Tag: Inflation

Fed officials call for more rate hikes to fight inflation

[ad_1]

WASHINGTON (AP) — The Federal Reserve will have to keep boosting its benchmark interest rate to a point that raises unemployment and gets inflation down from unusually high levels, two officials said in separate remarks Monday.

Susan Collins, the new president of the Federal Reserve Bank of Boston, endorsed Fed projections released last week that signaled its benchmark interest rate would rise to 4.6% by next year, up sharply from about 3.1% now.

Getting inflation down will “require slower employment growth and a somewhat higher unemployment rate,” Collins said in a speech to the Greater Boston Chamber of Commerce.

Later Monday, Cleveland Fed President Loretta Mester said the Fed’s short-term rate would have to stay higher for longer than previously expected, regardless of the uncertainties surrounding the economy, such as Russia’s invasion of Ukraine and ongoing supply chain difficulties.

“When there’s a lot of uncertainty, it can be better for policymakers to actually act more aggressively, because aggressive action and pre-emptive action can prevent the worst-case outcomes from happening,” she said.

Mester also said she expects higher interest rates will raise unemployment, but disagreed with a forecast by Bank of America that the unemployment rate would rise to 5.5%.

“I do expect the unemployment rate to rise, but not to that extent,” she said.

The comments from both officials added to an ongoing debate about how badly the Federal Reserve’s rate hikes — the fastest in more than 40 years — will hurt the economy. By lifting its benchmark rate, the Fed is pushing up the cost of a wide range of consumer and business loans, including for mortgages, auto loans, and credit cards.

Collins said that, while worries are rising about a recession, “the goal of a more modest slowdown, while challenging, is achievable.”

Also Monday, stocks fell for the fifth straight day and longer-term interest rates rose amid growing fears of a global recession. The yield on the 10-year Treasury, which influences mortgage rates, jumped to 3.89% from 3.69%.

Fed officials hope their rate hikes will achieve a “soft landing” by slowing consumer and business spending enough to bring down inflation but not so much as to cause a recession.

Yet many economists are increasingly skeptical that such an outcome is likely. The Fed has lifted its key rate to a range of 3% to 3.25%, the highest in 14 years, even as the U.S. economy has already slowed. That could cause a recession in the U.S. next year, economists fear.

In a question-and-answer session after her speech, Collins also said that inflation, which reached 9.1% in June from a year earlier and has since fallen to 8.3%, “perhaps may have peaked.”

But Mester said she did not see any such signs.

“Before I conclude that inflation has even peaked, I am going to have to see several months of declines in the readings,” she said.

At a policy meeting last week, the Fed lifted its short-term rate by three-quarters of a point for the third straight time. Hikes typically are a more modest quarter-point. Fed Chair Jerome Powell, at a news conference after the meeting, said that “the chances of a soft landing are likely to diminish” as the Fed steadily raises borrowing costs.

“No one knows whether this process will lead to a recession or, if so, how significant that recession would be,” Powell said.

One challenge for the Fed is that last week it also released its quarterly economic and interest rate projections. They showed that Fed policymakers expect unemployment to reach 4.4% by the end of next year, up from 3.7% currently.

According to a rule of thumb discovered by the economist Claudia Sahm, every time since World War II that unemployment has risen by a half-percentage point over several months, a recession has followed.

Collins is one of 12 voting members of the Fed’s policymaking committee and is the first Black woman to serve as president of a regional Fed bank. She was sworn in July 1. Collins previously served as a provost and executive vice president at the University of Michigan and served on the board of directors for the Chicago Fed.

Atlanta Fed President Bostic, in an interview Sunday on CBS News’ “Face the Nation,” also said “we need to have a slow down” to get inflation under control.

“But I do think that we’re going to do all that we can at the Federal Reserve to avoid deep, deep pain,” he added.

[ad_2]

Source link

September 26, 2022
The British pound has taken a tumble. What’s the impact?

[ad_1]

LONDON (AP) — The pound is taking a pounding.

The British currency has taken a plunge, sliding against the U.S. dollar to touch an all-time low. It’s a sign of the alarm in financial markets over new Prime Minister Liz Truss’ emergency budget measures unveiled last week aimed at jump-starting the ailing economy.

Investors are spooked by a sweeping package of tax cuts likely to cost tens of billions of pounds in extra government borrowing and amounts to a risky gamble to stave off a looming recession.

But that’s not all. The currency chaos is playing out against the wider backdrop of the dollar’s rally to a two-decade high.

Here’s a look at what it all means:

EVERYDAY IMPACT

Many Britons are struggling amid soaring inflation driven by rising prices for food and energy, in a cost-of-living crisis that’s been dubbed the worst in a generation.

The pound’s slump threatens to make it even worse. One of the most visible ways is by feeding into the energy crisis because oil and natural gas is priced in dollars. The impact is being felt at the pump.

British drivers are paying 5 pounds ($5.45) more on average to fill up their cars since the beginning of the year as the pound has fallen, according to an analysis by motoring association AA. U.K. gas prices would be at least 9 pence per liter cheaper if the pound was still at its mid-February level of $1.35, compared with the now-outdated $1.14 level that the group used last week for its calculation.

“There’s every chance that a falling pound will make life more expensive,” said Sarah Coles, senior personal finance analyst at financial services firm Hargreaves Lansdown. Anything bought from overseas — components, raw materials, supermarket staples and household basics — will be pricier.

“These rising costs will feed into higher prices, and push inflation even higher,” Coles said. “For anyone whose budget was already stretched to breaking point, this will mean even more pain at the tills.”

Finance minister Kwasi Kwarteng hopes that big tax cuts will spur economic growth and generate wealth, but the sliding pound raises the possibility that will be offset if the central bank steps in with bigger-than-expected interest rate increases.

Some analysts are speculating rates could rise as high as 6% by next spring, a sharp contrast to the near zero level they were at just a few years ago. Rising rates mean many homeowners face bigger monthly mortgage bills, leaving them less to spend on other goods and services.

HOW LOW CAN IT GO?

Fifteen years ago, 1 British pound was able to buy $2. Now, the pound is getting closer to parity with the greenback, a once-unthinkable event and a psychologically important milestone. The pound has tumbled more than 5% since the government outlined its economic plans Friday, dropping as low as $1.0373 early Monday, before bouncing back to above $1.06.

The markets are raising the prospect that the two currencies might soon reach equal footing. A lot of the decline has been driven by the strength of the dollar, which has climbed against a wide range of other currencies as the U.S. Federal Reserve aggressively raises rates, drawing interest from investors fleeing riskier assets.

The euro, for example, has been on a similar trajectory to the pound, having fallen below parity with the dollar recently and then hitting a fresh 20-year low Monday.

The pound has dropped more than most, though, because of local factors. Investors are alarmed at Kwarteng’s “lack of focus on fiscal prudence,” which outweighs any optimism about his pro-growth, anti-red tape agenda, said Victoria Scholar, head of investment at interactive investor.

“On top of being bullish towards the dollar, the international investor community is now also very bearish towards the pound amid fears about the UK’s economic outlook and investment case,” Scholar said.

TUG OF WAR

The plummeting pound highlights what analysts are calling a “tug of war” between Britain’s Treasury and the central bank, which has independence from the government to operate free of political influence.

The Truss government is gambling that slashing taxes and borrowing more to pay for it will kick-start economic growth as a recession looms.

That puts government officials at odds with the Bank of England, where policymakers are trying to rein in inflation that threatens financial stability by raising interest rates, with seven hikes so far this year and more in the pipeline.

The central bank said Monday that it wouldn’t hesitate to raise interest rates by as much as needed at its next meeting in November, which did little to soothe markets. An interim meeting to decide on an emergency rate hike could be needed, “though that would risk escalating tensions with the new government,” said Jeremy Lawson, chief economist at asset manager abrdn.

“There are no good options from here, just less bad ones, with the U.K.’s already struggling household and businesses left to pick up the pieces,” Lawson said.

IS THERE ANY UPSIDE?

British exports will be cheaper for buyers paying in dollars. But the economic impact is likely to be limited, given that the United Kingdom runs a trade deficit with the rest of the world by importing more than it exports.

It’ll be a lot cheaper for foreign visitors, especially Americans. Pub beers, theater tickets for shows in London’s West End, and hotel bills will be more affordable for tourists.

And for investors and wealthy people, the slumping pound makes it cheaper to buy real estate in Britain, especially in exclusive London neighborhoods that have long been favored by the global superrich.

[ad_2]

Source link

September 26, 2022
AP FACT CHECK: GOP skews budget bill’s impact on IRS, taxes

[ad_1]

Republican politicians and candidates are distorting how a major economic bill passed over the weekend by the Senate would reform the IRS and affect taxes for the middle class.

The “ Inflation Reduction Act,” which awaits a House vote after passing in the Senate on Sunday, would increase the ranks of the IRS, but it would not create a mob of armed auditors looking to harass middle-class taxpayers, as some Republicans are claiming.

While experts say corporate tax increases could indirectly burden people in the middle class, claims that they will face higher taxes are not supported by what is in the legislation.

A look at some of the claims about the package that emerged from a deal negotiated by Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va.:

HOUSE MINORITY LEADER KEVIN MCCARTHY, R-CALIF.: “Do you make $75,000 or less? Democrats’ new army of 87,000 IRS agents will be coming for you — with 710,000 new audits for Americans who earn less than $75k.” – tweet Tuesday.

SEN. TED CRUZ, R-TEXAS: “The Manchin-Schumer bill will create 87,000 new IRS agents to target regular, everyday Americans.” — Friday tweet.

THE FACTS: That’s misleading. Last year, before the bill emerged, the Treasury Department had proposed a plan to hire roughly that many IRS employees over the next decade if it got the money. The IRS will be releasing final numbers for its hiring plans in the coming months, according to a Treasury official. But those employees will not all be hired at the same time, they will not all be auditors and many will be replacing employees who are expected to quit or retire, experts and officials say.

The IRS currently has about 80,000 employees, including clerical workers, customer service representatives, enforcement officials, and others. The agency has lost roughly 50,000 employees over the past five years due to attrition, according to the IRS. More than half of IRS employees who work in enforcement are currently eligible for retirement, said Natasha Sarin, the Treasury Department’s counselor for tax policy and implementation.

Budget cuts, mostly demanded by Republicans, have also diminished the ranks of enforcement staff, which fell roughly 30% since 2010 despite the fact that the filing population has increased. The IRS-related money in the Inflation Reduction Act is intended to boost efforts against high-end tax evasion, Sarin said.

The nearly $80 billion for the IRS in the bill will also pay for other improvements, such as revamping the agency’s technology, said Janet Holtzblatt, a senior fellow at the Tax Policy Center and former Treasury official.

The Treasury says it will hire experienced auditors and workers who will improve taxpayer services, and that audit rates for those earning less than $400,000 are not expected to rise in relation to historic norms.

So that’s a long way from hiring 87,000 “agents” to go after average people in the United States, as the GOP claims have it. In any case, the bill has no mandate to hire that many people.

___

REP. TROY NEHLS, R-TEXAS: “Americans asked for lower inflation and the Democrats gave us an armed IRS shadow army to spy on your bank accounts.” — Sunday tweet.

REP. MARJORIE TAYLOR GREENE. R-Ga.: “It’s going to hire 87,000 new IRS agents and it’s going to arm — as in guns, you know, Democrats are always upset about guns — 70,000 of these IRS agents.” — at the Conservative Political Action Conference, in an interview with the conservative Canadian news magazine The Post Millennial.

THE FACTS: That’s false. The bill will not create any such army, officials and experts say. Only some IRS employees who work on criminal investigations carry firearms as part of their work.

A division of the IRS called criminal investigation serves as the agency’s law enforcement branch. Its agents, who work on issues such as seizing illicit crypto currency and Russian oligarchs’ assets, carry weapons, Sarin said.

There were just more than 2,000 such special agents working at the IRS in 2021, according to agency documents. The branch will get money from the Inflation Reduction Act, but the bulk of the dollars will go toward other areas, according to Sarin.

The bill does not designate money specifically for a large number of armed IRS employees.

___

NEVADA SENATE CANDIDATE ADAM LAXALT, criticizing his opponent, Democrat Sen. Catherine Cortez Masto: “.@CortezMasto just voted to raise taxes for Nevadans making as low as $30k/year.” — Sunday tweet.

THE FACTS: Nothing in the bill raises taxes on people earning less than $400,000, contrary to Laxalt’s claims. There are no individual tax rate increases for anyone in the bill, experts say.

It’s possible, though, that the bill’s new corporate taxes, including a minimum 15% tax for large corporations, could cause indirect economic impacts. A report from the Joint Committee on Taxation said some people who make less than $400,000 might see such impacts.

“Economists are generally in agreement that the corporate income tax is borne not just by the businesses, but also by shareholders and by workers,” Holtzblatt said. “So that tax that gets imposed on the corporation, some of that might end up getting shifted to workers in the form of lower wages.”

Added Garrett Watson, a senior policy analyst at the Tax Foundation: “Distinguishing between whether lower after-tax incomes happen because of a direct tax hike or indirect incidence may be a distinction without a difference for many households.”

Nevertheless, supporters of the bill did not vote for tax increases on people earning $30,000, as Laxalt claimed.

___

Associated Press writer Karena Phan in Los Angeles contributed to this report.

___

EDITOR’S NOTE — A look at the veracity of claims by political figures.

___

Find AP Fact Checks at http://apnews.com/APFactCheck

Follow @APFactCheck on Twitter: https://twitter.com/APFactCheck

[ad_2]

Source link

September 23, 2022
Why This Election Is So Weird

[ad_1]

The two major factors shaping the 2022 midterm elections collided in tumultuous fashion on Tuesday morning.

First came the government report that inflation last month had increased faster than economists had expected or President Joe Biden had hoped. The announcement triggered a sharp fall in the stock market, the worst day on Wall Street in two years.

That same afternoon, Senator Lindsey Graham of South Carolina introduced legislation that would impose a nationwide ban on abortion after 15 weeks of pregnancy.

The inflation report captured this year’s most powerful tailwind for Republicans: widespread dissatisfaction with Biden’s management of the economy. Graham’s announcement captured this year’s strongest Democratic tailwind: widespread unease about abortion rights.

Molly Jong-Fast: Of course voters care about abortion

The shift in the campaign debate away from Biden’s management of the economy and toward the GOP’s priorities on abortion and other issues has been the principal factor improving Democratic prospects since earlier this summer. But the unexpectedly pessimistic inflation report—which showed soaring grocery and housing bills overshadowing a steady decline in gasoline prices—was a pointed reminder that the economy remains a formidable threat to Democrats in November.

These two events also underscored how, to an extremely unusual degree, the parties are talking past each other. As the Democratic pollster Molly Murphy told me, 2022 is not an election year when most Americans “agree on what the top priorities [for the country] are” and debate “different solutions” from the two major parties.

Instead, surveys show that Republican voters stress inflation, the overall condition of the economy, crime, and immigration. For Democratic voters, the top priorities are abortion rights, the threats to democracy created by former President Donald Trump and his movement, gun control, climate change, and health care.

Few questions may shape the November results as much as whether the issues Democrats are stressing continue to motivate roughly as many voters as Republicans’ preferred issues. Gene Ulm, a Republican pollster, told me he believes that pocketbook strains will ultimately prove decisive for most voters, particularly those without a college degree. Those voters, he added, are basically saying, “‘I am worried about putting food on the table, and you are talking to me about all this other crap.’”

Yet there is no question that Democratic candidates are performing far above the consistently bleak public assessments of the economy, and especially Biden’s management of it. In one sense, that’s not shocking: Over the past few decades, voters’ economic assessments have become less predictive of election results, in large part because those judgments are themselves so heavily shaped by partisanship. But even in light of that trend, the disconnect between voters’ views on Biden’s economic management and their willingness to support Democratic candidates for the House and Senate remains striking.

Read: How the Democrats rallied

Biden has positive trends in the economy to celebrate, particularly robust job growth. He’s been cutting ribbons at a steady procession of infrastructure projects and manufacturing-plant openings (like last week’s groundbreaking for an Intel semiconductor facility in Ohio) tied to the tax incentives and direct spending from the infrastructure, climate, and semiconductor bills that he’s signed. Those economic milestones—yesterday, for instance, the White House touted $85 billion in new private investments for electric-vehicle production since Biden took office—will likely be a political asset for him in 2024, especially in the pivotal states across the industrial Midwest. But those accomplishments won’t necessarily sway voters this November, and in any case, all of these favorable trends for now are being overshadowed in most households by the persistent pain of higher prices on consumer goods.

Even before this week’s inflation report, voters gave Biden an extremely negative grade for his economic performance. In an NPR/PBS NewsHour/Marist Institute poll released last week, just 34 percent of those surveyed said that his actions have helped the economy, while 57 percent said they have hurt it. Not surprisingly, that discontent was most intense among Republicans and also among white voters without a college degree (a stunning 76 percent of whom said Biden’s actions had hurt the economy.) But that belief was also shared by 63 percent of independents, 55 percent of Generation Z and Millennial voters, 47 percent of nonwhite voters, and even 16 percent of people who voted for him in 2020.

However, the share in each of these groups that gave Biden an overall positive mark on his job performance was consistently five to nine percentage points higher than those who believed his actions had helped the economy. And the share in each group that said they intend to support House Democrats in the November election was higher still—enough to give Democrats a narrow lead on that crucial question. Independents, for example, were split evenly on which party they intend to support in November, even though they were negative on Biden’s economic performance by more than two to one.

This stark pattern points to another consequential anomaly in the 2022 polling so far. One of the most powerful modern trends in congressional races is a correlation between voters’ attitudes toward the president and their willingness to vote for candidates from his party. Virtually all voters who “strongly disapprove” of a president have voted against his party’s candidates in recent House and Senate elections. In 2018, two-thirds of voters who even “somewhat disapproved” of Trump voted for Democratic House candidates, according to exit polls. In 2010, two-thirds of voters who “somewhat disapproved” of Barack Obama likewise voted for Republican candidates.

By contrast, in the Marist survey, and another recent national poll by the Pew Research Center, Democrats led slightly among those who “somewhat disapproved” of Biden—a stunning result.

Murphy told me this disconnect has been evident since the outset of Biden’s presidency: Even when his approval numbers were high during his first months, she said of her polling, that didn’t lift other Democratic candidates, so she’s not entirely surprised that his decline hasn’t tugged them down. But Murphy, like others in the party, believes that concerns about Republicans—centered on their abortion-restriction efforts, their nomination of extremist and election-denying candidates, and their unflagging defense of Trump—also explain why Democratic candidates are consistently running ahead of Biden’s approval rating.

“It should have been pretty easy for [Republicans] to put these races away, given how concerned voters are about the economy and inflation,” Murphy told me. Now, she said, “I do think they are having to go back to the drawing board.”

Graham’s abortion legislation is certain to benefit Democratic efforts to shift voter focus from what Biden has done to what Republicans might do if returned to power. In a press conference, Graham flatly declared, “If we take back the House and Senate, I’ll assure you we’ll have a vote on our bill.” Although many Republican senators and candidates quickly distanced themselves from his proposal, his pledge meant that every Democratic Senate candidate can plausibly argue that creating a GOP majority in the chamber will ensure a congressional vote on a national abortion ban.

Dan Sena, the former executive director of the Democratic Congressional Campaign Committee, who now consults for many party House candidates, told me that the abortion fight’s biggest impact will be to inspire higher turnout from liberal-leaning and young voters. Abortion, he said, “has energized a group of people that we saw in 2018 and we saw in 2020 that traditionally don’t participate in midterm elections and are much more motivated by the cultural fight.”

Read: Abortion could define California’s elections

Yet few Democrats believe that the political threat from inflation and general unease about the economy is behind them in this election cycle. In focus groups, Ulm, the GOP pollster, told me, “We hear more gripes about groceries than anything.” Sena largely agrees: “Jobs and paychecks still matter, pal,” he said.

One Democratic pollster, who asked not to be identified while discussing private campaign research, told me that inflation and crime—the principal issues Republicans are stressing on the campaign trail—remain tangible and immediate concerns in swing districts. In House district polling, the pollster said, the firm often asks voters whether they worry more that Democratic policies are fueling inflation and crime or that Republicans are too extreme on abortion and too soft on the January 6 insurrection. On balance, the pollster told me, most respondents in swing districts say they worry more about Democratic policies.

Yes, the pollster said, the Supreme Court abortion decision, the revelations about Trump from the House January 6 committee hearings, and the Justice Department’s investigation into his stockpiling of classified documents have energized and awakened Democratic voters. But, the pollster added, it’s not as if everyone has decided that abortion and January 6 are more important than crime and inflation.

Strategists and pollsters on both sides believe that these diverging agendas could intensify one of the most powerful trends in modern American politics: the class inversion in which Democrats are running stronger among white voters with college degrees and Republicans are gaining ground among white voters without them, as well as among blue-collar Latino voters.

In white-collar America, inflation may be more of an inconvenience than an existential threat, which provides space for voters to prioritize their values on issues such as abortion or Trump’s threat to democracy. In blue-collar America, where inflation often presents more difficult daily choices and sacrifices, abortion and the fate of democracy may be less salient, even among those who agree with Democrats on those issues. In the Marist poll, twice as many white voters without a college degree picked inflation over abortion as their top concern in November, while slightly more college-educated white voters picked abortion than inflation.

Even with inflation at its highest level in 40 years, Republicans appear unlikely to significantly cut into such key Democratic constituencies as college-educated white voters, young people, and residents of large metropolitan areas. And even such a seismic shock as the Supreme Court abortion decision may not significantly loosen the Republican hold on white women without a college education. Although there may be some movement around the edges (inflation, for instance, could help Republicans gain among Latino voters), the biggest story of 2022 may be how closely it follows the lines of geographic and demographic polarization that the 2016, 2018, and 2020 elections have engraved.

As in those contests, a handful of competitive swing states (Georgia, Arizona, Nevada, Michigan, Wisconsin, and Pennsylvania) will tip the precarious national balance of power between red and blue areas that now behave more like separate nations than different sections. The November elections seem likely to demonstrate again that the U.S. remains locked in a struggle between two coalitions that hold utterly antithetical visions of America’s future—yet remain almost equal in size.

[ad_2]

Ronald Brownstein

Source link

September 15, 2022
Without Action, Water Shortages Will Lead to Less Food Production, Food Shortages, and Price Hikes

[ad_1]

Water shortages that continue to plague California are increasingly affecting the number of acres devoted to growing our food.

Press Release
–

May 16, 2022

SACRAMENTO, Calif., May 16, 2022 (Newswire.com)
–
Water shortages that continue to plague California are increasingly affecting the number of acres devoted to growing much of the nation’s fresh food, according to the California Farm Water Coalition. Farmers are making tough choices on which crops to grow and how much to plant in the face of crushing water supply cuts.

“New estimates are emerging on the number of acres without enough water to grow food and it doesn’t look good,” said Mike Wade, executive director of the California Farm Water Coalition. “We believe the state could see as much as 691,000 acres taken out of production this year, a 75 percent increase over last year and 151,000 acres more than the previous high in 2015.”

Critical for consumers are the crops that won’t make it to the grocery store because of insufficient water supplies. Fresh fruits and vegetables, along with strawberries, citrus, peaches, broccoli, rice, and tomatoes for things like pizza sauce and salsa, are among the crops impacted when farm water supplies are cut off. It’s estimated that up to 40 percent of California’s irrigated cropland will receive little or no surface water this year.

“When people talk about taking millions of acres of California farmland out of production, those are just numbers. To put that into perspective, every acre that is left unplanted because of a lack of irrigation water, it is the equivalent of 50,000 salads that will not be available to consumers,” said Bill Diedrich, president of the California Farm Water Coalition.

In addition to less food in our grocery stores, it’s expected that the number of job losses on the state’s farms will approach 25,000 with an economic hit to the State of about $3.4 billion.

Data from the United States Department of Food and Agriculture show that 80% of U.S.-produced fruits, nuts and vegetables are grown West of the Rockies.

“It is not an accident that so much of our food supply comes from the West and in particular, California,” said Diedrich. “California’s climate is unique and not replicated in any other state. Most other states have more significant weather extremes, higher altitudes, oppressive humidity, and in some cases, too much water.

“California’s Mediterranean climate lends itself to abundant food production. If we abandon that, we’re accepting food shortages, higher prices, and more imports from foreign countries, many with significantly lower safety standards.

“California has failed to adapt to changing weather patterns. Because more of our precipitation now comes in the form of rain, instead of snow, we need to build both small and large storage projects to capture the water when Mother Nature delivers it.

“Both the federal and state government have allocated money for water infrastructure, but it moves too slowly. A clear example is Sites Reservoir which was specifically designed to capture rainfall from extreme events. If it was in place now, 2022 would not look so bleak.

“In addition to lack of storage, our water policy has also failed to adapt and remains mired in outdated science and cumbersome bureaucracy.

“We are not asking people to choose between a domestic food supply and a clean environment. We need both and that is achievable if we make the necessary adjustments.

“Immediate action is necessary because by the time the grocery shelves are empty it will be too late.”

# # #

For further information, contact:

Mike Wade, California Farm Water Coalition
(916) 718-7408
mwade@farmwater.org

Source: California Farm Water Coalition

[ad_2]

Source link

May 16, 2022
Putin’s ruthless power play may not preclude a revival of Ukraine grain deal | CNN Politics

[ad_1]

CNN
—

Russian President Vladimir Putin just reminded the world that he has the capacity to apply pain far beyond the excruciating torment he’s inflicting on Ukraine.

Russia’s suspension of a deal allowing the export of Ukrainian grain from a region fabled as the world’s bread basket threatens to cause severe food shortages in Africa and send prices spiraling in supermarkets in the developed world. In the United States, it represents a political risk for President Joe Biden, who is embarking on a reelection campaign and can hardly afford a rebound of the high inflation that hounded US consumers at its peak last year.

Russia’s decision looked at first sight like a face-saving reprisal for an attack claimed by Ukraine on a bridge linking the annexed Crimean peninsula to the Russian mainland. The bridge was a vanity project for Putin and the apparent assault represented another humiliation for the Russian leader in a war that has gone badly wrong.

The Black Sea grain deal, agreed last year and brokered by Turkey and the United Nations, was a rare diplomatic ray of light during a war that has shattered Russia’s relations with the US and its allies and has had global reverberations.

By refusing to renew it, Putin appears again to be seeking to impose a cost on the West, in return for the sanctions strangling the Russian economy. He may reason that a food inflation crisis might help splinter political support in NATO nations for the prolonged and expensive effort to save Ukraine. And grain shortages afflicting innocent people in the developing world could exacerbate international pressure for a negotiated end to a war that has turned into a disaster for Russia.

The United States and other Western powers reacted to Russia’s announcement that the deal had been “terminated” with outrage, mirroring Ukrainian President Volodymyr Zelensky’s warning that Putin was trying to “weaponize hunger.”

Secretary of State Antony Blinken warned that Russia was trying to use food as a tool in its war on Ukraine, adding that the tactic would make “food harder to come by in places that desperately need it and have prices rise … The bottom line is, it’s unconscionable. It should not happen.”

Singling Russia out as a moral transgressor might be understandable given the horror it has visited on Ukraine and may rally fury over Putin’s move in the West and the developing world. But humanitarian arguments won’t sway a Russian president who launched an unprovoked onslaught on a sovereign neighbor and is accused of presiding over brutal war crimes.

Still, Russia’s rhetoric after canceling the deal and the reactions from key players elsewhere in Eurasia suggest that the agreement may not be quite as terminated as the Kremlin claims. There’s a chance Putin sees a grain showdown as a way to improve his dire position.

In a clear sign of diplomatic maneuvering, Russia justified its cancellation of the agreement by saying that it was not getting its share of the benefits. noting that it had faced obstacles with its own food exports. Kremlin spokesman Dmitry Peskov hinted, however, that Moscow might allow the return of exports from Ukraine’s Black Sea ports once its objectives were achieved.

But UN Secretary General António Guterres underscored how difficult it might be to return to the deal with a categorical repudiation of Russia’s points in a letter to Putin, arguing that under the agreement, the Russian grain trade had reached high export volumes and fertilizer markets were nearing full recovery with the return of Russian produce. Guterres said that he’d sent Russia proposals to keep the grain deal alive but that he was “deeply disappointed” that his efforts went unheeded.

The UN chief’s comments reinforced a view that, for now, Russia sees a point of leverage in refusing to renew the Black Sea grain deal. The decision comes against a complicated geopolitical backdrop following last week’s NATO summit at which G7, nations pledged to offer Ukraine the means of its self-defense for years to come.

It may also represent the latest chess move in a shady double game of great power geopolitics being waged by a pair of Machiavellian autocrats — Putin and Turkish President Recep Tayyip Erdogan, who are due to meet in August.

Erdogan won prestige and the gratitude of his fellow NATO leaders and developing nations for brokering the original grain deal. But he has angered Russia in recent days, despite keeping open channels with Putin during the war. It’s conceivable the Russian leader could be sending a shot across the bows of his Turkish partner by canceling out his achievement.

Russia was infuriated last week when Turkey sent a group of captured Ukrainian military commanders back to Zelensky despite a previous agreement they would not go home until after the war. Erdogan also risked his relationship with Putin by dropping opposition to Sweden’s entry into NATO, a move that significantly weakened Russia’s strategic position in Europe.

But it was noticeable that Erdogan, who has a reputation for cannily playing his cards to enhance his own and Turkey’s influence, referred to Putin as his “friend” on Monday and suggested that the Russian leader might want to keep the “humanitarian bridge” of grain exports open.

If he could somehow engineer a return to the deal, Erdogan could again bolster his place at the hinge of Eurasian great power politics. He’d also boost his goal of emerging as a leader among developing world nations and do a favor for Western leaders fearing an inflationary spike.

Michael Kimmage, who served on the policy planning staff at the State Department between 2014 and 2016 and is now a professor at Catholic University of America in Washington, argues that Turkey is in a unique position, since it possesses considerable leverage inside NATO but also has robust relationships with both Ukraine and Russia.

“I think it’s very possible that even before the Putin-Erdogan meeting there could be a resumption of the grain deal because that keeps Russia to a degree in the good graces of the international community,” Kimmage said.

Reviving the grain deal would show that Russia, in its isolation, retains some Turkish support, Kimmage added, but the episode also demonstrates to the rest of the world that “when Russia wants, it can turn off the grain deal and be an enormous pain in the neck in the Black Sea.”

First video of damage to Crimean bridge surfaces after reported strike

While the war in Ukraine has consumed Russia’s foreign policy, Moscow has also made intense efforts to carve out its own influence in Africa and elsewhere in opposition to the United States. So it may risk damaging its own priorities by triggering widespread food shortages, especially since much of Ukraine’s grain is used in World Food Programs to alleviate famine in Africa.

While the White House is fueling a sense of moral outrage over Russia’s move, it quickly dismissed another potential response – an attempt to bust a Russian blockade in the Black Sea.

“That’s not an option that’s being actively pursued,” John Kirby, the coordinator for strategic communications at the National Security Council, said Monday in a comment that was in line with Biden’s goal of avoiding any direct NATO clash with Russia, a nuclear superpower.

While the end of the grain deal would cause significant global hardship, its worst effects may be weeks away – so there could be time for diplomacy to work.

Nicolay Gorbachov, the President of the Ukrainian Grain Association, told Isa Soares on CNN International on Monday that exports by road, rail and river could mitigate the most damaging effects of the collapse of the deal for two or three weeks, even if such transportation methods lacked the volume of shipborne cargoes.

But he also warned that ultimately, if Ukraine could not export its grain – “all of us, in developed countries, in developing countries, will face food inflation.”

“In my opinion, the international community, the developed countries have to find the leverage to move grain from Ukraine to the world market,” he said.

[ad_2]

Source link

April 12, 2021
Ashton Whiteley: British Consumer Spending Increases

[ad_1]

U.K. shoppers spend more on essential items as inflation rises after Brexit vote causes devaluation of the pound.

Press Release
–

updated: Oct 12, 2017

SHANGHAI, October 12, 2017 (Newswire.com)
–
According to recent survey published by Shanghai, China-based Ashton Whiteley, although British consumers upped their spending last month at the most rapid pace so far this year, not including an Easter spending rush in April, most of the increase was an indication of elevated prices for clothing and food after the EU referendum.

According to the British Retail Consortium (BRC), retail sales increased by an annual 1.9 percent in September on a like-for-like basis, up from 1.6 percent in the previous month.

The growth follows other indications that shoppers in the United Kingdom are adjusting to the increased inflation which can be largely attributed to the decreased value of the pound after the country voted for Britain to exit the European Union in June of last year.

The Bank of England, which has indicated that it is ready to increase rates for the first time in a decade, is anticipating an increase in spending.

The BRC stated that, although growth in total sales in September decreased marginally to 2.3 percent from 2.4 percent in August, it was still more robust than in most months so far in 2017.

However, according to an Ashton Whiteley analyst, shoppers were not showing much confidence in their shopping choices.

BRC Chief Executive Helen Dickinson stated that spending is still largely centered on necessary purchases like clothes and food, while consumers are hesitant to pull the trigger on items like furniture and electrical goods.

According to Ashton Whiteley, U.K. retail outlets enjoyed their largest increase in sales in more than three years in September.

Contact – Market Watch Asia – 128 Chaoyang Park S Rd, Chaoyang Qu, Beijing Shi, China. media@marketwatch-asia.com

Source: Ashton Whiteley

[ad_2]

Source link

October 11, 2017
Britain’s ‘profound economic crisis’ gives Rishi Sunak only unpleasant choices | CNN Business

[ad_1]

London
CNN Business
—

Rishi Sunak, Britain’s third prime minister in seven weeks, took office on Tuesday with a pledge to fix the “mistakes” of predecessor Liz Truss and tackle a “profound economic crisis.”

The task won’t be an easy one, he acknowledged.

“This will mean difficult decisions to come,” Sunak said in his first speech from No. 10 Downing Street.

The United Kingdom was already sliding towards a recession when Truss took office in September, as soaring energy bills ate into spending. Now, Sunak has another headache: He must restore the government’s credibility with investors after Truss’ unfunded tax cuts sparked a bond market revolt, forcing the Bank of England to intervene to prevent a financial meltdown. Borrowing costs, including mortgage rates, shot higher.

Accomplishing this goal will require delivering a detailed plan to put public finances on a more sustainable path. (A government watchdog warned in July that without major action, debt could reach 320% of the UK’s gross domestic product in 50 years.)

The problem? There’s little appetite for government spending cuts after years of austerity in the wake of the 2008 global financial crisis. Plus, failing to help households deal with surging living costs could prove politically devastating and further weigh on the economy.

“It’s not a particularly pleasant economic hand to be dealt [as] a new prime minister,” said Ben Zaranko, a senior research economist at the Institute for Fiscal Studies.

Finance minister Jeremy Hunt got the ball rolling last week when he reversed £32 billion ($37 billion) in tax cuts that formed the bedrock of Truss’ plan to boost growth.

Yet Sunak and Hunt — who will stay in his job — still need to find between £30 billion and £40 billion in savings to bring down public debt as a share of the economy in the next five years, according to calculations by IFS, an influential think tank.

“It is going to be tough,” Hunt said in a tweet. “But protecting the vulnerable — and people’s jobs, mortgages and bills — will be at the front of our minds as we work to restore stability, confidence and long-term growth.”

Sunak and Hunt won’t have the option of going light on the details. If investors don’t buy into their plan and borrowing costs shoot up again, getting the situation under control would only become trickier, as interest payments on government debt rise.

“If markets don’t [see] the plans as credible, then filling the fiscal hole could become even harder,” said Ruth Gregory, senior UK economist at Capital Economics.

One area Sunak may be tempted to tap is the social welfare budget. Questions have swirled about whether the Conservative government may try to avoid boosting state benefits in line with inflation, as is customary. (American recipients of Social Security will receive the biggest cost-of-living adjustment in more than four decades next year.)

Most UK working-age benefits would typically go up by 10.1% next April based on inflation data. But there’s speculation the increase could be linked instead to average earnings, which are growing at a much slower rate than inflation. That could save £7 billion ($8 billion) in 2023-24, according to IFS.

Such a move would prove controversial, however — especially since benefits have not kept up with rampant inflation in 2022.

“I would like to see if we could find a way to increase benefits by inflation, but what I will say is that trade-offs are involved,” former Conservative cabinet minister Sajid Javid told ITV this week.

A more palatable option, at least for households, would be extracting more taxes from corporations.

Hunt has already said that corporate taxes will rise from 19% to 25% next spring. The Financial Times has reported that Hunt could also target earnings from oil and gas companies by extending a windfall tax on profits.

In an interview with the BBC earlier this month, Hunt said he was “not against the principle” of windfall taxes and that “nothing is off the table.” Higher taxes on the financial sector are also under consideration, according to the Financial Times.

Industry groups are already circling the wagons. Banking trade association UK Finance said its members already pay “a higher rate of taxation overall than any other sector,” and urged the government not to “risk the competitiveness of the UK’s banking and finance industry.”

Sunak could also walk back Truss’ commitment to boosting defense spending to 3% of the economy by 2030, though that carries its own political risks given Russia’s war in Ukraine. Other countries in the region, such as Germany, have said they will ramp up military investments, and the United Kingdom may be loath to fall behind, Zaranko said.

Investors and economists expect that the government will announce a mixture of tax increases and spending cuts shortly. Hunt is due to reveal his plans in greater depth on October 31.g

“Despite the fiscal U-turns, the government will still need to show a fiscally credible path next week in the budget to balance the books,” Sonali Punhani, an economist at Credit Suisse, said in a note to clients this week.

That could exacerbate the country’s downturn. The Bank of England has projected that the United Kingdom is already in a recession, and a gauge of business activity in October slumped to its lowest level in 21 months.

“We are seeing quite a dramatic shift in the fiscal outlook from being much looser than we expected just a few weeks ago to being much tighter than we expected,” Gregory of Capital Economics said. “I think the risk is that the recession is deeper or longer than we expect.”

A weaker economy would present its own complications.

No one wants to repeat the errors of the brief Truss era, when her gamble that unfunded tax cuts would jumpstart growth backfired spectacularly.

But business groups are warning that completely abandoning the objective of boosting Britain’s anemic economic growth would create problems, too.

The austerity of the 2010s produced “very low growth, zero productivity and low investment,” Tony Danker, head of the Confederation of British Industry, told the BBC on Tuesday.

“The country could end up in a similar doom loop where all you have to do is keep coming back every year to find more tax rises and more spending cuts, because you’ve got no growth.”

[ad_2]

Source link

December 31, 1969