Статті

U.S. Treasury Secretary Janet Yellen on Sunday forecast a substantial reduction in U.S. inflation in 2023, barring an unexpected shock.

“I believe by the end of next year you will see much lower inflation if there’s not … an unanticipated shock,” she told CBS’ ’60 Minutes’ in an interview released Sunday.

Asked about the likelihood of recession, the former Federal Reserve chair said, “There’s a risk of a recession. But … it certainly isn’t, in my view, something that is necessary to bring inflation down.”

Yellen’s comment came days before the Fed is expected to slow the aggressive pace of interest rate increases it has pursued this year. Fed Chair Jerome Powell has telegraphed a smaller, half-of-a-percentage point increase in the policy rate, to a range of 4.25%-4.5%, after four 75-basis point hikes this year.

Yellen told CBS that economic growth was slowing substantially, inflation was easing and she remained hopeful that the labor market would remain healthy.

She said she hoped the spike in inflation seen this year would be short-lived and said the U.S. government had learned “a lotta lessons” about the need to curtail inflation after high prices seen in the 1970s.

Shipping costs had come down and long delivery lags had eased, while gasoline prices at the pump were “way down.”

“I think we’ll see a substantial reduction in inflation in the year ahead,” she said.
…

Saudi energy minister Prince Abdulaziz bin Salman said Sunday the impact of European sanctions on Russian crude oil and price cap measures “did not bring clear results yet” and its implementation was still unclear.

The Group of 7 price cap on Russian seaborne oil came into effect Monday as the West tries to limit Moscow’s ability to finance its war in the Ukraine.

Russia has said it would not abide by the measure even if it must cut its production.

“What is happening now in terms of sanctions and price caps imposed and all of it really did not bring clear results, including measures implemented on Dec. 5, we see a state of uncertainty in implementation,” Prince Abdulaziz told a forum held following the country’s 2023 budget announcements in Riyadh.

Prince Abdulaziz said Russia’s reaction and what actions it would take in response to these tools was another aspect that needed to be taken into consideration when looking at the state of play in global markets.

“These tools were created for political purposes and it is not clear yet whether they can achieve these political purposes,” he said, referring to the price cap.

Other factors affecting the market going into 2023 include China’s COVID-19 policies. The impact on China’s economy from easing Covid restrictions still “needs time,” he said.

Central banks’ actions to tame inflation were also still a factor.

“Central banks are still preoccupied with managing inflation, no matter the cost of these measures and their possible negative impact on global economic growth.”

The OPEC+ alliance decision to cut production by 2 million barrels per day on Oct. 5 was proven to be the correct one when recent developments are taken into consideration, he said.

The alliance, which groups together members of The Organization of Petroleum Exporting Countries and allies including Russia, last met on Dec. 4 and decided to keep output unchanged amid a weakening economy and uncertainty over how the Russian price cap would affect the market.

Prince Abdulaziz said the alliance would continue to focus on market stability in the year ahead.

He also said he insisted that every OPEC+ alliance member take part in decision-making.

“Group action requires agreement and therefore I continue to insist that every OPEC+ member, whether a big or small producer…be a part of decision-making,” Prince Abdulaziz told the forum.

“Consensus has positive implications on the market.”
…

The Wall Street Journal reports U.S. smartphone giant Apple Inc. is accelerating plans to move some China-based production lines to other southeastern Asian countries such as India and Vietnam.

That, analysts said, would represent a significant shift in the so-called de-Sinification of global supply chains after manufacturers become aware of risks of concentrating production in China.

China’s zero-COVID policy, which paralyzed some of its supply chains, and its deteriorating business environment would be the major trigger behind the shift, they added.

India: the world’s next factory?

“China’s anti-virus measures have forced many multinationals, including Apple, to hedge against the risk of disrupted supply chains. Though China is set to ease COVID restrictions, uncertainty remains because these multinationals have had experienced much sudden change of policy there – reasons behind Apple’s accelerated relocation of its production lines outward,” Darson Chiu, a research fellow of the economic forecasting center under the Institute of Economic Research (TIER) in Taipei, told VOA over the phone.

He said that many companies, including Apple, have seen the potential in India in competing with China to be “the world’s next factory,” adding that cost of labor and land is “at one-fifth of the level in China.”

“This highlights an evolving trend, where many companies, not just Apple, are concerned about the environment in China, and not just because of COVID. When we look at theft of intellectual property, that’s of technology, cyber-attacks on companies inside China, the onerous restrictions that apply from Chinese government to data flows, there are a number of factors that are making China a much less attractive environment for manufacturers to be,” Stephen Ezell, director of global innovation policy at the Information Technology and Innovation Foundation (ITIF) in Washington told VOA by video.

“And I think it’s possible that Apple represents the tip of the spear for a much greater share of global high-tech production moving outside of China,” he added.

A domino effect?

Ezell said more multinationals might follow suit if Apple succeeds in shipping products from India, as it had produced a small percentage of iPhone 14s there.

Citing people involved in the discussion, The Wall Street Journal reported on December 6 that Apple had asked its suppliers to plan more actively for assembling its products elsewhere in Asia, “particularly India and Vietnam,” to reduce dependence on China-based assemblers, led by Taiwan-headquartered Foxconn’s Zhengzhou plant. 

Turmoil over anti-virus measures and wage disputes last month among the plant’s 300,000 workers have made Apple uncomfortable having so much business tied up in the plant, which made about 85% of the iPhone’s pro series, according to the report.

It added that Apple’s long-term goal is to ship 40% to 45% of iPhones from India, compared with a current single-digit percentage, citing Ming-chi Kuo, an analyst at TF International Securities in Hong Kong.

When asked by VOA, Foxconn refused to comment. But the company Thursday announced on its WeChat account that it has lifted closed-loop Covid restrictions at its Zhengzhou plant.

Paul Triolo, senior vice president for China, and technology policy lead at Albright Stonebridge Group in Washington, told VOA that Apple has already done some manufacturing with Foxconn in India, which plans to add 50,000 workers to total at 70,000 there over the next two years.

He warned, though, that it will be hard for Foxconn to duplicate its highly optimized China supply chain in India, where skilled workers and infrastructure including airports, ports and high-speed rail, as well as an ecosystem of component suppliers at a low cost, are lacking.

Painful transition

“India has some advantages … it does tend to crank out a lot of engineers but you’re talking about a sort of different cultural issues and expectations and labor practices, and all these things. So it’s not as easy as just picking up something and dropping it into another country. You have to learn the local situation. You have to work with local governments. That can be painful,” Triolo told VOA by video.

He added that, even though companies like Foxconn are good at managing production, the cost structures will be different in India.

Hence, he noted that some of Apple’s diversification of supply chains may happen inside China, as Foxconn is reportedly looking to expand at its Taiyuan plant in China’s northern Shanxi province.

The biggest challenge of all lies in India’s ability to strengthen its depth of supplier base for Apple at an optimal cost, Ezell said.

“The production ecosystem, that’s what’s the key driver in decreasing the cost, not just low labor costs. So, the challenge for India is going to be several folds. One, building a localized base of suppliers that can support production at lower cost. And then more broadly, ensuring that India does have the highly skilled trained workforce and individuals that had experience and building what are truly very complex electronics with iPads or phones,” Ezell said.

Negative impact on China’s jobless rate

Arthur Guo, a senior analyst at the market intelligence firm International Data Corp in Beijing, said he would not be surprised to see Apple diversify the production of its iPhone 15 next year after the lockdown at Foxconn’s Zhengzhou plant has seriously affected the supply of the iPhone 14.

That will hurr China’s economic growth and unemployment rate, Guo said in a written reply to VOA.

“However, this relocating process will last for a period and will not be implemented immediately. In the future, we believe China still will be an important production country for Apple and will find a better solution to this problem,” Guo added.

Earlier estimates by TF’s Kuo showed that the total shipment of iPhone 14 pro and pro max in the fourth quarter would be 15 million to 20 million units less than expected due to labor protests at the Zhengzhou plant.
…

The United Arab Emirates and Ukraine on Monday announced their intention to start negotiations on a bilateral trade deal, expected to conclude by the middle of next year, the UAE economy ministry said.

The UAE state has tried to remain neutral in the Russia-Ukraine war despite Western pressure on Gulf oil producers to help isolate Moscow, a fellow OPEC+ member.

The UAE’s minister of state for foreign trade, Thani Al Zeyoudi, and Ukraine’s economy minister, Yulia Svyrydenko, signed a joint statement on negotiations towards a Comprehensive Economic Partnership Agreement (CEPA), the ministry said.

It would be the UAE’s first such deal with a European country, following more than $3 billion in trade and investment pledges made during Ukrainian President Volodymyr Zelensky’s visit to the Gulf state in February 2021.

“For us, Ukraine is a key trade partner. The growth and investment potential was high before the whole geopolitical situation; we think it’s time to push things forward,” Thani Al Zeyoudi, UAE minister of state for foreign trade, told Reuters.

UAE-Ukraine non-oil trade amounted to just over $900 million in 2021, up nearly 29% over the previous year, and 12% more than in 2019, according to the UAE ministry.

Talks will likely center on opportunities to expand trade in the services sector, and on food security where the UAE, a trade hub, is making a push. Ukraine is a major supplier of grain to the Middle East.

The ministry statement said a CEPA with Ukraine would open up access to new markets in Asia, Africa and the Middle East for Ukraine’s agricultural and industrial output.

“This is not only going to bring added value to the UAE but also to Ukraine as well,” Al Zeyoudi told Reuters.

The UAE has signed free trade deals with India, Israel and Indonesia this year, aiming to build its position as a global trade and logistics hub at a time of rising competition from Saudi Arabia.
…

Sales of arms and military services grew in 2021, researchers said Monday, but were limited by worldwide supply issues related to the pandemic, with the war in Ukraine increasing demand while worsening supply difficulties.   

The top 100 arms companies sold weapons and related services totaling $592 billion in 2021, 1.9% more than the year before, said the latest report from the Stockholm International Peace Research Institute (SIPRI). 

However, the growth was severely impacted by widespread supply chain issues.   

“The lasting impact of the pandemic is really starting to show in arms companies,” Nan Tian, a senior researcher at SIPRI, told AFP.   

Disruptions from both labor shortages and difficulties in sourcing raw materials were “slowing down the companies’ ability to produce weapons systems and deliver them on time,” Tian said. “So what we see really is a potentially slower increase to what many would have expected in arms sales in 2021.”   

Russia’s invasion of Ukraine is also expected to worsen supply chain issues, in part “because Russia is a major supplier of raw materials used in arms production”, said the report’s authors.   

But the war has at the same time increased demand.   

“Definitely demand will increase in the coming years,” Tian said.   

By how much was at the same time harder to gauge, Tian said pointing to two factors that would impact demand. 

Firstly, countries that have sent weapons to Ukraine to the tune of hundreds of millions of dollars will be looking to replenish stockpiles.   

Secondly, the worsening security environment means “countries are looking to procure more weapons.”   

With the supply crunch expected to worsen, it could hamper these efforts, the authors noted. 

Companies in the U.S. continue to dominate global arms production, accounting for over half, $299 billion, of global sales and 40 of the top companies.   

At the same time, the region was the only one to see a drop in sales: 0.9 percent down on the 2020 figures.   

Among the top five companies — Lockheed Martin, Raytheon Technologies, Boeing, Northrop Grumman and General Dynamics — only Raytheon recorded an increase in sales.   

Meanwhile, sales from the eight largest Chinese arms companies rose 6.3% to $109 billion in 2021.   

European companies took 27 of the spots on the top 100, with combined sales of $123 billion, up 4.2% compared to 2020.   

The report also noted a trend of private equity firms buying up arms companies, something the authors said had become increasingly apparent over the last three or four years.   

This trend threatens to make the arms industry more opaque and therefore harder to track, Tian said, “because private equity firms will buy these companies and then essentially not produce any more financial records.” 
…

EU chief Ursula von der Leyen said Sunday the bloc must act to address “distortions” created by Washington’s $430-billion plan to spur climate-friendly technologies in the United States.

The European Union must “take action to rebalance the playing field where the IRA [Inflation Reduction Act] or other measures create distortions,” von der Leyen said in a speech at the College of Europe in the Belgian city of Bruges.

EU countries have poured criticism on Washington’s landmark Inflation Reduction Act, seeing it as anti-competitive and a threat to European jobs, especially in the energy and auto sectors.

The act, designed to accelerate the U.S. transition to a low-carbon economy, contains around $370 billion in subsidies for green energy as well as tax cuts for U.S.-made electric cars and batteries.

Von der Leyen said the EU had to work with the U.S. “to address some of the most concerning aspects of the law.”

She said that Brussels must also “adjust” its own rules to facilitate public investment in the environmental transition and “reassess the need for further European funding of the transition.”

French President Emmanuel Macron seized an opportunity on a state visit to Washington for talks with U.S. President Joe Biden last week to air deep grievances over U.S.-EU trade.

The White House touts the IRA as a groundbreaking effort to reignite US manufacturing and promote renewable technologies.
…

OPEC+ agreed to stick to its oil output targets at a meeting on Sunday, two OPEC+ sources told Reuters.

The decision comes two days after the Group of Seven (G-7) nations agreed a price cap on Russian oil.

OPEC+, which comprises the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, angered the United States and other Western nations in October when it agreed to cut output by 2 million barrels per day, about 2% of world demand, from November until the end of 2023.

Washington accused the group and one of its leaders, Saudi Arabia, of siding with Russia despite Moscow’s war in Ukraine.

OPEC+ argued it had cut output because of a weaker economic outlook. Oil prices have declined since October due to slower Chinese and global growth and higher interest rates.

On Friday, G-7 nations and Australia agreed a $60 per barrel price cap on Russian seaborne crude oil in a move to deprive President Vladimir Putin of revenue while keeping Russian oil flowing to global markets.

Moscow said it would not sell its oil under the cap and was analyzing how to respond.
…

President Joe Biden signed legislation Friday to block a national U.S. railroad strike that could have devastated the American economy.

The U.S. Senate voted 80 to 15 on Thursday to impose a tentative contract deal reached in September on a dozen unions representing 115,000 workers, who could have gone on strike on December 9. But the Senate failed to approve a measure that would have provided paid sick days to railroad workers.

Eight of 12 unions had ratified the deal. But some labor leaders have criticized Biden, a self-described friend of labor, for asking Congress to impose a contract that workers in four unions have rejected over its lack of paid sick leave.

Railroads have slashed labor and other costs to bolster profits in recent years, and they have been fiercely opposed to adding paid sick time that would require them to hire more staff.

A rail strike could have frozen almost 30% of U.S. cargo shipments by weight, stoked already surging inflation, cost the American economy as much as $2 billion a day, and stranded millions of rail passengers.

There are no paid short-term sick days under the tentative deal after unions asked for 15 and railroads settled on one personal day.

Teamsters President Sean O’Brien harshly criticized the Senate vote on sick leave. “Rail carriers make record profits. Rail workers get zero paid sick days. Is this OK? Paid sick leave is a basic human right. This system is failing,” O’Brien wrote on Twitter.

Congress invoked its sweeping powers to block strikes involving transportation – authority it does not have in other labor disputes.

The contract that will take effect with Biden’s signature includes a 24% compounded pay increase over five years and five annual $1,000 lump-sum payments.

American Association of Railroads CEO Ian Jefferies said that “none of the parties achieved everything they advocated for” but added, “without a doubt, there is more to be done to further address our employees’ work-life balance concerns.”

Without the legislation, rail workers could have gone out next week, but the impacts would be felt as soon as this weekend as railroads stopped accepting hazardous materials shipments and commuter railroads began canceling passenger service.

The contracts cover workers at carriers including Union Pacific, Berkshire Hathaway Inc’s BNSF, CSX , Norfolk Southern Corp and Kansas City Southern.
…

U.S. employers hired more workers than expected in November and raised wages despite mounting worries of a recession, which could complicate the Federal Reserve’s intention to start slowing the pace of its interest rate hikes this month.

Nonfarm payrolls increased by 263,000 jobs last month, the Labor Department said in its closely watched employment report on Friday. Data for October was revised higher to show payrolls rising 284,000 instead of 261,000 as previously reported.

Economists polled by Reuters had forecast payrolls increasing 200,000. Estimates ranged from 133,000 to 270,000.

Hiring remains strong despite technology companies, including Twitter, Amazon AMZN.O and Meta META.O, the parent of Facebook, announcing thousands of jobs cuts.

Economists said these companies were right-sizing after over-hiring during the COVID-19 pandemic. They noted that small firms remained desperate for workers.

There were 10.3 million job openings at the end of October, many of them in the leisure and hospitality as well as healthcare and social assistance industries.

The unemployment rate was unchanged at 3.7%.

Average hourly earnings increased 0.6% after advancing 0.5% in October. That raised the annual increase in wages to 5.1% from 4.9% in October. Wages peaked at 5.6% in March.

The report followed on the heels of news on Thursday of a slowdown in inflation in October. But the labor market remains tight, with 1.7 job openings for every unemployed person in October, keeping the Fed on its monetary tightening path at least through the first half of 2023.

Fed Chair Jerome Powell said on Wednesday the U.S. central bank could scale back the pace of its rate increases “as soon as December.” Fed officials meet on Dec. 13 and 14. The Fed has raised its policy rate by 375 basis points this year from near zero to a 3.75%-4.00% range in the fastest rate-hiking cycle since the 1980s as it battles high inflation.

Labor market strength is also one of the reasons economists believe an anticipated recession next year would be short and shallow, with data on Thursday showing a surge in consumer spending in October. Business spending is also holding up, though sentiment has weakened.
…

The U.S. central bank could scale back the pace of its interest rate hikes “as soon as December,” Federal Reserve Chair Jerome Powell said on Wednesday, while warning that the fight against inflation was far from over and key questions remain unanswered, including how high rates will ultimately need to rise and for how long.

“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down. The time for moderating the pace of rate increases may come as soon as the December meeting,” Powell said in a speech to the Brookings Institution think tank in Washington.

But, in remarks emphasizing the work left to be done in controlling inflation, Powell said that issue was “far less significant than the questions of how much further we will need to raise rates to control inflation, and the length of time it will be necessary to hold policy at a restrictive level.”

While the Fed chief did not indicate his estimated “terminal rate,” Powell said it is likely to be “somewhat higher” than the 4.6% indicated by policymakers in their September projections. He said curing inflation “will require holding policy at a restrictive level for some time,” a comment that appeared to lean against market expectations the U.S. central bank could begin cutting rates next year as the economy slows.

“We will stay the course until the job is done,” Powell said, noting that even though some data points to inflation slowing next year, “we have a long way to go in restoring price stability … Despite the tighter policy and slower growth over the past year, we have not seen clear progress on slowing inflation.”

The Fed’s response to the fastest outbreak of U.S. inflation in 40 years has been a similarly abrupt increase in interest rates. With a half-percentage-point increase expected at its Dec. 13-14 meeting, the central bank will have lifted its overnight policy rate from near zero as of March to the 4.25%-4.50% range, the swiftest change in rates since former Fed Chair Paul Volcker was battling an even worse rise in prices decades ago.

That has made home mortgages and other forms of credit more expensive for consumers and businesses.

It has not, however, caused any appreciable impact on the U.S. job market, where the current 3.7% unemployment rate has led some policymakers to argue they are free to tighten rates further without much risk.

But it has also had no convincing impact yet on inflation, a fact that has left open just how much further the Fed may need to raise rates into what it refers to as “restrictive” territory designed to slow the economy.

Powell said Fed estimates of inflation in October showed its preferred measure still rising at about triple the central bank’s 2% target.

‘Long way to go’

Powell’s remarks ignited a robust rally in equity and bond markets, which have taken a pounding this year on the back of the Fed’s aggressive rate hikes.

The benchmark S&P 500 index .SPX shot into positive territory and was last up by about 1.5% on the day, and bond yields, which move in the opposite direction to their prices, all tumbled. The yield on the 2-year Treasury note US2YT=RR, the maturity most sensitive to Fed rate expectations, dropped to about 4.47% from 4.52%. The dollar .DXY weakened against a basket of major trading partners’ currencies.

In rate futures markets, traders added to the prevailing bets that the Fed would slow its pace of rate hikes at its meeting in two weeks.

“You can’t keep raising rates as quickly as they were doing it,” said Rick Meckler at Cherry Lane Investments in New Vernon, New Jersey. “That said, investors always like the comfort of hearing it directly from the (Fed) chair.” 

Powell noted that the cost of housing is likely to continue to rise into next year, while key price measures for services remain high and the labor market is tight.

“Despite some promising developments, we have a long way to go in restoring price stability,” he said.
…

Days after flocking to stores on Black Friday, consumers are turning online for Cyber Monday to score more discounts on gifts and other items that have ballooned in price because of high inflation.

Cyber Monday is expected to remain the year’s biggest online shopping day and rake in up to $11.6 billion in sales, according to Adobe Analytics, which tracks transactions at over 85 of the top 100 U.S. online stores. That forecast represents a jump from the $10.7 billion consumers spent last year.

Adobe’s numbers are not adjusted for inflation, but the company says demand is growing even when inflation is factored in. Some analysts have said top line numbers will be boosted by higher prices and the amount of items consumers purchase could remain unchanged — or even fall — compared to prior years. Profit margins are also expected to be tight for retailers offering deeper discounts to attract budget-conscious consumers and clear out their bloated inventories. 

Shoppers spent a record $9.12 billion online on Black Friday, up 2.3% from last year, according to Adobe. E-commerce activity continued to be strong over the weekend, with $9.55 billion in online sales.

Salesforce, which also tracks spending, said their estimates showed online sales in the U.S. hit $15 billion on Friday and $17.2 billion over the weekend, with an average discount rate of 30% on products. Electronics, active wear, toys and health and beauty items were among those that provided a big boost, the two groups said.

Meanwhile, consumers who feared leaving their homes and embraced e-commerce during the pandemic are heading back to physical stores in greater numbers this year as normalcy returns. The National Retail Federation said its recent survey showed a 3% uptick in the number of Black Friday shoppers planning to go to stores. It expects 63.9 million consumers to shop online during Cyber Monday, compared to 77 million last year.

Consumers are spending cautiously

Mastercard SpendingPulse, which tracks spending across all types of payments including cash and credit card, said that overall sales on Black Friday rose 12% from the year-ago. Sales at physical stores rose 12%, while online sales were up 14%.

RetailNext, which captures sales and traffic via sensors, reported that store traffic rose 7% on Black Friday, while sales at physical stores improved 0.1% from a year ago. However, spending per customer dropped nearly 7% as cautious shoppers did more browsing than buying. Another company that tracks store traffic — Sensormatic Solutions — said store traffic was up 2.9% on Black Friday compared to a year ago.

“Shoppers are being more thoughtful, but they are going to more than a few retailers to be able to make a determination of what they are going to buy this year,” said Brian Field, Sensormatic’s global leader of retail consulting and analytics.

Overall, online spending has remained resilient in the past few weeks as eager shoppers buy more items on credit and embrace “buy now, pay later” services that lack interest charges but carry late fees.

In the first three weeks of November, online sales were essentially flat compared with last year, according to Adobe. It said the modest uptick shows consumers have a strong appetite for holiday shopping amid uncertainty about the economy.

Still, some major retailers are feeling a shift. Target, Macy’s and Kohl’s said this month they’ve seen a slowdown in consumer spending in the past few weeks. The exception was Walmart, which reported higher sales in its third quarter and raised its earnings outlook.

“We’re seeing that inflation is starting to really hit the wallet and that consumers are starting to amass more debt at this point,” said Guru Hariharan, founder and CEO of retail e-commerce management firm CommerceIQ, adding there’s more pressure on consumers to purchase cheaper alternatives.

Shifting demand

This year’s Cyber Monday also comes amid a wider e-commerce slowdown affecting online retailers that saw a boom in sales during most of the COVID-19 pandemic. Amazon, for example, raked in record revenue but much of the demand has waned as the worst of the pandemic eased and consumers felt more comfortable shopping in stores.

To deal with the change, the company has been scaling back its warehouse expansion plans and is cutting costs by axing some of its projects. It’s also following in the steps of other tech companies and implementing mass layoffs in its corporate ranks. Amazon CEO Andy Jassy said the company will continue to cut jobs until early next year.

Shopify, a company which helps businesses set up e-commerce websites and also offers offline software, laid off 10% of its staff this summer.

The company said Monday that its merchants have surpassed $5.1 billion in global sales since the start of Black Friday in New Zealand. And spending per U.S. customer went up $5 compared to last year, said Shopify President Harley Finkelstein.

Despite the bump, Finkelstein said shoppers were more intentional about their spending this year and waiting for discounts before making a purchase.
…

The International Energy Agency says 13% of cars sold worldwide this year will be electric. Mike O’Sullivan reports from Los Angeles that consumer demand for electric vehicles is increasing as the industry overcomes technical hurdles.
…

U.S. shoppers spent a record $9.12 billion online on Black Friday, a report showed Saturday, as consumers weathered the squeeze from high inflation and grabbed steep discounts on everything from smartphones to toys.

Online spending rose 2.3% on Black Friday, Adobe Inc’s data and insights arm Adobe Analytics said, thanks to consumers holding out for discounts until the traditionally big shopping days, despite deals starting as early as October.

Adobe Analytics, which measures e-commerce by analyzing transactions at websites, has access to data covering purchases at 85% of the top 100 internet retailers in the United States.

It had forecast Black Friday sales to rise a modest 1%.

Adobe expects Cyber Monday to be the season’s biggest online shopping day again, driving $11.2 billion in spending.

Consumers were expected to flock to stores after the pandemic put a dampener on in-store shopping over the past two years, but Black Friday morning saw stores draw less traffic than usual with sporadic rain in some parts of the country.

Americans turned to smartphones to make their holiday purchases, with data from Adobe showing mobile shopping represented 48% of all Black Friday digital sales.
…

The outlook for the global economy headed into 2023 has soured, according to a number of recent analyses, as the ongoing war in Ukraine continues to strain trade, particularly in Europe, and as markets await a fuller reopening of the Chinese economy following months of disruptive COVID-19 lockdowns.

In the United States, signs of a tightening job market and a slowdown in business activity fueled fears of a recession. Globally, inflation grew and business activity, especially in the eurozone and the United Kingdom, continued to shrink.

In an analysis released Thursday, the Institute of International Finance predicted a global economic growth rate of just 1.2% in 2023, a level on par with 2009, when the world was only beginning its emergence from the financial crisis.

The Organization for Economic Cooperation and Development (OECD) agrees with the pessimistic forecast. In a report issued this week, the organization’s interim Chief Economist Alvaro Santos Pereira wrote, “We are currently facing a very difficult economic outlook. Our central scenario is not a global recession, but a significant growth slowdown for the world economy in 2023, as well as still high, albeit declining, inflation in many countries.”

U.S. interest rates

In the U.S., inflation and the Federal Reserve’s efforts to combat it have been the dominant factors in most analyses of the current and future states of the economy.

The U.S has been experiencing its highest levels of inflation in 40 years, with prices beginning to jump significantly in mid-2021. By the beginning of 2022, annualized rates were over 6%, and while fluctuating a bit, touched a high of 6.6% in October.

Beginning in March, the central bank’s Federal Open Market Committee (FOMC), which sets base interest rates, has engaged in a dramatic series of increases, raising the benchmark rate from between 0.0% and 0.25% to between 3.75% and 4.0% today.

The idea behind the Fed’s moves is to change consumers’ incentives. By making the interest rates on savings more appealing, and the rates on borrowing less so, the central bank is working to reduce demand and thereby slow the rate of price increases.

In general, the Fed believes that an annual 2% rate of inflation is healthy and considers that its long-term target.

Avoiding a recession

The Fed’s goal is to get inflation under control without plunging the economy into a damaging recession. And while a number of economic signs indicate that efforts to slow demand might be working, the threat of a recession still looms.

Evidence released this week showed that business activity in the U.S. contracted for a fifth consecutive month as companies reacted to decreased consumer demand. Although the economy has continued to add jobs in recent months, applications for unemployment benefits are on the rise, suggesting a potential softening in the labor market.

The Federal Reserve this week released the minutes from the early November meeting of the FOMC. The minutes revealed a pessimistic view among the central bank’s staff economists about the U.S. economy in the coming year.

Among their findings was that they “viewed the possibility that the economy would enter a recession sometime over the next year as almost as likely as the baseline.”

A “substantial majority” of the voting members of the committee indicated that they believe it is time to slow the rate of interest rate increases, suggesting that the FOMC will retreat from its recent 0.75% increases when it meets in December, perhaps raising rates by just 0.5%.

Global struggle

Internationally, governments are facing a difficult challenge: supporting their citizens during a time when prices are rising dramatically, particularly for necessities like food and fuel, which have been deeply affected by the war in Ukraine.

In a report this week, the International Monetary Fund pointed to the difficult balancing act governments must manage, saying, “With many people still struggling, governments should continue to prioritize helping the most vulnerable to cope with soaring food and energy bills and cover other costs — but governments should also avoid adding to aggregate demand that risks dialing up inflation. In many advanced and emerging economies, fiscal restraint can lower inflation while reducing debt.”

According to the Institute of International Finance (IIF), while global growth will be low but net positive in 2023, specific areas will face declines. Chief among them is Europe, where the IIF forecasts a 2.0% decline in cumulative GDP.

Bright spots

To the extent that there are bright spots in the global economy in 2023, they are in areas such as Latin America and China.

Many countries of Latin America, where the export of raw materials, including timber, ore, and other major economic inputs drives many economies, global inflation has proved beneficial insofar as the prices for those goods have risen. The IIF report projects a 1.2% expansion in GDP across the region, even as much of the remainder of the world sees economic contraction.

China has suffered economically as a result of President Xi Jinping’s “zero-COVID” strategy, which has forced massive lockdowns of whole cities and regions, with serious disruption to economic activity. The IFF and other organizations expect significant loosening in China’s policy in the coming year, which will lead to economic growth of as much as 2.0% as the Chinese economy attempts to revive itself.

U.K. to suffer

With the exception of Russia, which is still laboring under crushing sanctions related to its invasion of Ukraine, the United Kingdom faces the gloomiest outlook for the coming year of any of the world’s largest economies.

With inflation running significantly ahead of other countries, annualized price increases are expected to touch 10% by the end of the year, before slowly moderating in 2023.

Among the G-7 countries, the U.K. is the only one in which economic output has not returned to pre-pandemic levels, and it is forecast to shrink further. The OECD projects that the British economy will decline in size by 0.3% in 2023 and will grow at only 0.2% in 2024.
…

Elon Musk said Friday that Twitter plans to relaunch its premium service that will offer different colored check marks to accounts next week, in a fresh move to revamp the service after a previous attempt backfired.

It’s the latest change to the social media platform that the billionaire Tesla CEO bought last month for $44 billion, coming a day after Musk said he would grant “amnesty” for suspended accounts and causing yet more uncertainty for users.

Twitter previously suspended the premium service, which under Musk granted blue-check labels to anyone paying $8 a month, because of a wave of imposter accounts. Originally, the blue check was given to government entities, corporations, celebrities and journalists verified by the platform to prevent impersonation.

In the latest version, companies will get a gold check, governments will get a gray check, and individuals who pay for the service, whether or not they’re celebrities, will get a blue check, Musk said Friday.

“All verified accounts will be manually authenticated before check activates,” he said, adding it was “painful, but necessary” and promising a “longer explanation” next week. He said the service was “tentatively launching” Dec. 2.

Twitter had put the revamped premium service on hold days after its launch earlier this month after accounts impersonated companies including pharmaceutical giant Eli Lilly & Co., Nintendo, Lockheed Martin, and even Musk’s own businesses Tesla and SpaceX, along with various professional sports and political figures.

It was just one change in the past two days. On Thursday, Musk said he would grant “amnesty” for suspended accounts, following the results of an online poll he conducted on whether accounts that have not “broken the law or engaged in egregious spam” should be reinstated.

The yes vote was 72%. Such online polls are anything but scientific and can easily be influenced by bots. Musk also used one before restoring former U.S. President Donald Trump’s account.

“The people have spoken. Amnesty begins next week. Vox Populi, Vox Dei,” Musk tweeted Thursday using a Latin phrase meaning “the voice of the people, the voice of God.”

The move is likely to put the company on a crash course with European regulators seeking to clamp down on harmful online content with tough new rules, which helped cement Europe’s reputation as the global leader in efforts to rein in the power of social media companies and other digital platforms.

Zach Meyers, senior research fellow at the Centre for European Reform think tank, said giving blanket amnesty based on an online poll is an “arbitrary approach” that’s “hard to reconcile with the Digital Services Act,” a new EU law that will start applying to the biggest online platforms by mid-2023.

The law is aimed at protecting internet users from illegal content and reducing the spread of harmful but legal content. It requires big social media platforms to be “diligent and objective” in enforcing restrictions, which must be spelled out clearly in the fine print for users when signing up, Meyers said.

Britain also is working on its own online safety law.

“Unless Musk quickly moves from a ‘move fast and break things’ approach to a more sober management style, he will be on a collision course with Brussels and London regulators,” Meyers said.

European Union officials took to social media to highlight their worries. The 27-nation bloc’s executive Commission published a report Thursday that found Twitter took longer to review hateful content and removed less of it this year compared with 2021.

The report was based on data collected over the spring — before Musk acquired Twitter — as part of an annual evaluation of online platforms’ compliance with the bloc’s voluntary code of conduct on disinformation. It found that Twitter assessed just over half of the notifications it received about illegal hate speech within 24 hours, down from 82% in 2021.

The numbers may yet worsen. Since taking over, Musk has l aid off half the company’s 7,500-person workforce along with an untold number of contractors responsible for content moderation. Many others have resigned, including the company’s head of trust and safety.

Recent layoffs at Twitter and results of the EU’s review “are a source of concern,” the bloc’s commissioner for justice, Didier Reynders tweeted Thursday evening after meeting with Twitter executives at the company’s European headquarters in Dublin.

In the meeting, Reynders said he “underlined that we expect Twitter to deliver on their voluntary commitments and comply with EU rules,” including the Digital Services Act and the bloc’s strict privacy regulations known as General Data Protection Regulation, or GDPR.

Another EU commissioner, Vera Jourova, tweeted Thursday evening that she was concerned about news reports that a “vast amount” of Twitter’s European staff were fired.

“If you want to effectively detect and take action against #disinformation & propaganda, this requires resources,” Jourova said. “Especially in the context of Russian disinformation warfare.”
…

Ghana’s finance minister says the country is at high risk of debt distress as the currency, the cedi, has depreciated against the U.S. dollar, increasing its foreign debt by $6 billion this year alone.  Ghana on Thursday announced more spending cuts, including a freeze on government hiring and a hike in the Value Added Tax.  It’s also looking to buy oil using gold rather than U.S. dollars as the West African country grapples with the worst economic crisis in a generation. 

There is immense pressure on the Ghanaian government to turn things around, with inflation hitting a record 40 percent in October. Traders closed their shops last month to protest the rising cost of goods and services as citizens decry the high cost of living. 

Market confidence is very low as the West African country negotiates with the International Monetary Fund (IMF) for a (U.S.) $3 billion deal to help restructure the economy. 

Presenting the 2023 budget in parliament Thursday, Finance Minister Ken Ofori-Atta, who some governing party lawmakers have already called for the president to fire, said depreciation of the cedi continues to be a huge problem as the government strives to address the country’s current challenges.

“The demand for foreign exchange to support our unbridled demand for imports undermines and weakens the value of the cedi,” he said. “This contributed to the depreciation of the cedi, which has lost about 53.8 percent of its value since the beginning of the year. Compared to the average 7 percent average annual depreciation of the cedi between 2017and 2021, the current year’s depreciation, which is driving the high costs of goods and services for everyone, is clearly an aberration – a very expensive one.”

As part of the measures to get the economy back in shape, Ofori-Atta announced a freeze on new tax waivers for foreign companies, a review of tax exemptions for mining, oil and gas companies and a reduction in the fuel allocation to government appointees. 

Daniel Amartey, an economist with the Accra-based Policy Initiative for Economic Development (PIED), said the spending cuts send a positive signal, but he wants the government to focus more on blocking leaks in the system. 

“What could be done more significantly in terms of minimizing government expenditure has to do with the corruption in the system and then financial malfeasance,” Amartey said.  “So, we should have a way of addressing corruption and its related offences. The government if indeed is ready to minimize expenditures should empower the office of the special prosecutor to be able to deal with corruption and its related offences.”

Meanwhile, the Vice-President Mahamudu Bawumia announced on Facebook that Ghana is working on a new policy, effective next year, to buy oil products with gold rather than U.S. dollar reserves as part of the government measures to strengthen the cedi.

Explaining how the policy works, Gideon Boako, the spokesperson of the vice president in a text to VOA said, “it is basically going to be [a] government-to-government transaction. The significant drain on the forex [FX, the foreign exchange marketplace] is from oil imports. Once you lock that tunnel, you are good on the FX side.”

He added: “The government of Ghana will buy gold locally with cedis through the Bank of Ghana (financier) and then exchange the gold for fuel (oil) in a barter form, for example, with the government of UAE.”

Amartey described the policy as innovative.

“It is a very progressive one and within the shortest possible time it should be able to help us address the depreciation of the cedi. So, less dollars will be used in terms of our exportation.”
…

China said on Friday it would cut the amount of cash that banks must hold as reserves for the second time this year, releasing about $69.8 billion in long-term liquidity to prop up a faltering economy hit by record COVID-19 cases.

The People’s Bank of China (PBOC) said it would cut the reserve requirement ratio for banks by 25 basis points (bps), effective from Dec. 5.

The central bank hopes to spur more lending into the economy, but analysts are skeptical it could achieve quick results, as new COVID outbreaks throw factories and households into lockdown, with little appetite for new credit, while the outlook for already slower-than-expected growth has darkened.

“The reduction … will help banks follow through on a directive to defer loan repayments from firms struggling with widening lockdown restrictions,” Mark Williams, chief Asia economist at Capital Economics, said in an email. “But few firms or households are willing to commit to new borrowing in this uncertain environment.”

The PBOC has been walking a tightrope on policy, seeking ways to support the slowing economy while avoiding big rate cuts that could fuel inflationary pressures and risk outflows from China, as the Federal Reserve and other central banks raise interest rates to fight inflation.

“We see limited room for further monetary easing in the medium term as the PBOC becomes more mindful of the inflation risk once China moves towards the post-pandemic era,” analysts at Citi said in an email.

On Monday, the central bank kept its benchmark lending rates unchanged for a third straight month, as a weaker yuan and persistent capital outflows limited Beijing’s ability to ease monetary conditions to support the economy.

The world’s second-largest economy suffered a broad slowdown in October and the recent spike in COVID cases has deepened concerns about growth in the last quarter of 2022. The economy was already under pressure from a property downturn and weakening global demand for Chinese goods.

Chinese cities have imposed lockdowns and other curbs, dampening both the economic outlook and hopes that China would soon back away from its harsh, outlier stance on COVID.

The economy grew just 3% in the first three quarters of this year, well below the annual target of around 5.5%. Full-year growth is widely expected by analysts to be just over 3%.

The central bank has cut the reserve ratio 14 times since early 2018, when it was at 14.9%, pumping more than 10 trillion yuan into the economy.

The government in recent months has also rolled out a flurry of policy measures to support growth, focusing on infrastructure spending and limited support for consumers, while loosening financing curbs to rescue the property sector.

The PBOC this week outlined 16 steps to support the property sector, while sources with direct knowledge of the matter said on Friday it will also offer cheap loans to financial firms to buy developers’ bonds, China’s strongest policy support yet for the crisis-hit sector.

Friday’s reserve ratio reduction follows a 25-bp cut in April and had been widely expected, after state media on Wednesday quoted the cabinet as saying China would use timely reserve ratio cuts, alongside other monetary policy tools, to keep liquidity reasonably ample.

The cut will lower the weighted average ratio for financial institutions to 7.8% and will affect all banks except those implementing a 5% reserve ratio, while lowering banks’ annual funding costs by about 5.6 billion yuan, the central bank said.

“[It will] keep liquidity reasonably sufficient and promote a steady fall in comprehensive financing costs,” while helping to stabilize the slowing economy, it said.

The PBOC also said on Friday that it would step up the implementation of its prudent monetary policy and focus on supporting the real economy, while avoiding flood-like stimulus.
…