USA Outlook January 16 to 20 - 2023

Economic slowdown may force workers into ‘lower quality’ jobs

Anunexpectedresultofthepandemicerahasbeen a surge in entrepreneurial activity. Since 2020, applications to start new businesses have skyrocketed,reversingadecades-longslump.

The reasons for the boom are manifold. Millions of peopleweresuddenlylaidoff,givingthemthetime, and inclination, to start new businesses. Personal savings jumped, buoyed partly by a frothy stock market and government stimulus payments, providing would-be entrepreneurs with the means to fulfill their visions. Rock-bottom interest rates mademoneycheapandwidelyavailable.

But the ebullient economic environment that helped foster this entrepreneurial spirit has given way to high inflation, rising interest rates and dwindling savings. That has left these nascent businesses to navigate challenging financial crosscurrents — and a possible recession — at a momentwhentheyareattheirmostfragile.

Higher interest rates and uncertainty about the economy have also appeared to dry up onceflowingsourcesofcapital,someentrepreneurssaid.

Souce: https://www.nytimes.com/2023/01/15/business/economy/new-business.html

US, Chinese officials discuss climate, economy, relationship

U.S. Treasury Secretary Janet Yellen met on Wednesday with her Chinese counterpart and pledged an effort to manage differences and “prevent competition from becoming anything ever near conflict” as the two nations try to thaw relations.

Yellen’s first face-to-face meeting with Vice Premier Liu He in Zurich is the highest-ranking contact between the two countries since their presidentsagreedlastNovemberduringtheirfirst in-person meeting to look for areas of potential cooperation.

A U.S. Treasury readout of the 2 1/2-hour meeting saysthetwoagreedthattheU.S.andChinawould cooperate more on issues around financing for battling climate change and work to support “developing countries in their clean energy transitions.” The readout also indicates Yellen plans to travel to China and welcomes her counterpartstotheU.S.inthenearfuture.

Photo: Canva Pro: Natee Meepian´s Images

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JPMorgan Chase CEO Jamie Dimon believes interestratescouldgohigherthanwhattheFederal Reserve currently projects as inflation remains stubbornlyelevated.

“I actually think rates are probably going to go higher than 5% ... because I think there’s a lot of underlyinginflation,whichwon’tgoawaysoquick,” Dimonsaid.

To battle soaring prices, the Fed has raised its benchmark interest rate to a targeted range between 4.25% and 4.5%, the highest level in 15 years. The anticipated “terminal rate,” or point whereofficialsexpecttoendtheratehikes,wasset at5.1%atitsDecembermeeting.

Theconsumerpriceindex,whichmeasuresthecost ofabroadbasketofgoodsandservices,rose6.5%in December from a year ago, marking the smallest annualincreasesinceOctober2021.

Dimon said the recent easing of inflation comes from temporary factors such as a pullback in oil prices and a slowdown in China due to the Covid pandemic.

Souce:

https://www.cnbc.com/2023/01/19/jamie-dimon-says-rates-will-rise-above-5percentbecause-there-is-still-a-lot-of-underlying-inflation.html

Debt ceiling: Here's what could happen if lawmakers don't raise the country's borrowing limit

The U.S. on Thursday hit the limit on the amount ofdebtthefederalgovernmentcanissuetohonor its financial obligations, also known as the debt ceiling. The milestone is prompting a slew of warnings from Wall Street analysts and economists about the potential financialfallout if Congressfailstotakeaction.

U.S. Treasury Secretary Janet Yellen said in a January19lettertocongressionalleadersthather agencyistaking"extraordinarymeasures"thatwill allow the country to avoid an unprecedented defaultonitsdebtforatleastthenextfewmonths.

The debt ceiling is currently at $31.4 trillion, representing borrowing that the Treasury undertakes to fund its financial obligations, ranging from safety-net benefits such as Social Security payments to interest on the national debt.

Yellenhasurgedcongressionalleaderstoraisethe debt limit, which is set by lawmakers, as soon as possibletoavoidafiscalcrisis.

Souce:

https://edition.cnn.com/2023/01/12/economy/us-government-budget-deficitdecember/index.html

Photo: Adam Galica | CNBC

Jamie Dimon says rates will rise above 5% because there is still ‘a lot of underlying inflation’

Photo: MANDEL NGANAFP

In December, egg prices climbed the most in Arizona, Nevada and New Mexico, according to retail data firm Datasembly, which collects real-time data from over 200 retailers across North America including Walmart,KrogerandTarget. A cartonof 12eggs increasedover 64% in allthe aforementionedstates, according to the retaildata firm. Thatcomparestothe18%increaseseeninstatessuchasOregon,CaliforniaandWashington,accordingto thedata.

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Photo: AP Photo/Nam Y. Huh / AP Newsroo