m not hiring.” And I was like, “No, no, you’re going to hire me.” And he did, so I started trading gas, and then he got promoted, and I took over that business.
Thu Trang traveled to Ho Chi Minh City, Vietnam, in 2019, ecstatic to get a job at a factory. She worked eight-hour shifts and was guaranteed overtime pay, and the wages were nearly triple what she had made as a farmer back home.
But during a Covid-19 outbreak this summer, the factory where she worked making Adidas, Converse and New Balance shoes virtually shut down. She and her co-workers were forced to live in a cramped apartment for nearly three months, subsisting on a diet of rice and soy sauce. In October, when restrictions loosened as global supply chain issues surged, Thu Trang decided she would pack up and return to her home province, Tra Vinh.
Her manager promised her higher wages, but she didn’t bother to find out how much.
“Even if the company doubles or triples our wages, I insist on moving back home,” said Thu Trang, who asked to be identified only by her first name because she feared retribution from her company and the government. “Ho Chi Minh City was once a destination where we sought our future, but this is no longer a safe place.”
Just last year, Vietnam’s coronavirus controls were lauded by health officials around the world. The country was so successful that it achieved the highest economic growth in Asia last year, at 2.9 percent. That outlook has dimmed: Workers have fled their factories, managers are struggling to get them back, and economists are forecasting that a full recovery in output won’t come until next year.
monthslong factory shutdowns in the Southeast Asian country. It could mean a longer wait for Nike sneakers,Lululemon yoga pants and Under Armour tank tops before the holidays.Several American retailers have already switched to suppliers in China to ease the crunch.
Patagonia and other brands.
Ms. Doan said that when the government imposed coronavirus restrictions, she went days without food and received only about $130 for August and September from local authorities. The subsidy was not enough for her to pay rent. She said shewas waiting for the company to approve her resignation.
“My trust in the authorities has vanished,” she said. “They failed to control the pandemic effectively, causing many to die from infection and to live in hunger.”
the deliveries of gifts during the Christmas season.
Nike cut its 2022 revenue growth forecast, sayingin September that it had lost 10 weeks of production because 80 percent of its footwear factories were in the south of Vietnam and nearly half of its apparel factories in the country were closed.
On earnings calls, Chico’s, a women’s clothing maker based in Florida, and Callaway, the golf company, said they had moved some of their production out of Vietnam.
Adam Sitkoff, the executive director of the American Chamber of Commerce in Vietnam, said many companies were looking for workarounds and other remedies to help ease the stress.
“American companies are seeing what they can do,” Mr. Sitkoff said. “If we charter buses and send them to whatever province and hometown, will that help us get the people back?”
American businesses have pushed the Vietnamese government to speed up its vaccine program, which they say is essential for workers to feel safe.Only 29 percent of the population has been fully inoculated, one of the lowest rates in Southeast Asia. Vietnam says it hopes to fully vaccinate 70 percent of its population by the end of the year.
Nguyen Huyen Trang, a 25-year-old worker for Changshin Vietnam, a major supplier for Nike, is fully vaccinated but said she still feared being back on the factory floor. Ms. Nguyen and her husband returned to their home inNinh Thuan, a province in central Vietnam, from Dong Nai when cases there started soaring at the end of July. Her husband wants to go back to the city, but her family is pressuring her to stay.
She said her manager called her in October and offered to increase her wages if she returned. Her response, she said, was “a definite head-shaking no.”