The latest economic news for March has revealed the slowing of manufacturing and inflation in the U.S., as well as the political upheaval in Tunisia. Meanwhile, the impact of the Federal Reserve’s aggressive year of interest rate hikes is expected to continue for at least another three decades. Inflation may not be achievable in an economy characterized by supply chain issues and an aging workforce.
Manufacturing slowing at mid-year as K-shaped recovery gives way to a K-shaped hangover
The first half of the year saw the global economy take a plunge. This was not only a result of the COVID-19 crisis in Europe, but also weak international trade. A number of major regions cobbled together recovery in the second half. Nevertheless, no major economy is free of decline in activity in calendar 2020. It is important to focus on spurring global recovery.
Global demand is likely to pick up slightly in the second half of the year. However, the replacement cycle is not expected to be compressed. Instead, the cycle will be staggered across the first half of the 2020s.
Inflation slowing more than many economists expected
Inflation has slowed more than most economists expected, but prices remain high for a number of goods. Economists expect more moderate inflation next year. However, they caution against a premature optimism.
A key measure of inflation, the Consumer Price Index, showed a slight increase in October, but a slower rate of growth than in September and July. The core measure of CPI, which excludes food and energy, rose 0.3% month-over-month.
Nevertheless, the Consumer Price Index shows that prices for a variety of consumer items have been rising for months, if not years. Among those that have been affected are gasoline, used cars and airline tickets.
Inflation might be unattainable in an economy where supply chain issues persist and the worker population is aging
Having an aging workforce might not seem like the sexiest topic in the room. But it’s important to know that it will strain the nation’s ability to support retirements and younger families.
There are numerous studies and data on how the aging of America’s workforce affects the economy. The latest study by Moody’s Analytics found that the aging of America’s workforce has reduced productivity growth by 0.2 percentage points in the last decade. This trend will continue in 2019.
During the past quarter of the 20th century, the US population was younger than it is today. In 1960, virtually no American workers were over 60 years old. However, the American Working Conditions Survey (AWCS) has found that more than half of retirees will return to work.
COVID-19 pandemic has changed the face of retail in cities in the U.S.
Coronavirus disease or COVID-19 has been a major shock to the US economy in 2019. The effects of the disease have been felt most in cities, but it’s also impacted retailing in the city centre.
COVID-19 has affected many industries, including small businesses. Many small businesses experienced temporary closures or reductions in employment during the pandemic, but only about one percent of them were permanently shut down.
The rise of e-commerce and technological advancements has influenced consumer behaviour. This has led to significant changes in purchasing practices, as well as decreased physical contact.
Despite the growth of online shopping, the largest share of all retail sales still comes from physical stores. As a result, many retailers are using new apps to manage their inventory, process payments, and keep their customers updated on new products.
Tunisia’s increasingly authoritarian president appears determined to upend country’s political system
In the months following his election, Tunisian President Kais Saied has shown a clear determination to upend the country’s political system. In a series of measures, he has dissolved the government, sacked a prime minister, and abolished the division of powers. He has also called for a radical restructuring of people’s councils.
But the president’s economic policies have yet to be implemented, and his pledges to stabilize the economy helped ensure a landslide victory in the presidential election. Meanwhile, he has sidelined economists from the state institutions and has not even presented an economic recovery plan.
With his authoritarian tendencies and his refusal to accept any independent economic policy, Saied is not in a position to lead the country out of its economic crisis. In fact, his recent actions seem intended to drive the country into further authoritarian rule.
Wall Street expects impact of Fed’s most aggressive year of interest rate hikes in at least three decades to continue
The Federal Reserve raised interest rates three-quarters of a percentage point for the fourth time this year. Initially, stocks were ebullient following the Fed’s announcement. However, the market subsequently turned negative as Chairman Jerome Powell and other officials talked about a possible pause in the aggressive tightening of monetary policy.
Officials also signaled that the rate may be hiked again in December. They also signaled that the economy will probably need a few more quarter point increases, or a “step-down” from the current pace of interest rate increases.
The Fed’s official economic forecast shows that it expects unemployment to rise to 4.4 percent in 2023 and 2024. Among other things, the Fed is hoping that a tight labor market will help bring down inflation, which has been running at over three times the Fed’s target rate.